PulteGroup misses on revenue and profit in third quarter

Revenue fell to $3.97 billion from $4.24 billion expected, as home closings and orders both declined from a year earlier

PulteGroup reported third-quarter earnings of $2.53 a share, $0.15 below estimates, on revenue of $3.97 billion versus the $4.24 billion expected. A year earlier, the homebuilder earned $2.96 a share on net income of $586 million, compared with $476 million this quarter, according to PulteGroup's earnings release.

Home sale revenue fell 9% to $3.9 billion from $4.2 billion, the release said. Closings dropped 9% to 6,876 homes, and the average sales price slipped 1% to $561,000. Net new orders fell 6.5% to 6,208 homes, short of the 6,664 expected, according to a Smartkarma earnings alert. Backlog still grew, up 4% to 10,298 homes, with backlog value rising 3% to $6.4 billion, PulteGroup said.

Gross margin came in at 24.8%, which included about 70 basis points of impact from $26 million in land impairments, according to a StockTitan summary of the release. Nine-month operating cash flow fell to $636.966 million from $1,100.122 million a year earlier, StockTitan's summary showed. In the prior quarter, PulteGroup had beaten estimates with EPS of $2.48, even as that figure was down 18.2% from $3.03 a year before, according to Zacks Investment Research.

Chief Executive Ryan Marshall said rising mortgage rates, inflation and global unrest weighed on homebuying demand, while strong margins from move-up and active-adult buyers supported earnings. The revenue shortfall, roughly $270 million below forecasts, is the larger part of this report, and Marshall's comments point to the mortgage rate path as the variable to watch. PulteGroup also bought back $350 million of its own shares during the quarter, 2.8 million shares at an average $124.70 each, a pace of buybacks that sits awkwardly next to a weaker top line.