NEW YORK (Reuters) - KB Home posted a wider-than-expected quarterly loss on Tuesday as prices and demand for its houses sagged and expenses climbed.
The top-five U.S. builder, whose shares fell 3 percent, said its loss narrowed to $54.7 million, or 71 cents per share, in the first quarter ended on February 28, from $58.1 million, or 75 cents per share, a year earlier.
Analysts on average had expected a loss of 42 cents per share, according to Thomson Reuters I/B/E/S.
Selling, general and administrative expenses rose 18 percent to $72.2 million, reflecting increased compensation and legal costs. Those expenses reduced earnings by 9 cents per share, UBS analyst David Goldberg wrote in a note to clients.
Revenue slumped 14 percent to $264 million, missing analysts' expectations of $276.2 million. The company said it delivered 8 percent fewer homes in the quarter, and the average home price fell 6 percent.
KB's orders rose 5 percent to 1,913, but some analysts had expected more, despite a tough comparison with the year-earlier period, when orders rose 26 percent.
Credit Suisse analyst Dan Oppenheim has forecast net order growth of 42 percent, while J.P. Morgan analyst Michael Rehaut and UBS' Goldberg had expected 10 percent.
"Although we believe KB's build-to-order focus and unique product will result in better profitability over the long term, it remains unclear how the company will fare over the next few months," Goldberg said.
KB was one of the first homebuilders to seize on the entry-level buyer -- unburdened by a home to sell in a period of plunging prices -- as the market segment that would help it get through a housing slump now in its fourth year.
KB slashed home sizes and prices and launched a new brand, the Open Series, designed to offer a relatively high degree of customization and to compete with foreclosures on price.
But building to order makes it difficult to have homes ready on short notice, which builders need as the federal homebuyer tax credit nears its expiration on April 30.
KB said it is positioned to make a profit in the second half of the year, but Goldberg said the strategic disadvantage associated with its lack of quick-deliver homes could make it difficult to achieve that target.
The latest results included $13.4 million in charges to reflect losses in land value and decisions by the company to abandon options to buy lots.
Based in Los Angeles, KB operates in 10 states and 30 markets.
In the fourth quarter, the company posted its first profit in almost three years due to a tax benefit generated after the extension of a federal law allowing companies to apply losses to prior income.
Rival top-five builder Lennar Corp
KB shares were down 54 cents to $16.90 in morning trading on the New York Stock Exchange.
(Reporting by Helen Chernikoff, editing by Gerald E. McCormick, Lisa Von Ahn and John Wallace)
