PULTEGROUP INC/MI/ - FORM 8-K - EX-99 - EXHIBIT 99 EARNINGS PR 1Q18 - April 24, 2018

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8-K - 8-K 4-24-18 EARNINGS RELEASE 1Q18 - PULTEGROUP INC/MI/a8-k4x24x18earningsrelease.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 2018 FINANCIAL RESULTS

•
Q1 Earnings Increased 111% Over Prior Year to $0.59 Per Share
•
Home Sale Revenues Gained 21% to $1.9 Billion; Closings Increased 9% to 4,626 Homes
•
Home Sale Gross Margins Increased 40 Basis Points to 23.6%
•
Operating Margin Increased 270 Basis Points to 11.0%
•
Value of Net New Orders Increased 18% to $2.9 Billion; Net New Orders Gained 12% to 6,875 Homes
•
Backlog Value Up 30% to $5.0 Billion; Unit Backlog Increased 21% to 11,245 Homes
•
Repurchased $52 Million of Stock During the Quarter

ATLANTA - April 24, 2018 - PulteGroup, Inc. (NYSE: PHM) announced today financial results for its first quarter ended March 31, 2018. For the quarter, the Company reported an 87% increase in net income to $171 million, and a 111% gain in earnings to $0.59 per share. The Company’s prior year net income was $92 million, or $0.28 per share, inclusive of $0.03 per share of expense associated with the resolution of certain insurance matters.

“PulteGroup has gotten off to an exceptional start in 2018, as we realized 21% top line growth while effectively doubling reported earnings per share,” said Ryan Marshall, President and CEO of PulteGroup. “By continuing to invest organically within our established markets, we have put ourselves in position to grow our business while continuing to generate high returns.”

“Robust buyer demand in the face of mortgage and financial market volatility attests to the strong underpinnings of this housing recovery which is being bolstered by sustained economic growth, good job trends, favorable demographics and a limited supply of homes for sale,” said Marshall. “Within this environment, we believe that our diversified operating platform, balanced customer base and supportive land pipeline puts the Company in a strong competitive position to achieve its long-term financial goals.”

Home sale revenues for the first quarter totaled $1.9 billion, an increase of 21% over the prior year. Higher revenues for the quarter were driven by a 10% increase in average selling price to $413,000, in combination with a 9% increase in closings to 4,626 homes.

Home sale gross profits for the quarter were $452 million, or 23.6% of home sale revenues, compared with $368 million, or 23.2% of home sale revenues, in the prior year. SG&A expense for the first quarter was $241 million, or 12.6% of home sale revenues. SG&A expense for the prior year was $236 million, or 14.9% of home sale revenues, inclusive of $15 million of expenses associated with the resolution of certain insurance matters. Operating margin for the period was 11.0%, an increase of 270 basis over prior year reported operating margin of 8.3%.


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For the quarter, net new orders increased 12% over the prior year to 6,875 homes, as the dollar value of net new orders increased 18% to $2.9 billion. During the first quarter, the Company operated out of 844 communities, which was up 8% over 2017.

The Company ended the quarter with a backlog of 11,245 homes valued at $5.0 billion, which are increases of 21% and 30%, respectively, over last year, and represent decade highs for the period. The average sales price in backlog increased 8% over last year to $441,000, as price benefitted from the product and geographic mix of homes, as well as higher selling prices realized within each buyer group.

PulteGroup’s financial services operations generated pretax income of $14 million, which is unchanged from last year, as the benefit of higher production volumes was offset by more competitive market conditions that impacted pricing and capture rate. Mortgage capture rate for the first quarter was 78% compared with 80% in the first quarter of 2017.

The Company ended the quarter with $185 million of cash. During the quarter, the Company repurchased 1.7 million common shares for $52 million, or an average price of $30.86 per share.

A conference call discussing PulteGroup's first quarter results is scheduled for Tuesday, April 24, 2018, 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 any impairment charge 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, including, but not limited to the Tax Cuts and Jobs Act 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; 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, 2017 and other public filings with the Securities and Exchange Commission (the “SEC”) for a further

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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 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,
 
 
2018
 
2017
Revenues:
 
 
 
 
Homebuilding
 
 
 
 
Home sale revenues
 
$
1,911,598

 
$
1,585,421

Land sale and other revenues
 
12,557

 
2,690

 
 
1,924,155

 
1,588,111

Financial Services
 
45,938

 
41,767

Total revenues
 
1,970,093

 
1,629,878

 
 
 
 
 
Homebuilding Cost of Revenues:
 
 
 
 
Home sale cost of revenues
 
(1,459,940
)
 
(1,217,678
)
Land sale cost of revenues
 
(11,548
)
 
(3,228
)
 
 
(1,471,488
)
 
(1,220,906
)
 
 
 
 
 
Financial Services expenses
 
(32,213
)
 
(28,367
)
Selling, general, and administrative expenses
 
(240,893
)
 
(236,268
)
Other expense, net
 
(1,308
)
 
(5,072
)
Income before income taxes
 
224,191

 
139,265

Income tax expense
 
(53,440
)
 
(47,747
)
Net income
 
$
170,751

 
$
91,518

 
 
 
 
 
Per share:
 
 
 
 
Basic earnings
 
$
0.59

 
$
0.29

Diluted earnings
 
$
0.59

 
$
0.28

Cash dividends declared
 
$
0.09

 
$
0.09

 
 
 
 
 
Number of shares used in calculation:
 
 
 
 
Basic
 
286,683

 
317,756

Effect of dilutive securities
 
1,343

 
2,329

Diluted
 
288,026

 
320,085





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PulteGroup, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
(Unaudited)
 
March 31,
2018
 
December 31,
2017
 
 
 
 
ASSETS
 
 
 
 
 
 
 
Cash and equivalents
$
150,821

 
$
272,683

Restricted cash
33,966

 
33,485

Total cash, cash equivalents, and restricted cash
184,787

 
306,168

House and land inventory
7,465,028

 
7,147,130

Land held for sale
69,522

 
68,384

Residential mortgage loans available-for-sale
385,453

 
570,600

Investments in unconsolidated entities
64,810

 
62,957

Other assets
784,355

 
745,123

Intangible assets
137,542

 
140,992

Deferred tax assets, net
614,898

 
645,295

 
$
9,706,395

 
$
9,686,649

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
Liabilities:
 
 
 
Accounts payable
$
446,304

 
$
393,815

Customer deposits
308,864

 
250,779

Accrued and other liabilities
1,226,233

 
1,356,333

Income tax liabilities
115,667

 
86,925

Financial Services debt
246,952

 
437,804

Notes payable
3,087,718

 
3,006,967

 
5,431,738

 
5,532,623

Shareholders' equity
4,274,657

 
4,154,026

 
$
9,706,395

 
$
9,686,649



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PulteGroup, Inc.
Consolidated Statements of Cash Flows
($000's omitted)
(Unaudited)
 
Three Months Ended
 
March 31,
 
2018
 
2017
Cash flows from operating activities:
 
 
 
Net income
$
170,751

 
$
91,518

Adjustments to reconcile net income to net cash from operating activities:
 
 
 
Deferred income tax expense
23,479

 
39,226

Land-related charges
3,419

 
3,535

Depreciation and amortization
11,890

 
13,209

Share-based compensation expense
8,451

 
14,161

Other, net
(793
)
 
555

Increase (decrease) in cash due to:
 
 
 
Inventories
(237,169
)
 
(267,014
)
Residential mortgage loans available-for-sale
185,147

 
194,117

Other assets
(9,246
)
 
21,858

Accounts payable, accrued and other liabilities
13,084

 
(71,362
)
Net cash provided by (used in) operating activities
169,013

 
39,803

Cash flows from investing activities:
 
 
 
Capital expenditures
(15,428
)
 
(9,996
)
Investments in unconsolidated entities
(1,000
)
 
(14,802
)
Other investing activities, net
452

 
1,423

Net cash used in investing activities
(15,976
)
 
(23,375
)
Cash flows from financing activities:
 
 
 
Repayments of debt
(451
)
 
(1,067
)
Borrowings under revolving credit facility
768,000

 
—

Repayments under revolving credit facility
(768,000
)
 
—

Financial Services borrowings (repayments)
(190,852
)
 
(191,240
)
Stock option exercises
2,723

 
11,118

Share repurchases
(59,491
)
 
(105,522
)
Dividends paid
(26,347
)
 
(29,102
)
Net cash provided by (used in) financing activities
(274,418
)
 
(315,813
)
Net increase (decrease)
(121,381
)
 
(299,385
)
Cash, cash equivalents, and restricted cash at beginning of period
306,168

 
723,248

Cash, cash equivalents, and restricted cash at end of period
$
184,787

 
$
423,863

 
 
 
 
Supplemental Cash Flow Information:
 
 
 
Interest paid (capitalized), net
$
30,109

 
$
12,830

Income taxes paid (refunded), net
$
631

 
$
1,043



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PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
 
 
 
 
 
Three Months Ended
 
March 31,
 
2018
 
2017
HOMEBUILDING:
 
 
 
Home sale revenues
$
1,911,598

 
$
1,585,421

Land sale and other revenues
12,557

 
2,690

Total Homebuilding revenues
1,924,155

 
1,588,111

 
 
 
 
Home sale cost of revenues
(1,459,940
)
 
(1,217,678
)
Land sale cost of revenues
(11,548
)
 
(3,228
)
Selling, general, and administrative expenses ("SG&A")
(240,893
)
 
(236,268
)
Other expense, net
(1,416
)
 
(5,175
)
Income before income taxes
$
210,358

 
$
125,762

 
 
 
 
FINANCIAL SERVICES:
 
 
 
Income before income taxes
$
13,833

 
$
13,503

 
 
 
 
CONSOLIDATED:
 
 
 
Income before income taxes
$
224,191

 
$
139,265

 
 
 
 
 
 
 
 
OPERATING METRICS:
 
 
 
Gross margin % (a)(b)
23.6
 %
 
23.2
 %
SG&A % (a)
(12.6
)%
 
(14.9
)%
Operating margin % (a)
11.0
 %
 
8.3
 %
(a)
As a percentage of home sale revenues.
(b)
Gross margin equals home sale revenues minus home sale cost of revenues.

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PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
 
 
 
 
 
Three Months Ended
 
March 31,
 
2018
 
2017
 
 
 
 
Home sale revenues
$
1,911,598

 
$
1,585,421

 
 
 
 
Closings - units
 
 
 
Northeast
251

 
232

Southeast
924

 
836

Florida
887

 
832

Midwest
767

 
668

Texas
809

 
840

West
988

 
817

 
4,626

 
4,225

Average selling price
$
413

 
$
375

 
 
 
 
Net new orders - units
 
 
 
Northeast
448

 
411

Southeast
1,259

 
1,077

Florida
1,444

 
1,040

Midwest
1,102

 
1,162

Texas
1,323

 
1,211

West
1,299

 
1,225

 
6,875

 
6,126

Net new orders - dollars
$
2,893,552

 
$
2,446,141

 
 
 
 
Unit backlog
 
 
 
Northeast
709

 
566

Southeast
2,051

 
1,612

Florida
2,235

 
1,626

Midwest
1,822

 
1,801

Texas
1,940

 
1,783

West
2,488

 
1,935

 
11,245

 
9,323

Dollars in backlog
$
4,961,018

 
$
3,802,231

 
 
 
 



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PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
 
 
 
 
 
Three Months Ended
 
March 31,
 
2018
 
2017
MORTGAGE ORIGINATIONS:
 
 
 
Origination volume
2,992

 
2,873

Origination principal
$
909,800

 
$
806,352

Capture rate
77.7
%
 
80.3
%


Supplemental Data
($000's omitted)
(Unaudited)
 
 
 
 
 
Three Months Ended
 
March 31,
 
2018
 
2017
 
 
 
 
Interest in inventory, beginning of period
$
226,611

 
$
186,097

Interest capitalized
43,960

 
44,923

Interest expensed
(30,558
)
 
(27,192
)
Interest in inventory, end of period
$
240,013

 
$
203,828




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