Pulte Homes Loss Widens - Analyst Blog

Pulte Homes (PHM) has shown a loss of $835 million or $2.21 per share (before special items) for the fourth quarter of 2009, driven by weak demand for new homes. This is much broader than the loss of $480 million or $1.89 per share (before special items) in the same quarter a year ago and the Zacks Consensus Estimate of 17 cents per share.

Consolidated revenue for the quarter went up 6% to $1.7 billion, including the operations of the recently completed merger with Centex Corporation. Revenue from Homebuilding rose 7% to $1.6 billion. The increase in revenue reflected a 13% increase in closings to 6,200 homes, partially offset by a 7% decrease in average selling price to $258,000.

The net new home orders in the quarter, inclusive of Centex operations for the entire period, increased 113% to 3,748 homes. The quarter-end backlog as of December 31, 2009, was 5,931 homes, valued at $1.6 billion compared to a backlog of 2,174 homes, valued at $631 million for the fourth quarter of 2008.

Pulte’s Financial Services operations reported a pre-tax loss of $36.3 million for the quarter compared to $7.9 million in the prior-year quarter. The increase in pre-tax loss was attributable to mortgage repurchase reserve charges recorded in the quarter. The mortgage capture rate for the quarter was 81% compared to 92% for the same period last year.

Annual Results

In 2009, Pulte Homes reported a loss of $1.13 billion or $3.54 per share, compared to $1.5 billion or $5.81 per share for the prior-year period. The loss is wider than the Zacks Consensus Estimate of $1.05 per share.

Consolidated revenue in the year fell 35% to $4.1 billion, including the operations of the recently completed Centex merger. Revenue from Homebuilding decreased 35% to $3.9 billion. The decline in revenue reflected closings of 15,013 homes, a 29% decrease from the prior year, combined with a 9% reduction in average selling price to $258,000.

Pulte's Financial Services operations, inclusive of Centex's mortgage and title operations effective August 19, 2009, generated a pre-tax loss of $55.0 million compared to a pre-tax income of $28 million in the prior year. This was driven by increased loss from loan reserves, the 29% decline in mortgage loans originated compared with the prior year and merger-related costs.

Pulte had cash and cash equivalents of $1.86 billion as of December 31, 2009. The company remains on track to achieve targeted synergies and savings of $440 million from the Centex merger on an annualized basis by the end of 2010.

Based on the depressed results, Pulte’s stock price went down about 2.25% in Tuesday trading.

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