Kimball Hill's total homebuilding revenues for the three month period ended December 31, 2006 were $238.8 million, an increase of $16.3 million, or 7.3% from the three month period ended December 31, 2005. Kimball Hill delivered 799 homes during the quarter ended December 31, 2006, compared with 763 homes during the quarter ended December 31, 2005. The average sales price of homes delivered during the first fiscal quarter of 2007 was $270 thousand, a 4.3% decrease from the average sales price of homes delivered during the first fiscal quarter of 2006.
Total gross homebuilding profit margin decreased to (1.8)% for the quarter ended December 31, 2006, compared to 24.8% for the quarter ended December 31, 2005. Included in gross homebuilding profit for the quarter ended December 31, 2006 are $40 million of inventory valuation charges. Net loss for the quarter ended December 31, 2006 was $21 million, as compared with net earnings of $15.5 million for the quarter ended December 31, 2005.
Conference Call
Kimball Hill will hold a conference call Tuesday, February 13, 2007 at 9:00 a.m. Central Time. The dial-in number is 888-889-1956. Participants may call in beginning at 8:45 a.m. Central Time. The call will be recorded and available for replay from 11:00 a.m. Central Time on February 13, 2007 to 1:00 a.m. Central Time on March 14, 2007. The dial-in number for the replay is 888-568-0661.
About Kimball Hill
Kimball Hill is one of the nation's largest privately-owned homebuilders as measured by home deliveries and revenues. Kimball Hill designs, builds and markets single-family detached, single-family attached and multi-family homes. Since its founding in 1969, Kimball Hill has delivered over 44,000 homes to a broad range of customers, including first-time buyers and first- and second- time move-up buyers. Kimball Hill has grown its business organically and now operates within 17 markets across nine states located in five regions: Florida, the Midwest, Nevada, the Pacific Coast and Texas.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Kimball Hill's management and are subject to substantial risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Kimball Hill's business is subject to a number of risks and uncertainties, including those disclosed in Item 1A of Kimball Hill's Annual Report on Form 10-K for the fiscal year ended September 30, 2006 filed with the SEC. Kimball Hill undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.
Website: http://www.kimballhillhomes.com
Kimball Hill, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
For the three months ended
December 31, 2006 and 2005 (in thousands) 2006 2005
HOMEBUILDING:
Revenues:
Sales of residential units and land $238,412 $221,028
Rental and other income 417 1,518
Total homebuilding revenues 238,829 222,546
Expenses:
Cost of sales of residential units and land 243,151 167,299
General and administrative 16,626 20,494
Sales and marketing 13,834 10,183
Depreciation 254 178
Total homebuilding expenses 273,865 198,154
Equity in income of unconsolidated
joint ventures 500 157
Minority interests in net earnings of
consolidated partnerships (76) (359)
Homebuilding (loss) earnings before
income taxes (34,612) 24,190
MORTGAGE BANKING:
Revenues:
Gain on sales of mortgage loans 1,742 1,369
Interest income 5
Total mortgage banking revenues 1,742 1,374
Expenses:
General and administrative 1,204 1,127
Interest expense 4
Depreciation 22 28
Total mortgage banking expenses 1,226 1,159
Mortgage banking earnings before
income taxes 516 215
(LOSS) EARNINGS BEFORE INCOME TAXES (34,096) 24,405
(BENEFIT) PROVISION FOR INCOME TAXES (13,127) 8,858
NET (LOSS) EARNINGS $(20,969) $15,547
Unaudited Other Consolidated Financial Data
For the three months ended
December 31, 2006 and 2005 (in thousands) 2006 2005
Interest expense in cost of sales $8,771 $5,046
Interest expense in mortgage banking operations $4
Interest incurred $11,827 $11,187
Kimball Hill, Inc. and Subsidiaries
Unaudited Supplemental Data For Reportable Homebuilding Segments(1)
Backlog Backlog
Average (units) (contract
Three Months Ended sales price Net new at value) at
December 31, of homes Homes home period period
(Dollars in thousands) delivered delivered orders(2) end(3) end(3)
2006
Florida $302 82 65 56 $17,380
Midwest 326 139 116 136 47,816
Nevada 382 97 116 64 24,511
Pacific Coast 440 92 107 95 39,466
Texas 175 389 318 330 61,623
Total $270 799 722 681 $190,796
2005
Florida $234 95 14 183 $43,839
Midwest 385 104 112 263 99,061
Nevada 382 88 79 103 41,916
Pacific Coast 457 145 82 221 110,683
Texas 161 331 351 575 93,675
Total $282 763 638 1,345 $389,174
(1) The five reportable homebuilding segments include operations in the
following geographic regions:
Florida
Midwest: Illinois, Ohio, and Wisconsin
Nevada
Pacific Coast: California, Oregon, and Washington
Texas
(2) Net new home orders represent the number of new sales contracts
executed with customers, net of sales contract cancellations.
(3) Backlog represents homes under sales contracts but not yet delivered
at the end of the period.
Kimball Hill, Inc. and Subsidiaries
Unaudited Supplemental Financial Data For Reportable Segments(1)
For the three months ended (Loss) earnings
December 31, 2006 and 2005 before income
(in thousands) Revenues taxes
2006
Florida $23,941 $(7,385)
Midwest 46,122 (11,530)
Nevada 55,030 19,662
Pacific Coast 39,269 (16,261)
Texas 69,916 (241)
Mortgage banking 1,742 516
Segment subtotal 236,020 (15,239)
Corporate and unallocated 177 (7,717)
236,197 (22,956)
Homebuilding interest expense(2) (8,771)
GAAP adjustment(3) 4,374 (2,369)
Consolidated total $240,571 $(34,096)
2005
Florida $22,210 $107
Midwest 42,520 817
Nevada 33,689 11,403
Pacific Coast 66,315 21,929
Texas 56,614 2,002
Mortgage banking 1,374 215
Segment subtotal 222,722 36,473
Corporate and unallocated 1,198 (10,955)
223,920 25,518
Homebuilding interest expense(2) (5,046)
GAAP adjustment(3) 3,933
Consolidated total $223,920 $24,405
(1) The above table presents financial information based on our internal
measurement system, which is not in accordance with accounting
principles generally accepted in the United States of America
("GAAP"). Our internal measurement system is intended to establish
accountabilities to continually improve business focus, motivate
behavior and drive performance. We aggregate our homebuilding
operating segments into five reportable segments and our mortgage
banking operations into one reportable segment. Our homebuilding
segments are engaged in the acquisition and development of land, and
construction and sale of residential homes. Our mortgage banking
segment originates mortgages, which are sold to third parties.
(2) For internal measurement purposes, we measure our homebuilding
operating results exclusive of any interest expense or other
financing costs.
(3) The GAAP adjustment to revenues is for certain closing costs and
brokers commissions that are included in revenue in our internal
measurement system that are reported as expenses in accordance with
GAAP. The GAAP adjustments to earnings before income taxes relate to:
(a) timing differences of certain capitalizable indirect construction
costs that are expensed as incurred in our internal measurement
system, and (b) minority interest expense which is not included in
our internal measurement system.
Kimball Hill, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
December 31, September 30,
(in thousands, except shares) 2006 2006
Assets
HOMEBUILDING:
Cash and cash equivalents $11,136 $16,042
Receivables 21,960 35,323
Income taxes receivable 2,428
Inventory 827,660 899,297
Inventory not owned 50,154 37,821
Deferred expenses and other assets 21,251 19,229
Investments in and advances to
unconsolidated entities 53,399 48,238
Deferred income taxes 28,864 14,133
Property and equipment, net of
accumulated depreciation 10,899 10,635
1,027,751 1,080,718
MORTGAGE BANKING:
Cash and cash equivalents 1,710 2,623
Trade accounts receivable 2,464 2,319
Mortgage loans held for sale 4,314 5,663
Property and equipment, net of
accumulated depreciation 239 254
8,727 10,859
TOTAL ASSETS $1,036,478 $1,091,577
Liabilities and equity
HOMEBUILDING:
Accounts payable and accrued expenses $73,380 $106,779
Deposits on sales of residential units 5,976 6,333
Liabilities related to inventory not owned 15,530 5,015
Income taxes payable 3,702
Notes payable 489,951 500,208
584,837 622,037
MORTGAGE BANKING:
Accounts payable and accrued expenses 595 927
Other liabilities 120 196
715 1,123
Total liabilities 585,552 623,160
MINORITY INTEREST IN CONSOLIDATED PARTNERSHIPS 46,320 43,244
MINORITY INTEREST IN INVENTORY NOT OWNED 31,721 31,721
REDEEMABLE EQUITY:
Redeemable common stock, no par value;
shares outstanding: 233,002 at 12/31/2006
and 228,002 at 9/30/2006 21,483 26,334
SHAREHOLDERS' EQUITY:
Common stock, no par value; 10,000,000 shares
authorized; shares outstanding: 4,316,859
at 12/31/2006 and 4,316,878 at 9/30/2006 111,668 111,305
Retained earnings 239,734 255,813
Total shareholders' equity 351,402 367,118
TOTAL LIABILITIES AND EQUITY $1,036,478 $1,091,577
