Valley’s largest homebuilder sees quarterly profit jump

Jennifer Shubinski

Friday, Dec. 17, 2004 | 11:17 a.m.

KB Home, the Las Vegas Valley's largest homebuilder, on Thursday reported a profit of $186.73 million or $4.42 per share for the fourth quarter ended Nov. 30, up from $138.73 million or $3.31 in the year-ago quarter.

Revenue grew 27 percent to $2.38 billion.

For the year ended Nov. 30, KB Home reported a profit of $480.9 million or $11.40 per share, up from $370.8 million in the year-ago fiscal year.

Revenue for the fiscal year grew 20.5 percent to $7.05 billion.

The company attributed the improvement to a number of different things including:

"Each of our five homebuilding regions posted double-digit increases in fourth-quarter revenues boosting companywide results to an all-time record for the period," Bruce Karatz, KB Home's chairman and chief executive said in a statement. " With a focus attuned to changing market conditions, we nonetheless believe that our business model is a key driver of our current and future growth, including deeper penetration of existing markets and extension into adjacent markets."

In Las Vegas, it appears that KB Home will again be the top homebuilder in Las Vegas, in terms of number of homes sold, for 2004.

From January to October, the most up-to-date statistics available, KB Home closed on 3,040 homes in the Las Vegas Valley, research firm SalesTraq reported.

Larry Murphy, president of SalesTraq, expects KB Home to close on 700 to 800 more homes by the end of the year, putting it just under 4,000 homes closed.

Murphy said KB Home now controls a 13.2 percent market share of all new homes built in the valley.

"One out of every 10 subdivisions in town is a KB Home subdivision," he said.

The average closing price of a Las Vegas KB Home, from January to October, was $233,029, an almost 18 percent increase in price over the same time period last year, Murphy said.

The average sales price of a KB Home nationwide was $229,200 during the fourth quarter, a 10.5 percent increase over the same time period a year ago. That is expected to increase to $237,000 in 2005, KB Home executives said during a conference call today.

In the Southwest, including Las Vegas, the average price of a KB Home was $213,800, an almost 19 percent increase over the year-ago quarter.

"Las Vegas will remain an extremely strong market for us. The economic dynamics have not changed," said Derrick Hall, KB Home vice president of corporate communications. "Unemployment remains low, job growth remains steady, and it comes down to having the right products at the right price. We are priced properly in the market, and in fact, any adjustments we have made involve increases."

Having a wide range of housing prices has helped the homebuilder reach a wide audience, Murphy said.

KB Home expanded its range of homes in the Las Vegas market earlier this year when it started construction and sales of its Tripoly product, triplex houses, around the valley. Prices for those homes start in the mid- to high $100,000 range.

Diversification of KB Home's product line, from luxury move up homes to attached product was a key to the company's success during the year and into the future, Karatz said during today's conference call.

"One of the reasons we've offered more attached product is our concerns about affordability in the most land-constrained markets, which is pushing land prices up and housing prices," Karatz said without mentioning any specific markets. "It doesn't take long before you start shrinking the pool of buyers who qualify, that's why we're going toward higher density."