Dallas, TX, October 25, 2006--Centex Corp. said that fiscal second-quarter net income dropped 59% from a year earlier as home builders struggle to adjust to the housing slowdown after years of higher sales and prices.
The company said earnings for the quarter ended Sept. 30 fell to $137.4 million, or $1.11 a share, from $334.5 million, or $2.49 a share, during the same period in the prior year. The year-ago results included a tax refund that boosted net income by $28 million, or 21 cents a share.
Quarterly revenue fell to $3.32 billion from $3.42 billion, as home closings decreased 7%.
A consensus of Wall Street analysts had expected quarterly profit of $102 million, or 68 cents a share, on revenue of $3.31 billion.
Centex said it sees per-share income from continuing operations of 90 cents for the third quarter, and of $4 for fiscal 2007. Analysts are looking for a per-share result of $1.01 for the quarter and $4.17 for the full year.
Earlier this month, Centex pre-announced certain second-quarter results, indicating that net orders fell 28% from the previous year on record cancellations and the inability of some buyers to sell their existing homes.
The company lowered its second-quarter earnings forecast to a range of 65 cents to 75 cents a share, and said it expected to take write-offs for land options and land-valuation adjustments.
Rival builder M.D.C. Holdings Inc. earlier Tuesday reported a 60% drop in quarterly profit and said buyers are waiting on the sidelines to see how the housing market shakes out. See related story.
After going into a tailspin earlier in 2006, home-builder stocks have bounced back recently with some investors wondering if the group has bottomed as the market makes its way through the inventory glut.
The SPDR Homebuilders ETF, an exchange-traded fund tracking an index of public home-construction companies, through Monday's close was up 13.3% for the trailing three months, according to Morningstar Inc.
Analysts will be closely watching reports on new- and existing-home sales expected later this week for any hints about a potential firming-up in the housing market.
