ATLANTA--(BUSINESS WIRE)--Apr 27, 2021--
PulteGroup, Inc. (NYSE: PHM) announced today financial results for its first quarter ended March 31, 2021. For the quarter, the Company reported net income of $304 million, or $1.13 per share. Adjusted net income for the period was $343 million, or $1.28 per share, after excluding a pre-tax charge of $61 million associated with the Company’s previously announced cash tender for $300 million of debt that was executed in the period, as well as a $10 million pre-tax insurance benefit recorded in the period. Reported net income for the first quarter of 2020 was $204 million, or $0.74 per share. Adjusted net income for the first quarter of 2020 was $219 million, or $0.80 per share, after excluding a $20 million pre-tax goodwill impairment charge recorded in the period.
“The year has gotten off to an outstanding start with strong demand across all of our markets and buyer groups which helped drive a 31% increase in net new orders, including a 49% gain in active-adult sales,” said Ryan Marshall, PulteGroup President and CEO. “In the first quarter, we continued to capitalize on this favorable demand environment as we expanded our adjusted operating margin by 280 basis points and generated a 60% increase in adjusted earnings per share.”
“Gains in our core homebuilding operations and resulting strong cash flows are allowing us to invest in future growth and return funds to shareholders, while helping to generate high returns on equity which increased to 24.4%* for the trailing 12 months.”
“Along with the important underpinnings of favorable demographics, low interest rates and improving consumer confidence, industry demand is benefiting from increased desire for single family living, the ability for new homes to better meet buyer wants and needs and from a limited supply of new and existing home inventory,” added Marshall. “The need for almost 4 million additional homes as recently estimated by Freddie Mac to meet buyer demand, and expectations for an acceleration in economic growth as the pandemic continues to recede, keep us optimistic about future housing conditions and the opportunity to drive additional gains in our business results.”
Home sale revenues for the first quarter totaled $2.6 billion, an increase of 17% over the prior year period. Higher revenues for the quarter benefited from a 12% increase in the number of homes closed to 6,044, in combination with a 4%, or $17,000, increase in average sales price to $430,000. The higher average sales price reported in the quarter reflects price increases realized across all buyer groups.
For the first quarter, home sale gross margin increased 180 basis points over the prior year to 25.5%, and on a sequential basis was up 50 basis points from the fourth quarter of 2020. Reported SG&A expense for the period was $272 million, or 10.5% of home sale revenues. Adjusted SG&A expense for the quarter, which excludes the $10 million pre-tax insurance benefit recorded in the period, was $282 million, or 10.9% of home sale revenues. Prior year SG&A expense for the first quarter was $264 million, or 11.9% of home sale revenues.
Net new orders for the first quarter increased 31% from the prior year to 9,852 homes. The dollar value of net new orders in the first quarter was $4.6 billion, which is an increase of 42% over the prior year. The Company operated from an average of 837 communities in the first quarter, which is a decrease of 4% from last year’s average of 873 communities.
The Company’s quarter-end backlog totaled 18,966 homes with a value of $8.8 billion. The average sales price in backlog increased 5%, or $23,000, over the prior year to $465,000.
First quarter pretax income for PulteGroup’s financial services operations more than tripled over the prior year to $66 million. The increase in pre-tax income for the quarter reflects a generally favorable competitive environment, along with higher loan volumes consistent with the growth in our homebuilding operations and gains in mortgage capture rate. Mortgage capture rate for the quarter increased to 88%, up from 87% last year.
The Company ended the first quarter with $1.6 billion of cash after using available funds to pay down $726 million of senior notes, as well as the repurchase of 3.3 million of its common shares for $154 million, or an average price of $46.11 per share. At quarter end, the Company had a net debt-to-capital of 5.5%.
In a separate press release, PulteGroup announced that its Board of Directors approved a $1.0 billion increase to the Company’s share repurchase authorization. “We have reduced our shares outstanding by 32% since reinstating our share repurchase program eight years ago and believe the systematic return of funds to our shareholders to be an important part of our capital allocation strategy,” said Bob O’Shaughnessy, PulteGroup executive vice president and CFO.
Following the close of the Company’s first quarter, Standard & Poor’s announced that it had upgraded PulteGroup to BBB- citing the Company’s lower debt and strong credit ratios. PulteGroup is now rated investment grade by S&P, Moody’s and Fitch.
Also following quarter end, PulteGroup was ranked among the 2021 Fortune 100 Best Companies to Work For ® by Great Place to Work ®. This is the first time PulteGroup has been named to this prestigious list. “We are proud to be named a Best Company to Work For and believe this recognition directly reflects the commitment of our people to creating a diverse and inclusive workforce where all of our employees are empowered to bring their best selves to work each day,” said Mr. Marshall.
A conference call to discuss PulteGroup's first quarter results is scheduled for Tuesday, April 27, 2021, at 8:30 a.m. Eastern Time. Interested investors can access the live webcast via PulteGroup's corporate website at .
* 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.
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; 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; the negative impact of the COVID-19 pandemic on our financial position and ability to continue our Homebuilding or Financial Services activities at normal levels or at all in impacted areas; the duration, effect and severity of the COVID-19 pandemic; the measures that governmental authorities take to address the COVID-19 pandemic which may precipitate or exacerbate one or more of the above-mentioned and/or other risks and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period of time; 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, 2020, 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.
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’s brands, go to pultegroup.com; ; ; ; ; ; and . Follow PulteGroup, Inc. on Twitter: .
This report contains information about our operating results reflecting certain adjustments, including net income, diluted earnings per share ("EPS"), operating margin, and debt-to-capital ratio. 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. We believe that reflecting these adjustments provides 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 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, except per share data):
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CONTACT: Company Contact
Investors: Jim Zeumer
KEYWORD: UNITED STATES NORTH AMERICA GEORGIA
INDUSTRY KEYWORD: BUILDING SYSTEMS OTHER CONSTRUCTION & PROPERTY RESIDENTIAL BUILDING & REAL ESTATE COMMERCIAL BUILDING & REAL ESTATE CONSTRUCTION & PROPERTY
SOURCE: PulteGroup, Inc.
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PUB: 04/27/2021 06:30 AM/DISC: 04/27/2021 06:30 AM