Boston, MA 03/20/2014 (wallstreetpr) – KB Home (NYSE:KBH) reported surprisingly strong results in its fiscal first quarter. The company cited that its strong figures for revenue and earnings were helped by higher prices it charged for homes and the fact that home buyers are adjusting to the high interest rates. But more about the homebuilders encouraging results in short while. For now, the company has just done what can be described as “striking while the iron is hot.”
Just when investors are still jumping in celebration for the better-than-expected results and the fact that the management has predicted spring sales to be even stronger, KB Home is out to perform stock dilution and to issue debt.
Concurrent stock and debt offering
KB Home (NYSE:KBH) announced in a press release issued Wednesday that it is offering underwritten common stock shares and senior notes. The secondary stock offering is worth $125 million of common stock share, although that amount to go up to $143.8 million if underwriters decide to exercise option to purchase additional shares. On the other hand, the company is offering $300 million senior notes, due 2019.
For the common stock and debt offering, KB Home (NYSE:KBH) has assigned Citigroup Global Markets, Bank of America Corp (NYSE:BAC), Deutsche Bank Securities and Credit Suisse to act as joint book-running managers.
Spending the proceeds
KB Home (NYSE:KBH) has identified several uses for the money resulting from the offering of common stock share and debt. The resulting net proceeds will be used in among other things, land acquisition and development.
Back to the figures
KB Home (NYSE:KBH), due to the high home prices, was able to report profit in its business for the first time in about seven years. Of all the markets that contributed to the strong first quarter performance, California stood out as the sparkle. The company realized net income of $10.6 million or $0.12 per share. That contrasted with net income of $12.5 million or $0.16 per share in the corresponding quarter a year earlier. Analyst on average expected profit of $0.08 per share.