News

04.27.11

PulteGroup, Inc. Reports First Quarter 2011 Financial Results

BLOOMFIELD HILLS, Mich., April 28, 2011 /PRNewswire via COMTEX/ --

  • Net New Home Orders Totaled 4,345, a Sequential Increase of 43% from Q4 2010
  • Adjusted Gross Margin of 16.9% Increased 60 Basis Points Over Prior Year
  • Homebuilding SG&A Reduced by 10% to $136 Million
  • Land Impairment Charges Drop to $0.7 Million
  • Loss of $0.10 Per Share Reflects Lower Closing Volumes Partially Offset by Improved Margins and Cost Controls
  • Cancellation Rate Dropped to 16.1% from 18.3%
  • Quarter Ending Cash Balance of $1.4 Billion
  • Company Expects Improving Margins and Greater Overhead Leverage to Drive Profitability in Second Half of 2011

PulteGroup, Inc. (NYSE: PHM) announced today financial results for its first quarter ended March 31, 2011. For the quarter, the Company reported a net loss of $40 million, or $0.10 per share, compared with a loss of $12 million, or $0.03 per share, for the comparable prior year period.

"We are encouraged by traffic and orders within the quarter which showed sequential increases from month-to-month, while we exceeded internal forecasts for the period on key business drivers including net new home orders and margins," said Richard J. Dugas, Jr., PulteGroup Chairman, President and CEO. "An improving economy is slowly beginning to generate new jobs which over the long term should translate into stronger consumer confidence, both of which are critical to a meaningful and sustained recovery in the U.S. housing industry.

"Over the near term, we expect the industry will continue to face low levels of demand and that overall operating conditions will remain highly competitive. Within this environment, we remain focused on implementing actions that can drive further margin expansion and sustained overhead leverage. In combination with anticipated higher closing volumes, we expect that the financial benefits associated with these actions will enable the Company to achieve profitability in the back half of 2011."

Revenue from home sales (settlements) in the first quarter declined 20% to $782 million, compared with $977 million in the prior year. Lower revenue for the quarter reflects a 17% decrease in closings to 3,141 homes, combined with a 3%, or $8,000, decrease in average selling price to $249,000. The decrease in average selling price primarily reflects a shift in the mix of homes closed during the quarter.

First quarter cost of sales related to home sales totaled $685 million compared with costs of $850 million in 2010. Prior year cost of sales included $5 million of impairments and $2 million in merger-related costs; these expenses were immaterial in the current period. Excluding impairments, capitalized interest expense and merger-related costs, gross margin for the quarter would have been 16.9%, compared with a comparable prior year gross margin of 16.3%. The improvement in adjusted gross margin reflects changes in the mix of houses closed and ongoing initiatives to reduce house construction costs.

Homebuilding selling, general and administrative (SG&A) expense for the quarter was $136 million, down from $151 million in the comparable period last year. Although down approximately $15 million in absolute dollars, on a year-over-year basis SG&A increased as a percentage of home sale revenue as a result of the approximately 20% decrease in revenue for the quarter.

The Company's first quarter homebuilding pre-tax loss was $41 million, compared with a $12 million pre-tax loss in the comparable prior year period.

Net new home orders for the first quarter were 4,345 homes, compared with net new orders of 4,320 for the first quarter of 2010. As previously announced, a change in the Company's signup process reduced reported first quarter 2010 orders by approximately 450 homes. Sequentially, orders for the quarter increased 43% from the fourth quarter of 2010. Net new orders in the quarter benefitted from a decrease in cancellation rate to 16%, compared with an 18% cancellation rate in the first quarter of last year. PulteGroup's quarter-ending backlog was 5,188 homes valued at $1.4 billion. Prior year backlog totaled 6,456 homes with an estimated value of $1.7 billion.

The Company's financial services operations reported pretax income of $1 million for the quarter, compared with prior year income of $5 million. Loan originations for the first quarter were 1,865 compared with prior year originations of 2,325. Lower pretax income and originations for the period directly reflect the impact of reduced closings in the Company's homebuilding operations. Mortgage capture rate for the quarter was 76%, compared with 75% for the same quarter last year.

The Company ended the quarter with a cash balance of $1.4 billion, including restricted cash. Prior to the close of the quarter, PulteGroup announced its decision to terminate the Company's $250 million revolving credit facility. Terminating this facility will save the Company an estimated $5 million annually, but resulted in a one-time charge of approximately $1.3 million for the quarter.

A conference call discussing PulteGroup's first quarter 2011 results is scheduled for Thursday, April 28, 2011, at 8:30 a.m. Eastern Time. Interested investors can access the live webcast via PulteGroup's corporate website at www.pultegroupinc.com.

Forward-Looking Statements

This press release includes "forward-looking statements." These statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or implied by, these statements. You can identify these statements by the fact that they do not relate to matters of a strictly factual or historical nature and generally discuss or relate to forecasts, estimates or other expectations regarding future events. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "may," "can," "could," "might," "will" and similar expressions identify forward-looking statements, including statements related to expected operating and performing results, planned transactions, planned objectives of management, future developments or conditions in the industries in which we participate and other trends, developments and uncertainties that may affect our business in the future.

Such risks, uncertainties and other factors include, among other things: interest rate changes and the availability of mortgage financing; continued volatility in, and potential further deterioration of, the debt and equity markets; competition within the industries in which PulteGroup operates; the availability and cost of land and other raw materials used by PulteGroup in its homebuilding operations; the availability and cost of insurance covering risks associated with PulteGroup's businesses; shortages and the cost of labor; weather related slowdowns; slow growth initiatives and/or local building moratoria; governmental regulation directed at or affecting the housing market, the homebuilding industry or construction activities; uncertainty in the mortgage lending industry, including revisions to underwriting standards and repurchase requirements associated with the sale of mortgage loans; the interpretation of or changes to tax, labor and environmental laws; economic changes nationally or in PulteGroup's local markets, including inflation, deflation, changes in consumer confidence and preferences and the state of the market for homes in general; legal or regulatory proceedings or claims; required accounting changes; terrorist acts and other acts of war; and other factors of national, regional and global scale, including those of a political, economic, business and competitive nature. See PulteGroup's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and other public filings with the Securities and Exchange Commission (the "SEC") for a further discussion of these and other risks and uncertainties applicable to our businesses.

About PulteGroup

PulteGroup, Inc. (NYSE: PHM) based in Bloomfield Hills, Mich., is America's premier home building company with operations in 60 markets located throughout 28 states. The Company has an unmatched capacity to meet the needs of all buyer segments through its brand portfolio that includes Pulte Homes, Centex and Del Webb. As the most awarded homebuilder in customer satisfaction, the brands of PulteGroup have consistently ranked among the nation's top homebuilders as surveyed by third-party, independent national customer satisfaction studies.

For more information about PulteGroup, Inc. and PulteGroup brands, see www.pultegroup.com; www.pulte.com; www.centex.com; www.delwebb.com.

PulteGroup, Inc.

Condensed Consolidated Results of Operations

($000's omitted, except per share data)

(Unaudited)






Three Months Ended


March 31,


2011


2010

CONSOLIDATED RESULTS:








Revenues:




Homebuilding

$ 783,767


$ 989,792

Financial Services

21,435


30,566

Total revenues

$ 805,202


$ 1,020,358





Pre-tax income (loss):




Homebuilding

$ (40,794)


$ (11,836)

Financial Services

973


5,472

Other non-operating

(5,571)


(8,144)

Income (loss) before income taxes

(45,392)


(14,508)





Income tax expense (benefit)

(5,866)


(2,020)

Net income (loss)

$ (39,526)


$ (12,488)





EARNINGS PER SHARE -




ASSUMING DILUTION:








Net income (loss)

$ (0.10)


$ (0.03)





Shares used in per share




calculations

379,544


377,747

Click to Download

<< Back

You must be logged in to view this item.

This area is reserved for members of the news media. If you qualify, please update your user profile and check the box marked "Check here to register as an accredited member of the news media". Please include any notes in the "Supporting information for media credentials" box. We will notify you of your status via e-mail in one business day.

PulteGroup, Inc.

Condensed Consolidated Balance Sheets