News

04.22.15

PulteGroup, Inc. Reports First Quarter 2015 Financial Results

ATLANTA, April 23, 2015 /PRNewswire/ --

  • Q1 Net Income of $55 Million, or $0.15 Per Share; Prior Year Net Income of $75 Million, or $0.19 Per Share, Includes a Net Benefit of $0.02 Per Share from Reversal of Mortgage Reserves Partially Offset by Debt Redemption Charges
  • Net New Orders Increased 6% to 5,139 Homes
  • Value of Net New Orders Increased 6% to $1.7 Billion
  • Q1 Community Count of 613, Up 5% Over the Prior Year
  • Average Closing Price Increased 2% to $323,000 Per Home
  • Gross Margin of 22.7% Consistent with Company Guidance
  • Unit Backlog Increased 6% to 7,624 Homes Valued at $2.6 Billion
  • Repurchased $100 Million of Stock in the Quarter

PulteGroup, Inc. (NYSE: PHM) announced today financial results for its first quarter ended March 31, 2015.  For the quarter, the Company reported net income of $55 million, or $0.15 per share.  Prior year net income of $75 million, or $0.19 per share, includes a net benefit of $0.02 per share relating to the reversal of mortgage repurchase reserves partially offset by expenses associated with debt redemption charges. 

"The improving demand conditions that we noted toward the end of 2014 carried through the first quarter of 2015 and provided a strong start to the spring selling season," said Richard J. Dugas, Jr. , PulteGroup Chairman, President and CEO.  "We remain encouraged by overall housing demand which continues along a sustained but slow recovery path supported by an improving job market, favorable demographics, low interest rates and generally low inventory of available homes."

"Although Q1 earnings were impacted by higher income tax expense, acquisition accounting and construction delays which slowed closings, we generated a 6% increase in unit signups while maintaining high absorption paces and low incentive levels.  Given the favorable demand environment and ongoing benefits from our Value Creation initiatives, we are well positioned to deliver another year of excellent operating and financial results," said Dugas.   

Home sale revenues for the first quarter were $1.1 billion, which was comparable with the prior year.  Revenues for the quarter reflect a 2% increase in average selling price to $323,000, offset by a 2% decrease in closings to 3,365 homes.  The higher average selling price was the result of price increases realized across all three of the Company's national brands: Centex, Pulte and Del Webb

Home sale gross margin for the quarter was 22.7% which was in line with Company guidance. Margins for the period reflect the impact of a 30 basis point reduction from acquisition accounting associated with the Company's 2014 purchase of certain assets from Dominion Homes.  Homebuilding SG&A expense for the period was $161 million, or 14.8% of home sale revenues, compared with $145 million, or 13.3% of home sale revenues, in the comparable prior year quarter. 

For the quarter, net new orders gained 6% over the prior year to 5,139 homes.  The dollar value of net new orders also increased 6% over the prior year to $1.7 billion.  For the quarter, the Company operated out of 613 communities which is an increase of 5% over last year.

PulteGroup's backlog at quarter end totaled 7,624 homes valued at $2.6 billion, compared with prior year backlog of 7,199 homes valued at $2.4 billion.  The average price in backlog of $336,000 is consistent with backlog as of March 31, 2014, and up 1% over December 31, 2014.

The Company's financial services operations reported pretax income of $5 million for the quarter, compared with pretax income of $22 million in the prior year.  First quarter 2014 pretax income included a $19 million benefit relating to the reversal of a portion of the Company's mortgage repurchase reserves.  Mortgage capture rate for the quarter was 82% compared with 78% in the comparable prior year period. 

Income tax expense for the period was $41 million, or an effective tax rate of 42.6%, which is higher than Company guidance of 38%.  The higher tax rate for the period reflects a charge of $0.02 per share relating to an adjustment to the Company's deferred tax asset resulting from a change in its prospective effective tax rate.  The Company currently estimates that its normalized tax rate for future quarters will remain near its previous guidance of 38%.

The Company ended the quarter with $1.1 billion of cash after investing $484 million in land and repurchasing 4.6 million shares of common stock in the period for $100 million, or an average price of $21.75 per share.

A conference call discussing PulteGroup's first quarter results is scheduled for Thursday, April 23, 2015, 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," "project," "may," "can," "could," "might," "will" and similar expressions identify forward-looking statements, including statements related to 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; continued volatility in the debt and equity markets; competition within the industries in which PulteGroup operates; the availability and cost of land and other raw materials used by PulteGroup in its 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; the availability and cost of insurance covering risks associated with PulteGroup's 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; economic changes nationally or in PulteGroup's 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, 2014, 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, GA, 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 and DiVosta Homes, 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 and www.divosta.com.

 

 

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PulteGroup, Inc.

Consolidated Results of Operations

($000's omitted, except per share data)

(Unaudited)






Three Months Ended


March 31,


2015


2014

Revenues:




Homebuilding




Home sale revenues

$

1,088,158



$

1,088,015


Land sale revenues

17,542



5,984



1,105,700



1,093,999


Financial Services

27,598



24,895


Total revenues

1,133,298



1,118,894






Homebuilding Cost of Revenues:




Home sale cost of revenues

841,145



828,603


Land sale cost of revenues

13,378



5,011



854,523



833,614


Financial Services expenses

22,541



3,322


Selling, general and administrative expenses

161,312



144,887


Other expense, net

1,136



13,831


Interest income

(1,099)



(1,111)


Interest expense

187



213


Equity in earnings of unconsolidated entities

(1,107)



(5,891)


Income before income taxes

95,805



130,029


Income tax expense

40,834



55,210


Net income

$

54,971



$

74,819






Per share: