, struggling with increased cancellations and lower demand, reported a 73% drop in third-quarter earnings and cut its profit forecast for the year.
The Florida-based company posted net income of $10.7 million, or 25 cents a share, down from $39.7 million, or 85 cents a share, a year earlier. The latest quarter included a charge of 25 cents a share related to the abandonment of land option contracts.
Revenue slid to $427.2 million from $621.9 million, as total home closings fell to 279 homes from 582 last year.
Analysts polled by Thomson First Call expected earnings of 18 cents a share and revenue of $466 million. WCI warned last month that its earnings would be significantly below its original forecast of 52 cents a share.
"Our results this quarter continue to reflect the impact of dramatically lower demand for our Florida traditional and tower homes,'' said Jerry Starkey, WCI's president and CEO, in a press release Tuesday. "Traditional home cancellations were about twice our historical rate during the quarter and we also experienced a higher rate of defaults in our tower division."
The company, citing a lack of visibility in demand, said it is reducing its overhead by cutting jobs and limiting its land spending. WCI didn't specify how many jobs would be reduced, but did say it expects to lower its annual payroll, incentive and benefit costs by $60 million a year.
The builder now sees 2006 earnings of $2.50 to $3 a share, below its July guidance of $2.75 to $3.25. The company lowered its revenue forecast to a range of $2.1 billion to $2.3 billion from an earlier view of $2.3 billion to $2.5 billion. Analysts predict 2006 earnings of $1.93 a share and revenue of $2.07 billion.
Looking ahead, WCI projects 2007 earnings of $1 to $2 a share on revenue of $1.3 billion to $1.7 billion. Wall Street expects earnings of just 31 cents a share, with revenue of $1.25 billion.
In a research note, Bank of America analyst Daniel Oppenheim said that WCI's guidance appears optimistic.
"We see risk to the downside based on continued deterioration in WCI's core markets and the risk of tower defaults," Oppenheim wrote.
Shares of WCI recently were up 54 cents, or 3.5%, to $15.80.