News

10.26.11

PulteGroup Reports Third Quarter 2011 Financial Results

BLOOMFIELD HILLS, Mich., Oct. 27, 2011 /PRNewswire via COMTEX/ --

  • Homebuilding Revenues Increase 7% to $1.1 Billion as Closings Climb 9% to 4,198 Homes
  • Adjusted Home Sale Gross Margin of 18.5%; Up from 16.7% in Prior Year and 17.2% in Second Quarter 2011
  • Reported Net Loss of $129 Million Includes a $241 Million Goodwill Impairment Charge Partially Offset by a $73 Million Tax Benefit
  • Homebuilding SG&A Drops to 10.6% of Home Sale Revenues
  • Net New Orders of 3,564 Homes, Flat with Prior Year on 4% Fewer Communities
  • Quarter-end Backlog of 5,143 Homes Valued at $1.4 Billion
  • Cash Balance at Quarter End of $1.3 Billion

PulteGroup, Inc. (NYSE: PHM) announced today financial results for its third quarter ended September 30, 2011. For the quarter, the Company reported a net loss of $129 million, or $0.34 per share, inclusive of a goodwill impairment charge of $241 million, or $0.63 per share, and land related charges of $4 million, or $0.01 per share, partially offset by a $73 million, or $0.19 per share, tax benefit recorded in the quarter.

The reported prior year third quarter net loss of $995 million, or $2.63 per share, included $986 million, or $2.60 per share, in charges for goodwill impairment, insurance reserve adjustments and land-related charges, partially offset by a $29 million, or $0.08 per share, tax benefit recorded in the quarter.

"I am pleased to report that PulteGroup's operations, excluding any impact from the goodwill impairment or tax gain in the quarter, returned to profitability for this quarter despite a housing demand environment that remains at historically low levels," said Richard J. Dugas, Jr., PulteGroup Chairman, President and Chief Executive Officer. "Our results were achieved through a combination of higher closings, improved margins and reduced SG&A expenditures. I am particularly pleased with the progress we continue to make in improving our homebuilding gross margin, along with the tangible results from our efforts to reduce the Company's cost structure and to more effectively allocate capital to projects that generate improved financial returns. PulteGroup's Q3 results demonstrate further success in our efforts to better position our homebuilding operations for long-term profitability."

Third Quarter Results

Revenues from home sales (settlements) totaled $1.1 billion, an increase of 7% from prior year revenue of $1.0 billion. Higher revenues in the quarter were driven by a 9% increase in unit closing volumes to 4,198 homes, partially offset by a 1% decrease in the Company's average selling price to $262,000.

Third quarter cost of sales related to home sales totaled approximately $948 million, which included $1 million of land-related charges, compared with $953 million in the prior year, which included $57 million of land-related charges. Excluding land-related charges, interest expense and merger-related costs, adjusted home sale gross margin for the third quarter 2011 was 18.5%. This represents an increase of 180 basis points over the prior year and a sequential increase of 130 basis points from the second quarter 2011.

Homebuilding selling, general and administrative (SG&A) expense for the quarter was $117 million, or 10.6% of home sale revenues, compared with $145 million, or 14.1%, in the prior year excluding an insurance reserve adjustment taken in the period. Lower SG&A expense in the quarter reflects actions taken by the Company in prior periods to consolidate operations and reduce related overhead expenditures.

PulteGroup recorded a non-cash, goodwill impairment charge of $241 million, or $0.63 per share in the third quarter. "During the quarter, the Company was required to assess the carrying value of its goodwill due to the decrease in the Company's stock price and associated market capitalization during the third quarter," said Robert O'Shaughnessy, Executive Vice President and Chief Financial Officer. "Based on the results of this assessment, which takes into account the decrease in the Company's market capitalization, it was determined that an impairment charge for all of the remaining goodwill was necessary."

Net new home orders for the third quarter were 3,564 homes, flat with the prior year. PulteGroup's quarter-end backlog was 5,143 homes valued at $1.4 billion, compared with prior year backlog of 5,345 homes valued at $1.4 billion.

The Company's financial services operations reported third quarter pretax income of $9 million, compared with prior year pretax income of $3 million. Mortgage capture rate for the quarter was 78%, which was unchanged from the comparable quarter last year.

The Company ended the third quarter with a cash balance of $1.3 billion, including restricted cash.

Nine Month Results

For the nine months ended September 30, 2011, PulteGroup reported a net loss of $224 million, or $0.59 per share, inclusive of $271 million, or $0.71 per share, of goodwill impairment, land and mortgage charges, partially offset by $77 million, or $0.20 per share, of tax benefits. For the comparable prior year period, the Company reported a net loss of $931 million, or $2.46 per share, inclusive of $1.1 billion, or $2.80 per share, of goodwill impairment, insurance, land and mortgage charges, partially offset by tax benefits of $113 million, or $0.30 per share.

Revenues from home sales for the period were $2.8 billion, compared with prior year revenues of $3.3 billion. Lower revenues for the period were driven by a 14% decrease in the number of homes closed combined with a 1% decrease in average selling price to $254,000. The year-over-year decrease in closings reflects the pull ahead of demand created by the 2010 tax credit and a lower community count.

A conference call discussing PulteGroup's third quarter 2011 results is scheduled for Thursday, October 27, 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 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 impact of any changes to our strategy in responding to continuing adverse conditions in the industry, including any changes regarding our land positions; 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. PulteGroup undertakes no duty to update any forward-looking statement, whether as a result of new information, future events or changes in PulteGroup's expectations.

About PulteGroup

PulteGroup, Inc. (NYSE: PHM), based in Bloomfield Hills, Mich., is one of America's largest home building companies with operations in approximately 60 markets throughout the country. Through its brand portfolio that includes Centex, Pulte Homes and Del Webb, the company is one of the industry's most versatile homebuilders able to meet the needs of multiple buyer groups and respond to changing consumer demand. PulteGroup conducts extensive research to provide home buyers with innovative solutions and new homes designed for the way people actually live today. As the most awarded home builder in customer satisfaction, PulteGroup brands have consistently ranked among top home builders in third-party 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.

Consolidated Results of Operations

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

(Unaudited)










Three Months Ended


Nine Months Ended


September 30,


September 30,


2011


2010


2011


2010

Revenues:








Homebuilding








Home sale revenues

$ 1,101,368


$ 1,024,847


$ 2,783,602


$ 3,264,643

Land sale revenues

12,659


5,908


19,023


25,639


1,114,027


1,030,755


2,802,625


3,290,282

Financial Services

27,904


27,009


71,720


93,738

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