"We all know that the housing industry is in a downturn," CEO Antonio B. Mon said Thursday during a company teleconference addressing the second quarter earnings of Technical Olympic USA Inc. (TOUSA). "We are struggling as an industry to pinpoint where the bottom is and when the recovery will take place."
"The stream of negative housing, credit market, and mortgage news continues unabated," Mon says. "This reminds me of the environment experienced in the last serious housing correction in the late '80s and early '90s."
The Hollywood, Fla.-based home builder says that its home sales also declined 12 percent in the quarter to $535.3 million from $605.3 million one year ago. Also included in their report was a 32 percent cancellation rate. The second quarter figures include a $9.9 million loss from the June 6 sale of TOUSA's Dallas division.
"While uncertainties and frustration levels remain high, we continue to manage our business from the perspective that this correction is part of the housing cycle and is necessary in order to resolve supply and demand balances and that it will ultimately, return the industry to a more normalized environment," Mon continued.
Mon says that the company is striving to continue a year-long initiative to improve the affordability of its homes by building larger units and taking out inefficient building configurations. By doing this, according to Mon, building costs are reduced in addition to providing the consumer more square footage.
TOUSA's earnings report comes one day after Fitch Ratings downgraded the company's issuer default rating to 'CCC' from 'B-' with a negative outlook. In addition, the company's rating was removed from negative watch as well.
Mon says the company is approaching the future with the notion that the housing market will remain in its current condition, saying he expects the environment to "remain challenging for some time to come."
"It is difficult to predict much beyond the next few months," he says. "Clearly it is too early to call."
At press time, TOUSA's stock was down nearly 6.5 percent.
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