Illinois-based Kimball Hill Homes disclosed yesterday that it would exit the Florida market, its smallest, over the next 10 months. The builder has committed to completing and delivering all of the homes it has under construction in that market by Dec. 31, and will meet its warranty obligations on its homes there. Kimball Hill's decision is one more piece in an evolving strategy to restructure its operations and avoid having to seek bankruptcy protection from its lenders.
In the three months ending Dec. 31, 2007, Kimball Hill's revenue in Florida fell 44.9 percent to $13.2 million, and it lost $9 million there over the last six months of 2007. The builder had $50.9 million in assets in Florida in the quarter, down 13.3 percent from the same period a year earlier. It reported having 62 net orders, and a 72-unit backlog valued at $13.3 million. Its gross margins on sales in that market were only 7.9 percent, as the quarterly average selling price in Florida declined by $113,000. The company stated in yesterday's SEC filing that it could no longer compete in Florida.
That filing also disclosed that Kimball Hill would reduce its workforce at its corporate headquarters in Rolling Meadows, Ill., and other locations by 75 positions this week. A company spokesperson, Anita-Marie Laurie, tells BUILDER Online that another 57 employees in Florida will be laid off during the wind-down in that market. The company's SEC filing also stated that the company is providing severance and outplacement assistance to associates whose positions will be eliminated.
Kimball Hill is now focusing its attention on its homebuilding activities in Illinois, Texas, Nevada, and California. Ken Love, its president, told the Chicago Tribune that "no further actions are planned," and that he remains optimistic about the builder pulling itself out of a financial hole that includes being saddled with more than $630 million in liabilities as of Dec. 31, 2007. "Over the next three years, I expect Kimball Hill to survive and be viewed as a winner," Love is quoted as saying.
Learn more about markets featured in this article: Orlando, FL.