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 |  Wall Street Journal -
Nov-04-2009Pulte Homes 3Q Loss Widens Amid Centex Charges(topic overview)
CONTENTS:
- With the acquisition of Centex in August, Pulte received an increased market share in the first-time homebuyer market. (More...)
- Pulte, which completed its acquisition of rival Centex Corp in August, did not adjust its prior year results to reflect the merger. (More...)
- The prior year, which wasn't adjusted for the merger, had $266.6 million in write-downs and land charges. (More...)
- Pulte's third-quarter gross margins of 13.1 percent, excluding interest, merger costs and impairments, were up from the second quarter and were solidly higher than Rehaut's 11.2 percent estimate. (More...)
- The quarter-end backlog was 8,838 homes, valued at $2.2 billion. (More...)
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With the acquisition of Centex in August, Pulte received an increased market share in the first-time homebuyer market. This market for the Company has received a government stimulus with the temporary federal tax credit. "Beyond the impact of the merger, Pulte's Q3 results reflect a homebuilding industry that continues its transition toward more stable market conditions as lower prices and historically low mortgage rates are helping to support homebuyer demand," said Richard J. Dugas, Jr., Chairman, President and CEO of Pulte Homes. Pulte Homes raised its merger synergy and savings target by 25% to $440 million. New home orders for the Company, including those made through Centex operations grew by 35 percent to 4.048 homes, ahead of the same quarter last year which saw 3,008 in sales. [1] In the third quarter of last year, Pulte posted a loss of $1.11 per share. ANALYST TAKE: Fox-Pitt Kelton analyst Robert Stevenson said he expects Pulte's new home orders will show some weakness as fewer buyers looked to take advantage of the tax credit toward the end of the quarter. "For most of the other (builders), that started weakening around September when they couldn't really market properties using the $8,000 tax credit on anything other than finished inventory," Stevenson said. "My guess is this quarter was not a particularly great quarter for the Del Webb active adult business either," he added.[2] Pulte Homes (NYSE: PHM ) recorded a loss of $361.4 million, or $1.15 per share for the third quarter, as compared to a loss of $280.4 million, or $1.11 per share, in the same quarter last year.[3]
The Bloomfield, Michigan-based company still lost money, reporting a quarterly loss of $1.15 per share, or $361.4 million, far worse than analysts' average forecast of a loss of 69 cents per share, according to Thomson Reuters I/B/E/S. Another source of comfort for investors: Pulte retired $1.7 billion of debt in the quarter, more than Fox-Pitt analyst Robert Stevenson had expected. "These results are not horrific, but some investors were expecting the worst," Stevenson said.[4] During the quarter, the company recorded a loss of $361.4 million, or $1.15 a share, compared with a loss of $280.4 million, or $1.11, in the year-ago period. This was significantly lower than the 69 cents a share analysts' expected.[5]
The company reported a third-quarter loss of $1.15 per share, far from the analyst consensus of a 64 cent loss per share.[1]
Analysts polled by Thomson Reuters were expecting a loss of 64 cents a share on revenue of about $1.2 billion.[6]
Revenue slumped 30% to $1.09 billion from $1.6 billion last year. The loss was overshadowed by the homebuilder's move to raise its forecast for efficiencies and savings from the purchase of Centex. Pulte now expects efficiencies and savings of $440 million, up 25% from its prior outlook.[5] Revenue fell to $1.09 billion, as compared to $1.56 billion last year, as home sales and home prices fell. This quarter includes charges related to the homebuilder's August acquisition of Centex, as well as impairments and debt retirement charges.[3] Pulte Homes Inc. (NYSE: PHM ) reported a loss of $361 million in the third quarter, however the company increased sales by more than a third with the acquisition of Centex Corp.[1] Pulte Homes Inc. lost $361.4 million in the third quarter, but with the acquisition of Centex Corp., the homebuilder's new orders increased by more than a third. Pulte completed its purchase of Centex in August, turning the Bloomfield Hills, Mich. -based company into the nation's largest builder.[6]
The biggest U.S. homebuilder also reported higher gross margins in the third quarter. Pulte, which has operations in 29 states, said its new target for efficiencies and savings from its purchase of Centex is $440 million, up 25 percent from its prior estimate.[4]
The company offered no combined figures for the third quarter last year, when Pulte lost $280.4 million, or $1.11 a share.[6] Total revenue also missed the market estimate for Pulte, with third-quarter numbers at $1.09 billion, below the $1.17 billion consensus and down from $1.5 billion in last year's third quarter.[1]
Pulte Homes Inc.' s (PHM) third-quarter loss widened due to costs related to its acquisition of Centex while orders jumped 35% from last year amid the deal.[7] Pulte Homes Inc.' s (PHM) third-quarter loss widened, missing analysts' expectations, due to costs related to acquiring builder Centex, while orders jumped 35% from last year amid the deal.[8]
NEW YORK (Reuters) - Pulte Homes Inc ( PHM.N ) raised its forecast for efficiencies and savings from its acquisition of rival Centex Corp, overshadowing a quarterly loss and sending its shares up 7.5 percent.[4] Wall Street will be looking for clues as to how the tax credit affected sales for Pulte, which in August acquired rival Centex Corp. ( CTX - news - people ) in part to bolster its reach into the first-time homebuyer market. Prior to the acquisition of Centex, Pulte's active adult home sales accounted for about 45 percent of its business, while first-time buyers represented only 17 percent. Now, the active adult segment makes up about one-third of its business. At an investors conference last month, Pulte Chief Financial Officer Roger Cregg said that housing demand had stabilized in some markets, but noted "It's hard to say that this is the bottom of the market at this point."[2]
Like other builders, Pulte continues to grapple with competition from heavily discounted foreclosed properties and a market that remains hampered by tighter mortgage-lending standards and high unemployment. It has seen new home orders pick up this year, thanks in part to low mortgage rates and a tax credit of up to $8,000 for first-time homebuyers. The tax credit due to expire at the end of this month.[2] One proposed bill in the Senate would give homebuyers until the end of April to sign contracts and still qualify. The bill would also give a $6,500 tax credit for buyers who have owned their home for at least five of the past eight years. Such a generous tax credit would likely give homebuilders a boost, but there's concern that the current incentive has already tapped into demand builders would have seen over the next few months.[6]
The looming expiration of the tax credit helped fuel builders' sales during much of the third quarter, but the impact of the incentive began to wane by September as it became less likely buyers could close a deal in time to qualify for the credit.[2] Dugas, however, cautioned the market remains "choppy and fragile." Sales also softened in September as families are less likely to move during fall and winter, and because a temporary tax credit for first-time buyers is set to expire this month.[6]
WHAT'S AHEAD: Congress is considering extending the tax credit through March 31 and gradually phasing it out over the rest of next year. One approach touted by a group of senators last week would give homebuyers until the end of April to sign deals and still qualify, as long as they complete the transaction by the end of June.[2]
Pulte, which completed its acquisition of rival Centex Corp in August, did not adjust its prior year results to reflect the merger. [9] BLOOMFIELD HILLS, Mich. ( TheStreet ) -- Pulte Homes ( PHM Quote ) widened its loss in the third-quarter, weighed down by its acquisition of Centex.[5] Pulte also took steps to pay down some $1.5 billion in debt in connection to the Centex acquisition.[6] Earnings were hurt by $86.7 million in costs related to the Centex acquisition.[6]
Pulte, of Bloomfield Hills, Mich., reported a net loss of $361.4 million, or $1.15 a share, compared with a year-earlier loss of $280.4 million, or $1.11 a share.[10] Pulte shares were up 69 cents, or 7.5 percent, to $9.92 in morning trading on the New York Stock Exchange, a new 12-month high.[4] Shares are climbing 4.8% to $9.67 in morning trading. -- Reported by Jeanine Poggi in New York Follow TheStreet.com on Twitter and become a fan on Facebook.[5]
Shares of Pulte Homes are priced at $9.23 before the market opens today.[1] LOS ANGELES -- Homebuilder Pulte Homes Inc. reports earnings for the third quarter on Wednesday.[2] Pulte's average home price fell by 10 percent from a year ago to $253,000. During the quarter, Pulte created the position of chief marketing officer to develop a unified strategy for its stable of brands it now has, including Del Webb, DiVosta and Fox & Jacobs.[6] The deal gave Pulte more communities with cheaply priced homes for first-time buyers, as well as desirable land in Texas and the Carolinas. By combining their operations, Pulte now expects to save $440 million annually — $90 million more than when the deal was announced last spring.[6] Pulte's results come as the building sector continues limping toward recovery amid a choppy economy. The "results reflect a home-building industry that continues its transition toward more stable market conditions as lower prices and historically low mortgage rates are helping to support home buyer demand," Richard J. Dugas, the combined builder's chairman and chief executive, said in the earnings release.[10] "I question, especially if mortgage rates start going up, what's going to be the real impact on housing sales," Stevenson said.[2]
The prior year, which wasn't adjusted for the merger, had $266.6 million in write-downs and land charges. [10] Results include $163.8 million in impairment and land-related charges and $86.7 million in acquisition-related charges.[5]
Revenue for the quarter was $321.40 million, which compares to the estimate of $316.69 million.[1] Revenue for the quarter was $284.4 million. Raises its FY09 operating margin guidance to 17.5-18%.[1]
Pulte's third-quarter gross margins of 13.1 percent, excluding interest, merger costs and impairments, were up from the second quarter and were solidly higher than Rehaut's 11.2 percent estimate. [4] The enhanced boost from the merger as well as higher-than-expected gross margins and lower-than-expected impairments make the third-quarter results a positive for the company, J.P. Morgan analyst Michael Rehaut wrote in a note to clients.[4]
The quarter-end backlog was 8,838 homes, valued at $2.2 billion. Pulte said as of September 30, 2009 it was out of compliance with the tangible net worth covenant under its credit facility, but it is in talks with banks to negotiate a permanent amendment by December 15, 2009. [1] New home sales in September dropped 3.6 percent nationwide - the first decline since March.[2] New home orders, including Centex's operations, climbed 35 percent to 4,048 homes versus 3,008 a year ago.[6]
SOURCES
1. StreetInsider.com
2. Earnings Preview: Pulte Homes to post 3Q results - Forbes.com
3. Pulte Posts Loss, Buts Sees Signs of Easing | Market News Video
4. Pulte raises Centex savings forecast, shares surge | Reuters
5. Pulte Homes Widens Loss on Acquisition | Earnings | Financial Articles & Investing News | TheStreet.com
6. The Associated Press: Pulte Homes posts $361.4M loss for Q3
7. Pulte 3Q Loss Widens Amid Centex Charges; Orders Up 35% - WSJ.com
8. 3rd UPDATE: Pulte Homes 3Q Loss Widens Amid Centex Charges - WSJ.com
9. Pulte Homes posts third-quarter loss
10. Pulte Posts Loss on Centex Charges - WSJ.com
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