* Fourth-quarter earnings $0.15/share vs $0.04 year earlier
* Revenue rises 25 percent, orders jump 27 percent
* Shares down 4 percent
By Mridhula Raghavan
Jan 31 PulteGroup Inc, the No.2 U.S.
homebuilder, said quarterly profit jumped fourfold, buoyed by a
rebound in the housing market, but a $49 million charge for
potential loan repurchase obligations dragged down its shares.
The charge aroused concerns that PulteGroup was at the risk
of having to buy back bad mortgages it originated during the
subprime lending boom, when underwriting standards were lax or
non-existent, RBC Capital Markets analyst Robert Wetenhall said.
The risk is commonly known as a "put-back".
Government-backed mortgage financers Fannie Mae and Freddie
Mac have been pressing banks to buy back soured home loans made
during the housing boom.
PulteGroup, whose shares were down 4 percent at $20.24 in
early afternoon trading on the New York Stock Exchange,
originates home loans through its in-house mortgage lending arm.
"We were a little disappointed to see additional reserves
for the put-back risks," said Williams Financial Group analyst
David Williams. "We had largely thought that had been an issue
of the past and did not expect it now."
However, the charge is a temporary headwind that may stifle
some new order growth only in the near term, Williams added.
"Fundamentally, the company is performing much better today
than it ever has through the downturn," he said.
U.S. builders sold 367,000 new single-family homes in 2012,
the most in three years, Commerce Department data showed last
"We now look ahead to 2013 with expectations for a continued
rebound in U.S. housing driven by record low interest rates,
rising home prices and sharply lower overall housing inventory,"
PulteGroup Chief Executive Richard Dugas said in a statement.
An improving U.S. economy and population growth have led to
a surge in demand for new homes while the number of homes ready
to be sold has declined sharply.
Collective new home inventory in the United States is at its
lowest since before the housing bubble, which burst in 2007.
PulteGroup said new orders -- a key indicator for builders,
which do not recognize revenue until they close on a home --
rose 27 percent in the fourth quarter ended December.
Its order backlog jumped 65 percent to 6,458 homes.
Smaller U.S. homebuilders Meritage Homes Corp, MDC
Holdings Inc and M/I Homes Inc also reported
sizeable jumps in new orders for the fourth quarter.
PulteGroup said its average selling price rose 6 percent to
$287,000 as it sold more move-up homes in the quarter.
Revenue rose 25 percent to $1.57 billion. Analysts on
average had expected $1.50 billion, according to Thomson Reuters
Net income rose to $58.7 million, or 15 cents per share,
from $13.8 million, or 4 cents per share, a year earlier.
Excluding charges of 21 cents per share and a tax benefit of
2 cents per share, PulteGroup earned 34 cents per share, beating
the average analyst estimate of 31 cents.