BLOOMFIELD HILLS, Mich., July 25 /PRNewswire-FirstCall/ -- Pulte Homes announced today financial results for its second quarter and six months ended June 30, 2007. For the quarter, the Company reported a loss from continuing operations of $507.6 million, or $2.01 per share, including impairments, land-related charges and restructuring charges. This compared with $243.9 million of income from continuing operations for the prior year second quarter, or $0.94 per diluted share. Consolidated revenues for the quarter were $2.0 billion, a decline of 40% from prior year revenues of $3.4 billion.
"As reported in our preliminary release last week, the homebuilding industry continues to face an extremely difficult environment that includes record existing and new home inventory levels, intense price competition and weak consumer sentiment for housing," said Richard J. Dugas, Jr., President and CEO of Pulte Homes. "Pulte continues to focus on reducing its land and speculative home portfolio, and properly adjusting overhead spending to put us in the best position to navigate through this continued severe downturn."
Second Quarter Results
Revenues from homebuilding settlements in the second quarter decreased 42% to $1.9 billion compared with $3.3 billion last year. The change in revenue for the quarter reflects a 40% decrease in closings to 5,938 homes, and a 4% decrease in average selling price to $320,000.
Second quarter homebuilding pre-tax loss was approximately $803.2 million, compared with prior year pre-tax income of $380.8 million. The pre-tax loss for the period reflects a decline in gross margins to -18.6% from 21.1% in the prior year quarter, combined with an increase in SG&A as a percentage of home sale revenues to 15.5% compared with 8.0% for the same period last year.
Homebuilding pre-tax loss for the second quarter of 2007 is inclusive of approximately $749.4 million of pre-tax charges, or $1.87 per share on an after-tax basis, resulting from adjustments to land inventory and land held for sale, including the Company's investment in unconsolidated joint ventures, and the write-off of deposits and pre-acquisition costs associated with land transactions the Company no longer plans to pursue. Pulte Homes also recorded a pre-tax restructuring charge of approximately $40 million during the quarter, or $0.10 per share on an after-tax basis, related to the restructuring plan announced by the Company on May 29, 2007.
Net new home orders for the second quarter were 7,532 homes, valued at $2.4 billion, which represents declines of 20% and 22%, respectively, from prior year second quarter results. Pulte Homes' ending backlog as of June 30, 2007 was valued at $5.2 billion (14,928 homes), compared with a value of $6.9 billion (19,516 homes) at the end of last year's second quarter. At the end of the second quarter 2007, the Company's debt-to-capitalization ratio was 37.9%.
The Company's financial services operations reported pre-tax income of $6.6 million for the second quarter 2007 compared with $15.1 million of pre-tax income for the prior year's quarter. The decrease in second quarter 2007 pre-tax income was primarily due to a 44% decline in mortgage loans originated during the quarter compared with the prior year's quarter. The mortgage capture rate for the quarter was approximately 93%, compared with 91% for the same quarter last year.
Six Month Results
For the six months ended June 30, 2007, Pulte Homes' loss from continuing operations was $593.2 million, or $2.35 per share, compared with prior year income from continuing operations of $506.5 million, or $1.95 per diluted share. Consolidated revenues for the period were $3.9 billion, down from $6.3 billion for the first six months of last year.
Revenues from homebuilding settlements for the period were $3.7 billion, down 40% from the prior year. Lower revenues for the period resulted from a 3% decrease in average selling price to $325,000, combined with a 39% decrease in the number of homes closed to 11,358.
Homebuilding pre-tax loss for the period was approximately $951.6 million, compared with pre-tax income of $758.4 million for the prior year period. The pre-tax loss for the period reflects a decline in gross margins to -4.3% from 22.0% in the prior year period, combined with an increase in SG&A as a percentage of home sale revenues to 15.6% compared with 8.9% for the same period last year. Homebuilding pre-tax loss for the first six months of 2007 is inclusive of approximately $881.5 million of pre-tax charges, or $2.19 per share on an after-tax basis, resulting from adjustments to land inventory and land held for sale, including the Company's investment in unconsolidated joint ventures, and the write-off of deposits and pre-acquisition costs associated with land transactions the Company no longer plans to pursue. The pre-tax loss for the period also included the second quarter restructuring plan charge previously mentioned.
For the first six months of 2007, Pulte's financial services operations reported pre-tax income of $19.8 million, compared with $64.4 million in the prior year. The prior year results reflect a first-quarter gain of approximately $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 six-month period, down 41% to 10,458 mortgages, also contributed to the decline.
Third Quarter 2007 Guidance
"In part due to our relatively strong backlog position, combined with lower overhead spending going forward, for the third quarter of 2007 we are projecting income from continuing operations in the range from $0.10 to $0.20 per diluted share, exclusive of any additional impairments or land-related charges," said Dugas. "Due to the lack of longer-term earnings visibility and the difficult market conditions that persist, we are not at this time providing guidance for any period beyond the third quarter of this year."
A conference call discussing Pulte Homes' second quarter results will be held Thursday, July 26, 2007 at 8:30 a.m. Eastern Time, and web cast live via Pulte.com. Interested investors can access the call via the Company's home page at http://www.pulte.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) general economic and business conditions; (2) interest rate changes and the availability of mortgage financing; (3) the relative stability of debt and equity markets; (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, including 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; and (14) other factors over which the Company has little or no control. See the Company's Annual Report on Form 10-K and Annual Report to Shareholders for the year ended December 31, 2006 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., , based in Bloomfield Hills, Michigan, is a FORTUNE 200 company with operations in 51 markets and 26 states. In 2006, it delivered 41,487 homes and generated consolidated revenues of $14.3 billion. During its 57-year history, the Company has constructed nearly 500,000 homes. In 2006, Pulte Homes received the most awards in the J.D. Power and Associates(R) New Home-Builder Customer Satisfaction Studysm, marking the seventh-straight year Pulte achieved this distinction. Under its Del Webb brand, Pulte is the nation's largest builder of active adult communities for people age 55 and better. Its DiVosta brand is renowned in Florida for its Built Solid(TM) building system and distinctive master-planned communities. Pulte Mortgage LLC is a nationwide lender offering Pulte customers a wide variety of loan products and superior service.
Websites: http://www.pulte.com/; http://www.delwebb.com/; http://www.divosta.com/
Pulte Homes, Inc.
Condensed Consolidated Results
Of Operations
(000's omitted, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ------------------
2007 2006 2007 2006
------ ------ ------ ------
CONSOLIDATED RESULTS:
Revenues:
Homebuilding $1,993,498 $3,318,055 $3,823,406 $6,232,807
Financial Services 27,362 40,467 66,943 85,324
Other non-operating 386 445 2,330 3,412
---------- ---------- ---------- ----------
Total Revenues $2,021,246 $3,358,967 $3,892,679 $6,321,543
========== ========== ========== ==========
Pre-tax income (loss):
Homebuilding $(803,191) $380,822 $(951,577) $758,405
Financial Services 6,568 15,056 19,763 64,400
Other non-operating (9,986) (8,153) (17,343) (17,536)
---------- ---------- ---------- ----------
Income (loss)
from continuing
operations before
income taxes (806,609) 387,725 (949,157) 805,269
Income taxes
(benefit) (299,058) 143,873 (355,934) 298,772
---------- ---------- ---------- ----------
Income (loss) from
continuing
operations (507,551) 243,852 (593,223) 506,497
(Loss) from
discontinued
operations - (833) - (833)
---------- ---------- ---------- ----------
Net income (loss) $(507,551) $243,019 $(593,223) $505,664
========== ========== ========== ==========
EARNINGS PER SHARE -
ASSUMING DILUTION:
Income (loss) from
continuing
operations $(2.01) $0.94 $(2.35) $1.95
(Loss) from
discontinued
operations - - - -
---------- ---------- ---------- ----------
Net income (loss) $(2.01) $0.94 $(2.35) $1.95
========== ========== ========== ==========
Shares used in
per share
calculations 252,093 258,947 252,006 259,852
========== ========== ========== ==========
Pulte Homes, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
June 30, Dec. 31 June 30,
2007 2006 2006
(Unaudited) (Unaudited)
----------- ----------- -----------
ASSETS
Cash and equivalents $74,652 $551,292 $104,459
Unfunded settlements 37,170 72,597 54,794
House and land
inventory 9,088,899 9,374,335 10,676,352
Land held for sale 389,582 465,823 397,818
Land, not owned, under
option agreements 34,848 43,609 61,526
Residential mortgage
loans available-for-sale 380,555 871,350 521,508
Investments in
unconsolidated entities 165,217 150,685 222,228
Goodwill 375,677 375,677 377,040
Intangible assets, net 114,829 118,954 123,079
Other assets 850,010 982,034 1,084,889
Deferred income tax
assets 551,404 170,518 -
----------- ----------- -----------
$12,062,843 $13,176,874 $13,623,693
=========== =========== ===========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable,
accrued and other
liabilities $1,997,353 $2,180,592 $2,519,118
Unsecured short-term
borrowings 173,000 - 614,500
Collateralized short-
term debt, recourse
solely to applicable
subsidiary assets 333,071 814,707 477,028
Income taxes 111,718 66,267 81,721
Deferred income tax
liability - - 9,479
Senior notes 3,477,534 3,537,947 3,537,237
----------- ----------- -----------
Total Liabilities 6,092,676 6,599,513 7,239,083
Shareholders' Equity 5,970,167 6,577,361 6,384,610
----------- ----------- -----------
$12,062,843 $13,176,874 $13,623,693
=========== =========== ===========
Pulte Homes, Inc.
Segment Data
($000's omitted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- --------------------
2007 2006 2007 2006
------ ------ ------ ------
HOMEBUILDING:
Home sales
(settlements) $1,901,825 $3,304,960 $3,691,107 $6,193,794
Land sales 91,673 13,095 132,299 39,013
---------- ---------- ---------- ----------
Homebuilding
Revenues $1,993,498 $3,318,055 $3,823,406 $6,232,807
Home cost of
sales (2,254,881) (2,608,042) (3,849,352) (4,834,008)
Land cost of
sales (118,618) (32,461) (174,980) (53,604)
Selling, general
& administrative
expense (295,213) (265,404) (576,866) (550,153)
Other income
(expense), net (127,977) (31,326) (173,785) (36,637)
---------- ---------- ---------- ----------
Pre-tax income
(loss) $(803,191) $380,822 $(951,577) $758,405
========== ========== ========== ==========
FINANCIAL SERVICES:
Pre-tax income $6,568 $15,056 $19,763 $64,400
========== ========== ========== ==========
OTHER NON-OPERATING:
Pre-tax loss:
Net interest
income (expense) $(552) $1,569 $402 $2,659
Other expense, net (9,434) (9,722) (17,745) (20,195)
---------- ---------- ---------- ----------
Total Other
non-operating $(9,986) ($8,153) $(17,343) $(17,536)
========== ========== ========== ==========
Pulte Homes, Inc.
Business Operating Data
($000's omitted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Homebuilding
Settlement
Revenues $1,901,825 $3,304,960 $3,691,107 $6,193,794
========== ========== ========== ==========
Unit settlements:
Northeast 533 819 904 1,535
Southeast 1,024 1,129 1,779 2,004
Florida 859 1,889 1,886 3,518
Midwest 594 917 1,040 1,666
Central 631 1,327 1,361 2,462
Southwest 1,636 2,656 3,135 4,913
California 661 1,142 1,253 2,383
---------- ---------- ---------- ----------
5,938 9,879 11,358 18,481
========== ========== ========== ==========
Average selling price $320 $335 $325 $335
========== ========== ========== ==========
Unit net new orders:
Northeast 856 790 1,560 1,518
Southeast 1,018 1,523 2,024 3,096
Florida 1,074 1,112 2,596 2,914
Midwest 895 1,020 1,654 2,231
Central 808 1,433 1,497 2,828
Southwest 2,106 2,627 4,769 5,352
California 775 950 1,931 2,241
---------- ---------- ---------- ----------
7,532 9,455 16,031 20,180
========== ========== ========== ==========
Net new orders -
dollars: $2,427,000 $3,121,000 $5,339,000 $6,804,000
========== ========== ========== ==========
Unit backlog:
Northeast 1,573 1,576
Southeast 1,953 2,672
Florida 1,922 3,481
Midwest 1,813 1,848
Central 1,304 2,084
Southwest 4,505 5,698
California 1,858 2,157
---------- ----------
14,928 19,516
========== ==========
Dollars in backlog $5,227,000 $6,911,000
========== ==========
Pulte Homes, Inc.
Business Operating Data, continued
($000's omitted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
MORTGAGE ORIGINATIONS:
Origination volume 5,300 9,498 10,458 17,589
========== ========== ========== ==========
Origination
principal $1,176,700 $2,022,600 $2,319,700 $3,766,800
========== ========== ========== ==========
Capture rate
percentage 92.6% 91.0% 92.8% 90.2%
========== ========== ========== ==========
Pulte Homes, Inc.
Supplemental Information
($000's omitted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Interest expense (income):
Homebuilding
(included in home
cost of sales) $96,422 $55,899 $144,380 $97,068
Financial Services 3,616 4,846 8,234 10,147
Other non-operating 938 (1,124) 1,928 753
---------- ---------- ---------- ----------
Total interest
expense $100,976 $59,621 $154,542 $107,968
========== ========== ========== ==========
Depreciation &
amortization $21,613 $19,624 $43,273 $37,987
========== ========== ========== ==========
