News

10.22.14

PulteGroup Reports Third Quarter 2014 Financial Results

ATLANTA, Oct. 23, 2014 /PRNewswire/ --

  • Q3 Pretax Income of $225 Million Increased 29% from the Prior Year
  • Q3 Earnings of $0.37 Per Share; Prior Year Earnings of $5.87 Per Share Reflect the Reversal of $2.1 Billion of the Company's Deferred Tax Asset Valuation Allowance
  • Home Sale Revenues Increased 4% to $1.6 Billion Driven by an 8% Increase in Average Selling Price to $334,000
  • Gross Margin of 22.9%, Which Includes the Impact of Acquisition Accounting Adjustments Associated with its Purchase of the Homebuilding Assets of Dominion Homes, Increased 200 Basis Points Over 2013
  • Q3 Absorption Pace Increased 5% Excluding Impact of Dominion Acquisition
  • Q3 Backlog Value Increased 8% to $2.6 Billion on a Unit Backlog Increase of 5% to 7,934 Homes, Inclusive of Assumed Dominion Backlog
  • In a Separate Release, the Company Announced a 60% Increase of its Quarterly Dividend to $0.08 Per Share and Expansion of its Share Repurchase Authorization by $750 Million

PulteGroup, Inc. (NYSE: PHM) announced today financial results for its third quarter ended September 30, 2014.  For the quarter, the Company reported net income of $141 million, or $0.37 per share.  Net income for the period reflects $84 million, or $0.22 per share, of income tax expense.  Prior year net income of $2.3 billion, or $5.87 per share, reflects $2.1 billion, or $5.42 per share, of income tax benefit primarily related to the reversal of the Company's deferred tax asset valuation allowance.

"I am extremely pleased with the benefits we continue to realize from our Value Creation strategy and with the resulting balance sheet strength and flexibility we have today," said Richard J. Dugas, Jr. , Chairman, President and Chief Executive Officer of PulteGroup.  "By remaining disciplined in our construction and land investment practices, we continue to improve our returns on invested capital while positioning the Company to take advantage of market opportunities.

"Our view of the U.S. housing market remains positive, as continued improvements in both the economy and employment provide ongoing support to an industry that continues to benefit from low inventory, low mortgage rates and favorable demographic trends.  Further, we are encouraged by proposed changes at FHFA which have the potential to improve mortgage availability, particularly for first-time homebuyers.  Consistent with our expectation for an ongoing recovery in housing, we have authorized $2.4 billion for land investment in 2015, an increase of $600 to $700 million over our expected 2014 land expenditures.

"Our first priority in allocating capital is to invest responsibly in our business, and then to return excess funds to shareholders in the form of dividends and share repurchases on a routine and systematic basis.  Given the strong cash flows we expect to realize in the future, our Board has approved a 60% increase of PulteGroup's quarterly dividend to $0.08 per share and a $750 million increase in our share repurchase authorization.  By intelligently investing in our business while routinely returning funds to shareholders, we are aligning our capital allocation decisions with our Value Creation strategy and our fundamental goal of increasing long-term total shareholder returns."

Third Quarter Results

On August 25, 2014, PulteGroup announced that it had acquired certain real estate assets from Dominion Homes, including control of approximately 8,200 lots and the assumption of 622 homes in backlog.  PulteGroup's third quarter results, which reflect the contribution from these assets for approximately 5 weeks of the quarter, include 64 signups and 86 closings from 33 communities.

Home sale revenues for the third quarter increased 4% from the prior year to $1.6 billion.  Higher revenues for the period were driven by an 8% increase in average selling price to $334,000, partially offset by a 4% decrease in closings to 4,646 homes.  The higher average selling price realized in the quarter reflects price increases implemented by the Company in our move-up and active adult communities which typically carry higher selling prices.

For the third quarter, pretax income from homebuilding operations increased 31% to $214 million, compared with prior year pretax income of $164 million.  The Company's home sale gross margin for the period was 22.9%, an increase of 200 basis points over the prior year.  Reported gross margin for the period was impacted by acquisition accounting adjustments associated with the Company's purchase of Dominion homebuilding assets.  Homebuilding SG&A expense for the quarter was $147 million, or 9.5% of home sale revenues.

Net new orders for the third quarter totaled 3,779 homes, which is comparable with the prior year.  On a dollar basis, signup value was $1.3 billion, which is up 3% from the third quarter of 2013.  The Company ended the quarter with 600 active communities, which is consistent with the prior year.  PulteGroup's quarter-end backlog of 7,934 homes, including backlog relating to acquired Dominion assets, was valued at $2.6 billion, compared with prior year backlog of 7,522 homes with a value of $2.4 billion.

The Company's financial services operations reported third quarter pretax income of $11 million, which is comparable with prior year results.  Mortgage capture rate for the quarter was 80%, which is consistent with the same quarter last year.

During the quarter, PulteGroup invested $525 million in land acquisition and development, raising its total land spend through the first nine months of 2014 to $1.25 billion.  The Company also repurchased 2.7 million shares of common stock for $50.3 million, or an average price of $18.85 per share.  PulteGroup ended the quarter with $1.2 billion of cash.

Company Significantly Increases Dividend and Share Repurchase Authorization

In a separate press release issued today, PulteGroup announced that its Board of Directors voted to increase its quarterly dividend by 60% to $0.08 per share.  The Board also approved an increase in the Company's share repurchase authorization of $750 million.  At the end of the third quarter, the Company had $85 million available under its existing repurchase authorization.

A conference call discussing PulteGroup's third quarter 2014 results is scheduled for Thursday, October 23, 2014, 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, 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, Georgia, 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.

 

 

 

PulteGroup, Inc.

Consolidated Results of Operations

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

(Unaudited)














Three Months Ended


Nine Months Ended


September 30,


September 30,


2014


2013


2014


2013

Revenues:












Homebuilding












  Home sale revenues

$

1,551,226



$

1,491,959



$

3,885,703



$

3,811,386


  Land sale revenues

10,047



55,783



24,558



102,299



1,561,273



1,547,742



3,910,261



3,913,685


Financial Services

33,452



34,336



89,544



110,571


Total revenues

1,594,725



1,582,078



3,999,805



4,024,256














Homebuilding Cost of Revenues:












Home sale cost of revenues

1,195,369



1,180,137



2,976,665



3,072,425


Land sale cost of revenues

3,539



49,933



15,382



92,661



1,198,908



1,230,070



2,992,047



3,165,086


Financial Services expenses

22,623



23,244



48,058



68,867


Selling, general and administrative expenses

147,136



138,637



521,791



418,794


Other expense, net

2,406



17,055



25,561



79,166


Interest income

(1,205)



(1,036)



(3,431)



(3,321)


Interest expense

210



171



625



544


Equity in (earnings) loss of unconsolidated entities

(281)



(785)



(7,483)



(282)


Income before income taxes

224,928



174,722



422,637



295,402


Income tax expense (benefit)

84,383



(2,107,162)



165,393



(2,104,661)


Net income

$

140,545



$

2,281,884



$

257,244



$

2,400,063














Per share:












Basic earnings

$

0.37



$

5.92



$

0.68



$

6.20


Diluted earnings

$

0.37



$

5.87



$

0.67



$

6.14


Cash dividends declared

$

0.05



$

0.10



$

0.15



$

0.10














Number of shares used in calculation:












Basic

373,531



382,883



376,097



384,159


Effect of dilutive securities

3,761



3,220



3,723



3,745


Diluted

377,292



386,103



379,820



387,904


 

 

PulteGroup, Inc.

Condensed Consolidated Balance Sheets

($000's omitted)

(Unaudited)








September 30,
 2014


December 31,
 2013







ASSETS












Cash and equivalents

$

1,221,817



$

1,580,329


Restricted cash

25,003



72,715


House and land inventory

4,431,801



3,978,561


Land held for sale

93,162



61,735


Land, not owned, under option agreements

16,817



24,024


Residential mortgage loans available-for-sale

236,372



287,933


Investments in unconsolidated entities

40,295



45,323


Other assets

500,744



460,621


Intangible assets

126,340



136,148


Deferred tax assets, net

1,922,294



2,086,754



$

8,614,645



$

8,734,143








LIABILITIES AND SHAREHOLDERS' EQUITY












Liabilities:






Accounts payable

$

299,004



$

202,736


Customer deposits

192,551



134,858


Accrued and other liabilities

1,327,819



1,377,750


Income tax liabilities

196,214



206,015


Financial Services debt

71,594



105,664


Senior notes

1,817,054



2,058,168



3,904,236



4,085,191








Shareholders' equity

4,710,409



4,648,952









$

8,614,645



$

8,734,143


 

 

 

PulteGroup, Inc.

Consolidated Statements of Cash Flows

($000's omitted)

(Unaudited)


Nine Months Ended


September 30,


2014


2013

Cash flows from operating activities:






Net income

$

257,244



$

2,400,063


Adjustments to reconcile net income to net cash flows provided by (used in)

  operating activities:






Deferred income tax expense

164,460



(2,108,756)


Depreciation and amortization

28,864



23,134


Stock-based compensation expense

21,290



21,570


Equity in (earnings) loss of unconsolidated entities

(7,483)



(282)


Distributions of earnings from unconsolidated entities

4,824



1,693


Loss on debt retirements

8,584



26,930


Other non-cash, net

8,211



12,314


Increase (decrease) in cash due to:






Restricted cash

(689)



1,654


Inventories

(384,571)



89,040


Residential mortgage loans available-for-sale

49,600



21,967


Other assets

(12,802)



(29,989)


Accounts payable, accrued and other liabilities

74,102



97,607


Income tax liabilities

(9,799)



(1,995)


Net cash provided by (used in) operating activities

201,835



554,950


Cash flows from investing activities:






Distributions from unconsolidated entities

7,624



200


Investments in unconsolidated entities

(9)



(1,057)


Net change in loans held for investment

(6,338)



236


Change in restricted cash related to letters of credit

48,401



875


Proceeds from the sale of property and equipment

83



9


Capital expenditures

(41,888)



(18,354)


Cash used for business acquisitions

(77,469)




Net cash provided by (used in) investing activities

(69,596)



(18,091)


Cash flows from financing activities:






Financial Services borrowings (repayments)

(34,070)



(23,697)


Other borrowings (repayments)

(250,631)



(477,220)


Stock option exercises

6,034



18,549


Stock repurchases

(155,140)



(89,940)


Dividends paid

(56,944)



(19,317)


Net cash provided by (used in) financing activities

(490,751)



(591,625)


Net increase (decrease) in cash and equivalents

(358,512)



(54,766)


Cash and equivalents at beginning of period

1,580,329



1,404,760


Cash and equivalents at end of period

$

1,221,817



$

1,349,994








Supplemental Cash Flow Information:






Interest paid (capitalized), net

$

(23,236)



$

(18,304)


Income taxes paid (refunded), net

$

(1,054)



$

(792)


 

PulteGroup, Inc.

Segment Data

($000's omitted)

(Unaudited)














Three Months Ended


Nine Months Ended


September 30,


September 30,


2014


2013


2014


2013

HOMEBUILDING:












Home sale revenues

$

1,551,226



$

1,491,959



$

3,885,703



$

3,811,386


Land sale revenues

10,047



55,783



24,558



102,299


Total Homebuilding revenues

1,561,273



1,547,742



3,910,261



3,913,685














Home sale cost of revenues

1,195,369



1,180,137



2,976,665



3,072,425


Land sale cost of revenues

3,539



49,933



15,382



92,661


Selling, general and administrative expenses

147,136



138,637



521,791



418,794


Equity in (earnings) loss of  unconsolidated entities

(233)



(749)



(7,391)



(186)


Other expense, net

2,406



17,055



25,561



79,166


Interest income, net

(995)



(865)



(2,806)



(2,777)


Income before income taxes

$

214,051



$

163,594



$

381,059



$

253,602














FINANCIAL SERVICES:












Income before income taxes

$

10,877



$

11,128



$

41,578



$

41,800














CONSOLIDATED:












Income before income taxes

$

224,928



$

174,722



$

422,637



$

295,402


 

 

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)














Three Months Ended


Nine Months Ended


September 30,


September 30,


2014


2013


2014


2013













Home sale revenues

$

1,551,226



$

1,491,959



$

3,885,703



$

3,811,386














Closings - units












Northeast

383



532



1,072



1,212


Southeast

833



823



2,265



2,209


Florida

754



760



1,944



1,992


Texas

963



976



2,629



2,833


North

1,098



926



2,406



2,333


Southwest

615



800



1,564



2,223



4,646



4,817



11,880



12,802


Average selling price

$

334



$

310



$

327



$

298














Net new orders - units












Northeast

336



405



1,160



1,519


Southeast

756



714



2,460



2,560


Florida

650



589



2,274



2,094


Texas

735



813



3,046



2,881


North

778



720



2,658



2,665


Southwest

524



540



1,822



2,147



3,779



3,781



13,420



13,866


Net new orders - dollars (a)

$

1,251,081



$

1,210,976



$

4,453,895



$

4,312,597














Unit backlog












Northeast







709



929


Southeast







1,248



1,262


Florida







1,243



1,167


Texas







1,667



1,503


North







2,087



1,599


Southwest







980



1,062









7,934



7,522


Dollars in backlog







$

2,615,288



$

2,432,747


























(a)  Net new order dollars represent a composite of new order dollars combined with other movements of the dollars in backlog related to cancellations and change orders.

 

 

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)














Three Months Ended


Nine Months Ended


September 30,


September 30,


2014


2013


2014


2013

MORTGAGE ORIGINATIONS:












Origination volume

2,899



3,126



7,482



8,660


Origination principal

$

724,025



$

733,433



$

1,816,827



$

1,998,697


Capture rate

80.3

%


79.5

%


79.7

%


80.5

%

















 

Supplemental Data

($000's omitted)

(Unaudited)














Three Months Ended


Nine Months Ended


September 30,


September 30,


2014


2013


2014


2013













Interest in inventory, beginning of period

$

210,603



$

298,575



$

230,922



$

331,880


Interest capitalized

32,025



35,962



98,793



118,527


Interest expensed

(52,286)



(68,013)



(139,373)



(183,883)


Interest in inventory, end of period

$

190,342



$

266,524



$

190,342



$

266,524


Interest incurred

$

32,025



$

35,962



$

98,793



$

118,527


 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/pultegroup-reports-third-quarter-2014-financial-results-886877492.html

SOURCE PulteGroup, Inc.

Investors: Jim Zeumer, (404) 978-6434, Email: jim.zeumer@pultegroup.com

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