Pulte Homes Inc., Bloomfield Hills, Mich. (NYSE:PHM) knew it would have to take a big write-down associated with its 2009 acquisition of Centex. The company chose to take the charge in the fourth quarter of 2010, which threw the company to a $116.9 million loss despite an $800 million tax benefit under the extended net-operating-loss carryback provision of the Worker, Homeownership and Business Assistance Act of 2009.
The loss of $0.31 per share included charges to goodwill of $563 million, land-impairment charges of $280 million, merger-related charges of $45 million and a charge to its mortgage repurchase reserves of $37 million. The total of approximately $925 million more than wiped out the $800 million tax benefit.
Analysts were expecting a loss of $0.19 per share. Even with the charges to earnings, however, the loss was a marked improvement from the net loss of $338 million (-$1.33 per share) it recorded in the fourth quarter of 2008, which included goodwill impairments and land-related charges of $386 million and an income tax benefit of $142 million. Shares of Pulte were down 2.2% at $10.88 in morning trading.
For the full year ended Dec. 31, Pulte's net loss was $1.2 billion (-$3.75 per share), compared with a net loss of $1.5 billion (-$5.81 per share) for the prior year period. Consolidated revenue for 2009 was $4.1 billion, compared with $6.3 billion for 2008. Home building revenue for the year was$3.9 billion, compared with revenue of $6.0 billion in the prior year as closings declined 29% to 15,013 and a 9% reduction in average selling price to $258,000. The 2009 financial results reflect the merger with Centex that closed on Aug. 18, and included Centex results for the period from Aug.19 through yearend. Prior year results were not adjusted for the merger.
Minus the charges, the company would have operated at breakeven for the quarter. Consolidated revenue for the quarter was $1.7 billion, up 5% from the prior-year quarter. Revenue from closings in the quarter ended Dec. 31 totaled $1.6 billion, up from $1.5 billion in last year's fourth quarter, on a 13% increase in closings to 6,200 homes partially offset by a 7% decrease in average selling price to $258,000.
New orders for the quarter, including Centex operations, increased 113% to3,748 homes compared with prior year orders of 1,763 homes. Pulte did not report a cancellation rate.
The company's backlog as of Dec. 31, was 5,931 homes, valued at $1.6 billion. Backlog for the fourth quarter 2008 was 2,174 homes, valued at $631 million.
Financial services operations reported a pre-tax loss of $36.3 million for the quarter, compared with a pre-tax loss of $7.9 million for the prior year, driven primarily by the mortgage repurchase reserve charges. The mortgage capture rate for the quarter was 81%, compared with 92% for the same period last year.
Minus the charges, gross margin was 14.2%, up from 13.1% in the previous quarter. SG&A for the period was $188 million, 11.8% of home sales revenue, down 170 basis points from 13.5% the prior year.
The company ended the quarter, and the year, with $1.9 billion in home building cash. It listed $1.84 billion in collateralized short-term debt and$4.28 billion in longer-term debt on its balance sheet at yearend.
"With our integration of Centex's operations well underway, we have made great strides toward realizing the operating and financial benefits that made the deal so compelling. ," said Richard J. Dugas, Jr., chairman, president and CEO. "We remain on track to capture targeted synergies and savings of $440 million on an annualized basis by the end of 2010, while Centex's land assets are proving to be an important resource in a market facing a limited supply of well-positioned homebuilding lots. Finally, with$1.9 billion in cash on our balance sheet and a pending tax refund, we have ample liquidity to manage our operations."
The company also announced during its earnings call that it was changing its name to Pulte Group. The stock will continue to trade on the NYSE under the symbol PHM.