Quote of the Day
"At the current stock price of $1.69, he has a bit of a loss, but at least he could have control over the assets until some value could be recovered down the road when the
Motor Home Maker Winnebago's Earnings Fall 73% In Latest Quarter. “Winnebago Industries Inc. said Friday that its fiscal third-quarter profit skidded 73% as high gasoline prices, tighter credit and a soft economy drive motor home sales lower industry-wide. The company earned $3 million, or $0.10/share, in the three months ended May 31, compared with $11.3M, or $0.35/year earlier. Sales fell almost 40% to $139.7M. The profit figure included a tax benefit of $8.9M. The company reported an operating loss of $6.9M, compared with operating income of $14.7M last year. Analysts expected earnings of $0.03/share on sales of $157.6M.” (LA Times, June 21st)
Home Builders Group Spent $1.3 Million Lobbying On Housing, Economic Issues In First Quarter. “The National Association of Home Builders spent more than $1.3 million lobbying in Q1 on efforts to jump-start the slumping housing market. The trade group has been asking lawmakers to include a tax credit for home buyers in a housing stimulus package being considered in Congress. Earlier this month, the group withdrew support for a $6 billion emergency tax break that would let companies use losses from 2008 and 2009 to offset profits earned over the previous four years, instead of the usual two-year timeframe. The provision failed to build traction on Capitol Hill amid criticism that it was a gift to homebuilders.” (Canadian Business, June 20th)
D.R. Horton Closes Exchange Offer For Notes. “D.R. Horton Inc., the nation's largest homebuilder, said Friday it closed its exchange offer for its 9.75% senior subordinated notes due 2010. D.R. Horton (DHI) said notes worth about $96.8 million, or 85.3%, of the outstanding principal amount of existing notes, had been tendered for exchange. The company accepted all validly tendered existing notes and issued an equal amount of new notes. For each $1,000 principal amount of outstanding existing notes tendered before June 4, holders also received a consent payment of $10.” (Forbes, June 20th)
WCI Finally Open To Icahn. “Last year, Carl Icahn was offering $22/share for
UBS Upgrades Beazer On Valuation. “UBS Investment Research upgraded Beazer Homes USA Inc. (BZH), saying the sell-off that has sent its shares tumbling 52% from a recent peak in May has been too extreme. "Given our belief that the company has sufficient liquidity to withstand this downturn, we view the recent pullback as overdone," analyst David Goldberg said.” (Forbes, June 20th)
Ryland Gains Market Share. “Ryland Group: [Besides a] short tail in land, low debt levels, and strong balance sheet… Ryland (RYL) has gained market share in 13 of its 21 geographic markets. EVP and COO Larry Nicholson attributed some of that growth to smaller, private builders going out of business, but also… sales teams [that] have been converting traffic to sales at higher rates than normal… Generally between 5%-8% [Nicholson]. FTN Midwest analyst Jay McCanless: Foot traffic in May was steady or increased at all the Ryland communities surveyed… Respondents also indicated that they expected future promotions like reduced costs on options or cash toward closing to increase in the future.” (Big Builder Online, June 19th)
Ryland begins sales at
BofA Builders Conference: Toll Brothers On New Sales Numbers. “Bob Toll, CEO of Toll Brothers (TOL) says there's no way new home sales are running as high as the census claims because they don't include cancellations which are still running around 30%. He thinks holding onto land is a good idea because it puts him at a competitive advantage when things finally do turn around… On gas prices: most of the builders so far have downplayed the effects, but Toll says its hitting his subcontractors hard and driving up the prices of petroleum-based materials, like plastic piping.” (CNBC, June 19th)
Builder Execs Nervous About Jobs And The Economy. “Lawrence Angelilli, SVP, Finance at Centex Corp. (CTX) "Everything that's happened so far has been in what was considered a relatively low interest-rate environment with historic low unemployment, so you've had this massive dislocation in the home-building space, totally independent of any economic fundamentals… If we introduce unemployment, that would be very significant." Despite worries about jobs and the economy, home-builder executives said they're reducing the backlog of new homes for sale on the market by scaling back construction, lowering prices and other measures. Angelilli: "The standing inventory of new construction is declining rapidly, but it's being offset somewhat by existing homes and foreclosure.” (MarketWatch, June 19th)
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