EX-99.1 2 ex991earningspr9302015.htm PRESS RELEASE ISSUED ON OCTOBER 22, 2015 Exhibit


+
 


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

PULTEGROUP REPORTS THIRD QUARTER 2015 FINANCIAL RESULTS

•
Q3 Earnings of $0.30 Per Share Include Net Charges of $0.03 Per Share Resulting from Litigation-Related Reserve Adjustments
•
Gross Margin of 23.6%, Up 70 Basis Points Over Prior Year and 30 Basis Points Over Prior Quarter
•
Signup Dollars Totaled $1.5 Billion, an Increase of 17% Over the Prior Year
•
Net Signups Increased 8% to 4,092 Homes Driven by a 6% Gain in Absorption Pace
•
Quarter End Backlog Value Increased 18% to $3.1 Billion; Unit Backlog Up 10% to 8,734 Homes
•
Company Repurchased $121 Million of Stock
•
Company Entered into a New $500 Million Term Loan Agreement

ATLANTA, Oct. 22, 2015 - PulteGroup, Inc. (NYSE: PHM) announced today financial results for its third quarter ended September 30, 2015. For the quarter, the Company reported net income of $108 million, or $0.30 per share, inclusive of $9 million, or $0.03 per share, of net charges resulting from litigation-related reserve adjustments taken in the quarter. Prior year net income for the quarter was $141 million, or $0.37 per share.

“PulteGroup’s third quarter results demonstrate our continued focus on delivering higher returns on invested capital over the housing cycle as we realized an improved sales pace while expanding gross margins,” said Richard J. Dugas, Jr., Chairman, President and Chief Executive Officer of PulteGroup. “We also continued to allocate capital in alignment with our stated priorities as we invested $586 million in the business, keeping us on track to invest approximately $2.3 billion for the year, while still returning $149 million to shareholders in the quarter through dividends and share repurchases.

“Demand in the quarter and through the first nine months of 2015 show a U.S. housing industry that continues on a sustained recovery path benefitting from an improving economy, low interest rates and a generally balanced inventory of homes available for sale. At just over 500,000 new home sales annually, however, the industry is operating well below its 50-year average, so we remain optimistic that demand can continue to increase in the coming years and are investing in our business accordingly.

“With a backlog approaching 9,000 homes, more capital being invested in the business and expectations for a sustained housing recovery, PulteGroup is in a very strong position to capitalize on future market opportunities.”

Third Quarter Results

Home sale revenues for the third quarter totaled $1.5 billion, compared with prior year revenue of $1.6 billion. The 6% decrease in revenue reflects a 6% decline in closings to 4,356 homes, partially offset by a 1% increase in average selling price to $336,000.


1


For the third quarter, pretax income from homebuilding operations was $165 million, compared with prior year pretax income of $214 million. The Company's home sale gross margin for the period was 23.6%, an increase of 70 basis points over the prior year. On a sequential basis, gross margins increased 30 basis points from the second quarter of 2015. Homebuilding SG&A expense for the quarter was $159 million, or 10.9% of home sale revenues. SG&A expense for the period includes a benefit of $6 million from a reserve adjustment associated with a recent legal settlement.

In the quarter, the Company recorded a charge of $20 million in Other Expense, net, to increase reserves following a recent unfavorable jury verdict in a contract dispute. The Company has already filed post-trial motions seeking to, among other things, overturn the verdict, but given the decision the Company believes a reserve adjustment is appropriate.

Net new orders for the third quarter totaled 4,092 homes, which is up 8% from prior year orders of 3,779 homes. On a dollar basis, third quarter signup value was $1.5 billion, which is an increase of 17% from the third quarter 2014 signup value of $1.3 billion. For the quarter, the Company operated from 611 active communities, which is up 2% from the prior year.

PulteGroup's quarter-end backlog values of $3.1 billion and 8,734 homes, are up 18% and 10%, respectively, over prior year backlog values of $2.6 billion and 7,934 homes. The Company’s average selling price in backlog is $354,000, which is up 7% over the prior year and up 5% from the average price of homes closed in the third quarter of 2015.

The Company's financial services operations reported third quarter pretax income of $14 million, which is up from pretax income of $11 million in the comparable prior year quarter. Mortgage capture rate for the quarter increased to 83%, up from 80% in the same quarter last year.

In the third quarter, PulteGroup invested $586 million in land acquisition and development, raising its total land spend through the first nine months to $1.5 billion, as it remains on track to invest approximately $2.3 billion for the full year. The Company also repurchased 5.9 million common shares for $121 million, or an average price of $20.29 per share.

During the quarter, PulteGroup entered into a new $500 million term loan agreement with proceeds expected to be used for working capital and general corporate purposes. Inclusive of these funds, the Company ended the quarter with $760 million of cash and a debt-to-capital ratio of 31%.


A conference call discussing PulteGroup's third quarter 2015 results is scheduled for Thursday, October 22, 2015, 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.


2


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 the cyclical nature of 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; 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, 2014, 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 Atlanta, GA, 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 and DiVosta Homes, 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 and www.divosta.com.


# # #






3



PulteGroup, Inc.
Consolidated Results of Operations
($000's omitted, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Homebuilding
 
 
 
 
 
 
 
Home sale revenues
$
1,464,131

 
$
1,551,226

 
$
3,795,366

 
$
3,885,703

Land sale revenues
3,649

 
10,047

 
27,651

 
24,558

 
1,467,780

 
1,561,273

 
3,823,017

 
3,910,261

Financial Services
38,967

 
33,452

 
97,319

 
89,544

Total revenues
1,506,747

 
1,594,725

 
3,920,336

 
3,999,805

 
 
 
 
 
 
 
 
Homebuilding Cost of Revenues:
 
 
 
 
 
 
 
Home sale cost of revenues
1,118,874

 
1,195,369

 
2,913,299

 
2,976,665

Land sale cost of revenues
3,301

 
3,539

 
21,992

 
15,382

 
1,122,175

 
1,198,908

 
2,935,291

 
2,992,047

Financial Services expenses
24,602

 
22,623

 
67,909

 
48,058

Selling, general and administrative expenses
159,361

 
147,136

 
450,793

 
521,791

Other expense, net
23,826

 
2,406

 
29,962

 
25,561

Interest income
(504
)
 
(1,205
)
 
(2,458
)
 
(3,431
)
Interest expense
203

 
210

 
598

 
625

Equity in earnings of unconsolidated entities
(2,192
)
 
(281
)
 
(4,464
)
 
(7,483
)
Income before income taxes
179,276

 
224,928

 
442,705

 
422,637

Income tax expense
71,507

 
84,383

 
176,643

 
165,393

Net income
$
107,769

 
$
140,545

 
$
266,062

 
$
257,244

 
 
 
 
 
 
 
 
Per share:
 
 
 
 
 
 
 
Basic earnings
$
0.31

 
$
0.37

 
$
0.74

 
$
0.68

Diluted earnings
$
0.30

 
$
0.37

 
$
0.73

 
$
0.67

Cash dividends declared
$
0.08

 
$
0.05

 
$
0.24

 
$
0.15

 
 
 
 
 
 
 
 
Number of shares used in calculation:
 
 
 
 
 
 
 
Basic
350,147

 
373,531

 
359,236

 
376,097

Effect of dilutive securities
3,225

 
3,761

 
3,273

 
3,723

Diluted
353,372

 
377,292

 
362,509

 
379,820



4



PulteGroup, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
(Unaudited)
 
September 30,
2015
 
December 31,
2014
 
 
 
 
ASSETS
 
 
 
 
 
 
 
Cash and equivalents
$
734,153

 
$
1,292,862

Restricted cash
25,942

 
16,358

House and land inventory
5,240,932

 
4,392,100

Land held for sale
85,130

 
101,190

Land, not owned, under option agreements
102,548

 
30,186

Residential mortgage loans available-for-sale
270,658

 
339,531

Investments in unconsolidated entities
41,509

 
40,368

Other assets
637,962

 
513,032

Intangible assets
113,440

 
123,115

Deferred tax assets, net
1,549,304

 
1,720,668

 
$
8,801,578

 
$
8,569,410

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
Liabilities:
 
 
 
Accounts payable
$
372,498

 
$
270,516

Customer deposits
241,047

 
142,642

Accrued and other liabilities
1,373,910

 
1,343,774

Income tax liabilities
50,906

 
48,722

Financial Services debt
107,508

 
140,241

Term loan
500,000

 
—

Senior notes
1,584,104

 
1,818,561

 
4,229,973

 
3,764,456

Shareholders' equity
4,571,605

 
4,804,954

 
$
8,801,578

 
$
8,569,410



5


PulteGroup, Inc.
Consolidated Statements of Cash Flows
($000's omitted)
(Unaudited)
 
Nine Months Ended
 
September 30,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net income
$
266,062

 
$
257,244

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Deferred income tax expense
171,364

 
164,460

Depreciation and amortization
33,719

 
28,864

Share-based compensation expense
20,139

 
21,290

Equity in earnings of unconsolidated entities
(4,464
)
 
(7,483
)
Distributions of earnings from unconsolidated entities
2,594

 
4,824

Loss on debt retirements
—

 
8,584

Other non-cash, net
13,170

 
8,211

Increase (decrease) in cash due to:
 
 
 
Restricted cash
(13,293
)
 
(689
)
Inventories
(835,276
)
 
(384,571
)
Residential mortgage loans available-for-sale
68,381

 
49,600

Other assets
(132,195
)
 
(12,802
)
Accounts payable, accrued and other liabilities
160,803

 
74,102

Income tax liabilities
2,184

 
(9,799
)
Net cash provided by (used in) operating activities
(246,812
)
 
201,835

Cash flows from investing activities:
 
 
 
Change in restricted cash related to letters of credit
3,710

 
48,401

Capital expenditures
(34,049
)
 
(41,888
)
Cash used for business acquisition
—

 
(77,469
)
Other investing activities, net
9,959

 
1,360

Net cash provided by (used in) investing activities
(20,380
)
 
(69,596
)
Cash flows from financing activities:
 
 
 
Financial Services borrowings (repayments)
(32,733
)
 
(34,070
)
Proceeds from debt issuance
500,000

 
—

Repayments of debt
(238,520
)
 
(250,631
)
Borrowings under revolving credit facility
125,000

 
—

Repayments under revolving credit facility
(125,000
)
 
—

Stock option exercises
10,371

 
6,034

Share repurchases
(442,738
)
 
(155,140
)
Dividends paid
(87,897
)
 
(56,944
)
Net cash provided by (used in) financing activities
(291,517
)
 
(490,751
)
Net increase (decrease) in cash and equivalents
(558,709
)
 
(358,512
)
Cash and equivalents at beginning of period
1,292,862

 
1,580,329

Cash and equivalents at end of period
$
734,153

 
$
1,221,817

 
 
 
 
Supplemental Cash Flow Information:
 
 
 
Interest paid (capitalized), net
$
(20,304
)
 
$
(23,236
)
Income taxes paid (refunded), net
$
740

 
$
(1,054
)


6



PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2015
 
2014
 
2015
 
2014
HOMEBUILDING:
 
 
 
 
 
 
 
Home sale revenues
$
1,464,131

 
$
1,551,226

 
$
3,795,366

 
$
3,885,703

Land sale revenues
3,649

 
10,047

 
27,651

 
24,558

Total Homebuilding revenues
1,467,780

 
1,561,273

 
3,823,017

 
3,910,261

 
 
 
 
 
 
 
 
Home sale cost of revenues
1,118,874

 
1,195,369

 
2,913,299

 
2,976,665

Land sale cost of revenues
3,301

 
3,539

 
21,992

 
15,382

Selling, general and administrative expenses
159,361

 
147,136

 
450,793

 
521,791

Equity in earnings of unconsolidated entities
(2,192
)
 
(233
)
 
(4,465
)
 
(7,391
)
Other expense, net
23,826

 
2,406

 
29,962

 
25,561

Interest income, net
(301
)
 
(995
)
 
(1,860
)
 
(2,806
)
Income before income taxes
$
164,911

 
$
214,051

 
$
413,296

 
$
381,059

 
 
 
 
 
 
 
 
FINANCIAL SERVICES:
 
 
 
 
 
 
 
Income before income taxes
$
14,365

 
$
10,877

 
$
29,409

 
$
41,578

 
 
 
 
 
 
 
 
CONSOLIDATED:
 
 
 
 
 
 
 
Income before income taxes
$
179,276

 
$
224,928

 
$
442,705

 
$
422,637



7


PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
Home sale revenues
$
1,464,131

 
$
1,551,226

 
$
3,795,366

 
$
3,885,703

 
 
 
 
 
 
 
 
Closings - units
 
 
 
 
 
 
 
Northeast
401

 
383

 
965

 
1,072

Southeast
865

 
833

 
2,249

 
2,265

Florida
712

 
754

 
1,910

 
1,944

Texas
821

 
963

 
2,321

 
2,629

North
978

 
1,098

 
2,541

 
2,406

Southwest
579

 
615

 
1,479

 
1,564

 
4,356

 
4,646

 
11,465

 
11,880

Average selling price
$
336

 
$
334

 
$
331

 
$
327

 
 
 
 
 
 
 
 
Net new orders - units
 
 
 
 
 
 
 
Northeast
346

 
336

 
1,226

 
1,160

Southeast
780

 
756

 
2,759

 
2,460

Florida
755

 
650

 
2,471

 
2,274

Texas
698

 
735

 
2,808

 
3,046

North
871

 
778

 
2,951

 
2,658

Southwest
642

 
524

 
2,134

 
1,822

 
4,092

 
3,779

 
14,349

 
13,420

Net new orders - dollars (a)
$
1,465,322

 
$
1,251,081

 
$
4,940,560

 
$
4,453,895

 
 
 
 
 
 
 
 
Unit backlog
 
 
 
 
 
 
 
Northeast
 
 
 
 
722

 
709

Southeast
 
 
 
 
1,478

 
1,248

Florida
 
 
 
 
1,563

 
1,243

Texas
 
 
 
 
1,760

 
1,667

North
 
 
 
 
1,872

 
2,087

Southwest
 
 
 
 
1,339

 
980

 
 
 
 
 
8,734

 
7,934

Dollars in backlog
 
 
 
 
$
3,089,054

 
$
2,615,288

 
 
 
 
 
 
 
 

(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
 
Nine Months Ended
 
September 30,
 
September 30,
 
2015
 
2014
 
2015
 
2014
MORTGAGE ORIGINATIONS:
 
 
 
 
 
 
 
Origination volume
2,992

 
2,899

 
7,615

 
7,482

Origination principal
$
766,450

 
$
724,025

 
$
1,916,391

 
$
1,816,827

Capture rate
83.5
%
 
80.3
%
 
82.9
%
 
79.7
%


Supplemental Data
($000's omitted)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
Interest in inventory, beginning of period
$
164,384

 
$
210,603

 
$
167,638

 
$
230,922

Interest capitalized
28,006

 
32,025

 
90,105

 
98,793

Interest expensed
(36,609
)
 
(52,286
)
 
(101,962
)
 
(139,373
)
Interest in inventory, end of period
$
155,781

 
$
190,342

 
$
155,781

 
$
190,342




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