Pulte Pulls In Higher Profit

Shares drop 6% after weak numbers from fellow builders Centex and Beazer.
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Updated from April 26

Pulte Homes

(PHM) - Get Report

reported a 20% jump in first-quarter earnings and reiterated its guidance, while also posting a drop in new-home orders.

The homebuilder said late Wednesday that its profit rose to $262.6 million, or $1.01 a share, from $218.2 million, or 83 cents a share, a year earlier. Analysts had an average forecast for earnings of 96 cents a share, according to Thomson First Call.

Revenue grew 18% to $2.96 billion from $2.52 billion, though the top line was slightly shy of analysts' forecast of $3.04 billion. The number of closings rose 7% to 8,602 homes.

New orders, a sign of future profits, fell 11% on a unit basis to 10,725, and the value of those contracts fell 4% to $3.8 billion. The company's backlog of sold homes stood at $7.1 billion at the end of the quarter, up from $6.5 billion a year earlier.

On a unit basis, orders rose 7% in the Central region, but fell 29% in the Northeast, 15% in the West, 13% in the Midwest and 9% in the Southeast.

In the company's conference call Thursday, Pulte management attributed the large drop in Northeast orders to declining demand in the New York metro region and the New England area.

Out West, sales were slow in Northern California, but the company said it saw strong demand in Southern California and Nevada. In Arizona, sales have been slower because of a limited amount of Pulte homes for sale there and competition from the growing inventory of existing homes. Buyers have been much more cautious in Arizona of late, the company said.

Pulte said the competition from the growing amount of existing homes for sale is a national issue, but it is most pronounced in Orlando and Phoenix, where builders are exacerbating the situation by adding more inventory to the market.

"The investors that were buyers two to three years ago have been sellers today ... and that's presenting some inventory issues in certain markets," management said on the call.

Overall cancellation rates rate increased to 21% in the quarter, up from 16% a year ago. A 21% rate is near historical averages, the company said.

Pulte maintained its 2006 EPS guidance of $6 to $6.25, based on the expectation that the housing market will have a "soft landing." Analysts forecast full-year earnings of $5.98 a share.

Pulte shares fell 6.5% to $36.49 in early trading Wednesday, partially dragged down by the

disappointing earnings report

Centex

(CTX)

released after the market closed Wednesday, as well as

weak orders numbers and soft guidance from

Beazer Homes

(BZH) - Get Report

.

The Philadelphia Housing Index

(HGX)

fell 2.9% in early trading.