Homebuilder Pulte Homes posts loss for fourth quarter, weighed down by charges

Pulte Homes posts loss for Q4

Pulte Homes Inc. said Tuesday its loss narrowed in its fourth quarter, and the nation’s largest homebuilder expressed cautious optimism for housing demand this year.

Pulte CEO Richard Dugas said job growth and improved consumer confidence will be needed for a meaningful rebound in new home sales this year. Possible obstacles include the expiration of two homebuyer tax credits, a rise in mortgage rates and tight lending standards, all of which could hurt demand and price stability.

“Externally, while we are cautiously optimistic about housing demand in the year ahead, we can’t control macro conditions, but can only be prepared to respond as the year plays out,” Dugas said.

For the quarter, Pulte reported increased orders and completed sales, as well as improved margins as the company cut costs. The company said its merger with rival Centex last fall strengthened its land ownership position by adding 56,000 lots. And it saw buyer traffic improve as January progressed.

“We are in a much improved position heading into the new year,” Dugas said.

Still, investors seemed nonplussed by Pulte’s earnings report. Shares fell 5 cents to $11.08.

Pulte said it lost $116.9 million, or 31 cents a share, in the quarter. That compares with a loss of $338.2 million, or $1.33 a share, a year earlier.

The results included $925 million in charges related to impairment of assets, the value of land, and its merger with Centex.

Those charges were balanced by an $800 million tax gain, thanks to a new tax rule allowing companies to offset past losses. As a result of the new rule, the company expects to receive a federal tax refund of $917 million.

But Pulte didn’t turn a quarterly profit like other builders who benefited from the tax rule, like Beazer Homes USA Inc., D.R. Horton Inc. and KB Home.

Excluding items, Pulte’s results would have been about break-even for the period.

Revenue rose 5 percent to $1.73 billion from $1.64 billion. Revenue was helped by a 13 percent increase in completed sales, partly offset by a 7 percent decrease in the average selling price, to $258,000.

Analysts polled by Thomson Reuters were expecting a loss of 19 cents a share on revenue of about $1.5 billion.

Orders for new homes ballooned, more than doubling to 3,748 from 1,763 a year earlier, as the company’s latest quarter included results from Centex.

Margins improved in every quarter in 2009. Before the one-time items, fourth quarter gross margin was 14.2 percent, up from 13.1 percent in the third quarter.

Like other builders, Pulte Homes has seen orders pick up due to low mortgage interest rates and the tax credits — $8,000 for new buyers and $6,500 for current owners. But many industry experts question how the housing recovery will hold up once they expire.

Recent data shows the up-and-down nature of the housing market’s recovery. Sales of new homes fell 7.6 percent in December for the second month in a row. The results were the weakest since March and were only 4 percent above the bottom last January.

Still, the number of people preparing to buy a home in December rose slightly from November, a positive sign heading into the spring home buying season.

With its Centex acquisition, Pulte now has more communities with cheaply priced homes, as well as desirable land in Texas and the Carolinas. That helps future sales and cash flow, and doesn’t put pressure on the builder to buy more land, the company said.

“We are seeing new land transactions being offered and completed at values that are meaningfully higher than those of just six to 12 months ago,” Dugas said.

The Bloomfield Hills, Mich., company said its Centex acquisition could help it save $440 million by the end of 2010.

For all of 2009, Pulte reported a net loss of $1.18 billion, or $3.75 a share, compared with a net loss of $1.47 billion, or $5.81 a share, for 2008. Full-year revenue was $4.08 billion, compared with $6.26 billion for 2008.

Analysts expected a full-year loss of $3.73 a share.

On the Net:

Pulte Homes: www.pulte.com/