Updated from Oct. 25
said its third-quarter earnings fell 52% from a year ago as the U.S. housing market continued its decline, forcing the homebuilder to write down $87.7 million of land inventory and options.
On its earnings call Thursday, Pulte Chief Executive Richard Dugas told investors that there isn't yet a bottom in the real estate market.
However, he said there are several positive signs developing in the U.S. housing market, such as the
dropping inventory of existing homes on the market and the talk that Sacramento (one of the nation's worst housing markets of late) is getting better.
"We would like to see this be the beginning of a more stable operating environment," Dugas told investors on the call.
The homebuilder earned $190.2 million in the third quarter, down from $395.4 million a year earlier, the company said after the market closed Wednesday. Earnings per share from continuing operations dropped to 74 cents from $1.45 in the prior period. Analysts expected earnings of 76 cents a share, according to Thomson First Call.
The company's total revenue dropped to $3.56 billion from $3.79 billion, while gross margins tumbled 670 basis points to 17.1%. Profits were hurt by $87.7 million of charges resulting from adjustments to land values and the write-off of option deposits.
New orders declined 39% to 7,299 homes.
The operating landscape for new-home sales remained challenging during the third quarter, as high inventory levels, affordability issues, elevated cancellation rates and a general lack of buyer confidence continued to weigh on new-home demand, the company said.
In response to these more difficult market conditions, the company said it continues to shorten its land pipeline, reduce production volumes and to balance home price and profitability with sales pace.
Pulte forecast fourth-quarter earnings of 30 cents to 70 cents per share, including a potential $150 million of land-related charges. "While these charges are not a certainty, we think it is appropriate to incorporate the potential impact into our near-term guidance," Dugas said.
Analysts had forecast earnings of $1.09 a share for the fourth quarter.
Shares of Pulte recently were down 64 cents, or 2%, to $31.56.
Earnings Drop at Meritage, M/I Homes
also posted big drops in their third-quarter earnings.
Meritage late Wednesday posted a profit of $59.5 million, or $2.25 a share, down from $70.3 million, or $2.40 a share, a year earlier, as increased incentives weighed on margins. The company also recorded $9 million in charges related to forfeited lot option deposits and inventory writedowns.
Analysts forecast earnings of $2.02 a share.
Revenue rose to $878.2 million from $755.5 million. Sales orders declined 36% to 1,870 units.
For the full year, Meritage forecast earnings of $9 to $9.50 a share and revenue of $3.4 billion to $3.5 billion. Analysts, on average, predict earnings of $9.37 a share and revenue of $3.39 billion.
M/I Homes, meanwhile, said net income slid to $15.2 million, or $1.08 a share, from $25.1 million, or $1.72 a share. Wall Street expected earnings of $1.45 a share. Revenue tumbled to $306.2 million from $332.5 million.