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Kaufman & Broad Rides Housing Upturn

Earnings: Higher prices, sales lift first-quarter profit 52%, beating estimates. But company sees pressure on near-term results.

March 21, 2000|From Bloomberg News

Kaufman & Broad Corp., the No. 1 U.S. home builder, on Monday said fiscal first-quarter profit rose 52%, beating estimates, on higher home prices and sales.

Profit from continuing operations for the period ended Feb. 29 rose to $24.6 million, or 56 cents a share, compared with net income of $16.2 million, or 35 cents a share, a year ago. The company was expected to earn 54 cents, based on the average estimate of nine analysts polled by First Call/Thomson Financial.

Revenue rose 15% to $799.6 million from $694.1 million.

The company said it cut an unspecified number of jobs in the first quarter to cut costs. It may take related charges in the second quarter.

Los Angeles-based Kaufman said sales were up during the quarter, with the average price rising 6.6% from a year ago. The company also reduced its selling and administrative costs. Following stock buybacks, Kaufman has 5.1% fewer shares outstanding than a year ago.

Kaufman Chief Financial Officer Michael Henn said a slowdown in housing orders and one-time charges from cost-cutting programs will "put some pressure" on fiscal second-quarter earnings. The company should be able to meet First Call fiscal 2000 full-year estimates of $3.77 a share, Henn said.

Kaufman shares rose 38 cents to close at $20.88 on the New York Stock Exchange.

Including a gain of $39.6 million, or 91 cents a share, from the initial public offering of its French home-building unit, Kaufman reported net income of $64.2 million, or $1.47, in the quarter.

Kaufman said it will generate between $300 million and $400 million to pay down debt and buy back additional stock.

The proceeds will come from several sources, including the French stock offering, the planned sale of an apartment development unit and the sale of $50 million to $75 million in land holdings.

Kaufman also said it formed an e-commerce unit to make investments in Internet companies, especially those related to the home-building industry.

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