In a November 3, 2010 conference call, Nishu Sood, Financial Analyst for Deutsche Bank AG, asked Richard Dugas, Chairman, President, and Chief Executive Officer of Pulte Group, Inc., the following question:
“I just wanted to follow up on the construction, the warranty charges. I would expect on an ongoing basis in any given quarter you’re going to have a number of claims, this is an ongoing part of the business because of the complexity of the construction process, but a charge of this size kind of implies that there was something systematic, maybe among a product line or in a region or something. I was just wondering if you could be a little more specific in terms of describing the patterns or the (inaudible) of the claims that emerged here. Just on an operating basis, so we can have a better sense of what drove such a large charge in one quarter.”
Dugas responded:
“...We did not see any specific region of the country that jumped out at us. What was unusual here was the number of claims we received in a particular quarter that was completely unforeseen. Most of them related to water intrusion issues…”
Good question, Mr. Sood! Too bad that you didn’t get a straight answer. Dugas, however, did admit that his company, which touts itself as “Master Builder”, has WIDESPREAD problems with water intrusion (bad stucco) in their houses.
Some “Master Builder”!
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