EX-99.1 2 d58802exv99w1.htm PRESS RELEASE exv99w1
Exhibit 99.1
     
(CENTEX LOGO)
  Centex Corporation
 
  2728 N. Harwood
 
  Dallas, Texas 75201-1516
 
  P.O. Box 199000
 
  Dallas, Texas 75219-9000
news release
For Immediate Release
For additional information, please contact:
Matthew G. Moyer, Vice President — Investor Relations
Eric Bruner, Director — Public Relations
214.981.5000
CENTEX REPORTS FIRST QUARTER RESULTS
DALLAS — July 29, 2008: Centex Corporation (NYSE: CTX) today reported financial results for its fiscal first quarter ended June 30, 2008.
Highlights of the quarter ended June 30, 2008 (compared to last year’s first quarter):
  •   Sales (orders) decreased 35% (down 23% on a per neighborhood basis) to 4,215
 
  •   Loss from continuing operations of $1.36 per diluted share
 
  •   Reduced homebuilding SG&A expenses by 44% or $132 million
 
  •   Generated positive cash flow from homebuilding operations
 
  •   June 30th cash balance of $1.24 billion
“The housing market worsened in the June quarter, and I don’t expect to see it improve this fiscal year,” said Tim Eller, chairman and CEO of Centex Corp. “We ended the quarter with $1.24 billion in cash, improved our gross margins sequentially and continued to reduce overhead expenses. I am confident that we will continue to lower our costs and improve our balance sheet through positive homebuilding operating cash flow generation over the remainder of this fiscal year.”
Corporate Results
Fiscal 2009’s first quarter revenues were $1.13 billion, 41% lower than the same quarter last year. The loss from continuing operations for the first quarter was $169 million, or a loss of $1.36 per diluted share, up from a loss of $132 million, or $1.08 per diluted share, in the previous year’s fiscal first quarter. Included in the first quarter of fiscal 2009’s loss from continuing operations are $80 million of impairments and other land-related charges, including the company’s share of joint venture impairments. First quarter’s corporate general and administrative expenses were $58.6 million this year, up from $45.0 million in last year’s first quarter reflecting primarily an increase in reserves, strategic investments to improve our core business processes and the centralization of certain division functions. “Restoring profitability remains a top company priority. While corporate G&A was higher this quarter, I am pleased that when combined with homebuilding SG&A, the total was down 35% from last year’s first quarter as we continue to adjust overhead spending to the new revenue realities,” Mr. Eller said.

 

 

Home Building
Fiscal 2009’s first quarter revenues were $1.05 billion, 42% lower than the same quarter last year as a result of a 35% decrease in closings to 3,939 homes and a 10% decrease in average sales price to $262,044. Home building reported an operating loss of $131 million for the quarter versus a loss of $172 million in last year’s first quarter. The operating loss includes $80 million of impairments and write offs.
Housing operating losses (housing revenues less housing cost of sales and SG&A) were $44 million, up from a loss of $5 million in the previous year. The increase in loss is a result of a 470 bps reduction in housing gross margin as well as a 42% decrease in housing revenues. The reduction in gross margin was primarily a result of a 170 bps increase in discounts and sales incentives to 10.5% of revenues and higher financing and closing costs.
Financial Services
Financial Services reported operating earnings of $6 million this quarter, down from earnings of $15 million in the first quarter of fiscal 2007, due principally to lower origination volumes.
Other
Centex recently announced new national energy-efficiency standards starting in January 2009. Homes equipped with the “Centex Energy Advantage” are up to 22% more energy efficient than comparable new homes and up to 40% more efficient than a typical 10-year-old home, according to the NAHB Research Center. “Centex Energy Advantage takes direct aim at making home ownership more affordable. As energy costs continue to mount, first-time homebuyers are increasingly sensitive to the operating costs of a home,” Mr. Eller said. “We believe the Centex Energy Advantage will be a key consideration among customers who are budget-conscious or environmentally sensitive.”
During the fiscal first quarter, the Company increased by $49 million a valuation allowance related to its deferred tax asset in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” The increase in the valuation allowance was reflected as a charge to income tax expense and a reduction of the Company’s deferred tax asset. At the end of the quarter, the balance of the Company’s deferred tax asset was $143 million, net of a valuation allowance of $879 million.
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 senior management will host a conference call to discuss the first quarter financial results at 10 a.m. Eastern Time (9 a.m. Central Time) on Wednesday, July 30th. The live webcast may be accessed on the Investor Relations section of the Centex web site at http://ir.centex.com. A replay of the webcast, as well as the presentation, will be archived on the Investor Relations page under the “Presentations” link.

 

 

# # #
Forward-Looking Statements
Some of the statements in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by the fact that they relate only to anticipated or expected events, activities, trends or results, which are inherently subject to risks, uncertainties and other factors. Actual results and outcomes may differ materially from what is expressed or forecast in such statements. Important factors include, but are not limited to: (1) the effects of the current downturn in the homebuilding industry, including potential adverse market conditions that could result in additional inventory or other impairments; (2) changes in national or regional economic or business conditions, including employment levels and interest rates; (3) competition; (4) customer cancellations; (5) price changes in raw materials or other components of our houses; (6) the effects of disruptions in the mortgage finance industry, including tightening of credit and reduction in liquidity; (7) the availability of adequate sources of financing to continue to implement our business strategy; and (8) our ability to generate cash from sales of assets and other sources that supplement our existing capital resources. These and other risks and uncertainties are described in greater detail in our periodic and other reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2008. Forward-looking statements included in this press release are made as of its date. We do not undertake any obligation to update or revise any forward-looking statement.
Note Attachments
(1) Revenues and Earnings by Lines of Business
(2) Condensed Consolidated Balance Sheet
(3) Home Building Segment Data
(4) Supplemental Home Building Data

 

 

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)  
    2008     2007 (C)     Change  
Revenues
                        
Home Building (A)
   $ 1,049,699     $ 1,803,820       (42 %)
Financial Services
     76,423       97,966       (22 %)
 
                    
Total
   $ 1,126,122     $ 1,901,786       (41 %)
 
                    
 
                        
Operating Earnings (Loss)
                        
Home Building (A)
   $ (131,103 )   $ (171,779 )        
Financial Services
     6,067       14,969          
Other
     7,108       4,926          
 
                    
Total Operating Earnings (Loss)
     (117,928 )     (151,884 )        
 
                        
Corporate General and Administrative Expenses
     (58,639 )     (44,981 )        
Interest Expense
     (6,180 )     —          
 
                    
 
                        
Loss from Continuing Operations Before Income Taxes
     (182,747 )     (196,865 )        
 
                        
Income Tax Benefit (B)
     13,635       64,784          
 
                    
 
                        
Loss from Continuing Operations
     (169,112 )     (132,081 )        
 
                        
Earnings from Discontinued Operations, net
     19,013       4,122          
 
                    
 
                        
Net Loss
   $ (150,099 )   $ (127,959 )        
 
                    
 
                        
Earnings (Loss) Per Share — Basic and Diluted
                        
Continuing Operations
   $ (1.36 )   $ (1.08 )        
Discontinued Operations
     0.15       0.03          
 
                    
Earnings (Loss) Per Share — Basic and Diluted
   $ (1.21 )   $ (1.05 )        
 
                    
 
                        
Average Shares Outstanding — Basic and Diluted
     124,231,358       121,469,951          
 
(A)   See Attachment 3 for detailed home building segment revenues and earnings.
 
(B)   Current period includes a $49 million valuation allowance related to the deferred tax assets.
 
(C)   Prior periods have been conformed to the current year presentation.
INTEREST ANALYSIS
                 
    Quarter Ended  
    June 30,  
    (unaudited)  
    2008     2007  
Total Interest Incurred
   $ 61,752     $ 82,351  
Less — Interest Capitalized
     (51,269 )     (61,863 )
— Financial Services’ Interest Expense
     (4,303 )     (20,488 )
 
            
Interest Expense, net
   $ 6,180     $ —  
 
            
 
                
Capitalized Interest Charged to Home Building’s Costs and Expenses
   $ 25,535     $ 43,066  
 
            

 

 

Attachment 2
Centex Corporation and Subsidiaries
Condensed Consolidated Balance Sheet
(Dollars in millions)
(unaudited)
BALANCE SHEET
                 
    June 30,     March 31,  
    2008     2008  
Assets
                
Cash -
                
Unrestricted
   $ 1,235     $ 587  
Restricted
     50       51  
Receivables -
                
Residential Mortgage Loans Held for Sale, net
     563       516  
Other Receivables
     220       824  
Inventories -
                
Direct Construction
     1,574       1,746  
Land Under Development
     2,633       2,883  
Land Held for Development and Sale
     653       558  
Land Held Under Option Agreements not Owned
     143       148  
Other
     16       27  
Investments
     219       207  
Property and Equipment, net
     69       78  
Goodwill
     52       52  
Deferred Tax Asset, Net of Valuation Allowance of $879 and $830
     143       191  
Deferred Charges and Other Assets
     158       172  
Assets of Discontinued Operations
     —       97  
 
            
 
   $ 7,728     $ 8,137  
 
            
 
                
Liabilities and Stockholders’ Equity
                
Accounts Payable and Accrued Liabilities
   $ 1,868     $ 2,064  
Senior Notes and Other
     3,254       3,325  
Financial Services Debt Secured by Mortgage Loans
     400       337  
Liabilities of Discontinued Operations
     —       34  
Minority Interests
     62       78  
Stockholders’ Equity
     2,144       2,299  
 
            
 
   $ 7,728     $ 8,137  
 
            

 

 

Attachment 3
Centex Corporation and Subsidiaries
Home Building Segment Data (A)
(Dollars in thousands, except per unit data)
(Unaudited)
                                                                         
    Revenues     Closings (Units)     Average Housing Revenue per Unit  
    2008     2007     Change     2008     2007     Change     2008     2007     Change  
Quarter Ended June 30,
                                                                        
East
   $ 183,131     $ 360,776       (49 %)     644       1,119       (42 %)   $ 279,894     $ 317,134       (12 %)
Southeast
     136,242       213,857       (36 %)     498       716       (30 %)     261,394       290,675       (10 %)
Central
     131,973       202,028       (35 %)     607       940       (35 %)     216,713       212,744       2 %
Texas
     177,341       263,540       (33 %)     1,007       1,521       (34 %)     174,839       171,728       2 %
Northwest
     253,780       378,566       (33 %)     621       915       (32 %)     408,663       410,491       — %
Southwest
     152,938       342,397       (55 %)     526       774       (32 %)     282,120       438,145       (36 %)
Other homebuilding
     14,294       42,656       (66 %)     36       110       (67 %)     332,833       325,836       2 %
 
                                                            
Total Home Building
   $ 1,049,699     $ 1,803,820       (42 %)     3,939       6,095       (35 %)   $ 262,044     $ 291,179       (10 %)
 
                                                            
                                                                         
    Sales (Orders) (Units)     Sales (Orders) Backlog (Units)     Sales (Orders) Backlog  
    2008     2007     Change     2008     2007     Change     2008     2007     Change  
Quarter Ended June 30,
                                                                        
East
     1,016       1,282       (21 %)     1,662       2,011       (17 %)   $ 469,766     $ 668,842       (30 %)
Southeast
     579       743       (22 %)     1,417       1,546       (8 %)     396,138       456,564       (13 %)
Central
     499       1,091       (54 %)     1,008       2,030       (50 %)     211,775       415,423       (49 %)
Texas
     1,251       1,570       (20 %)     2,121       2,319       (9 %)     370,156       403,087       (8 %)
Northwest
     515       796       (35 %)     1,144       1,551       (26 %)     411,217       677,900       (39 %)
Southwest
     322       962       (67 %)     670       1,441       (54 %)     190,509       537,290       (65 %)
Other homebuilding
     33       30       10 %     —       132       (100 %)     —       49,067       (100 %)
 
                                                            
Total Home Building
     4,215       6,474       (35 %)     8,022       11,030       (27 %)   $ 2,049,561     $ 3,208,173       (36 %)
 
                                                            
                                                                 
    Operating Earnings (Loss)     Impairments & Write-offs (B)     Lots Owned (Units)     Lots Controlled (Units)  
    2008     2007     2008     2007     2008     2007     2008     2007  
Quarter Ended June 30,
                                                                
East
   $ (21,788 )   $ 18,052     $ 8,902     $ 7,372       14,346       18,170       5,577       23,201  
Southeast
     (65,460 )     (13,017 )     31,155       10,459       20,462       25,027       2,470       6,537  
Central
     (20,392 )     (9,092 )     10,473       5,793       5,449       8,773       1,375       5,561  
Texas
     7,976       15,214       8       335       13,620       18,617       3,309       9,178  
Northwest
     (2,645 )     (29,358 )     4,959       21,795       5,059       8,531       1,149       5,824  
Southwest
     (28,449 )     (116,676 )     4,719       88,337       6,506       13,377       670       4,047  
Other homebuilding
     (345 )     (36,902 )     —       31,371       1,324       3,870       —       —  
 
                                                
Total Home Building
   $ (131,103 )   $ (171,779 )     60,216       165,462       66,766       96,365       14,550       54,348  
 
                                                    
 
                                                                
Share of Joint Venture Impairments
                     19,698       27,050                                  
 
                                                            
Total Impairments
                   $ 79,914     $ 192,512                                  
 
                                                            
 
(A)   Prior periods have been conformed to the current year presentation.
 
(B)   Impairments and write-offs by segment include land-related impairments and write-offs and goodwill impairments.

 

 

Attachment 4
Centex Corporation and Subsidiaries
Supplemental Home Building Data
(Dollars in thousands, except per unit data)
(unaudited)
RECONCILIATION OF HOUSING/HOME BUILDING OPERATING EARNINGS
                                 
    Quarter Ended June 30,  
    2008     2007  
HOME BUILDING
                                
 
                                
Revenues — Housing
   $ 1,032,191       100.0 %   $ 1,774,738       100.0 %
Cost of Sales — Housing
     (910,126 )     (88.2 %)     (1,481,351 )     (83.5 %)
 
                        
Gross Margin — Housing
     122,065       11.8 %     293,387       16.5 %
 
                                
Selling, General & Administrative (A)
     (166,215 )     (16.1 %)     (298,628 )     (16.8 %)
 
                        
 
                                
Housing Operating Loss (B)
     (44,150 )     (4.3 %)     (5,241 )     (0.3 %)
 
                                
Revenues — Land Sales & Other
     17,508               29,082          
Cost of Sales — Land Sales & Other
     (88,262 )             (175,567 )        
 
                        
Gross Margin — Land Sales & Other
     (70,754 )             (146,485 )        
 
                                
Losses from Unconsolidated Entities and Other (C)
     (16,199 )             (20,053 )        
 
                        
 
                                
Operating Loss
   $ (131,103 )     (12.5 %)   $ (171,779 )     (9.5 %)
 
                        
 
                                
Average Neighborhoods
     568               676          
% Change
     (16.0 %)             1.0 %        
 
(A)   Selling, General & Administrative expenses above are those associated with field operations.
 
(B)   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.
 
(C)   Includes losses from unconsolidated entities of $20,297 and $25,353, respectively.
IMPAIRMENTS AND WRITE-OFFS
                 
    Quarter Ended June 30,  
    2008     2007  
Impairment Charges
   $ 50,115     $ 142,592  
Write-offs of Land Deposits and Pre-Acquisition Costs
     10,101       22,870  
 
            
Subtotal
     60,216       165,462  
Share of Joint Venture Impairments
     19,698       27,050  
 
            
Total Impairments and Write-offs
   $ 79,914     $ 192,512