PulteGroup Inc., Bloomfield Hills, Mich., on Thursday before market open reported a net loss of $55 million ($0.15 per share) for the second quarter ended June 30. The loss compared with a profit of $76 million, or $0.20 per share, in the prior year.

The results included $41 million ($0.11 per share) in impairments, write-downs and organizational restructuring and debt repurchase charges. Analysts, who do not normally factor in charges to earnings, were expecting a loss of $0.04 per share, putting the in line with expectations. Last year's quarter included $48 million, or $0.13 per share in charges offset by a net benefit from income taxes of $82 million, or $0.22 per share.

Home building revenues declined 29% from the prior year quarter to $900 million as closings fell 28% to 3,633. The average selling price dropped 1% to $248,000.

New orders were flat with last year's quarter at 4,222 and down 3% from this year's first quarter. New order dollars fell 2.8% to $1.15 million. The company did not report a cancellation rate, community count or land position.

PulteGroup's quarter-end backlog was up 2% to 5,777 homes with a value of$1.6 billion, compared with a prior year backlog of 5,644 homes with a value of $1.6 billion.

Gross margin on sales was flat with last year's quarter at 17.2% and up 30 basis points from the first quarter. Homebuilding SG&A, including $5 million in restructuring costs, was $132 million, down $15 million from the prior-year quarter and down $4 million from the first quarter 2011. It was 14.1% of sales.

Financial services operations reported a pre-tax loss of $17 million, up from a prior year pre-tax loss of $9 million on lower loan originations, which were down 32% to 2,217 loans. The mortgage capture rate for the quarter was 77% compared with 76% for last year's quarter.

During the quarter, PulteGroup purchased $53 million of senior debt in open market transactions, resulting in a charge of approximately $3 million. The company ended the quarter with $1.2 billion in cash and restricted cash, down from approximately $1.5 billion at yearend 2010. Its net debt-to-capital ratio rose 270 basis points to 50.9%, according to an analysis by Michael Rehaut at J.P. Morgan.

Richard J. Dugas, Jr., chairman, president and CEO of PulteGroup, said the company expects to turn profitable for the second half of 2011 and that the company expects to realize $50 million in annual savings as a result of the restructuring that took place during the quarter.

"The 2011 U.S. housing market continues to operate within the range of expectations we projected at the beginning of the year," said Dugas. "It is a positive sign that buyer demand appears to have stabilized following expiration of the homebuyer tax credit last spring, but residential construction volumes are at historically low levels and market conditions remain highly competitive. In this operating environment, we are focused on reducing our construction and overhead costs and enhancing our product offerings."

In his research alert, Rehaut wrote, "The quarter featured key metrics that were largely in-line with our estimates ... PHM also noted that it continues to believe it will be able to achieve profitability in 2H11. Overall, we maintain our relative Neutral rating on Pulte amid our positive sector stance, as we believe PHM's valuation ... reflects its below-average gross margins, lower mix of new communities, higher level of charges, and our outlook for negative EPS in 2011 and 2012, partially offset by its solid balance sheet and above-average demographic diversification."

Adam Rudiger at Wells Fargo was more critical. In his alert, he wrote, "While orders beat our estimates for the second quarter in the row, PHM continues to report 'messy' quarters in our view, with an unexpected $19MM financial services charge, a $5MM restructuring charge and a $3MM early retirement of debt charge. The Centex acquisition closed almost two years ago, yet PHM still is unable to demonstrate an ability to generate profits. The company remains more of a restructuring story than some of its peers, in our view, given continued restructuring/severance charges and below-average gross margins."