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8-K - FORM 8-K - PULTEGROUP INC/MI/a0131138k.htm


FOR IMMEDIATE RELEASE
Company Contact
 
Investors: Jim Zeumer
 
(248) 433-4502
 
          Email: jim.zeumer@pultegroup.com


PULTEGROUP REPORTS FINANCIAL RESULTS FOR 2012 FOURTH QUARTER

Q4 Earnings of $0.15 Per Share After Net Charges of $0.19 Per Share Resulting from Mortgage and Debt-Repurchase Charges, Partially Offset by Tax Benefits
Adjusted Q4 Home Sale Gross Margin of 21.8% Increased 320 Basis Points Over Prior Year and 20 Basis Points Over Prior Quarter
SG&A Reduced 40 Basis Points from Prior Year to 9.6% of Home Sale Revenues
Net New Orders Increased 27% to 3,926 Generated from 4% Fewer Communities
Dollar Value of Net New Orders Increased 41% to $1.2 Billion
Backlog Value Increased 82% to $1.9 Billion; Unit Backlog Up 65% to 6,458 Homes
Repurchased $496 Million of Senior Notes in Q4; Retired $592 Million of Debt in 2012
Cash Balance of $1.5 Billion Up $292 Million from Prior Year End

Bloomfield Hills, Mich., January 31, 2013 - PulteGroup, Inc. (NYSE: PHM) announced today financial results for its fourth quarter ended December 31, 2012. For the quarter, PulteGroup reported net income of $59 million, or $0.15 per share. Reported net income includes charges of $49 million, or $0.13 per share, for potential future loan repurchase obligations, and $32 million, or $0.08 per share, relating to the repurchase of $496 million of senior notes in the period. These charges were partially offset by $8 million, or $0.02 per share, of income tax benefits associated with the favorable resolution of certain tax matters.

In the prior year fourth quarter, PulteGroup reported net income of $14 million, or $0.04 per share, inclusive of net charges totaling $27 million, or $0.07 per share, related to potential future loan repurchase obligations, land-related charges, and debt repurchases, partially offset by land-sale gains and income tax benefits.

“We are pleased to report another quarter of strong financial results that demonstrate improved fundamental operating performance and higher returns on invested capital,” said Richard J. Dugas, Jr., Chairman, President and CEO of PulteGroup. “Improving market conditions, combined with the value creation initiatives we have implemented over the last two years, helped to drive a 320 basis point increase in our adjusted gross margin to 21.8%. In addition, our continued focus on cost controls enabled us to realize a 40 basis point decrease in our SG&A as a percentage of home sales to 9.6%.”

“Fourth quarter results also demonstrated continued strong cash flow generation consistent with our focus on greater capital efficiency. For the full year, we were able to increase our cash position by $292 million after paying down almost $600 million of senior notes.”


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“We now look ahead to 2013 with expectations for a continued rebound in U.S. housing driven by record low interest rates, higher rent vs. own costs, rising home prices and sharply lower overall housing inventory. Given this expectation, and consistent with our focus on improving long-term returns, we have authorized an additional $250 million per year of investment in land and related development in 2013 and 2014. This incremental investment, which will raise planned land spend for each year to approximately $1.2 billion, will be made using the same disciplined capital investment process we established 18 months ago. The incremental investment is expected to provide additional land resources for use primarily in 2014 and beyond.”

Fourth Quarter Results

Home sale revenues in the fourth quarter ended December 31, 2012, totaled $1.5 billion, an increase of 27% over the prior year's fourth quarter. The increase in revenue was driven by a 20% increase in closings to 5,154 homes, combined with a 6% increase in average selling price to $287,000. The higher average selling price reported for the quarter reflects price increases, as well as a continued shift in product mix to include more move-up homes being closed in the period.

The Company's adjusted home sale gross margin for the fourth quarter was 21.8%, an increase of 320 basis points over the prior year and 20 basis points compared with the third quarter of 2012. Homebuilding SG&A expense for the quarter was $142 million, or 9.6% of home sale revenues. SG&A for the prior year period was $117 million, or 10.0% of home sale revenues.

For the quarter, the Company reported 3,926 net new orders, an increase of 27% over prior year orders of 3,084. The dollar value of net new orders in the quarter was $1.2 billion, an increase of 41% over the prior year order value of $828 million. The Company operated out of 4% fewer communities in the fourth quarter of 2012 compared with the comparable prior year period. Contract backlog at year end was valued at $1.9 billion and totaled 6,458 homes, which represent increases of 82% and 65%, respectively, over the prior year.

The Company's financial services operations reported a pretax loss of $24 million in the quarter, inclusive of a $49 million charge associated with potential future loan repurchase obligations. The increase in estimated repurchase obligations primarily reflects the Company's expectation that repurchase requests will now continue through 2014, or a year longer than previously estimated, coupled with a higher volume of repurchase requests experienced in 2012.

During the quarter, the Company used available cash to repurchase $496 million principal value of its senior notes, resulting in a pretax charge of $32 million. Combined with transactions completed earlier in the year, the Company retired an aggregate $592 million principal value of its senior notes during 2012 which helped to lower the Company's year-end debt and net debt-to-total capitalization to 53% and 32%, respectively.

A conference call discussing PulteGroup's fourth quarter results will be held Thursday, January 31, 2013, at 8:30 a.m. Eastern Time, and webcast live via pultegroupinc.com. Interested investors can access the call via the Company's home page at pultegroupinc.com, and are encouraged to download the available slides that provide additional details on the Company's fourth quarter results.

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

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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 continuing adverse conditions in 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; 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, 2011, 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 Bloomfield Hills, Mich., is one of America's largest homebuilding companies with operations in approximately 60 markets throughout the country. Through its brand portfolio that includes Centex, Pulte Homes and Del Webb, 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 new homes designed for the way people actually live today. As the most awarded homebuilder in customer satisfaction, PulteGroup brands have consistently ranked among top homebuilders in third-party customer satisfaction studies.

For more information about PulteGroup, Inc. and PulteGroup brands, go to pultegroupinc.com; www.pulte.com; www.centex.com; and www.delwebb.com.


# # #





3



PulteGroup, Inc.
Consolidated Results of Operations
($000's omitted, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2012
 
2011
 
2012
 
2011
Revenues:
 
 
 
 
 
 
 
Homebuilding
 
 
 
 
 
 
 
Home sale revenues
$
1,481,517

 
$
1,167,141

 
$
4,552,412

 
$
3,950,743

Land sale revenues
36,928

 
63,830

 
106,698

 
82,853

 
1,518,445

 
1,230,971

 
4,659,110

 
4,033,596

Financial Services
48,521

 
31,374

 
160,888

 
103,094

Total revenues
1,566,966

 
1,262,345

 
4,819,998

 
4,136,690

 
 
 
 
 
 
 
 
Homebuilding Cost of Revenues:
 
 
 
 
 
 
 
Home sale cost of revenues
1,228,201

 
1,021,873

 
3,833,451

 
3,444,398

Land sale cost of revenues
32,811

 
57,497

 
94,880

 
59,279

 
1,261,012

 
1,079,370

 
3,928,331

 
3,503,677

 
 
 
 
 
 
 
 
Financial Services expenses
72,597

 
58,836

 
135,511

 
137,666

Selling, general, and administrative expenses
141,766

 
117,204

 
514,457

 
519,583

Other expense (income), net
41,728

 
18,337

 
66,298

 
293,102

Interest income
(1,331
)
 
(1,351
)
 
(4,913
)
 
(5,055
)
Interest expense
204

 
323

 
819

 
1,313

Equity in (earnings) loss of unconsolidated entities
(223
)
 
(1,299
)
 
(4,059
)
 
(3,296
)
Income (loss) before income taxes
51,213

 
(9,075
)
 
183,554

 
(310,300
)
Income tax expense (benefit)
(7,529
)
 
(22,896
)
 
(22,591
)
 
(99,912
)
Net income (loss)
$
58,742

 
$
13,821

 
$
206,145

 
$
(210,388
)
 
 
 
 
 
 
 
 
Net income (loss) per share:
 
 
 
 
 
 
 
Basic
$
0.15

 
$
0.04

 
$
0.54

 
$
(0.55
)
Diluted
$
0.15

 
$
0.04

 
$
0.54

 
$
(0.55
)
 
 
 
 
 
 
 
 
Number of shares used in calculation:
 
 
 
 
 
 
 
Basic
383,404

 
380,149

 
381,562

 
379,877

Effect of dilutive securities
5,900

 
1,112

 
3,002

 

Diluted
389,304

 
381,261

 
384,564

 
379,877



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PulteGroup, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
(Unaudited)
 
 
 
 
 
December 31,
2012
 
December 31,
2011
 
 
 
 
ASSETS
 
 
 
 
 
 
 
Cash and equivalents
$
1,404,760

 
$
1,083,071

Restricted cash
71,950

 
101,860

House and land inventory
4,214,046

 
4,636,468

Land held for sale
91,104

 
135,307

Land, not owned, under option agreements
31,066

 
24,905

Residential mortgage loans available-for-sale
318,931

 
258,075

Investments in unconsolidated entities
45,629

 
35,988

Other assets
407,675

 
447,598

Intangible assets
149,248

 
162,348

 
$
6,734,409

 
$
6,885,620

 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
Liabilities:
 
 
 
Accounts payable
$
178,274

 
$
196,447

Customer deposits
101,183

 
46,960

Accrued and other liabilities
1,418,063

 
1,411,941

Income tax liabilities
198,865

 
203,313

Financial Services debt
138,795

 

Senior notes
2,509,613

 
3,088,344

Total liabilities
4,544,793

 
4,947,005

 
 
 
 
Shareholders' equity
2,189,616

 
1,938,615

 
 
 
 
 
$
6,734,409

 
$
6,885,620



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PulteGroup, Inc.
Consolidating Statements of Cash Flows
($000's omitted)
(Unaudited)
 
Year Ended
 
December 31,
 
2012
 
2011
Cash flows from operating activities:
 
 
 
Net income (loss)
$
206,145

 
$
(210,388
)
Adjustments to reconcile net income (loss) to net cash flows provided by (used in)
      operating activities:
 
 
 
Write-down of land and deposits and pre-acquisition costs
17,195

 
35,786

Goodwill impairments

 
240,541

Amortization and depreciation
30,027

 
32,098

Stock-based compensation expense
22,897

 
16,970

Loss on debt repurchases
32,071

 
5,638

Equity in (earnings) loss of unconsolidated entities
(4,059
)
 
(3,296
)
Distributions of earnings from unconsolidated entities
7,488

 
7,083

Other non-cash, net
10,356

 
12,188

Increase (decrease) in cash due to:
 
 
 
Restricted cash
1,257

 
5,940

Inventories
455,223

 
54,891

Residential mortgage loans available-for-sale
(60,828
)
 
(82,113
)
Other assets
26,014

 
182,471

Accounts payable, accrued and other liabilities
20,802

 
(189,435
)
Income tax liabilities
(4,448
)
 
(91,095
)
Net cash provided by (used in) operating activities
760,140

 
17,279

Cash flows from investing activities:
 
 
 
Distributions from unconsolidated entities
3,029

 
4,531

Investments in unconsolidated entities
(16,456
)
 
(4,603
)
Net change in loans held for investment
836

 
325

Change in restricted cash related to letters of credit
28,653

 
(83,199
)
Proceeds from the sale of property and equipment
7,586

 
10,555

Capital expenditures
(13,942
)
 
(21,238
)
Net cash provided by (used in) investing activities
9,706

 
(93,629
)
Cash flows from financing activities:
 
 
 
Financial Services borrowings (repayments)
138,795

 

Other borrowings (repayments)
(618,800
)
 
(321,133
)
Stock option exercises
32,809

 

Stock repurchases
(961
)
 
(2,836
)
Net cash provided by (used in) financing activities
(448,157
)
 
(323,969
)
Net increase (decrease) in cash and equivalents
321,689

 
(400,319
)
Cash and equivalents at beginning of period
1,083,071

 
1,483,390

Cash and equivalents at end of period
$
1,404,760

 
$
1,083,071

 
 
 
 
Supplemental Cash Flow Information:
 
 
 
Interest paid (capitalized), net
$
(1,470
)
 
$
(9,623
)
Income taxes paid (refunded), net
$
(13,322
)
 
$
(62,167
)


6




PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2012
 
2011
 
2012
 
2011
HOMEBUILDING:
 
 
 
 
 
 
 
Home sale revenues
$
1,481,517

 
$
1,167,141

 
$
4,552,412

 
$
3,950,743

Land sale revenues
36,928

 
63,830

 
106,698

 
82,853

Total Homebuilding revenues
1,518,445

 
1,230,971

 
4,659,110

 
4,033,596

 
 
 
 
 
 
 
 
Home sale cost of revenues
1,228,201

 
1,021,873

 
3,833,451

 
3,444,398

Land sale cost of revenues
32,811

 
57,497

 
94,880

 
59,279

Selling, general, and administrative expenses
141,766

 
117,204

 
514,457

 
519,583

Equity in (earnings) loss of unconsolidated entities
(159
)
 
(1,263
)
 
(3,873
)
 
(3,194
)
Other expense (income), net
41,728

 
18,337

 
66,298

 
293,102

Interest income, net
(1,127
)
 
(1,028
)
 
(4,094
)
 
(3,742
)
Income (loss) before income taxes
$
75,225

 
$
18,351

 
$
157,991

 
$
(275,830
)
 
 
 
 
 
 
 
 
FINANCIAL SERVICES:
 
 
 
 
 
 
 
Income (loss) before income taxes
$
(24,012
)
 
$
(27,426
)
 
$
25,563

 
$
(34,470
)
 
 
 
 
 
 
 
 
CONSOLIDATED:
 
 
 
 
 
 
 
Income (loss) before income taxes
$
51,213

 
$
(9,075
)
 
$
183,554

 
$
(310,300
)


7



PulteGroup, Inc.
Segment data, continued
($000's omitted)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2012
 
2011
 
2012
 
2011
 
 
 
 
 
 
 
 
Home sale revenues
$
1,481,517

 
$
1,167,141

 
$
4,552,412

 
$
3,950,743

 
 
 
 
 
 
 
 
Closings - units
 
 
 
 
 
 
 
Northeast
576

 
649

 
1,800

 
1,880

Southeast
773

 
739

 
2,757

 
2,771

Florida
707

 
596

 
2,340

 
2,251

Texas
1,003

 
822

 
3,487

 
3,327

North
1,046

 
742

 
3,103

 
2,579

Southwest
1,049

 
755

 
3,018

 
2,467

 
5,154

 
4,303

 
16,505

 
15,275

Average selling price
$
287

 
$
271

 
$
276

 
$
259

 
 
 
 
 
 
 
 
Net new orders - units
 
 
 
 
 
 
 
Northeast
398

 
371

 
1,997

 
1,749

Southeast
682

 
534

 
3,066

 
2,642

Florida
600

 
470

 
2,747

 
2,314

Texas
905

 
597

 
4,117

 
3,278

North
789

 
586

 
3,661

 
2,635

Southwest
552

 
526

 
3,451

 
2,597

 
3,926

 
3,084

 
19,039

 
15,215

Net new orders - dollars (a)
$
1,166,760

 
$
828,154

 
$
5,424,300

 
$
3,953,829

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
 
 
 
 
 
2012
 
2011
Unit backlog
 
 
 
 
 
 
 
Northeast
 
 
 
 
622

 
425

Southeast
 
 
 
 
911

 
602

Florida
 
 
 
 
1,065

 
658

Texas
 
 
 
 
1,455

 
825

North
 
 
 
 
1,267

 
709

Southwest
 
 
 
 
1,138

 
705

 
 
 
 
 
6,458

 
3,924

Dollars in backlog
 
 
 
 
$
1,931,538

 
$
1,059,649

 
 
 
 
 
 
 
 

(a)
Net new order dollars represent a composite of new order dollars combined with other movements of the dollars in backlog related to cancellations and change orders.

8




PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2012
 
2011
 
2012
 
2011
MORTGAGE ORIGINATIONS:
 
 
 
 
 
 
 
Origination volume
3,625

 
2,815

 
11,322

 
9,482

Origination principal
$
828,607

 
$
622,473

 
$
2,509,928

 
$
1,986,225

Capture rate
83.0
%
 
81.8
%
 
81.9
%
 
78.5
%


Supplemental Data
($000's omitted)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2012
 
2011
 
2012
 
2011
 
 
 
 
 
 
 
 
Interest in inventory, beginning of period
$
352,026

 
$
365,343

 
$
355,068

 
$
323,379

Interest capitalized
47,734

 
53,704

 
201,103

 
221,071

Interest expensed
(67,880
)
 
(63,979
)
 
(224,291
)
 
(189,382
)
Interest in inventory, end of period
$
331,880

 
$
355,068

 
$
331,880

 
$
355,068

Interest incurred
$
47,734

 
$
53,704

 
$
201,103

 
$
221,071




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PulteGroup, Inc.
Reconciliation of Non-GAAP Financial Measures

This report contains information about our home sale gross margins reflecting certain adjustments. This measure is considered a non-GAAP financial measure under the SEC's rules and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measure as a measure of our operating performance. Management and our local divisions use this measure in evaluating the operating performance of each community and in making strategic decisions regarding sales pricing, construction and development pace, product mix, and other daily operating decisions. We believe it is a relevant and useful measure to investors for evaluating our performance through gross profit generated on homes delivered during a given period and for comparing our operating performance 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 gross margins and any adjustments thereto before comparing our measure to that of such other companies.

The following table sets forth a reconciliation of this non-GAAP financial measure to the GAAP financial measure that management believes to be most directly comparable ($000's omitted):

Home Sale Gross Margin
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
December 31,
2012
 
September 30,
2012
 
June 30,
2012
 
March 31,
2012
 
December 31,
2011
 
 
 
 
 
 
 
 
 
 
Home sale revenues
$
1,481,517

 
$
1,232,704

 
$
1,024,405

 
$
813,786

 
$
1,167,141

Home sale cost of revenues
1,228,201

 
1,023,704

 
869,379

 
712,166

 
1,021,873

Home sale gross margin
253,316

 
209,000

 
155,026

 
101,620

 
145,268

Add:
 
 
 
 
 
 
 
 
 
Impairments (a)
2,250

 
385

 
633

 
3,700

 
7,885

Capitalized interest amortization (a)
67,880

 
57,155

 
52,070

 
47,186

 
63,979

Adjusted home sale gross margin
$
323,446

 
$
266,540

 
$
207,729

 
$
152,506

 
$
217,132

 
 
 
 
 
 
 
 
 
 
Home sale gross margin as a
   percentage of home sale revenues
17.1
%
 
17.0
%
 
15.1
%
 
12.5
%
 
12.4
%
 
 
 
 
 
 
 
 
 
 
Adjusted home sale gross margin as a
   percentage of home sale revenues
21.8
%
 
21.6
%
 
20.3
%
 
18.7
%
 
18.6
%

(a)
Write-offs of capitalized interest related to impairments are reflected in capitalized interest amortization.



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