PULTEGROUP, INC. ATLANTA, July 24, 2014 /PRNewswire/ --
-- Q2 Earnings of $0.11 Per Share, After Charges of $0.14 Per Share for
Insurance Reserves and Office Relocation Costs
-- Q2 Pretax Income of $68 Million After Charges of $88 Million; Q2 2013
Pretax Income of $38 Million After Charges of $67 Million
-- Home Sale Revenues Increased 2% to $1.2 Billion
-- Average Selling Price for Homes Delivered in the Quarter Increased 12%
to $328,000
-- Gross Margin of 23.6% Expanded by 480 Basis Points Over Prior Year
-- Value of Net New Orders Increased 5% to $1.6 Billion
-- Higher Absorptions Per Community Drove Signups of 4,778 Homes
-- Backlog Value at Quarter End of $2.8 Billion, Up from $2.7 Billion in
2013
-- 7% Increase in Average Sales Price of Homes in Backlog to $339,000
-- Company Announces New $500 Million Senior Unsecured Revolving Credit
Facility
PulteGroup, Inc. (NYSE: PHM) announced today financial results for its second quarter ended June 30, 2014. For the quarter, net income was $42 million, or $0.11 per share, after pretax charges of $88 million, or $0.14 per share, for insurance reserves and office relocation costs. Net income for the second quarter reflects $26 million, or $0.07 per share, of income tax expense. Prior year net income was $36 million, or $0.09 per share, after pretax charges of $67 million, or $0.17 per share, resulting from a contractual dispute, debt repurchases and corporate relocation. Prior year net income reflects $2 million, or less than $0.01 per share, of income tax expense.
"The ongoing gains demonstrated in PulteGroup's second quarter operating results reflect the benefits of company-specific initiatives and favorable macro conditions that exist in today's housing market," said Richard J. Dugas, Jr., Chairman, President and Chief Executive Officer of PulteGroup. "Price appreciation, which in combination with the operational improvements we continue to realize, supported a 480 basis point increase in gross margin to 23.6% and corresponding gains in quarterly net income.
"Our view of the U.S. housing market remains positive, as improvements in both the economy and employment provide ongoing support to an industry already benefiting from low inventory, low mortgage rates, better pricing and favorable demographic trends. Within this environment, our strong operating gains enable us to continue increasing investment into the business, while continuing to drive excellent returns on invested capital."
Second Quarter Results
Home sale revenues for the second quarter increased 2% to $1.2 billion. Higher revenues for the period were driven by a 12% increase in average selling price to $328,000, partially offset by a 9% decrease in closings to 3,798 homes. The higher average selling price in the quarter is the result of price increases realized across all three of the Company's brands serving entry level, move up and active adult homebuyers.
The Company's home sale gross margin for the period was 23.6%, which is an increase of 480 basis points over the prior year. Homebuilding SG&A expense for the quarter was $230 million, or 18.4% of home sale revenues, compared with $151 million, or 12.3% last year. Higher SG&A for the period was due primarily to an $84 million charge for increased insurance reserves.
"The adjustment to insurance reserves was primarily driven by estimated costs associated with siding repairs in certain previously completed communities in the west that, in turn, impacted actuarial estimates for potential future claims," said Bob O'Shaughnessy, Executive Vice President and Chief Financial Officer. "We are in the process of making needed repairs and look to complete the work in a timely and cost-efficient manner."
The value of net new orders for the second quarter increased 5% to $1.6 billion. On a unit basis, net new orders for the period were 4,778 homes, compared with 4,885 in the prior year. For the quarter, the Company operated out of 589 communities, which is a decrease of 6% from the second quarter of 2013.
PulteGroup's quarter-end backlog was 8,179 homes valued at $2.8 billion, compared with a prior year backlog of 8,558 homes with a value of $2.7 billion. The average price of homes in backlog was $339,000 which is up 7% over last year and up 3% from the average selling price of homes delivered in the second quarter.
The Company's financial services operations reported second quarter pretax income of $9 million compared with $16 million in the prior year. Mortgage capture rate for the quarter was 80%, which is unchanged from the prior year. The reduction in pretax income for the period was the result of lower origination volumes and the more competitive operating conditions that continue to exist within the mortgage industry.
During the quarter, PulteGroup invested $395 million in land acquisition and development. The Company also repurchased 2.8 million shares of common stock for $53 million, or an average price of $19.12 per share. The Company ended the quarter with $1.3 billion of cash.
Effective July 23, 2014, PulteGroup entered into a new three year, $500 million senior unsecured revolving credit facility. The revolver includes an uncommitted accordion feature which could increase its size to $1.0 billion, subject to certain conditions and availability of additional bank commitments. The revolver is expected to be used primarily to replace a letter of credit facility that is set to expire later this year.
A conference call discussing PulteGroup's second quarter 2014 results is scheduled for Thursday, July 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 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.
PulteGroup, Inc.
Consolidated Results of Operations
($000's omitted, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
Revenues:
Homebuilding
Home sale revenues $1,246,462 $1,219,675 $2,334,477 $2,319,427
Land sale revenues 8,527 20,385 14,511 46,516
----- ------ ------ ------
1,254,989 1,240,060 2,348,988 2,365,943
Financial Services 31,198 39,362 56,093 76,235
------ ------ ------ ------
Total revenues 1,286,187 1,279,422 2,405,081 2,442,178
--------- --------- --------- ---------
Homebuilding Cost of Revenues:
Home sale cost of
revenues 952,692 990,818 1,781,295 1,892,288
Land sale cost of
revenues 6,832 20,710 11,843 42,728
----- ------ ------ ------
959,524 1,011,528 1,793,138 1,935,016
------- --------- --------- ---------
Financial Services
expenses 22,114 23,035 25,436 45,623
Selling, general and
administrative
expenses 229,767 150,531 374,655 280,157
Other expense, net 9,324 57,339 23,155 62,111
Interest income (1,115) (1,112) (2,226) (2,285)
Interest expense 203 166 416 373
Equity in (earnings)
loss of unconsolidated
entities (1,311) (395) (7,202) 503
------ ---- ------ ---
Income before income
taxes 67,681 38,330 197,709 120,680
Income tax expense 25,801 1,913 81,010 2,501
------ ----- ------ -----
Net income $41,880 $36,417 $116,699 $118,179
======= ======= ======== ========
Per share:
Basic earnings $0.11 $0.09 $0.31 $0.31
===== ===== ===== =====
Diluted earnings $0.11 $0.09 $0.30 $0.30
===== ===== ===== =====
Cash dividends declared $0.05 $ - $0.10 $ -
Number of shares used in calculation:
Basic 376,072 385,389 377,410 384,813
Effect of dilutive
securities 3,592 5,791 3,703 5,943
Diluted 379,664 391,180 381,113 390,756
======= ======= ======= =======
PulteGroup, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
(Unaudited)
June 30, December 31,
2014 2013
---- ----
ASSETS
Cash and equivalents $1,170,934 $1,580,329
Restricted cash 101,607 72,715
House and land inventory 4,197,121 3,978,561
Land held for sale 80,328 61,735
Land, not owned, under
option agreements 27,294 24,024
Residential mortgage loans
available-for-sale 221,607 287,933
Investments in
unconsolidated entities 40,131 45,323
Other assets 496,990 460,621
Intangible assets 129,598 136,148
Deferred tax assets, net 2,001,726 2,086,754
--------- ---------
$8,467,336 $8,734,143
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable $253,915 $202,736
Customer deposits 206,991 134,858
Accrued and other
liabilities 1,301,186 1,377,750
Income tax liabilities 193,146 206,015
Financial Services debt 58,506 105,664
Senior notes 1,815,548 2,058,168
--------- ---------
3,829,292 4,085,191
Shareholders' equity 4,638,044 4,648,952
$8,467,336 $8,734,143
========== ==========
PulteGroup, Inc.
Consolidated Statements of Cash Flows
($000's omitted)
(Unaudited)
Six Months Ended
June 30,
--------
2014 2013
---- ----
Cash flows from operating activities:
Net income $116,699 $118,179
Adjustments to reconcile net income to net cash
flows provided by (used in)
operating activities:
Deferred income tax expense 85,028 -
Depreciation and amortization 18,904 15,084
Stock-based compensation expense 16,797 15,765
Equity in (earnings) loss of
unconsolidated entities (7,202) 503
Distributions of earnings from
unconsolidated entities 4,777 1,298
Loss on debt retirements 8,584 23,072
Other non-cash, net 6,649 8,986
Increase (decrease) in cash due to:
Restricted cash (726) 1,285
Inventories (249,861) 32,920
Residential mortgage loans
available-for-sale 64,672 81,336
Other assets (15,709) (32,607)
Accounts payable, accrued and
other liabilities 38,539 67,463
Income tax liabilities (12,869) 1,781
------- -----
Net cash provided by (used in)
operating activities 74,282 335,065
------ -------
Cash flows from investing activities:
Distributions from
unconsolidated entities 7,577 200
Investments in unconsolidated
entities (9) (807)
Net change in loans held for
investment (6,791) 18
Change in restricted cash
related to letters of credit (28,166) 4,222
Proceeds from the sale of
property and equipment 98 9
Capital expenditures (33,021) (11,017)
------- -------
Net cash provided by (used in)
investing activities (60,312) (7,375)
------- ------
Cash flows from financing activities:
Financial Services borrowings
(repayments) (47,158) (78,929)
Other borrowings (repayments) (240,133) (452,950)
Stock option exercises 5,789 18,544
Stock repurchases (103,711) (6,447)
Dividends paid (38,152) -
------- ---
Net cash provided by (used in)
financing activities (423,365) (519,782)
-------- --------
Net increase (decrease) in cash
and equivalents (409,395) (192,092)
Cash and equivalents at
beginning of period 1,580,329 1,404,760
--------- ---------
Cash and equivalents at end of
period $1,170,934 $1,212,668
========== ==========
Supplemental Cash Flow Information:
Interest paid (capitalized), net $(328) $2,309
===== ======
Income taxes paid (refunded),
net $(2,487) $(2,471)
======= =======
PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
HOMEBUILDING:
Home sale revenues $1,246,462 $1,219,675 $2,334,477 $2,319,427
Land sale revenues 8,527 20,385 14,511 46,516
----- ------ ------ ------
Total Homebuilding
revenues 1,254,989 1,240,060 2,348,988 2,365,943
Home sale cost of revenues 952,692 990,818 1,781,295 1,892,288
Land sale cost of revenues 6,832 20,710 11,843 42,728
Selling, general and
administrative expenses 229,767 150,531 374,655 280,157
Equity in (earnings) loss
of unconsolidated
entities (1,287) (363) (7,157) 563
Other expense, net 9,324 57,339 23,155 62,111
Interest income, net (912) (946) (1,810) (1,912)
---- ------
Income before income taxes $58,573 $21,971 $167,007 $90,008
======= ======= ======== =======
FINANCIAL SERVICES:
Income before income taxes $9,108 $16,359 $30,702 $30,672
====== ======= ======= =======
CONSOLIDATED:
Income before income taxes $67,681 $38,330 $197,709 $120,680
======= ======= ======== ========
PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
Home sale
revenues $1,246,462 $1,219,675 $2,334,477 $2,319,427
========== ========== ========== ==========
Closings - units
Northeast 346 378 689 680
Southeast 785 735 1,432 1,386
Florida 623 649 1,190 1,232
Texas 885 960 1,666 1,857
North 678 741 1,308 1,407
Southwest 481 689 949 1,423
3,798 4,152 7,234 7,985
===== ===== ===== =====
Average selling
price $328 $294 $323 $290
==== ==== ==== ====
Net new orders - units
Northeast 380 543 824 1,114
Southeast 880 887 1,704 1,846
Florida 774 701 1,624 1,505
Texas 1,139 988 2,311 2,068
North 988 976 1,880 1,945
Southwest 617 790 1,298 1,607
4,778 4,885 9,641 10,085
===== ===== ===== ======
Net new orders
-dollars (a) $1,594,408 $1,519,656 $3,202,814 $3,101,621
========== ========== ========== ==========
Unit backlog
Northeast 756 1,056
Southeast 1,325 1,371
Florida 1,347 1,338
Texas 1,895 1,666
North 1,785 1,805
Southwest 1,071 1,322
8,179 8,558
===== =====
Dollars in backlog $2,770,134 $2,713,733
========== ==========
(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 Six Months Ended
June 30, June 30,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
MORTGAGE ORIGINATIONS:
Origination volume 2,469 2,812 4,583 5,534
===== ===== ===== =====
Origination principal $597,273 $643,267 $1,092,802 $1,265,264
======== ======== ========== ==========
Capture rate 80.3% 79.8% 79.3% 81.0%
==== ==== ==== ====
Supplemental Data
($000's omitted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
Interest in
inventory,
beginning of
period $225,619 $320,859 $230,922 $331,880
Interest
capitalized 31,455 39,909 66,768 82,565
Interest
expensed (46,471) (62,193) (87,087) (115,870)
Interest in
inventory, end
of period $210,603 $298,575 $210,603 $298,575
======== ======== ======== ========
Interest
incurred $31,455 $39,909 $66,768 $82,565
======= ======= ======= =======
SOURCE PulteGroup, Inc.
