Pulte Homes Inc. had record consolidated revenues of $14.7 billion in 2005, a 28 percent increase over 2004, the company reported this week, and net income in 2005 increased 51.2 percent.
Fourth-quarter 2005 net income increased 44.6 percent over fourth-quarter 2004 net income, to $574.5 million, Pulte also announced in its quarterly earnings report.
Full-year earnings from continuing operations in 2005 gained 43 percent to $5.47 per diluted share, compared with $3.82 in the prior year.
Also, Pulte announced:
– Fourth-quarter earnings from continuing operations increased 28 percent to a record $2.03 per diluted share, compared with prior year earnings from continuing operations of $1.59 per diluted share;
– Fourth-quarter home settlement revenues climb 28 percent to a record $5 billion and consolidated fourth quarter revenues for the company increased 24 percent to $5.1 billion;
– Net new orders for the quarter climb 24 percent to $3.3 billion and backlog value increases 22 percent to $6.3 billion;
– The company reaffirms guidance for 2006 earnings from continuing operations in the range of $6 to $6.25 per diluted share;
– The company repurchased $102 million of stock in fourth-quarter 2005 and Pulte’s board approved a new $200 million share repurchase authorization.
Revenues from home-building settlements for 2005 increased 30 percent to $14.4 billion. Higher revenues in 2005 resulted from a 10 percent increase in average selling price to $315,000 combined with an 18 percent increase in the number of homes closed which totaled a record 45,630 homes. The increase in average selling price for the period reflects a combination of price increases and a favorable change in the mix of product closed during the period.
Home-building pretax income for the year increased 41 percent to a record $2.3 billion, compared with prior year pretax income of $1.6 billion. Gross margins from home sales for the period increased 80 basis points to 23.4 percent, while selling, general and administrative costs as a percentage of settlement revenues dropped approximately 110 basis points to 7.7 percent. Land sales for the year generated $18.2 million in pretax income, compared with $99.8 million in 2004, the company reported.
For 2005, Pulte’s financial services operations reported pretax income of $70.6 million, an increase of 49 percent over prior year pretax income of $47.4 million. Higher home-building volumes, combined with a 140 basis point increase in capture rate to 89.2 percent, helped drive loan originations for the period to 42,994 loans, representing $8.5 billion in principal value.
Higher revenues from home-building settlements in fourth-quarter 2005 were the result of a 9 percent increase in average selling price to $321,000 combined with a 17 percent increase in total home deliveries to 15,670 homes, Pulte announced. “The higher average selling price for the period reflects a combination of price increases realized during the quarter and changes in the mix of homes delivered,” according to the announcement.
Fourth quarter home-building pretax income increased 23 percent to $820.5 million, compared with prior year pretax income of $664.8 million. Pretax income for the period benefited from a 130 basis point decrease in selling, general and administrative expenses as a percent of home settlement revenues, partially offset by a 40 basis point decrease in gross margins from home settlements.
In addition, land sales during the quarter generated $9.3 million in gross profits, compared with $62.9 million in 2004. Land sales are an important component of the company’s domestic homebuilding operations, but can fluctuate quarter-to-quarter depending upon the timing of individual land transactions, the company noted.
The dollar value of net new home orders for the quarter was $3.3 billion, or 9,821 homes, up 24 percent from the prior year fourth quarter order value of $2.7 billion, or 8,940 homes. Ending backlog for Pulte’s home-building operations was valued at $6.3 billion, an increase of 22 percent over the prior year. Yearend unit backlog totaled 17,817 homes, an increase of 12 percent compared with 15,916 at the end of 2004.
Fourth quarter pretax income for the company’s financial services operations totaled $25.9 million, compared with prior year pretax income of $17.7 million. The 47 percent increase in pretax income was driven by an increase in loan originations and a more favorable interest rate environment. Higher home-building volumes, combined with a 180 basis point increase in capture rate to 90.6 percent, helped drive loan production for the period to 14,972 loans, representing $3 billion in principal value.
Quarterly and annual earnings per share for both years have been adjusted for the company’s 2:1 stock split effected Sept. 1, 2005, and for the reclassification of Pulte’s Mexico business to discontinued operations following its sale as announced on Dec. 27, 2005, Pulte reported.
Richard J. Dugas Jr., Pulte president and CEO, said in a statement that Pulte continues to target 2006 earnings growth of roughly 10 percent to 15 percent, which is inline with current guidance for earnings of $6 to $6.25 per share.
Pulte Homes also announced that its board of directors has authorized the company to repurchase up to an additional $200 million of its outstanding stock. “During the fourth quarter of 2005, we repurchased approximately $102 million worth of our outstanding shares, which used all but approximately $20 million of the previous authorization,” said Roger A. Cregg, Pulte’s executive vice president and chief financial officer. “Given current market conditions, we see an opportunity to invest in our business through the purchase of land assets and our own stock.”
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