Earnings Reports To Watch: KB Home (KBH)

KB Home (NYSE:KBH) reported earnings for the three months ended May 2016 on June 21, 2016. The company earned $0.17 per share on revenue of $811.05M. Analysts had been modeling earning per share of $0.14 with $747.06M in revenue.

KB Home (NYSE:KBH) reported results for its second quarter ended May 31, 2016.

Three Months Ended May 31, 2016 (comparisons on a year-over-year basis)

  • Total revenues rose 30% to $811.1 million.
  • Housing revenues increased 33% to $807.4 million.
  • Deliveries grew 30% to 2,329 homes, reflecting double-digit increases in all four of the Company’s regions.
  • Average selling price increased 2% to $346,700.
  • Housing gross profit margin decreased 50 basis points to 15.5%, reflecting approximately 80 basis points of inventory-related charges.
  • Adjusted housing gross profit margin, which excludes the amortization of previously capitalized interest and inventory-related charges, improved 40 basis points to 20.7%.
  • Selling, general and administrative expenses improved 140 basis points to 11.6% of housing revenues.
  • Homebuilding operating income increased 45% to $25.9 million despite total inventory impairment and land option contract abandonment charges of $11.7 million, of which $6.8 million related to the Company’s wind down of its Metro Washington, D.C. operations. Inventory-related charges in the year-earlier quarter totaled $.5 million.
    • Homebuilding operating income margin improved 30 basis points to 3.2%. Excluding inventory-related charges, homebuilding operating income margin rose 170 basis points to 4.7%.
  • Pretax income increased 96% to $24.8 million.
  • Income tax expense of $9.2 million was favorably impacted by $.4 million of federal energy tax credits earned from building energy-efficient homes and represented an effective tax rate of 37.1%.
  • Net income rose 63% to $15.6 million and earnings per diluted share increased to $.17, with both metrics unfavorably impacted by inventory-related charges.

Six Months Ended May 31, 2016 (comparisons on a year-over-year basis)

  • Total revenues increased 24% to $1.49 billion.
  • Deliveries rose 27% to 4,282 homes.
  • Average selling price increased 3% to $345,600.
  • Land sale revenues totaled $4.2 million, compared to $68.9 million.
  • Homebuilding operating income rose 39% to $44.9 million.
  • Net income increased 65% to $28.7 million and earnings per diluted share advanced to $.31 from $.18.

Backlog and Net Orders (comparisons on a year-over-year basis)

  • Ending backlog value grew 14% to $1.83 billion, reflecting increases in all regions.
  • Homes in backlog rose 10% to 5,205.
  • Net order value for the quarter grew 14% to $1.20 billion.
  • Net orders for the quarter increased 8% to 3,249.
  • The cancellation rate as a percentage of beginning backlog for the quarter improved to 21% from 25%, and as a percentage of gross orders improved to 21% from 22%.
  • Average community count for the quarter decreased 2% to 242.

Balance Sheet (as of May 31, 2016)

  • Cash, cash equivalents and restricted cash totaled $278.4 million.
  • Inventories totaled $3.53 billion, with investments in land acquisition and development totaling $702.6 million for the six months ended May 31, 2016.
  • Lots owned or controlled totaled 47,283, of which 82% were owned.
  • There were no cash borrowings outstanding under the unsecured revolving credit facility.
  • Average diluted shares outstanding for the quarter were reduced 7% from the year-earlier quarter to 94.7 million, reflecting repurchases of nearly 8.4 million shares of common stock during the 2016 first quarter at a total cost of $85.9 million. No shares were repurchased in the 2016 second quarter.

KB Home earnings per share showed a decreasing trend of -90.8% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 161%.Analysts project EPS growth over the next 5 years at 27.9%. It has EPS annual growth over the past 5 fiscal years of 24.1% when sales grew 13.8. It reported 16.9% sales growth, and 66.5% EPS growth in the last quarter.

The stock is trading at $15.08, up 67.51% from 52-week low of $9.04. The stock trades down -12.77% from its peak of $17.42 and % below the consensus price target of $14.96. Its volume clocked up at 2.9 million shares which is lower than the average volume of 3 million shares. Its market capitalization currently stands at $1.25B.

Earnings Recap: Science Applications International Corporation (NYSE:SAIC)

Science Applications International Corporation (NYSE:SAIC) reported earnings for the three months ended April 2016 on June 13, 2016. The company earned $0.8 per share on revenue of $1.22B. Analysts had been modeling earning per share of $0.74 with $1.15B in revenue.

Science Applications International Corporation (NYSE:SAIC) announced financial results for the first quarter ended May 6, 2016.

Revenues for the first quarter were $1,215 million compared to $1,009 million during the prior year quarter, which represents an increase of $206 million. Our fiscal year 2017 is a 53-week year and contains an extra week compared to the prior fiscal year. The extra week occurred during the first quarter of fiscal 2017. Of the $206 million increase in revenue in the current quarter, an estimated $88 million of the increase was due to the additional week in the first quarter. The remaining revenue growth was primarily due to the acquisition of Scitor, which occurred during the second quarter of the prior fiscal year and revenue from newly awarded programs ($42 million). These increases were partially offset by lower current quarter supply chain material volume ($41 million) as a result of a recompete contract loss last year.

The Company’s internal revenue contraction for the first quarter was 3.1%. As is shown in Schedule 5, to calculate internal revenue growth or contraction, revenues from the prior year quarter were adjusted to include Scitor’s historical revenues as if the acquisition had occurred at the beginning of the comparable prior year period. Also, this calculation adjusted first quarter fiscal 2017 revenues to exclude the estimated impact of the additional week in order to provide a more equitable comparison to fiscal 2016. Revenues contracted primarily due to the supply chain contract loss and a decrease in revenues generated by the legacy Scitor business caused by delays in contract awards, and transition of work to small business set aside contracts. These decreases were partially offset by revenues on newly awarded programs.

Operating income for the quarter was $66 million, or 5.4% of revenues, down from 5.6% in the prior year quarter. The decrease was primarily due to increased current year selling, general and administrative expense (SG&A) as well as acquisition and integration costs related to lease exit costs. SG&A for the quarter includes the amortization of acquired Scitor intangible assets ($7 million) and executive severance expense ($2 million). These decreases to operating income were partially offset by higher net favorable changes in contract profit estimates compared to the prior year period ($5 million) and reduced volume on supply chain contracts that generate lower operating margins.

Adjusted EBITDA (which excludes acquisition and integration costs) was $86 million for the first quarter, or 7.1% of revenues, compared to 6.4% in the comparable prior year quarter. The increase was due to strong contract performance and the inclusion of Scitor which has a relatively higher EBITDA margin percentage than our historical business, along with reduced supply chain contract volume.

Net income for the quarter was consistent with the prior year quarter, primarily due to increased operating income ($6 million, net of tax), offset by increased interest expense on incremental term loan borrowings related to the Scitor acquisition ($6 million, net of tax).

Diluted earnings per share was $0.71 for the quarter and adjusted diluted earnings per share was $0.80 (which excludes the estimated after-tax effects of $7 million of acquisition and integration costs). The weighted-average diluted shares outstanding during the quarter was 46.5 million shares.

Cash Generation and Capital Deployment

Total cash flows provided by operating activities for the quarter were $35 million, an increase of $6 million from the comparable prior year quarter. The increase in operating cash flows over the prior year quarter was primarily due to lower income tax payments ($3 million) and cash flows provided by the operating activities of Scitor. These increases were partially offset by a current period investment of working capital for the Assault Amphibious Vehicle contract ($7 million) and higher interest payments in the current period as a result of additional borrowings ($9 million).

Science Applications International Corporation earnings per share showed a decreasing trend of -15.1% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 348%.Analysts project EPS growth over the next 5 years at 5%. It has EPS annual decline over the past 5 fiscal years of -10.3% when sales declined -2.4. It reported 20.4% sales growth, and 2.4% EPS growth in the last quarter.

The stock is trading at $58.49, up 51.95% from 52-week low of $39.28. The stock trades down -5.55% from its peak of $61.93 and % below the consensus price target of $64.17. Its volume clocked up at 0.36 million shares which is higher than the average volume of 0.29 million shares. Its market capitalization currently stands at $2.59B.

Earnings Recap: Hovnanian Enterprises Inc. (NYSE:HOV)

Hovnanian Enterprises Inc. (NYSE:HOV) reported earnings for the three months ended April 2016 on June 02, 2016. The company earned $-0.06 per share on revenue of $654.72M. Analysts had been modeling earning per share of $0.02 with $643.06M in revenue.

Hovnanian Enterprises Inc. (NYSE:HOV) reported results for its fiscal second quarter and six months ended April 30, 2016.

RESULTS FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED APRIL 30, 2016:

  • Total revenues were $654.7 million in the second quarter of fiscal 2016, an increase of 39.6% compared with $468.9 million in the second quarter of fiscal 2015. For the six months ended April 30, 2016, total revenues increased 34.5% to $1.23 billion compared with $914.7 million in the first half of the prior year.
  • Total interest expense as a percentage of total revenues was 7.0% during the second quarter of fiscal 2016, a decrease of 50 basis points, compared with 7.5% in the same period of the previous year. For the six months ended April 30, 2016, total interest expense as a percentage of total revenues declined 100 basis points to 6.8% compared with 7.8% during the same period a year ago.
  • Total SG&A was $69.0 million, or 10.5% of total revenues, a 420 basis point improvement during the second quarter of fiscal 2016 compared with $69.1 million, or 14.7% of total revenues, in last year’s second quarter. Total SG&A was $132.8 million, or 10.8% of total revenues, a 380 basis point improvement for the first six months of fiscal 2016 compared with $133.7 million, or 14.6% of total revenues, in the first half of the prior year.
  • Homebuilding gross margin percentage, before interest expense and land charges included in cost of sales, was 16.1% for both the second quarter ended April 30, 2016 and 2015. During the first six months of fiscal 2016, homebuilding gross margin percentage, before interest expense and land charges included in cost of sales, was 16.3% compared with 17.1% in the same period of the previous year.
  • The loss before income taxes in the second quarter of fiscal 2016 was $17.6 million compared with a loss before income taxes of $29.5 million in the prior year’s second quarter. For the first half of fiscal 2016, the loss before income taxes was $30.8 million compared with a loss before income taxes of $49.2 million during the first six months of fiscal 2015.
  • The loss before income taxes, excluding land-related charges, in the second quarter of fiscal 2016 was $7.9 million compared with the loss before income taxes, excluding land-related charges, of $25.2 million in the prior year’s second quarter. For the first half of fiscal 2016, the loss before income taxes, excluding land-related charges, was $9.4 million compared with a loss before income taxes, excluding land-related charges, of $42.6 million during the first six months of fiscal 2015.
  • Net loss was $8.5 million, or $0.06 per common share, for the second quarter of fiscal 2016, compared with a net loss of $19.6 million, or $0.13 per common share, in the second quarter of the previous year. For the six months ended April 30, 2016, the net loss was $24.6 million, or $0.17 per common share, compared with a net loss of $33.9 million, or $0.23 per common share, in the first half of fiscal 2015.
  • For the second quarter of fiscal 2016, Adjusted EBITDA was $39.7 million compared with $12.2 million during the second quarter of 2015, a 224.4% increase. For the first half of fiscal 2016, Adjusted EBITDA increased 134.3% to $78.5 million compared with $33.5 million during the first six months of fiscal 2015.
  • As of April 30, 2016, consolidated active selling communities decreased 5.3% to 196 communities compared with 207 communities at the end of the prior year’s second quarter. As of end of the second quarter of fiscal 2016, active selling communities, including unconsolidated joint ventures, decreased 3.7% to 208 communities compared with 216 communities at April 30, 2015.
  • The dollar value of consolidated net contracts increased 9.6% to $768.1 million for the three months ended April 30, 2016 compared with $700.7 million during the same quarter a year ago. The dollar value of net contracts, including unconsolidated joint ventures, during the second quarter of fiscal 2016 increased 5.1% to $789.3 million compared with $750.9 million in last year’s second quarter.
  • The dollar value of consolidated net contracts increased 16.0% to $1.40 billion for the first six months of fiscal 2016 compared with $1.20 billion in the first half of the previous year. The dollar value of net contracts, including unconsolidated joint ventures, for the six months ended April 30, 2016 increased 14.6% to $1.46 billion compared with $1.27 billion in the first six months of fiscal 2015.
  • The number of consolidated net contracts, during the second quarter of fiscal 2016, increased 0.9% to 1,812 homes compared with 1,796 homes in the prior year’s second quarter. In the second quarter of fiscal 2016, the number of net contracts, including unconsolidated joint ventures, decreased 1.7% to 1,862 homes from 1,894 homes during the second quarter of fiscal 2015.
  • The number of consolidated net contracts, during the six month period ended April 30, 2016, increased 7.3% to 3,343 homes compared with 3,115 homes in the same period of the previous year. During the first half of fiscal 2016, the number of net contracts, including unconsolidated joint ventures, was 3,454 homes, an increase of 6.0% from 3,260 homes during the first six months of fiscal 2015.

Hovnanian Enterprises Inc. earnings per share showed a decreasing trend of -105.9% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 20%.Analysts project EPS decline over the next 5 years at 0%. It has EPS annual decline over the past 5 fiscal years of -40% when sales grew 9.4. It reported 39.6% sales growth, and 56.9% EPS growth in the last quarter.

The stock is trading at $1.67, up 40.34% from 52-week low of $1.19. The stock trades down -42.61% from its peak of $2.91 and 12.57% above the consensus price target of $1.88. Its volume clocked up at 0.88 million shares which is lower than the average volume of 1.48 million shares. Its market capitalization currently stands at $239.81M.

Earnings in Focus: Restoration Hardware Holdings, Inc. (RH)

Restoration Hardware Holdings, Inc. (NYSE:RH) reported earnings for the three months ended April 2016 on June 08, 2016. The company earned $-0.05 per share on revenue of $455.46M. Analysts had been modeling earning per share of $0.05 with $452.14M in revenue.

Restoration Hardware Holdings, Inc. (NYSE:RH) announced financial results for the first quarter ended April 30, 2016.

The Company will post a video presentation between approximately 1:15 p.m. – 1:30 p.m. PT (4:15 p.m. – 4:30 p.m. ET) today highlighting its continued evolution and recent performance on the RH Investor Relations website at ir.restorationhardware.com.

First Quarter Highlights

  • Net revenues increased 8% on top of a 15% increase last year
  • Comparable brand revenues increased 4% on top of a 15% increase last year
  • GAAP net loss of $13.5 million compared to net income of $7.2 million for the same period last year
  • Adjusted net loss of $2.1 million compared to adjusted net income of $9.8 million last year
  • GAAP diluted loss per share of $0.33 compared to diluted earnings per share of $0.17 for the same period last year
  • Adjusted diluted loss per share of $0.05 compared to adjusted diluted earnings per share of $0.23 last year

First Quarter Fiscal 2016 Results

Revenue – Net revenues for the first quarter of fiscal 2016 increased 8% to $455.5 million from $422.4 million in the first quarter of fiscal 2015.

  • Comparable brand revenue growth, which includes direct, was 4% in the first quarter of fiscal 2016 on top of 15% for the same period last year.
  • Stores revenues increased 19% to $256.1 million in the first quarter of fiscal 2016. This growth is on top of a 13% increase in stores revenues in the first quarter of fiscal 2015.
  • Direct revenues decreased 4% to $199.4 million in the first quarter of fiscal 2016. Direct revenues during the first quarter of fiscal 2016 represented 44% of total net revenues.

Operating Income and Margin** – On an unadjusted basis, GAAP operating loss was $11.5 million in the first quarter of fiscal 2016 compared to GAAP operating income of $17.0 million for the same period last year and GAAP operating margin was -2.5% compared to 4.0% for the same period last year.

Adjusted operating income in the first quarter of fiscal 2016 was $0.7 million compared to $18.6 million in the first quarter of fiscal 2015. Adjusted operating margin in the first quarter of fiscal 2016 was 0.2% compared to 4.4% for the same period last year.

Net Income (Loss) ** – On an unadjusted basis, GAAP net loss for the first quarter of fiscal 2016 was $13.5 million compared to GAAP net income of $7.2 million for the same period last year.

Adjusted net loss in the first quarter of fiscal 2016 was $2.1 million compared to adjusted net income of $9.8 million in the first quarter of fiscal 2015.

Earnings (Loss) Per Share** – On an unadjusted basis, GAAP diluted loss per share for the first quarter of fiscal 2016 was $0.33 compared to GAAP diluted earnings per share of $0.17 for the same period last year.

Adjusted diluted loss per share for the first quarter of fiscal 2016 was $0.05 compared to adjusted diluted earnings per share of $0.23 for the same period last year.

A reconciliation of GAAP to non-GAAP financial measures is provided in the tables accompanying this release.

Restoration Hardware Holdings, Inc. earnings per share showed a decreasing trend of -2% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 235%.Analysts project EPS growth over the next 5 years at 19.5%. It has EPS annual growth over the past 5 fiscal years of 63.9% when sales grew 22.2. It reported 7.8% sales growth, and -294.6% EPS decline in the last quarter.

The stock is trading at $27.92, up 12.81% from 52-week low of $24.75. The stock trades down -73.78% from its peak of $106.49 and % below the consensus price target of $40.07. Its volume clocked up at 2.84 million shares which is lower than the average volume of 2.97 million shares. Its market capitalization currently stands at $1.12B.

Earnings in Focus: Lands’ End, Inc. (NASDAQ:LE)

Lands’ End, Inc. (NASDAQ:LE) reported earnings for the three months ended April 2016 on June 01, 2016. The company earned $-0.18 per share on revenue of $273.43M. Analysts had been modeling earning per share of $0.02 with $293.24M in revenue.

Lands’ End, Inc. (NASDAQ:LE) announced financial results for the first quarter ended April 29, 2016.

First Quarter Fiscal 2016 Highlights:

  • Net revenue was $273.4 million as compared to $299.4 million in the first quarter last year. Direct segment net revenue decreased 8.4% to $232.2 million. Retail segment net revenue decreased 10.4% to $41.2 million primarily driven by a 7.1% decrease in same store sales and a reduction in the number of Lands’ End Shops at Sears.
  • Gross margin was 47.4% as compared to 49.0% in the first quarter last year due to deeper promotions as compared to last year in response to a difficult retail environment.
  • Net loss was $5.8 million, or $0.18 per share, as compared to net income of $1.7 million, or $0.05 per diluted share, in the first quarter last year.
  • Adjusted EBITDA1 was $0.6 million compared to $13.1 million in the first quarter of fiscal 2015.

Federica Marchionni, Lands’ End’s Chief Executive Officer, stated, “We continued to make progress across a number of initiatives; we remained focused on strengthening our core business and launching additional collections that we believe will drive future profitable growth. While we are encouraged by the initial wins, our financial results in the first quarter were impacted by the overall weakness in the retail environment, including aggressive discounting and promotional activity.  That said, during the quarter, we further executed our strategy by strengthening our traditional product categories and launching the Canvas by Lands’ End collection. We also enhanced our brand image, including elevated marketing initiatives, the newly-launched multi-brand e-commerce website and refinements to our catalog strategy.  We continued to receive positive response from both existing and lapsed customers on our new product offering, marketing programs, and website enhancements, and while we expect the retail environment will be very challenging, we will remain focused on building on this momentum with sequential improvement beginning in the second quarter of fiscal 2016.”

Lands’ End, Inc. earnings per share showed a decreasing trend of -126.5% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 115%.Analysts project EPS growth over the next 5 years at 20%. It has EPS annual decline over the past 5 fiscal years of -17.9% when sales declined -2. It reported -8.7% sales drop, and -434.7% EPS decline in the last quarter.

The stock is trading at $16.82, up 8.59% from 52-week low of $15.49. The stock trades down -42% from its peak of $29 and 27.82% above the consensus price target of $21.5. Its volume clocked up at 0.13 million shares which is lower than the average volume of 0.25 million shares. Its market capitalization currently stands at $536.81M.

Earnings Estimates Report: Ambarella, Inc. (NASDAQ:AMBA)

Ambarella, Inc. (NASDAQ:AMBA) reported earnings for the three months ended April 2016 on June 02, 2016. The company earned $0.34 per share on revenue of $57.16M. Analysts had been modeling earning per share of $0.28 with $57.01M in revenue.

Ambarella, Inc. (NASDAQ:AMBA) announced financial results for its first quarter of fiscal year 2017 ended April 30, 2016.

  • Revenue for the first quarter of fiscal 2017 was $57.2 million, down 19.5% from $71.0 million in the same period in fiscal 2016.
  • Gross margin under U.S. generally accepted accounting principles (GAAP) for the first quarter of fiscal 2017 was 64.2%, compared with 64.7% for the same period in fiscal 2016.
  • GAAP net income for the first quarter of fiscal 2017 was $1.8 million, or $0.05 per diluted ordinary share, compared with GAAP net income of $18.9 million, or $0.56 per diluted ordinary share, for the same period in fiscal 2016.

Financial results on a non-GAAP basis for the first quarter of fiscal 2017 are as follows:

  • Gross margin on a non-GAAP basis for the first quarter of fiscal 2017 was 64.6%, compared with 64.8% for the same period in fiscal 2016.
  • Non-GAAP net income for the first quarter of fiscal 2017 was $11.4 million, or $0.34 per diluted ordinary share. This compares with non-GAAP net income of $23.7 million, or $0.71 per diluted ordinary share, for the same period in fiscal 2016.

Ambarella reports gross margin, net income and earnings per share in accordance with GAAP and, additionally, on a non-GAAP basis. Non-GAAP financial information for the first fiscal quarter excludes the impact of stock-based compensation adjusted for the associated tax impact which includes the effect of any benefits or shortfalls recognized. A reconciliation of the GAAP to non-GAAP gross margin, net income and earnings per share numbers for the periods presented, as well as a description of the items excluded from the non-GAAP calculations, is included in the financial statements portion of this press release.

Stock Repurchase

Ambarella also announced that its Board of Directors has authorized the repurchase of up to $75 million of its ordinary shares over a six month period commencing in the second quarter of fiscal 2017. Repurchases under the program may be made from time-to-time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors. The repurchase program does not obligate the company to acquire any particular amount of ordinary shares, and it may be suspended at any time at the company’s discretion. The repurchase program will be funded using Ambarella’s working capital and any repurchased shares will be available for general corporate purposes.

Ambarella, Inc. earnings per share showed an increasing trend of 44.7% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 290%.Analysts project EPS growth over the next 5 years at 14.5%. It has EPS annual growth over the past 5 fiscal years of 35.5% when sales grew 27.3. It reported -19.4% sales drop, and -90.7% EPS decline in the last quarter.

The stock is trading at $52.31, up 56.66% from 52-week low of $33.39. The stock trades down -59.51% from its peak of $129.19 and % below the consensus price target of $57.63. Its volume clocked up at 1.46 million shares which is higher than the average volume of 1.14 million shares. Its market capitalization currently stands at $1.69B.