In a bold move to help Holiday Builders cut critical overhead costs, which should ensure the company's survival through 2010, Kim Shelpman resigned her position as the company's president and CEO, effective immediately. However, Shelpman, who had served as chief executive since August 2006, will continue to serve on the company's board of directors and board of trustees for the foreseeable future. COO Bruce Assam and CFO Richard Fadil will assume her responsibilities.
In an exclusive interview with Big Builder Monday morning, Assam explained that Shelpman's decision to step down as chief executive stemmed from the company's need to cut costs and preserve cash. While Assam said the company has a low debt overhang, foreclosures and short sales in key Florida markets have created significant pricing pressures, which is affecting the company's margins and ability to make its necessary returns. Although the cost cuts will not immediately return the company to profitability, Assam said they will go far in extending the company's life expectancy.
Holiday is wholly owned by its employees.
"We want to be sure we are sustainable as we bump along the bottom," Assam said.
"I had thrown it around for probably the last month or two because we were planning a company reduction," said Shelpman, reached later in the day. "Truthfully, it was my decision to make. We were obviously going through right-sizing the company, and at the end of the day it made all the sense in the world to put my name on the list."
The elimination of Shelpman's position is just one of a number of staffing reductions, Assam said. However, he declined to give more details on just how deep the cuts will go, saying "it's still kind of rolling out."
However, it's likely that much of the reduction in force will be from the company's home state of Florida, where market conditions have been particularly severe. Approximately 70% of its business is concentrated in Florida, and although there are still some isolated areas in the state that are producing the margins and volumes the company needs, Assam said many are not and, therefore, the company will be transitioning out of communities in those areas. Although he stressed that the company is not exiting Florida--the company headquarters will remain in Melbourne--Assam said going forward the company will "keep most areas of Florida dormant," reviving operations when demand returns. In the meantime, the company will be looking to beef up operations in South Carolina and some areas of Texas, where there's some velocity to absorptions.
"Strategically we need to go where the fish are biting," Assam explained. "The problem is we don't have enough of those communities."
In 2008, the company closed 735 homes, a 36.2% decline from the previous year, for revenues of $130 million, down 45% from 2007.
Shelpman said she has not decided what she will do after leaving the company. "I wish I did have a plan," she said. But, when asked if she would consider rejoining Holiday once times got better, she replied, "Never say never."
Teresa Burney and Lynn Norusis also contributed to this story.