PULTEGROUP, INC. 
By BLOOMFIELD HILLS, Mich., April 24, 2014 /PRNewswire/ --
-- Q1 Pretax Income Increased 58% to $130 Million; Up from $82 Million in
2013
-- Q1 2014 Pretax Includes $19 million of Income Relating to the Reversal
of Mortgage Repurchase Reserves and $9 Million of Expense Relating to
Debt Redemption Charges
-- Net Income of $75 Million, or $0.19 Per Share, Includes Income Tax
Expense of $55 Million; Prior Year Net Income of $82 Million, or $0.21
Per Share, Includes Income Tax Expense of $1 Million
-- Average Selling Price Up 10% to $317,000
-- Gross Margin of 23.8% Increased 580 Basis Points Over Prior Year and 60
Basis Points Over Q4 2013
-- Value of Net New Orders Increased 2% to $1.6 Billion, as Increased
Absorptions Per Community Generate New Orders of 4,863 Homes
-- Unit Backlog of 7,199 Homes Valued at $2.4 Billion
-- During the Quarter, Company Redeemed $246 Million of Senior Notes and
Repurchased $45 Million of Stock
PulteGroup, Inc. (NYSE: PHM) announced today financial results for its first quarter ended March 31, 2014. For the quarter, the Company reported pretax income of $130 million, an increase of 58% over prior year pretax income of $82 million. Net income for the period was $75 million, or $0.19 per share, compared with prior year net income of $82 million, or $0.21 per share.
Net income in 2014 included income tax expense of $55 million, or $0.14 per share, compared with prior year income tax expense of $1 million, or less than $0.01 per share. The first quarter effective tax rate of 42% was higher than expected primarily as the result of deferred tax expense associated with changes in certain state income tax rates.
"PulteGroup has gotten off to a strong start in 2014, with first quarter results showing gains resulting from our efforts to drive better pricing, operating margins and pretax earnings in support of higher returns on invested capital," said Richard J. Dugas, Jr., PulteGroup Chairman, President and CEO. "Our first quarter gross margin of 23.8% is up 580 basis points over last year and 60 basis points over the prior quarter, marking our ninth consecutive quarter of gross margin expansion."
"We are pleased with the start of the spring selling season, as absorption paces per community improved from year ago levels and demand accelerated through the quarter. We continue to believe housing is in the early stages of a multiyear recovery benefitting from low interest rates, low inventory and continued relative affordability of homes, and with consumers looking for well-located houses and displaying a clear willingness to invest in those features they value most."
Home sale revenues for the first quarter were $1.1 billion, which was comparable with last year. Revenues for the quarter reflect a 10%, or $30,000, increase in average selling price to $317,000, offset by a 10% decrease in closings to 3,436 homes. The higher average selling price was the result of price increases in each of our entry level, move-up and active adult demographics.
The Company's home sale gross margin for the quarter was 23.8%, which is an increase of 580 basis points over the prior year and 60 basis points over the fourth quarter of 2013. Homebuilding SG&A expense for the period was $144 million, or 13.3% of home sale revenues. SG&A expense for the first quarter of 2013 was $129 million, or 11.8% of home sale revenues.
For the quarter, the Company reported 4,863 net new orders, a decrease of 6% from prior year. The dollar value of new orders was $1.6 billion, which is up 2% from the prior year. For the quarter, the Company operated out of 584 communities which is a decrease of 10% from the first quarter last year.
PulteGroup's backlog at quarter end totaled 7,199 homes valued at $2.4 billion, compared with prior year backlog of 7,825 homes valued at $2.4 billion. The average selling price in the Company's current backlog increased 9%, or $28,000, over the prior year to $336,000.
The Company's financial services operations reported pretax income of $22 million for the quarter, compared with pretax income of $14 million in the prior year. Mortgage capture rate for the quarter was 78% compared with 82% in the comparable prior year period. Pretax income for the period reflects the reversal of $19 million of mortgage repurchase reserves, offset by a decrease in operating profitability due to the more competitive operating conditions that currently exist within the mortgage industry.
During the quarter, PulteGroup repurchased 2.2 million shares of common stock in the first quarter for $45 million, or an average price of $19.95 per share. The Company also completed its previously announced redemption of $246 million of senior notes, resulting in a first quarter charge of $9 million.
A conference call discussing PulteGroup's first quarter results is scheduled for Thursday, April 24, 2014, 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 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; 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, 2013, 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 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.
PulteGroup, Inc.
Consolidated Results of Operations
($000's omitted, except per share data)
(Unaudited)
Three Months Ended
March 31,
---------
2014 2013
---- ----
Revenues:
Homebuilding
Home sale revenues $1,088,015 $1,099,752
Land sale revenues 5,984 26,131
----- ------
1,093,999 1,125,883
Financial Services 24,895 36,873
------ ------
Total revenues 1,118,894 1,162,756
--------- ---------
Homebuilding Cost of Revenues:
Home sale cost of revenues 828,603 901,470
Land sale cost of revenues 5,011 22,018
----- ------
833,614 923,488
------- -------
Financial Services
expenses 3,322 22,588
Selling, general and
administrative expenses 144,887 129,626
Other expense, net 13,831 4,772
Interest income (1,111) (1,173)
Interest expense 213 207
Equity in (earnings) loss
of unconsolidated
entities (5,891) 898
------ ---
Income before income taxes 130,029 82,350
Income tax expense 55,210 588
------ ---
Net income $74,819 $81,762
======= =======
Per share:
Basic earnings $0.19 $0.21
===== =====
Diluted earnings $0.19 $0.21
===== =====
Cash dividends declared $0.05 $ -
Number of shares used in
calculation:
Basic 383,991 384,228
Effect of dilutive
securities 3,815 6,093
Diluted 387,806 390,321
======= =======
PulteGroup, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
(Unaudited)
March 31, December
31,
2014 2013
---- ----
ASSETS
Cash and equivalents $1,268,162 $1,580,329
Restricted cash 75,596 72,715
House and land inventory 4,034,294 3,978,561
Land held for sale 72,531 61,735
Land, not owned, under
option agreements 22,200 24,024
Residential mortgage loans
available-for-sale 209,921 287,933
Investments in
unconsolidated entities 40,120 45,323
Other assets 461,046 460,621
Intangible assets 132,873 136,148
Deferred tax assets, net 2,034,668 2,086,754
--------- ---------
$8,351,411 $8,734,143
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable $205,234 $202,736
Customer deposits 168,573 134,858
Accrued and other
liabilities 1,257,854 1,377,750
Income tax liabilities 205,810 206,015
Financial Services debt 35,836 105,664
Senior notes 1,814,041 2,058,168
--------- ---------
3,687,348 4,085,191
Shareholders' equity 4,664,063 4,648,952
$8,351,411 $8,734,143
======== ========
PulteGroup, Inc.
Consolidated Statements of Cash Flows
($000's omitted)
(Unaudited)
Three Months Ended
March 31,
---------
2014 2013
---- ----
Cash flows from operating activities:
Net
income $74,819 $81,762
Adjustments to reconcile net income to
net cash flows provided by (used in)
operating activities:
Deferred
income
tax
expense 52,086 -
Depreciation
and
amortization 5,670 7,339
Stock-
based
compensation
expense 8,522 7,141
Equity
in
(earnings)
loss
of
unconsolidated
entities (5,891) 898
Distributions
of
earnings
from
unconsolidated
entities 4,753 265
Loss
on
debt
retirements 8,584 -
Other
non-
cash,
net 3,256 3,035
Increase (decrease) in cash due to:
Restricted
cash (890) 860
Inventories (68,812) 99,760
Residential
mortgage
loans
available-
for-
sale 76,357 80,727
Other
assets 17,090 (370)
Accounts
payable,
accrued
and
other
liabilities (83,943) (8,795)
Income
tax
liabilities (205) (2,002)
---- ------
Net
cash
provided
by
(used
in)
operating
activities 91,396 270,620
------ -------
Cash flows from investing activities:
Distributions
from
unconsolidated
entities 6,385 200
Investments
in
unconsolidated
entities (9) (593)
Net
change
in
loans
held
for
investment (6,390) 10
Change
in
restricted
cash
related
to
letters
of
credit (1,991) 4,513
Proceeds
from
the
sale
of
property
and
equipment 23 59
Capital
expenditures (17,865) (5,378)
------- ------
Net
cash
provided
by
(used
in)
investing
activities (19,847) (1,189)
------- ------
Cash flows from financing activities:
Financial
Services
borrowings
(repayments) (69,828) (82,164)
Other
borrowings
(repayments) (250,013) (213)
Stock
option
exercises 5,295 7,537
Stock
repurchases (50,105) (6,427)
Dividends
paid (19,065) -
------- ---
Net
cash
provided
by
(used
in)
financing
activities (383,716) (81,267)
-------- -------
Net
increase
(decrease)
in
cash
and
equivalents (312,167) 188,164
Cash
and
equivalents
at
beginning
of
period 1,580,329 1,404,760
--------- ---------
Cash
and
equivalents
at
end
of
period $1,268,162 $1,592,924
========== ==========
Supplemental Cash Flow Information:
Interest
paid
(capitalized),
net $(19,556) $(23,095)
======== ========
Income
taxes
paid
(refunded),
net $(8,253) $(3,026)
======= =======
PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
Three Months
Ended
March 31,
---------
2014 2013
---- ----
HOMEBUILDING:
Home sale revenues $1,088,015 $1,099,752
Land sale revenues 5,984 26,131
----- ------
Total Homebuilding revenues 1,093,999 1,125,883
Home sale cost of revenues 828,603 901,470
Land sale cost of revenues 5,011 22,018
Selling, general and administrative
expenses 144,887 129,626
Equity in (earnings) loss of
unconsolidated entities (5,870) 926
Other expense, net 13,831 4,772
Interest income, net (898) (966)
----
Income before income taxes $108,435 $68,037
======== =======
FINANCIAL SERVICES:
Income before income taxes $21,594 $14,313
======= =======
CONSOLIDATED:
Income before income taxes $130,029 $82,350
======== =======
PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
Three Months Ended
March 31,
---------
2014 2013
---- ----
Home sale revenues $1,088,015 $1,099,752
======== ========
Closings - units
Northeast 343 302
Southeast 647 651
Florida 567 583
Texas 781 897
North 630 666
Southwest 468 734
3,436 3,833
===== =====
Average selling price $317 $287
==== ====
Net new orders - units
Northeast 444 571
Southeast 824 959
Florida 850 804
Texas 1,172 1,080
North 892 969
Southwest 681 817
4,863 5,200
===== =====
Net new orders -
dollars (a) $1,608,406 $1,581,965
======== ========
Unit backlog
Northeast 722 891
Southeast 1,230 1,219
Florida 1,196 1,286
Texas 1,641 1,638
North 1,475 1,570
Southwest 935 1,221
7,199 7,825
===== =====
Dollars in backlog $2,422,187 $2,413,753
======== ========
(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.
PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
Three Months
Ended
March 31,
---------
2014 2013
---- ----
MORTGAGE ORIGINATIONS:
Origination volume 2,114 2,722
===== =====
Origination principal $495,529 $621,997
======== ========
Capture rate 78.2% 82.3%
==== ====
Supplemental Data
($000's omitted)
(Unaudited)
Three Months Ended
March 31,
---------
2014 2013
---- ----
Interest in
inventory,
beginning of period $230,922 $331,880
Interest capitalized 35,313 42,656
Interest expensed (40,616) (53,677)
Interest in
inventory, end of
period $225,619 $320,859
======== ========
Interest incurred $35,313 $42,656
======= =======
SOURCE PulteGroup, Inc.
