PulteGroup Inc. (PHM) reported a much wider loss of $40 million or 10 cents per share in the first quarter of 2011 compared with a loss of $12 million or 3 cents per share in the corresponding quarter of 2010. However, per share loss was lower than the Zacks Consensus Estimate of a loss of 14 cents per share.
Consolidated revenues in the quarter slipped 26.7% to $805.2 million from last year’s $1.02 billion. However, revenues exceeded the Zacks Consensus Estimate of $792 million. The decline in consolidated revenues was attributable to lower revenues generated by each of the company’s segments mostly driven by low levels of demand and increased competition.
Revenues from the Homebuilding segment amounted to $783.8 million, down 26.3% from $989.8 million a year ago driven by reduced revenues from both home sales as well as land sales. Home sales slashed 19.8% to $782.5 million and land sales dropped almost 90% to $1.3 million this quarter.
Lower home sales for the quarter reflected a 17% decrease in closings to 3,141 homes along with a 3% decrease in average selling price to $249,000. The decrease in average selling price primarily reflects a shift in the mix of homes closed during the quarter.
Excluding impairment charges, interest expense and merger-related costs, home sale gross margin improved to 16.9% from the year-ago gross margin of 16.3% led by changes in the mix of houses closed and the ongoing cost-efficient initiatives.
Net new orders during the quarter totaled 4,345 homes, slightly higher than 4,320 homes for the first quarter of 2010. The growth in orders was facilitated by a lower order cancellation rate.
The order cancellation rate dropped to 16.1% from 18.3% in the previous year. The quarter-end backlog slashed 19.6% to 5,188 homes, valued at $1.37 billion, from the prior-year backlog of 6,456 homes valuing $1.69 billion.
Revenues in the Financial Services segment slumped 30% to $21.4 million compared with $30.6 million during the corresponding quarter of 2010. The mortgage capture rate for the quarter was 76% compared with 75% in the previous year.
Pulte had cash and cash equivalents of $1.29 billion as of March 31, 2011, significantly down from $2.58 billion as of March 31, 2010.
Pulte continues to focus on cost reduction action, further margin expansion and sustained overhead leverage. The company is also optimistic about home closings which will bring Pulte back to profits in the remaining quarters of 2011.
PULTE GROUP ONC (PHM): Free Stock Analysis Report
Zacks Investment Research
