KB Liquidates Assets: Fool by Numbers

On June 28, KB Home (NYSE: KBH  ) released second-quarter earnings for the period ended May 31.

  • Total revenues declined by 35.8%, thanks to housing affordability challenges and tighter credit conditions in the subprime and near-prime mortgage market.
  • The company announced the sale of the entire 49% equity interest in its French subsidiary Kaufman & Broad SA.
  • CEO Jeffery Mezger cited the sale as a chance for KB to become more liquid and focus on strategic expansion opportunities. The deal plans to finalize by the end of the third quarter and gross approximately $800 million.
  • KB Home carries a Motley Fool CAPS rating of one star (out of a potential five). It looks like the CAPS community believes homebuilders are out of favor, as competitors Lennar (NYSE: LEN  ) and D.R. Horton (NYSE: DHI  ) each carry a low one-star rating.

(Figures in millions, except per-share data.)

Income Statement Highlights

Q2 2007

Q2 2006

Change

Sales

$1,413.2

$2,202.3

(35.8%)

Net Profit*

($174.2)

$184.4

N/A

EPS

($2.26)

$2.20

N/A

Diluted Shares

77.1

84.0

(8.2%)

*Income from continuing operations

Get back to basics with the income statement.

Margin Checkup

Q2 2007

Q2 2006

Change*

Gross Margin **

(4.7%)

25.7%

(30.4)

Operating Margin

(18.5%)

13.5%

(31.9)

Net Margin

(12.3%)

8.4%

(20.7)

*Expressed in percentage points. **Cost of Goods Sold includes details from Home Construction segment only.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q2 2007

Q2 2006

Change

Cash + ST Invest.

$272.1

$9.7

2710.8%

Accounts Rec.

$235.3

$573.2

(59.0%)

Inventory

$5,238.3

$7,569.0

(30.8%)

Liabilities

Q2 2007

Q2 2006

Change

Accounts Payable

$399.0

$935.1

(57.3%)

Long-Term Debt

No Data

No Data

No Data

The balance sheet reflects the company's health.

Cash Flow Highlights

Not provided.

Free cash flow is a Fool's best friend.

Related Foolishness:

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.


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