Avatar Holdings Inc. (NASDAQ:AVTR), Coral Gables, Fla., on Monday reported a net loss of $9.8 million (-$1.13 per share) on revenues of $19.3 million for the quarter ended June 30, compared to a net loss of $6.9 million (-$0.81 per share) on revenues of $24.9 million for the comparable quarter last year. The sole analyst who covers the company was looking for a loss of 63 cents a share.
Avatar closed 70 homes in the quarter, flat with last year's quarter, but dollar volume decreased 20.8% to $14.3 million. New orders were off 1.5% to 65, with dollar volume falling 39.6% to $10.8 million. The cancellation rate was 16.7%.
Average price on closed homes in the company's primary residential homes fell to $151,000 from $270,000 in the year-ago quarter and, year to date, are 43% below average prices in fiscal 2006. Average price on closed homes in Avatar's active-adult communities fell to $220,000 from $274,000 in last year's second quarter, down 17% year to date from 2006.
At quarter's end, Avatar had cash and cash equivalents of $182,299,000. Debt at June 30, 2009 was $118,307,000, which includes the net carrying amount of $62,293,000 for the $64,804,000 outstanding principal amount of 4.50% convertible senior notes and $55,903,000 borrowed under the unsecured line of credit.
There was no comment from Avatar executives in the earnings release.However, in the executive summery section of its 10-Q filing with the Securities and Exchange Commission, the company stated, "Our communities are located in areas of Florida and Arizona where there is an excess of units for sale, including foreclosures and assets being sold by lenders, and an increasing use of various sales incentives by residential builders in our markets, including Avatar...As of June 30, 2009, our inventory of unsold(speculative) homes, both completed and under construction, was 119 units compared to 233 units as of December 31, 2008. As of June 30, 2009, approximately 91% of unsold homes were completed compared to approximately 88% as of December 31, 2008."
It continued, "It is our intention to continue to monetize our inventory of unsold homes and many of our model homes in anticipation of introducing new homes across many of our product lines. Many of these new products will consist of smaller and less amenitized houses to enable us to sell homes at lower price points when the market recovers. In the areas in which our developments are located, we believe that for the foreseeable future there may be significant demand for smaller and less amenitized homes than in prior years. We continue to defer the introduction of new housing products or recommencing developing activities in our existing communities until such times as we believe that our markets would enable us to construct and sell new houses at an acceptable profit."
It also stated, "While the level and duration of the downturn cannot currently be predicted, we anticipate that these conditions will continue to have an adverse effect on our operations during 2009. We anticipate such operating losses for 2009 will be greater than such losses incurred during 2008. We believe that we have sufficient available cash to fund these losses for 2009. We have taken steps to decrease operating expenses including the consolidation of field operations and a reduction of staff. Since December 31, 2005, we reduced our headcount by 60% to 234 full-time and part-time employees (almost half of whom are support staff for amenity operations and maintenance) from 585 full-time and part-time employees."
Avatar shares closed down 0.8% at $19.91 on Monday on heavier-than-usual volume as the entire builder group, save Beazer and Standard Pacific, was down.