PulteGroup, Inc. (NYSE:PHM), Bloomfield Hills, Mich., on Wednesday morning reported a net loss of $12.5 million (-$0.03) per share) for the first quarter ended March 31, compared with a loss of $515 million (-$2.02 per share) for the first quarter of 2009. The loss included $8 million in pre-tax charge inventory impairments and other land-related charges, down from $410 million for the same period a year before.
The results beat analyst expectations for a loss of 22 cents a share, largely the result of lower-than-expected impairment charges. The stock was down 1.4% at $12.92 in pre-market trading Wednesday morning before recovering slightly to $12.98 by mid-morning.
Total revenue was up nearly 75% from $584 million in last year's quarter to$1.02 billion in the 2010 first quarter. Revenue from home sales increased 73% to $977 million on a 77% increase in closings to 3,795 homes, partially offset by a 2%, or $6,000, decrease in average selling price to $257,000.
Net new home orders for the quarter were up 43% from last year's first quarter to 4,320 homes, a 15% sequential increase from the fourth quarter of 2009. The new orders, however, fell short of analyst expectations of a gain of 94%. The cancellation rate was 18%, down from 21% for last year's first quarter and and 26% for the fourth quarter.
Backlog more than doubled to 6,456 homes valued at $1.7 billion, up from Prior 3,049 homes with an estimated value of $853 million at the end of March, 2009.
Financial services reported pre-tax income of $5.5 million for the quarter, compared with a pre-tax loss of $0.7 million in the prior-year quarter, due primarily to a 44% increase in mortgage loans originated and a resulting 65% increase in revenue. The mortgage capture rate for the quarter was 75%, compared with 92% for the same quarter last year.
Gross margin improved to 13% of home sale revenue from a negative 59% in last year's first quarter and 1.6% in the fourth quarter. Minus impairments and other charges, the margin improved to 16.3% from 8.6% and 14.2%, respectively. SG&A for the quarter was $151 million, down from $188 million in the fourth quarter of 2009, amounting to 15.4% of homes sales revenue.
PulteGroup ended the quarter with $2.61 billion in cash and restricted cash and listed $4.3 billion in long-term debt on its balance sheet, roughly even with the same period last year. The net-debt-to-capitalization ratio was 35%, down from 57.6% at the close of last year's quarter.
"While expectations are for market conditions to remain relatively stable for the remainder of 2010, high resale inventory, particularly foreclosure inventory, expiration of the tax credit and weak consumer confidence could limit the pace of housing's recovery for several more quarters," said Richard J. Dugas, Jr., chairman, president and CEO. "Despite these headwinds, PulteGroup's results in 2010 will continue to benefit from last year's merger with Centex and resulting opportunities to realize additional margin expansion and SG&A leverage. Assuming market conditions remain stable, we expect PulteGroup to be profitable for the year."
Analyst views were mixed. Noting the miss on revenues and new orders, UBS home building analyst David Goldberg dropped his price target on PulteGroups stock to $8 a share. Citi's Josh Levin, on the other hand, wrote in a research alert, "While we think order growth falls short of investor expectations, we think operating and profitability metrics likely meet or may exceed investor expectations."