PulteGroup, Inc. (PHM) reported a net loss of $55 million or 15 cents per share in the second quarter of 2011, worsening significantly from a net income of $76 million or 20 cents per share in the year-ago quarter.
Reported earnings included charges of $41 million or 11 cents per share associated with land, mortgage, organizational restructuring and debt repurchases, while the prior-year quarter earnings included similar charges of $48 million or 13 cents and a net benefit of $82 million or 22 cents per share from income taxes.
Excluding these items, the company’s adjusted loss for the quarter amounted to $14 million or 4 cents per share compared with the adjusted income of $110 million or 29 cents per share a year ago. Adjusted loss per share exactly matched the Zacks Consensus Estimate of a loss of 4 cents per share.
Consolidated revenues slipped 29% to $927.2 million from $1.31 billion in the year-ago period. Revenues also missed the Zacks Consensus Estimate of $1.0 billion. The decline in consolidated revenues was attributable to poor performance across all the company’s segments arising from lower demand and increased competition.
Revenues from the Homebuilding segment totaled $904.8 million, down 28.7% from $1.27 billion a year ago, driven by reduced revenues from both home sales as well as land sales. Home sales plunged 28.8% to $899.8 million while land sales dropped almost 24.9% to $5.07 million in the quarter.
Lower home sales for the quarter reflected a 28% decrease in closings and a 1% dip in average selling price to $248,000. The decrease in average selling price was primarily attributed to a shift in the mix of homes closed during the quarter.
Excluding impairment charges, interest expense and merger-related costs, home sale gross profit declined to $154.4 million from the year-ago gross profit of $217.3 million, although gross margin remained unchanged at 17.2%.
Net new orders during the quarter totaled 4,222 homes, slightly higher than 4,218 homes in the second quarter of 2010. Backlog at the end of the quarter improved 2% to 5,777 homes totaling $1.58 billion from the prior-year backlog of 5,644 homes valuing $1.58 billion.
Revenues from the Financial Services segment plummeted 38.1% to $22.4 million from $36.2 million reported in the corresponding quarter of 2010. The mortgage capture rate for the quarter was 77% compared with 76% in the previous year.
Pulte had cash and cash equivalents of $1.20 billion as of June 30, 2011 compared with $1.50 billion as of December 31, 2010. The company used $220.2 million of cash in operating activities in the first half of 2011 compared with $850.1 million in the year-ago period.
Pulte continues to focus on increased product offerings, cost-reduction initiatives, further margin expansion and sustained overhead leverage. Moreover, the acquisition of Dallas-based Centex Corporation in August 2009 has helped the company become the nation's largest homebuilder (by units), surpassing D.R. Horton Inc. (DHI).
The combined company caters to 59 markets, including 29 states and the District of Columbia. It also provides access to states like Texas, North Carolina and South Carolina, which have shown comparatively strong new home sales despite the housing slump.
Considering all these, the shares of PulteGroup are maintaining a Zacks #1 Rank, which translates into a short-term Strong Buy rating.
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