PHM PulteGroup Inc

• Reported Net Income of $1.13 Per Share
• Adjusted Net Income of $1.28 Per Share
• Closings Increased 12% to 6,044 Homes
• Home Sale Gross Margin of 25.5%
• Net New Orders Increased 31% to 9,852 Homes; Net New Order Value Increased 42% to $4.6 Billion
• Backlog Increased 50% to 18,966 Homes with a Value of $8.8 Billion
• Debt-to-Capital Lowered to 23.3%, as Company Paid Down $726 Million of Senior Notes in the Quarter
• Company Repurchased 3.3 Million Shares for $154 million in the Quarter
• Company Increases Share Repurchase Authorization by $1.0 Billion

Please replace the release with the following version which corrects the table titled, "PulteGroup, Inc. Segment Data, continued ($000's omitted) (Unaudited)."

The updated release reads:

PULTEGROUP, INC. REPORTS FIRST QUARTER 2021 FINANCIAL RESULTS

• Reported Net Income of $1.13 Per Share
• Adjusted Net Income of $1.28 Per Share
• Closings Increased 12% to 6,044 Homes
• Home Sale Gross Margin of 25.5%
• Net New Orders Increased 31% to 9,852 Homes; Net New Order Value Increased 42% to $4.6 Billion
• Backlog Increased 50% to 18,966 Homes with a Value of $8.8 Billion
• Debt-to-Capital Lowered to 23.3%, as Company Paid Down $726 Million of Senior Notes in the Quarter
• Company Repurchased 3.3 Million Shares for $154 million in the Quarter
• Company Increases Share Repurchase Authorization by $1.0 Billion

PulteGroup, Inc. (NYSE: PHM) announced today financial results for its first quarter ended March 31, 2021. For the quarter, the Company reported net income of $304 million, or $1.13 per share. Adjusted net income for the period was $343 million, or $1.28 per share, after excluding a pre-tax charge of $61 million associated with the Company’s previously announced cash tender for $300 million of debt that was executed in the period, as well as a $10 million pre-tax insurance benefit recorded in the period. Reported net income for the first quarter of 2020 was $204 million, or $0.74 per share. Adjusted net income for the first quarter of 2020 was $219 million, or $0.80 per share, after excluding a $20 million pre-tax goodwill impairment charge recorded in the period.

“The year has gotten off to an outstanding start with strong demand across all of our markets and buyer groups which helped drive a 31% increase in net new orders, including a 49% gain in active-adult sales,” said Ryan Marshall, PulteGroup President and CEO. “In the first quarter, we continued to capitalize on this favorable demand environment as we expanded our adjusted operating margin by 280 basis points and generated a 60% increase in adjusted earnings per share.”

“Gains in our core homebuilding operations and resulting strong cash flows are allowing us to invest in future growth and return funds to shareholders, while helping to generate high returns on equity which increased to 24.4%* for the trailing 12 months.”

“Along with the important underpinnings of favorable demographics, low interest rates and improving consumer confidence, industry demand is benefiting from increased desire for single family living, the ability for new homes to better meet buyer wants and needs and from a limited supply of new and existing home inventory,” added Marshall. “The need for almost 4 million additional homes as recently estimated by Freddie Mac to meet buyer demand, and expectations for an acceleration in economic growth as the pandemic continues to recede, keep us optimistic about future housing conditions and the opportunity to drive additional gains in our business results.”

First Quarter Financial Results

Home sale revenues for the first quarter totaled $2.6 billion, an increase of 17% over the prior year period. Higher revenues for the quarter benefited from a 12% increase in the number of homes closed to 6,044, in combination with a 4%, or $17,000, increase in average sales price to $430,000. The higher average sales price reported in the quarter reflects price increases realized across all buyer groups.

For the first quarter, home sale gross margin increased 180 basis points over the prior year to 25.5%, and on a sequential basis was up 50 basis points from the fourth quarter of 2020. Reported SG&A expense for the period was $272 million, or 10.5% of home sale revenues. Adjusted SG&A expense for the quarter, which excludes the $10 million pre-tax insurance benefit recorded in the period, was $282 million, or 10.9% of home sale revenues. Prior year SG&A expense for the first quarter was $264 million, or 11.9% of home sale revenues.

Net new orders for the first quarter increased 31% from the prior year to 9,852 homes. The dollar value of net new orders in the first quarter was $4.6 billion, which is an increase of 42% over the prior year. The Company operated from an average of 837 communities in the first quarter, which is a decrease of 4% from last year’s average of 873 communities.

The Company’s quarter-end backlog totaled 18,966 homes with a value of $8.8 billion. The average sales price in backlog increased 5%, or $23,000, over the prior year to $465,000.

First quarter pretax income for PulteGroup’s financial services operations more than tripled over the prior year to $66 million. The increase in pre-tax income for the quarter reflects a generally favorable competitive environment, along with higher loan volumes consistent with the growth in our homebuilding operations and gains in mortgage capture rate. Mortgage capture rate for the quarter increased to 88%, up from 87% last year.

The Company ended the first quarter with $1.6 billion of cash after using available funds to pay down $726 million of senior notes, as well as the repurchase of 3.3 million of its common shares for $154 million, or an average price of $46.11 per share. At quarter end, the Company had a net debt-to-capital of 5.5%.

In a separate press release, PulteGroup announced that its Board of Directors approved a $1.0 billion increase to the Company’s share repurchase authorization. “We have reduced our shares outstanding by 32% since reinstating our share repurchase program eight years ago and believe the systematic return of funds to our shareholders to be an important part of our capital allocation strategy,” said Bob O’Shaughnessy, PulteGroup executive vice president and CFO.

Following the close of the Company’s first quarter, Standard & Poor’s announced that it had upgraded PulteGroup to BBB- citing the Company’s lower debt and strong credit ratios. PulteGroup is now rated investment grade by S&P, Moody’s and Fitch.

Also following quarter end, PulteGroup was ranked among the 2021 Fortune 100 Best Companies to Work For® by Great Place to Work®. This is the first time PulteGroup has been named to this prestigious list. “We are proud to be named a Best Company to Work For and believe this recognition directly reflects the commitment of our people to creating a diverse and inclusive workforce where all of our employees are empowered to bring their best selves to work each day,” said Mr. Marshall.

A conference call to discuss PulteGroup's first quarter results is scheduled for Tuesday, April 27, 2021, at 8:30 a.m. Eastern Time. Interested investors can access the live webcast via PulteGroup's corporate website at www.pultegroup.com.

* The Company's return on equity is calculated as net income for the trailing twelve months divided by average shareholders' equity, where average shareholders' equity is the sum of ending shareholders' equity balances of the trailing five quarters divided by five.

Forward-Looking Statements

This 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 potential impairment charges 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; the negative impact of the COVID-19 pandemic on our financial position and ability to continue our Homebuilding or Financial Services activities at normal levels or at all in impacted areas; the duration, effect and severity of the COVID-19 pandemic; the measures that governmental authorities take to address the COVID-19 pandemic which may precipitate or exacerbate one or more of the above-mentioned and/or other risks and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period of time; 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, 2020, 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, American West 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’s purpose is building incredible places where people can live their dreams.

For more information about PulteGroup, Inc. and PulteGroup’s brands, go to pultegroup.com; www.pulte.com; www.centex.com; www.delwebb.com; www.divosta.com; www.jwhomes.com; and www.americanwesthomes.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,

 

2021

 

2020

Revenues:

 

 

 

Homebuilding

 

 

 

Home sale revenues

$

2,596,510

 

 

$

2,221,503

 

Land sale and other revenues

27,159

 

 

18,927

 

 

2,623,669

 

 

2,240,430

 

Financial Services

106,122

 

 

54,550

 

Total revenues

2,729,791

 

 

2,294,980

 

 

 

 

 

Homebuilding Cost of Revenues:

 

 

 

Home sale cost of revenues

(1,935,635

)

 

(1,694,865

)

Land sale and other cost of revenues

(24,636

)

 

(15,014

)

 

(1,960,271

)

 

(1,709,879

)

 

 

 

 

Financial Services expenses

(39,674

)

 

(34,949

)

Selling, general, and administrative expenses

(271,686

)

 

(263,669

)

Loss on debt retirement

(61,469

)

 

—

 

Goodwill impairment

—

 

 

(20,190

)

Other expense, net

(2,639

)

 

(2,524

)

Income before income taxes

394,052

 

 

263,769

 

Income tax expense

(89,945

)

 

(60,058

)

Net income

$

304,107

 

 

$

203,711

 

 

 

 

 

Per share:

 

 

 

Basic earnings

$

1.14

 

 

$

0.75

 

Diluted earnings

$

1.13

 

 

$

0.74

 

Cash dividends declared

$

0.14

 

 

$

0.12

 

 

 

 

 

Number of shares used in calculation:

 

 

 

Basic

265,407

 

 

270,000

 

Effect of dilutive securities

605

 

 

1,218

 

Diluted

266,012

 

 

271,218

 

   

PulteGroup, Inc. Condensed Consolidated Balance Sheets ($000's omitted) (Unaudited)

 

 

March 31,

2021

 

December 31,

2020

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Cash and equivalents

$

1,579,586

 

 

$

2,582,205

 

Restricted cash

64,468

 

 

50,030

 

Total cash, cash equivalents, and restricted cash

1,644,054

 

 

2,632,235

 

House and land inventory

7,975,211

 

 

7,721,798

 

Land held for sale

31,796

 

 

27,962

 

Residential mortgage loans available-for-sale

495,049

 

 

564,979

 

Investments in unconsolidated entities

39,558

 

 

35,562

 

Other assets

969,437

 

 

923,270

 

Intangible assets

158,432

 

 

163,425

 

Deferred tax assets, net

132,204

 

 

136,267

 

 

$

11,445,741

 

 

$

12,205,498

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Liabilities:

 

 

 

Accounts payable

$

404,564

 

 

$

511,321

 

Customer deposits

589,634

 

 

449,474

 

Deferred tax liabilities

110,884

 

 

103,548

 

Accrued and other liabilities

1,352,629

 

 

1,407,043

 

Financial Services debt

270,819

 

 

411,821

 

Notes payable

2,031,937

 

 

2,752,302

 

 

4,760,467

 

 

5,635,509

 

Shareholders' equity

6,685,274

 

 

6,569,989

 

 

$

11,445,741

 

 

$

12,205,498

 

   

PulteGroup, Inc. Consolidated Statements of Cash Flows ($000's omitted) (Unaudited)

 

 

Three Months Ended

 

March 31,

 

2021

 

2020

Cash flows from operating activities:

 

 

 

Net income

$

304,107

 

 

$

203,711

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

Deferred income tax expense

11,391

 

 

19,955

 

Land-related charges

1,368

 

 

9,729

 

Loss on debt retirement

61,469

 

 

—

 

Goodwill impairment

—

 

 

20,190

 

Depreciation and amortization

17,142

 

 

15,149

 

Share-based compensation expense

11,630

 

 

11,479

 

Other, net

(687

)

 

(903

)

Increase (decrease) in cash due to:

 

 

 

Inventories

(243,947

)

 

(189,364

)

Residential mortgage loans available-for-sale

69,930

 

 

145,113

 

Other assets

(54,303

)

 

(3,534

)

Accounts payable, accrued and other liabilities

(1,352

)

 

(26,910

)

Net cash provided by (used in) operating activities

176,748

 

 

204,615

 

Cash flows from investing activities:

 

 

 

Capital expenditures

(14,752

)

 

(20,139

)

Investments in unconsolidated entities

(8,169

)

 

(663

)

Distributions of capital from unconsolidated entities

5,000

 

 

6,500

 

Business acquisition

(10,400

)

 

(83,200

)

Other investing activities, net

698

 

 

1,706

 

Net cash provided by (used in) investing activities

(27,623

)

 

(95,796

)

Cash flows from financing activities:

 

 

 

Repayments of notes payable

(794,435

)

 

(9,245

)

Borrowings under revolving credit facility

—

 

 

700,000

 

Financial Services borrowings (repayments), net

(141,002

)

 

(56,573

)

Stock option exercises

11

 

 

50

 

Share repurchases

(153,703

)

 

(95,676

)

Cash paid for shares withheld for taxes

(10,566

)

 

(14,838

)

Dividends paid

(37,611

)

 

(32,740

)

Net cash provided by (used in) financing activities

(1,137,306

)

 

490,978

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

(988,181

)

 

599,797

 

Cash, cash equivalents, and restricted cash at beginning of period

2,632,235

 

 

1,251,456

 

Cash, cash equivalents, and restricted cash at end of period

$

1,644,054

 

 

$

1,851,253

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

Interest paid (capitalized), net

$

17,368

 

 

$

14,019

 

Income taxes paid (refunded), net

$

15,574

 

 

$

5,540

 

   

 

PulteGroup, Inc. Segment Data ($000's omitted) (Unaudited)

 

 

Three Months Ended

 

March 31,

 

2021

 

2020

HOMEBUILDING:

 

 

 

Home sale revenues

$

2,596,510

 

 

$

2,221,503

 

Land sale and other revenues

27,159

 

 

18,927

 

Total Homebuilding revenues

2,623,669

 

 

2,240,430

 

 

 

 

 

Home sale cost of revenues

(1,935,635

)

 

(1,694,865

)

Land sale and other cost of revenues

(24,636

)

 

(15,014

)

Selling, general, and administrative expenses ("SG&A")

(271,686

)

 

(263,669

)

Loss on debt retirement

(61,469

)

 

—

 

Goodwill impairment

—

 

 

(20,190

)

Other expense, net

(2,539

)

 

(2,474

)

Income before income taxes

$

327,704

 

 

$

244,218

 

 

 

 

 

FINANCIAL SERVICES:

 

 

 

Income before income taxes

$

66,348

 

 

$

19,551

 

 

 

 

 

CONSOLIDATED:

 

 

 

Income before income taxes

$

394,052

 

 

$

263,769

 

 

 

 

 

 

 

 

 

OPERATING METRICS:

 

 

 

Gross margin % (a)(b)

25.5

%

 

23.7

%

SG&A % (a)

(10.5

)%

 

(11.9

)%

Operating margin % (a)

15.0

%

 

11.8

%

(a)

As a percentage of home sale revenues

(b)

Gross margin represents home sale revenues minus home sale cost of revenues

   

PulteGroup, Inc. Segment Data, continued ($000's omitted) (Unaudited)

 

 

 

Three Months Ended

 

 

March 31,

 

 

2021

 

2020

 

 

 

 

 

Home sale revenues

 

$

2,596,510

 

 

$

2,221,503

 

 

 

 

 

 

Closings - units

 

 

 

 

Northeast

 

317

 

 

310

 

Southeast

 

1,054

 

 

928

 

Florida

 

1,420

 

 

1,210

 

Midwest

 

839

 

 

708

 

Texas

 

1,225

 

 

1,128

 

West

 

1,189

 

 

1,089

 

 

 

6,044

 

 

5,373

 

Average selling price

 

$

430

 

 

$

413

 

 

 

 

 

 

Net new orders - units

 

 

 

 

Northeast

 

608

 

 

448

 

Southeast

 

1,561

 

 

1,141

 

Florida

 

2,404

 

 

1,685

 

Midwest

 

1,561

 

 

1,019

 

Texas

 

1,892

 

 

1,509

 

West

 

1,826

 

 

1,693

 

 

 

9,852

 

 

7,495

 

Net new orders - dollars

 

$

4,630,317

 

 

$

3,268,749

 

 

 

 

 

 

Unit backlog

 

 

 

 

Northeast

 

1,244

 

 

727

 

Southeast

 

2,847

 

 

2,078

 

Florida

 

4,638

 

 

2,781

 

Midwest

 

2,921

 

 

1,851

 

Texas

 

3,720

 

 

2,231

 

West

 

3,596

 

 

2,961

 

 

 

18,966

 

 

12,629

 

Dollars in backlog

 

$

8,826,989

 

 

$

5,583,051

 

   

PulteGroup, Inc. Segment Data, continued ($000's omitted) (Unaudited)

 

 

Three Months Ended

 

March 31,

 

2021

 

2020

MORTGAGE ORIGINATIONS:

 

 

 

Origination volume

4,708

 

 

3,870

 

Origination principal

$

1,564,668

 

 

$

1,213,266

 

Capture rate

88.3

%

 

86.8

%

   

Supplemental Data ($000's omitted) (Unaudited)

 

 

Three Months Ended

 

March 31,

 

2021

 

2020

 

 

 

 

Interest in inventory, beginning of period

$

193,409

 

 

$

210,383

 

Interest capitalized

34,627

 

 

39,913

 

Interest expensed

(34,684

)

 

(36,871

)

Interest in inventory, end of period

$

193,352

 

 

$

213,425

 

     

PulteGroup, Inc.

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

This report contains information about our operating results reflecting certain adjustments, including net income, diluted earnings per share ("EPS"), operating margin, and debt-to-capital ratio. These measures are considered non-GAAP financial measures under the SEC's rules and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measures. We believe that reflecting these adjustments provides investors relevant and useful information for evaluating the comparability of financial information presented and comparing our profitability and liquidity to other companies in the homebuilding industry. Although other companies in the homebuilding industry report similar information, the methods used may differ. We urge investors to understand the methods used by other companies in the homebuilding industry to calculate these measures and any adjustments thereto before comparing our measures to those of such other companies.

The following tables set forth a reconciliation of the non-GAAP financial measures to the GAAP financial measures that management believes to be most directly comparable ($000's omitted, except per share data):

Adjusted EPS

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Results of Operations

Classification

 

March 31,

 

 

2021

 

2020

 

 

 

 

 

 

Net income, as reported

 

 

$

304,107

 

 

$

203,711

 

Adjustments to income before income taxes:

 

 

 

 

 

Loss on debt retirement

Loss on debt retirement

 

61,469

 

 

—

 

Insurance benefit

SG&A

 

(10,382

)

 

—

 

Goodwill impairment

Goodwill impairment

 

—

 

 

20,190

 

Income tax effect of the above items

Income tax expense

 

(12,435

)

 

(4,967

)

Adjusted net income

 

 

$

342,759

 

 

$

218,934

 

 

 

 

 

 

 

EPS (diluted), as reported

 

 

$

1.13

 

 

$

0.74

 

Adjusted EPS (diluted)

 

 

$

1.28

 

 

$

0.80

 

     

Adjusted Operating Margin

 

 

 

 

 

 

 

 

Three Months Ended

 

March 31,

 

2021

 

2020

 

 

 

 

 

 

Home sale revenues

$

2,596,510

 

 

 

$

2,221,503

 

 

 

 

 

 

 

 

Gross margin (a)

$

660,875

 

25.5

%

 

$

526,638

 

23.7

%

 

 

 

 

 

 

SG&A, as reported

$

271,686

 

10.5

%

 

$

263,669

 

11.9

%

Insurance benefit

10,382

 

0.4

%

 

—

—

%

Adjusted SG&A

$

282,068

 

10.9

%

 

$

263,669

 

11.9

%

 

 

 

 

 

 

Operating margin, as reported (b)

 

15.0

%

 

 

11.8

%

Adjusted operating margin (c)

 

14.6

%

 

 

11.8

%

(a)

Gross margin represents home sale revenues minus home sale cost of revenues

(b)

Operating margin represents gross margin less SG&A

(c)

Adjusted operating margin represents gross margin less adjusted SG&A

     

Debt-to-Capital Ratios

 

 

 

 

 

 

 

March 31,

2021

 

December 31,

2020

Notes payable

 

$

2,031,937

 

 

$

2,752,302

 

Shareholders' equity

 

6,685,274

 

 

6,569,989

 

Total capital

 

$

8,717,211

 

 

$

9,322,291

 

Debt-to-capital ratio

 

23.3

%

 

29.5

%

 

 

 

 

 

Notes payable

 

$

2,031,937

 

 

$

2,752,302

 

Less: Total cash, cash equivalents, and restricted cash

 

(1,644,054

)

 

(2,632,235

)

Total net debt

 

$

387,883

 

 

$

120,067

 

Shareholders' equity

 

6,685,274

 

 

6,569,989

 

Total net capital

 

$

7,073,157

 

 

$

6,690,056

 

Net debt-to-capital ratio

 

5.5

%

 

1.8

%

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210427005211/en/

Company Contact Investors: Jim Zeumer (404) 978-6434 Email: jim.zeumer@pultegroup.com