- Q1 Earnings Increased 111% Over
Prior Year to $0.59 Per Share
- Home Sale Revenues Gained 21% to
$1.9 Billion; Closings Increased 9% to 4,626 Homes
- Home Sale Gross Margins Increased 40
Basis Points to 23.6%
- Operating Margin Increased 270 Basis
Points to 11.0%
- Value of Net New Orders Increased
18% to $2.9 Billion; Net New Orders Gained 12% to 6,875
Homes
- Backlog Value Up 30% to $5.0
Billion; Unit Backlog Increased 21% to 11,245 Homes
- Repurchased $52 Million of Stock
During the Quarter
PulteGroup, Inc. (NYSE: PHM) announced today financial results
for its first quarter ended March 31, 2018. For the quarter, the
Company reported an 87% increase in net income to $171 million, and
a 111% gain in earnings to $0.59 per share. The Company’s prior
year net income was $92 million, or $0.28 per share, inclusive of
$0.03 per share of expense associated with the resolution of
certain insurance matters.
“PulteGroup has gotten off to an exceptional start in 2018, as
we realized 21% top line growth while effectively doubling reported
earnings per share,” said Ryan Marshall, President and CEO of
PulteGroup. “By continuing to invest organically within our
established markets, we have put ourselves in position to grow our
business while continuing to generate high returns.”
“Robust buyer demand in the face of mortgage and financial
market volatility attests to the strong underpinnings of this
housing recovery which is being bolstered by sustained economic
growth, good job trends, favorable demographics and a limited
supply of homes for sale,” said Marshall. “Within this environment,
we believe that our diversified operating platform, balanced
customer base, and supportive land pipeline puts the Company in a
strong competitive position to achieve its long-term financial
goals.”
Home sale revenues for the first quarter totaled $1.9 billion,
an increase of 21% over the prior year. Higher revenues for the
quarter were driven by a 10% increase in average selling price to
$413,000, in combination with a 9% increase in closings to 4,626
homes.
Home sale gross profits for the quarter were $452 million, or
23.6% of home sale revenues, compared with $368 million, or 23.2%
of home sale revenues, in the prior year. SG&A expense for the
first quarter was $241 million, or 12.6% of home sale revenues.
SG&A expense for the prior year was $236 million, or 14.9% of
home sale revenues, inclusive of $15 million of expenses associated
with the resolution of certain insurance matters. Operating margin
for the period was 11.0%, an increase of 270 basis over prior year
reported operating margin of 8.3%.
For the quarter, net new orders increased 12% over the prior
year to 6,875 homes, as the dollar value of net new orders
increased 18% to $2.9 billion. During the first quarter, the
Company operated out of 844 communities, which was up 8% over
2017.
The Company ended the quarter with a backlog of 11,245 homes
valued at $5.0 billion, which are increases of 21% and 30%,
respectively, over last year, and represent decade highs for the
period. The average sales price in backlog increased 8% over last
year to $441,000, as price benefitted from the product and
geographic mix of homes, as well as higher selling prices realized
within each buyer group.
PulteGroup’s financial services operations generated pretax
income of $14 million, which is unchanged from last year, as the
benefit of higher production volumes was offset by more competitive
market conditions that impacted pricing and capture rate. Mortgage
capture rate for the first quarter was 78% compared with 80% in the
first quarter of 2017.
The Company ended the quarter with $185 million of cash. During
the quarter, the Company repurchased 1.7 million common shares for
$52 million, or an average price of $30.86 per share.
A conference call discussing PulteGroup's first quarter results
is scheduled for Tuesday, April 24, 2018, at 8:30 a.m. Eastern
Time. Interested investors can access the live webcast via
PulteGroup's corporate website at www.pultegroupinc.com.
Forward-Looking Statements
This press release includes "forward-looking statements." These
statements are subject to a number of risks, uncertainties and
other factors that could cause our actual results, performance,
prospects or opportunities, as well as those of the markets we
serve or intend to serve, to differ materially from those expressed
in, or implied by, these statements. You can identify these
statements by the fact that they do not relate to matters of a
strictly factual or historical nature and generally discuss or
relate to forecasts, estimates or other expectations regarding
future events. Generally, the words “believe,” “expect,” “intend,”
“estimate,” “anticipate,” “plan,” “project,” “may,” “can,” “could,”
“might,” "should", “will” and similar expressions identify
forward-looking statements, including statements related to any
impairment charge and the impacts or effects thereof, expected
operating and performing results, planned transactions, planned
objectives of management, future developments or conditions in the
industries in which we participate and other trends, developments
and uncertainties that may affect our business in the future.
Such risks, uncertainties and other factors include, among other
things: interest rate changes and the availability of mortgage
financing; competition within the industries in which we operate;
the availability and cost of land and other raw materials used by
us in our homebuilding operations; the impact of any changes to our
strategy in responding to the cyclical nature of the industry,
including any changes regarding our land positions and the levels
of our land spend; the availability and cost of insurance covering
risks associated with our businesses; shortages and the cost of
labor; weather related slowdowns; slow growth initiatives and/or
local building moratoria; governmental regulation directed at or
affecting the housing market, the homebuilding industry or
construction activities; uncertainty in the mortgage lending
industry, including revisions to underwriting standards and
repurchase requirements associated with the sale of mortgage loans;
the interpretation of or changes to tax, labor and environmental
laws, including, but not limited to the Tax Cuts and Jobs Act which
could have a greater impact on our effective tax rate or the value
of our deferred tax assets than we anticipate; economic changes
nationally or in our local markets, including inflation, deflation,
changes in consumer confidence and preferences and the state of the
market for homes in general; legal or regulatory proceedings or
claims; our ability to generate sufficient cash flow in order to
successfully implement our capital allocation priorities; required
accounting changes; terrorist acts and other acts of war; and other
factors of national, regional and global scale, including those of
a political, economic, business and competitive nature. See
PulteGroup's Annual Report on Form 10-K for the fiscal year ended
December 31, 2017, and other public filings with the Securities and
Exchange Commission (the "SEC") for a further discussion of these
and other risks and uncertainties applicable to our businesses.
PulteGroup undertakes no duty to update any forward-looking
statement, whether as a result of new information, future events or
changes in PulteGroup's expectations.
About PulteGroup
PulteGroup, Inc. (NYSE: PHM), based in Atlanta, Georgia, is one
of America's largest homebuilding companies with operations in
approximately 50 markets throughout the country. Through its brand
portfolio that includes Centex, Pulte Homes, Del Webb, DiVosta
Homes and John Wieland Homes and Neighborhoods, the Company is one
of the industry's most versatile homebuilders able to meet the
needs of multiple buyer groups and respond to changing consumer
demand. PulteGroup conducts extensive research to provide
homebuyers with innovative solutions and consumer inspired homes
and communities to make lives better.
For more information about PulteGroup, Inc. and PulteGroup
brands, go to www.pultegroupinc.com;
www.pulte.com; www.centex.com; www.delwebb.com; www.divosta.com and www.jwhomes.com.
PulteGroup, Inc.
Consolidated Results of
Operations
($000's omitted, except per share
data)
(Unaudited)
Three Months Ended March
31, 2018 2017 Revenues: Homebuilding Home
sale revenues $ 1,911,598 $ 1,585,421 Land sale and other revenues
12,557 2,690 1,924,155 1,588,111 Financial Services
45,938 41,767 Total revenues 1,970,093
1,629,878
Homebuilding Cost of Revenues: Home
sale cost of revenues (1,459,940 ) (1,217,678 ) Land sale cost of
revenues (11,548 ) (3,228 ) (1,471,488 ) (1,220,906 )
Financial Services expenses (32,213 ) (28,367 )
Selling,
general, and administrative expenses (240,893 ) (236,268 )
Other expense, net (1,308 ) (5,072 )
Income before income
taxes 224,191 139,265
Income tax expense (53,440 )
(47,747 )
Net income $ 170,751 $ 91,518
Per share: Basic earnings $ 0.59 $ 0.29
Diluted earnings $ 0.59 $ 0.28 Cash dividends
declared $ 0.09 $ 0.09
Number of shares
used in calculation: Basic 286,683 317,756 Effect of dilutive
securities 1,343 2,329 Diluted 288,026 320,085
PulteGroup, Inc.
Condensed Consolidated Balance
Sheets
($000's omitted)
(Unaudited)
March 31, 2018
December 31, 2017 ASSETS Cash
and equivalents $ 150,821 $ 272,683 Restricted cash 33,966
33,485 Total cash, cash equivalents, and restricted cash 184,787
306,168 House and land inventory 7,465,028 7,147,130 Land held for
sale 69,522 68,384 Residential mortgage loans available-for-sale
385,453 570,600 Investments in unconsolidated entities 64,810
62,957 Other assets 784,355 745,123 Intangible assets 137,542
140,992 Deferred tax assets, net 614,898 645,295 $ 9,706,395
$ 9,686,649
LIABILITIES AND SHAREHOLDERS’
EQUITY Liabilities: Accounts payable $ 446,304 $ 393,815
Customer deposits 308,864 250,779 Accrued and other liabilities
1,226,233 1,356,333 Income tax liabilities 115,667 86,925 Financial
Services debt 246,952 437,804 Notes payable 3,087,718
3,006,967 5,431,738 5,532,623 Shareholders' equity 4,274,657
4,154,026 $ 9,706,395 $ 9,686,649
PulteGroup, Inc.
Consolidated Statements of Cash
Flows
($000's omitted)
(Unaudited)
Three Months Ended March 31,
2018 2017 Cash flows from operating
activities: Net income $ 170,751 $ 91,518 Adjustments to
reconcile net income to net cash from operating activities:
Deferred income tax expense 23,479 39,226 Land-related charges
3,419 3,535 Depreciation and amortization 11,890 13,209 Share-based
compensation expense 8,451 14,161 Other, net (793 ) 555 Increase
(decrease) in cash due to: Inventories (237,169 ) (267,014 )
Residential mortgage loans available-for-sale 185,147 194,117 Other
assets (9,246 ) 21,858 Accounts payable, accrued and other
liabilities 13,084 (71,362 ) Net cash provided by (used in)
operating activities 169,013 39,803
Cash flows
from investing activities: Capital expenditures (15,428 )
(9,996 ) Investments in unconsolidated entities (1,000 ) (14,802 )
Other investing activities, net 452 1,423 Net cash
used in investing activities (15,976 ) (23,375 )
Cash flows from
financing activities: Repayments of debt (451 ) (1,067 )
Borrowings under revolving credit facility 768,000 — Repayments
under revolving credit facility (768,000 ) — Financial Services
borrowings (repayments) (190,852 ) (191,240 ) Stock option
exercises 2,723 11,118 Share repurchases (59,491 ) (105,522 )
Dividends paid (26,347 ) (29,102 ) Net cash provided by (used in)
financing activities (274,418 ) (315,813 ) Net increase (decrease)
(121,381 ) (299,385 ) Cash, cash equivalents, and restricted cash
at beginning of period 306,168 723,248 Cash, cash
equivalents, and restricted cash at end of period $ 184,787
$ 423,863
Supplemental Cash Flow Information:
Interest paid (capitalized), net $ 30,109 $ 12,830
Income taxes paid (refunded), net $ 631 $ 1,043
PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
Three Months Ended March
31, 2018 2017 HOMEBUILDING: Home sale
revenues $ 1,911,598 $ 1,585,421 Land sale and other revenues
12,557 2,690 Total Homebuilding revenues 1,924,155
1,588,111 Home sale cost of revenues (1,459,940 ) (1,217,678
) Land sale cost of revenues (11,548 ) (3,228 ) Selling, general,
and administrative expenses ("SG&A") (240,893 ) (236,268 )
Other expense, net (1,416 ) (5,175 ) Income before income taxes $
210,358 $ 125,762
FINANCIAL SERVICES:
Income before income taxes $ 13,833 $ 13,503
CONSOLIDATED: Income before income taxes $ 224,191 $
139,265
OPERATING METRICS: Gross margin
% (a)(b) 23.6 % 23.2 % SG&A % (a) (12.6 )% (14.9 )% Operating
margin % (a) 11.0 % 8.3 %
(a) As a percentage of home sale
revenues.
(b) Gross margin equals home sale revenues
minus home sale cost of revenues.
PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
Three Months Ended March
31, 2018 2017 Home sale revenues $
1,911,598 $ 1,585,421
Closings - units
Northeast 251 232 Southeast 924 836 Florida 887 832 Midwest 767 668
Texas 809 840 West 988 817 4,626 4,225
Average
selling price $ 413 $ 375
Net new orders -
units Northeast 448 411 Southeast 1,259 1,077 Florida 1,444
1,040 Midwest 1,102 1,162 Texas 1,323 1,211 West 1,299 1,225
6,875 6,126
Net new orders - dollars $ 2,893,552
$ 2,446,141
Unit backlog Northeast 709 566
Southeast 2,051 1,612 Florida 2,235 1,626 Midwest 1,822 1,801 Texas
1,940 1,783 West 2,488 1,935 11,245 9,323
Dollars
in backlog $ 4,961,018 $ 3,802,231
PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
Three Months Ended March
31, 2018 2017 MORTGAGE ORIGINATIONS: Origination
volume 2,992 2,873 Origination principal $ 909,800
$ 806,352 Capture rate 77.7 % 80.3 %
Supplemental Data
($000's omitted)
(Unaudited)
Three Months Ended March 31, 2018
2017 Interest in inventory, beginning of period $
226,611 $ 186,097 Interest capitalized 43,960 44,923 Interest
expensed (30,558 ) (27,192 ) Interest in inventory, end of period $
240,013 $ 203,828
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180424005226/en/
PulteGroup, Inc.Jim Zeumer,
404-978-6434jim.zeumer@pultegroup.com
PulteGroup (NYSE:PHM)
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