- Q1 Earnings of $0.59 Per
Share
- Home Sale Revenues Gained 2% to $1.9
Billion
- Closings of 4,635 Homes with an
Average Sales Price of $421,000
- Home Sale Gross Margin of
23.4%
- Net New Orders Totaled 6,463 Homes
Valued at $2.7 Billion
- Unit Backlog of 10,550 Homes Valued
at $4.6 Billion
- Company Repurchased $25 Million of
Common Shares During the Quarter
PulteGroup, Inc. (NYSE: PHM) announced today financial results
for its first quarter ended March 31, 2019. For the quarter, the
Company reported net income of $167 million, or $0.59 per share,
which is comparable with prior year net income of $171 million, or
$0.59 per share.
“Helped by the recent decline in mortgage rates, homebuyers have
been steadily returning to the market after a period of slowing
demand that began in the second half of 2018,” said Ryan Marshall,
President and CEO of PulteGroup. “In addition to the strong
financial results PulteGroup delivered in the quarter, we view the
significant increase in consumer traffic into our communities as an
important indicator of the overall health of the housing
industry.”
“Given the very positive macroeconomic backdrop, we continue to
maintain a constructive view on the overall housing cycle and are
pleased with our competitive position in the markets in which we
operate,” added Marshall. “Within this environment, we will remain
disciplined in our business practices, while looking to capitalize
on market opportunities that can help deliver long-term growth and
continued strong financial performance.”
Home sale revenues for the first quarter increased 2% to $1.9
billion. The increase in revenue for the period was driven by a 2%
increase in average selling price to $421,000. The Company closed
4,635 homes in the quarter which is a slight increase from the
prior year.
Home sale gross profit for the quarter was $457 million, or
23.4% of home sale revenues, compared with prior year gross profit
of $452 million, or 23.6% of home sale revenues. SG&A expense
for the first quarter was $253 million, or 13.0% of home sale
revenues. SG&A expense for the prior year was $241 million, or
12.6% of home sale revenues. Operating margin for the period
decreased by 50 basis points to 10.5%.
For the quarter, the Company reported net new orders of 6,463
homes, valued at $2.7 billion, compared with prior year net new
orders of 6,875 homes valued at $2.9 billion. For the first
quarter, the Company operated out of 858 communities, which was an
increase of 2% over the first quarter of 2018.
The Company ended the first quarter with a backlog of 10,550
homes valued at $4.6 billion. Prior year first quarter backlog
totaled 11,245 homes valued at $5.0 billion. The average sales
price in backlog was $438,000, compared with $441,000 in the prior
year.
PulteGroup’s financial services operations generated pretax
income of $12 million, compared with pretax income of $14 million
in 2018. Consistent with recent trends, higher production volumes
were offset by more competitive market conditions that impacted
pricing. Mortgage capture rate for the first quarter improved to
80%, up from 78% last year.
The Company ended the quarter with $1.1 billion of cash. During
the quarter, the Company repurchased 0.9 million common shares for
$25 million, or an average price of $27.16 per share.
A conference call to discuss PulteGroup's first quarter results
is scheduled for Tuesday, April 23, 2019, at 8:30 a.m. Eastern
Time. Interested investors can access the live webcast via
PulteGroup's corporate website at www.pultegroup.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 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, 2018, 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 more
than 40 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.pultegroup.com; www.pulte.com; www.centex.com;
www.delwebb.com; www.divosta.com and www.jwhomes.com.
Follow PulteGroup, Inc. on Twitter: @PulteGroupNews
PulteGroup, Inc.
Consolidated Statements of
Operations
($000's omitted, except per share
data)
(Unaudited)
Three Months Ended March 31,
2019 2018 Revenues: Homebuilding Home sale
revenues $ 1,949,856 $ 1,911,598 Land sale and other revenues 2,975
12,557 1,952,831 1,924,155 Financial Services 43,862
45,938 Total revenues 1,996,693 1,970,093
Homebuilding Cost of Revenues: Home sale cost
of revenues (1,492,791 ) (1,459,940 ) Land sale cost of revenues
(2,050 ) (11,548 ) (1,494,841 ) (1,471,488 )
Financial
Services expenses (31,449 ) (32,213 )
Selling, general, and
administrative expenses (252,727 ) (240,893 )
Other expense,
net (973 ) (1,308 )
Income before income taxes 216,703
224,191
Income tax expense (49,946 ) (53,440 )
Net
income $ 166,757 $ 170,751
Per
share: Basic earnings $ 0.59 $ 0.59 Diluted
earnings $ 0.59 $ 0.59 Cash dividends declared $ 0.11
$ 0.09
Number of shares used in
calculation: Basic 277,637 286,683 Effect of dilutive
securities 1,003 1,343 Diluted 278,640 288,026
PulteGroup, Inc.
Condensed Consolidated Balance
Sheets
($000's omitted)
(Unaudited)
March 31, 2019 December
31, 2018 ASSETS Cash and
equivalents $ 1,055,457 $ 1,110,088 Restricted cash 25,496
23,612 Total cash, cash equivalents, and restricted cash 1,080,953
1,133,700 House and land inventory 7,506,543 7,253,353 Land held
for sale 39,431 36,849 Residential mortgage loans
available-for-sale 326,995 461,354 Investments in unconsolidated
entities 55,725 54,590 Other assets 823,066 830,359 Intangible
assets 123,742 127,192 Deferred tax assets, net 250,881
275,579 $ 10,207,336 $ 10,172,976
LIABILITIES AND
SHAREHOLDERS’ EQUITY Liabilities: Accounts payable $
444,322 $ 352,029 Customer deposits 294,548 254,624 Accrued and
other liabilities 1,270,367 1,360,483 Income tax liabilities 18,108
11,580 Financial Services debt 222,139 348,412 Notes payable
3,024,413 3,028,066 5,273,897 5,355,194 Shareholders' equity
4,933,439 4,817,782 $ 10,207,336 $ 10,172,976
PulteGroup, Inc.
Consolidated Statements of Cash
Flows
($000's omitted)
(Unaudited)
Three Months Ended March 31,
2019 2018 Cash flows from operating
activities: Net income $ 166,757 $ 170,751 Adjustments to
reconcile net income to net cash from operating activities:
Deferred income tax expense 24,690 23,479 Land-related charges
2,979 3,419 Depreciation and amortization 13,210 11,890 Share-based
compensation expense 9,019 8,451 Other, net (39 ) (793 ) Increase
(decrease) in cash due to: Inventories (259,865 ) (237,169 )
Residential mortgage loans available-for-sale 134,217 185,147 Other
assets 64,533 (9,246 ) Accounts payable, accrued and other
liabilities 3,408 13,084 Net cash provided by (used
in) operating activities 158,909 169,013
Cash
flows from investing activities: Capital expenditures (16,070 )
(15,428 ) Investments in unconsolidated entities (1,289 ) (1,000 )
Other investing activities, net 291 452 Net cash
provided by (used in) investing activities (17,068 ) (15,976 )
Cash flows from financing activities: Repayments of debt
(3,605 ) (451 ) Borrowings under revolving credit facility —
768,000 Repayments under revolving credit facility — (768,000 )
Financial Services borrowings (repayments) (126,273 ) (190,852 )
Stock option exercises 1,445 2,723 Share repurchases (35,353 )
(59,491 ) Dividends paid (30,802 ) (26,347 ) Net cash provided by
(used in) financing activities (194,588 ) (274,418 ) Net increase
(decrease) in cash, cash equivalents, and restricted cash (52,747 )
(121,381 ) Cash, cash equivalents, and restricted cash at beginning
of period 1,133,700 306,168 Cash, cash equivalents,
and restricted cash at end of period $ 1,080,953 $ 184,787
Supplemental Cash Flow Information: Interest
paid (capitalized), net $ 17,164 $ 30,109 Income
taxes paid (refunded), net $ (30,850 ) $ 631
PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
Three Months Ended March 31,
2019 2018 HOMEBUILDING: Home sale revenues $
1,949,856 $ 1,911,598 Land sale and other revenues 2,975
12,557 Total Homebuilding revenues 1,952,831 1,924,155
Home sale cost of revenues (1,492,791 ) (1,459,940 ) Land
sale cost of revenues (2,050 ) (11,548 ) Selling, general, and
administrative expenses ("SG&A") (252,727 ) (240,893 ) Other
expense, net (969 ) (1,416 ) Income before income taxes $ 204,294
$ 210,358
FINANCIAL SERVICES: Income
before income taxes $ 12,409 $ 13,833
CONSOLIDATED: Income before income taxes $ 216,703 $
224,191
OPERATING METRICS: Gross margin
% (a)(b) 23.4 % 23.6 % SG&A % (a) (13.0 )% (12.6 )% Operating
margin % (a) 10.5 % 11.0 %
(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, 2019 2018 Home sale
revenues $ 1,949,856 $ 1,911,598
Closings -
units Northeast 219 251 Southeast 897 924 Florida 1,008 887
Midwest 726 767 Texas 849 809 West 936 988 4,635
4,626
Average selling price $ 421 $ 413
Net
new orders - units Northeast 361 448 Southeast 1,073 1,259
Florida 1,346 1,444 Midwest 1,024 1,102 Texas 1,366 1,323 West
1,293 1,299 6,463 6,875
Net new orders -
dollars $ 2,735,852 $ 2,893,552
Unit
backlog Northeast 612 709 Southeast 1,786 2,051 Florida 2,227
2,235 Midwest 1,700 1,822 Texas 2,009 1,940 West 2,216 2,488
10,550 11,245
Dollars in backlog $ 4,622,145 $
4,961,018
PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
Three Months Ended March
31, 2019 2018 MORTGAGE
ORIGINATIONS: Origination volume 2,998 2,992
Origination principal $ 914,711 $ 909,800 Capture
rate 79.7 % 77.7 %
Supplemental Data
($000's omitted)
(Unaudited)
Three Months Ended
March 31, 2019 2018 Interest in
inventory, beginning of period $ 227,495 $ 226,611 Interest
capitalized 42,381 43,960 Interest expensed (34,563 ) (30,558 )
Interest in inventory, end of period $ 235,313 $ 240,013
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190423005150/en/
Investors: Jim Zeumer(404) 978-6434Email:
jim.zeumer@pultegroup.com
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