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Centex Reports Record Fourth Quarter and Fiscal Year
Results
Fourth Quarter Earnings From Continuing Operations Grow
38%; Reiterates Fiscal Year 2006 Earnings Guidance of $8.75 to $9.25 Per
Diluted Share
DALLAS, April 27, 2005 - Centex Corporation (NYSE: CTX) today announced
revenues, operating earnings and diluted earnings per share for the quarter
ended March 31, 2005, were higher than any quarter in its history. The
company also announced record results for the ninth consecutive fiscal year.
Highlights of the quarter ended March 31, 2005 (compared to last year's
fourth quarter):
* Revenues grew 25% to $3.99 billion
* Earnings from continuing operations grew 38%
* Earnings per diluted share from continuing operations grew 34% to $2.75
* Domestic home building operating earnings increased 49% to $525 million
* Domestic home sales (orders) rose 9%; backlog rose 21% to 18,589 units
Highlights of Fiscal Year 2005 (compared to Fiscal Year 2004)
* Revenues grew 24% to $12.86 billion
* Earnings from continuing operations grew 30%
* Earnings per diluted share from continuing operations grew 27% to $7.64
* Domestic home building operating earnings increased 43% to $1.38 billion
* Domestic home building operating margin was 14.7%, up 190 basis points
* Return on Average Stockholders' Equity exceeded 28%
"Overall, fiscal 2005 was another outstanding year. Net earnings surpassed
$1 billion for the first time in the company's history and earnings per
diluted share from continuing operations grew by 27 percent. At the same
time, we set the foundation for continued strong growth into the future with
our record backlog and solid land position," said Tim Eller, Centex
Corporation Chairman and CEO. "The fundamental demand drivers of the U.S.
homebuilding industry remain favorable, and we will continue to focus our
investment in Centex Homes' growth. For fiscal 2006, we expect to accelerate
our neighborhood growth while continuing to expand our operating margins."
HOME BUILDING
Domestic
Operating earnings from Centex Homes were $525 million for the fourth
quarter this year, 49% higher than $353 million for the fourth quarter a
year ago. Fiscal 2005's fourth quarter revenues from Centex Homes were $3.09
billion, 29% higher than $2.40 billion for the same quarter last year.
The 49% increase in operating earnings was achieved on a 5% increase in
closings to 10,126 homes in this year's fourth quarter, as well as a 230
basis point improvement in the operating margin to 17.0%. The operating
margin improvement was composed of a 160 basis point improvement in housing
gross margin, SG&A leverage and joint venture income. The housing gross
margin improvement was driven primarily by an increase in the average
selling price of homes delivered and the results of ongoing process
improvement initiatives. Additionally, land sales contributed 40 basis
points of the 200 basis point gross margin improvement.
New home orders for this year's fourth quarter were 11,214 homes, 9% above
last year's level. The backlog of homes sold but not delivered at March 31,
2005 was 18,589 units, 21% higher than the backlog at the same time a year
ago. On a dollar basis, backlog grew 40% to exceed $5.94 billion.
Fiscal 2005 operating earnings from Centex Homes reached a record $1.38
billion, 43% higher than fiscal 2004 operating earnings of $0.97 billion.
Centex Homes revenues of $9.36 billion for fiscal 2005 were 24% higher than
last year's revenues.
International
London-based Fairclough Homes, the international operation of Centex Homes,
closed 496 homes during the fourth quarter of fiscal 2005 versus 433 units
for the same quarter last year. Operating earnings for the quarter were $29
million, a 58% increase over last year's fourth quarter operating earnings
of $18 million. Operating margin increased 300 basis points to 16.7% in the
quarter. This increase reflects an improved pricing environment and
increased deliveries from higher-margin neighborhoods.
For fiscal 2005, Fairclough closed 1,563 homes, producing $67 million of
operating earnings and posting increases of 1% and 60%, respectively.
Operating profit margin increased 390 basis points to 13.3% for the year.
FINANCIAL SERVICES
Operating earnings from Financial Services for the fourth quarter this year
were $48 million, a 7% increase from the same quarter last year. Revenues
from this segment were $289 million for the fourth quarter this year, 15%
above $252 million for the same quarter a year ago.
Fiscal 2005 operating earnings from Financial Services were $204 million, a
decrease of 11% compared to $230 million for fiscal 2004. Revenues from
Financial Services were $1.11 billion for fiscal 2005, 6% higher than last
year's revenues of $1.05 billion.
CTX Mortgage Company
Operating earnings from CTX Mortgage Company totaled $21 million for the
fourth quarter of fiscal 2005, 21% lower than $27 million for fiscal 2004's
fourth quarter. Originations from Centex Homes' closings increased 4% while
retail originations fell 18%. CTX Mortgage provided mortgage loans to 73% of
Centex Homes' buyers for the fourth quarter.
Fiscal 2005 operating earnings from CTX Mortgage Company were $96 million
compared to $166 million for the same period a year ago.
Centex Home Equity Company
Centex Home Equity Company (CHEC) reported operating earnings of $26 million
for the fourth quarter of fiscal 2005, a 50% improvement over $18 million in
last year's fourth quarter. For fiscal year 2005, CHEC's operating earnings
rose 68% to $108 million from $65 million in fiscal 2004. The increased
earnings were driven by the growth in the loan portfolio, a higher return on
that portfolio and an increase in whole loan sales. CHEC's loan servicing
portfolio on which it earns an interest margin reached $7.91 billion,
growing 22% versus last year. The return earned on the servicing portfolio
grew 34 basis points to 1.50% for fiscal 2005.
CONSTRUCTION SERVICES
Operating earnings from Construction Services were $7 million for the fourth
quarter this fiscal year, versus $4 million for the same quarter last year.
The operating margin was 1.8% for this year's fourth quarter, up 90 basis
points from last year's fourth quarter. New contracts for the quarter were
approximately $400 million. For fiscal 2005, Construction Services reported
operating earnings of $24 million, 43% more than $16 million in operating
earnings in the prior year. Construction Services revenues for fiscal 2005
were $1.74 billion, 9% higher than $1.60 billion in the prior year. For the
fourth quarter, Construction Services revenue declined 5% to $407 million.
During fiscal 2005, Construction Services was awarded approximately $1.99
billion of new contracts, a 9% increase over $1.82 billion in fiscal 2004.
The backlog of uncompleted construction contracts at March 31, 2005 was
$2.00 billion, 15% more than $1.75 billion at March 31, 2004.
OUTLOOK
Centex enters fiscal 2006 with the highest year-end backlog of home sales in
its history. Based on current positive sales trends and the strength of the
backlog, the company is reiterating its earnings per diluted share guidance
of $8.75 to $9.25, which would represent its tenth consecutive record year.
Centex's senior management will conduct a conference call to discuss the
fourth quarter and fiscal year 2005 financial results, as well as its
outlook for fiscal 2006, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time)
on Thursday, April 28. 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. With respect to forward-looking statements relating to the
business, operations, assets, liabilities, financial condition or results of
operations of Centex, the risks and uncertainties to which these statements
are subject include the following: general economic conditions and interest
rates; the cyclical and seasonal nature of our businesses; adverse weather
conditions; changes in property taxes and energy costs; changes in federal
income tax laws and federal mortgage financing programs; governmental
regulations; changes in governmental and public policy; changes in economic
conditions specific to any one or more of our markets and businesses;
competition; availability of land and raw materials; and unexpected
operational difficulties. For example, increases in interest rates or
decreases in demand for housing on a national or regional basis or increases
in the cost or reductions in the supply of suitable land for development, or
lumber or other building materials or labor, could affect the revenues or
operating earnings of our homebuilding operations. Similarly, increases in
interest rates could adversely affect demand for some of the mortgage loans
offered by our mortgage finance operations. Finally, changes in national and
regional economic conditions and levels of infrastructure and construction
spending could adversely affect the results of operations of our
construction services operations. These and other 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, 2004 (including under the
captions "Forward-Looking Statements" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations"), Centex's
subsequent Quarterly Reports on Form 10-Q, as well as recent Current Reports
on Form 8-K, which are on file with the SEC and may be obtained free of
charge through the website maintained by the SEC at http://www.sec.gov . 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.
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