EXHIBIT 99.1
| | |
| | | |
| | | Company Contacts |
| | | Investors: Calvin Boyd |
| | | (248) 433-4527 |
| | | email:calvin.boyd@pulte.com |
| | | |
| | | Media: Mark Marymee |
| | | (248) 433-4648 |
| | | email:mark.marymee@pulte.com |
PULTE HOMES REPORTS THIRD QUARTER 2007 FINANCIAL RESULTS
| • | | Net New Orders Were 4,582 for the Quarter, Down 37% from the Prior Year Third Quarter |
| |
| • | | Closed 7,468 Homes in Third Quarter 2007, a Decrease of 28% From Last Year; Average Sales Price Per Home Decreased 4% from the Prior Year Third Quarter to Approximately $322,000 |
| |
| • | | Backlog at September 30, 2007 of 12,042 Homes, Valued at $4.1 Billion |
| |
| • | | Impairments and Land-Related Charges of $842 Million, and $336 Million in Goodwill Impairment for the Third Quarter 2007 |
| |
| • | | Q3 2007 Net Loss of $3.12 Per Share, Inclusive of Impairments, Land-Related Charges and Impairment of Goodwill |
| |
| • | | Pre-Impairment, Pre-tax Income Exceeded the High End of Previous Guidance Range |
| |
| • | | Company Provides Fourth Quarter 2007 Guidance |
Bloomfield Hills, MI, October 24, 2007— Pulte Homes (NYSE: PHM) announced today financial results for its third quarter and nine months ended September 30, 2007. For the quarter, the Company reported a loss from continuing operations of $787.9 million, or $3.12 per share, compared with income from continuing operations of $191.5 million for the prior year third quarter, or $0.74 per diluted share. The third quarter 2007 loss included $1.18 billion on a pre-tax basis, or $3.33 per share after-tax, recorded for impairments, land-related charges and impairment of goodwill, compared with $87.7 million, or $0.22 per diluted share for the third quarter of 2006.
Consolidated revenues for the quarter were $2.5 billion, a decline of 31% from prior year revenues of $3.6 billion.
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“The operating environment continues to be challenged with elevated levels of new and resale home inventory, tightening of mortgage liquidity, and weak consumer sentiment for housing,” said Richard J. Dugas, Jr., President and CEO of Pulte Homes. “In the midst of these conditions, in the third quarter we were profitable on a pre-impairment basis, which exceeded the higher end of the guidance we previously provided of $0.10 to $0.20 per diluted share, exclusive of impairments or land-related charges. We also modestly improved our cash position, while reducing outstanding debt under the revolving credit facility. We remain focused on maintaining a strong, transparent balance sheet, generating additional cash, and managing SG&A costs to better match this challenging operating environment.”
The Company ended the quarter with $102 million in cash and paid down $148 million of debt outstanding under its $1.86 billion revolving credit facility since June 30, 2007. Pulte’s debt-to-capitalization ratio was 40.3%, as of September 30, 2007, compared with 39.5% one year ago.
Third Quarter Results
Revenues from homebuilding settlements in the third quarter decreased 31% to $2.4 billion compared with $3.5 billion last year. The change in revenue for the quarter reflects a 28% decrease in closings to 7,468 homes, and a 4% decrease in average selling price to $322,000.
Third quarter homebuilding pre-tax loss was approximately $1.1 billion, compared with prior year pre-tax income of $286.1 million. The pre-tax loss for the period reflects a decline in gross margins to -12.2% from 17.1% in the prior year quarter. Homebuilding SG&A expense decreased 15% compared with the prior year quarter, but increased to 9.8% as a percentage of home sale revenues compared with 8% for the same period last year. Homebuilding pre-tax loss for the third quarter is inclusive of approximately $842 million of pre-tax charges, or $2.10 per share on an after-tax basis, resulting from adjustments to land inventory and land held for sale, including the Company’s investment in unconsolidated joint ventures, and the write-off of deposits and other related costs associated with land transactions the Company no longer plans to pursue. The homebuilding pre-tax loss also includes goodwill impairment of $336 million, or $1.23 per share on an after-tax basis, recorded during the quarter.
Net new home orders for the third quarter were 4,582 homes, valued at $1.3 billion, which represent declines of 37% and 47%, respectively, from prior year third quarter results. Pulte Homes’ ending backlog as of September 30, 2007 was valued at $4.1 billion (12,042 homes), compared with a value of $5.8 billion (16,375 homes) at the end of last year’s third quarter.
The Company’s financial services operations reported pre-tax income of $12.9 million for the third quarter 2007 compared with $21.4 million of pre-tax income for the prior year’s quarter. The decrease in third quarter 2007 pre-tax income was primarily due to a 38% decline in mortgage loans originated during the quarter compared with the prior year’s quarter. The mortgage capture rate for the quarter was approximately 92%, compared with 91% for the same quarter last year.
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Nine Month Results
For the nine months ended September 30, 2007, Pulte Homes’ loss from continuing operations was $1.38 billion, or $5.48 per share, compared with prior year income from continuing operations of $697.9 million, or $2.70 per diluted share. Consolidated revenues for the period were $6.4 billion, down from $9.9 billion for the first nine months of last year.
Revenues from homebuilding settlements for the period were $6.1 billion, down 37% from the prior year. Lower revenues for the period resulted from a 3% decrease in average selling price to $324,000, combined with a 35% decrease in the number of homes closed to 18,826.
Homebuilding pre-tax loss for the period was approximately $2.05 billion, compared with pre-tax income of $1.04 billion for the prior year period. The pre-tax loss for the period reflects a decline in gross margins to -7.4% from 20.2% in the prior year period. Homebuilding SG&A expense declined 2% for the current year period compared with the prior year period, but increased to 13.3% as a percentage of home sale revenues compared with 8.6% for the same period last year. Homebuilding pre-tax loss for the first nine months of 2007 is inclusive of approximately $1.7 billion of pre-tax charges, or $4.29 per share on an after-tax basis, resulting from adjustments to land inventory and land held for sale, including the Company’s investment in unconsolidated joint ventures, and the write-off of deposits and other related costs associated with land transactions the Company no longer plans to pursue. Homebuilding pre-tax loss also includes goodwill impairment of $336 million, or $1.23 per share on an after-tax basis, recorded during the period. A pre-tax restructuring charge of approximately $47 million was recorded during the period related to the restructuring plan announced by the Company on May 29, 2007.
For the first nine months of 2007, Pulte’s financial services operations reported pre-tax income of $32.7 million, compared with $85.8 million in the prior year. The prior year results reflect a first-quarter gain of approximately $31.6 million from the sale by Pulte Mortgage LLC of its investment in a Mexico-based mortgage-banking company. In addition, lower loan originations for the nine-month period, down 40% to 16,719 mortgages, also contributed to the decline.
Fourth Quarter 2007 Guidance
“In part due to our relatively strong backlog position, combined with our lower overhead spending, for the fourth quarter of 2007 we are projecting income from continuing operations in the range from break-even to $0.10 per diluted share, exclusive of any additional impairments, land-related charges or goodwill impairment,” said Dugas. “Due to the lack of longer-term earnings visibility and the difficult market conditions that persist, we are not at this time providing guidance for any period beyond the fourth quarter of this year.”
A conference call discussing Pulte Homes’ third quarter results will be held Thursday, October 25, 2007 at 8:30 a.m. Eastern Time, and web cast live via Pulte.com. Interested investors can access the call via the Company’s home page atwww.pulte.com.
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Certain statements in this release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (1) general economic and business conditions; (2) interest rate changes and the availability of mortgage financing; (3) the relative stability of debt and equity markets; (4) competition; (5) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (6) the availability and cost of insurance covering risks associated with the Company’s business; (7) shortages and the cost of labor; (8) weather related slowdowns; (9) slow growth initiatives and/or local building moratoria; (10) governmental regulation, including the interpretation of tax, labor and environmental laws; (11) changes in consumer confidence and preferences; (12) required accounting changes; (13) terrorist acts and other acts of war; and (14) other factors over which the Company has little or no control. See the Company’s Annual Report onForm 10-K and Annual Report to Shareholders for the year ended December 31, 2006 and other public filings with the Securities and Exchange Commission for a further discussion of these and other risks and uncertainties applicable to Pulte’s business. Pulte undertakes no duty to update any forward-looking statement whether as a result of new information, future events or changes in Pulte’s expectations.
About Pulte Homes
Pulte Homes, Inc., (NYSE: PHM), based in Bloomfield Hills, Mich., is a FORTUNE 200 company with operations in 51 markets and 26 states. In 2006, it delivered 41,487 homes and generated consolidated revenues of $14.3 billion. During its 57-year history, the company has constructed nearly 500,000 homes. Since 2000, Pulte Homes operations have earned more top-three finishes than any other homebuilder in the annual J.D. Power and Associates® New Home-Builder Customer Satisfaction Studysm. Under its Del Webb brand, Pulte is the nation’s largest builder of active adult communities for people age 55 and better. Its DiVosta brand is renowned in Florida for its Built Solid™ building system and distinctive master-planned communities. Pulte Mortgage LLC is a nationwide lender offering Pulte customers a wide variety of loan products and superior service.
Websites:www.pulte.com; www.delwebb.com; www.divosta.com
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Pulte Homes, Inc.
Condensed Consolidated Results
Of Operations
(000’s omitted, except per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| | | | | | | | | | | | | | | | | |
| CONSOLIDATED RESULTS: | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Revenues: | | | | | | | | | | | | | | | | |
| Homebuilding | | $ | 2,438,556 | | | $ | 3,513,776 | | | $ | 6,261,962 | | | $ | 9,746,583 | |
| Financial Services | | | 32,743 | | | | 49,609 | | | | 99,686 | | | | 134,933 | |
| Other non-operating | | | 499 | | | | 574 | | | | 2,829 | | | | 3,986 | |
| | | | | | | | | | | | | |
| Total Revenues | | $ | 2,471,798 | | | $ | 3,563,959 | | | $ | 6,364,477 | | | $ | 9,885,502 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Pre-tax income (loss): | | | | | | | | | | | | | | | | |
| Homebuilding | | $ | (1,098,679 | ) | | $ | 286,057 | | | $ | (2,050,256 | ) | | $ | 1,044,462 | |
| Financial Services | | | 12,896 | | | | 21,377 | | | | 32,659 | | | | 85,777 | |
| Other non-operating | | | (8,130 | ) | | | (11,920 | ) | | | (25,473 | ) | | | (29,456 | ) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations before income taxes | | | (1,093,913 | ) | | | 295,514 | | | | (2,043,070 | ) | | | 1,100,783 | |
| Income taxes (benefit) | | | (306,042 | ) | | | 104,064 | | | | (661,976 | ) | | | 402,836 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations | | | (787,871 | ) | | $ | 191,450 | | | | (1,381,094 | ) | | $ | 697,947 | |
| | | | | | | | | | | | | | | | | |
| Loss from discontinued operations | | | — | | | | (1,231 | ) | | | — | | | | (2,064 | ) |
| | | | | | | | | | | | | |
| Net income (loss) | | $ | (787,871 | ) | | $ | 190,219 | | | $ | (1,381,094 | ) | | $ | 695,883 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| EARNINGS (LOSS) PER SHARE - ASSUMING DILUTION: | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations | | $ | (3.12 | ) | | $ | 0.74 | | | $ | (5.48 | ) | | $ | 2.70 | |
| Loss from discontinued operations | | | — | | | | — | | | | — | | | | (0.01 | ) |
| | | | | | | | | | | | | |
| Net income (loss) | | $ | (3.12 | ) | | $ | 0.74 | | | $ | (5.48 | ) | | $ | 2.69 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Shares used in per share calculations | | | 252,264 | | | | 257,215 | | | | 252,093 | | | | 258,953 | |
| | | | | | | | | | | | | |
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Pulte Homes, Inc.
Condensed Consolidated Balance Sheets
($000’s omitted)
| | | | | | | | | | | | | |
| | | September 30, | | | December 31, | | | September 30, | |
| | | 2007 | | | 2006 | | | 2006 | |
| | | (Unaudited) | | | | | | (Unaudited) | |
| | | | | | | | | | | | | |
| ASSETS | | | | | | | | | | | | |
| Cash and equivalents | | $ | 101,786 | | | $ | 551,292 | | | $ | 94,633 | |
| Unfunded settlements | | | 44,967 | | | | 72,597 | | | | 84,778 | |
| House and land inventory | | | 8,130,891 | | | | 9,374,335 | | | | 10,826,766 | |
| Land held for sale | | | 372,245 | | | | 465,823 | | | | 447,414 | |
| Land, not owned, under option agreements | | | 31,739 | | | | 43,609 | | | | 59,108 | |
| Residential mortgage loans available-for-sale | | | 337,941 | | | | 871,350 | | | | 579,172 | |
| Investments in unconsolidated entities | | | 152,557 | | | | 150,685 | | | | 249,448 | |
| Goodwill | | | 40,068 | | | | 375,677 | | | | 377,040 | |
| Intangible assets, net | | | 112,767 | | | | 118,954 | | | | 121,017 | |
| Other assets | | | 733,999 | | | | 982,034 | | | | 1,060,145 | |
| Deferred income tax assets | | | 796,676 | | | | 170,518 | | | | 16,702 | |
| | | | | | | | | | |
| | | $ | 10,855,636 | | | $ | 13,176,874 | | | $ | 13,916,223 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | |
| Accounts payable, accrued and other liabilities | | $ | 1,826,603 | | | $ | 2,180,592 | | | $ | 2,477,401 | |
| Unsecured short-term borrowings | | | 25,000 | | | | — | | | | 754,300 | |
| Collateralized short-term debt, recourse solely to applicable subsidiary assets | | | 286,080 | | | | 814,707 | | | | 533,846 | |
| Income taxes | | | 51,222 | | | | 66,267 | | | | 45,610 | |
| Senior notes | | | 3,477,882 | | | | 3,537,947 | | | | 3,537,592 | |
| | | | | | | | | | |
| Total Liabilities | | | 5,666,787 | | | | 6,599,513 | | | | 7,348,749 | |
| | | | | | | | | | | | | |
| Shareholders’ Equity | | | 5,188,849 | | | | 6,577,361 | | | | 6,567,474 | |
| | | | | | | | | | |
| | | $ | 10,855,636 | | | $ | 13,176,874 | | | $ | 13,916,223 | |
| | | | | | | | | | |
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Pulte Homes, Inc.
Segment Data
($000’s omitted)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| HOMEBUILDING: | | | | | | | | | | | | | | | | |
| Home sales (settlements) | | $ | 2,407,762 | | | $ | 3,498,499 | | | $ | 6,098,869 | | | $ | 9,692,293 | |
| Land sales | | | 30,794 | | | | 15,277 | | | | 163,093 | | | | 54,290 | |
| | | | | | | | | | | | | |
| Homebuilding revenues | | | 2,438,556 | | | | 3,513,776 | | | | 6,261,962 | | | | 9,746,583 | |
| | | | | | | | | | | | | | | | | |
| Home cost of sales | | | (2,700,512 | ) | | | (2,899,981 | ) | | | (6,549,864 | ) | | | (7,733,989 | ) |
| Land cost of sales | | | (110,041 | ) | | | (18,709 | ) | | | (285,021 | ) | | | (72,313 | ) |
| Selling, general & administrative expense | | | (236,610 | ) | | | (279,223 | ) | | | (813,476 | ) | | | (829,376 | ) |
| Other income (expense), net | | | (490,072 | ) | | | (29,806 | ) | | | (663,857 | ) | | | (66,443 | ) |
| | | | | | | | | | | | | |
| Pre-tax income (loss): | | $ | (1,098,679 | ) | | $ | 286,057 | | | $ | (2,050,256 | ) | | $ | 1,044,462 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| FINANCIAL SERVICES: | | | | | | | | | | | | | | | | |
| Pre-tax income | | $ | 12,896 | | | $ | 21,377 | | | $ | 32,659 | | | $ | 85,777 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| OTHER NON-OPERATING: | | | | | | | | | | | | | | | | |
| Pre-tax loss: | | | | | | | | | | | | | | | | |
| Net interest income (expense) | | $ | (268 | ) | | $ | (1,338 | ) | | $ | 134 | | | $ | 1,321 | |
| Other expense, net | | | (7,862 | ) | | | (10,582 | ) | | | (25,607 | ) | | | (30,777 | ) |
| | | | | | | | | | | | | |
| Total Other non-operating | | $ | (8,130 | ) | | $ | (11,920 | ) | | $ | (25,473 | ) | | $ | (29,456 | ) |
| | | | | | | | | | | | | |
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Pulte Homes, Inc.
Business Operating Data
($000’s omitted)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Homebuilding settlement revenues | | $ | 2,407,762 | | | $ | 3,498,499 | | | $ | 6,098,869 | | | $ | 9,692,293 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Unit settlements: | | | | | | | | | | | | | | | | |
| Northeast | | | 729 | | | | 900 | | | | 1,633 | | | | 2,435 | |
| Southeast | | | 1,019 | | | | 1,024 | | | | 2,798 | | | | 3,028 | |
| Florida | | | 1,058 | | | | 1,872 | | | | 2,944 | | | | 5,390 | |
| Midwest | | | 987 | | | | 1,331 | | | | 2,092 | | | | 3,179 | |
| Central | | | 699 | | | | 1,265 | | | | 1,995 | | | | 3,545 | |
| Southwest | | | 2,170 | | | | 2,853 | | | | 5,305 | | | | 7,766 | |
| California | | | 806 | | | | 1,195 | | | | 2,059 | | | | 3,578 | |
| | | | | | | | | | | | | |
| | | | 7,468 | | | | 10,440 | | | | 18,826 | | | | 28,921 | |
| | | | | | | | | | | | | |
| Average selling price | | $ | 322 | | | $ | 335 | | | $ | 324 | | | $ | 335 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net new orders: | | | | | | | | | | | | | | | | |
| Northeast | | | 440 | | | | 672 | | | | 2,000 | | | | 2,190 | |
| Southeast | | | 883 | | | | 821 | | | | 2,907 | | | | 3,917 | |
| Florida | | | 766 | | | | 818 | | | | 3,362 | | | | 3,732 | |
| Midwest | | | 495 | | | | 1,163 | | | | 2,291 | | | | 3,596 | |
| Central | | | 521 | | | | 958 | | | | 1,876 | | | | 3,584 | |
| Southwest | | | 1,036 | | | | 1,958 | | | | 5,805 | | | | 7,310 | |
| California | | | 441 | | | | 909 | | | | 2,372 | | | | 3,150 | |
| | | | | | | | | | | | | |
| | | | 4,582 | | | | 7,299 | | | | 20,613 | | | | 27,479 | |
| | | | | | | | | | | | | |
| Net new orders — dollars * | | $ | 1,267,000 | | | $ | 2,396,000 | | | $ | 6,606,000 | | | $ | 9,200,000 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Unit backlog: | | | | | | | | | | | | | | | | |
| Northeast | | | | | | | | | | | 1,284 | | | | 1,348 | |
| Southeast | | | | | | | | | | | 1,817 | | | | 2,469 | |
| Florida | | | | | | | | | | | 1,630 | | | | 2,427 | |
| Midwest | | | | | | | | | | | 1,444 | | | | 1,804 | |
| Central | | | | | | | | | | | 1,003 | | | | 1,653 | |
| Southwest | | | | | | | | | | | 3,371 | | | | 4,803 | |
| California | | | | | | | | | | | 1,493 | | | | 1,871 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | 12,042 | | | | 16,375 | |
| | | | | | | | | | | | | | | |
| Dollars in backlog | | | | | | | | | | $ | 4,087,000 | | | $ | 5,809,000 | |
| | | | | | | | | | | | | | | |
| | |
| * | | Net new order dollars represent a composite of new order dollars combined with other movements of the dollars in backlog related to cancellations and change orders. |
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Pulte Homes, Inc.
Business Operating Data, continued
($000’s omitted)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| | | | | | | | | | | | | | | | | |
| MORTGAGE ORIGINATIONS: | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Origination volume | | | 6,261 | | | | 10,052 | | | | 16,719 | | | | 27,641 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Origination principal | | $ | 1,424,100 | | | $ | 2,154,600 | | | $ | 3,743,800 | | | $ | 5,921,400 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Capture rate percentage | | | 92.5 | % | | | 91.1 | % | | | 92.7 | % | | | 90.5 | % |
| | | | | | | | | | | | | |
Pulte Homes, Inc.
Supplemental Information
($000’s omitted)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Interest expense: | | | | | | | | | | | | | | | | |
| Homebuilding (included in home cost of sales) | | $ | 98,205 | | | $ | 65,217 | | | $ | 242,585 | | | $ | 162,285 | |
| Financial Services | | | 4,230 | | | | 6,651 | | | | 12,464 | | | | 16,798 | |
| Other non-operating | | | 767 | | | | 1,912 | | | | 2,695 | | | | 2,665 | |
| | | | | | | | | | | | | |
| Total interest expense | | $ | 103,202 | | | $ | 73,780 | | | $ | 257,744 | | | $ | 181,748 | |
| | | | | | | | | | | | | |
| Depreciation & amortization | | $ | 20,836 | | | $ | 20,522 | | | $ | 64,109 | | | $ | 58,509 | |
| | | | | | | | | | | | | |
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