PultGroup Reports Second Quarter 2016 Financial Results, Announces Next Phase Of Value Creation Plan And Adds Three Experienced Executives To Its Board Of Directors

- Reported Q2 Net Income of $0.34 Per Share Includes $0.03 Per Share of Land     and Corporate Office Relocation Charges; Prior Year Net Income of $0.28 Per       Share Included a Benefit of $0.05 Per Share Relating to a Legal Settlement
- Home Sale Revenues Increased 41% to $1.8 Billion; Closings Increased 27% to    4,772 Homes
- Value of Net New Orders Increased 21% to $2.1 Billion; Net New Orders Up 11%    to 5,697 Homes
- Backlog Value Increased 21% to $3.7 Billion; Unit Backlog Increased 8% to           9,679 Homes
- Company Announces Next Phase of Value Creation with Plans to Drive Greater     Overhead Leverage, Moderate the Growth of Future Land Investment and              Increase Share Repurchase Activities Consistent with Stated Capital Allocation      Priorities
- Company Increases Share Repurchase Authorization by $1.0 Billion to $1.5            Billion and Intends to Repurchase $1.5 Billion of its Shares by End of 2017
- Company Adds 3 New Independent Directors, Bringing Additional Industry and        Financial Expertise to its Board

ATLANTA,  July 21, 2016  /PRNewswire/ --  PulteGroup, Inc.  (NYSE: PHM) announced today financial results for its second quarter ended  June 30 , 2016.  For the quarter, the Company's reported net income of  $118 million , or  $0.34  per share, included pretax charges of  $15 million , or  $0.03  per share, associated with the termination of certain pending land transactions and recognition of final costs associated with its corporate relocation.  Prior year net income of  $103 million , or  $0.28  per share, included a pretax benefit of  $27 million , or $0.05  per share, resulting from a legal settlement realized in the period. 

"Building on our strong Q1 results,  PulteGroup  posted another quarter of significant year-over-year growth in signups, closings, revenues and earnings," said  Richard J. Dugas, Jr. , Chairman and Chief Executive Officer of PulteGroup.  "Equally important, given the 21% increase in our backlog value to  $3.7 billion , we believe the Company is well positioned to deliver outstanding full year performance in 2016."

"We remain optimistic about the direction of the overall housing market and expect that current economic conditions, continued job formations and low interest rates can support slow and steady growth in housing demand for the next several years.  Against this backdrop, we believe that our prior period land investments position us well for continued strong earnings growth."

Second Quarter Results
Home sale revenues for the second quarter increased 41% over the prior year to  $1.8 billion .  Higher revenues for the period were driven by a 27% increase in deliveries to 4,772 homes, combined with an 11% increase in average selling price to  $367,000 .

The Company's second quarter home sale gross margin was 21.5%, which is in line with Company guidance.  Margins for the quarter were reduced by approximately 70 basis points as a result of closings associated with the Company's purchase of substantially all of the assets of John Wieland Homes  and Communities in January 2016. 

Homebuilding SG&A expense for the quarter was  $192 million , or 11.0% of home sale revenues.  Prior year SG&A of  $130 million , or 10.5% of home sale revenues, included a benefit of  $27 million  relating to a legal settlement realized in the period. 

The value of net new orders in the second quarter increased 21% to  $2.1 billion .  On a unit basis, net new orders for the period increased 11% to 5,697 homes.  The Company operated out of 700 communities in the quarter, an increase of 11% from the second quarter of 2015.

Backlog value increased 21% over the prior year to  $3.7 billion , while the number of homes in backlog increased 8% to 9,679 homes.  The average price of homes in backlog was  $387,000 , which is up 13% over last year and up 5% from the average selling price of homes delivered in the current quarter.

The Company's financial services operations reported second quarter pretax income of  $17 million  compared with  $10 million  in 2015.  Higher pretax income for the period was the result of higher closing volumes in the Company's homebuilding operations and a favorable interest rate environment.  Mortgage capture rate for the quarter was 81%, compared with 83% in the prior year.

During the quarter,  PulteGroup  repurchased 2.6 million common shares for  $48 million , or an average price of  $18.53  per share.  The Company also used available cash to retire  $465 million of bonds which matured during the second quarter. 

PulteGroup  announced today that its Board approved increasing its existing share repurchase authorization by  $1.0 billion , bringing the total authorization to  $1.5 billion .  At the end of the second quarter, the Company had  $507 million  available under the existing repurchase authorization.  The Company expects that share repurchases will be made from time to time in the open market, through privately negotiated transactions or otherwise subject to market conditions, applicable legal requirements, and other relevant factors. 

Company Announces Next Phase of Value Creation
The Company also announced the next phase of its Value Creation strategy, with plans to drive greater overhead leverage, moderate the growth of future land investment, and increase share repurchase activities consistent with stated capital allocation priorities.  These actions build on the highly successful initiatives it launched in 2011 in support of efforts to deliver higher returns on invested capital.  As part of its Value Creation strategy, the Company established its capital allocation priorities which include investing in high returning projects, while routinely returning funds to shareholders through dividends and systematic share repurchases.  Since launching Value Creation, the Company has seen its gross margins, its operating margins, and its returns increase to be among the industry leaders, and it has returned over  $1.2 billion  to shareholders through dividends and share buy backs. 

"Through our Value Creation strategy,  PulteGroup  has realized tremendous gains in its operating and financial performance, which is what ultimately drives returns for our shareholders," said Mr. Dugas.  "After our initial focus on improving our operating and balance sheet metrics, we transitioned to increasing investment into the business in support of profitable growth.  Increased land investment over the past 24 to 36 months is resulting in substantial growth in 2016 volumes, revenues and profitability, and we believe has the Company well positioned for continued earnings growth over the next few years."

"As we now look ahead and begin planning for the next successful phase of Value Creation, we are implementing the following actions:
  • We plan to slow the rate of growth in our land spend going forward, and use expected strong cash flows from operations to help fund the repurchase of $1.5 billion of our shares over the next six quarters;
  • We are taking actions to lower our SG&A spend from an expected 10% of home sale revenues in 2016 to a targeted rate of 9% or less of 2017 home sale revenues;
  • Our Board of Directors has approved a $1.0 billion increase in the Company's share repurchase authorization raising our total authorization to $1.5 billion. The Company plans to repurchase $250 million of its shares in each of the third and fourth quarters of 2016 and $1.0 billion of its shares in 2017;
  • And, as announced in a separate release, we have added three new directors: John Peshkin, who has over 30 years of direct homebuilding experience including having served as CEO ofTaylor Woodrow Homes and on the Boards of Standard Pacific Homes and WCI Communities;Joshua Gotbaum, who has served in a number of senior private and public sector roles; andScott Powers, who has over 30 years of experience in financial asset management and most recently served as president and CEO of State Street Global Advisors."
Elliott Management Comments on Company Actions
"We appreciate  PulteGroup's  ongoing efforts to run a more efficient homebuilding business and toward building long-term shareholder value," said  Dave Miller , Senior Portfolio Manager at Elliott Management.  "The addition of these proven executives to the Board, along with PulteGroup's  continued focus on improving operations, unlocking the value of its asset base and accretive capital return will drive significant value for shareholders."

The Company and affiliates of  Elliott Management , which recently acquired 4.7% of PulteGroup  shares, have entered into an agreement that provides, among other things, that Elliott will support the Company's slate of director nominees at the Company's 2017 Annual Meeting of Shareholders. 

Company Updates CEO search
PulteGroup  announced that newly named Board members  John Peshkin  and  Josh Gotbaum will be added to the Company's previously established CEO search committee.  "We look forward to having the perspectives of two experienced senior leaders such as John and Josh added to the committee," stated  Patrick J. O'Leary ,  PulteGroup  director and search committee leader.  "Our committee is making good progress and we look forward to completing our evaluation of internal and external candidates." 

A conference call discussing  PulteGroup's  second quarter 2016 results is scheduled for Thursday, July 21, 2016 , 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 and the rate of growth in land spend; 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, 2015 , 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 ,  DiVosta Homes  and John Wieland Homes  and Neighborhoods, 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; and
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