MW CEO of Los Angeles-based home builder says rebuilding will take a long time

By Steve Goldstein

KB Home profit beats analyst estimates

The chief executive of a home builder based in Los Angeles said it's going to take a while for homes to be rebuilt after the wildfires that have devastated the area.

KB Home Chairman and CEO Jeffrey Mezger said the company, based in the Westwood neighborhood of Los Angeles, is fully operational, though some of its employees have been affected by the fires.

He said it's too early to speculate on the impact of the fires on the company's business.

"This will be an extremely complex situation to deal with, and it's going to take some time. So we don't expect that 6 months from now, there will be 8,000 housing starts in L.A. County as all these homes go right back up," said Mezger.

He said he didn't anticipate a labor or material pinch, though he said the company would have to be "nimble" with utilities. "It will take a long time to get this thing rebuilt," said Mezger, according to a transcript of an analyst call from S&P Global Market Intelligence after the company's fiscal fourth-quarter results.

Robert McGibney, the chief operating officer, told investors that roughly 60% of its net orders in the fourth quarter had some kind of mortgage concession. He said that was consistent relative to the past four quarters, despite rising mortgage rates.

"Although our goal is to wind down the use of these incentives as a selling tool, we will use them as needed to support our sales," he said.

The builder did report improving profit and sales in the Nov. 30-ending quarter. Its profit jumped 27% to $190.6 million, or $2.52 a share, as revenue rose 19% to $2 billion.

Its average selling price rose 3% during the quarter, as homes delivered increased 17%.

Analysts expected earnings of $2.44 a share on revenue of $1.99 billion, according to FactSet.

KB Home shares (KBH) rose 9% in premarket trade.

The company said net orders, as well as net order value, both rose 41% in the fourth quarter.

It's guiding for revenue between $7 billion and $7.5 billion for the year - versus $6.93 billion in 2024 - and for average selling prices in the range of $488,000 to $498,000, up from 2024's $486,900.

-Steve Goldstein

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 14, 2025 05:44 ET (10:44 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.