The negative trends of quarters past persisted for Orleans Homebuilding Cos. during its most recent quarter. Decreases in revenue, backlog, and new orders as well as a $43.5 million deferred tax charge rolled up into a $55.7 million net loss for the Pennsylvania-based company's fiscal 3Q2008, which ended March 31, 2008.
The company delivered 243 homes during the quarter for $109.0 million in revenue, which marked a 15% year-over-year fall off. Backlog also eroded 13% to $313.5 million–or 633 homes–from a year ago, while new orders plummeted 40% to $121.2 million–or 266 homes–during the same period. Cancellations crept up to 33% from 20% in fiscal 3Q2007.
However, despite the year-over-year rise in can rates, the company managed to keep spec inventory in check. Spec count decreased by 33% from the same period a year ago to 248 units at the beginning the quarter. The company exerted a similar decrease in its land pipeline, which fell 30% from 3Q2007 to 8,242 owned and optioned lots.
On a more positive note was that, despite delivering fewer homes during the quarter, the company gained some pricing traction. The average selling price for homes delivered during the quarter was $449,000 compared to $424,000 a year ago.
But the real piece of good news was that management was able to negotiate a limited waiver on its credit facility that would effectively ignore a $43.5 million deferred tax asset valuation charge on the company's books. Without the easement, the company faced noncompliance with its tangible net worth, leverage, and land covenants. The waiver will expire on Sept. 15, 2008.
Moreover, the company continued to chip away at its debt. Through the use of land sale proceeds and income tax refunds, Orleans reduced its bank debt by $13.0 million during the quarter. Including this sum, the company has redeemed roughly $106.0 million in debt since Jan. 1, 2007.
In a statement, CEO Jeffrey Orleans said, "We have made significant progress in reducing debt, maintaining acceptable liquidity, and streamlining our operations. We have seen some improvement in sales traffic, but third quarter orders have been slower year-over-year, and it is certainly too early to forecast any real immediate rebound."