Lennar reports $120 million net loss in Q2
Lennar, the second largest U.S. home builder, on June 26 reported a net loss of $120.9 million in the second quarter, compared to a loss of $244.2 million in the same quarter last year.
Revenues fell 62 percent to $1.0 billion for the quarter, compared to $2.7 billion in 2007.
Deliveries of homes fell 60 percent to 3,830, while new orders slipped 45 percent to 4,396, and the value of Lennar’s backlog sank 56 percent to $1.3 billion. On the positive side, the company said its unsold completed inventory was reduced by 70 percent in the quarter compared to 2007.
“Consistent with our expectations, the housing market has continued its downward trend throughout our second quarter,” said Stuart Miller, president and CEO of Lennar. “Foreclosures have increased while higher unemployment and diminishing consumer confidence have defined overall economic weakness.”
Miller urged the federal government to acknowledge the need for further reform and to institute programs designed to stabilize and facilitate the recovery of the housing market.
“With the U.S. housing inventory growing in excess of absorption and limited credit availability, the prospect of further deterioration in the home-building industry will likely become reality absent federal government action,” he said.
Riding out the downturn at PCBC
San Francisco The chief executives from two of the nation’s largest home builders, Pulte and Shea Homes, ended a joint session here by delivering the following message: the housing industry is cyclical. Hang in there, if you can, and the business will come back.
Of course, most of the attendees at PCBC 2008, the West Coast’s annual conference and trade show for the building industry, already knew all that. But many of them were happily reassured on June 25 by Richard Dugas, president and CEO of Pulte Homes, and Bert Selva, president and CEO of Shea Homes. As two of the largest production builders in the country, Dugas and Selva were also able to address the changes they see coming during “What’s Next: A Housing Market Overview.”
Although “market dynamics” seem to be better in the Rockies, and job growth is still strong in Texas and Colorado, neither builder saw definite signs of a recovery. Looking into 2009, the CEOs saw a healthier market, but a changed one.
“There will be less players when the dust settles,” said Selva, addressing the issue of builders merging or going out of business.
Dugas agreed. “The headlines don’t show it, but you’re going to have more consolidation.”
On the issue of reducing the cost of materials — a subject of several seminars on this year’s educational program — Dugas said he hopes to use value engineered home plans across different parts of the country. Selva is taking a second look at “a lot of things we put in a house [where] I wonder if we’re really getting paid for it.”
Pulte and Shea have reduced their staffing by 60 percent and 45 percent, respectively, as have other home builders, architectural firms and trade contractors. The industry wide layoffs had a noticeable effect on this year’s show, both in terms of foot traffic and number of booths.
Anumber of exhibitors drilled down into the green category with solar water heaters, LED lighting systems and energy-efficient ventilation fans. Manufacturers also addressed the growing number of state and municipal fire code regulations aimed at preventing another season of raging wildfires in states like California and Colorado.
Organized by the California Building Industry Association, the three-day conference, held June 25 to 27 at the Moscone Center, continues today with a keynote address by Malcolm Gladwell, author of “The Tipping Point” and “Blink.”
ProBuild names new head for gypsum operations
ProBuild Holdings has named Robert Rugg as president, gypsum, overseeing all strategic operations for the company’s gypsum business. Rugg will report to Bill Myrick, ProBuild’s chief operating officer.
Rugg joins ProBuild from his position as executive director of the Drake Group, a Mission Viejo, Calif.-based association of independent building material distributors that serve the residential and commercial markets with drywall and other interior products. He also served as president, James Hardie Gypsum and executive vp-James Hardie Industries. Prior to James Hardie, Rugg worked for USG Corp. for 19 years in various marketing, strategic planning and general management roles including director of product and market development; director of business development, gypsum wood fiber; and general manager of industrial gypsum.
Rugg replaces Rich Young, who will now direct the business development functions for gypsum, including M&A activities and the integration of newly acquired companies into ProBuild. Young, as vp-business development, gypsum, will report directly to Rugg.
In a prepared statement, Myrick said that ProBuild plans to “leverage the expertise we’ve developed in selected geographies and expand the [gypsum] business in markets across the country to better service our customers. I am confident that under [Robb’s] direction we will both broaden the portfolio of gypsum related products and services in existing market, as well as spread our expertise throughout the ProBuild network.”