PULTEGROUP, INC. ATLANTA, July 23, 2015 /PRNewswire/ -- PulteGroup, Inc. (NYSE: PHM) announced today financial results for its second quarter ended June 30, 2015. For the quarter, the Company reported net income of $103 million, or $0.28 per share, including a pretax benefit of $27 million, or $0.05 per share, resulting from a legal settlement in the period. Prior year net income of $42 million, or $0.11 per share, included pretax charges of $88 million, or $0.14 per share, for insurance reserves and office relocation costs.
"We are very pleased with market conditions as solid buyer demand helped to drive an 11% increase in the value of new orders to $1.8 billion, our highest quarterly order value since 2007," said Richard J. Dugas, Jr., Chairman, President and Chief Executive Officer of PulteGroup. "Within this positive demand environment, we continue to demonstrate disciplined capital allocation consistent with our Value Creation strategy by growing our land and community pipeline, while simultaneously paying down $238 million of debt and returning $243 million to shareholders through share repurchases and dividends.
"Demand trends experienced throughout the first half of 2015 demonstrate that the recovery in U.S. housing remains on track and continues to be supported by an improving economy, better employment, rising consumer confidence and a low interest rate environment. With our strong margins and a backlog of almost 9,000 sold homes to be built, PulteGroup is extremely well positioned to capitalize on these favorable conditions and continue delivering outstanding financial results in the coming quarters."
Second Quarter Results
Home sale revenues for the second quarter totaled $1.2 billion, which is unchanged from the prior year. Revenues for the period reflect a 1% increase in average selling price to $332,000, offset by a 1% decrease in closings to 3,744 homes.
The Company's second quarter home sale gross margin was 23.3%, an increase of 60 basis points from the first quarter of 2015 and a decrease of 30 basis points from the comparable prior year period. Homebuilding SG&A expense for the quarter was $130 million, or 10.5% of home sale revenues, compared with $230 million, or 18.4% last year. Second quarter 2015 SG&A includes a benefit of $27 million relating to a legal settlement, whereas prior year SG&A included charges of $88 million for insurance reserves and office relocation costs.
The value of net new orders for the second quarter increased 11% to $1.8 billion. On a unit basis, net new orders for the period increased 7% to 5,118 homes. The Company operated out of 630 communities in the quarter, an increase of 7% from the second quarter of 2014.
PulteGroup's quarter-end backlog was 8,998 homes valued at $3.1 billion, compared with a prior year backlog of 8,179 homes with a value of $2.8 billion. The average price of homes in backlog was $343,000 which is up 1% 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 $10 million compared with $9 million in 2014. Mortgage capture rate for the quarter was 83%, compared with 80% in the prior year.
During the quarter, PulteGroup repurchased 10.7 million shares of common stock for $213 million, or an average price of $19.90 per share. The Company also used available cash to retire $238 million of bonds which matured during the second quarter. The Company ended the period with $478 million of cash.
A conference call discussing PulteGroup's second quarter 2015 results is scheduled for Thursday, July 23, 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.
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, 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.
PulteGroup, Inc.
Consolidated Results of Operations
($000's omitted, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Revenues:
Homebuilding
Home sale revenues $1,243,077 $1,246,462 $2,331,235 $2,334,477
Land sale revenues 6,460 8,527 24,002 14,511
----- ----- ------ ------
1,249,537 1,254,989 2,355,237 2,348,988
Financial Services 30,754 31,198 58,352 56,093
------ ------ ------ ------
Total revenues 1,280,291 1,286,187 2,413,589 2,405,081
--------- --------- --------- ---------
Homebuilding Cost of Revenues:
Home sale cost of revenues 953,280 952,692 1,794,425 1,781,295
Land sale cost of revenues 5,312 6,832 18,691 11,843
----- ----- ------ ------
958,592 959,524 1,813,116 1,793,138
------- ------- --------- ---------
Financial Services expenses 20,767 22,114 43,308 25,436
Selling, general and administrative expenses 130,119 229,767 291,431 374,655
Other expense, net 4,998 9,324 6,134 23,155
Interest income (856) (1,115) (1,955) (2,226)
Interest expense 208 203 395 416
Equity in earnings of unconsolidated entities (1,164) (1,311) (2,271) (7,202)
------ ------ ------ ------
Income before income taxes 167,627 67,681 263,431 197,709
Income tax expense 64,303 25,801 105,136 81,010
------ ------ ------- ------
Net income $103,324 $41,880 $158,295 $116,699
======== ======= ======== ========
Per share:
Basic earnings $0.28 $0.11 $0.43 $0.31
===== ===== ===== =====
Diluted earnings $0.28 $0.11 $0.43 $0.30
===== ===== ===== =====
Cash dividends declared $0.08 $0.05 $0.16 $0.10
===== ===== ===== =====
Number of shares used in calculation:
Basic 361,009 376,072 363,863 377,410
Effect of dilutive securities 3,232 3,592 3,297 3,703
Diluted 364,241 379,664 367,160 381,113
======= ======= ======= =======
PulteGroup, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
(Unaudited)
June 30, December 31,
2015 2014
---- ----
ASSETS
Cash and
equivalents $460,361 $1,292,862
Restricted
cash 17,174 16,358
House
and
land
inventory 4,888,560 4,392,100
Land
held
for
sale 88,513 101,190
Land,
not
owned,
under
option
agreements 98,264 30,186
Residential
mortgage
loans
available-
for-
sale 269,544 339,531
Investments
in
unconsolidated
entities 40,232 40,368
Other
assets 561,034 513,032
Intangible
assets 116,665 123,115
Deferred
tax
assets,
net 1,617,609 1,720,668
--------- ---------
$8,157,956 $8,569,410
========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities:
Accounts
payable $290,436 $270,516
Customer
deposits 217,315 142,642
Accrued
and
other
liabilities 1,292,321 1,343,774
Income
tax
liabilities 48,774 48,722
Financial
Services
debt 119,271 140,241
Senior
notes 1,583,580 1,818,561
--------- ---------
3,551,697 3,764,456
Shareholders'
equity 4,606,259 4,804,954
$8,157,956 $8,569,410
========== ==========
PulteGroup, Inc.
Consolidated Statements of Cash Flows
($000's omitted)
(Unaudited)
Six Months Ended
June 30,
--------
2015 2014
---- ----
Cash flows from operating activities:
Net income $158,295 $116,699
Adjustments to reconcile net income to net cash flows provided by (used in)
operating activities:
Deferred income tax expense 103,059 85,028
Depreciation and amortization 21,853 18,904
Share-based compensation expense 14,654 16,797
Equity in earnings of unconsolidated entities (2,271) (7,202)
Distributions of earnings from unconsolidated entities 1,500 4,777
Loss on debt retirements - 8,584
Other non-cash, net 10,090 6,649
Increase (decrease) in cash due to:
Restricted cash (4,526) (726)
Inventories (485,676) (249,861)
Residential mortgage loans available-for-sale 70,123 64,672
Other assets (57,054) (15,709)
Accounts payable, accrued and other liabilities (21,202) 38,539
Income tax liabilities 52 (12,869)
--- -------
Net cash provided by (used in) operating activities (191,103) 74,282
-------- ------
Cash flows from investing activities:
Distributions from unconsolidated entities 906 7,577
Investments in unconsolidated entities - (9)
Net change in loans held for investment 9,634 (6,791)
Change in restricted cash related to letters of credit 3,710 (28,166)
Proceeds from the sale of property and equipment 400 98
Capital expenditures (23,115) (33,021)
Net cash provided by (used in) investing activities (8,465) (60,312)
------ -------
Cash flows from financing activities:
Financial Services borrowings (repayments) (20,970) (47,158)
Other borrowings (repayments) (237,994) (240,133)
Stock option exercises 7,222 5,789
Share repurchases (322,066) (103,711)
Dividends paid (59,125) (38,152)
------- -------
Net cash provided by (used in) financing activities (632,933) (423,365)
-------- --------
Net increase (decrease) in cash and equivalents (832,501) (409,395)
Cash and equivalents at beginning of period 1,292,862 1,580,329
--------- ---------
Cash and equivalents at end of period $460,361 $1,170,934
======== ==========
Supplemental Cash Flow Information:
Interest paid (capitalized), net $(1,911) $(328)
======= =====
Income taxes paid (refunded), net $(1,685) $(2,487)
======= =======
PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
HOMEBUILDING:
Home sale revenues $1,243,077 $1,246,462 $2,331,235 $2,334,477
Land sale revenues 6,460 8,527 24,002 14,511
----- ----- ------ ------
Total Homebuilding revenues 1,249,537 1,254,989 2,355,237 2,348,988
Home sale cost of revenues 953,280 952,692 1,794,425 1,781,295
Land sale cost of revenues 5,312 6,832 18,691 11,843
Selling, general and administrative expenses 130,119 229,767 291,431 374,655
Equity in earnings of unconsolidated entities (1,164) (1,287) (2,271) (7,157)
Other expense, net 4,998 9,324 6,134 23,155
Interest income, net (648) (912) (1,560) (1,810)
---- ------
Income before income taxes $157,640 $58,573 $248,387 $167,007
======== ======= ======== ========
FINANCIAL SERVICES:
Income before income taxes $9,987 $9,108 $15,044 $30,702
====== ====== ======= =======
CONSOLIDATED:
Income before income taxes $167,627 $67,681 $263,431 $197,709
======== ======= ======== ========
PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Home sale revenues $1,243,077 $1,246,462 $2,331,235 $2,334,477
========== ========== ========== ==========
Closings - units
Northeast 316 346 564 689
Southeast 772 785 1,384 1,432
Florida 597 623 1,198 1,190
Texas 754 885 1,500 1,666
North 828 678 1,563 1,308
Southwest 477 481 900 949
3,744 3,798 7,109 7,234
===== ===== ===== =====
Average selling price $332 $328 $328 $323
==== ==== ==== ====
Net new orders - units
Northeast 443 380 880 824
Southeast 1,041 880 1,979 1,704
Florida 805 774 1,716 1,624
Texas 993 1,139 2,110 2,311
North 1,084 988 2,080 1,880
Southwest 752 617 1,492 1,298
5,118 4,778 10,257 9,641
===== ===== ====== =====
Net new orders - dollars (a) $1,766,848 $1,594,408 $3,475,238 $3,202,814
========== ========== ========== ==========
Unit backlog
Northeast 777 756
Southeast 1,563 1,325
Florida 1,520 1,347
Texas 1,883 1,895
North 1,979 1,785
Southwest 1,276 1,071
8,998 8,179
===== =====
Dollars in backlog $3,087,862 $2,770,134
========== ==========
(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,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
MORTGAGE ORIGINATIONS:
Origination volume 2,507 2,469 4,623 4,583
===== ===== ===== =====
Origination principal $635,153 $597,273 $1,149,941 $1,092,802
======== ======== ========== ==========
Capture rate 83.4% 80.3% 82.5% 79.3%
==== ==== ==== ====
Supplemental Data
($000's omitted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Interest in inventory, beginning of period $166,887 $225,619 $167,638 $230,922
Interest capitalized 31,296 31,455 62,099 66,768
Interest expensed (33,799) (46,471) (65,353) (87,087)
Interest in inventory, end of period $164,384 $210,603 $164,384 $210,603
======== ======== ======== ========
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SOURCE PulteGroup, Inc.
