KB Home, one of the nation's largest home builders, Wednesday reported record profit during its fiscal third quarter and raised its earnings outlook for the year as the housing industry continues to thrive.
Net income rose 39% during the three months ended Aug. 31 to $83.9 million, the company's highest quarterly profit, or $1.95 a share, compared with $60.4 million, or $1.58, a year earlier. The Westwood-based company beat analysts' consensus estimate by 28 cents a share.
Sales rose to nearly $1.29 billion in the latest period, up 5% from $1.23 billion a year earlier.
KB Home has improved its efficiency by corralling home-building costs, Chairman Bruce Karatz said. And sales have been boosted by incorporating standard features requested by home buyers in surveys conducted by the builder, he said.
The company reported net orders of 6,320 units, up about 10% from a year earlier, as all 15 markets KB Home serves from California to Florida reported increases in volume. A backlog of orders valued at $2.64 billion was reported, the highest for any third quarter.
The results led KB Home to raise its profit forecast for the year to $6.75 a share from $6.50. The level of profit achieved in the third quarter is too large to be sustained, Karatz said, but he expects net income to rise by at least 15% in coming years.
"Demographics seem to be so strong that housing demand will continue to be very healthy," he said, "and will be in the future."
The company also announced Wednesday an agreement to acquire American Heritage Homes of Orlando, Fla. KB Home has been expanding in large states that have rapid growth, including Florida, which ranks third in home building, behind California and Texas.
Another major builder, Lennar Corp., also reported record results for its fiscal third quarter ended Aug. 31. Profit grew 33% to $142.2 million or $2.01 a share, compared with $106.7 million, or $1.53 a share, a year earlier.
The Miami builder, which expanded its presence in Southern California this summer by acquiring a major builder in the Inland Empire, reported revenue of $1.86 billion in the quarter, up 18% from a year earlier.
In a separate report, the National Assn. of Home Builders said builders' confidence has soared to its highest level since November 2000. The index, a measure of builders' outlook for sales, rose eight points this month to 63, overcoming a six-point dip the last month.
"Builders expect the housing juggernaut to roll on for the foreseeable future," Stephen Stanley, an economist at Greenwich Capital Markets Inc., wrote in a note to investors.
KB Home closed at $50.24 on the New York Stock Exchange, down $1.37. Lennar finished down $1.14 at $56.65.
KB shares have risen 25% this year while Lennar is up 21%. Most builders' shares have rocketed since 1999, but they have largely stalled out since spring as investors have taken profits.