"The homebuilding operating environment took yet another step down during the fourth quarter of 2008," said Richard J. Dugas, Jr., President and CEO of Pulte Homes. "During the quarter, consumers faced unprecedented levels of financial uncertainty that dramatically impacted purchases of all large-ticket items, especially homes. Sinking consumer confidence, excess foreclosure inventory and continued very tight mortgage availability put dramatic downward pressure on the homebuilding market. These factors, combined with an exceptionally weak economy and a surge in unemployment across all industries left many potential home purchasers on the sidelines to wait for a more certain view of the future.
"Despite this strong downward market momentum, Pulte achieved its stated cash goal as we generated significant positive cash flow during the quarter. We ended the year with nearly $1.7 billion in cash, no debt outstanding under our revolving credit facility and took further action to restructure our company overhead to better match anticipated reduced volume for 2009. Pulte's strong beginning cash position, anticipated tax refunds, and expected positive operating cash flow in 2009 leave us well positioned to capitalize on opportunities once stability in the housing sector begins to materialize."
Fourth Quarter Results
Revenues from homebuilding settlements in the fourth quarter decreased 45% to $1.5 billion, compared with $2.8 billion in last year's fourth quarter. The change in revenue for the quarter reflects a 37% decrease in closings to 5,474 homes, and a 13% decrease in average selling price to $278,000.
Fourth quarter homebuilding pre-tax loss was $466.3 million, compared with a $459.2 million pre-tax loss for the prior year quarter. Homebuilding SG&A expense totaled $205 million for the quarter, including $15 million of severance-related charges. During the fourth quarter of 2008, the Company recorded $380 million of impairments and land-related charges, including $205 million related to land impairments, $14 million associated with the write-off of land deposits and pre-acquisition costs, $146 million of impairments of land held for sale and $15 million related to the Company's investment in unconsolidated joint ventures. For the prior year quarter, impairments and land-related charges totaled $509 million. In addition, goodwill impairments of $5 million were recorded during the 2008 fourth quarter, compared with $34 million for the prior year quarter.
Net new home orders for the fourth quarter were 1,763 homes, a decline of 61% from the prior year fourth quarter. Pulte Homes' ending backlog as of December 31, 2008 was valued at $631 million (2,174 homes), compared with a value of $2.5 billion (7,890 homes) at the end of last year's fourth quarter. At the end of the fourth quarter 2008, the Company's debt-to-capitalization ratio was 52.8%, and on a net debt-to-capitalization basis was 34.8%.
The Company's financial services operations reported pre-tax loss of $7.9 million for the fourth quarter 2008, compared with $10.3 million of pre-tax income for the prior year's quarter. This fourth quarter 2008 pre-tax loss was primarily due to a 42% decline in mortgage loans originated during the quarter compared with the prior year quarter combined with an increase in loan loss reserves. The mortgage capture rate for the quarter was 92%, compared with 91% for the same quarter last year.
Full Year Results
For the year ended December 31, 2008, Pulte Homes' net loss was $1.5 billion, or $5.81 per share, compared with a $2.3 billion, or $8.94 per share, net loss for the prior year. Consolidated revenues for 2008 were $6.3 billion, down 32% from $9.3 billion for the prior year.
Revenues from homebuilding settlements for the period were approximately $6 billion, down 33% from the prior year. Lower revenues for the period resulted from a 12% decrease in average selling price to $284,000, combined with a 24% decrease in the number of homes closed to 21,022.
Homebuilding pre-tax loss for 2008 was $1.7 billion, compared with a $2.5 billion pre-tax loss for the prior year. Homebuilding SG&A expense decreased $284 million, or 27%, compared with last year. During 2008, the Company recorded $1.5 billion of impairments and land-related charges, including $1.2 billion related to land impairments, $33 million associated with the write-off of land deposits and pre-acquisition costs, $271 million of impairments of land held for sale, and $18 million related to the Company's investment in unconsolidated joint ventures. For 2007, these impairments and land-related charges totaled $2.2 billion. Homebuilding pre-tax loss for the year also includes goodwill impairments of $5 million compared with $370 million in the prior year.
Pulte's financial services operations reported pre-tax income of $28 million in 2008 compared with $43 million in the prior year. The 35% decrease in mortgage loans originated during the year was the primary cause for this decrease, partially offset by a positive shift in the mix of mortgage loans toward more profitable agency-backed products.
A conference call discussing Pulte Homes' fourth quarter results will be held Thursday, February 5 at 8:30 a.m. Eastern Time. Interested investors can access the live webcast via the Company's corporate website at www.pulteinc.com.
Certain statements in this release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (1) adverse national and regional economic and business conditions, including further deterioration in the unemployment rate and the current downturn in the homebuilding industry; (2) interest rate changes and the availability of mortgage financing; (3) continued volatility and potential further deterioration in the debt and equity markets, which have adversely impacted the banking and mortgage finance industries, resulting in tightening of credit; (4) competition; (5) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (6) the availability and cost of insurance covering risks associated with the Company's business; (7) shortages and the cost of labor; (8) weather-related slowdowns; (9) slow growth initiatives and/or local building moratoria; (10) governmental regulation and the interpretation of tax, labor and environmental laws; (11) changes in consumer confidence and preferences; (12) required accounting changes; (13) terrorist acts and other acts of war; (14) the potential loss of tax benefits if we have an "ownership change" under IRC Section 382; and (15) other factors of national, regional and global scale, including those of a political, economic, business and competitive nature. See the Company's Annual Report on Form 10-K and Annual Report to Shareholders for the year ended December 31, 2007 and other public filings with the Securities and Exchange Commission for a further discussion of these and other risks and uncertainties applicable to Pulte's business. Pulte undertakes no duty to update any forward-looking statement whether as a result of new information, future events or changes in Pulte's expectations.
About Pulte Homes
Pulte Homes, Inc., (NYSE: PHM), based in Bloomfield Hills, Mich., is one of America's largest home building companies with operations in 49 markets and 25 states. During its 59-year history, the company has delivered more than 500,000 new homes. In 2008, Pulte Homes operations ranked highest in customer satisfaction in 11 U.S. markets, the most of any homebuilder, in the annual J.D. Power and Associates(R) New-Home Builder Customer Satisfaction Study(sm). Under its Del Webb brand, Pulte is the nation's largest builder of active adult communities for people age 55 and older. Its DiVosta Homes brand is renowned in Florida for its distinctive master-planned communities. Pulte Mortgage LLC is a nationwide lender offering Pulte customers a wide variety of loan products and superior service.
Websites: www.pulte.com; www.delwebb.com; www.divosta.com
Pulte Homes, Inc.
Condensed Consolidated Results
Of Operations
(000's omitted, except per share data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
-------- --------- -------- ---------
CONSOLIDATED RESULTS:
Revenues:
Homebuilding $1,611,672 $2,859,768 $6,112,038 $9,121,730
Financial Services 32,145 35,083 151,016 134,769
Other non-operating 6,468 3,766 26,404 6,595
---------- ---------- ---------- ----------
Total Revenues $1,650,285 $2,898,617 $6,289,458 $9,263,094
========= ========= ========= ==========
Pretax income (loss):
Homebuilding $(466,294) $(459,236) $(1,694,711) $(2,509,492)
Financial Services (7,893) 10,321 28,045 42,980
Other non-operating (5,538) (4,918) (15,933) (30,391)
---------- ---------- ---------- ----------
Loss from continuing
operations before
income taxes (479,725) (453,833) (1,682,599) (2,496,903)
Income taxes
(benefit) (141,560) 439,490 (209,486) (222,486)
---------- ---------- ---------- ----------
Loss from continuing
operations (338,165) (893,323) (1,473,113) (2,274,417)
Income from
discontinued
operations 0 18,662 0 18,662
---------- ---------- ---------- ----------
Net loss $(338,165) $(874,661) $(1,473,113) $(2,255,755)
======== ======== ========== =========
EARNINGS (LOSS)
PER SHARE -
ASSUMING DILUTION:
Loss from continuing
operations $(1.33) $(3.54) $(5.81) $(9.02)
Income from
discontinued
operations 0.00 0.07 0.00 0.07
------- ------- ------- -------
Net loss $(1.33) $(3.46) $(5.81) $(8.94)
====== ====== ====== ======
Shares used in per
share calculations 253,841 252,485 253,512 252,192
====== ====== ====== ======
Pulte Homes, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
December 31, December 31,
2008 2007
(Unaudited) (Unaudited)
----------- -----------
ASSETS
Cash and equivalents $1,655,264 $1,060,311
Unfunded settlements 11,988 38,714
House and land inventory 4,201,289 6,835,945
Land held for sale 164,954 252,563
Land, not owned, under option agreements 171,101 212,235
Residential mortgage loans
available-for-sale 297,755 447,089
Investments in unconsolidated entities 134,886 105,479
Other assets 697,652 904,298
Income taxes receivable 373,569 263,163
Deferred income tax assets - 105,906
---------- ----------
$7,708,458 $10,225,703
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable, accrued and other
liabilities $1,338,280 $1,859,911
Collateralized short-term debt, recourse
solely to applicable subsidiary assets 237,560 440,611
Income tax liabilities 130,615 126,758
Senior notes 3,166,305 3,478,230
---------- ----------
Total Liabilities 4,872,760 5,905,510
Shareholders' Equity 2,835,698 4,320,193
---------- ----------
$7,708,458 $10,225,703
========== ==========
Pulte Homes, Inc.
Segment Data
($000's omitted)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2008 2007 2008 2007
------ ------ ------ ------
HOMEBUILDING:
Home sales
(settlements) $1,519,896 $2,782,640 $5,980,289 $8,881,509
Land sales 91,776 77,128 131,749 240,221
---------- ---------- ---------- ----------
Homebuilding
Revenue 1,611,672 2,859,768 6,112,038 9,121,730
Home cost of sales (1,603,790) (2,779,490) (6,585,177) (9,329,354)
Land cost of sales (233,019) (133,156) (393,998) (418,177)
Selling, general
& administrative
expense (205,096) (247,342) (776,673) (1,060,818)
Other income
(expense), net (36,061) (159,016) (50,901) (822,873)
---------- ---------- ---------- ----------
Pretax income (loss) $(466,294) $(459,236) $(1,694,711) $(2,509,492)
======== ======== ========= ===========
FINANCIAL SERVICES:
Pretax income (loss) $(7,893) $10,321 $28,045 $42,980
OTHER NON-OPERATING:
Pretax loss:
Net interest income $5,739 $2,597 $23,496 $2,731
Other expense, net (11,277) (7,515) (39,429) (33,122)
---------- ---------- ---------- ----------
Total Other
Non-operating $(5,538) $(4,918) $(15,933) $(30,391)
====== ====== ======= =======
Pulte Homes, Inc.
Business Operating Data
($000's omitted)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2008 2007 2008 2007
------ ------ ------ ------
Homebuilding
settlement
revenues $1,519,896 $2,782,640 $5,980,289 $8,881,509
======== ========= ========= =========
Unit settlements:
Atlantic Coast 1,578 2,132 5,416 6,563
Gulf Coast 1,316 1,691 5,391 6,630
Midwest 752 1,351 2,651 3,888
Southwest 1,303 2,458 5,494 7,318
California 525 1,082 2,070 3,141
--------- ---------- -------- ----------
5,474 8,714 21,022 27,540
===== ====== ====== ======
Average selling
price $278 $319 $284 $322
===== ===== ===== =====
Unit net new orders:
Atlantic Coast 494 1,103 3,920 6,010
Gulf Coast 416 1,180 3,958 6,418
Midwest 262 530 2,094 3,319
Southwest 362 1,302 3,878 6,609
California 229 447 1,456 2,819
------ ------- --------- --------
1,763 4,562 15,306 25,175
===== ===== ====== ======
Net new orders -
dollars* $442,000 $1,206,000 $4,101,000 $7,812,000
======== ========= ========= ==========
Unit backlog:
Atlantic Coast 576 2,072
Gulf Coast 689 2,122
Midwest 271 828
Southwest 394 2,010
California 244 858
------- -------
2,174 7,890
===== =====
Dollars in backlog $631,000 $2,510,000
======== =========
* Net new order dollars represent a composite of new order dollars
combined with other movement of the dollars in backlog related to
cancellations and change orders.
Pulte Homes, Inc.
Business Operating Data, continued
($000's omitted)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
-------------------- -------------------
2008 2007 2008 2007
------ ------ ------ ------
MORTGAGE ORIGINATIONS:
Origination volume 3,858 6,685 15,227 23,404
===== ===== ====== ======
Origination principal $847,700 $1,592,600 $3,403,500 $5,336,400
======== ========= ========= =========
Capture rate percentage 92.2% 90.7% 92.0% 92.1%
===== ===== ===== =====
Pulte Homes, Inc.
Supplemental Information
($000's omitted)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2008 2007 2008 2007
------ ------ ------ ------
Interest expense:
Homebuilding
(included in
home cost of
sales) $61,059 $72,413 $210,709 $314,998
Financial Services 1,225 4,019 6,118 16,483
Other non-
operating 729 1,169 2,908 3,864
------ ------- -------- ---------
Total interest
expense $63,013 $77,601 $219,735 $335,345
====== ====== ======= =======
Depreciation &
amortization $16,439 $19,743 $73,980 $83,852
======= ======= ======= =======
SOURCE Pulte Homes
http://www.pulte.com
