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February 1, 2008 |
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PULTE HOMES: Posts US$453.8-Mln 4Q Pre-Tax Loss from Operations Pulte Homes Inc. has announced financial results for its fourth quarter and year ended Dec. 31, 2007. For the quarter, the company reported a pre-tax loss from continuing operations of US$453.8 million, compared with an US$18.1 million pre-tax loss for the prior year fourth quarter. The fourth quarter 2007 pre- tax loss included US$543.3 million of charges related to inventory impairments, other land-related charges and impairment of goodwill. These charges were equal to US$1.28 per share on an after-tax basis, before consideration of the valuation allowance related to the deferred tax assets discussed below. In the fourth quarter of 2006, these charges totaled US$349.9 million, or US$0.64 per share on an after-tax basis. An after-tax, non-cash valuation allowance of US$622 million, or US$2.46 per share, was recorded during the fourth quarter of 2007 by the company related to its deferred tax assets in accordance with Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes." This allowance is reflected as a charge to fourth quarter income tax expense and a reduction of the company's deferred tax assets as of Dec. 31, 2007. Including this valuation allowance, the company recorded a loss from continuing operations of US$893.3 million, or US$3.54 per share, for the fourth quarter 2007, compared with a loss of US$8.3 million, or US$0.03 per share, for the prior year fourth quarter. Consolidated revenues for the quarter were US$2.9 billion, a decline of 34% from prior year revenues of US$4.4 billion. For the full year 2007, Pulte Homes reported consolidated revenues of US$9.3 billion, a decrease of 35% from the prior year. The company had a loss from continuing operations of US$9.02 per share, compared with earnings of US$2.67 per diluted share in the prior year. "The challenging market conditions that plagued the homebuilding industry for the first nine months of 2007 worsened in the fourth quarter," said Pulte Homes President and Chief Executive Officer, Richard J. Dugas, Jr. "Levels of new and existing home inventory remain elevated, buyer demand for new homes continues to be weak, and mortgage availability is still a problem for many prospective homebuyers. However, in the midst of this difficult operating environment, we were able to exceed our goal of US$1 billion of cash at year-end and exceed our guidance previously provided related to income from operations of break- even to US$0.10 per diluted share, exclusive of any impairments or land-related charges. We were also successful in lowering overhead spending and improving our house and land inventory positions. Pulte will continue to focus on generating cash and strengthening the balance sheet as we navigate through this ongoing industry downturn." The company ended the year with US$1.1 billion in cash and no debt outstanding under its US$1.86 billion revolving credit facility. Fourth Quarter Results Revenues from homebuilding settlements in the fourth quarter decreased 35% to US$2.8 billion, compared with US$4.3 billion last year. The change in revenue for the quarter reflects a 31% decrease in closings to 8,714 homes and a 6% decrease in average selling price to US$319,000. Fourth quarter homebuilding pre-tax loss from continuing operations was US$459.2 million, compared with a US$34.1 million pre-tax loss for the prior year quarter. The pre-tax loss for the period reflects a decline in gross margins from 11% to less than one percent. Homebuilding SG&A expense decreased US$59.3 million, or 19%, compared with the prior year quarter. Homebuilding pre-tax loss for the fourth quarter 2007 is inclusive of approximately US$508.9 million of pre-tax charges, or US$1.18 per share on an after-tax basis, resulting from adjustments to land inventory and land held for sale, including the company's investments in unconsolidated joint ventures, and the write-off of deposits and other related costs associated with land transactions the company no longer plans to pursue. In the fourth quarter of 2006, these charges totaled US$349.9 million, or US$0.64 per share on an after-tax basis. The homebuilding pre-tax loss for the fourth quarter of 2007 also includes goodwill impairment of US$34.4 million, or US$0.10 per share on an after-tax basis. An after-tax valuation allowance of US$622 million, or US$2.46 per share, was recorded during the quarter associated with the company's deferred tax assets. Net new home orders for the fourth quarter were 4,562 homes, valued at US$1.2 billion, which represent declines of 29% and 41%, respectively, from prior year fourth quarter results. Pulte Homes' ending backlog as of Dec. 31, 2007 was valued at US$2.5 billion (7,890 homes), compared with a value of US$3.6 billion (10,255 homes) at the end of last year's fourth quarter. The company's financial services operations reported pre-tax income of US$10.3 million for the fourth quarter 2007, compared with US$29.7 million of pre- tax income for the prior year's quarter. The decrease in fourth quarter 2007 pre-tax income was primarily due to a 47% decline in mortgage loans originated during the quarter compared with the prior year's quarter. The mortgage capture rate for the quarter was approximately 91%, compared with 93% for the same quarter last year. Full Year Results For the year 2007, Pulte Homes' loss from continuing operations was US$2.3 billion, or US$9.02 per share, compared with prior year income from continuing operations of US$689.6 million, or US$2.67 per diluted share. Consolidated revenues for the year were US$9.3 billion, down from US$14.3 billion for the prior year. Revenues from homebuilding settlements for the period were US$8.9 billion, down 36% from the prior year. Lower revenues for the year resulted from a 4% decrease in average selling price to US$322,000, combined with a 34% decrease in the number of homes closed to 27,540. Homebuilding pre-tax loss for 2007 was US$2.5 billion, compared with pre-tax income of approximately US$1 billion for the prior year. The pre-tax loss reflects a decline in gross margins to - 5% from 17.4% in the prior year. Homebuilding SG&A expense declined US$75.2 million, or 7%, for the current year compared with the prior year. Homebuilding pre-tax loss for 2007 is inclusive of approximately US$2.2 billion of pre-tax charges, or US$5.48 per share on an after-tax basis, resulting from adjustments to land inventory and land held for sale, including the company's investments in unconsolidated joint ventures, and the write-off of deposits and other related costs associated with land transactions the company no longer plans to pursue. For 2006, these charges totaled US$505 million, or US$1.24 per share on an after-tax basis. Homebuilding pre-tax loss for 2007 also includes goodwill impairment of US$370 million, or US$1.33 per share on an after-tax basis, and a pre-tax restructuring charge of approximately US$45.7 million, or US$0.11 per share on an after-tax basis, related to the restructuring plan announced by the company during its second quarter. An after-tax valuation allowance of US$622 million, or US$2.47 per share, was recorded in 2007 associated with the company's deferred tax assets. Pulte's financial services operations reported pre-tax income of US$43 million for 2007, compared with US$115.5 million in the prior year. The prior year results reflect a first-quarter gain of approximately US$31.6 million from the sale by Pulte Mortgage LLC of its investment in a Mexico-based mortgage- banking company. In addition, lower loan originations for the year, down 42% to 23,404 mortgages, also contributed to the decline. First Quarter 2008 Guidance "Given the ongoing weakness in the homebuilding industry, for the first quarter of 2008 we are projecting a net loss from continuing operations in the range from US$0.15 to US$0.30 per share, exclusive of a tax benefit and any additional impairments or land-related charges," said Mr. Dugas. "This projection reflects the ongoing tough operating environment for homebuilding. However, with our focus on inventory and cash management, we are targeting to end 2008 with a cash position of US$2 billion to US$2.2 billion, inclusive of an additional US$650 million to US$850 million generated from operations and a US$250 million tax refund." About Pulte Homes Headquartered in Bloomfield Hills, Michigan, Pulte Homes, Inc. is one of the country's largest homebuilders, with domestic operations in 27 states and 52 markets, as well as in Puerto Rico. Revenues and net income for the trailing twelve-month period ended June 30, 2007, were approximately US$11.8 billion and US$411 million, respectively. * * * As reported in the Troubled Company Reporter-Latin America on Nov. 6, 2007, Standard & Poor's Ratings Services has lowered its corporate credit and senior unsecured debt ratings on Pulte Homes Inc. to 'BB+' from 'BBB-'. The outlook remains negative. The ratings affect approximately US$3.5 billion of senior unsecured notes. |
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