When will the day dawn that we'll look at homebuilding earnings without focusing on big cuts in land or finished product prices? Centex
For the quarter, the company stepped forth with a loss from continuing operations of $131 million, or $1.08 per share. Those figures represent a big swing from the $172 million in earnings, or $1.37 a share, the company reported just a year ago. The company's reversal of fortunes (which, apparently, will be the order of the day for the industry, as others report in the coming days and weeks) included $192.5 million pre-tax, or $0.98 per share, in impairments and other land charges.
Fools who watch the homebuilders should become accustomed to impairments; they essentially represent a reduction in the balance sheet value of an asset that is no longer worth what it once appeared to be. That balance sheet decrease carries with it a proportional expense -- or reduction in earnings -- in the same period.
Closings in the quarter were down across the board, with the Southeast, including the disastrous Florida market, leading the questionable parade with a 40% year-over-year decline. The Texas market was the "healthiest," with closings declining just 7%. New unit sales in the quarter were down 22% from the March 2006 period.
But Centex and other builders like Pulte
So, Fools, housing's serious sickness is hardly a spotty thing, befalling some of the builders but sparing others. It's an across-the-board plague that shows no signs of letting up. Under the circumstances, and at the risk of mingled metaphors, I wouldn't call a bottom for housing here until it becomes so obvious that it hits you in the face.
Building on earlier Foolishness:
Fool contributor David Lee Smith admits that he once worked for Centex, and hastens to note that he wasn't cut. He doesn't own shares in any of the named companies. He welcomes your questions, comments, or other communiques. The Motley Fool has a disclosure policy.