Huge Onetime Tax Benefit Boosts PulteGroup’s Q3 Profit
PulteGroup Inc. (NYSE: PHM) said on Thursday that fiscal third quarter income soared as the bottom line was boosted by a huge favorable tax adjustment while higher number of closings and increase in selling prices also helped driving up the top line growth.
Pulte’s sales are considered as a bellwether for the industry as the homebuilder is among the leading players in the U.S. Even though the industry has seen weaker demand for homes in the recent past due to jump in mortgage rates, low-supply of existing home inventory has benefitted homebuilders.
Pulte said that new orders fell 17% in the latest quarter from the year-ago period; however, closings increased 9%.
For the latest period, Pulte posted a profit of $2.28 billion or $5.87 a share compared to net income of $116.6 million or 30 cents a share. The latest quarter included a gain of $5.42 a share linked to the reversal of the company’s deferred tax asset valuation allowance.
Stripping out onetime items, the adjusted earnings came in at 45 cents a share.
Total revenue soared 21% to $1.58 billion.
Analysts’ consensus estimate was for earnings of 36 cents a share on revenue of $1.46 billion.
The average selling prices rose 11% to $310,000 in the latest quarter. Home-building cost of revenue climbed 18%. Home sales gross margin, (excluding impairments) improved to 22.5% from 21.6%.
Speaking to analysts and investors, PulteGroup’s Chairman and CEO, Richard Dugas Jr. said, “While consumers have recently slowed home purchases due to higher home prices, a rapid rise in mortgage rates, and political and economic uncertainty, we believe the slowdown will ultimately prove to be short lived within a sustained, multiyear housing recovery.”