Centex Corp. (NYSE:CTX) early on Jan. 23 released preliminary fiscal third-quarter results showing an 80.5% drop in net sales orders and a 48.8% decline in closings compared to the same period in 2008. The company also said it expected to take between $550 million and $600 million in write-downs and impairments when it reports earnings on Feb. 3.
"Abrupt and sweeping changes in the economy caused unprecedented homebuyer hesitancy," said Centex CEO Tim Eller in a statement. "As housing starts dropped to record lows and unemployment rose, buyers remained firmly on the sidelines early in the quarter. We responded with incentives and adjustments that resulted in better sales volumes in December and into January while successfully protecting our strong backlog."
Net sales orders for the quarter ended Dec. 31 were 1,080 units, down from 5,537 in the prior year's fiscal third quarter. Homes in backlog totaled 4,628 units, down from 8,513 at the same time last year. Closings were down to 3,405 units compared to 6,657 in last year's fiscal third quarter.
The company said it had $1.5 billion in cash on hand, up $200 million from the second quarter.
"Our strategic focus continues to be on restoring profitability, maintaining a strong cash position and improving balance sheet strength," said Eller. "We anticipate generating positive cash flow from operations in the current quarter and for fiscal year 2010. Also, we continue to aggressively manage expenditures. We've accelerated overhead reductions to prepare the organization for what potentially could become a sustained period of lower sales volumes. We also expect to further reduce land and development spending."
Centex said it has obtained sufficient lender approvals to amend the terms of its unsecured revolving credit facility and waive a potential event of default. The Company currently has no direct borrowings outstanding under the facility. Under the terms of the proposed amendment, the total commitment is being reduced to $500 million at the Company's request. The full terms will be filed with the SEC after the closing of the amendment.