- Reported Net Income of $1.22 Per Share
- Adjusted Net Income of $1.14 Per Share
- Net New Orders Increased 33% to 5,691 Homes
- Closings Increased 2% to 6,822 Homes
- Home Sale Revenues Increased 1% to $2.9 Billion
- Unit Backlog Up 20% to 10,507 Homes
- Backlog Value Increased 18% to $4.5 Billion
- Year-end Cash Balance of $1.2 Billion; Debt-to-Total
Capitalization Decreased to 33.6%
- Company Announces Purchase of Off-site Framing-Shell
Manufacturer
PulteGroup, Inc. (NYSE: PHM) announced today financial results
for its fourth quarter ended December 31, 2019. For the quarter,
the Company reported net income of $336 million, or $1.22 per
share. Adjusted net income for the period was $312 million, or
$1.14 per share, after excluding $31 million of pre-tax benefit
from an insurance reserve adjustment.
Reported net income for the fourth quarter of 2018 was $238
million, or $0.84 per share. Adjusted net income for the fourth
quarter of 2018 was $314 million, or $1.11 per share, after
excluding $85 million of pre-tax land charges and a $16 million
pre-tax charge for a Financial Services reserve adjustment.
“As demonstrated by our 33% increase in orders, the recovery in
housing demand that began earlier this year gained momentum through
the fourth quarter as we realized strong sales across all buyer
groups,” said Company President and CEO Ryan Marshall. “The quarter
completes an outstanding year during which we continued to invest
in growing our business, generated $1.1 billion in operating cash
flow, returned $397 million to shareholders, paid down $310 million
of homebuilder debt, and realized a 20.0% return on equity.”
“Strong demand for new homes is benefitting from favorable
market dynamics including improved affordability in part due to low
mortgage rates, high employment and consumer confidence, and a
generally balanced inventory of new homes,” added Marshall. “The
sustained strength in housing demand allowed us to deliver strong
fourth quarter and full-year results, and has PulteGroup well
positioned to increase delivery volumes, revenues, homebuilding
gross margins and earnings in 2020.”
Fourth Quarter Results
Home sale revenues for the fourth quarter increased 1% over the
fourth quarter of 2018 to $2.9 billion. Higher revenues for the
period reflect a 2% increase in closings to 6,822 homes, partially
offset by a less than 1% decrease in average sales price to
$429,000.
Home sale gross margin for the fourth quarter was 22.8%,
compared with prior year reported and adjusted gross margins of
21.5% and 23.8%, respectively.
Reported fourth quarter SG&A expense of $262 million, or
8.9% of home sale revenues, included a $31 million pre-tax benefit
from an insurance reserve adjustment recorded in the period.
Exclusive of this benefit, adjusted SG&A expense for the
quarter was $293 million, or 10.0% of home sale revenues. SG&A
expense for the fourth quarter of 2018 was $292 million, or 10.1%
of home sale revenues.
Net new orders for the quarter increased 33% over the fourth
quarter of 2018 to 5,691 homes as results benefitted from both
increased community count and higher absorption pace. The value of
net new orders increased 35% to $2.5 billion, up from $1.8 billion
in the fourth quarter of 2018. Average community count for the
fourth quarter was 865 communities, compared with 825 communities
in the fourth quarter of 2018.
Unit backlog is up 20% over last year to 10,507 homes, while the
backlog dollar value increased 18% to $4.5 billion. The decrease in
the average price of homes in backlog reflects the Company’s
efforts to modestly expand its first-time buyer business which
typically carries a lower sales price.
Pre-tax income for the Company’s Financial Services operations
was $34 million compared with $5 million in the fourth quarter of
2018. Results for the fourth quarter of 2018 included a $16 million
pre-tax charge for a reserve adjustment recorded in the period. The
increase in pre-tax income for the period also reflects a strong
margin environment, higher loan volumes resulting from growth in
the Company’s homebuilding operations and a higher mortgage capture
rate. Capture rate for the fourth quarter increased to 84% from 77%
last year.
During the quarter, the Company repurchased 0.8 million of its
common shares for $30 million, or an average price of $39.16 per
share. For the year, the Company repurchased 8.4 million common
shares, or 3% of its outstanding shares, for $274 million, or an
average price of $32.52 per share.
At year end, the Company had $1.2 billion of cash and a
debt-to-total capitalization of 33.6%, which is down from 38.6% at
the end of 2018.
Company Acquires Off-site Framing-Shell Manufacturer
In a separate press release, PulteGroup also announced today
that it has acquired the assets of Innovative Construction Group
(ICG), a leading off-site solutions provider focused on single
family and multifamily wood framed construction. Based in
Jacksonville, Florida, ICG’s comprehensive framing solutions
include design services, manufactured wall panels, roof trusses and
floor systems, and onsite installation to provide a full frame
shell construction process. ICG will remain a stand-alone operation
and continue serving its existing customer base and builder
clients.
“In response to ongoing labor constraints which are impacting
construction trades throughout the country, we have made the
strategic decision to acquire off-site manufacturing capabilities
that we believe can help us drive greater production efficiencies,”
said Marshall. “We view this acquisition as a logical next step in
the common plan management platform we have been advancing for
years and see the potential to open comparable production plants in
future years.”
A conference call discussing PulteGroup's fourth quarter 2019
results is scheduled for Tuesday, January 28, 2020, 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,” “plan,” “project,” “may,” “can,” “could,”
“might,” “should”, “will” and similar expressions identify
forward-looking statements, including statements related to any
impairment charge and the impacts or effects thereof, 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; competition within the industries in which we operate;
the availability and cost of land and other raw materials used by
us in our 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 levels
of our land spend; the availability and cost of insurance covering
risks associated with our 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 which could have a greater impact on our effective tax rate or
the value of our deferred tax assets than we anticipate; economic
changes nationally or in our 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 the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2018, and the Company’s
other public filings with the Securities and Exchange Commission
for a further discussion of these and other risks and uncertainties
applicable to our businesses. The Company 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 more
than 40 markets throughout the country. Through its brand portfolio
that includes Centex, Pulte Homes, Del Webb, DiVosta Homes,
American West 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 to pultegroup.com; www.pulte.com; www.centex.com;
www.delwebb.com; www.divosta.com; www.jwhomes.com and
www.americanwesthomes.com. Follow PulteGroup, Inc. on Twitter:
@PulteGroupNews.
PulteGroup, Inc.
Consolidated Results of
Operations
($000's omitted, except per
share data)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2019
2018
2019
2018
Revenues:
Homebuilding
Home sale revenues
$
2,925,288
$
2,884,557
$
9,915,705
$
9,818,445
Land sale and other revenues
21,828
59,534
62,821
164,504
2,947,116
2,944,091
9,978,526
9,982,949
Financial Services
69,797
55,059
234,431
205,382
Total revenues
3,016,913
2,999,150
10,212,957
10,188,331
Homebuilding Cost of Revenues:
Home sale cost of revenues
(2,259,131
)
(2,264,704
)
(7,628,700
)
(7,540,937
)
Land sale cost of revenues
(20,484
)
(54,769
)
(56,098
)
(126,560
)
(2,279,615
)
(2,319,473
)
(7,684,798
)
(7,667,497
)
Financial Services expenses
(35,906
)
(50,772
)
(130,770
)
(147,422
)
Selling, general, and administrative
expenses
(261,545
)
(292,318
)
(1,044,337
)
(1,012,023
)
Other expense, net
(3,896
)
(7,096
)
(13,476
)
(13,849
)
Income before income taxes
435,951
329,491
1,339,576
1,347,540
Income tax expense
(100,153
)
(91,842
)
(322,876
)
(325,517
)
Net income
$
335,798
$
237,649
$
1,016,700
$
1,022,023
Net income per share:
Basic
$
1.23
$
0.84
$
3.67
$
3.56
Diluted
$
1.22
$
0.84
$
3.66
$
3.55
Cash dividends declared
$
0.12
$
0.11
$
0.45
$
0.38
Number of shares used in
calculation:
Basic
270,843
278,964
274,495
283,578
Effect of dilutive securities
632
1,248
802
1,287
Diluted
271,475
280,212
275,297
284,865
PulteGroup, Inc.
Condensed Consolidated Balance
Sheets
($000's omitted)
(Unaudited)
December 31,
2019
December 31,
2018
ASSETS
Cash and equivalents
$
1,217,913
$
1,110,088
Restricted cash
33,543
23,612
Total cash, cash equivalents, and
restricted cash
1,251,456
1,133,700
House and land inventory
7,680,614
7,253,353
Land held for sale
24,009
36,849
Residential mortgage loans
available-for-sale
508,967
461,354
Investments in unconsolidated entities
59,766
54,590
Other assets
895,686
830,359
Intangible assets
124,992
127,192
Deferred tax assets, net
170,107
275,579
$
10,715,597
$
10,172,976
LIABILITIES AND SHAREHOLDERS’
EQUITY
Liabilities:
Accounts payable
$
435,916
$
352,029
Customer deposits
294,427
254,624
Accrued and other liabilities
1,399,368
1,360,483
Income tax liabilities
36,093
11,580
Financial Services debt
326,573
348,412
Notes payable
2,765,040
3,028,066
Total liabilities
5,257,417
5,355,194
Shareholders' equity
5,458,180
4,817,782
$
10,715,597
$
10,172,976
PulteGroup, Inc.
Consolidated Statements of
Cash Flows
($000's omitted)
(Unaudited)
Year Ended
December 31,
2019
2018
Cash flows from operating
activities:
Net income
$
1,016,700
$
1,022,023
Adjustments to reconcile net income to net
cash from operating activities:
Deferred income tax expense
105,438
362,777
Land-related charges
27,101
99,446
Depreciation and amortization
53,999
49,429
Share-based compensation expense
28,368
28,290
Loss on debt retirements
4,927
76
Other, net
1,155
(3,688
)
Increase (decrease) in cash due to:
Inventories
(237,741
)
(50,362
)
Residential mortgage loans
available-for-sale
(48,261
)
107,330
Other assets
(15,125
)
(64,174
)
Accounts payable, accrued and other
liabilities
140,984
(101,400
)
Net cash provided by (used in) operating
activities
1,077,545
1,449,747
Cash flows from investing
activities:
Capital expenditures
(58,119
)
(59,039
)
Investments in unconsolidated entities
(9,515
)
(1,000
)
Business acquisition
(163,724
)
—
Other investing activities, net
5,129
18,097
Net cash provided by (used in) investing
activities
(226,229
)
(41,942
)
Cash flows from financing
activities:
Debt issuance costs
—
(8,164
)
Repayments of notes payable
(309,985
)
(82,775
)
Borrowings under revolving credit
facility
—
1,566,000
Repayments under revolving credit
facility
—
(1,566,000
)
Financial Services borrowings
(repayments), net
(21,841
)
(89,393
)
Stock option exercises
6,399
6,555
Share repurchases
(274,333
)
(294,566
)
Cash paid for shares withheld for
taxes
(11,450
)
(7,910
)
Dividends paid
(122,350
)
(104,020
)
Net cash provided by (used in) financing
activities
(733,560
)
(580,273
)
Net increase (decrease)
117,756
827,532
Cash, cash equivalents, and restricted
cash at beginning of period
1,133,700
306,168
Cash, cash equivalents, and restricted
cash at end of period
$
1,251,456
$
1,133,700
Supplemental Cash Flow
Information:
Interest paid (capitalized), net
$
5,605
$
557
Income taxes paid, net
$
137,119
$
89,204
PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2019
2018
2019
2018
HOMEBUILDING:
Home sale revenues
$
2,925,288
$
2,884,557
$
9,915,705
$
9,818,445
Land sale and other revenues
21,828
59,534
62,821
164,504
Total Homebuilding revenues
2,947,116
2,944,091
9,978,526
9,982,949
Home sale cost of revenues
(2,259,131
)
(2,264,704
)
(7,628,700
)
(7,540,937
)
Land sale cost of revenues
(20,484
)
(54,769
)
(56,098
)
(126,560
)
Selling, general, and administrative
expenses
(261,545
)
(292,318
)
(1,044,337
)
(1,012,023
)
Other expense, net
(3,549
)
(7,362
)
(13,130
)
(14,625
)
Income before income taxes
$
402,407
$
324,938
$
1,236,261
$
1,288,804
FINANCIAL SERVICES:
Income before income taxes
$
33,544
$
4,553
$
103,315
$
58,736
CONSOLIDATED:
Income before income taxes
$
435,951
$
329,491
$
1,339,576
$
1,347,540
PulteGroup, Inc.
Segment Data,
continued
($000's omitted)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2019
2018
2019
2018
Home sale revenues
$
2,925,288
$
2,884,557
$
9,915,705
$
9,818,445
Closings - units
Northeast
487
556
1,443
1,558
Southeast
1,067
1,123
3,982
4,220
Florida
1,459
1,509
5,045
4,771
Midwest
1,091
1,063
3,583
3,716
Texas
1,366
1,193
4,528
4,212
West
1,352
1,265
4,651
4,630
6,822
6,709
23,232
23,107
Average selling price
$
429
$
430
$
427
$
425
Net new orders - units
Northeast
322
265
1,562
1,516
Southeast
956
814
4,237
4,114
Florida
1,316
1,018
5,462
4,982
Midwest
827
651
3,721
3,631
Texas
1,094
767
4,886
4,278
West
1,176
752
5,109
4,312
5,691
4,267
24,977
22,833
Net new orders - dollars
$
2,450,095
$
1,809,352
$
10,615,363
$
9,675,529
December 31,
2019
2018
Unit backlog
Northeast
589
470
Southeast
1,865
1,610
Florida
2,306
1,889
Midwest
1,540
1,402
Texas
1,850
1,492
West
2,357
1,859
10,507
8,722
Dollars in backlog
$
4,535,805
$
3,836,147
PulteGroup, Inc.
Segment Data,
continued
($000's omitted)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2019
2018
2019
2018
MORTGAGE ORIGINATIONS:
Origination volume
4,802
4,145
15,821
14,464
Origination principal
$
1,534,416
$
1,286,154
$
4,976,973
$
4,456,360
Capture rate
84.1
%
76.8
%
82.4
%
76.2
%
Supplemental Data
($000's omitted)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2019
2018
2019
2018
Interest in inventory, beginning of
period
$
228,562
$
242,787
$
227,495
$
226,611
Interest capitalized
40,191
42,335
164,114
172,809
Interest expensed
(58,370
)
(57,627
)
(181,226
)
(171,925
)
Interest in inventory, end of period
$
210,383
$
227,495
$
210,383
$
227,495
PulteGroup, Inc. Reconciliation of Non-GAAP
Financial Measures (Unaudited)
This report contains information about our operating results
reflecting certain adjustments, including adjustments to cost of
revenues, selling general, and administrative expenses, income
before income taxes, income tax expense, net income, diluted
earnings per share, and operating margin. These measures are
considered non-GAAP financial measures under the SEC's rules and
should be considered in addition to, rather than as a substitute
for, the comparable GAAP financial measures as measures of our
profitability. We believe that reflecting these adjustments
provides investors relevant and useful information for evaluating
the comparability of financial information presented and comparing
our profitability 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 these measures and any
adjustments thereto before comparing our measures to those of such
other companies.
The following tables set forth a reconciliation of the non-GAAP
financial measures to the GAAP financial measures that management
believes to be most directly comparable ($000's omitted):
Reconciliation of Adjusted Net
Income and Adjusted EPS
Three Months Ended
December 31,
Results of Operations
Classification
2019
2018
Net income, as reported
$
335,798
$
237,649
Adjustments to income before income
taxes:
Land impairments
Home sale cost of revenues
*
66,911
Net realizable value adjustments - land
held for sale
Land sale cost of revenues
*
8,968
Write-offs of pre-acquisition costs
Other income (expense)
*
9,595
Insurance reserve adjustments
SG&A
(31,099
)
*
Financial Services reserve adjustments
Financial Services expense
*
16,224
Income tax effect of the above items
Income tax expense
7,672
(25,719
)
Adjusted net income
$
312,371
$
313,628
EPS (diluted), as reported
$
1.22
$
0.84
Adjusted EPS (diluted)
$
1.14
$
1.11
*Item not meaningful for the period
presented
Other Reconciliations
Three Months Ended
December 31,
2019
2018
Home sale revenues
$
2,925,288
$
2,884,557
Gross margin, as reported
$
666,157
22.8
%
$
619,853
21.5
%
Land impairments
*
*
66,911
2.3
%
Adjusted gross margin
$
666,157
22.8
%
$
686,764
23.8
%
SG&A, as reported
$
261,545
8.9
%
$
292,318
10.1
%
Insurance reserve adjustments
31,099
1.1
%
*
*
Adjusted SG&A
$
292,644
10.0
%
$
292,318
10.1
%
Operating margin, as reported**
13.8
%
11.4
%
Adjusted operating margin***
12.8
%
13.7
%
*Item not meaningful for the period
presented
**Operating margin represents gross margin
less SG&A divided by home sale revenues
***Adjusted operating margin represents
adjusted gross margin less adjusted SG&A divided by home sale
revenues
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200128005146/en/
Investors: Jim Zeumer (404) 978-6434 Email:
jim.zeumer@pultegroup.com
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