KB Home plans to invest $350 million in acquisitions to boost earnings

By Sahara Marte

New York, June 29 - KB Home plans to aggressively invest in land assets to accelerate its growth, despite the unstable housing market, Jeffery Mezger, president and chief executive officer, said during the company's second quarter conference call.

The company expects to spend $350 million on land and development for the second half of the year. It sees improvements in 32 of its markets and plans to take advantage by expanding, said Mezger. Results should show in the fourth quarter and for the entire year of 2013.

KB Home predicts a neutral cash flow at the end of the year due to the acquisitions.

"We are observing a heightened sense of urgency among potential home buyers," added Mezger. "We're seeing healthy traffic levels with customers appearing more confident in making the home buying decision."

Although the overall housing market appears to have stabilized, real estate remains localized and the pace of recovery varies, said Mezger.

The company believes the driving factors in an economic recovery are job growth and consumer confidence, neither of which are significantly improving at the moment.

Regardless of the rough market, KB spent $83 million on acquisitions for the second quarter and increased revenues by 11% from the same quarter of 2011. It reported a total revenues of $303 million. Its net loss decreased to $24 million from $69 million of the same period in 2011. It was down to $0.31 per share from $0.89 per share.

To further boost earnings, KB Home has partnered with Nationstar as the company's preferred lender.

"We are pleased with our transition to Nationstar," stated Mezger. "We've been very impressed with what we are seeing, thus far, and are confident that this alliance, although it did not have a significant impact on this quarter, will have a positive impact on our business and financial performance in future."

KB Home is a Los Angeles-based homebuilding and financial services company.

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