PULTEGROUP INC/MI/ - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 25, 2017

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8-K - 8-K 2017 Q1 EARNINGS RELEASE 4-25-17 - PULTEGROUP INC/MI/a425178kpr.htm


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FOR IMMEDIATE RELEASE
Company Contact
 
Investors: Jim Zeumer
 
(404) 978-6434
 
          Email: jim.zeumer@pultegroup.com
 
 

PULTEGROUP, INC. REPORTS FIRST QUARTER 2017 FINANCIAL RESULTS

•
Q1 Net Income of $92 Million, or $0.28 Per Share, Includes $0.03 Per Share Charge for Resolution of Certain Insurance Matters; Reported EPS Up 17% Over Prior Year;
•
Home Sale Revenues Gained 14% to $1.6 Billion; Closings Increased 7% to 4,225 Homes;
•
Value of Net New Orders Increased 16% to $2.4 Billion; Net New Orders Up 8% to 6,126 Homes;
•
Backlog Value Up 13% to $3.8 Billion; Backlog Increased 6% to 9,323 Homes;
•
Repurchased $100 Million of Stock During the Quarter

ATLANTA - April 25, 2017 - PulteGroup, Inc. (NYSE: PHM) announced today financial results for its first quarter ended March 31, 2017. For the quarter, the Company reported net income of $92 million, or $0.28 per share, inclusive of $0.03 per share of expense associated with the resolution of certain insurance matters. Prior year net income was $83 million, or $0.24 per share.

“Reflecting our increased business investment over the past few years and the ongoing execution of our Value Creation strategy, PulteGroup delivered another quarter of significant operating and financial gains that drove a 17% increase in earnings to $0.28 per share,” said Ryan Marshall, President and CEO of PulteGroup. “Consistent with our focus on delivering superior returns over the housing cycle, we continue to realize strong operating margins, improve our asset efficiency and return excess funds to our shareholders.”

“Buyer interest during the spring selling season of 2017 has been high and points to the ongoing strength in recovery for the housing industry,” added Marshall. “Strong buyer demand continues to be supported by an improving economy and resulting employment and wage gains, high consumer confidence, a low inventory of new and existing homes, and the powerful demographic forces of Millennials and Baby Boomers. Given the strength of our land pipeline and our disciplined investment practices, PulteGroup is well positioned to grow its market presence and improve its financial performance within this operating environment.”

Home sale revenues for the first quarter totaled $1.6 billion, an increase of 14% over the prior year. Higher revenues for the quarter were driven by a 7% increase in closings to 4,225 homes, in combination with a 6% increase in average selling price to $375,000.

Home sale gross profits for the quarter totaled $368 million, or 23.2% of home sale revenues, compared with $356 million, or 25.5% of home sale revenues, in the prior year. SG&A expense for the period was $236 million, or 14.9% of home sale revenues, inclusive of $15 million of expenses associated with the resolution of certain insurance matters. SG&A expense for the first quarter of 2016 was $242 million, or 17.4% of home sale revenues.


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For the quarter, net new orders increased 8% to 6,126 homes, while the dollar value of net new orders increased 16% over the prior year to $2.4 billion. The Company operated out of 780 communities for the quarter, which is an increase of 10% over last year.

PulteGroup’s backlog at quarter end totaled 9,323 homes valued at $3.8 billion, compared with prior year backlog of 8,755 homes valued at $3.4 billion. The average sales price in backlog of $408,000 is up 6% over the prior year and reflects the ongoing shift in both the mix of homes sold toward more move-up product and toward higher prices within the buyer category.

Higher homebuilder closing volumes helped increase pretax income in the Company's financial services operations to $14 million for the quarter, compared with pretax income of $10 million in the prior year. Mortgage capture rate for the quarter was 80% compared with 81% in the comparable prior year period.

The Company ended the quarter with $424 million of cash. During the quarter, the Company repurchased 4.7 million common shares for $100 million, or an average price of $21.30 per share.

A conference call discussing PulteGroup's first quarter results is scheduled for Tuesday, April 25, 2017, 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 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; 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 PulteGroup's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 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. We undertake no duty to update any forward-looking statement, whether as a result of new information, future events or changes in our expectations.


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About PulteGroup

PulteGroup, Inc. (NYSE: PHM), based in Atlanta, Georgia, is one of America's largest homebuilding companies with operations in approximately 50 markets throughout the country. Through its brand portfolio that includes Centex, Pulte Homes, Del Webb, DiVosta Homes 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 www.pultegroupinc.com;
www.pulte.com; www.centex.com; www.delwebb.com; www.divosta.com and www.jwhomes.com.



# # #

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PulteGroup, Inc.
Consolidated Results of Operations
($000's omitted, except per share data)
(Unaudited)
 
 
 
 
 
Three Months Ended
 
March 31,
 
2017
 
2016
Revenues:
 
 
 
Homebuilding
 
 
 
Home sale revenues
$
1,585,421

 
$
1,394,243

Land sale revenues
1,640

 
2,487

 
1,587,061

 
1,396,730

Financial Services
41,767

 
35,848

Total revenues
1,628,828

 
1,432,578

 
 
 
 
Homebuilding Cost of Revenues:
 
 
 
Home sale cost of revenues
(1,217,678
)
 
(1,038,028
)
Land sale cost of revenues
(3,228
)
 
(2,028
)
 
(1,220,906
)
 
(1,040,056
)
 
 
 
 
Financial Services expenses
(28,367
)
 
(26,119
)
Selling, general, and administrative expenses
(236,268
)
 
(242,316
)
Other expense, net
(4,022
)
 
(5,874
)
Income before income taxes
139,265

 
118,213

Income tax expense
(47,747
)
 
(34,913
)
Net income
$
91,518

 
$
83,300

 
 
 
 
Per share:
 
 
 
Basic earnings
$
0.29

 
$
0.24

Diluted earnings
$
0.28

 
$
0.24

Cash dividends declared
$
0.09

 
$
0.09

 
 
 
 
Number of shares used in calculation:
 
 
 
Basic
317,756

 
347,815

Effect of dilutive securities
2,329

 
2,662

Diluted
320,085

 
350,477



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PulteGroup, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
(Unaudited)
 
March 31,
2017
 
December 31,
2016
 
 
 
 
ASSETS
 
 
 
 
 
 
 
Cash and equivalents
$
397,758

 
$
698,882

Restricted cash
26,105

 
24,366

Total cash, cash equivalents, and restricted cash
423,863

 
723,248

House and land inventory
7,028,335

 
6,770,655

Land held for sale
48,563

 
31,728

Residential mortgage loans available-for-sale
345,379

 
539,496

Investments in unconsolidated entities
65,293

 
51,447

Other assets
829,625

 
857,426

Intangible assets
151,342

 
154,792

Deferred tax assets, net
1,028,414

 
1,049,408

 
$
9,920,814

 
$
10,178,200

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
Liabilities:
 
 
 
Accounts payable
$
367,180

 
$
405,455

Customer deposits
240,745

 
187,891

Accrued and other liabilities
1,360,418

 
1,448,994

Income tax liabilities
41,941

 
34,860

Financial Services debt
140,381

 
331,621

Senior notes
3,110,004

 
3,110,016

 
5,260,669

 
5,518,837

Shareholders' equity
4,660,145

 
4,659,363

 
$
9,920,814

 
$
10,178,200



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PulteGroup, Inc.
Consolidated Statements of Cash Flows
($000's omitted)
(Unaudited)
 
Three Months Ended
 
March 31,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Net income
$
91,518

 
$
83,300

Adjustments to reconcile net income to net cash from operating activities:
 
 
 
Deferred income tax expense
39,226

 
50,026

Depreciation and amortization
13,209

 
13,113

Share-based compensation expense
14,161

 
9,355

Other, net
4,090

 
4,447

Increase (decrease) in cash due to:
 
 
 
Inventories
(267,014
)
 
(381,910
)
Residential mortgage loans available-for-sale
194,117

 
151,886

Other assets
21,858

 
(25,133
)
Accounts payable, accrued and other liabilities
(71,362
)
 
31,999

Net cash provided by (used in) operating activities
39,803

 
(62,917
)
Cash flows from investing activities:
 
 
 
Capital expenditures
(9,996
)
 
(9,460
)
Investment in unconsolidated subsidiaries
(14,802
)
 
(13,534
)
Cash used for business acquisition
—

 
(430,011
)
Other investing activities, net
1,423

 
1,253

Net cash used in investing activities
(23,375
)
 
(451,752
)
Cash flows from financing activities:
 
 
 
Proceeds from debt issuance
—

 
991,575

Repayments of debt
(1,067
)
 
(702
)
Borrowings under revolving credit facility
—

 
220,000

Repayments under revolving credit facility
—

 
(220,000
)
Financial Services borrowings (repayments)
(191,240
)
 
(149,263
)
Stock option exercises
11,118

 
52

Share repurchases
(105,522
)
 
(52,745
)
Dividends paid
(29,102
)
 
(31,568
)
Net cash provided by (used in) financing activities
(315,813
)
 
757,349

Net increase (decrease)
(299,385
)
 
242,680

Cash, cash equivalents, and restricted cash at beginning of period
723,248

 
775,435

Cash, cash equivalents, and restricted cash at end of period
$
423,863

 
$
1,018,115

 
 
 
 
Supplemental Cash Flow Information:
 
 
 
Interest paid (capitalized), net
$
12,830

 
$
(23,124
)
Income taxes paid (refunded), net
$
1,043

 
$
1,212



6



PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
 
 
 
 
 
Three Months Ended
 
March 31,
 
2017
 
2016
HOMEBUILDING:
 
 
 
Home sale revenues
$
1,585,421

 
$
1,394,243

Land sale revenues
1,640

 
2,487

Total Homebuilding revenues
1,587,061

 
1,396,730

 
 
 
 
Home sale cost of revenues
(1,217,678
)
 
(1,038,028
)
Land sale cost of revenues
(3,228
)
 
(2,028
)
Selling, general, and administrative expenses
(236,268
)
 
(242,316
)
Other expense, net
(4,125
)
 
(5,925
)
Income before income taxes
$
125,762

 
$
108,433

 
 
 
 
FINANCIAL SERVICES:
 
 
 
Income before income taxes
$
13,503

 
$
9,780

 
 
 
 
CONSOLIDATED:
 
 
 
Income before income taxes
$
139,265

 
$
118,213



7


PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
 
 
 
 
 
Three Months Ended
 
March 31,
 
2017
 
2016
 
 
 
 
Home sale revenues
$
1,585,421

 
$
1,394,243

 
 
 
 
Closings - units
 
 
 
Northeast
232

 
262

Southeast
836

 
826

Florida
832

 
745

Midwest
668

 
552

Texas
840

 
775

West
817

 
785

 
4,225

 
3,945

Average selling price
$
375

 
$
353

 
 
 
 
Net new orders - units
 
 
 
Northeast
411

 
378

Southeast
1,077

 
1,052

Florida
1,040

 
923

Midwest
1,162

 
994

Texas
1,211

 
1,121

West
1,225

 
1,184

 
6,126

 
5,652

Net new orders - dollars
$
2,446,141

 
$
2,113,973

 
 
 
 
Unit backlog
 
 
 
Northeast
566

 
560

Southeast
1,612

 
1,689

Florida
1,626

 
1,452

Midwest
1,801

 
1,531

Texas
1,783

 
1,691

West
1,935

 
1,832

 
9,323

 
8,755

Dollars in backlog
$
3,802,231

 
$
3,359,157

 
 
 
 



8


    
PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
 
2017
 
2016
 
MORTGAGE ORIGINATIONS:
 
 
 
 
Origination volume
2,873

 
2,548

 
Origination principal
$
806,352

 
$
666,647

 
Capture rate
80.3
%
 
81.1
%
 


Supplemental Data
($000's omitted)
(Unaudited)
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
 
2017
 
2016
 
 
 
 
 
 
Interest in inventory, beginning of period
$
186,097

 
$
149,498

 
Interest capitalized
44,923

 
35,284

 
Interest expensed
(27,192
)
 
(26,129
)
 
Interest in inventory, end of period
$
203,828

 
$
158,653

 



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