TOUSA,Inc. today reported a second-quarter loss of $132 million (-$2.21 per diluted share) on revenue of $576.7 million, which was down 10% from the same period last year.
Included in the loss were a $9.9 million charge related to the shuttering of the company's Dallas division as well as a $32.0 million increase in the pre-tax loss contingency relating to the Transeastern JV settlement. The company also took $123.0 million in pre-tax charges resulting from goodwill impairments and the write-down of assets including inventory impairments and write-off of deposits and abandonment costs. Of this amount, $41.4 million was impairment of active communities, $43.4 million was related to land impairments, deposit write-offs and abandonment costs, and $38.2 million was related to goodwill impairment.
TOUSA realized net proceeds from the sale of the Dallas division of $56.5 million.
Net sales orders were down 15% to 1,572, and the cancellation rate increased to 33% from 30% last quarter. The company cut its number of controlled homesites by 29% from last year's second quarter to 46,000, and worked off 29% of spec homes from the same period last year to 870. homes in backlog decreased 25% to 3,806 in the second quarter of 2007 from 5,068 in the second quarter of 2006. Homes in backlog decreased 27% to $1.3 billion from $1.8 billion during last year's second quarter.
"The adverse conditions facing the homebuilding industry and TOUSA continued in the second quarter and resulted in a challenging operating environment and a selling season that was below our expectations," said Antonio B. Mon, CEO of TOUSA. "The fundamental issue remains too much supply combined with lower demand. While the rate at which inventory is increasing is declining, we have not reached the point of stabilization in many of our markets and we expect the difficult operating environment to persist for some time."
Home building were $565.7 million, a 9% decrease from the $621.4 million in the second quarter of 2006. Revenue from home sales decreased 12% to $535.3 million from $605.3 million for the 2006 quarter. The number of deliveries declined 12% to 1,656 from 1,878. The average price increased to $323,000 from $322,000. Including discontinued operations, deliveries were down 15% to 1,725 from 2,034 for the three months ended June 30, 2006.
TOUSA's gross profit margin, excluding impairment and related charges, decreased to 18.2% from 25.5% in last year's second quarter, primarily due to higher incentives, which increased to $37,700 per delivery for the second quarter of 2007 from $16,700 per delivery for the second quarter of 2006.
SG&A decreased 15% to $85.0 million, and SG&A as a percentage of homesales revenue decreased 60 basis points to 15.9%. The decrease was due to a reduction in overhead and related expenses, including reductions in cash compensation and severance costs, partially offset by an increase of $1.3 million in direct selling and advertising expenses, which include commissions, closing costs, advertising and sales associate compensation, as a result of the more challenging housing market and $4.5 million in professional fees related to the Transeastern JV settlement. Professional fees relating to the Transeastern JV will increase in the third quarter of 2007 in connection with the closing of the global settlement.
EBITDA for the second quarter of 2007 were $47.8 million compared to $125.4 million in the second quarter of 2006.
TOUSA said it has reduced the number of homes under construction to 3,300 homes completed or under construction from 3,800 homes at the end of last year, a 13% decrease. Approximately 27% of homes under construction were unsold at June 30, 2007, a decrease from 34% at December 31, 2006. Unsold inventory of homes was reduced by 17% from the first quarter of 2007 and 34% from December 31, 2006. At June 30, 2007, TOUSA had 190 completed unsold homes, down 35% from 293 homes at December 31, 2006.
As previously announced, TOUSA's existing $800.0 million revolving credit facility has been amended and restated to reduce the revolving commitments by $100.0 million and permit the incurrence of the $500 million term loans facility, the proceeds of which were used to finance the Transeastern JV global settlement. The company's pro-forma availability at quarter's end was $350 million under the amended revolving credit facility.