KB Home works to return to profitability in volatile sales environment

By Jennifer Lanning Drey

Portland, Ore., June 25 - KB Home continues to work toward a return to profitability, which chief executive officer Jeffrey Mezger said the company can achieve in the current environment, but the goal may be pushed back a quarter or two as a result of an unpredictable sales climate.

"Regardless of whether we cross the threshold of profitability during 2010 or shortly thereafter, our strategic vision for 2011 and our clear path on how to get there remain unchanged," Mezger said Friday during the company's second-quarter earnings conference call.

KB Home reported revenues of $374.1 million for the second quarter, down from revenues of $384.5 million in the same period of 2009. The company said the decrease was a result of lower housing revenues.

At the same time, KB Home said homes delivered were up 1% from the year-ago period, marking the first time in 14 quarters that the company has posted a year-over-year increase in homes delivered.

Nonetheless, any potential recovery in the housing market remains uneven, Mezger said during the call.

"We are undoubtedly in a better position than we were a year ago, and housing is on the road to recovery, but the recovery remains uneven while the market in many ways is still finding balance," he said.

KB Home's net loss narrowed by 61% in the second quarter to $30.7 million. The figure compared to a net loss of $78.4 million in the same period of 2009.

$1.09 billion in cash

KB Home also reported Friday that it ended the second quarter with $1.09 billion of cash, cash equivalents and restricted cash at May 31.

The balance decreased during the period, mainly reflecting investments in land opportunities and the repayment of debt, Mezger said.

According to its earnings release, KB Home's land acquisition activity increased during the second quarter in each of its geographic regions on both a year-over-year and sequential basis.

The company's debt balance was $1.76 billion at May 31, down $65 million from six months earlier.

KB Home continues to expect to end 2010 with a cash balance in excess of $1 billion, Mezger said.

KB Home is a Los Angeles-based builder of single-family homes.

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