PulteGroup Q1 Profit Down 8%; DR Horton Q2 Profit Rises, Results Beat View

(RTTNews) - Home builder PulteGroup, Inc. (PHM) Thursday reported an 8 percent decline in profit for the first quarter from last year, reflecting lower revenues and a decline in new orders. The latest quarter's results were also impacted by higher tax expenses. Both revenue and earnings per share for the quarter missed analysts' estimates.

Meanwhile, DR Horton, Inc. (DHI) reported an 18 percent increase in profit for the second quarter on strong homebuilding revenue growth that reflected higher home closings as well as selling prices. Both revenue and earnings per share beat analysts' expectations.

PulteGroup's net income for the first quarter was $74.82 million or $0.19 per share, down from $81.76 million or $0.21 per share in the prior-year period.

On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $0.20 per share for the quarter. Analysts' estimates typically exclude special items.

The latest quarter's results include income tax expense of $55 million or $0.14 per share, compared with income tax expense of $1 million, or less than $0.01 per share in the year-ago quarter.

The company noted that the effective tax rate of 42 percent in the quarter was higher than expected primarily as the result of deferred tax expense associated with changes in certain state income tax rates.

Total revenues for the quarter declined 3 percent to $1.12 billion from $1.16 billion in the year-ago period. Analysts' revenue consensus was $1.18 billion for the quarter.

Revenues for the latest quarter reflect a 10 percent increase in average selling price from the prior-year period to $317,000, offset by a 10 percent decrease in closings to 3,436 homes. The higher average selling price resulted from price increases in each of the company's entry level, move-up and active adult demographics.

Net new orders decreased 6 percent from the year-ago period to 4,863. However, the dollar value of new orders rose 2 percent from the year-ago quarter to $1.61 billion.

The company's home sale gross margin for the quarter of 23.8 percent increased 580 basis points over the prior year.

PulteGroup's backlog at end of the quarter totaled 7,199 homes valued at $2.42 billion, compared with prior year backlog of 7,825 homes valued at $2.41 billion.

Meanwhile, Fort Worth, Texas-based D R Horton's net income for the second quarter rose to $131 million or $0.38 per share from $111 million or $0.32 per share in the prior-year period.

On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $0.34 per share for the quarter. Analysts' estimates typically exclude special items.

Homebuilding revenues grew 22 percent to $1.70 billion from $1.39 billion in the same quarter last year. Analysts had a consensus revenue estimate of $1.55 billion.

Homes closed in the quarter grew 10 percent to 6,194 homes from 5,643 homes in the prior-year period, while average selling price also increased 10 percent to $278,900.

Home sales gross margin expanded 210 basis points from last year to 22.5 percent.

Net sales orders for the quarter improved 9 percent to 8,569 homes from 7,879 homes in the same period last year, and the value of net sales orders increased 20 percent to $2.39 billion from $2.00 billion. The company noted that its cancellation rate for the second quarter was 19 percent.

At the end of the second quarter, DR Horton's sales order backlog increased 5 percent from the year-ago period to 10,059 homes, while the value of the backlog rose 18 percent from last year to $2.82 billion.

The company declared a quarterly cash dividend of $0.0375 per share, payable on May 27, 2014 to stockholders of record on May 15, 2014.

Looking ahead, Donald Horton, chairman of the Board said, "Our broad geographic footprint, diversified product offerings, solid balance sheet and robust finished lot supply put us in a strong position to capture demand and increase revenues and profitability in the second half of our fiscal year."

PHM is currently trading at $18.82, up $0.25 or 1.35 percent on a volume of 1.76 million shares. DHI is trading at $22.96, up $1.61 or 7.54 percent on a volume of 3.54 million shares.