For the middle of the road home builder KB Homes, 2010 is expected to be the year the red ink stops bleeding. That is what CEO Jeffrey Mezger is saying at least.
The home builder has been hemorrhaging money over the past few years as it right sized the company after massive expansions in the early part of the decade. Now the company is getting it’s footing and is expected to be profitable.
But profitability and size are different. KB Homes revenue dropped 14 percent for the quarter on a year over year basis. So right sizing the company is the way profitability will return. Massive sales volume increase are not to be expected as part of the equation.
Still, we are excited to hear that KB Homes will be on a solid footing. That is good news for the industry.
“Encouraging data in recent months suggest that a number of housing markets may be stabilizing or starting to rebound, though we do not yet see, in many respects, a sustained nationwide recovery,” Chairman and Chief Executive Jeffrey Mezger said in prepared comments.
“While the pace is likely to be uneven in the months ahead, we currently expect housing market conditions to follow a generally positive trajectory throughout this year and into 2011.”
Like many other home builders, KB has struggled, posting repeated losses amid a sharp drop in demand during the recession. The housing market has shown recent signs of stabilization as a host of consumers have taken advantage of an $8,000 first-time homebuyer tax credit.
For the quarter ended Feb. 28, KB Home reported a loss of $54.7 million, or 71 cents a share, compared with a year-earlier loss of $58.1 million, or 75 cents. The results included of inventory- and land-related write-downs of $13.4 million and $32.3 million, respectively.
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THERE SHOULD BE NO APOSTROPHE IN THE TITLE OF THIS ARTICLE. It’s (proper use–contraction of “it” and “is”) offensive to the English language and makes its (see the lack of punctuation there with the possessive) author look dumb.
Sorry, I should have added that you obviously aren’t dumb and that I enjoy the blog. But it’s basic punctuation! (I know, never start a sentence with “but”…)
I think KB Home has been creating a self inflicted wound to its reputation and perception. I think the great lengths that the company will go through to cut corners or avoid taking responsibility for issues to save a few bucks usually ends up costing the company a lot more. You would think by now that the company has finally learned its lesson but that doesn't appear to be the case. We purchased a new KB Home and were extremely disappointed with the quality and service. For more information visit http://www.kbhomeproblems.com
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