PulteGroup Reports Financial Results For 2012 Fourth Quarter

BLOOMFIELD HILLS, Mich., Jan. 31, 2013 /PRNewswire/ -- PulteGroup, Inc. (NYSE: PHM) announced today financial results for its fourth quarter ended December 31, 2012.  For the quarter, PulteGroup reported net income of $59 million, or $0.15 per share.  Reported net income includes charges of $49 million, or $0.13 per share, for potential future loan repurchase obligations, and $32 million, or $0.08 per share, relating to the repurchase of $496 million of senior notes in the period.  These charges were partially offset by $8 million, or $0.02 per share, of income tax benefits associated with the favorable resolution of certain tax matters.    

In the prior year fourth quarter, PulteGroup reported net income of $14 million, or $0.04 per share, inclusive of net charges totaling $27 million, or $0.07 per share, related to potential future loan repurchase obligations, land-related charges, and debt repurchases, partially offset by land-sale gains and income tax benefits.    

"We are pleased to report another quarter of strong financial results that demonstrate improved fundamental operating performance and higher returns on invested capital," said Richard J. Dugas, Jr. , Chairman, President and CEO of PulteGroup.  "Improving market conditions, combined with the value creation initiatives we have implemented over the last two years, helped to drive a 320 basis point increase in our adjusted gross margin to 21.8%.  In addition, our continued focus on cost controls enabled us to realize a 40 basis point decrease in our SG&A as a percentage of home sales to 9.6%." 

"Fourth quarter results also demonstrated continued strong cash flow generation consistent with our focus on greater capital efficiency.  For the full year, we were able to increase our cash position by $292 million after paying down almost $600 million of senior notes."

"We now look ahead to 2013 with expectations for a continued rebound in U.S. housing driven by record low interest rates, higher rent vs. own costs, rising home prices and sharply lower overall housing inventory.  Given this expectation, and consistent with our focus on improving long-term returns, we have authorized an additional $250 million per year of investment in land and related development in 2013 and 2014.  This incremental investment, which will raise planned land spend for each year to approximately $1.2 billion, will be made using the same disciplined capital investment process we established 18 months ago.  The incremental investment is expected to provide additional land resources for use primarily in 2014 and beyond."      

Fourth Quarter Results

Home sale revenues in the fourth quarter ended December 31, 2012, totaled $1.5 billion, an increase of 27% over the prior year's fourth quarter.  The increase in revenue was driven by a 20% increase in closings to 5,154 homes, combined with a 6% increase in average selling price to $287,000.  The higher average selling price reported for the quarter reflects price increases, as well as a continued shift in product mix to include more move-up homes being closed in the period. 

The Company's adjusted home sale gross margin for the fourth quarter was 21.8%, an increase of 320 basis points over the prior year and 20 basis points compared with the third quarter of 2012.  Homebuilding SG&A expense for the quarter was $142 million, or 9.6% of home sale revenues.  SG&A for the prior year period was $117 million, or 10.0% of home sale revenues.  

For the quarter, the Company reported 3,926 net new orders, an increase of 27% over prior year orders of 3,084.  The dollar value of net new orders in the quarter was $1.2 billion, an increase of 41% over the prior year order value of $828 million.  The Company operated out of 4% fewer communities in the fourth quarter of 2012 compared with the comparable prior year period.  Contract backlog at year end was valued at $1.9 billion and totaled 6,458 homes, which represent increases of 82% and 65%, respectively, over the prior year.  

The Company's financial services operations reported a pretax loss of $24 million in the quarter, inclusive of a $49 million charge associated with potential future loan repurchase obligations.  The increase in estimated repurchase obligations primarily reflects the Company's expectation that repurchase requests will now continue through 2014, or a year longer than previously estimated, coupled with a higher volume of repurchase requests experienced in 2012.  

During the quarter, the Company used available cash to repurchase $496 million principal value of its senior notes, resulting in a pretax charge of $32 million.  Combined with transactions completed earlier in the year, the Company retired an aggregate $592 million principal value of its senior notes during 2012 which helped to lower the Company's year-end debt and net debt-to-total capitalization to 53% and 32%, respectively.

A conference call discussing PulteGroup's fourth quarter results will be held Thursday, January 31, 2013, at 8:30 a.m. Eastern Time, and webcast live via pultegroupinc.com.  Interested investors can access the call via the Company's home page at pultegroupinc.com, and are encouraged to download the available slides that provide additional details on the Company's fourth quarter results. 

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 continuing adverse conditions in 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; 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, 2011, 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 Bloomfield Hills, Mich., is one of America's largest homebuilding companies with operations in approximately 60 markets throughout the country. Through its brand portfolio that includes Centex, Pulte Homes and Del Webb , 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 new homes designed for the way people actually live today. As the most awarded homebuilder in customer satisfaction, PulteGroup brands have consistently ranked among top homebuilders in third-party customer satisfaction studies.

For more information about PulteGroup, Inc. and PulteGroup brands, go to pultegroupinc.com; www.pulte.com; www.centex.com; and www.delwebb.com.

PulteGroup, Inc.
Reconciliation of Non-GAAP Financial Measures

This report contains information about our home sale gross margins reflecting certain adjustments.  This measure is considered a non-GAAP financial measure under the SEC's rules and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measure as a measure of our operating performance.  Management and our local divisions use this measure in evaluating the operating performance of each community and in making strategic decisions regarding sales pricing, construction and development pace, product mix, and other daily operating decisions.  We believe it is a relevant and useful measure to investors for evaluating our performance through gross profit generated on homes delivered during a given period and for comparing our operating performance 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 gross margins and any adjustments thereto before comparing our measure to that of such other companies.

The following table sets forth a reconciliation of this non-GAAP financial measure to the GAAP financial measure that management believes to be most directly comparable ($000's omitted):

SOURCE PulteGroup, Inc.

Investors: Jim Zeumer, +1-248-433-4502, jim.zeumer@pultegroup.com