ATLANTA, Jan. 26, 2017 /PRNewswire/ -- PulteGroup, Inc. (NYSE: PHM) announced today financial results for its fourth quarter ended December 31, 2016. For the quarter, PulteGroup reported net income of $273 million, or $0.83 per share, inclusive of $0.16 per share of insurance and income tax benefits. Prior year reported net income of $228 million, or $0.64 per share, included $0.07 per share of benefits associated with the reversal of certain mortgage and insurance reserves.
"With the gains achieved in our fourth quarter results, PulteGroup completed a year in which it realized significant growth, including double-digit year-over-year increases in orders, closings, revenues, net income and backlog," said Ryan Marshall, President and CEO of PulteGroup. "Consistent with the Company's long-term objectives, our outstanding 2016 operating results drove strong returns on invested capital, which we view as an important component to delivering increased shareholder value over the housing cycle.
"The gains PulteGroup realized for the quarter and full year reflect the successful investments we are making into our business, in combination with the positive demand conditions that continue in the housing market. We believe that continued favorable trends in the economy, job growth, demographics and consumer confidence can more than offset the impact of modestly higher rates, allowing the housing recovery to continue at a steady pace."
Fourth Quarter Results
Home sale revenues for the fourth quarter totaled $2.4 billion, an increase of 21% over the prior year. Higher revenues for the period were driven by a 9% increase in closings to 6,197 homes, combined with an 11% increase in average selling price to $391,000. The Company's average selling price continues to benefit from a shift in the mix of homes closed, along with price increases realized by all three of the Company's national brands: Centex, Pulte Homes and Del Webb.
Beginning with this quarter's reporting, the Company reclassified internal and external sales commission expense from home sale cost of revenues to SG&A in order to be more consistent with a majority of its peers. Based on this reclassification of commission expense, the Company's reported home sale gross margin was 24.8% in the fourth quarter. Commission expense was 3.5% of revenue in the quarter.
SG&A expense in the fourth quarter, including commissions, was $208 million, or 8.6% of home sale revenues. Fourth quarter SG&A includes a $55 million benefit relating to a reversal of construction related insurance reserves in the period. SG&A expense, including commissions, in the fourth quarter of 2015 was $210 million, or 10.5% of home sale revenues. Prior year SG&A included a $30 million benefit relating to a reversal of construction related insurance reserves.
For the quarter, net new orders increased 15% over the prior year to 4,202 homes. The dollar value of fourth quarter orders increased 22% over the prior year to $1.7 billion. The Company ended the year with 726 active communities, which represents an increase of 17% over the comparable prior year period.
PulteGroup's year-end backlog of 7,422 homes, valued at $2.9 billion, compares with prior year backlog of 6,731 homes, valued at $2.5 billion. The average selling price in backlog increased 9% over the prior year to $396,000, which reflects a continued mix shift toward higher priced homes and moderate price increases.
The Company's financial services operations reported pretax income for the quarter of $25 million. Prior year financial services pretax income of $29 million included a $12 million benefit relating to a reversal of mortgage repurchase reserves. Financial services pretax income primarily benefitted from higher closing volumes in the Company's homebuilding operations and a fourth quarter capture rate of 82%.
For the quarter, the Company reported $141 million of income tax expense, representing an effective tax rate of 34%. The Company's effective tax rate for the quarter was lower than its previous guidance of 38%, due to the recognition of energy efficient home credits, as well as a deferred tax benefit relating to a legal entity restructuring.
During the fourth quarter, the Company repurchased 13.2 million common shares for $252 million, or an average price of $19.07 per share. The Company ended the year with a cash balance of $723 million.
A conference call discussing PulteGroup's fourth quarter results will be held Thursday, January 26, 2017, at 8:30 a.m. Eastern Time, and webcast live via www.pultegroupinc.com. Interested investors can access the call via the Company's home page at www.pultegroupinc.com, and are encouraged to download the available slides that provide additional details on the Company's fourth quarter results.
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," "plan," "project," "may," "can," "could," "might," "should," "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; competition within the industries in which we operate; the availability and cost of land and other raw materials used by us in our 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 and the levels of our land spend; the availability and cost of insurance covering risks associated with our 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 our 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, 2015, 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, Georgia, 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, DiVosta Homes and John Wieland Homes and Neighborhoods, 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;www.divosta.com and www.jwhomes.com.
PulteGroup, Inc. Consolidated Results of Operations ($000's omitted, except per share data) (Unaudited) Three Months Ended Year Ended December 31, December 31, 2016 2015 2016 2015 ---- ---- ---- ---- Revenues: Homebuilding Home sale revenues $2,423,472 $1,997,309 $7,451,315 $5,792,675 Land sale revenues 15,431 20,885 36,035 48,536 ------ ------ ------ ------ 2,438,903 2,018,194 7,487,350 5,841,211 Financial Services 54,175 43,434 181,126 140,753 ------ ------ ------- ------- Total revenues 2,493,078 2,061,628 7,668,476 5,981,964 --------- --------- --------- --------- Homebuilding Cost of Revenues: Home sale cost of revenues (1,821,672) (1,456,186) (5,587,974) (4,235,945) Land sale cost of revenues (14,256) (13,867) (32,115) (35,858) ------- ------- ------- ------- (1,835,928) (1,470,053) (5,620,089) (4,271,803) Financial Services expenses (29,370) (14,138) (108,573) (82,047) Selling, general, and administrative expenses (207,647) (210,398) (957,150) (794,728) Other expense, net (6,412) 6,276 (48,814) (17,363) ------ ----- ------- ------- Income before income taxes 413,721 373,315 933,850 816,023 Income tax expense (140,549) (145,288) (331,147) (321,933) -------- -------- -------- -------- Net income $273,172 $228,027 $602,703 $494,090 ======== ======== ======== ======== Net income per share: Basic $0.83 $0.65 $1.76 $1.38 ===== ===== ===== ===== Diluted $0.83 $0.64 $1.75 $1.36 ===== ===== ===== ===== Cash dividends declared $0.09 $0.09 $0.36 $0.33 ===== ===== ===== ===== Number of shares used in calculation: Basic 325,975 348,699 339,747 356,576 Effect of dilutive securities 1,834 3,047 2,376 3,217 ----- ----- ----- ----- Diluted 327,809 351,746 342,123 359,793 ======= ======= ======= =======
PulteGroup, Inc. Condensed Consolidated Balance Sheets ($000's omitted) (Unaudited) December 31, December 31, 2016 2015 ---- ---- ASSETS Cash and equivalents $698,882 $754,161 Restricted cash 24,366 21,274 ------ ------ Total cash, cash equivalents, and restricted cash 723,248 775,435 House and land inventory 6,770,655 5,450,058 Land held for sale 31,728 81,492 Residential mortgage loans available- for- sale 539,496 442,715 Investments in unconsolidated entities 51,447 41,267 Other assets 857,426 893,345 Intangible assets 154,792 110,215 Deferred tax assets, net 1,049,408 1,394,879 --------- --------- $10,178,200 $9,189,406 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Accounts payable $405,455 $327,725 Customer deposits 187,891 186,141 Accrued and other liabilities 1,448,994 1,516,783 Income tax liabilities 34,860 57,050 Financial Services debt 331,621 267,877 Term loan - 498,423 Senior notes 3,110,016 1,576,082 --------- --------- Total liabilities 5,518,837 4,430,081 Shareholders' equity 4,659,363 4,759,325 $10,178,200 $9,189,406 =========== ==========
PulteGroup, Inc. Consolidated Statements of Cash Flows ($000's omitted) (Unaudited) Year Ended December 31, 2016 2015 ---- ---- Cash flows from operating activities: Net income $602,703 $494,090 Adjustments to reconcile net income to net cash from operating activities: Deferred income tax expense 334,787 311,699 Write-down of land and deposits and pre- acquisition costs 19,357 11,467 Depreciation and amortization 54,007 46,222 Share- based compensation expense 22,228 24,752 Loss on debt retirements 657 - Other, net 1,614 (4,865) Increase (decrease) in cash due to: Inventories (897,092) (917,298) Residential mortgage loans available- for-sale (99,527) (104,609) Other assets (45,721) (175,150) Accounts payable, accrued and other liabilities 75,257 (23,898) Net cash provided by (used in) operating activities 68,270 (337,590) ------ -------- Cash flows from investing activities: Capital expenditures (39,295) (45,440) Investment in unconsolidated subsidiaries (14,539) (454) Cash used for business acquisition (430,458) - Other investing activities, net 13,100 11,330 ------ ------ Net cash used in investing activities (471,192) (34,564) -------- ------- Cash flows from financing activities: Proceeds from debt issuance 1,995,937 498,087 Repayments of debt (986,919) (239,193) Borrowings under revolving credit facility 619,000 125,000 Repayments under revolving credit facility (619,000) (125,000) Financial Services borrowings 63,744 127,636 Stock option exercises 5,845 10,535 Share repurchases (603,206) (442,738) Dividends paid (124,666) (115,958) -------- -------- Net cash provided by (used in) financing activities 350,735 (161,631) ------- -------- Net increase (decrease) (52,187) (533,785) Cash, cash equivalents and restricted cash at beginning of period 775,435 1,309,220 Cash, cash equivalents and restricted cash at end of period $723,248 $775,435 ======== ======== Supplemental Cash Flow Information: Interest paid (capitalized), net $(26,538) $(4,193) ======== ======= Income taxes paid (refunded), net $2,743 $(5,654) ====== =======
PulteGroup, Inc. Segment Data ($000's omitted) (Unaudited) Three Months Ended Year Ended December 31, December 31, 2016 2015 2016 2015 ---- ---- ---- ---- HOMEBUILDING: Home sale revenues $2,423,472 $1,997,309 $7,451,315 $5,792,675 Land sale revenues 15,431 20,885 36,035 48,536 ------ ------ ------ ------ Total Homebuilding revenues 2,438,903 2,018,194 7,487,350 5,841,211 Home sale cost of revenues (1,821,672) (1,456,186) (5,587,974) (4,235,945) Land sale cost of revenues (14,256) (13,867) (32,115) (35,858) Selling, general, and administrative expenses (207,647) (210,398) (957,150) (794,728) Other income (expense), net (6,604) 6,276 (49,345) (17,363) ------ ----- ------- ------- Income before income taxes $388,724 $344,019 $860,766 $757,317 ======== ======== ======== ======== FINANCIAL SERVICES: Income before income taxes $24,997 $29,296 $73,084 $58,706 ======= ======= ======= ======= CONSOLIDATED: Income before income taxes $413,721 $373,315 $933,850 $816,023 ======== ======== ======== ========
PulteGroup, Inc. Segment Data, continued ($000's omitted) (Unaudited) Three Months Ended Year Ended December 31, December 31, 2016 2015 2016 2015 ---- ---- ---- ---- Home sale revenues $2,423,472 $1,997,309 $7,451,315 $5,792,675 ========== ========== ========== ========== Closings - units Northeast 529 531 1,418 1,496 Southeast (a) 1,102 1,027 3,901 3,276 Florida 1,093 986 3,441 2,896 Midwest 1,142 977 3,418 2,961 Texas 1,080 1,036 3,726 3,357 West 1,251 1,105 4,047 3,141 6,197 5,662 19,951 17,127 ===== ===== ====== ====== Average selling price $391 $353 $373 $338 ==== ==== ==== ==== Net new orders - units Northeast 306 253 1,361 1,479 Southeast (a) 804 695 3,810 3,454 Florida 705 697 3,585 3,168 Midwest 766 630 3,636 2,862 Texas 784 621 3,793 3,429 West 837 763 4,141 3,616 4,202 3,659 20,326 18,008 ===== ===== ====== ====== Net new orders - dollars (b) $1,666,066 $1,364,821 $7,753,399 $6,305,380 ========== ========== ========== ========== December 31, 2016 2015 ---- ---- Unit backlog Northeast 387 444 Southeast (a) 1,371 1,146 Florida 1,418 1,274 Midwest 1,307 1,089 Texas 1,412 1,345 West 1,527 1,433 7,422 6,731 ===== ===== Dollars in backlog $2,941,512 $2,456,565 ========== ========== (a) Southeast includes the acquisition in January 2016 of substantially all of the assets of JW Homes ("Wieland"). (b) Net new orders excludes backlog acquired from Wieland in January 2016. 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 Year Ended December 31, December 31, 2016 2015 2016 2015 ---- ---- ---- ---- MORTGAGE ORIGINATIONS: Origination volume 4,250 3,820 13,373 11,435 ===== ===== ====== ====== Origination principal $1,225,568 $1,013,140 $3,706,745 $2,929,531 ========== ========== ========== ========== Capture rate 81.8% 82.8% 81.2% 82.9% ==== ==== ==== ==== Supplemental Data ($000's omitted) (Unaudited) Three Months Ended Year Ended December 31, December 31, 2016 2015 2016 2015 ---- ---- ---- ---- Interest in inventory, beginning of period $176,661 $155,781 $149,498 $167,638 Interest capitalized 44,961 29,896 160,506 120,001 Interest expensed (35,525) (36,179) (123,907) (138,141) Interest in inventory, end of period $186,097 $149,498 $186,097 $149,498 ======== ======== ======== ========
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SOURCE PulteGroup, Inc.