Tuesday, November 07, 2006

tower homebuildingorders "minus 4"!!!!!!!!!! the winner of the ugliest warning is ....wci!

i stand by my prediction that they will go under in the first half 2007.
bin überzeugte denn je das die im 1 hf 2007 pleite gehen.

almost everything that management denied in the last call is now in the numbers (defaults, debt/cash/ratio and tehrefore violating creditrules, they are still betting on the towerclosings in the next quarter. that shows you how desperate they are

alles was das management im letzetn quartal noch abgestritten hat ist jetzt eingetreten.

but first a classic from mid august http://immobilienblasen.blogspot.com/2006/08/analyst-von-jmp-sec-zu-wci.html

2006-08-15 14:08:15
WCI Communities was upgraded by JMP Securities. JMP cut their 2007 earnings estimates on WCI to a negative seventy-five cents per share. The only thing in the reasoning for their upgrade was they saw WCI as having the ability to “remain solvent”.

Net income: $10.7 million - down 73.0%
Diluted EPS: $0.25 - down 70.6%
Revenues: $427.2 million - down 31.3% -
New orders: $120.1 million - down 82.0%
Backlog at September 30, 2006: $1.41 billion
Reduced projected 2006 diluted EPS to $2.50 to $3.00 from $2.75 to $3.25
Projected 2007 diluted EPS of $1.00 to $2.00 (how?)!

a charge of $14.0 million or $0.25 EPS

Eight towers are expected to close in the fourth quarter of 2006, with another six expected to close in the first half of 2007.(read this twice with negative orders in q3 2006!)

We are carefully monitoring the tower closings, as collecting these tower receivables is a key driver of our cash flow and debt reduction during this slower demand period

Tower Homebuilding orders for the third quarter 2006 totaled negative four (comprised of nine new contracts less 13 defaults) versus 333 in the third quarter of 2005.(in the last call they denied that there is any pronlem with defaults......)

Tower Homebuilding backlog at September 30, 2006 totaled $384.3 million, a 63.7% decrease over the $1.06 billion backlog at September 30, 2005

During the quarter, the company completed and delivered one tower, consisting of 45 units, and experienced nine defaults (that makes 20%!!!)in that tower plus another four defaults in other towers recently closed or under construction. For the nine months ended September 30, 2006, seven towers with 407 units were completed with a total of 19 defaults, producing a default rate of approximately 4.7%.

For the nine months ended September 30, 2006, net cash used in operating activities, including the purchase and development of real estate inventories, totaled $605.0 million compared with cash used of $115.2 million in the same period a year ago. The company expects a large inflow of cash in the next three to nine months related to the closing of 14 towers. In total, the closing of over 1,100 tower units over the period is expected to result in a net cash inflow of approximately $1.1 billion.( good luck! they maybe should spend the remaining cash to play lotto)

On September 7th, 2006, the company's Board of Directors increased WCI's common stock share repurchase authorization by three million shares to a total of five million shares (try not to laugh....no fools day.../bitte nicht lachen, ist ernst gemeint und kein aprilscherz)

The ratio of net debt to net capitalization increased to 65.4% compared with 58.4% at September 30, 2005 and 62.1% at June 30, 2006. (goal from management was close to 50!)

disclosure: short wci

here is in advance on the conference call their presentation (horror show!)/ pdf


update conference call (well over 150 minutes):

continuing to expect only 5% default rate. despite spiking double digits in the latest quarter. they blame it on the auditors. when the defalut rate is 20% as in the latest quarter 35 cents impact 06 and 25 cents 2007. no model was run with higher defaultrates. (unrealistic!)

38 mio $ options on land/lots. full write down 0,54 eps impact

owned 18.300 lots land. bought on average 5 years ago. 87%! locatet in florida!(pdf 19)

bookvalue 25,64$ based on a "discounted cash flow model" that assumes a modest decline in 07 and a recouvery in 08.

wci is the 3rd largest short position on wall street

capitalized interest 150 mio$ (130 land, 20 construction)

still betting 100% on the towers that will close the next 2 quarters. they are all sold out with an average deposit of 18%. but as the latest figures show, the defalut rate is spiking close to 20%. they assume that they can sell the units with 90% of its contractvalue (contracts closed in 2003-2005). very optimistic!(look at page 18 of the pdf) they asume that when the building is 100% sold they will sell in 12 month, when not 100% 12-24 month.(look at the condoflip link ........)

get this: from their main condoproduct "one bal harbour" with 290 units (when you include the condo/hotel) and a value 480 mio$ that is officially 100% sold almost 87 (30%)are listet at condoflip.com. lots of competition......default rate only 5% seems overly optimistic !!!!!!!!!! http://www.zilbert.com/one_bal_harbour/one_bal_harbour.asp (condoflip/they say 260 units/maybe they exclude the hotelunits)

try to sell golf course resorts and commercial land in the next 9 month for about 70-80 mio$

25.7 mio$ spend on caped call option for buyback 12 month out !!!!!!! looks like this money is going out the window..................amazing!

200-300 mio$ left in credit line

when they fail with the towers in the next quarters they are in deep deep trouble!


Anonymous rob said...

I have a big put position in this one, will be interesting to see how market reacts.

Default rate keeps climbing for tower units.

4:47 AM  
Blogger jmf said...

i too.

they will slam the stock today.

4:55 AM  
Anonymous rob said...

are you a member here?


you can join for free. several bloggers participate there.

12:28 PM  
Blogger jmf said...

hi rob,

not yet.

thanks for the info.

10:58 PM  
Anonymous Rob said...

Credit suisse skeptical of WCI


6:56 AM  
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11:10 PM  

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