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PulteGroup Reports Third Quarter 2023 Financial Results

  • Net Income Increased 8% to $2.90 Per Share
  • Home Sale Revenues Increased 3% to $3.9 Billion
  • Home Sale Gross Margin of 29.5%
  • Net New Orders Increased 43% to 7,065 Homes with a Value of $3.8 Billion
  • Unit Backlog Totaled 13,547 Homes with a Value of $8.1 Billion
  • Repurchased $300 Million of Common Shares and Retired $65 Million of Senior Notes in the Quarter
  • Debt-to-Capital Ratio Reduced to 16.5%; Net Debt-to-Capital Ratio of 1% Including Company’s Cash Balance of $1.9 Billion

PulteGroup, Inc. (NYSE: PHM) announced today financial results for its third quarter ended September 30, 2023. For the quarter, the Company reported net income of $639 million, or $2.90 per share. In the prior year period, the Company reported net income of $628 million, or $2.69 per share.

“PulteGroup’s third quarter results show a continuation of recent positive trends, as top line revenue growth combined with strong margin performance drove record third quarter earnings of $2.90 per share,” said Ryan Marshall, PulteGroup President and CEO. “Earnings growth and disciplined balance sheet management allowed the Company to realize a return on equity* of 30.1%, while using the resulting cash flows to invest in our business, to repurchase $300 million of common shares, to retire $65 million of senior notes and to further strengthen our overall liquidity profile.”

“Fed actions and broader market forces have combined to push interest rates to 20-year highs, but the fundamental desire for homeownership is strong while the supply of houses remains constrained,” added Mr. Marshall. “PulteGroup’s ability to offer a variety of locations, price points, floor plans and incentive packages allows us to meet consumer needs while helping to address the affordability challenges caused by today’s higher rates.”

Third Quarter Results

The Company’s third quarter home sale revenues increased 3% over the prior year to $3.9 billion. Higher revenues for the period were driven primarily by a 2% increase in the average sales price of homes closed to $549,000, as closings increased by less than 1% to 7,076 homes.

For its third quarter, the Company reported home sale gross margin of 29.5%, compared with prior year gross margin of 30.5%. Homebuilding SG&A expense for the period was $353 million, or 9.1% of home sale revenues compared with $350 million, or 9.2% in the prior year period.

In the third quarter, the Company’s net new orders increased 43% over the prior year to 7,065 homes. The value of net new orders in the period increased 36% over last year to $3.8 billion. The Company’s average community count for the third quarter was 923, which is up 12% from the comparable prior year period.

The Company’s unit backlog at the end of the third quarter was 13,547 homes with a value of $8.1 billion.

Third quarter pre-tax income for the Company's financial services operations increased 5% over the prior year to $29 million. Mortgage capture rate for the third quarter was 84%, up from 77% last year.

The Company’s third quarter pre-tax income totaled $847 million, which is an increase of 4% over the prior year. Income tax expense for the third quarter was $209 million, or an effective tax rate of 24.6%.

In the third quarter, PulteGroup repurchased 3.8 million of its common shares for $300 million, or an average price of $79.84 per share. Through the first nine months of 2023, PulteGroup has repurchased 10.2 million common shares, or 4.5% of shares outstanding, for $700 million, or $68.76 per share. During the third quarter, the Company also retired a total of $65 million of its 2026 and 2027 senior notes via open market repurchases. After these equity and debt repurchases, the Company ended the quarter with $1.9 billion of cash and a debt-to-capital ratio of 16.5%.

A conference call discussing PulteGroup's third quarter 2023 results is scheduled for Tuesday, October 24, 2023, at 8:30 a.m. Eastern Time. Interested investors can access the live webcast via PulteGroup's corporate website at www.pultegroupinc.com.

* The Company's return on equity is calculated as net income for the trailing twelve months divided by average shareholders' equity, where average shareholders' equity is the sum of ending shareholders' equity balances of the trailing five quarters divided by five.

Forward-Looking Statements

This 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 potential impairment charges 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; the impact of any changes to our strategy in responding to the cyclical nature of the industry or deteriorations in industry changes or downward changes in general economic or other business conditions, including any changes regarding our land positions and the levels of our land spend; 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; labor supply shortages and the cost of labor; the availability and cost of land and other raw materials used by us in our homebuilding operations; a decline in the value of the land and home inventories we maintain and resulting possible future writedowns of the carrying value of our real estate assets; competition within the industries in which we operate; governmental regulation directed at or affecting the housing market, the homebuilding industry or construction activities, slow growth initiatives and/or local building moratoria; the availability and cost of insurance covering risks associated with our businesses, including warranty and other legal or regulatory proceedings or claims; damage from improper acts of persons over whom we do not have control or attempts to impose liabilities or obligations of third parties on us; weather related slowdowns; the impact of climate change and related governmental regulation; adverse capital and credit market conditions, which may affect our access to and cost of capital; the insufficiency of our income tax provisions and tax reserves, including as a result of changing laws or interpretations; the potential that we do not realize our deferred tax assets; our inability to sell mortgages into the secondary market; uncertainty in the mortgage lending industry, including revisions to underwriting standards and repurchase requirements associated with the sale of mortgage loans, and related claims against us; risks related to information technology failures or data security issues; failure to retain key personnel; the disruptions associated with the COVID-19 pandemic (or another epidemic or pandemic or similar public threat or fear of such an event), and the measures taken to address it; the effect of cybersecurity incidents and threats; and other factors of national, regional and global scale, including those of a political, economic, business and competitive nature. See Item 1A – Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for a further discussion of these and other risks and uncertainties applicable to our businesses. We undertake no duty to update any forward-looking statement, whether as a result of new information, future events or changes in our 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’s purpose is building incredible places where people can live their dreams.

For more information about PulteGroup, Inc. and PulteGroup brands, go to pultegroup.com; pulte.com; centex.com; delwebb.com; divosta.com; jwhomes.com; and americanwesthomes.com. Follow PulteGroup, Inc. on Twitter: @PulteGroupNews.

PulteGroup, Inc.

Consolidated Statements of Operations

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

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

Homebuilding

 

 

 

 

 

 

 

Home sale revenues

$

3,886,908

 

 

$

3,791,695

 

 

$

11,433,476

 

 

$

10,587,080

 

Land sale and other revenues

 

39,905

 

 

 

30,658

 

 

 

107,575

 

 

 

97,626

 

 

 

3,926,813

 

 

 

3,822,353

 

 

 

11,541,051

 

 

 

10,684,706

 

Financial Services

 

76,720

 

 

 

72,709

 

 

 

226,875

 

 

 

239,627

 

Total revenues

 

4,003,533

 

 

 

3,895,062

 

 

 

11,767,926

 

 

 

10,924,333

 

 

 

 

 

 

 

 

 

Homebuilding Cost of Revenues:

 

 

 

 

 

 

 

Home sale cost of revenues

 

(2,739,596

)

 

 

(2,636,842

)

 

 

(8,068,287

)

 

 

(7,364,743

)

Land sale and other cost of revenues

 

(35,007

)

 

 

(26,314

)

 

 

(92,467

)

 

 

(89,971

)

 

 

(2,774,603

)

 

 

(2,663,156

)

 

 

(8,160,754

)

 

 

(7,454,714

)

 

 

 

 

 

 

 

 

Financial Services expenses

 

(46,431

)

 

 

(45,323

)

 

 

(137,244

)

 

 

(132,655

)

Selling, general, and administrative expenses

 

(353,167

)

 

 

(350,112

)

 

 

(1,004,323

)

 

 

(1,030,391

)

Equity income from unconsolidated entities, net

 

891

 

 

 

446

 

 

 

4,348

 

 

 

2,390

 

Gain on debt retirement

 

362

 

 

 

 

 

 

362

 

 

 

 

Other income (expense), net

 

16,729

 

 

 

(25,640

)

 

 

32,134

 

 

 

(33,220

)

Income before income taxes

 

847,314

 

 

 

811,277

 

 

 

2,502,449

 

 

 

2,275,743

 

Income tax expense

 

(208,539

)

 

 

(183,349

)

 

 

(611,070

)

 

 

(540,657

)

Net income

$

638,775

 

 

$

627,928

 

 

$

1,891,379

 

 

$

1,735,086

 

 

 

 

 

 

 

 

 

Per share:

 

 

 

 

 

 

 

Basic earnings

$

2.92

 

 

$

2.70

 

 

$

8.49

 

 

$

7.26

 

Diluted earnings

$

2.90

 

 

$

2.69

 

 

$

8.45

 

 

$

7.22

 

Cash dividends declared

$

0.16

 

 

$

0.15

 

 

$

0.48

 

 

$

0.45

 

 

 

 

 

 

 

 

 

Number of shares used in calculation:

 

 

 

 

 

 

 

Basic

 

218,288

 

 

 

230,967

 

 

 

221,832

 

 

 

237,639

 

Effect of dilutive securities

 

1,394

 

 

 

1,333

 

 

 

1,152

 

 

 

1,240

 

Diluted

 

219,682

 

 

 

232,300

 

 

 

222,984

 

 

 

238,879

 

PulteGroup, Inc.

Condensed Consolidated Balance Sheets

($000's omitted)

(Unaudited)

 

 

September 30,

2023

 

December 31,

2022

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Cash and equivalents

$

1,848,451

 

$

1,053,104

Restricted cash

 

51,110

 

 

41,449

Total cash, cash equivalents, and restricted cash

 

1,899,561

 

 

1,094,553

House and land inventory

 

11,585,447

 

 

11,326,017

Land held for sale

 

35,116

 

 

42,254

Residential mortgage loans available-for-sale

 

414,360

 

 

677,207

Investments in unconsolidated entities

 

162,287

 

 

146,759

Other assets

 

1,426,747

 

 

1,291,572

Goodwill

 

68,930

 

 

68,930

Other intangible assets

 

58,960

 

 

66,875

Deferred tax assets

 

65,855

 

 

82,348

 

$

15,717,263

 

$

14,796,515

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Liabilities:

 

 

 

Accounts payable

$

567,561

 

$

565,975

Customer deposits

 

769,893

 

 

783,556

Deferred tax liabilities

 

331,366

 

 

215,446

Accrued and other liabilities

 

1,629,171

 

 

1,685,202

Financial Services debt

 

425,456

 

 

586,711

Notes payable

 

1,981,315

 

 

2,045,527

 

 

5,704,762

 

 

5,882,417

Shareholders' equity

 

10,012,501

 

 

8,914,098

 

$

15,717,263

 

$

14,796,515

PulteGroup, Inc.

Consolidated Statements of Cash Flows

($000's omitted)

Unaudited)

 

Nine Months Ended

 

September 30,

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

Net income

$

1,891,379

 

 

$

1,735,086

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

Deferred income tax expense

 

132,389

 

 

 

43,485

 

Land-related charges

 

16,978

 

 

 

32,475

 

Gain on debt retirement

 

(362

)

 

 

 

Depreciation and amortization

 

59,765

 

 

 

51,934

 

Equity income from unconsolidated entities

 

(4,348

)

 

 

(2,390

)

Distributions of income from unconsolidated entities

 

4,564

 

 

 

1,278

 

Share-based compensation expense

 

38,401

 

 

 

39,520

 

Other, net

 

(501

)

 

 

952

 

Increase (decrease) in cash due to:

 

 

 

Inventories

 

(173,377

)

 

 

(2,706,142

)

Residential mortgage loans available-for-sale

 

262,637

 

 

 

507,861

 

Other assets

 

(142,131

)

 

 

(127,173

)

Accounts payable, accrued and other liabilities

 

(177,050

)

 

 

119,189

 

Net cash provided by (used in) operating activities

 

1,908,344

 

 

 

(303,925

)

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(67,561

)

 

 

(88,585

)

Investments in unconsolidated entities

 

(18,059

)

 

 

(58,154

)

Distributions of capital from unconsolidated entities

 

2,316

 

 

 

3,413

 

Business acquisition

 

 

 

 

(10,400

)

Other investing activities, net

 

(11,727

)

 

 

(964

)

Net cash used in investing activities

 

(95,031

)

 

 

(154,690

)

Cash flows from financing activities:

 

 

 

Repayments of notes payable

 

(86,794

)

 

 

(4,856

)

Borrowings under revolving credit facility

 

 

 

 

1,925,000

 

Repayments under revolving credit facility

 

 

 

 

(1,606,000

)

Financial Services repayments, net

 

(161,254

)

 

 

(287,933

)

Debt issuance costs

 

(1,500

)

 

 

(11,167

)

Proceeds from liabilities related to consolidated inventory not owned

 

108,707

 

 

 

 

Payments related to consolidated inventory not owned

 

(49,379

)

 

 

 

Share repurchases

 

(700,000

)

 

 

(974,673

)

Cash paid for shares withheld for taxes

 

(10,409

)

 

 

(14,326

)

Dividends paid

 

(107,676

)

 

 

(109,597

)

Net cash used in financing activities

 

(1,008,305

)

 

 

(1,083,552

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

805,008

 

 

 

(1,542,167

)

Cash, cash equivalents, and restricted cash at beginning of period

 

1,094,553

 

 

 

1,833,565

 

Cash, cash equivalents, and restricted cash at end of period

$

1,899,561

 

 

$

291,398

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

Interest paid (capitalized), net

$

11,048

 

 

$

5,642

 

Income taxes paid (refunded), net

$

546,871

 

 

$

493,559

 

PulteGroup, Inc.

Segment Data

($000's omitted)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

HOMEBUILDING:

 

 

 

 

 

 

 

Home sale revenues

$

3,886,908

 

 

$

3,791,695

 

 

$

11,433,476

 

 

$

10,587,080

 

Land sale and other revenues

 

39,905

 

 

 

30,658

 

 

 

107,575

 

 

 

97,626

 

Total Homebuilding revenues

 

3,926,813

 

 

 

3,822,353

 

 

 

11,541,051

 

 

 

10,684,706

 

 

 

 

 

 

 

 

 

Home sale cost of revenues

 

(2,739,596

)

 

 

(2,636,842

)

 

 

(8,068,287

)

 

 

(7,364,743

)

Land sale and other cost of revenues

 

(35,007

)

 

 

(26,314

)

 

 

(92,467

)

 

 

(89,971

)

Selling, general, and administrative expenses ("SG&A")

 

(353,167

)

 

 

(350,112

)

 

 

(1,004,323

)

 

 

(1,030,391

)

Equity income from unconsolidated entities

 

891

 

 

 

319

 

 

 

3,293

 

 

 

1,112

 

Gain on debt retirement

 

362

 

 

 

 

 

 

362

 

 

 

 

Other income (expense), net

 

18,069

 

 

 

(25,641

)

 

 

33,474

 

 

 

(33,151

)

Income before income taxes

$

818,365

 

 

$

783,763

 

 

$

2,413,103

 

 

$

2,167,562

 

 

 

 

 

 

 

 

 

FINANCIAL SERVICES:

 

 

 

 

 

 

 

Income before income taxes

$

28,949

 

 

$

27,514

 

 

$

89,346

 

 

$

108,181

 

 

 

 

 

 

 

 

 

CONSOLIDATED:

 

 

 

 

 

 

 

Income before income taxes

$

847,314

 

 

$

811,277

 

 

$

2,502,449

 

 

$

2,275,743

 

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Home sale revenues

$

3,886,908

 

$

3,791,695

 

$

11,433,476

 

$

10,587,080

 

 

 

 

 

 

 

 

Closings - units

 

 

 

 

 

 

 

Northeast

 

344

 

 

378

 

 

996

 

 

1,026

Southeast

 

1,291

 

 

1,295

 

 

3,864

 

 

3,406

Florida

 

1,983

 

 

1,628

 

 

5,802

 

 

4,840

Midwest

 

1,018

 

 

1,104

 

 

2,693

 

 

3,179

Texas

 

1,211

 

 

1,431

 

 

4,030

 

 

4,124

West

 

1,229

 

 

1,211

 

 

3,603

 

 

3,688

 

 

7,076

 

 

7,047

 

 

20,988

 

 

20,263

Average selling price

$

549

 

$

538

 

$

545

 

$

522

 

 

 

 

 

 

 

 

Net new orders - units

 

 

 

 

 

 

 

Northeast

 

376

 

 

237

 

 

1,161

 

 

1,046

Southeast

 

1,374

 

 

1,081

 

 

4,277

 

 

3,716

Florida

 

1,598

 

 

1,471

 

 

5,386

 

 

4,898

Midwest

 

1,090

 

 

655

 

 

3,426

 

 

2,660

Texas

 

1,258

 

 

979

 

 

4,070

 

 

3,718

West

 

1,369

 

 

501

 

 

4,046

 

 

3,275

 

 

7,065

 

 

4,924

 

 

22,366

 

 

19,313

Net new orders - dollars

$

3,823,619

 

$

2,807,308

 

$

11,884,620

 

$

11,442,579

 

 

 

 

 

 

 

 

Unit backlog

 

 

 

 

 

 

 

Northeast

 

 

 

 

 

639

 

 

808

Southeast

 

 

 

 

 

2,319

 

 

2,786

Florida

 

 

 

 

 

4,225

 

 

5,488

Midwest

 

 

 

 

 

2,083

 

 

2,169

Texas

 

 

 

 

 

1,829

 

 

2,693

West

 

 

 

 

 

2,452

 

 

3,109

 

 

 

 

 

 

13,547

 

 

17,053

Dollars in backlog

 

 

 

 

$

8,125,182

 

$

10,581,026

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

MORTGAGE ORIGINATIONS:

 

 

 

 

 

 

 

Origination volume

 

4,362

 

 

 

4,369

 

 

 

12,770

 

 

 

12,994

 

Origination principal

$

1,745,952

 

 

$

1,715,344

 

 

$

5,053,379

 

 

$

5,009,957

 

Capture rate

 

83.5

%

 

 

77.2

%

 

 

80.5

%

 

 

78.7

%

Supplemental Data

($000's omitted)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

Interest in inventory, beginning of period

$

141,994

 

 

$

151,554

 

 

$

137,262

 

 

$

160,756

 

Interest capitalized

 

31,659

 

 

 

33,235

 

 

 

95,388

 

 

 

96,156

 

Interest expensed

 

(33,643

)

 

 

(41,120

)

 

 

(92,640

)

 

 

(113,243

)

Interest in inventory, end of period

$

140,010

 

 

$

143,669

 

 

$

140,010

 

 

$

143,669

 

PulteGroup, Inc.

Reconciliation of Non-GAAP Financial Measures

This report contains information about our debt-to-capital ratios. These measures could be considered non-GAAP financial measures under the SEC's rules and should be considered in addition to, rather than as a substitute for, comparable GAAP financial measures. We calculate total net debt by subtracting total cash, cash equivalents, and restricted cash from notes payable to present the amount of assets needed to satisfy the debt. We use the debt-to-capital and net debt-to-capital ratios as indicators of our overall leverage and believe they are useful financial measures in understanding the leverage employed in our operations. We believe that these measures provide investors relevant and useful information for evaluating the comparability of financial information presented and comparing our profitability and liquidity 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 table sets forth a reconciliation of the debt-to-capital ratios ($000's omitted):

Debt-to-Capital Ratios

 

 

 

 

 

 

 

September 30,

2023

 

December 31,

2022

Notes payable

 

$

1,981,315

 

 

$

2,045,527

 

Shareholders' equity

 

 

10,012,501

 

 

 

8,914,098

 

Total capital

 

$

11,993,816

 

 

$

10,959,625

 

Debt-to-capital ratio

 

 

16.5

%

 

 

18.7

%

 

 

 

 

 

Notes payable

 

$

1,981,315

 

 

$

2,045,527

 

Less: Total cash, cash equivalents, and

restricted cash

 

 

(1,899,561

)

 

 

(1,094,553

)

Total net debt

 

$

81,754

 

 

$

950,974

 

Shareholders' equity

 

 

10,012,501

 

 

 

8,914,098

 

Total net capital

 

$

10,094,255

 

 

$

9,865,072

 

Net debt-to-capital ratio

 

 

0.8

%

 

 

9.6

%

 

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