Pulte Homes late today (April 25) reported a net loss of $85.7 million for the first quarter of 2007, or $0.33 per diluted share, compared with $262.6 million of net income for the prior year first quarter, or $1.01 per diluted share. Consolidated revenues for the quarter were $1.9 billion, a decline of 37% from prior year revenues of $3 billion.
"Overall, the home building environment remained challenging during the first quarter of 2007, as elevated inventory levels combined with weak consumer confidence for housing continue to place pressure on results," said Richard J. Dugas, Jr., president and CEO of Pulte Homes. "During this period of market weakness, Pulte continues to focus on maintaining a healthy balance sheet and adjusting our house and land inventory levels to better match current market conditions."
Revenues from home building settlements in the first quarter decreased 38% to $1.8 billion compared with $2.9 billion last year. The change in revenue for the quarter reflects a 37% decrease in closings to 5,420 homes, and a 2% decrease in average selling price to $330,000.
First-quarter home building pre-tax loss was approximately $148.4 million, compared with prior year pre-tax income of $377.6 million. The pre-tax loss for the period reflects a decline in gross margins to 11% from 23% in the prior-year quarter, combined with an increase in SG&A as a percentage of home sale revenues to 16% compared with 10% for the same period last year.
Home building pre-tax loss for the first quarter of 2007 is inclusive of approximately $132.1 million of pre-tax charges, or $0.31 per diluted share on an after-tax basis, resulting from adjustments to land inventory and land held for sale, and the write-off of deposits and pre-acquisition costs associated with land transactions the Company no longer plans to pursue.
Net new home orders for the first quarter were 8,499 homes, valued at $2.9 billion, both representing declines of 21% from prior year first quarter results. Pulte Homes' ending backlog as of March 31, 2007 was valued at $4.7 billion (13,334 homes), compared with a value of $7.1 billion (19,940 homes) at the end of last year's first quarter. At the end of the first quarter 2007, the Company's debt-to-capitalization ratio was 35%.
The Company's financial services operations reported pre-tax income of $13.2 million for the first quarter 2007 compared with $49.3 million of pre- tax income for the prior year's quarter. The first quarter 2006 results reflect a gain of approximately $31.6 million from the sale by Pulte Mortgage LLC of its investment in a Mexico-based mortgage-banking unit. The decrease in first quarter 2007 pre-tax income was primarily due to lower mortgage originations funded during the quarter compared with the prior year's quarter. The mortgage capture rate for the quarter was 93%, compared with 89.3% for the same quarter last year.
"For the second quarter of 2007, we are providing guidance in the range from break-even to a loss of $.10 per diluted share, exclusive of any additional land-related charges," said Dugas. "Due to the lack of earnings visibility, difficult market conditions that exist today and uncertainty regarding possible land-related charges going forward, we are not in a position at this time to provide guidance for the remainder of 2007."
Regionally, unit settlements in the Northeast were 371 during the first quarter versus 716 during the first quarter of last year; 755 vs. 875 in the Southeast; 1,027 vs. 1,629 in Florida; 446 vs. 749 in the Midwest; 896 vs. 1,366 in the Central region; 1,333 vs. 2,026 in the Southwest; and 592 vs. 1,241 in California. Unit net new orders were 704 vs. 728 in the Northeast; 1,006 vs. 1,573 in the Southeast; 1,522 vs. 1,802 in Flordia; 759 vs. 1,211 in the Midwest; 885 vs. 1,692 in the Central region; 2,467 vs. 2,428 in the Southwest; and 1,156 vs. 1,291 in California. Unit backlog was 1,250 vs. 1,605 in the Northeast; 1,959 vs. 2,278 in the Southeast; 1,707 vs. 4,258 in Florida; 1,512 vs. 1,745 in the Midwest; 1,309 vs. 2,401 in the Central region; 3,853 vs. 5,304 in the Southwest; and 1,744 vs. 2,349 in California.