PulteGroup Reports Second Quarter 2014 Financial Results

ATLANTA, July 24, 2014 /PRNewswire/ --

  • Q2 Earnings of $0.11 Per Share, After Charges of $0.14 Per Share for Insurance Reserves and Office Relocation Costs
  • Q2 Pretax Income of $68 Million After Charges of $88 Million; Q2 2013 Pretax Income of $38 Million After Charges of $67 Million
  • Home Sale Revenues Increased 2% to $1.2 Billion
  • Average Selling Price for Homes Delivered in the Quarter Increased 12% to $328,000
  • Gross Margin of 23.6% Expanded by 480 Basis Points Over Prior Year
  • Value of Net New Orders Increased 5% to $1.6 Billion
  • Higher Absorptions Per Community Drove Signups of 4,778 Homes
  • Backlog Value at Quarter End of $2.8 Billion, Up from $2.7 Billion in 2013
  • 7% Increase in Average Sales Price of Homes in Backlog to $339,000
  • Company Announces New $500 Million Senior Unsecured Revolving Credit Facility

PulteGroup, Inc. (NYSE: PHM) announced today financial results for its second quarter ended June 30, 2014.  For the quarter, net income was $42 million, or $0.11 per share, after pretax charges of $88 million, or $0.14 per share, for insurance reserves and office relocation costs.  Net income for the second quarter reflects $26 million, or $0.07 per share, of income tax expense.  Prior year net income was $36 million, or $0.09 per share, after pretax charges of $67 million, or $0.17 per share, resulting from a contractual dispute, debt repurchases and corporate relocation.  Prior year net income reflects $2 million, or less than $0.01 per share, of income tax expense.

"The ongoing gains demonstrated in PulteGroup's second quarter operating results reflect the benefits of company-specific initiatives and favorable macro conditions that exist in today's housing market," said Richard J. Dugas, Jr. , Chairman, President and Chief Executive Officer of PulteGroup.  "Price appreciation, which in combination with the operational improvements we continue to realize, supported a 480 basis point increase in gross margin to 23.6% and corresponding gains in quarterly net income.

"Our view of the U.S. housing market remains positive, as improvements in both the economy and employment provide ongoing support to an industry already benefiting from low inventory, low mortgage rates, better pricing and favorable demographic trends.  Within this environment, our strong operating gains enable us to continue increasing investment into the business, while continuing to drive excellent returns on invested capital."

Second Quarter Results

Home sale revenues for the second quarter increased 2% to $1.2 billion.  Higher revenues for the period were driven by a 12% increase in average selling price to $328,000, partially offset by a 9% decrease in closings to 3,798 homes.  The higher average selling price in the quarter is the result of price increases realized across all three of the Company's brands serving entry level, move up and active adult homebuyers.

The Company's home sale gross margin for the period was 23.6%, which is an increase of 480 basis points over the prior year.  Homebuilding SG&A expense for the quarter was $230 million, or 18.4% of home sale revenues, compared with $151 million, or 12.3% last year.  Higher SG&A for the period was due primarily to an $84 million charge for increased insurance reserves.

"The adjustment to insurance reserves was primarily driven by estimated costs associated with siding repairs in certain previously completed communities in the west that, in turn, impacted actuarial estimates for potential future claims," said Bob O'Shaughnessy , Executive Vice President and Chief Financial Officer.  "We are in the process of making needed repairs and look to complete the work in a timely and cost-efficient manner."

The value of net new orders for the second quarter increased 5% to $1.6 billion.  On a unit basis, net new orders for the period were 4,778 homes, compared with 4,885 in the prior year.  For the quarter, the Company operated out of 589 communities, which is a decrease of 6% from the second quarter of 2013.

PulteGroup's quarter-end backlog was 8,179 homes valued at $2.8 billion, compared with a prior year backlog of 8,558 homes with a value of $2.7 billion.  The average price of homes in backlog was $339,000 which is up 7% over last year and up 3% from the average selling price of homes delivered in the second quarter.

The Company's financial services operations reported second quarter pretax income of $9 million compared with $16 million in the prior year.  Mortgage capture rate for the quarter was 80%, which is unchanged from the prior year.  The reduction in pretax income for the period was the result of lower origination volumes and the more competitive operating conditions that continue to exist within the mortgage industry.

During the quarter, PulteGroup invested $395 million in land acquisition and development.  The Company also repurchased 2.8 million shares of common stock for $53 million, or an average price of $19.12 per share.  The Company ended the quarter with $1.3 billion of cash.

Effective July 23, 2014, PulteGroup entered into a new three year, $500 million senior unsecured revolving credit facility.   The revolver includes an uncommitted accordion feature which could increase its size to $1.0 billion, subject to certain conditions and availability of additional bank commitments. The revolver is expected to be used primarily to replace a letter of credit facility that is set to expire later this year.

A conference call discussing PulteGroup's second quarter 2014 results is scheduled for Thursday, July 24, 2014, at 8:30 a.m. Eastern Time.  Interested investors can access the live webcast via PulteGroup's corporate website at

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; 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, 2013, 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;;; and


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