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© 2008 Centex Corporation
JP Morgan Basics & Industrials Conference
June 3-4, 2008
2
Forward-looking StatementsThis presentation contains forward-looking statements which 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 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, 2008 (including under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations"), as well as recent reports on Form 10-Q and Form 8-K, which are 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, the effects of the current downturn in the homebuilding industry, including reductions in the value of our land portfolio and revisions to our business plans to address changing market conditions; 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; the effects of recent disruptions in the mortgage financing industry, including tightening of credit and reduction in liquidity; the availability of adequate sources of financing to continue to implement our business strategy, particularly in view of recent downgrades in our credit rating, write downs in asset values and tightening of credit available to the home building industry; our ability to generate cash from sales of assets and other sources that supplement our existing capital resources; and other factors that could affect demand for our homes or mortgage loans, or the profitability of our operations, or our access to financing. All forward-looking statements made in this presentation are made as of the date hereof, and the risk that actual results will differ materially from the expectations expressed in this presentation 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. All forward-looking statements involving financial or operating projections or estimates contained herein were initially provided on May 1, 2008 and have not been updated for this presentation. The risk that actual results will differ materially from expectations expressed in this presentation will increase with the passage of time.
3
Fiscal year 2008 commitments
Reduce land position
Sell homes
Reduce unsold inventory
Generate cash
Structure for profitability
4
Reduce land position
0
50
100
150
200
250
300
350
Jun-0
3Sep
-03
Dec-0
3Mar
-04Ju
n-04
Sep-0
4Dec
-04
Mar-05
Jun-0
5Sep
-05
Dec-0
5Mar
-06Ju
n-06
Sep-0
6Dec
-06
Mar-07
Jun-0
7Sep
-07
Dec-0
7Mar
-08
Lots Owned Lots Controlled
Total Lots Owned and Controlled
5
Sell homes
0K
2K
4K
6K
8K
10K
12K
14K
16K
Jun-0
3Sep
-03
Dec-0
3Mar
-04Ju
n-04
Sep-0
4Dec
-04
Mar-05
Jun-0
5Sep
-05
Dec-0
5Mar
-06Ju
n-06
Sep-0
6Dec
-06
Mar-07
Jun-0
7Sep
-07
Dec-0
7Mar
-08
0%
10%
20%
30%
40%Cancellation Ratio Gross Sales Net Sales
Sales and Cancellation rates
6
Top 10 RankingsCalendar Year
% Change
Horton -41%Centex -17Lennar -39Pulte -26KB Home -19NVR -7Hovnanian -21Beazer -25Ryland -19MDC -36
‘07 vs. '06
1.2.3.4.5.6.7.8.9.
10.
'07 Sales
29,16125,79625,75325,17519,77212,270 11,6679,3738,9826,504
7
Minimize inventory
2,50
6
3,20
6
4,17
0
2,86
2
2,90
7
3,65
5
4,80
3
3,37
6
3,06
2
4,17
4
6,19
1
5,82
3
5,79
8
6,57
5
6,38
6
4,90
9
4,81
5
4,70
8
4,25
9
1,75
4
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000Ju
n-03
Sep-
03De
c-03
Mar
-04
Jun-
04Se
p-04
Dec-
04M
ar-0
5Ju
n-05
Sep-
05De
c-05
Mar
-06
Jun-
06Se
p-06
Dec-
06M
ar-0
7Ju
n-07
Sep-
07De
c-07
Mar
-08
0%
5%
10%
15%
20%
25%
30%Started Not Sold UnitsStarted Not Sold $ as % of Housing Inventory $
8
Strong cash flow and debt reduction
Lowered homebuilding debt by almost $800 mil in FY2008• Includes approximately $200 mil of joint venture debt
Repaid $1.35 billion of financial services debt
Generated more than $775 mil of operating cash flow in 4Q
Expect cash balance to exceed $1 billion by June 30, 2008
Total land spend this year expected to be less than half of last year
9
Restoring profitability is a top priorityQuickly returning to “building to a sold backlog” model• Higher gross margin experienced over selling standing
inventory• Unsold inventory down to 2.9 per neighborhood
Improving core Centex business processes• Expect to see more meaningful gross margin impact in
FY2009
Remain highly focused on overhead• Homebuilding overhead per closing down 12% in
FY2008
Concentrating focus into core markets
10
Signs of a typical housing market bottomForeclosures rise
Economy slows, recession is likely
Housing starts fall precipitously
New home market corrects much faster than existing
Land prices begin to soften more widely
Homebuilders with liquidity begin to reinvest
Source: Experience in previous cycles
11
Foreclosure InventoryPercent of Mortgage Loans in Foreclosure, Seasonally Adjusted Annual Rate
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
20-Year Average
Source: Mortgage Bankers Association/Mortgage Delinquency Survey
1991 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201019921987 1988 1989 1990
12
ARM Reset Schedule
2007J FMAM J J A SOND
2009J FMAM J J A SOND
2008J FMAM J J A SOND
2010J FMAM J J A SOND
2011J FMAM J J A SOND
2012J FMAM J J A SOND
Source: The Norris Group; Credit Suisse
Today
13
Housing StartsSingle-Family Housing Starts (Millions), Seasonally Adjusted Annual Rate
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
1991 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201019921987 1988 1989 1990
Source: Census Bureau
14
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
New Homes Existing Homes
New and Existing Home InventoriesMillions of Homes
(Left Axis) (Right Axis)
1991 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201019921987 1988 1989 1990
Source: Census Bureau; National Assocation of Realtors
15
AffordabilityPercent of Median House Price that a Median Income Family can Afford
90
100
110
120
130
140
150
Source: National Association of Realtors
1991 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201019921987 1988 1989 1990
20-Year Average
16
0
50
100
150
200
250
300
3501Q
983Q
981Q
993Q
991Q
003Q
001Q
013Q
011Q
023Q
021Q
033Q
031Q
043Q
041Q
053Q
051Q
063Q
061Q
073Q
071Q
083Q
081Q
093Q
09FY
2010
FY20
12
Centex Fiscal Periods
Inde
xed
Ave
rage
Sel
ling
Pric
e
Actual Results Projected
Priced significantly below existing homes
OFHEO HPI for Riverside-San Bernardino-Ontario, CA MSA*
Centex Inland Empire Division
25%
* Data from historic & projected OFHEO housing price index. The HPI is a weighted, repeat sales index that measures average price changes in repeat sales
17
Aggressively building a better Centex nowRestoring profitability is a top priority
Sales incentives and discounts should diminish
Concentrating focus into core markets• Neighborhood reduction will continue
Expect strong cash flow generation to continue this year• Estimate cash balance, including tax refund, in excess
of $1 billion by end of June quarter
18
Capital allocation is keyConcentrate investment in markets with greatest long-term profit potential that reward high relative market share
Consolidate divisions where resources can be shared
Exit those markets without strong long-term economic fundamentals or where scale is not meaningful
The resulting re-investment strategy will produce improved margins and returns
19
0%
10%
20%
Relative Local Market Share
Rationale for strategic reinvestment
0%
10%
20%
30%
40%
Relative Local Market Share
0.4 0.6 1.210.8 0.4 0.6 1.210.8
Relationship between relative local market share and performance among Centex divisions
Operating Margin ROANA
Regression analysis based on CY02-04 Centex averages
20
Aggressively building a better Centex for the long term
Focused on asset efficiency and a more flexible land position
Improving core Centex business processes
Increasing relative share strength in markets that will provide best returns
Expect sustainable cost reductions and higher, more consistent future returns
Continue to exceed customer expectations
© 2008 Centex Corporation
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