JP Morgan Basics &
Industrials Conference
     June 3-4, 2008




                 © 2008 Centex Corporation
Forward-looking Statements
This presentation contains forward-looking statements which may be identified by the context of...
Fiscal year 2008 commitments
 Reduce land position

 Sell homes

 Reduce unsold inventory

 Generate cash

 Structure for ...
0
                     50
                          100
                                150
                              ...
Ju




               0K
                    2K
                         4K
                               6K
            ...
Top 10 Rankings
Calendar Year
                                   ‘07 vs. '06
                           '07
              ...
0
                         1,000
                                 2,000
                                           3,000
 ...
Strong cash flow and debt reduction
 Lowered homebuilding debt by almost $800 mil in FY2008
  • Includes approximately $20...
Restoring profitability is a top priority
 Quickly returning to “building to a sold backlog” model
 • Higher gross margin ...
Signs of a typical housing market bottom
 Foreclosures rise

 Economy slows, recession is likely

 Housing starts fall pre...
Foreclosure Inventory
Percent of Mortgage Loans in Foreclosure, Seasonally Adjusted Annual Rate

2.2%

2.0%

1.8%

1.6%

1...
ARM Reset Schedule
                           Today




   J F MAM J J A S ON D J F MAM J J A S ON D J F MAM J J A S ON D ...
Housing Starts
Single-Family Housing Starts (Millions), Seasonally Adjusted Annual Rate

2.0

1.8

1.6

1.4

1.2

1.0

0.8...
New and Existing Home Inventories
Millions of Homes


                                             New Homes              ...
Affordability
Percent of Median House Price that a Median Income Family can Afford


 150


 140


 130                   ...
Priced significantly below existing homes
                                350
                                            ...
Aggressively building a better Centex now
 Restoring profitability is a top priority
 Sales incentives and discounts shoul...
Capital allocation is key
 Concentrate investment in markets with greatest long-
 term profit potential that reward high r...
Rationale for strategic reinvestment
             Relationship between relative local market share
                and per...
Aggressively building a better Centex for the
long term
 Focused on asset efficiency and a more flexible land
 position
 I...
Questions and Answers




             © 2008 Centex Corporation
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centex JPM_060308

  1. 1. JP Morgan Basics & Industrials Conference June 3-4, 2008 © 2008 Centex Corporation
  2. 2. Forward-looking Statements This 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 quot;Risk Factorsquot; and quot;Management's Discussion and Analysis of Financial Condition and Results of Operationsquot;), 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. 2
  3. 3. Fiscal year 2008 commitments Reduce land position Sell homes Reduce unsold inventory Generate cash Structure for profitability 3
  4. 4. 0 50 100 150 200 250 300 350 Ju n- 0 Se 3 p- 0 D3 ec -0 M3 ar -0 Ju 4 n- 04 S ep -0 D4 ec -0 M4 Lots Owned ar -0 Ju 5 n- 05 S Reduce land position ep -0 D5 ec -0 M5 ar -0 Ju 6 n- 06 S ep -0 D6 ec -0 M6 Total Lots Owned and Controlled ar -0 Ju 7 Lots Controlled n- 0 Se 7 p- 0 D7 ec -0 M7 ar -0 8 4
  5. 5. Ju 0K 2K 4K 6K 8K 10K 12K 14K 16K n- Se 03 p- D 03 ec -0 M3 ar -0 Ju 4 n- Sell homes Se 04 p- D 04 ec -0 M4 ar -0 Cancellation Ratio Ju 5 n- Se 05 p- 0 D5 ec -0 M5 ar -0 Ju 6 n- Se 06 p- D 06 ec Gross Sales -0 M6 Sales and Cancellation rates ar -0 Ju 7 n- Se 07 p- D 07 ec -0 M7 ar -0 8 Net Sales 0% 10% 20% 30% 40% 5
  6. 6. Top 10 Rankings Calendar Year ‘07 vs. '06 '07 % Change Sales Horton -41% 1. 29,161 Centex -17 2. 25,796 Lennar -39 3. 25,753 Pulte -26 4. 25,175 KB Home -19 5. 19,772 NVR -7 6. 12,270 Hovnanian -21 7. 11,667 Beazer -25 8. 9,373 Ryland -19 9. 8,982 MDC -36 10. 6,504 6
  7. 7. 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Ju n -0 3 2,506 Se p -0 3,206 De 3 c -0 3 4,170 Ma r -0 2,862 Ju 4 n -0 2,907 Se 4 p -0 3,655 De 4 c -0 Started Not Sold Units 4,803 Ma 4 r -0 3,376 Minimize inventory Ju 5 n -0 3,062 Se 5 p -0 4,174 De 5 c -0 6,191 Ma 5 r -0 5,823 Ju 6 n -0 5,798 Started Not Sold $ as % of Housing Inventory $ Se 6 p -0 6,575 De 6 c -0 6 6,386 Ma r -0 4,909 Ju 7 n -0 4,815 Se 7 p -0 4,708 De 7 c -0 7 4,259 Ma r -0 8 1,754 0% 5% 10% 15% 20% 25% 30% 7
  8. 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 8
  9. 9. Restoring profitability is a top priority Quickly 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 9
  10. 10. Signs of a typical housing market bottom Foreclosures 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 10
  11. 11. Foreclosure Inventory Percent of Mortgage Loans in Foreclosure, Seasonally Adjusted Annual Rate 2.2% 2.0% 1.8% 1.6% 1.4% 20-Year 1.2% Average 1.0% 0.8% 0.6% 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Mortgage Bankers Association/Mortgage Delinquency Survey 11
  12. 12. ARM Reset Schedule Today J F MAM J J A S ON D J F MAM J J A S ON D J F MAM J J A S ON D J F MAM J J A S ON D J F MAM J J A S ON D J F MAM J J A S ON D 2007 2008 2009 2010 2011 2012 Source: The Norris Group; Credit Suisse 12
  13. 13. Housing Starts Single-Family Housing Starts (Millions), Seasonally Adjusted Annual Rate 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Census Bureau 13
  14. 14. New and Existing Home Inventories Millions of Homes New Homes Existing Homes (Left Axis) (Right Axis) 0.7 4.5 4.0 0.6 3.5 0.5 3.0 0.4 2.5 2.0 0.3 1.5 0.2 1.0 0.1 0.5 0.0 0.0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Census Bureau; National Assocation of Realtors 14
  15. 15. Affordability Percent of Median House Price that a Median Income Family can Afford 150 140 130 20-Year Average 120 110 100 90 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: National Association of Realtors 15
  16. 16. Priced significantly below existing homes 350 OFHEO HPI for Riverside-San Bernardino-Ontario, CA MSA* 300 Centex Inland Empire Division 250 25% Indexed Average Selling Price 200 150 100 50 0 10 12 98 98 99 99 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 09 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 20 20 FY FY Centex Fiscal Periods Actual Results Projected * Data from historic & projected OFHEO housing price index. The HPI is a weighted, repeat sales index that measures average price changes in repeat sales 16
  17. 17. Aggressively building a better Centex now Restoring 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 17
  18. 18. Capital allocation is key Concentrate 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 18
  19. 19. Rationale for strategic reinvestment Relationship between relative local market share and performance among Centex divisions Operating Margin ROANA 20% 40% 30% 20% 10% 10% 0% 0% 0.4 0.6 0.8 1 1.2 0.4 0.6 0.8 1 1.2 Relative Local Market Share Relative Local Market Share Regression analysis based on CY02-04 Centex averages 19
  20. 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 20
  21. 21. Questions and Answers © 2008 Centex Corporation
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