Presley Cos. Posts $3.4-Million Loss in Third Quarter
Citing continued increases in the cost of marketing its homes, as well as declining revenue from each sale, Presley Cos. said Monday it lost $3.4 million for the third quarter. That contrasted with a $2.5-million profit for the same period a year earlier for the home building company, which has projects in California, Arizona and New Mexico.
Presley officials said the third-quarter financial performance also was diminished as the company completed land development activities in major projects and was unable to continue setting aside certain interest charges.
Presley reported a 77% increase in home sales for the quarter, however: 446 compared to 252 a year earlier. The company said it booked orders for 376 new homes during the quarter, up 16% from 325 orders in the third quarter of 1992. Presley’s backlog--home sales that had not yet closed escrow--was 381 units at the end of the quarter, down 10% from 422 units a year earlier.
Though analysts said Presley’s third-quarter loss was not unexpected, investors responded to the news by selling the company’s shares. In moderate trading on the New York Stock Exchange, Presley’s common stock closed at $2.25 Monday, off 25 cents. The company went public at $10 a share late in 1991.
Presley was caught with a portfolio of high-priced land on its books when the housing market collapsed several years ago and has been forced by its bankers and by changes in accounting rules to chalk up huge losses by devaluing its land holdings by $39.1 million over the past 18 months.
Presley officials said Monday that the rise in third-quarter sales and orders was not caused by any systematic improvement in the housing market, which remains mired in a three-year recession, but was the result of reduced prices, increased buyer incentives and the effect of low mortgage interest rates.
Presley reported gross income of $81.5 million from the sale of homes and land and $73.2 million in sales expenses--including $2.5 million in buyer incentives, an average of $5,600 for each home sold.
For the first nine months of the year, Presley reported a loss of $22.3 million, almost double its loss of $11.4 million for the first nine months of 1992. A big part of the latest loss was a $13.1-million write-down of land value during the second quarter. Revenue for the nine months was $182.1 million, up 23% from $148 million a year earlier.
The company’s home sales for the first nine months rose 45% to 1,052 units from 725 for the same period a year earlier. New orders were up 26% to 1,195 units from 952.
