By Lisa Beilfuss
Home builder PulteGroup Inc.'s first-quarter profit dropped 26%,
as closings fell and orders were soft.
Climbing consumer confidence, low mortgage rates and low
inventory have helped spur new home sales over the quarter. The
annual sales pace hit a seven-year high in the most recent report
from the U.S. Census Bureau, while the National Association of
Realtors reported a 7.8% surge in new home prices in March from a
year earlier.
But while Chief Executive Richard Dugas acknowledged improving
demand conditions, orders rose just 6% over the quarter at
PulteGroup versus 30% at rival D.R. Horton.
Pulte was hit by a higher-than-anticipated income tax expense,
acquisition accounting and construction delays that slowed
closings, Mr. Dugas said.
Shares in Pulte, up 15% over the past 12 months through
Wednesday's close, were down 7.8% in recent premarket trading to
$20.01.
The Atlanta-based home builder, one of the nation's largest,
said closings slid 2% to 3,365 homes. Net new orders rose 6% to
5,139 homes, and the value of net new orders also rose 6% to $1.7
billion. Backlog totaled $2.6 billion, up from $2.4 billion a year
earlier.
While promotions have been pressuring some builders' margins,
Pulte's margin has held up and incentive levels remain low. In its
latest quarter, home-building cost of revenue increased 1.5%. The
company's gross margin fell to 22.7% from 23.8%.
For the quarter ended March 31, Pulte booked profit of $55
million, or 15 cents a share, down from $74.8 million, or 19 cents
a share, a year earlier.
Revenue rose 1.3% to $1.13 billion.
Analysts surveyed by Thomson Reuters projected 20 cents in
per-share profit and $1.24 billion in revenue.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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