Homebuilding and financial services company Pultegroup Inc. (PHM) exuded confidence of better year in 2012. The company believes that positive long-term catalyst from housing data allows them to be confidence of a profitable 2012. This is also on the strength of progress it had made in its core homebuilding operations.
The company made a profit for the fourth quarter compared to a loss last year on the back of increased average selling price, which was partly offset by a 2 percent fall in closings. Pulte also witnessed 1 percent rise in its new orders for home and backlog remains at $1.1 billion.
Q4 Results
The Bloomfield Hills, Michigan-based Pultegroup reported net income of $14 million or 4 cents a share versus a net loss of $165 million or 44 cents loss a share in the year-ago quarter. The results included various charges of $68 million or 17 cents a share, partly offset by benefits of $39 million or 10 cents a share. The previous year results were also impacted by various charges and gains.
Excluding charges and gains, the company would have earned 11 cents a share for the latest quarter. Total revenues grew 6 percent to $1.26 billion from $1.19 billion in the year earlier quarter. Of this, home sales revenues accounted for $1.167 billion, up 1 percent from $1.155 billion and revenue from land sales vaulted to $63.83 million from $2.18 million in the previous year quarter.
On average, Street analysts had earnings estimation of 7 cents a share on revenues of $1.14 billion.
Importantly, the company had spent 87.5 percent of its revenue towards home sale cost compared to 95.15 percent in the year-ago quarter. Pulte's adjusted home sale gross margin rose by 2 percentage points to 18.6 from last year, but improved 10 basis points from third quarter. The company had also spent 10 percent of home sale revenues towards selling, general and administration compared to 13 percent in the previous year.
Pulte's net new orders witnessed a modest rise to 3,084 from 3,044, which included one time 200 signups due to changes in its order recognition process. Excluding this, net new orders would have witnessed 8 percent upside.
Our Take
The company gained from housing market stability though at low levels considering net new home sales. The industry is yet to see any major signs of recovery though optimism and data provides sea-saw comfort. One can consider entering the counter as and when some more positive data emerges from the industry.