PulteGroup 3Q losses double due to dwindling demand for new homes
PulteGroup (PHM) reported a net loss of $995.1 million, or $2.63 per diluted share, for the third quarter of 2010. The company spent a total of $417 million in the quarter, compared to $209 million the previous year. Pulte said its merger with home builder Centex, completed in August 2009, also contributed to the quarterly loss as well as the net loss for the first nine months of the year; however, third quarter costs included the $23 million merger with Centex. Pulte acquired 4,316 homes from Centex. Earnings fell 175.4% during 3Q from a net loss of $361.4 million, or $1.15 per diluted share, in the third quarter of 2009. Regardless, revenue was $1.1 billion, consistent with the $1.1 billion generated in revenue one year ago. The firm said revenues are down due to market conditions. Pulte's average price per home fell 5% to $265,000 and its home closing volume fell 7% to 3,865 in 3Q. Still, chairman, president and CEO of Pulte, Richard Dugas Jr. remained positive about the company's operations. "PulteGroup's third quarter loss was driven primarily by charges taken in the period for goodwill impairment and insurance reserve adjustments," said Dugas. "Looking beyond the charges, our homebuilding operations continued to demonstrate year-over-year progress as we execute on our strategies to capture greater operating efficiencies within our homebuilding operations." Dugas added that as market conditions are not expected to improve, Pulte will continue to reduce direct construction and overhead costs. The firm also plans to restructure to reduce selling, general and administrative costs, a $100 million venture, according to the CEO. For the first nine months of the year, PulteGroup has a net loss of $931.3 million, compared to a loss of $1.1billion in the same period of 2009. At the end of the third quarter, Pulte had a total of $9.1 billion assets on its balance sheet and a reported backlog of 5,345 homes ($1.4 billion) on the market. Write to Christine Ricciardi. Disclosure: The author holds no relevant investments.