Covington Development Back in Black in 2nd Quarter

Covington Development Group, a Fullerton home builder that had been losing money despite an unprecedented boom in the Orange County housing market, reported Monday that it returned to profitability during the second quarter.

The company attributed its $569,000 profit for the quarter to the completion of several backlogged development projects, including the Terra Nova single-family development in Laguna Niguel.

“We expect to have a very profitable 1988,” said Robert L. Shirley, chief financial officer. “The large loss in the first quarter was a result of a lack of completed units. But we’ve had a very good second quarter and we’re looking for more of the same.”

Covington reported sales of $21.3 million for the second quarter. During the same period in 1987, the company recorded a loss of $399,000 on sales of $15.4 million. Covington lost $1 million on sales of $7.4 million during the first quarter of 1988.

In 1987, the company lost $2.3 million on sales of $68.2 million. But in 1986, the firm earned $1.9 million on $81.7 million in sales.

Changes in Direction

Covington Development changed its name from Covington Technologies last year, in part to dispel investor confusion over the nature of the company’s business, Shirley said.

The firm has been hurt over the years by abrupt changes in business direction at a time when the housing market in Orange County has generally been booming, according to Jeffrey Kilpatrick, president of Newport Securities.

For much of the 1980s, the company sold prefabricated housing panels, with wiring and plumbing already installed. But the line was not successful, and the company exited that business last year.

The company also changed presidents in 1987, when Deyo (Pat) Breen took over from Robert B. Fitzpatrick as part of a management shake-up intended to rejuvenate the company.

“They’ve had a problem finding an identity. But they’ve finally gotten back to their basic business and may have an opportunity to participate in the normal cycles of the housing industry. Their main problem now is finding the pieces of land that make smaller scale development possible,” Kilpatrick said.