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PulteGroup Reports Second Quarter 2023 Financial Results

  • Net Income of $3.21 Per Share
  • Home Sale Revenues Increased 8% to $4.1 Billion
  • Closings Increased 5% to 7,518 Homes; Average Sales Price Up 3% to $540,000
  • Home Sale Gross Margin of 29.6%
  • Net New Orders Increased 24% to 7,947 Homes with a Value of $4.3 Billion
  • Unit Backlog of 13,558 Homes with a Value of $8.2 Billion
  • Company Repurchased $250 Million of Shares in the Quarter

PulteGroup, Inc. (NYSE: PHM) announced today financial results for its second quarter ended June 30, 2023. For the quarter, the Company reported net income of $720 million, or $3.21 per share. Reported net income for the quarter includes a $65 million pre-tax, or $0.21 per share, insurance benefit recorded in the period. In the prior year, the Company reported net income for the second quarter of $652 million, or $2.73 per share.

“Our outstanding financial results reflect the benefits of our operating model as we strategically align production of build-to-order and quick-move-in homes with applicable demand across our consumer groups,” said Ryan Marshall, President and Chief Executive Officer of PulteGroup. “By remaining disciplined and balanced in executing our business plan, we were able to realize higher closings and prices in the period, along with driving exceptional margins of 29.6% and a return on equity* of 32%.”

“Our net new orders increased 24% over last year, which reflects our ability to help solve affordability challenges caused by today’s higher mortgage rates and capitalize on the ongoing strength in demand for new homes,” added Mr. Marshall. “While there remains an extremely limited supply of existing homes, we have an expanded community count and a much improved supply chain that has PulteGroup well positioned to meet buyer demand going forward.”

Home sale revenues for the second quarter increased 8% over the prior year to $4.1 billion. Higher revenues in the quarter were driven by a 5% increase in closings to 7,518 homes, in combination with a 3% increase in average sales price to $540,000.

The Company’s second quarter homebuilding gross margin of 29.6% was down 170 basis points from the prior year, but represents a sequential increase of 50 basis points from the first quarter of 2023. Reported second quarter SG&A expense of $315 million, or 7.8% of home sale revenues, includes the $65 million pre-tax insurance benefit recorded in the period. Prior year SG&A expense was $351 million, or 9.3% of home sale revenues.

Net new orders for the second quarter increased 24% over last year to 7,947 homes. The dollar value of net new orders in the second quarter was $4.3 billion, which is an increase of 9% over the prior year period. For the second quarter, the Company operated out of an average of 903 communities, which is an increase of 14% over the second quarter of 2022.

At the end of the second quarter, the Company’s backlog totaled 13,558 homes with a value of $8.2 billion.

Second quarter pre-tax income for the Company's financial services operations increased 16% over last year to $46 million. Mortgage capture rate for the second quarter was 80%, up from 78% last year.

The Company’s reported income tax expense for the second quarter was $233 million, representing an effective tax rate of 24.4%.

The Company ended the second quarter with $1.8 billion of cash and a debt-to-capital ratio of 17.3%. In the second quarter, the Company repurchased 3.7 million of its shares for $250 million, or an average price of $68.31 per share. In the first six months of 2023, the Company repurchased a total 6.4 million shares, or approximately 3% of its outstanding shares, for $400 million, or $62.28 per share.

A conference call discussing PulteGroup's second quarter 2023 results is scheduled for Tuesday, July 25, 2023, 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; the impact of any changes to our strategy in responding to the cyclical nature of the industry or deteriorations in industry changes or downward changes in general economic or other business conditions, including any changes regarding our land positions and the levels of our land spend; 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; labor supply shortages and the cost of labor; the availability and cost of land and other raw materials used by us in our homebuilding operations; a decline in the value of the land and home inventories we maintain and resulting possible future writedowns of the carrying value of our real estate assets; competition within the industries in which we operate; governmental regulation directed at or affecting the housing market, the homebuilding industry or construction activities, slow growth initiatives and/or local building moratoria; the availability and cost of insurance covering risks associated with our businesses, including warranty and other legal or regulatory proceedings or claims; damage from improper acts of persons over whom we do not have control or attempts to impose liabilities or obligations of third parties on us; weather related slowdowns; the impact of climate change and related governmental regulation; adverse capital and credit market conditions, which may affect our access to and cost of capital; the insufficiency of our income tax provisions and tax reserves, including as a result of changing laws or interpretations; the potential that we do not realize our deferred tax assets; our inability to sell mortgages into the secondary market; uncertainty in the mortgage lending industry, including revisions to underwriting standards and repurchase requirements associated with the sale of mortgage loans, and related claims against us; risks related to information technology failures or data security issues; failure to retain key personnel; the disruptions associated with the COVID-19 pandemic (or another epidemic or pandemic or similar public threat or fear of such an event), and the measures taken to address it; the effect of cybersecurity incidents and threats; and other factors of national, regional and global scale, including those of a political, economic, business and competitive nature. See Item 1A – Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for a further discussion of these and other risks and uncertainties applicable to our businesses. We undertake no duty to update any forward-looking statement, whether as a result of new information, future events or changes in our 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 brands, go to pultegroup.com; pulte.com; centex.com; delwebb.com; divosta.com; jwhomes.com; and 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

 

Six Months Ended

 

June 30,

 

June 30,

 

2023

 

2022

 

2023

 

2022

Revenues:

 

 

 

 

 

 

 

Homebuilding

 

 

 

 

 

 

 

Home sale revenues

$

4,058,930

 

 

$

3,763,167

 

 

$

7,546,567

 

 

$

6,795,384

 

Land sale and other revenues

 

37,604

 

 

 

33,810

 

 

 

67,671

 

 

 

66,969

 

 

 

4,096,534

 

 

 

3,796,977

 

 

 

7,614,238

 

 

 

6,862,353

 

Financial Services

 

92,219

 

 

 

82,775

 

 

 

150,156

 

 

 

166,918

 

Total revenues

 

4,188,753

 

 

 

3,879,752

 

 

 

7,764,394

 

 

 

7,029,271

 

 

 

 

 

 

 

 

 

Homebuilding Cost of Revenues:

 

 

 

 

 

 

 

Home sale cost of revenues

 

(2,856,361

)

 

 

(2,584,922

)

 

 

(5,328,690

)

 

 

(4,727,900

)

Land sale and other cost of revenues

 

(32,494

)

 

 

(31,656

)

 

 

(57,461

)

 

 

(63,657

)

 

 

(2,888,855

)

 

 

(2,616,578

)

 

 

(5,386,151

)

 

 

(4,791,557

)

 

 

 

 

 

 

 

 

Financial Services expenses

 

(46,778

)

 

 

(43,847

)

 

 

(90,813

)

 

 

(87,333

)

Selling, general, and administrative expenses

 

(314,637

)

 

 

(351,256

)

 

 

(651,156

)

 

 

(680,279

)

Equity income from unconsolidated entities

 

944

 

 

 

723

 

 

 

3,456

 

 

 

1,944

 

Other income (expense), net

 

13,586

 

 

 

(4,221

)

 

 

15,405

 

 

 

(7,580

)

Income before income taxes

 

953,013

 

 

 

864,573

 

 

 

1,655,135

 

 

 

1,464,466

 

Income tax expense

 

(232,668

)

 

 

(212,138

)

 

 

(402,531

)

 

 

(357,308

)

Net income

$

720,345

 

 

$

652,435

 

 

$

1,252,604

 

 

$

1,107,158

 

 

 

 

 

 

 

 

 

Per share:

 

 

 

 

 

 

 

Basic earnings

$

3.23

 

 

$

2.74

 

 

$

5.58

 

 

$

4.56

 

Diluted earnings

$

3.21

 

 

$

2.73

 

 

$

5.55

 

 

$

4.54

 

Cash dividends declared

$

0.16

 

 

$

0.15

 

 

$

0.32

 

 

$

0.30

 

 

 

 

 

 

 

 

 

Number of shares used in calculation:

 

 

 

 

 

 

 

Basic

 

222,160

 

 

 

236,328

 

 

 

223,635

 

 

 

241,036

 

Effect of dilutive securities

 

1,232

 

 

 

1,318

 

 

 

1,031

 

 

 

1,193

 

Diluted

 

223,392

 

 

 

237,646

 

 

 

224,666

 

 

 

242,229

 

PulteGroup, Inc.

Condensed Consolidated Balance Sheets

($000's omitted)

(Unaudited)

 

June 30,

2023

 

December 31,

2022

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Cash and equivalents

$

1,728,713

 

$

1,053,104

Restricted cash

 

49,067

 

 

41,449

Total cash, cash equivalents, and restricted cash

 

1,777,780

 

 

1,094,553

House and land inventory

 

11,335,048

 

 

11,326,017

Land held for sale

 

34,324

 

 

42,254

Residential mortgage loans available-for-sale

 

432,481

 

 

677,207

Investments in unconsolidated entities

 

151,295

 

 

146,759

Other assets

 

1,295,539

 

 

1,291,572

Goodwill

 

68,930

 

 

68,930

Other intangible assets

 

61,583

 

 

66,875

Deferred tax assets

 

68,936

 

 

82,348

 

$

15,225,916

 

$

14,796,515

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Liabilities:

 

 

 

Accounts payable

$

543,419

 

$

565,975

Customer deposits

 

797,249

 

 

783,556

Deferred tax liabilities

 

295,438

 

 

215,446

Accrued and other liabilities

 

1,536,010

 

 

1,685,202

Financial Services debt

 

315,583

 

 

586,711

Notes payable

 

2,033,192

 

 

2,045,527

 

 

5,520,891

 

 

5,882,417

Shareholders' equity

 

9,705,025

 

 

8,914,098

 

$

15,225,916

 

$

14,796,515

 

PulteGroup, Inc.

Consolidated Statements of Cash Flows

($000's omitted)

(Unaudited)

 

 

Six Months Ended

 

June 30,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net income

$

1,252,604

 

 

$

1,107,158

 

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

 

 

 

Deferred income tax expense

 

93,389

 

 

 

20,823

 

Land-related charges

 

10,110

 

 

 

8,013

 

Depreciation and amortization

 

39,204

 

 

 

33,393

 

Equity income from unconsolidated entities

 

(3,456

)

 

 

(1,944

)

Distributions of income from unconsolidated entities

 

4,564

 

 

 

1,150

 

Share-based compensation expense

 

27,960

 

 

 

29,640

 

Other, net

 

(161

)

 

 

736

 

Increase (decrease) in cash due to:

 

 

 

Inventories

 

52,001

 

 

 

(1,683,129

)

Residential mortgage loans available-for-sale

 

244,516

 

 

 

393,350

 

Other assets

 

(6,602

)

 

 

(87,569

)

Accounts payable, accrued and other liabilities

 

(263,546

)

 

 

280,722

 

Net cash provided by operating activities

 

1,450,583

 

 

 

102,343

 

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(45,076

)

 

 

(62,557

)

Investments in unconsolidated entities

 

(7,858

)

 

 

(50,480

)

Distributions of capital from unconsolidated entities

 

2,216

 

 

 

3,010

 

Business acquisition

 

 

 

 

(10,400

)

Other investing activities, net

 

(3,278

)

 

 

(2,713

)

Net cash used in investing activities

 

(53,996

)

 

 

(123,140

)

Cash flows from financing activities:

 

 

 

Repayments of notes payable

 

(17,305

)

 

 

(4,152

)

Borrowings under revolving credit facility

 

 

 

 

110,000

 

Repayments under revolving credit facility

 

 

 

 

(110,000

)

Financial Services repayments, net

 

(271,128

)

 

 

(183,307

)

Debt issuance costs

 

 

 

 

(11,167

)

Proceeds from liabilities related to consolidated inventory not owned

 

91,354

 

 

 

 

Payments related to consolidated inventory not owned

 

(33,577

)

 

 

 

Share repurchases

 

(400,000

)

 

 

(794,227

)

Cash paid for shares withheld for taxes

 

(10,389

)

 

 

(13,614

)

Dividends paid

 

(72,315

)

 

 

(74,197

)

Net cash used in financing activities

 

(713,360

)

 

 

(1,080,664

)

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

 

683,227

 

 

 

(1,101,461

)

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

 

1,094,553

 

 

 

1,833,565

 

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

$

1,777,780

 

 

$

732,104

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

Interest paid (capitalized), net

$

2,757

 

 

$

230

 

Income taxes paid (refunded), net

$

380,527

 

290,571 

 

PulteGroup, Inc.

Segment Data

($000's omitted)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2023

 

2022

 

2023

 

2022

HOMEBUILDING:

 

 

 

 

 

 

 

Home sale revenues

$ 4,058,930

 

 

$ 3,763,167

 

 

$ 7,546,567

 

 

$ 6,795,384

 

Land sale and other revenues

37,604

 

 

33,810

 

 

67,671

 

 

66,969

 

Total Homebuilding revenues

4,096,534

 

 

3,796,977

 

 

7,614,238

 

 

6,862,353

 

 

 

 

 

 

 

 

 

Home sale cost of revenues

(2,856,361

)

 

(2,584,922

)

 

(5,328,690

)

 

(4,727,900

)

Land sale and other cost of revenues

(32,494

)

 

(31,656

)

 

(57,461

)

 

(63,657

)

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

(314,637

)

 

(351,256

)

 

(651,156

)

 

(680,279

)

Equity income from unconsolidated entities

(110

)

 

(427

)

 

2,402

 

 

794

 

Other income (expense), net

13,586

 

 

(4,218

)

 

15,405

 

 

(7,513

)

Income before income taxes

$ 906,518

 

 

$ 824,498

 

 

$ 1,594,738

 

 

$ 1,383,798

 

 

 

 

 

 

 

 

 

FINANCIAL SERVICES:

 

 

 

 

 

 

 

Income before income taxes

$ 46,495

 

 

$ 40,075

 

 

$ 60,397

 

 

$ 80,668

 

 

 

 

 

 

 

 

 

CONSOLIDATED:

 

 

 

 

 

 

 

Income before income taxes

$ 953,013

 

 

$ 864,573

 

 

$ 1,655,135

 

 

$ 1,464,466

 

 

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

Home sale revenues

$

4,058,930

 

$

3,763,167

 

$

7,546,567

 

$

6,795,384

 

 

 

 

 

 

 

 

Closings - units

 

 

 

 

 

 

 

Northeast

 

315

 

 

386

 

 

652

 

 

648

Southeast

 

1,405

 

 

1,085

 

 

2,573

 

 

2,111

Florida

 

2,067

 

 

1,779

 

 

3,819

 

 

3,212

Midwest

 

918

 

 

1,131

 

 

1,675

 

 

2,075

Texas

 

1,511

 

 

1,483

 

 

2,819

 

 

2,693

West

 

1,302

 

 

1,313

 

 

2,374

 

 

2,477

 

 

7,518

 

 

7,177

 

 

13,912

 

 

13,216

Average selling price

$

540

 

$

524

 

$

542

 

$

514

 

 

 

 

 

 

 

 

Net new orders - units

 

 

 

 

 

 

 

Northeast

 

400

 

 

384

 

 

785

 

 

809

Southeast

 

1,556

 

 

1,304

 

 

2,903

 

 

2,635

Florida

 

1,910

 

 

1,554

 

 

3,788

 

 

3,427

Midwest

 

1,253

 

 

842

 

 

2,336

 

 

2,005

Texas

 

1,388

 

 

1,225

 

 

2,812

 

 

2,739

West

 

1,440

 

 

1,109

 

 

2,677

 

 

2,774

 

 

7,947

 

 

6,418

 

 

15,301

 

 

14,389

Net new orders - dollars

$

4,271,008

 

$

3,903,999

 

$

8,061,001

 

$

8,635,271

 

 

 

 

 

 

 

 

Unit backlog

 

 

 

 

 

 

 

Northeast

 

 

 

 

 

607

 

 

949

Southeast

 

 

 

 

 

2,236

 

 

3,000

Florida

 

 

 

 

 

4,610

 

 

5,645

Midwest

 

 

 

 

 

2,011

 

 

2,618

Texas

 

 

 

 

 

1,782

 

 

3,145

West

 

 

 

 

 

2,312

 

 

3,819

 

 

 

 

 

 

13,558

 

 

19,176

Dollars in backlog

 

 

 

 

$

8,188,502

 

$

11,614,167

 

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2023

 

2022

 

2023

 

2022

MORTGAGE ORIGINATIONS:

 

 

 

 

 

 

 

Origination volume

 

4,539

 

 

 

4,568

 

 

 

8,408

 

 

 

8,625

 

Origination principal

$

1,790,977

 

 

$

1,754,715

 

 

$

3,307,427

 

 

$

3,294,613

 

Capture rate

 

79.7

%

 

 

78.2

%

 

 

79.1

%

 

 

79.5

%

 

Supplemental Data

($000's omitted)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

Interest in inventory, beginning of period

$

141,271

 

 

$

158,670

 

 

$

137,262

 

 

$

160,756

 

Interest capitalized

 

31,927

 

 

 

31,338

 

 

 

63,729

 

 

 

62,921

 

Interest expensed

 

(31,204

)

 

 

(38,454

)

 

 

(58,997

)

 

 

(72,123

)

Interest in inventory, end of period

$

141,994

 

 

$

151,554

 

 

$

141,994

 

 

$

151,554

 

 

PulteGroup, Inc.

Reconciliation of Non-GAAP Financial Measures

This report contains information about our debt-to-capital ratios. These measures could be considered non-GAAP financial measures under the SEC's rules and should be considered in addition to, rather than as a substitute for, comparable GAAP financial measures. We calculate total net debt by subtracting total cash, cash equivalents, and restricted cash from notes payable to present the amount of assets needed to satisfy the debt. We use the debt-to-capital and net debt-to-capital ratios as indicators of our overall leverage and believe they are useful financial measures in understanding the leverage employed in our operations. We believe that these measures provide 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 table sets forth a reconciliation of the debt-to-capital ratios ($000's omitted):

Debt-to-Capital Ratios

 

 

 

 

 

 

 

June 30,

2023

 

December 31,

2022

Notes payable

 

$

2,033,192

 

 

$

2,045,527

 

Shareholders' equity

 

 

9,705,025

 

 

 

8,914,098

 

Total capital

 

$

11,738,217

 

 

$

10,959,625

 

Debt-to-capital ratio

 

 

17.3

%

 

 

18.7

%

 

 

 

 

 

Notes payable

 

$

2,033,192

 

 

$

2,045,527

 

Less: Total cash, cash equivalents, and restricted cash

 

 

(1,777,780

)

 

 

(1,094,553

)

Total net debt

 

$

255,412

 

 

$

950,974

 

Shareholders' equity

 

 

9,705,025

 

 

 

8,914,098

 

Total net capital

 

$

9,960,437

 

 

$

9,865,072

 

Net debt-to-capital ratio

 

 

2.6

%

 

 

9.6

%

 

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