KB Home executives said that issues with supplies and hiring enough workers harmed the company’s ability to complete construction of homes early in 2022, and financial results missed expectations in a Wednesday report, sending shares lower.
reported fiscal first-quarter profit of $134.3 million, or $1.47 a share, up from $1.02 a share a year ago. Total revenue increased to $1.4 billion from $1.14 billion the year prior, while home-building revenue rose to $1.39 billion from $1.14 billion, as KB Home delivered 2,868 homes, roughly even with the year before.
Analysts on average expected earnings of $1.54 a share on home-building revenue of more than $1.5 billion, with deliveries of 3,180 homes, according to FactSet. Shares fell more than 4% in after-hours trading, following a 4.7% decline in the regular session.
“While we grew our revenues 23%, as the quarter progressed, supply-chain issues intensified and an already constrained construction labor force was further stressed, which extended our build times and delayed completions and planned deliveries,” Chief Executive Jeffrey Mezger said in a statement. “We will continue to work on addressing issues as they arise to navigate these challenges.”
Despite the difficulties, KB Home executives maintained their annual sales guidance, which calls for $7.2 billion to $7.6 billion in home-building revenue, but increased expectations for the average selling price for homes by $10,000. Executives now expect their new homes to sell for $490,000 to $500,000 this year, after previously stating $480,000 to $490,000.
The National Association of Home Builders’ monthly confidence index declined for the fourth consecutive month in March, while the underlying index that gauges home builders’ expectations for single-family home sales in the next six months dropped 10 points to a reading of 70, the lowest level for that metric since June 2020. Inflationary effects on materials and difficulty hiring workers were cited as reasons for that decline.
For more: Home builder confidence sinks on concerns about future home sales
“Low inventories are supporting building activity, but worker shortages, high prices and limited material availability remain constraints,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research note when that report was released.
KB Home stock has suffered amid the downturn, falling 17% in the past three months as the S&P 500 index
has declined 4.5%.
MarketWatch staff writer Jacob Passy contributed to this article.