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UPDATE 3-Pulte bullish on housing demand, shares at more than 10-year high
October 24, 2017 / 10:59 AM / a month ago

UPDATE 3-Pulte bullish on housing demand, shares at more than 10-year high

* Q3 profit edges past estimate, revenue misses

* Orders jump 11 pct

* Shares hit a more than 10-year high (Adds details from conference call, updates share price)

By Arunima Banerjee

Oct 24 (Reuters) - PulteGroup Inc, the No. 3 U.S. homebuilder, reported a quarterly profit that edged past estimates on Tuesday and remained upbeat on housing demand despite hurricanes that curtailed operations, sending its shares to a more than 10-year record.

While hurricanes Harvey and Irma caused significant slowdowns in the quarter, demand remained robust, Chief Executive Ryan Marshall said on an earnings.

He said demand rebounded “quite nicely” in Houston and Florida, which were particularly hard hit.

“Going forward, we expect that the ongoing job and wage growth, high consumer confidence and historically low-interest rate environment can support the continued growth of housing demand,” Marshall added.

Pulte’s shares rose as much as 3.7 percent to $28.92 - a more than 10-year high.

During the quarter orders, a key metric of future revenue for homebuilders, rose 11 percent to 5,300 units, beating FactSet’s estimate of 5,107 units.

Earlier this month, bigger rival Lennar Corp was also optimistic about the housing market after its quarterly results trumped estimates.

Pulte, which mainly sells single-family homes, said the average selling price increased 6.7 percent to $399,000, but missed a FactSet estimate of $407,000.

Atlanta, Georgia-based Pulte’s number of homes sold rose 2.3 percent to 5,151 units in the quarter ended Sept. 30, but it was its slowest growth in eight quarters. The figure also missed the estimate of 5,433 units, according to FactSet.

FACING HIGHER COSTS

Pulte expects gross margin in the current quarter at the lower end of its previous forecast of 23.6-24.1 percent, as it pays higher prices for labor and materials after the hurricanes.

It expects to deliver 6,400-6,700 homes in the current quarter, up from 6,197 homes in the fourth quarter last year.

Scarce labor is being pulled toward rebuilding efforts and materials are bid higher, constraining supply of homes in the United States further.

The company expects the higher costs to subside over time but increasing lumber prices could have a longer-lasting effect due to wildfires in Canada and tariffs by the United States.

The company’s net income rose 38.2 percent to $177.5 million, or 58 cents per share, in the quarter.

Pulte earned 60 cents per share on an adjusted basis, beating estimates of 59 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 9.6 percent to $2.13 billion, but missed the average analyst estimate of $2.30 billion.

Up to Monday’s close, Pulte’s shares had risen 51.8 percent this year. (Reporting by Arunima Banerjee in Bengaluru; Editing by Bernard Orr and Maju Samuel)

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