Pulte Homes CEO Richard J. Dugas Jr. says he doesn't expect the housing downturn to end anytime soon-in fact, he doesn't expect the downturn to end until 2009. Regardless, Pulte will remain focused on goals the Michigan-based builder set as it entered the fourth quarter.
"While demand for new housing is weak and supply levels continue to be elevated, we remain committed to our previous guidance for fourth-quarter pre-impairment earnings and cash position, and we continue to improve our already strong balance sheet," said Dugas prior to the beginning of the JPMorgan Homebuilding and Building Products Conference in Las Vegas. "Our teams continue to do an outstanding job selling and closing standing inventory and lowering overall land investment levels, all in an effort to generate cash and give Pulte maximum flexibility entering 2008."
At Tuesday's presentation, Dugas said the consumer needs to be in a better buying setting before conditions improve. In addition, he admitted that the builder was not immune to market forces. But he did say Pulte was prepared to weather the storm-how ever long it takes.
According to the Pulte presentation, being a bigger builder gives Pulte a better advantage because it can withstand a lengthy downturn by better managing contractor resources and controlling land resources. Part of controlling the company's land involves not falling into a price reduction trap.
"We don't want to add insult to injury," Dugas said when asked about discounting current land developments.
Pulte also announced just before the conference that on Nov. 19, Roger A. Cregg, the company CFO, purchased 182,400 shares of Pulte's common stock through the exercise of employee stock options. Subsequently, Cregg sold 152,300 of these shares on the same day and continues to hold 30,100 of these shares. Cregg took this action during the Pulte's current open trading window because these options were scheduled to expire during a pre-determined blackout period in January 2008. As a result of these option exercises, Cregg has increased his direct holdings with Pulte from approximately 368,090 shares of common stock to approximately 398,190 shares.