PulteGroup, Inc. : Reports First Quarter 2012 Financial Results
04/26/2012| 06:35am US/Eastern
Recommend:
BLOOMFIELD HILLS, Mich., April 26, 2012 /PRNewswire/ --
-- Net Loss of $0.03 Per Share Compared with Prior Year Net Loss of $0.10
Per Share; Company Remains on Track for Full Year Profitability
-- Home Sale Revenues Increased 4% to $814 Million Driven by 5% Increase in
Average Selling Price
-- Adjusted Gross Margin Increased 180 Basis Points to 18.7%
-- SG&A Reduced by 13% to $123 Million; Falls 300 Basis Points to 15.2% of
Home Sale Revenues
-- 15% Increase in Signups to 4,991 Homes Generated from 6% Fewer
Communities
-- Unit Backlog Up 12% to 5,798 Homes With a Value of $1.6 Billion
-- Quarter Ending Cash Balance of $1.3 Billion Up $117 Million From Year
End 2011
PulteGroup, Inc. (NYSE: PHM) announced today financial results for its first quarter ended March 31, 2012. For the quarter, the Company reported a net loss of $12 million, or $0.03 per share. Reported net loss includes $6 million of land related charges which were offset by $6 million of land-sale gains. In the prior year the Company reported a net loss of $40 million, or $0.10 per share. Land-related charges and land sale gains were immaterial in the prior year period.
"PulteGroup's first quarter financial results demonstrate further success in our efforts to reposition the business and drive better long term financial returns," said Richard J. Dugas, Jr., PulteGroup Chairman, President and CEO. "For the quarter, improved gross margins and excellent control of overhead costs within our operations, along with better results from our financial services operations, helped to drive a $32 million increase in pretax operating results. Our first quarter results reflect the benefit of initiatives launched in 2011 which are expected to deliver additional gains as we move through the remainder of 2012 and beyond."
"While overall industry volumes remain well below normal levels, our first quarter sales and traffic patterns suggest a positive shift in buyer sentiment during the period. The 15% increase in our reported signups reflects broad based gains as we experienced improved signups from all of our brands and across the vast majority of our markets. We are only one quarter into the year, but the start has exceeded our internal estimates and has us cautiously optimistic that housing demand may have reached a positive inflection point."
Home sale revenues in the first quarter increased 4% to $814 million, compared with $782 million in the prior year. Higher revenue for the quarter reflects a 5%, or $12,000, increase in average selling price to $261,000, partially offset by a 1% decrease in closings to 3,117 homes. The increase in average selling price primarily reflects an ongoing shift in the mix of closings towards move-up homes which carry a higher selling price.
First quarter cost of sales related to home sales was $712 million, compared with prior year costs of $685 million. Cost of sales for the current quarter included $5 million of impairments, compared with none in the prior year. Excluding impairments and capitalized interest expense, adjusted gross margin for the quarter would have been 18.7%, compared with 16.9% in the comparable prior year period. The 180 basis point improvement in adjusted gross margin primarily reflects ongoing shifts in the mix of houses closed to include a greater percentage of move-up homes and an increase in closings from recently opened communities.
The Company's selling, general and administrative (SG&A) expense for the quarter was $123 million, a decrease of 13% from $142 million in the comparable period last year. As a percent of homebuilding revenue, SG&A for the quarter fell 300 basis points to 15.2%.
For the quarter, the Company reported a 15% increase in net signups of 4,991 homes which were generated from 6% fewer communities. Prior year net signups were 4,345 homes. The cancellation rate in the first quarter was 15%, down from 16% in the prior year.
The Company's contract backlog as of March 31, 2012, was 5,798 homes, with a value of $1.6 billion, compared to a prior year contract backlog of 5,188 homes, valued at $1.4 billion.
The Company's financial services operations reported pretax income of $7 million for the quarter, compared with prior year income of $1 million. Loan originations for the first quarter were 2,021 compared with prior year originations of 1,865. Mortgage capture rate for the quarter was 78%, compared with 76% for the same quarter last year.
The Company's quarter-end cash balance of $1.3 billion represents an increase of $117 million over 2011 year end.
A conference call discussing PulteGroup's first quarter results is scheduled for Thursday, April 26, 2012, 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 continuing adverse conditions in 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, 2011, 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 60 markets throughout the country. Through its brand portfolio that includes Centex, Pulte Homes and Del Webb, 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 home buyers with innovative solutions and new homes designed for the way people actually live today. As the most awarded homebuilder in customer satisfaction, PulteGroup brands have consistently ranked among top homebuilders in third-party customer satisfaction studies.
For more information about PulteGroup, Inc. and PulteGroup brands, go to: www.pultegroupinc.com; www.pulte.com; www.centex.com; www.delwebb.com
PulteGroup, Inc.
Consolidated Results of Operations
($000's omitted, except per share data)
(Unaudited)
Three Months Ended
March 31,
---------
2012 2011
---- ----
Revenues:
Homebuilding
Home sale
revenues $813,786 $782,471
Land sale
revenues 38,398 1,296
------ -----
852,184 783,767
Financial
Services 28,852 21,435
------ ------
Total revenues 881,036 805,202
------- -------
Homebuilding
Cost of
Revenues:
Home sale cost
of revenues 712,166 685,030
Land sale cost
of revenues 33,397 930
------ ---
745,563 685,960
Financial
Services
expenses 22,009 20,473
Selling,
general, and
administrative
expenses 123,314 142,446
Other expense
(income), net 6,619 3,910
Interest
income (1,199) (1,437)
Interest
expense 217 351
Equity in
(earnings)
loss of
unconsolidated
entities (1,996) (1,109)
------ ------
Income (loss)
before income
taxes (13,491) (45,392)
Income tax
expense
(benefit) (1,825) (5,866)
Net income
(loss) $(11,666) $(39,526)
======== ========
Net income
(loss) per
share:
Basic $(0.03) $(0.10)
====== ======
Diluted $(0.03) $(0.10)
====== ======
Number of
shares used
in
calculation:
Basic 380,502 379,544
======= =======
Diluted 380,502 379,544
======= =======
PulteGroup, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
(Unaudited)
March 31, December 31,
2012 2011
---- ----
ASSETS
Cash and
equivalents $1,211,735 $1,083,071
Restricted cash 89,869 101,860
House and land
inventory 4,584,416 4,636,468
Land held for
sale 136,232 135,307
Land, not
owned, under
option
agreements 26,121 24,905
Residential
mortgage loans
available-
for-sale 184,164 258,075
Investments in
unconsolidated
entities 34,146 35,988
Income taxes
receivable 29,673 27,154
Other assets 404,014 420,444
Intangible
assets, net 159,073 162,348
$6,859,443 $6,885,620
========== ==========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Liabilities:
Accounts
payable $170,609 $196,447
Customer
deposits 71,580 46,960
Accrued and
other
liabilities 1,382,330 1,411,941
Income tax
liabilities 215,150 203,313
Senior notes 3,090,946 3,088,344
Total
liabilities 4,930,615 4,947,005
Shareholders'
equity 1,928,828 1,938,615
$6,859,443 $6,885,620
========== ==========
PulteGroup, Inc.
Consolidating Statements of Cash Flows
($000's omitted)
(Unaudited)
Three Months Ended
March 31,
---------
2012 2011
---- ----
Cash flows from operating
activities:
Net income (loss) $(11,666) $(39,526)
Adjustments to reconcile net
income (loss) to net cash flows
provided by (used in) operating
activities:
Write-down of land and deposits
and pre-acquisition costs 5,896 726
Depreciation and amortization 7,393 8,970
Stock-based compensation expense 3,719 5,510
Equity in (earnings) loss of
unconsolidated entities (1,996) (1,109)
Distributions of earnings from
unconsolidated entities 3,518 411
Other, net 103 781
Increase (decrease) in cash due
to:
Restricted cash 53 864
Inventories 45,969 (10,315)
Residential mortgage loans
available-for-sale 74,073 32,292
Other assets 10,257 79,383
Accounts payable, accrued and
other liabilities (34,466) (122,825)
Income tax liabilities 11,837 (4,803)
Net cash provided by (used in)
operating activities 114,690 (49,641)
------- -------
Cash flows from investing
activities:
Distributions from unconsolidated
entities - 1,021
Investments in unconsolidated
entities (49) (1,968)
Net change in loans held for
investment 293 255
Change in restricted cash related
to letters of credit 11,938 (109,667)
Proceeds from the sale of fixed
assets 4,475 2,441
Capital expenditures (3,758) (6,128)
Net cash provided by (used in)
investing activities 12,899 (114,046)
------ --------
Cash flows from financing
activities:
Net borrowings (repayments) of
other borrowings 1,920 (13,312)
Stock repurchases (845) (969)
Net cash provided by (used in)
financing activities 1,075 (14,281)
----- -------
Net increase (decrease) in cash
and equivalents 128,664 (177,968)
Cash and equivalents at beginning
of period 1,083,071 1,483,390
Cash and equivalents at end of
period $1,211,735 $1,305,422
========== ==========
Supplemental Cash Flow
Information:
Interest paid (capitalized), net $(22,808) $(23,833)
======== ========
Income taxes paid (refunded), net $(11,142) $(2,922)
======== =======
PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
Three Months Ended
March 31,
---------
2012 2011
---- ----
HOMEBUILDING:
Home sale revenues $813,786 $782,471
Land sale revenues 38,398 1,296
------ -----
Total Homebuilding
revenues 852,184 783,767
Home sale cost of revenues 712,166 685,030
Land sale cost of revenues 33,397 930
Selling, general, and
administrative expenses 123,314 142,446
Equity in (earnings) loss
of unconsolidated
entities (1,978) (1,098)
Other expense (income),
net 6,619 3,910
Interest income, net (982) (1,086)
Income (loss) before
income taxes $(20,352) $(46,365)
======== ========
FINANCIAL SERVICES:
Income (loss) before
income taxes $6,861 $973
====== ====
CONSOLIDATED:
Income (loss) before
income taxes $(13,491) $(45,392)
======== ========
PulteGroup, Inc.
Segment data, continued
($000's omitted)
(Unaudited)
Three Months Ended
March 31,
---------
2012 2011
---- ----
Home sale revenues $813,786 $782,471
======== ========
Closings - units
Northeast 352 348
Southeast 535 589
Florida 476 492
Texas 699 695
North 531 494
Southwest 524 523
--- ---
3,117 3,141
===== =====
Average selling price $261 $249
==== ====
Net new orders - units
Northeast 553 482
Southeast 774 748
Florida 768 736
Texas 1,109 1,048
North 869 658
Southwest 918 673
--- ---
4,991 4,345
===== =====
Net new orders - dollars (a) $1,339,977 $1,093,634
========== ==========
March 31,
---------
2012 2011
---- ----
Unit backlog
Northeast 626 690
Southeast 841 890
Florida 950 839
Texas 1,235 1,227
North 1,047 817
Southwest 1,099 725
----- ---
5,798 5,188
===== =====
Dollars in backlog $1,585,840 $1,367,725
========== ==========
(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,
---------
2012 2011
---- ----
MORTGAGE ORIGINATIONS:
Origination volume 2,021 1,865
===== =====
Origination principal $429,465 $377,972
======== ========
Capture rate 78.3% 76.5%
==== ====
Supplemental Data
($000's omitted)
(Unaudited)
Three Months Ended
March 31,
---------
2012 2011
---- ----
Interest in
inventory, beginning
of period $355,068 $323,379
Interest capitalized 51,323 56,191
Interest expensed (47,186) (34,816)
Interest in
inventory, end of
period $359,205 $344,754
======== ========
Interest incurred $51,323 $56,191
======= =======
PulteGroup, Inc.
Reconciliation of Non-GAAP Financial Measures
This report contains information about our home sale gross margins reflecting certain adjustments. This measure is considered a non-GAAP financial measure under the SEC's rules and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measure as a measure of our operating performance. Management and our local divisions use this measure in evaluating the operating performance of each community and in making strategic decisions regarding sales pricing, construction and development pace, product mix, and other daily operating decisions. We believe it is a relevant and useful measure to investors for evaluating our performance through gross profit generated on homes delivered during a given period and for comparing our operating performance to other companies in the homebuilding industry. Although other companies in the homebuilding industry report similar information, the methods used may differ. We urge investors to understand the methods used by other companies in the homebuilding industry to calculate gross margins and any adjustments thereto before comparing our measure to that of such other companies.
The following table sets forth a reconciliation of this non-GAAP financial measure to the GAAP financial measure that management believes to be most directly comparable ($000's omitted):
Home Sale Gross Margin
----------------------
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
2012 2011 2011 2011 2011
---- ---- ---- ---- ----
Home sale revenues $813,786 $1,167,141 $1,101,368 $899,763 $782,471
Home sale cost of revenues 712,166 (1,021,873) (947,817) (789,678) (685,030)
------- ---------- -------- -------- --------
Home sale gross margin 101,620 145,268 153,551 110,085 97,441
Add:
Impairments (a) 3,700 7,885 526 2,046 41
Capitalized interest amortization (a) 47,186 63,979 48,693 41,894 34,816
Adjusted home sale gross margin $152,506 $217,132 $202,770 $154,025 $132,298
======== ======== ======== ======== ========
Home sale gross margin as a 12.5% 12.4% 13.9% 12.2% 12.5%
percentage of home sale revenues
Adjusted home sale gross margin as a 18.7% 18.6% 18.4% 17.1% 16.9%
percentage of home sale revenues
(a) Write-offs of capitalized interest related to impairments are reflected in capitalized interest amortization.
SOURCE PulteGroup, Inc.
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