PulteGroup, Inc. Message Board

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  • cu_momo cu_momo Apr 21, 2008 7:25 PM Flag


    I can't imagine this qtr's operating cashflow would provide a positive $900m in changes in inventory. I would think this qtr's cashflow would be similar to the June 2007 qtr.

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    • cu, assuming yahoo #'s are correct (sometimes they aren't) the big change was "Change in Inventory", the way I interpret the "Change in Inventory" is that Pulte stopped building houses and they sold a lot of houses, land, etc. from their inventory. Their revenue is 9.6B so the $1B, though large, is conceivable that they could do this in one quarter. Also the change in inventory should be reported on their balance sheet and if you look at their balance sheet you will see the inventory change agrees with the cash flow "change in inventory":


      If you do round #'s, assume sales are 50% down, this is a revenue of 4.8B dollars per year instead of 9.6B dollars which means they are selling about 1.25B per quarter instead of 2.5B per quarter. Now assume they turn off all new home building and they only sell out of inventory.....then you can have a "Change in Inventory" of 1B dollars and this would show up as cash.

      The numbers I have thus seen seem to correlate that Pulte is building up cash, this to me is a large "tell", in that they expect large liability payments. Given this much cash, it is either this, or they are accruing cash to buy land at present cheap rates.....but this doesn't make sense either. To me the data points to that cash is being built up to pay for liability and litigation. Note that litigation costs is separate from liability, since time is money they (Pulte) may purposefully stretch out the court proceding's to years in order that liability payment is at a time when it doesn't hit earnings as bad, besides this some people who bring the original law suite against Pulte will drop out with time.....again lowering their costs.

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