Pulte Homes expects to report positive income by 2010, although the builder does not forecast its home building revenue will bounce back until the following year.

Those projections are based on estimates the Bloomfield Hills, Mich.-based builder prepared prior to Pulte’s April 8 merger with Centex. According to an S-4 filing with the Securities and Exchange Commission (SEC), Pulte-Centex’s projected combined home building revenue would be $7.19 billion in 2009, or about 35% less than their aggregate sales in 2008.

This year, Pulte is projecting a loss of $475 million in earnings before taxes and interest, and estimates that Centex would report a net loss of $1.39 billion. In fiscal 2010, the combined company’s revenue is expected to dip to $5.76 billion, but also to show positive earnings.

Pulte projects the combined company’s first home building revenue gain in 2011, during which it expects positive earnings despite a slight loss from Centex’s operations, which Pulte believes will be profitable over the following three years. By 2014, the combined company is expected to be generating more than $16 billion in homebuilding sales.

During a teleconference with analysts this morning, Pulte officers reiterated their contention that the merger would accelerate the combined company’s return to profitability faster than if each builder continued to operate as a separate business. The merger should be completed by the third quarter of 2009; meanwhile, Pulte continues to reduce its overhead costs and manage its assets.

Richard Dugas, Pulte’s president and CEO, called the current slump “the worst downturn since the Great Depression.” His company only converted 21% of its backlog to closings during a first quarter, whose financial results reflected how tough it continues to be for builders to sell homes and make money. However, Dugas did point to certain markets—the Virginia side of Washington, D.C., and California, where  tax credits are spurring first-time home buyers—that are showing encouraging signs.

But housing markets in much of the rest of the country are struggling, and Pulte continues to control its costs in line with weak business conditions. During that quarter, Pulte cut its overhead by 41%, or $82 million. Its officers attribute that reduction, in part, to the builder’s “House-Cost Blitz,” which focuses on building smaller houses, and adjusting the material content of those homes to bring down their prices. Pulte continues to negotiate with its suppliers and contractors for better pricing terms. “They realize that we’re all in this together,” said Steve Petruska, Pulte’s COO.

Pulte is still laying off workers. Dugas declined to comment about how the consolidation of Pulte and Centex would affect their respective workforces, except to say that the goal of the merger “is to operate on day one in as strong a position as possible.”

Having ended last year with a high level of unsold spec homes, Pulte engaged in an aggressive marketing strategy during the first quarter that reduced its specs by 32% to 2,400 units (1,300 of which are finished specs, representing a 29% reduction from the same period a year ago). However, heavy price discounting of those specs “substantially hurt” Pulte’s margins, said Dugas. (Even then, Dugas and Petruska said that its active-adult and retired buyers are still reluctant to buy specs in the builder’s Del Webb communities.)

Pulte ended its first quarter with 121,000 lots under its control, down 17% from a year ago. Of that total, Pulte owns 98,000 lots. The company expects to spend $150 million this year on land, which Dugas said would be mostly takedowns of lot options as market conditions warrant. Pulte’s land development costs this year are expected to fall between $600 million and $650 million. However, Dugus and Roger Cregg, Pulte’s CFO, said that by merging with Centex, which has a significant number of finished lots, the combined company would be able to take a conservative approach to land acquisition.

As of March 31, the value of Pulte’s land and houses was $3.9 billion, after it had lowered its inventory in the quarter by $52 million. Pulte currently has 4,435 homes under construction in 549 active communities, which are down from 695 communities a year ago. During the quarter, the company “tested” 150 communities for possible impairment adjustments and made adjustments in 116 communities that contributed to $410.2 million in pretax impairment charges the builder recorded in the first quarter.

John Caulfield is senior editor at BUILDER magazine.

Learn more about markets featured in this article: Detroit, MI, Washington, DC.