Updated from 9:18 a.m. EDT
became the second U.S. homebuilder this week to post dismal numbers, saying its third-quarter revenue slumped 32% from the same period a year earlier.
Owing to the slowdown in the housing market, revenue totaled $1.54 billion for the quarter ended Aug. 31, compared with $2.28 billion a year ago. Home deliveries declined 28% year over year to 5,699, and the average selling price of houses fell to $267,700 from $288,000.
KB had a loss from continuing operations, net of an income tax benefit, of $478.6 million, or $6.19 a share. The results reflect $690.1 million in pretax noncash charges related to inventory and joint-venture impairments and the abandonment of land option contracts, along with $107.9 million for a goodwill impairment.
A year ago, KB's continuing operations generated after-tax income of $129.3 million, or $1.60 a share. Discontinued operations in France contributed third-quarter after-tax profits of $443 million, or $5.73 a share, including a gain realized on the sale of the business.
Overall, the company posted a loss in the 2007 third quarter, including the French discontinued operations, of $35.6 million, or 46 cents a share, compared with net earnings of $153.2 million and $1.90 a share a year earlier.
KB's backlog at Aug. 31 totaled 11,880 homes, representing potential future housing revenue of $3.07 billion. However, that was down 31% and 38%, respectively, from the 17,198 backlog units and $4.95 billion backlog value one year ago.
The company expects housing industry conditions to continue to worsen through the end of the year and into 2008, and it said rising foreclosure rates are intensifying the problem of surplus inventory and will probably lead to further reductions in home prices.
"Our third-quarter results reflect the seriously challenging market conditions that prevail for homebuilders across most of the nation," said Jeffrey Mezger, president and chief executive of KB, in a press release. "The oversupply of unsold new and resale homes and downward pressure on new home values has worsened in many of our markets as tighter lending standards, low affordability and greater buyer caution suppress demand, while higher foreclosure activity combined with heightened builder and investor efforts to monetize their real estate investments boost supply."
The company also said that at this time, "we see no signs that the housing market is stabilizing and believe it will be some time before a recovery begins." Still, KB is "making steady progress on strengthening our balance sheet and aligning our operations and investment strategy with current market conditions and our longer-term expectations for the business."
Earlier this week,
said it lost $514 million, or $3.25 a share, for the most recent third quarter, reversing the year-ago profit of $207 million, or $1.30 a share.
Shares of KB were down 0.6% to $23.95 in premarket trading Thursday.