KB Home shares rise after earnings beat

Key Points
  • KB Home beat revenue and earnings expectations.
  • CEO Jeffrey Mezger again apologized for insulting comedian Kathy Griffin.
  • He also said the company saw minimal damage from Hurricanes Harvey and Irma.
KB Home beats the Street
KB Home beats the Street

KB Home reported quarterly earnings and revenue that beat analysts' expectations on Thursday.

Here's what the company reported compared to what Wall Street expected:

  • EPS: 51 cents vs. 46 cents expected, according to Thomson Reuters
  • Revenue: $1.14 billion vs. $1.12 billion expected, according to Thomson Reuters
  • New home deliveries: 2,765 vs. 2,736 expected, according to StreetAccount

In the year-ago quarter, KB Home reported earnings of 42 cents per share on $913 million in revenue.

Shares of KB Home rose about 1 percent in after-hours trading.

Hurricane impact

Hurricane Harvey devastated Houston, one of the company's major markets.

Despite the record rainfall, CEO Jeffrey Mezger said that KB Home saw minimal damage in Houston because the company's homes were built in newer areas which have higher drainage system requirements.

While Mezger said the company missed 50 deliveries in Texas because of the hurricane, KB Home resumed deliveries and recover by early September.

The KB Home CEO said that Hurricane Irma didn't hit Florida until the first week of the company's fiscal fourth quarter. Like in Texas, Mezger said the company saw relatively little damage. He said the company has resumed deliveries and starts in all communities in the region.

Mezger said the impact is likely a short-term disruption and that the company expects demand to increase.

Another apology for expletive-laden rant

But Mezger has been skating on thin ice with the company's board since he insulted comedian Kathy Griffin in a tirade laced with sexist and homophobic slurs.

At the beginning of the earnings conference call, Mezger again apologized for his remarks.

"I regretted the incident immediately and I've apologized for it sincerely. The board of directors has already taken action as the company has disclosed and I and the KB Home team are fully focused on leading this company into the future," the CEO said late Thursday.

Last week the Huffington Post published a recording of Mezger railing against Griffin, his neighbor in Los Angeles' upscale Bel Air neighborhood, after she called the police about noise at his home.

Mezger subsequently apologized for his language through a spokesperson, but not without taking another swipe at Griffin, calling her "unneighborly."

KB Home has slashed Mezger's year-end bonus by 25 percent and threatened to fire him if something similar happens again.

"If in the future there is any similar incident, he will be dismissed," the KB Home board said in a statement.