It became more of the same this week when two more large builders -- Pulte Homes (NYSE: PHM) and Beazer Homes (NYSE: BZH) -- reported first-quarter losses and refused to issue earnings guidance for the current year.
For the quarter, Pulte recorded a net loss of $85.7 million, or $0.33 per share, compared with earnings of $262.6 million, or $1.01 a share, a year ago. With the nation's depressed housing circumstances worsening steadily, the company's revenues declined 37%. All of Pulte's seven regions experienced declining revenues, and all but the Southwest saw net new orders decline.
For its part, Atlanta-based Beazer reported a loss of $1.12 a share, versus $2.35 a share a year ago. The company's closings fell 36% for the quarter to 2,743 units, while its revenues slid 35% to $826.3 million.
"Overall, the homebuilding environment remained challenging during the first quarter of 2007, as elevated inventory levels, combined with weak consumer confidence for housing, continue to place pressure on results," said Richard J. Dugas Jr., Pulte's president and CEO, when he released his company's results.
"Challenging" -- that's a word that builders have been invoking more frequently than Aaron Burr and Alexander Hamilton ever thought to do before their famous duel. Beazer CEO Ian McCarthy took his turn when he described the climate for his company: "We continued to experience extremely challenging operating conditions during our second quarter of fiscal 2007. Most housing markets across the country continue to experience lower levels of demand, coupled with higher levels of inventory, resulting in increased competition and continued significant discounting."
Of course, these two are not alone in their current misery. In recent weeks, such other major builders as Hovnanian (NYSE: HOV), KB Home (NYSE: KBH), and D.R. Horton (NYSE: DHI) have reported less than spectacular results.
Again, I must urge Fools to avoid the builders unless you have the flexibility to lengthen your investment time horizon beyond the norm. On that basis, however, if you're so inclined, I continue to believe that over time, profits will materialize from the likes of Centex (NYSE: CTX) and Toll Brothers (NYSE: TOL).
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Fool contributor David Lee Smith does own shares in Centex but not in the other companies mentioned. He welcomes your questions or comments. The Motley Fool has a disclosure policy.
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