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PulteGroup Quarterly Profit Quadruples as Home Sales Climb

JAN 31, 2013 4:54pm ET
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PulteGroup Inc., the best performer in the Standard & Poor’s 500 Index last year, said fourth-quarter profit quadrupled as the homebuilder’s sales increased amid a U.S. real estate revival.

Net income was $58.7 million, or 15 cents a share, compared with $13.8 million, or 4 cents, a year earlier, the Bloomfield Hills, Mich.-based company said today in a statement. Revenue climbed to $1.57 billion from $1.26 billion.

Demand for new houses is rising as inventories of existing properties tighten and mortgage rates hover near record lows. U.S. new-home sales jumped 20% last year to the highest since 2009. PulteGroup, the largest homebuilder by market value, has lowered costs to boost profitability as orders climb.

The company “turned in a solid quarter,” Stephen East, an analyst at International Strategy & Investment Group in Saint Charles, Mo., wrote in a note to clients. PulteGroup “is executing their strategic plan much as they advertised over the past year plus. They are pulling costs out, improving the balance sheet and generating cash.”

The profit includes costs of $49 million, or 13 cents a share, for potential future loan-repurchase obligations, and $32 million, or 8 cents, tied to the repurchase of senior notes, PulteGroup said. These were partially offset by an income-tax benefit of $8 million, or 2 cents a share. East said earnings per share was 34 cents excluding one-time issues, slightly above analysts’ projections. The average estimate of 19 analysts in a Bloomberg survey was for net income of 31 cents a share.

PulteGroup’s fourth-quarter net new orders increased 27% to 3,926 homes. Backlog, an indication of future revenue, jumped 82% to $1.9 billion.

The order increase was in line with estimates, David Goldberg, an analyst with UBS AG in New York, wrote in a note to clients. While the growth trailed that of some peers, it reflected fewer communities, he said.

D.R. Horton Inc., the largest homebuilder by revenue, reported that its profit for the quarter ended Dec. 31 more than doubled as orders rose 39%. The Fort Worth, Texas-based company said it is seeing “broad improvement” in most of its markets and is increasing land purchases to meet demand.

U.S. housing starts climbed last year to the fastest rate since 2008, according to Commerce Department data.

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