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| 8-K - 8-K - PULTEGROUP INC/MI/ | a425138k.htm |
FOR IMMEDIATE RELEASE | Company Contact |
Investors: Jim Zeumer | |
(248) 433-4502 | |
Email: jim.zeumer@pultegroup.com | |
PULTEGROUP, INC. REPORTS FIRST QUARTER 2013 FINANCIAL RESULTS
• | Q1 Net Income of $0.21 Per Share Compared with Prior Year Net Loss of ($0.03) Per Share |
• | Adjusted Gross Margin of 22.9% Increased 420 Basis Points Over Prior Year and 110 Basis Points Over Q4 2012 |
• | SG&A Lowered to 11.8% of Home Sale Revenues Compared with 15.2% in the Prior Year |
• | Backlog Value Increased 52% to $2.4 Billion; Unit Backlog Up 35% to 7,825 Homes |
• | Net New Orders Increased 4% to 5,200 Homes Generated from 14% Fewer Communities |
• | Quarter Ending Cash Balance of $1.7 Billion Up $183 Million From Year End 2012 |
• | Company to Redeem All Outstanding 2014 Senior Notes Totaling $399 Million |
Bloomfield Hills, Mich., April 25, 2013 - PulteGroup, Inc. (NYSE: PHM) announced today financial results for its first quarter ended March 31, 2013. For the quarter, the Company reported net income of $82 million, or $0.21 per share, compared with a net loss of $12 million, or ($0.03) per share, in the prior year.
“PulteGroup has gotten off to an extremely strong start in 2013, as the Company continues to realize significant improvement across key operating metrics including gross margin, overhead leverage, inventory turns and return on invested capital,” said Richard J. Dugas, Jr., PulteGroup Chairman, President and CEO. “These gains, which are consistent with the Company's ongoing value creation work, helped drive our outstanding first quarter profitability and cash flows.
“The stronger demand which the housing industry saw throughout 2012 has carried into the spring selling season of 2013. We experienced higher traffic in our communities with buyers feeling a greater sense of urgency given the combination of limited product inventory and rising prices found in many markets throughout the country. Within this environment, and aligned with our focus on generating higher returns, we continue to emphasize price, margin realization and effective management of land assets. Our successful execution of these strategies can be seen in the higher selling prices and improved margins achieved across each of our primary brands.
“Given the operational gains demonstrated by our strong first quarter results, and our expectations for an ongoing recovery in new home demand, we have again increased our authorized investment in land and development for 2013 and 2014 to $1.4 billion annually. The incremental investment, which amounts to approximately $200 million in each year, will be made using the defined and disciplined process we put in place more than 18 months ago.”
Home sale revenues for the first quarter increased 35% to $1.1 billion, compared with $814 million last year. Higher revenues for the quarter resulted from a 23% increase in closings to 3,833 homes combined with a 10%, or $26,000, increase in average selling price to $287,000. The higher average selling price reflects price increases implemented by the Company and a shift in the mix of closings toward move-up homes which carry higher prices.
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The Company's adjusted home sale gross margin for the quarter was 22.9%, which is an increase of 420 basis points over the prior year and 110 basis points over the fourth quarter of 2012. Homebuilding SG&A expense for the period was $130 million, or 11.8% of home sale revenues. SG&A expense for the first quarter of 2013 decreased by 340 basis points from the 15.2% of home sale revenues reported in the prior year.
For the quarter, the Company reported 5,200 net new orders, an increase of 4% over prior year orders of 4,991 homes. The dollar value of these orders was $1.6 billion, an increase of 18% over the prior year order value of $1.3 billion. At quarter end, the Company had 650 communities, which represents a decrease of 14% from the end of the first quarter last year. Contract backlog at quarter end was valued at $2.4 billion and totaled 7,825 homes, which represent increases of 52% and 35%, respectively, over the prior year.
The Company's financial services operations reported pretax income of $14 million for the quarter, compared with pretax income of $7 million in the prior year. Financial services benefitted from increased loan originations resulting from the Company's higher homebuilding volumes in combination with a 400 basis point increase in capture rate to 82% in the first quarter.
The Company's cash position increased $183 million during the quarter to $1.7 billion. The increase in cash relates primarily to the Company's increased closing volumes and improved profitability.
Company to Redeem $399 Million of Senior Notes
In an earlier release, PulteGroup announced that it will use a portion of its cash on hand to redeem all outstanding Senior Notes due in 2014. The redemptions, which will total $399 million in aggregate principal amount, will be comprised of the $188 million of the Company's 5.25% Notes due January 2014 and $211 million of its 5.70% Notes due May 2014.
“Our significant liquidity, including the strong current year cash generation resulting from our improving operating performance, allows us to opportunistically reduce our nearest term debt while increasing our authorization for land acquisition and development in 2013 and 2014,” said Bob O'Shaughnessy, Executive Vice President and Chief Financial Officer. “Upon completion of these transactions, we will have retired almost $1.0 billion of debt since the start of 2012, and expect our debt to capital ratio will drop by approximately 400 basis points from the 52% reported as of March 31, 2013.”
A conference call discussing PulteGroup's first quarter results is scheduled for Thursday, April 25, 2013, 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,” “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
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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, 2012, 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 55 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 www.pultegroupinc.com; www.pulte.com; www.centex.com; and www.delwebb.com.
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PulteGroup, Inc. Consolidated Results of Operations ($000's omitted, except per share data) (Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2013 | 2012 | ||||||
Revenues: | |||||||
Homebuilding | |||||||
Home sale revenues | $ | 1,099,752 | $ | 813,786 | |||
Land sale revenues | 26,131 | 38,398 | |||||
1,125,883 | 852,184 | ||||||
Financial Services | 36,873 | 28,852 | |||||
Total revenues | 1,162,756 | 881,036 | |||||
Homebuilding Cost of Revenues: | |||||||
Home sale cost of revenues | 901,470 | 712,166 | |||||
Land sale cost of revenues | 22,018 | 33,397 | |||||
923,488 | 745,563 | ||||||
Financial Services expenses | 22,588 | 22,009 | |||||
Selling, general and administrative expenses | 129,626 | 123,314 | |||||
Other expense (income), net | 4,772 | 6,619 | |||||
Interest income | (1,173 | ) | (1,199 | ) | |||
Interest expense | 207 | 217 | |||||
Equity in (earnings) loss of unconsolidated entities | 898 | (1,996 | ) | ||||
Income (loss) before income taxes | 82,350 | (13,491 | ) | ||||
Income tax expense (benefit) | 588 | (1,825 | ) | ||||
Net income (loss) | $ | 81,762 | $ | (11,666 | ) | ||
Net income (loss) per share: | |||||||
Basic | $ | 0.21 | $ | (0.03 | ) | ||
Diluted | $ | 0.21 | $ | (0.03 | ) | ||
Number of shares used in calculation: | |||||||
Basic | 384,228 | 380,502 | |||||
Effect of dilutive securities | 6,093 | — | |||||
Diluted | 390,321 | 380,502 | |||||
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PulteGroup, Inc. Condensed Consolidated Balance Sheets ($000's omitted) (Unaudited) | |||||||
March 31, 2013 | December 31, 2012 | ||||||
ASSETS | |||||||
Cash and equivalents | $ | 1,592,924 | $ | 1,404,760 | |||
Restricted cash | 66,577 | 71,950 | |||||
House and land inventory | 4,112,797 | 4,214,046 | |||||
Land held for sale | 92,153 | 91,104 | |||||
Land, not owned, under option agreements | 38,988 | 31,066 | |||||
Residential mortgage loans available-for-sale | 238,204 | 318,931 | |||||
Investments in unconsolidated entities | 44,744 | 45,629 | |||||
Other assets | 408,781 | 407,675 | |||||
Intangible assets | 145,973 | 149,248 | |||||
$ | 6,741,141 | $ | 6,734,409 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Liabilities: | |||||||
Accounts payable, including book overdrafts of $34,676 and $42,053 in 2013 and 2012, respectively | $ | 176,696 | $ | 178,274 | |||
Customer deposits | 126,069 | 101,183 | |||||
Accrued and other liabilities | 1,397,638 | 1,418,063 | |||||
Income tax liabilities | 196,863 | 198,865 | |||||
Financial Services debt | 56,631 | 138,795 | |||||
Senior notes | 2,511,729 | 2,509,613 | |||||
4,465,626 | 4,544,793 | ||||||
Shareholders' equity | 2,275,515 | 2,189,616 | |||||
$ | 6,741,141 | $ | 6,734,409 | ||||
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PulteGroup, Inc. Consolidating Statements of Cash Flows ($000's omitted) (Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 81,762 | $ | (11,666 | ) | ||
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 | 704 | 5,896 | |||||
Depreciation and amortization | 7,339 | 7,393 | |||||
Stock-based compensation expense | 7,141 | 3,719 | |||||
Equity in (earnings) loss of unconsolidated entities | 898 | (1,996 | ) | ||||
Distributions of earnings from unconsolidated entities | 265 | 3,518 | |||||
Other non-cash, net | 2,331 | 421 | |||||
Increase (decrease) in cash due to: | |||||||
Restricted cash | 860 | 53 | |||||
Inventories | 99,760 | 45,969 | |||||
Residential mortgage loans available-for-sale | 80,727 | 74,073 | |||||
Other assets | (370 | ) | 9,939 | ||||
Accounts payable, accrued and other liabilities | (8,795 | ) | (34,466 | ) | |||
Income tax liabilities | (2,002 | ) | 11,837 | ||||
Net cash provided by (used in) operating activities | 270,620 | 114,690 | |||||
Cash flows from investing activities: | |||||||
Distributions from unconsolidated entities | 200 | — | |||||
Investments in unconsolidated entities | (593 | ) | (49 | ) | |||
Net change in loans held for investment | 10 | 293 | |||||
Change in restricted cash related to letters of credit | 4,513 | 11,938 | |||||
Proceeds from the sale of property and equipment | 59 | 4,475 | |||||
Capital expenditures | (5,378 | ) | (3,758 | ) | |||
Net cash provided by (used in) investing activities | (1,189 | ) | 12,899 | ||||
Cash flows from financing activities: | |||||||
Financial Services borrowings (repayments) | (82,164 | ) | — | ||||
Other borrowings (repayments) | (213 | ) | 1,920 | ||||
Stock option exercises | 7,537 | — | |||||
Stock repurchases | (6,427 | ) | (845 | ) | |||
Net cash provided by (used in) financing activities | (81,267 | ) | 1,075 | ||||
Net increase (decrease) in cash and equivalents | 188,164 | 128,664 | |||||
Cash and equivalents at beginning of period | 1,404,760 | 1,083,071 | |||||
Cash and equivalents at end of period | $ | 1,592,924 | $ | 1,211,735 | |||
Supplemental Cash Flow Information: | |||||||
Interest paid (capitalized), net | $ | (23,095 | ) | $ | (22,808 | ) | |
Income taxes paid (refunded), net | $ | (3,026 | ) | $ | (11,142 | ) | |
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PulteGroup, Inc. Segment Data ($000's omitted) (Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2013 | 2012 | ||||||
HOMEBUILDING: | |||||||
Home sale revenues | $ | 1,099,752 | $ | 813,786 | |||
Land sale revenues | 26,131 | 38,398 | |||||
Total Homebuilding revenues | 1,125,883 | 852,184 | |||||
Home sale cost of revenues | 901,470 | 712,166 | |||||
Land sale cost of revenues | 22,018 | 33,397 | |||||
Selling, general, and administrative expenses | 129,626 | 123,314 | |||||
Equity in (earnings) loss of unconsolidated entities | 926 | (1,978 | ) | ||||
Other expense (income), net | 4,772 | 6,619 | |||||
Interest income, net | (966 | ) | (982 | ) | |||
Income (loss) before income taxes | $ | 68,037 | $ | (20,352 | ) | ||
FINANCIAL SERVICES: | |||||||
Income (loss) before income taxes | $ | 14,313 | $ | 6,861 | |||
CONSOLIDATED: | |||||||
Income (loss) before income taxes | $ | 82,350 | $ | (13,491 | ) | ||
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PulteGroup, Inc. Segment data, continued ($000's omitted) (Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2013 | 2012 | ||||||
Home sale revenues | $ | 1,099,752 | $ | 813,786 | |||
Closings - units | |||||||
Northeast | 302 | 352 | |||||
Southeast | 651 | 535 | |||||
Florida | 583 | 476 | |||||
Texas | 897 | 699 | |||||
North | 666 | 531 | |||||
Southwest | 734 | 524 | |||||
3,833 | 3,117 | ||||||
Average selling price | $ | 287 | $ | 261 | |||
Net new orders - units | |||||||
Northeast | 571 | 553 | |||||
Southeast | 959 | 774 | |||||
Florida | 804 | 768 | |||||
Texas | 1,080 | 1,109 | |||||
North | 969 | 869 | |||||
Southwest | 817 | 918 | |||||
5,200 | 4,991 | ||||||
Net new orders - dollars (a) | $ | 1,581,965 | $ | 1,339,977 | |||
Unit backlog | |||||||
Northeast | 891 | 626 | |||||
Southeast | 1,219 | 841 | |||||
Florida | 1,286 | 950 | |||||
Texas | 1,638 | 1,235 | |||||
North | 1,570 | 1,047 | |||||
Southwest | 1,221 | 1,099 | |||||
7,825 | 5,798 | ||||||
Dollars in backlog | $ | 2,413,753 | $ | 1,585,840 | |||
(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. |
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PulteGroup, Inc. Segment Data, continued ($000's omitted) (Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2013 | 2012 | ||||||
MORTGAGE ORIGINATIONS: | |||||||
Origination volume | 2,722 | 2,021 | |||||
Origination principal | $ | 621,997 | $ | 429,465 | |||
Capture rate | 82.3 | % | 78.3 | % | |||
Supplemental Data ($000's omitted) (Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2013 | 2012 | ||||||
Interest in inventory, beginning of period | $ | 331,880 | $ | 355,068 | |||
Interest capitalized | 42,656 | 51,323 | |||||
Interest expensed | (53,677 | ) | (47,186 | ) | |||
Interest in inventory, end of period | $ | 320,859 | $ | 359,205 | |||
Interest incurred | $ | 42,656 | $ | 51,323 | |||
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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 | |||||||||||||||||||
March 31, 2013 | December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | |||||||||||||||
Home sale revenues | $ | 1,099,752 | $ | 1,481,517 | $ | 1,232,704 | $ | 1,024,405 | $ | 813,786 | |||||||||
Home sale cost of revenues | 901,470 | 1,228,201 | 1,023,704 | 869,379 | 712,166 | ||||||||||||||
Home sale gross margin | 198,282 | 253,316 | 209,000 | 155,026 | 101,620 | ||||||||||||||
Add: | |||||||||||||||||||
Land and community valuation adjustments (a) | — | 2,250 | 385 | 633 | 3,700 | ||||||||||||||
Capitalized interest amortization (a) | 53,677 | 67,880 | 57,155 | 52,070 | 47,186 | ||||||||||||||
Adjusted home sale gross margin | $ | 251,959 | $ | 323,446 | $ | 266,540 | $ | 207,729 | $ | 152,506 | |||||||||
Home sale gross margin as a percentage of home sale revenues | 18.0 | % | 17.1 | % | 17.0 | % | 15.1 | % | 12.5 | % | |||||||||
Adjusted home sale gross margin as a percentage of home sale revenues | 22.9 | % | 21.8 | % | 21.6 | % | 20.3 | % | 18.7 | % | |||||||||
(a) | Write-offs of capitalized interest related to impairments are reflected in capitalized interest amortization. |
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