Homebuilder Centex posts loss of $910.5M on hefty charges
DALLAS—Homebuilder Centex Corp. reported a loss of $911 million in its fiscal fourth quarter, as sales tumbled 37 percent and the company wrote down the value of unsold homes, reflecting the ongoing turmoil in the nation's housing markets.
To revive sales, Centex cut its average selling price 15 percent. Still, home closings declined in every region of the country.
The company said Wednesday that it lost $7.34 per share in the three months ended March 31, compared with a profit of $198.9 million, or $1.65, a year earlier.
Analysts polled by Thomson Financial had expected a loss of $2.43 per share.
Centex took an impairment charge of $362 million to cover the declining value of unsold homes, and a loss of $395 million from a land sale.
Revenue fell to $2.31 billion from $3.64 billion a year earlier, but beat analysts' forecast of $2.2 billion.
Chairman and Chief Executive Timothy Eller called this "the most difficult housing market in decades" and said the outlook remained weak.
Eller said Centex was disappointed to lose money, but he said the company reduced debt, sold off land and generated cash flow in the quarter.
It was the fourth quarter in Centex's fiscal year, during which the Dallas-based builder lost $2.66 billion, or $21.68 per year. The year before, Centex earned $268.4 million, or $2.23.
Annual revenue fell 30 percent to $8.28 billion.
Builders have been cutting prices to reduce inventory. The average selling price of a Centex house fell to $267,953 from $315,157 a year ago.
The Southeast and Southwest were Centex's worst regions, as home closings fell 47 percent and 40 percent, respectively, from early 2007. It was only slightly less grim in the Northwest, off 18 percent, and Texas, down 21 percent.
Builders have been struggling to keep up debt payments despite their declining revenue. Centex reported that its net debt-to-capitalization ratio ballooned to 54.6 percent as of March 31, compared with 37.1 percent a year ago.
Centex took to selling off assets, including its bulk-land operation and pest-control business to raise cash and pay down debt.
Analysts had expected the huge write-downs from Centex. For example, Lehman Brothers analyst Megan Talbott McGrath had predicted Centex would take a $667 million charge in the last quarter.
Centex shares fell $1.41, or 6.3 percent, to $20.82 on Wednesday, before the quarterly results were released. They are more than 50 percent below their 52-week high of $49.85, set in May 2007.
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