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Centex Maintains Outlook

The builder's third-quarter earnings rise 30% as home closings remain strong.




said quarterly earnings rose 30% on strong home closings, and the company confirmed its outlook for both fiscal 2006 and 2007.

The Dallas-based builder said net income rose to $329.3 million, or $2.49 a share, for its fiscal third quarter ending Dec. 31, up from $253.8 million, or $1.91 a share, a year earlier. Excluding discontinued items, Centex posted earnings of $332.7 million, or $2.52 a share. Analysts expected earnings of $2.48 a share, according to Thomson First Call.

Revenue rose 25% to $3.74 billion, shy of analysts forecast of $3.81 billion.

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The earnings growth came amid an 18% increase in home closings, which rose to 9,504 units from 8,047, and a 130-basis-point jump in operating margin.

Centex said its new orders rose 4% to 8,128 homes. Sales were strongest in the Southwest, where orders spiked 28% year over year. On the West Coast, orders rose 10%. But orders fell 15% in the Southeast, 8% in the mid-Atlantic and 3% in the Midwest.

"This is not particularly positive to hit only 4%, though we don't know all the details behind it," says A.G. Edwards analyst Greg Gieber, who was expecting nearly 11% order growth.

But Gieber says the strong order numbers for the West and Southwest show that hot markets like California, Phoenix and Las Vegas are holding up rather well. Gieber has a hold rating on Centex, and his firm provides no investment banking services to the company.

The company reiterated its fiscal 2006 EPS guidance of $9.65 to $9.85, as well as its 2007 forecast of $10.75 to $11.25 a share. Analysts expect Centex to post earnings of $9.80 a share for the fiscal year ending in March and $10.82 a share for fiscal 2007.

"The long-term fundamentals driving the industry remain strong, and we continue to see opportunities to gain market share in a more normalized housing environment," said Chairman and CEO Tim Eller in a statement.

Centex shares recently traded up 30 cents in after-hours trading to $73.59.