Los Angeles-based KB Home reported weaker-than-expected results in its first quarter ended Feb. 29, 2012. In particular, the results reflected weaker orders due in part to challenges related to the company's transition to a new preferred mortgage provider. We lowered our corporate credit rating on KB Home to 'B' from 'B+', reflecting our belief that full-year results will fall below our prior base-case estimate and slow the company's rebound in profitability and key credit metrics. We also lowered the ratings on the company's senior notes to 'B' from 'B+'. Our ratings primarily reflect the company's highly leveraged financial profile stemming from the severe housing downturn that has substantially reduced KB Home's revenues and EBITDA. The negative outlook reflects the company's
