Pulte Homes (NYSE: PHM) on Wednesday evening reported a fourth-quarter loss of $453.8 million, including $543.3 million in impairments and other write-downs but not including a non-cash FAS 109 valuation allowance of $622 million, which brought total write-downs to $1.16 billion. That brought the loss to $893.3 million ($3.54 per share) for the quarter, compared with a loss of $8.3 million, ($0.03 per share) for the 2006 fourth quarter.
On a brighter note, the company achieved its goal of having more than $1 billion in cash on hand--$1.1 billion was the actual number--and no outstanding balance on its $1.86 billion revolver.
For the full year 2007, Pulte reported consolidated revenues of $9.3 billion, a decrease of 35% from the prior year, and posted a loss from continuing operations of $2.3 billion ($9.02 per share), compared with earnings of $2.67 per diluted share in the prior year.
Revenues from homebuilding settlements were down 35% to $2.8 billion on a 31% decrease in closings to 8,714 homes and a 6% decrease in average selling price to $319,000. The pre-tax loss from continuing operations was $459.2 million, compared with a $34.1 million pre-tax loss for the prior year quarter. Gross margins fell from 11% to less than 1%. Homebuilding SG&A expense decreased $59.3 million, or 19%, compared with fourth quarter, 2006.
Net orders for the fourth quarter were 4,562 homes, valued at $1.2 billion, which represent declines of 29% and 41%, respectively, from prior year fourth quarter results. Pulte Homes' ending backlog as of December 31, 2007 was valued at $2.5 billion (7,890 homes), compared with a value of $3.6 billion (10,255 homes) at the end of last year's fourth quarter.
The financial services operations reported pre-tax income of $10.3 million for the quarter, compared with $29.7 million for the prior year's quarter. The decrease in fourth quarter 2007 pre-tax income was primarily due to a 47% decline in mortgage loans originated during the quarter compared with the prior year's quarter. The mortgage capture rate for the quarter was approximately 91%, compared with 93% for the same quarter last year.
For the year, revenues from homebuilding settlements were $8.9 billion, down 36% from the prior year, on a 4% decrease in average selling price to $322,000 and a 34% decrease in the number of homes closed to 27,540.Homebuilding pre-tax loss for 2007 was $2.5 billion, compared with pre-tax income of approximately $1 billion for the prior year. Gross margins fell to -5% from 17.4% in the prior year; SG&A expense declined $75.2 million, or 7%, for 2007 compared to 2006. The company took $2.2 billion in pre-tax charges ($5.48 per share) for 2007 after adjustments to land inventory and land held for sale, including the Pulte's investments in unconsolidated joint ventures and the write-off of deposits and other related costs associated with land transactions the Company no longer plans to pursue.
Pulte's financial services operations reported pre-tax income of $43 million for 2007, compared with $115.5 million in 2006, which included a first-quarter gain of approximately $31.6 million from the sale by Pulte Mortgage LLC of its investment in a Mexico-based mortgage- banking company. Loan originations fell 42% to 23,404 mortgages.
"The challenging market conditions that plagued the homebuilding industry for the first nine months of 2007 worsened in the fourth quarter," said Richard J. Dugas, Jr., president and CEO of Pulte. "Levels of new and existing home inventory remain elevated, buyer demand for new homes continues to be weak, and mortgage availability is still a problem for many prospective homebuyers. However, in the midst of this difficult operating environment, we were able to exceed our goal of $1 billion of cash at year-end and exceed our guidance previously provided related to income from operations of break-even to $0.10 per diluted share, exclusive of any impairments or land-related charges."
Dugas also provided guidance for 2008, including "a net loss from continuing operations in the range from $0.15 to $0.30 per share, exclusive of a tax benefit and any additional impairments or land-related charges," he said. "This projection reflects the ongoing tough operating environment for homebuilding. However, with our focus on inventory and cash management, we are targeting to end 2008 with a cash position of $2 billion to $2.2 billion, inclusive of an additional $650 million to $850 million generated from operations and a $250 million tax refund."