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

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