PulteGroup swings to loss in 2Q
Homebuilder PulteGroup (PHM) reported a second-quarter loss of $55.4 million, or 15 cents a share, as it took significant organizational restructuring and debt repurchase charges for the quarter. That compares to net income of $76 million, or 20 cents per share, in the prior year. The Bloomfield Hills, Mich.-based company said its 2Q reorganization actions should reduce overhead by $50 million annually, and said it remains on track to be profitable in the second half of 2011. The company missed analysts' estimates of a loss of 4 cents per share for the quarter. Results included $41 million, 11 cents per share, of land, mortgage, organizational restructuring and debt repurchase charges. The prior year results included $48 million, or 13 cents per share, one-time charge, but that was offset by a net benefit from income taxes of $82 million. "The 2011 U.S. housing market continues to operate within the range of expectations we projected at the beginning of the year," said Richard Dugas Jr., chairman, president and CEO. "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." Total revenue was $927.2 million, down from $1.3 billion in the year-ago period. Revenue from home sales in the second quarter decreased 29% from the prior year to $900 million. Lower revenue for the period was driven by a 28% decrease in closings, combined with a 1% decrease in average selling price to $248,000. Prior year results benefited from increased demand stimulated by the federal first-time homebuyer tax credit, which expired in June 2010. For the quarter, homebuilding operations generated a pre-tax loss of $28 million, compared with pre-tax income of $12 million for the same period last year. Net new home orders for the second quarter were 4,222, consistent with the prior year's second quarter but down 3% compared with the first quarter of 2011. Pulte's financial operations segment's loss widened with a pre-tax loss of $17 million, compared to a prior year pre-tax loss of $9 million. Loan originations for the quarter were down 32% to 2,217 loans, due to lower closing volumes in the company's homebuilding operations. Current and prior year results for the financial services operations included charges of $19 million and $17 million, respectively, related to potential loan repurchase obligations. Pulte said it has not experienced a material change in repurchase trends, but recorded the current year adjustment primarily to reflect current expectations that repurchase activity will now extend through 2012 rather than being substantially complete by the end of 2011. During the second quarter, Pulte repurchased $53 million of senior debt, resulting in a charge of approximately $3 million. For the six months ended June 30, PulteGroup reported a net loss of $95 million, or 25 cents per share, compared with net income of $64 million, or 17 cents per share, in the prior year period. Write to Kerry Curry. Follow her on Twitter @communicatorKLC.