Pulte Homes Inc. (PHM, Financial) filed Quarterly Report for the period ended 2009-03-31.
Pulte Corporation is a publicly held holding company whose subsidiaries engage in the homebuilding and financial services businesses. The company's significant subsidiaries include Pulte Financial Companies Inc. Pulte Diversified Companies Inc. and other subsidiaries which are engaged in the homebuilding business. Pulte Homes Inc. has a market cap of $2.82 billion; its shares were traded at around $10.9 with and P/S ratio of 0.5.
We continue to evaluate our existing land positions to ensure the most effective use of capital. Land sale revenues and their related gains or losses may vary significantly between periods, depending on the timing of land sales. Gross profit from land sales had negative margin contributions of $0.3 million and $63.3 million during the three months ended March 31, 2009 and 2008, respectively. These negative margin contributions in the first quarters of 2009 and 2008 included net realizable value adjustments totaling $0.6 million and $64.5 million, respectively, related to land held for sale.
Selling, general, and administrative expense as a percentage of home settlement revenues was 21.2% for the three months ended March 31, 2009 compared with 14.5% for the same period in the prior year. While our internal initiatives focused on controlling costs and matching our overall cost structure with the current business environment have resulted in significant reductions in our selling, general, and administrative expenses (a decrease of 40.8% compared with the prior year period), these reductions have been offset by reduced operating leverage resulting from the significant decrease in home settlement revenues and lower absorption into inventory of overhead costs due to lower construction volumes. We incurred employee severance costs related to overhead reductions totaling $2.8 million and $7.7 million for the three months ended March 31, 2009 and 2008, respectively.
Equity income (loss) was ($50.5) million and $3.7 million for the three months ended March 31, 2009 and 2008, respectively. The equity loss experienced during the first quarter of 2009 included impairments related to investments in unconsolidated joint ventures totaling $50.4 million. There were no impairments related to investments in unconsolidated joint ventures during the three months ended March 31, 2008.
Other income (expense), net includes the write-off of deposits and pre-acquisition costs resulting from decisions not to pursue certain land acquisitions, which totaled $0.6 million and $0.3 million for the three months ended March 31, 2009 and 2008, respectively. These write-offs vary in amount from period to period as we continue to evaluate potential land acquisitions for the most effective use of capital. Additionally, other income (expense), net includes restructuring charges (primarily asset impairments and lease exit costs) of $2.2 million and $1.2 million for the three months ended March 31, 2009 and 2008, respectively, related to overhead reduction efforts.
The total purchase price related to approved land under option for use by our Homebuilding operations at future dates approximated $1.3 billion at March 31, 2009. These land option agreements, which may be cancelled at our discretion and may extend over several years, are secured by deposits and pre-acquisition costs totaling $228.5 million, of which $1.4 million is refundable. This balance excludes $19.5 million of contingent payment obligations which may or may not become actual obligations to us.
Read the The complete ReportPHM is in the portfolios of Bill Miller of Legg Mason Value Trust, Charles Brandes of Brandes Investment.
Pulte Corporation is a publicly held holding company whose subsidiaries engage in the homebuilding and financial services businesses. The company's significant subsidiaries include Pulte Financial Companies Inc. Pulte Diversified Companies Inc. and other subsidiaries which are engaged in the homebuilding business. Pulte Homes Inc. has a market cap of $2.82 billion; its shares were traded at around $10.9 with and P/S ratio of 0.5.
Highlight of Business Operations:
Homebuilding gross profit margins from home sales deteriorated to negative 59.0% for the three months ended March 31, 2009 compared with negative 32.1% for the same period in the prior year. The significant decrease in gross profit margins was primarily attributable to land and community valuation adjustments as such adjustments were lower in absolute dollars but higher as a percentage of sales. We recorded land and community valuation adjustments of $358.6 million during the three months ended March 31, 2009, compared with $598.8 million during the prior year period. Excluding these land and community valuation adjustments, gross profit margins deteriorated moderately during the three months ended March 31, 2009 compared with the prior year period primarily as the result of lower average selling prices.We continue to evaluate our existing land positions to ensure the most effective use of capital. Land sale revenues and their related gains or losses may vary significantly between periods, depending on the timing of land sales. Gross profit from land sales had negative margin contributions of $0.3 million and $63.3 million during the three months ended March 31, 2009 and 2008, respectively. These negative margin contributions in the first quarters of 2009 and 2008 included net realizable value adjustments totaling $0.6 million and $64.5 million, respectively, related to land held for sale.
Selling, general, and administrative expense as a percentage of home settlement revenues was 21.2% for the three months ended March 31, 2009 compared with 14.5% for the same period in the prior year. While our internal initiatives focused on controlling costs and matching our overall cost structure with the current business environment have resulted in significant reductions in our selling, general, and administrative expenses (a decrease of 40.8% compared with the prior year period), these reductions have been offset by reduced operating leverage resulting from the significant decrease in home settlement revenues and lower absorption into inventory of overhead costs due to lower construction volumes. We incurred employee severance costs related to overhead reductions totaling $2.8 million and $7.7 million for the three months ended March 31, 2009 and 2008, respectively.
Equity income (loss) was ($50.5) million and $3.7 million for the three months ended March 31, 2009 and 2008, respectively. The equity loss experienced during the first quarter of 2009 included impairments related to investments in unconsolidated joint ventures totaling $50.4 million. There were no impairments related to investments in unconsolidated joint ventures during the three months ended March 31, 2008.
Other income (expense), net includes the write-off of deposits and pre-acquisition costs resulting from decisions not to pursue certain land acquisitions, which totaled $0.6 million and $0.3 million for the three months ended March 31, 2009 and 2008, respectively. These write-offs vary in amount from period to period as we continue to evaluate potential land acquisitions for the most effective use of capital. Additionally, other income (expense), net includes restructuring charges (primarily asset impairments and lease exit costs) of $2.2 million and $1.2 million for the three months ended March 31, 2009 and 2008, respectively, related to overhead reduction efforts.
The total purchase price related to approved land under option for use by our Homebuilding operations at future dates approximated $1.3 billion at March 31, 2009. These land option agreements, which may be cancelled at our discretion and may extend over several years, are secured by deposits and pre-acquisition costs totaling $228.5 million, of which $1.4 million is refundable. This balance excludes $19.5 million of contingent payment obligations which may or may not become actual obligations to us.
Read the The complete ReportPHM is in the portfolios of Bill Miller of Legg Mason Value Trust, Charles Brandes of Brandes Investment.
