Centex Posts Wide Loss on $1B in Impairment Charges

The nation's housing woes continued to affect homebuilders after Centex Corp. reported a worse-than-expected quarterly loss following the close Tuesday. The news sent the company's shares down 1.6% after hours, on top of a 3.6% drop during regular hours in anticipation of the report. Its shares are now down more than 56% YTD. Centex's net loss of $643.8 million ($5.26/share) was much worse than the -$3.26/share analysts polled by Thomson Financial expected (Reuters and Bloomberg consensus estimates were for -$5.52). A year ago, the company earned $1.11 a share. Behind the wide losses were $983 million in land value write-downs and impairment charges, announced earlier this month (full story) - a direct product of downward pricing pressures resulting from the ongoing housing slump. Losses from continuing operations were also $5.26 a share, versus a gain of $0.65 a year ago. The home building unit recorded losses of $953 million. Revenue fell 21% y/y, to $2.22 billion; consensus analyst estimates expected revenue of $2.08 billion. Southeast operations were especially poor, with a 32% reduction in revenue and closings down 26%. Nationally, closings fell 14%. Said CEO Tim Eller: "Market conditions were extremely challenging during the quarter, reflecting the serious disruptions in the credit and mortgage markets that occurred during that period. In response, we meaningfully reduced prices in order to improve affordability for our home buyers" full transcript later today).

Sources: Press release, Wall Street Journal, MarketWatch, TheStreet.com, Reuters
Commentary: Centex to Take $1B Impairment Charge • Another Absurd Homebuilder Rally
Stocks to watch: CTX. Competitors: DHI, LEN, PHM, TOL. ETFs: ITB
Earnings call transcript: Centex F1Q08 (Qtr End 6/30/07)

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