- Reported Net Income of $0.99 Per Share
- Adjusted Net Income of $1.01 Per Share
- Net New Orders Increased 13% to 6,031 Homes; Net New Order
Value Increased 11% to $2.5 Billion
- Closings Increased 3% to 6,186 Homes
- Home Sale Revenues Increased 3% to $2.6 Billion
- Reported Homebuilding Gross Margin of 23.1%; Adjusted Gross
Margin of 23.4%
- Unit Backlog Up 4% to 11,638 Homes; Backlog Value Increased
2% to $5.0 Billion
- Company Repurchased 4.1 Million Shares of Stock in the
Quarter for $136 Million
PulteGroup, Inc. (NYSE: PHM) announced today financial results
for its third quarter ended September 30, 2019. For the quarter,
the Company reported net income of $273 million, or $0.99 per
share. Adjusted net income for the period was $280 million, or
$1.01 per share, after excluding a $9 million pre-tax warranty
charge taken in the quarter related to a closed-out community.
Reported prior year net income was $290 million, or $1.01 per
share.
“Improving demand dynamics continued throughout the quarter, as
lower interest rates and improved affordability had a positive
impact on buyer interest,” said Ryan Marshall, PulteGroup President
and CEO. “The 13% gain in orders that we realized in the third
quarter reflects this improved demand environment, particularly
among first-time buyers where orders were up 39% over last
year.”
“Given a broadly favorable macroeconomic backdrop and
expectations for interest rates to remain low, we see the
opportunity for housing demand to continue moving higher over
time,” added Marshall. “Within this environment, our strong balance
sheet and outstanding local market operations have the Company well
positioned to grow our business while continuing to deliver high
returns on equity and invested capital.”
Third Quarter Results
Home sale revenues for the third quarter increased 3% over the
prior year to $2.6 billion. The higher revenues for the period
reflect a 3% increase in closings to 6,186 homes. The average price
of homes closed was $426,000, which is consistent with the prior
year.
The Company’s reported home sale gross margin for the third
quarter was 23.1%. The Company’s third quarter adjusted home sale
gross margin, which excludes the $9 million pre-tax warranty
charge, was 23.4%. Homebuilding SG&A expense for the quarter
was $271 million, or 10.3% of home sale revenues, compared with
$253 million, or 9.8% of home sale revenues, in the prior year.
Net new orders for the third quarter increased 13% over the
prior year to 6,031 homes. The value of third quarter net new
orders was $2.5 billion, which is an increase of 11% over the prior
year. In the third quarter, the Company operated out of 865
communities which is an increase of 4% over the comparable prior
year period.
Unit backlog at the end of the quarter totaled 11,638 homes,
which is up 4% over the third quarter of last year. Backlog value
for the third quarter was $5.0 billion, which is an increase of 2%
over the third quarter of 2018.
Third quarter pretax income for the Company's financial services
operations increased 64% over the prior year to $32 million. The
higher pretax income was driven by an increase in mortgage
origination volumes associated with growth in the Company’s
homebuilding operations and higher capture rates, coupled with
improved margins in our mortgage operations resulting from the
declining rate environment. Mortgage capture rate for the quarter
was 84%, up from 75% last year.
During the quarter, the Company repurchased 4.1 million common
shares for $136 million, or an average price of $32.93 per share.
For the first nine months of 2019, the Company repurchased a total
of 7.7 million common shares for $244 million, or an average price
of $31.86 per share.
PulteGroup ended the quarter with a debt-to-total capital ratio
of 34.6%, which is down from 38.6% at the end of 2018.
A conference call discussing PulteGroup's third quarter 2019
results is scheduled for Tuesday, October 22, 2019, 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 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 the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2018, and the Company’s
other public filings with the Securities and Exchange Commission
for a further discussion of these and other risks and uncertainties
applicable to our businesses. The Company 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 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 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
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
Revenues:
Homebuilding
Home sale revenues
$
2,637,002
$
2,572,236
$
6,990,417
$
6,933,888
Land sale and other revenues
8,548
25,510
40,993
104,971
2,645,550
2,597,746
7,031,410
7,038,859
Financial Services
64,815
51,620
164,634
150,322
Total revenues
2,710,365
2,649,366
7,196,044
7,189,181
Homebuilding Cost of Revenues:
Home sale cost of revenues
(2,028,622
)
(1,954,160
)
(5,369,568
)
(5,276,232
)
Land sale cost of revenues
(7,350
)
(22,060
)
(35,615
)
(71,791
)
(2,035,972
)
(1,976,220
)
(5,405,183
)
(5,348,023
)
Financial Services expenses
(32,514
)
(32,213
)
(94,864
)
(96,650
)
Selling, general, and administrative
expenses
(270,625
)
(252,757
)
(782,791
)
(719,706
)
Other expense, net
(5,108
)
(3,488
)
(9,581
)
(6,753
)
Income before income taxes
366,146
384,688
903,625
1,018,049
Income tax expense
(93,042
)
(95,153
)
(222,723
)
(233,674
)
Net income
$
273,104
$
289,535
$
680,902
$
784,375
Per share:
Basic earnings
$
0.99
$
1.01
$
2.44
$
2.72
Diluted earnings
$
0.99
$
1.01
$
2.44
$
2.71
Cash dividends declared
$
0.11
$
0.09
$
0.33
$
0.27
Number of shares used in
calculation:
Basic
272,992
283,489
275,734
285,127
Effect of dilutive securities
640
1,183
858
1,301
Diluted
273,632
284,672
276,592
286,428
PulteGroup, Inc.
Condensed Consolidated Balance
Sheets
($000's omitted)
(Unaudited)
September 30, 2019
December 31, 2018
ASSETS
Cash and equivalents
$
736,986
$
1,110,088
Restricted cash
31,658
23,612
Total cash, cash equivalents, and
restricted cash
768,644
1,133,700
House and land inventory
7,830,059
7,253,353
Land held for sale
34,495
36,849
Residential mortgage loans
available-for-sale
383,893
461,354
Investments in unconsolidated entities
62,182
54,590
Other assets
864,846
830,359
Intangible assets
128,592
127,192
Deferred tax assets, net
191,802
275,579
$
10,264,513
$
10,172,976
LIABILITIES AND SHAREHOLDERS’
EQUITY
Liabilities:
Accounts payable
$
389,843
$
352,029
Customer deposits
333,672
254,624
Accrued and other liabilities
1,327,241
1,360,483
Income tax liabilities
38,624
11,580
Financial Services debt
249,360
348,412
Notes payable
2,744,181
3,028,066
5,082,921
5,355,194
Shareholders' equity
5,181,592
4,817,782
$
10,264,513
$
10,172,976
PulteGroup, Inc.
Consolidated Statements of
Cash Flows
($000's omitted)
(Unaudited)
Nine Months Ended
September 30,
2019
2018
Cash flows from operating
activities:
Net income
$
680,902
$
784,375
Adjustments to reconcile net income to net
cash from operating activities:
Deferred income tax expense
83,752
230,335
Land-related charges
17,549
13,973
Depreciation and amortization
40,302
36,717
Share-based compensation expense
21,389
21,521
Other, net
2,567
(3,466
)
Increase (decrease) in cash due to:
Inventories
(427,183
)
(263,734
)
Residential mortgage loans
available-for-sale
76,813
218,900
Other assets
4,146
(22,117
)
Accounts payable, accrued and other
liabilities
82,543
(1,524
)
Net cash provided by (used in) operating
activities
582,780
1,014,980
Cash flows from investing
activities:
Capital expenditures
(43,162
)
(46,529
)
Investments in unconsolidated entities
(8,515
)
(1,000
)
Business acquisition
(163,724
)
—
Other investing activities, net
5,009
15,545
Net cash provided by (used in) investing
activities
(210,392
)
(31,984
)
Cash flows from financing
activities:
Repayments of notes payable
(297,411
)
(82,655
)
Borrowings under revolving credit
facility
—
1,566,000
Repayments under revolving credit
facility
—
(1,566,000
)
Financial Services borrowings
(repayments)
(99,052
)
(187,071
)
Debt issuance costs
—
(8,165
)
Stock option exercises
6,368
5,462
Share repurchases
(244,388
)
(172,060
)
Cash paid for shares withheld for
taxes
(10,726
)
(7,379
)
Dividends paid
(92,235
)
(78,284
)
Net cash provided by (used in) financing
activities
(737,444
)
(530,152
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
(365,056
)
452,844
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
$
768,644
$
759,012
Supplemental Cash Flow
Information:
Interest paid (capitalized), net
$
19,569
$
16,747
Income taxes paid (refunded), net
$
60,329
$
88,544
PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
HOMEBUILDING:
Home sale revenues
$
2,637,002
$
2,572,236
$
6,990,417
$
6,933,888
Land sale and other revenues
8,548
25,510
40,993
104,971
Total Homebuilding revenues
2,645,550
2,597,746
7,031,410
7,038,859
Home sale cost of revenues
(2,028,622
)
(1,954,160
)
(5,369,568
)
(5,276,232
)
Land sale cost of revenues
(7,350
)
(22,060
)
(35,615
)
(71,791
)
Selling, general, and administrative
expenses ("SG&A")
(270,625
)
(252,757
)
(782,791
)
(719,706
)
Other expense, net
(5,091
)
(3,714
)
(9,582
)
(7,263
)
Income before income taxes
$
333,862
$
365,055
$
833,854
$
963,867
FINANCIAL SERVICES:
Income before income taxes
$
32,284
$
19,633
$
69,771
$
54,182
CONSOLIDATED:
Income before income taxes
$
366,146
$
384,688
$
903,625
$
1,018,049
OPERATING METRICS:
Gross margin % (a)(b)
23.1
%
24.0
%
23.2
%
23.9
%
SG&A % (a)
(10.3
)%
(9.8
)%
(11.2
)%
(10.4
)%
Operating margin % (a)
12.8
%
14.2
%
12.0
%
13.5
%
(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
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
Home sale revenues
$
2,637,002
$
2,572,236
$
6,990,417
$
6,933,888
Closings - units
Northeast
388
350
956
1,002
Southeast
1,067
1,101
2,915
3,097
Florida
1,326
1,241
3,586
3,262
Midwest
944
1,014
2,492
2,653
Texas
1,194
1,114
3,162
3,019
West
1,267
1,211
3,299
3,365
6,186
6,031
16,410
16,398
Average selling price
$
426
$
427
$
426
$
423
Net new orders - units
Northeast
424
353
1,240
1,251
Southeast
994
948
3,281
3,300
Florida
1,340
1,173
4,146
3,964
Midwest
895
823
2,894
2,980
Texas
1,103
1,005
3,792
3,511
West
1,275
1,048
3,933
3,560
6,031
5,350
19,286
18,566
Net new orders - dollars
$
2,538,708
$
2,278,357
$
8,165,268
$
7,866,177
Unit backlog
Northeast
754
761
Southeast
1,976
1,919
Florida
2,449
2,380
Midwest
1,804
1,814
Texas
2,122
1,918
West
2,533
2,372
11,638
11,164
Dollars in backlog
$
5,010,999
$
4,911,353
PulteGroup, Inc.
Segment Data,
continued
($000's omitted)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
MORTGAGE ORIGINATIONS:
Origination volume
4,301
3,692
11,019
10,319
Origination principal
$
1,365,940
$
1,138,389
$
3,442,557
$
3,170,206
Capture rate
83.7
%
75.0
%
81.6
%
76.0
%
Supplemental Data
($000's omitted)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
Interest in inventory, beginning of
period
$
234,709
$
243,627
$
227,495
$
226,611
Interest capitalized
39,893
42,743
123,924
130,474
Interest expensed
(46,040
)
(43,583
)
(122,857
)
(114,298
)
Interest in inventory, end of period
$
228,562
$
242,787
$
228,562
$
242,787
PulteGroup, Inc. Reconciliation of
Non-GAAP Financial Measures (Unaudited)
This report contains information about our operating results
reflecting certain adjustments, including: adjustments to gross
margin; income tax expense; net income; and diluted earnings per
share ("EPS"). 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 as measures of our profitability. We believe that
reflecting these adjustments provides investors relevant and useful
information for evaluating the comparability of financial
information presented and comparing our profitability 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):
Three Months Ended
Results of Operations
Classification
September 30,
2019
2018
Net income, as reported
$
273,104
$
289,535
Adjustments to income before income
taxes:
Warranty claim
Home sale cost of revenues
8,956
—
Income tax effect of the above item
Income tax expense
(2,229
)
—
Adjusted net income
$
279,831
$
289,535
EPS (diluted), as reported
$
0.99
$
1.01
Adjusted EPS (diluted)
$
1.01
$
1.01
Three Months Ended
September 30,
2019
2018
Home sale revenues
$
2,637,002
$
2,572,236
Gross margin, as reported (a)
$
608,380
23.1
%
$
618,076
24.0
%
Adjustments:
Warranty claim
8,956
0.3
%
—
—
%
Adjusted gross margin
$
617,336
23.4
%
$
618,076
24.0
%
(a) Gross margin represents home sale
revenues minus home sale cost of revenues
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191022005192/en/
Investors: Jim Zeumer (404) 978-6434
jim.zeumer@pultegroup.com
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