Pulte Homes Inc., Bloomfield Hillds, Mich. (NYSE:PHM) on Wednesday reported a net loss of $361.4 million (-$1.15 per share) for the third quarter ended Sept. 30. The loss compares with a $28.4 million loss in the third quarter of 2008. Analysts were expecting a loss of $0.69 per share.
The loss was driven by approximately $86.7 in charges related to the August merger with Centex Corp. and $163.8 million in inventory impairments and other land-related charges. Pulte also took a $47.4 million write-down related to debt retired in the quarter. The results have been adjusted to include the performance of Centex.
Revenue for the quarter fell 31.2% to $1.1 billion as home building revenue declined 26.6%. Home closings fell 23% to 4,166 homes; average selling price dropped 10% to $253,000. The company said revenue and closings for the quarter benefited from the inclusion of Centex¹s operations for the final six weeks of the quarter.
Net new home orders, including Centex operations from August 19, 2009 through September 30, 2009, were up 35% to 4,048 homes compared with prior year orders of 3,008 homes. Backlog as of September 30, 2009 was 8,383 homes, valued at $2.2 billion, including 4,585 homes which were in Centex¹s backlog at merger close and which were recorded directly to Pulte¹s backlog without impacting sign-ups for the period. At quarter end, Centex¹s backlog totaled 4,316 homes. Backlog for the third quarter 2008 was 5,885 homes, valued at $1.7 billion.
The financial services segment reported a pre-tax loss of $8.6 million, down from pre-tax income of $10.1 million for the prior year quarter, due to a 24% drop in mortgage originations and increase loan-loss reserves and merger related costs. The mortgage capture rate for the quarter was 86%, compared with 93% for the same period last year.
SG&A for the quarter was $209.1 million, including $51 million in one-time, merger-related expenses. Excluding merger-related costs, SG&A was 15.0% of settlement revenue, up from 12.7% of settlement income, or $192 million, in the third quarter of 2008. Gross margin rose 370 basis points to 13.1%.
Pulte ended the quarter with $1.5 billion in cash and another $34.5 million in restricted cash. CFO Roger Cregg said Pulte expects to have $2 billion in cash on hand by yearend. The company also said it was out of compliance with its bank credit facilities, that it had obtained a waiver until Dec. 15 and was currently negotiating new terms. It said that if those negotiations failed, it may terminate the facility.
Pulte retired $1.9 billion in debt during the quarter, bringing its net debt-to-capital ratio down to 45%.
Richard J. Dugas, Jr., chairman, president and CEO of Pulte, said the results reflected "a homebuilding industry that continues its transition toward more stable market conditions as lower prices and historically low mortgage rates are helping to support homebuyer demand. Challenges remain, however, as economic weakness, foreclosures, rising unemployment and recent uncertainty over the expiration of the federal tax credit continue to influence buyer behavior.
"Looking past the quarter, our merger with Centex offers powerful near-term opportunities as reflected in our increased synergy and savings target of $440 million on an annualized basis," said Dugas. "In addition, our post-merger analysis indicates the potential to realize annualized purchasing synergies on the combined business in the range of $150 million to $200 million. Longer term, Centex¹s strong brand and 27,000 finished lots, many in communities serving the first-time homebuyer, enable Pulte to expand its presence within this important customer segment with minimal future investment."
Shares of Pulte were trading up 1% at $9.33 shortly after market open Wednesday.