Los Angeles home builder KB Home widened its loss considerably in its first quarter as the housing market soured and the company took a financial hit on the bankruptcy of a big Las Vegas development.
The company posted a net loss of $114.5 million, or $1.49 a share, for the three months that ended Feb. 28. That compared with a net loss of $54.7 million, or 71 cents, a year earlier.
The company took a $53.7-million charge and a loss on loan guaranty of $22.8 million related to the bankruptcy of South Edge, of which KB Home is a partial owner. South Edge is the developer of a massive planned Las Vegas community called Inspirada.
KB Home revenue totaled $196.9 million, down 25% from $264 million a year earlier. Home deliveries in the quarter plunged 28% to 949.
In a conference call with analysts, Chief Executive Jeffrey Mezger said he did not expect the company to be profitable for the year as consumers remain fickle.
"Today's consumers remain very cautious, whether they have concerns about home prices falling further, their job status, their ability to qualify for a loan or general confidence in the economy," Mezger said. "The timeline to make the purchase decision has extended significantly, with a typical buyer visiting a community numerous times before signing a purchase contract."
KB Home shares slid 51 cents, or 4.2%, to $11.69, their seventh straight decline.
Home builders are facing strong head winds in 2011. New-home sales in the U.S. hit a record low in February, adding to concern that any recovery in the housing market is still a long way off.
Cash-rich investors and other buyers have increased their presence in the market in recent months, and they are mostly focused on foreclosures and other so-called distressed homes, where the borrowers on the properties are having trouble paying their mortgages.
Demand from the more everyday buyer — those who buy a home to live in — has become scarce since tax credits expired last year. KB Home and other builders have been trying to lure potential buyers away from the resale market and into their new properties by offering smaller, more affordable models and rolling out more modern, energy-efficient designs.