Pulte earnings soar 60 percent

Sarah Karush

Thursday, Feb. 3, 2005 | 11:19 a.m.

DETROIT -- Pulte Homes Inc. said Wednesday that its fourth-quarter earnings climbed 60 percent beating Wall Street forecasts -- despite a high cancelation rate in Las Vegas -- as domestic homebuilding revenues were fueled by both higher prices and more sales.

The Bloomfield Hills-based company said net income for the quarter ended Dec. 31 was $397 million, or $3.04 a share. Income from continuing operations rose 68 percent to $418 million, or $3.20 per share.

Analysts polled by Thomson First Call had predicted income of $3.05 per share.

For the full year, net income rose 58 percent to $986 million, or $7.58 a share. Income from continuing operations increased 61 percent to $998 million, or $7.67 per share -- 16 cents above Wall Street estimates.

Revenues increased 35 percent to $4.2 billion for the quarter and 30 percent to $11.7 billion for the year. It was the first time the company's annual revenues topped $11 billion.

Pulte attributed its higher revenues to a 13 percent increase in the average selling price of its homes to $294,000 and a 20 percent increase in total home deliveries in the fourth quarter to 13,424 homes.

The company on Wednesday reaffirmed its 2005 guidance of $9 to $9.50 per share for earnings from continuing operations.

"As strong as 2004 was, Pulte is entering 2005 in an even better position with a record backlog valued at $5.2 billion and a strong land pipeline capable of supporting our growth targets for 2005," Chief Executive Richard Dugas Jr. said in a statement.

The company took orders for 8,940 new homes last quarter, a 6 percent increase over the fourth quarter of 2003.

The increase came despite a high cancelation rate in Las Vegas. Pulte was forced to slash prices in the valley from 5 percent to 28 percent in October, abandoning an aggressive pricing policy that helped increase prices in one of the country's hottest real estate markets.

Excluding Las Vegas, fourth-quarter sign-ups would have increased 17 percent, Pulte said. The company operates in 44 other markets.

"Order activity in Las Vegas responded as planned following price adjustments announced in October, but the anticipated higher cancellation rates experienced during the period distort reported fourth quarter net sign ups," Dugas said.

In Las Vegas, Pulte homes and its Del Web division remained the second largest builder, in terms of homes sold, in 2004. The company sold more than 3,300 homes in the valley during the year, SalesTraq reported.

Last month, Pulte announced it had completed the sale of its Argentine operations, and Pulte Argentina was recorded as a discontinued operation for the fourth quarter.