by Calculated Risk on 1/18/2007 08:02:00 PM

Pulte Homes warns on Q4 results.

"Pulte Homes continues to navigate through a challenging operating environment, with demand for new homes during the fourth quarter still far below pre-2006 levels."
Richard J. Dugas, Jr., President and CEO of Pulte Homes, Jan 18, 2007

Pulte had already guided earnings expectations lower. Now they are reducing their Q4 earnings estimates again:

The Company expects fourth quarter results to be in the range of a loss of $.05 to earnings of $.05 per diluted share from continuing operations. Pulte Homes had previously issued earnings guidance in the range of $.30 to $.70 per diluted share, guiding to the lower end of the range in its earnings conference call for the third quarter.

Orders are getting worse:

The Company closed 12,566 homes during the fourth quarter of 2006, a decline of 20% from the fourth quarter of 2005. Net new orders for the quarter were 6,446 homes, a 34% decrease from last year's fourth quarter. For the full year 2006, home closings were 41,487, down 9% compared with 2005. Net new orders for the full year 2006 decreased 29% from the prior year to 33,925 homes.

But the cancellation rate improved slightly:

"... [Pulte] experienced a stabilization to a slight improvement in our fourth quarter cancellation rate compared with the third quarter, as this metric showed progressive improvement throughout the period."

Of course if orders fall to zero, the cancellation rate will decline to zero too. So this metric needs to be kept in context.

Impairments are much worse than expected:

On a preliminary basis, Pulte Homes anticipates that these impairments and land-related charges will be in the range of $330 million to $350 million for the fourth quarter, or $.83 to $.88 per diluted share. The Company previously issued guidance of $150 million for impairments and land-related charges.

Perhaps the only good news is Pulte is reducing their production:

"[Pulte] continue[s] to reduce the number of homes we are starting, as evidenced by our meaningful reduction in speculative units under construction during the quarter."