PulteGroup, Bloomfield Hills, Mich. (NYSE:PHM) on Friday reported a net loss of $165 million, or $0.44 per share, for the fourth quarter ended Dec. 31. The loss included $196 million in write downs, including $82 million in land-related charges and other costs associated with organizational restructuring, debt retirement and other financing amendments partly offset by a $35 million income tax benefit and a $10 million insurance reserve reversal realized in the quarter.
Wall Street was expecting a loss of 9 cents per share, ex charges.
For the prior year quarter, PulteGroup reported a net loss of $117 million, or $0.31 per share, including $925 million in charges to goodwill and land impairments, merger-related charges and mortgage repurchase reserves, partly offset by $800 million in income tax benefits.
Revenues dropped 29.4% to $1.2 billion as home closings dropped 29% to 4,405 homes, partially offset by a 2% increase in average selling price to $262,000.
Net new orders were down 19% to 3,044 homes. New order dollars were down 21.7% to $766 million. The company did not report a community count or cancellation rate.
Backlog at quarter's end was 3,984 homes with a value of $1.1 billion, down from 5,931 homes, valued at $1.6 billion, at the close of the 2009 quarter.
Financial services operations reported pretax income of $5 million for the quarter, compared with a pretax loss of $36 million, inclusive of mortgage repurchase reserve charges recorded in the prior-year quarter. The mortgage capture rate for the quarter was flat with the 2009 quarter at 81%.
Gross margin as a percentage of sales was 4.9%, down from 7% in last year's quarter. Minus charges, however, the margin was 16.6%, up from 14.2% in last year's quarter. SG&A was $141 million, down from $188 million in the prior-year quarter, with this quarter's results including $11 million in severance costs associated with a previously announced restructuring plan that is expected to shave $100 million from SG&A during 2011.
PulteGroup ended the quarter with $1.47 billion in cash and $24.6 million in restricted cash, down from $1.86 billion and $32.4 million at the close of last year's quarter. During this year's quarter, the company amended its credit agreement and used available cash to redeem outstanding senior notes and community development district (CDD) bonds totaling $1 billion in principal value, which resulted in a pretax charge of $42 million. Long-term debt was $3.39 billion, down from $4.28 billion at close of the 2009 quarter.
For the full year, the net loss was $1.1 billion, or $2.90 per share, compared with a prior year net loss of $1.2 billion, or $3.94 per share.Revenue was $4.4 billion, compared with revenue of $3.9 billion in the prior year, on 17,095 homes closed, an increase of 14% from the prior year, due in part to the integration of Centex into PulteGroup. Average selling price was up less than 1% to $259,000. New orders were up 6.8% to 156,148.
"After four years of steep declines, the U.S. housing market continues to show signs of stabilizing, albeit at historically low levels," said Richard J. Dugas, Jr., chairman, president and CEO. "Businesses are once again adding jobs, which directly stimulates buying and, in turn, consumer confidence, both of which are critical to ultimately raising demand for new homes. In fact, we may already be realizing some positive effects as January buyer traffic and sales trends were encouraging, although we'll have to see if this continues through the selling season and the year."
He added, "Within this environment, our underlying homebuilding business is operating around the breakeven mark after adjusting for charges realized in the quarter and for the year. "
Michael Rehaut, home building analyst at J.P. Morgan, said in a research note, "Net-net, while land-related charges were well above our estimate, offsetting this, in our view, was the company¹s core operating margins(ex-charges) modestly above our estimate, as well as orders roughly in-line with our estimate." He maintained his neutral rating on the stock.
Shares of PHM were up modestly at $7.62 during morning trading Friday as the only other builder stock to post a gain was NVR.