EX-99.1 2 d48358exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
     
 
   www.centex.com
 
   P.O. Box 199000
 
   Dallas, Texas 75219-9000
(CENTEX LOGO)
  
 
 
   2728 North Harwood
 
   Dallas, Texas 75201-1516
 
  
 
 
  
Phone: (214) 981-5000
N e w s R e l e a s e
 
FOR IMMEDIATE RELEASE     
For additional information, contact at (214) 981-5000:
Matthew G. Moyer, Vice President—Investor Relations
Eric Bruner, Director—Public Relations
http://www.centex.com
CENTEX REPORTS FIRST QUARTER RESULTS
DALLAS – July 24, 2007: Centex Corporation (NYSE: CTX) today reported financial results for its fiscal first quarter ended June 30, 2007.
Highlights of the quarter ended June 30, 2007 (compared to last year’s first quarter):
  •   Loss from continuing operations was $1.08 per diluted share
 
  •   Sales (orders) decreased 22% to 6,474
 
  •   Reduced homebuilding SG&A expenses by 20%, or $80 million
 
  •   Reduced inventory of unsold homes by 17% to 4,815
 
  •   Homebuilding cancellation rate improved 150 bps to 31.2%
     Tim Eller, Centex Corporation Chairman and CEO, said, “In the quarter, we reduced overhead expenses and unsold inventory, and we saw an improving cancellation rate in a difficult market. We remain focused on the fundamentals: selling homes, minimizing inventory, generating cash and attacking costs.”
CORPORATE RESULTS
     Fiscal 2008’s first-quarter revenues were $1.94 billion, 31% lower than the same quarter last year. The loss from continuing operations for the first quarter was $131 million, or a loss of $1.08 per diluted share, down from earnings of $172 million, or $1.37 per diluted share, in the previous year’s fiscal first quarter. Included in the first quarter of fiscal 2008’s loss from continuing operations is $193 million on a pre-tax basis, or $0.98 per diluted share, of impairments and other land charges.
HOME BUILDING
     Fiscal 2008’s first-quarter revenues were $1.80 billion, 32% lower than the same quarter last year as a result of a 27% decrease in closings to 6,095 homes. Home building reported an operating loss of $172 million for the quarter, after $193 million in impairments and other land charges. The housing operating loss (housing revenues less housing cost of sales and SG&A) was $5 million, down from earnings of $318 million in the previous year. The decrease is a result of lower unit volume, a 5.5% decrease in the unit average sales price and higher sales incentives.

 

 

Centex Corporation, Page 2 of 2
FINANCIAL SERVICES
     Operating earnings from Financial Services totaled $15 million for the first quarter of fiscal 2008, 35% lower than the same quarter a year ago due principally to lower origination volume. CTX Mortgage originated loans for 78% of Centex Homes’ buyers during the first quarter, up one percentage point versus last year’s first quarter. Centex’s Financial Services operations provide Centex home buyers with a streamlined home-closing and settlement process.
NON-GAAP FINANCIAL MEASURES
     Explanations of non-GAAP financial measures used in this press release and the accompanying attachments, and reconciliations of the non-GAAP financial measures to the comparable GAAP financial measures, are given in the applicable attachments.
     Centex’s senior management will conduct a conference call to discuss the first quarter fiscal year 2008 financial results at 10 a.m. Eastern Time (9 a.m. Central Time) on Wednesday, July 25. The conference call, accompanied by a slide presentation, will be webcast simultaneously on the Centex Web site at http://www.centex.com. A replay of the call, as well as the presentation, will be archived on that site.
# # #
Forward-Looking Statements. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when Centex is discussing its beliefs, estimates or expectations. Such statements include projections, forecasts, and plans and objectives of management for future operations and operating and financial performance, as well as any related assumptions. These statements are not historical facts or guarantees of future performance but instead represent only Centex’s belief at the time the statements were made regarding future events, which are subject to significant risks, uncertainties and other factors, many of which are outside of Centex’s control. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. These risks and uncertainties are described in greater detail in Centex’s most recent Annual Report on Form 10-K for the fiscal year ended March 31, 2007 (including under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), which is on file with the SEC and may be obtained free of charge through the Web site maintained by the SEC at http://www.sec.gov. The factors discussed in these reports include, but are not limited to, changes in national or regional economic or business conditions, including employment levels and interest rates, competition, customer cancellations, shortages or price changes in raw materials or labor, and other factors that could affect demand for our homes or mortgage loans or the profitability of our operations. All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release will increase with the passage of time. Centex makes no commitment, and disclaims any duty, to update or revise any forward-looking statement to reflect future events or changes in Centex’s expectations.
NOTE ATTACHMENTS:
(1) Revenues and Earnings by Lines of Business
(2) Consolidated Balance Sheet
(3) Home Building Revenues and Earnings
(4) Supplemental Home Building Data
(5) Supplemental Home Building Segment Data
(6) Supplemental Financial Services Data
(7) Supplemental Financial Data
(8) Reconciliation of Housing/Home Building Operating Earnings
-MORE-

 

 

Attachment 1
Centex Corporation and Subsidiaries
Revenues and Earnings by Lines of Business
(Dollars in thousands, except per share data)
                         
    Quarter Ended  
    June 30,  
    (unaudited)  
    2007     2006 (C)     Change  
Revenues
                        
Home Building (A)
   $ 1,803,820     $ 2,649,837       (32 %)
Financial Services
     97,966       122,741       (20 %)
Other
     39,629       31,322       27 %
 
                    
Total
   $ 1,941,415     $ 2,803,900       (31 %)
 
                    
 
                        
Operating Earnings (Loss)
                        
Home Building (A)
   $ (171,779 )   $ 311,913       (155 %)
Financial Services
     14,969       23,087       (35 %)
Other
     6,134       (1,767 )     447 %
 
                    
Total Operating Earnings (Loss)
     (150,676 )     333,233       (145 %)
 
                        
Corporate General and Administrative Expenses (B)
     (44,981 )     (54,770 )        
 
                    
 
                        
Earnings (Loss) from Continuing Operations Before Income Taxes
     (195,657 )     278,463       (170 %)
 
                        
Income Tax (Provision) Benefit
     64,322       (106,035 )        
 
                    
 
                        
Earnings (Loss) from Continuing Operations
     (131,335 )     172,428       (176 %)
 
                        
Earnings (Loss) from Discontinued Operations, net
     3,376       (12,171 )        
 
                    
 
                        
Net Earnings (Loss)
   $ (127,959 )   $ 160,257       (180 %)
 
                    
 
                        
Earnings (Loss) Per Share — Basic
                        
Continuing Operations
   $ (1.08 )   $ 1.41       (177 %)
Discontinued Operations
     0.03       (0.10 )        
 
                    
Earnings (Loss) Per Share — Basic
   $ (1.05 )   $ 1.31       (180 %)
 
                    
 
                        
Earnings (Loss) Per Share — Diluted
                        
Continuing Operations
   $ (1.08 )   $ 1.37       (179 %)
Discontinued Operations
     0.03       (0.10 )        
 
                    
Earnings (Loss) Per Share — Diluted
   $ (1.05 )   $ 1.27       (183 %)
 
                    
 
                        
Average Shares Outstanding:
                        
Basic
     121,469,951       121,969,085       — %
Diluted
     121,469,951       126,233,469       (4 %)
 
(A)   See Attachment 3 for detailed home building segment revenues and earnings.
 
(B)   In connection with the change in the Company’s reporting segments at March 31, 2007, home building corporate general and administrative expenses have been reclassified to Corporate General and Administrative Expenses consistent with the structure of the internal organization. Prior periods have been restated accordingly.
 
(C)   Certain prior year items have been reclassified to conform to current period classifications.

 

 

Attachment 2
Centex Corporation and Subsidiaries
Condensed Consolidated Balance Sheet
(Dollars in millions)
(unaudited)
                 
    June 30,     March 31,  
    2007     2007  
Assets
                
Cash -
                
Unrestricted
   $ 233     $ 883  
Restricted
     147       146  
Receivables -
                
Residential Mortgage Loans Held for Sale
     1,474       1,688  
Other Receivables
     187       228  
Inventories -
                
Homebuilding
     8,671       8,654  
Land Held Under Option Agreements not Owned
     208       282  
Other
     16       15  
Investments
     274       282  
Property and Equipment, net
     126       136  
Goodwill
     222       219  
Deferred Charges and Other Assets
     887       667  
 
            
 
   $ 12,445     $ 13,200  
 
            
 
                
Liabilities and Stockholders’ Equity
                
Accounts Payable and Accrued Liabilities
   $ 2,198     $ 2,344  
Debt -
                
Non-Financial Services
     3,849       3,904  
Financial Services
     1,457       1,663  
Minority Interests
     148       177  
Stockholders’ Equity (A)
     4,793       5,112  
 
            
 
   $ 12,445     $ 13,200  
 
            
 
(A)   Effective April 1, 2007, the Company adopted Financial Accounting Standards FIN 48, “Accounting for Uncertainty in Income Taxes”. The change in accounting for income taxes reduced retained earnings by $208 and stockholders’ equity by $213.

 

 

Attachment 3
Centex Corporation and Subsidiaries
Home Building Revenues and Earnings
(Dollars in thousands)
                         
    Quarter Ended  
    June 30,  
    (unaudited)  
    2007     2006     Change  
Home Building Revenues
                        
East
   $ 360,776     $ 544,423       (34 %)
Southeast
     213,857       397,782       (46 %)
Central
     185,069       289,914       (36 %)
Texas
     234,733       244,356       (4 %)
Northwest
     395,525       504,879       (22 %)
Southwest
     371,204       592,033       (37 %)
Other Home Building
     42,656       76,450       (44 %)
 
                    
Total Home Building
   $ 1,803,820     $ 2,649,837       (32 %)
 
                    
 
                        
Home Building Operating Earnings (Loss) (A)
                        
East
   $ 18,052     $ 82,979       (78 %)
Southeast
     (13,017 )     60,602       (121 %)
Central
     (6,367 )     9,633       (166 %)
Texas
     14,136       20,347       (31 %)
Northwest
     (32,081 )     73,290       (144 %)
Southwest
     (115,600 )     48,170       (340 %)
Other Home Building
     (36,902 )     16,892       (318 %)
 
                    
Total Home Building
   $ (171,779 )   $ 311,913       (155 %)
 
                    
 
(A)   Operating Earnings above exclude home building corporate general and administrative expenses which have been reclassified to Corporate General and Administrative Expenses in connection with the change in the Company’s reporting segments at March 31, 2007. Further information regarding the home building reporting segments shown above may be found in Part 1, Item 1 (Business) of Centex’s Form 10-K for the fiscal year ended March 31, 2007. Prior periods have been restated accordingly.

 

 

Attachment 4
Centex Corporation and Subsidiaries
Supplemental Home Building Data
(Dollars in thousands, except per unit data)
(unaudited)
MARGIN DATA
                                 
    Quarter Ended June 30,  
    2007     2006  
Revenues — Housing
   $ 1,774,738       100.0 %   $ 2,562,058       100.0 %
Cost of Sales — Housing
     (1,481,351 )     (83.5 %)     (1,866,511 )     (72.9 %)
 
                        
Gross Margin — Housing
     293,387       16.5 %     695,547       27.1 %
 
                        
 
                                
Revenues — Land Sales & Other
     29,082               87,779          
Cost of Sales — Land Sales & Other
     (175,567 )             (104,777 )        
 
                            
Gross Margin — Land Sales & Other
     (146,485 )             (16,998 )        
 
                            
 
                                
Total Gross Margin
     146,902       8.1 %     678,549       25.6 %
 
                                
Selling, General & Administrative (A)
     (298,628 )     (16.5 %)     (377,304 )     (14.2 %)
 
                                
Other Income (Expense) (B)
     (20,053 )     (1.1 %)     10,668       0.4 %
 
                        
 
                                
Operating Earnings (Loss)
   $ (171,779 )     (9.5 %)   $ 311,913       11.8 %
 
                            
 
                                
Units Closed
     6,095               8,318          
 
                                
Average Unit Sales Price
   $ 291,179             $ 308,014          
% Change
     (5.5 %)             7.6 %        
 
                                
Average Neighborhoods
     676               669          
% Change
     1.0 %             10.6 %        
 
(A)   Selling, General & Administrative expenses above are those associated with field operations. As noted on Attachments 1 and 3, home building corporate general and administrative expenses have been reclassified to Corporate General and Administrative Expense and are no longer included in the calculation of home building operating earnings, consistent with the structure of the internal organization. Prior periods have been restated accordingly.
 
(B)   Other Income (Expense) includes earnings (loss) from unconsolidated entities of ($25,353) and $5,505, respectively.
IMPAIRMENTS AND WRITE-OFFS
                         
    Quarter Ended June 30,  
    2007     2006     Change  
Impairment Charges
   $ 142,592     $ —       — %
Write-offs of Land Deposits and Pre-Acquisition Costs
     22,870       36,302       (37 %)
Share of Joint Venture Impairments
     27,050       —       — %
 
                    
 
                        
Total Impairments and Write-offs
   $ 192,512     $ 36,302       430 %
 
                    
LOT POSITION
                         
    As of June 30,  
    2007     2006     Change  
Lot Owned and Controlled:
                        
 
                        
Lots Owned
     96,365       112,976       (15 %)
 
                        
Lots Controlled
     54,348       169,614       (68 %)
 
                    
 
                        
Total
     150,713       282,590       (47 %)
 
                    

 

 

Attachment 5
Centex Corporation and Subsidiaries
Supplemental Home Building Data
Housing Activity by Geographic Area
(Unaudited)
                                                 
                            Housing Revenues  
    Closings (Units)     (Dollars in thousands)  
    Quarter Ended June 30,     Quarter Ended June 30,  
    2007     2006     Change     2007     2006     Change  
East
     1,119       1,653       (32 %)   $ 354,873     $ 543,973       (35 %)
Southeast
     716       1,193       (40 %)     208,123       371,008       (44 %)
Central
     868       1,320       (34 %)     183,020       288,265       (37 %)
Texas
     1,400       1,506       (7 %)     232,391       233,178       — %
Northwest
     987       1,090       (9 %)     392,558       493,362       (20 %)
Southwest
     895       1,364       (34 %)     367,931       574,736       (36 %)
Other Home Building
     110       192       (43 %)     35,842       57,536       (38 %)
 
                                        
 
                                                
 
     6,095       8,318       (27 %)   $ 1,774,738     $ 2,562,058       (31 %)
 
                                        
                                                 
    Sales (Orders) Backlog     Sales (Orders) Backlog  
    (Units)     (Dollars in thousands)  
    As of June 30,     As of June 30,  
    2007     2006     Change     2007     2006     Change  
East
     2,011       2,969       (32 %)   $ 668,842     $ 1,013,154       (34 %)
Southeast
     1,546       3,292       (53 %)     456,564       1,115,712       (59 %)
Central
     1,849       2,250       (18 %)     372,790       466,242       (20 %)
Texas
     2,055       2,517       (18 %)     340,234       390,076       (13 %)
Northwest
     1,732       2,270       (24 %)     720,533       1,017,648       (29 %)
Southwest
     1,705       3,138       (46 %)     600,143       1,431,164       (58 %)
Other Home Building
     132       883       (85 %)     49,067       312,330       (84 %)
 
                                        
 
                                                
 
     11,030       17,319       (36 %)   $ 3,208,173     $ 5,746,326       (44 %)
 
                                        
                         
    Sales (Orders) (Units)  
    Quarter Ended June 30,  
    2007     2006     Change  
East
     1,282       1,549       (17 %)
Southeast
     743       1,017       (27 %)
Central
     973       1,308       (26 %)
Texas
     1,435       1,834       (22 %)
Northwest
     914       1,146       (20 %)
Southwest
     1,097       1,329       (17 %)
Other Home Building
     30       67       (55 %)
 
                    
 
                        
 
     6,474       8,250       (22 %)
 
                    

 

 

Attachment 6
Centex Corporation and Subsidiaries
Supplemental Financial Services Data
(Unaudited)
CTX Mortgage Company
                         
    Quarter Ended June 30,  
    2007     2006     Change  
Originations
                        
Builder
     4,541       6,065       (25 %)
Retail
     7,451       8,917       (16 %)
 
                    
 
                        
Total
     11,992       14,982       (20 %)
 
                    
 
                        
Loan Volume (in billions)
   $ 2.77     $ 3.49       (21 %)
 
                    
 
                        
Average Loan Size
   $ 231,000     $ 232,800       (1 %)
 
                    

 

 

Attachment 7
Centex Corporation and Subsidiaries
Supplemental Financial Data — Debt-to-Capitalization Ratio
(Dollars in millions)
(Unaudited)
                         
    As of June 30, 2007     As of March 31, 2007     As of June 30, 2006  
Consolidated Debt/Capitalization (A)
                        
Debt
   $ 5,306     $ 5,567     $ 6,548  
Minority Interests
     148       177       421  
Less Minority Interests on Lot Options (C)
     (124 )     (153 )     (386 )
Stockholders’ Equity
     4,793       5,112       5,023  
 
                  
Capitalization
     10,123       10,703       11,606  
Less Unrestricted Cash
     (233 )     (883 )     (84 )
 
                  
Net Capitalization
   $ 9,890     $ 9,820     $ 11,522  
 
                  
 
                        
Consolidated Debt-to-Capitalization Ratio
     52.4 %     52.0 %     56.4 %
 
                  
 
                        
Consolidated Net Debt-to-Capitalization Ratio (D)
     51.3 %     47.7 %     56.1 %
 
                  
 
                        
Debt/Capitalization, Excluding Financial Services (B)
                        
Debt
   $ 3,849     $ 3,904     $ 4,842  
Minority Interests
     148       176       420  
Less Minority Interests on Lot Options (C)
     (124 )     (153 )     (386 )
Stockholders’ Equity
     4,793       5,112       5,023  
 
                  
Capitalization
     8,666       9,039       9,899  
Less Unrestricted Cash
     (229 )     (871 )     (73 )
 
                  
Net Capitalization
   $ 8,437     $ 8,168     $ 9,826  
 
                  
 
                        
Debt-to-Capitalization Ratio
     44.4 %     43.2 %     48.9 %
 
                  
 
                        
Net Debt-to-Capitalization Ratio (D)
     42.9 %     37.1 %     48.5 %
 
                  
 
(A)   Consolidated capitalization includes debt, minority interest (excluding lot options), and stockholders’ equity, including Financial Services.
 
(B)   Capitalization includes debt, minority interest (excluding lot options), and stockholders’ equity. Capitalization presented above reflects Financial Services on an equity basis and does not include debt or minority interests attributable to Financial Services.
 
(C)   Pursuant to the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 46, “Consolidation of Variable Interest Entities,” as revised (“FIN 46”), the Company consolidates certain lot option agreements and records the deposit and remaining purchase price related to these options as land held under option agreements not owned with a corresponding increase in minority interests. These minority interests are excluded from the debt-to-capitalization ratio as the Company is not obligated to purchase the properties and pay these amounts.
 
(D)   Net debt-to-capitalization ratios are provided reflecting net capitalization, including net debt (debt less unrestricted cash), minority interest (excluding lot options), and stockholders’ equity. We believe this ratio reflects the debt/capitalization structure in a more inclusive manner as unrestricted cash could be applied to reduce debt at quarter end.
 
Debt-to-capitalization is a common financial ratio used in the homebuilding industry to evaluate debt capacity and leverage.

 

 

Attachment 8
Centex Corporation and Subsidiaries
Reconciliation of Housing/Home Building Operating Earnings
(Dollars in thousands)
(unaudited)
                                 
    Quarter Ended June 30,  
    2007     2006  
HOME BUILDING
                                
 
                                
Revenues — Housing
   $ 1,774,738       100.0 %   $ 2,562,058       100.0 %
Cost of Sales — Housing
     (1,481,351 )     (83.5 %)     (1,866,511 )     (72.9 %)
 
                        
Gross Margin — Housing
     293,387       16.5 %     695,547       27.1 %
 
                                
Selling, General & Administrative
     (298,628 )     (16.8 %)     (377,304 )     (14.7 %)
 
                        
 
                                
Housing Operating Earnings (Loss) (A)
     (5,241 )     (0.3 %)     318,243       12.4 %
 
                                
Revenues — Land Sales & Other
     29,082               87,779          
Cost of Sales — Land Sales & Other
     (175,567 )             (104,777 )        
 
                            
Gross Margin — Land Sales & Other
     (146,485 )             (16,998 )        
 
                                
Other Income (Expense)
     (20,053 )             10,668          
 
                            
 
                                
Operating Earnings (Loss)
   $ (171,779 )     (9.5 %)   $ 311,913       11.8 %
 
                            
 
(A)   Housing Operating Earnings is defined as housing revenues less housing cost of sales less selling, general & administrative expenses. Housing Operating Margin is defined as housing operating earnings divided by total housing revenues.