EX-99.1 2 ex991earningspr3312014.htm PRESS RELEASE ISSUED ON APRIL 24, 2014 BY PULTEGROUP, INC Ex 99.1 earnings PR 3/31/2014


 


FOR IMMEDIATE RELEASE
Company Contact
 
Investors: Jim Zeumer
 
(248) 433-4502
 
          Email: jim.zeumer@pultegroup.com
 
 

PULTEGROUP, INC. REPORTS FIRST QUARTER 2014 FINANCIAL RESULTS

•
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

Bloomfield Hills, Mich., April 24, 2014 - 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.

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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

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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.


# # #


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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



4



PulteGroup, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
(Unaudited)
 
 
 
 
 
March 31,
2014
 
December 31,
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



5


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
)


6



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



7


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.

8



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




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