Pulte Homes Reports Fourth Quarter and Full Year 2007 Financial Results
However, in the midst of this difficult operating environment, we were able to exceed our goal of $1 billion of cash at year-end and exceed our guidance previously provided related to income from operations of break-even to $0.10 per diluted share, exclusive of any impairments or land-related charges. We were also successful in lowering overhead spending and improving our house and land inventory positions. Pulte will continue to focus on generating cash and strengthening the balance sheet as we navigate through this ongoing industry downturn."
The Company ended the year with $1.1 billion in cash and no debt outstanding under its $1.86 billion revolving credit facility.
Fourth Quarter Results
Revenues from homebuilding settlements in the fourth quarter decreased 35% to $2.8 billion, compared with $4.3 billion last year. The change in revenue for the quarter reflects a 31% decrease in closings to 8,714 homes and a 6% decrease in average selling price to $319,000.
Fourth quarter homebuilding pre-tax loss from continuing operations was $459.2 million, compared with a $34.1 million pre-tax loss for the prior year quarter. The pre-tax loss for the period reflects a decline in gross margins from 11% to less than one percent. Homebuilding SG&A expense decreased $59.3 million, or 19%, compared with the prior year quarter. Homebuilding pre-tax loss for the fourth quarter 2007 is inclusive of approximately $508.9 million of pre-tax charges, or $1.18 per share on an after-tax basis (before consideration of the deferred tax valuation allowance), resulting from adjustments to land inventory and land held for sale, including the Company's investments 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. In the fourth quarter of 2006, these charges totaled $349.9 million, or $0.64 per share on an after-tax basis. The homebuilding pre-tax loss for the fourth quarter of 2007 also includes goodwill impairment of $34.4 million, or $0.10 per share on an after-tax basis (before consideration of the deferred tax valuation allowance). An after-tax valuation allowance of $622 million, or $2.46 per share, was recorded during the quarter associated with the Company's deferred tax assets.
Net new home orders for the fourth quarter were 4,562 homes, valued at $1.2 billion, which represent declines of 29% and 41%, respectively, from prior year fourth quarter results. Pulte Homes' ending backlog as of December 31, 2007 was valued at $2.5 billion (7,890 homes), compared with a value of $3.6 billion (10,255 homes) at the end of last year's fourth quarter.
The Company's financial services operations reported pre-tax income of $10.3 million for the fourth quarter 2007, compared with $29.7 million of pre- tax income for the prior year's quarter. The decrease in fourth quarter 2007 pre-tax income was primarily due to a 47% decline in mortgage loans originated during the quarter compared with the prior year's quarter. The mortgage capture rate for the quarter was approximately 91%, compared with 93% for the same quarter last year.