By Lisa Beilfuss
Home builder PulteGroup Inc. said its second-quarter profit
rose, as order growth and a gain stemming from a legal settlement
offset soft closings.
Adjusted per-share earnings topped expectations, though revenue
slipped and missed estimates.
Climbing consumer confidence, low mortgage rates and low
inventory have helped spur new-home sales over recent months. The
Federal Reserve's policy-setting committee in its latest assessment
signaled a more optimistic shift in its view of the housing market,
and the annual sales pace hit a seven-year high in the most recent
report from the U.S. Census Bureau.
Chief Executive Richard Dugas on Thursday said the company is
"pleased with market conditions" that "demonstrate that the
recovery in U.S. housing remains on track."
Orders grew 7% over the quarter to 5,118 homes, though less than
some analysts expected. Jack Micenko of Susquehanna Investment
Group, for example, expected a 10% increase to 5247 units. Texas
was the weak spot, with orders there off 13%. On a call with
analysts, Mr. Dugas pointed to rain-induced production delays
across the state and soft demand particularly in Houston, where
much of the economy is tied to the slowing energy sector.
The value of new orders rose 11% to $1.8 billion, which the
company called its best quarterly order value since before the
financial crisis. Backlog totaled $3.1 billion, up from $2.8
billion a year earlier and the highest since 2007.
The Atlanta-based home builder, one of the nation's largest,
said closings fell 1% to 3,744 homes, offsetting a 1% increase in
the average price to $332,000. Closings were lower in all regions
except for the North and fell most in Texas, where they were down
15% from last year's quarter.
In all for the June period, Pulte booked profit of $103.3
million, or 28 cents a share, up from $41.9 million, or 11 cents, a
year earlier. Earnings benefited from a legal settlement that added
$27 million, or 5 cents a share. The prior year's quarter was hurt
by charges that shaved 14 cents off of per-share earnings.
Revenue declined 0.5% to $1.28 billion.
Analysts anticipated 26 cents in earnings per share and $1.37
billion in revenue.
Home building gross margin slipped to 23.3% from 23.5%. Pulte's
chief financial officer said margins in the third and fourth
quarters would be "comparable to the 23.3%" the company posted in
the second quarter, adding that Pulte is on track to surpass its
full-year margin guidance of 23%.
Shares in the company, down about 8% this year and
underperforming the gain in a basket of home-builder stocks, added
0.3% in midday trading.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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