ATLANTA, Oct. 20, 2016 /PRNewswire/ -- PulteGroup, Inc.
(NYSE: PHM) announced today financial results for its third quarter
ended September 30, 2016. The
Company's reported Q3 net income of $128
million, or $0.37 per share,
included pretax charges of $31
million, or $0.06 per share,
associated with the settlement of a disputed land transaction,
restructuring costs associated with previously announced plans to
reduce overhead expenses, and costs relating to shareholder
activities. Prior year net income of $108 million, or $0.30 per share, included net pretax charges of
$14 million, or $0.03 per share, resulting from
litigation-related reserve adjustments in the quarter.
"I am extremely pleased with PulteGroup's third quarter results
which show a continuation of the strong demand and operating trends
we experienced in the first half of 2016," said Ryan Marshall, President and Chief Executive
Officer of PulteGroup. "Of particular note, the 25% increase
in the value of our Q3 orders, one of the largest gains we have
realized in years, benefited from the increased land investments we
made in recent years and strong sales activity across all buyer
groups, as first time, move up and active adult all gained over
last year.
"Along with delivering strong operating and financial results,
the Company also completed its announced leadership transition
during the quarter as Richard Dugas
retired as CEO following a successful 22-year career. As an
organization, we will continue to advance the Company's Value
Creation strategy which has been instrumental in elevating our
financial results over the past five years to be among the industry
leaders.
"With U.S. new home sales for 2016 on track to grow in excess of
10% over last year, we believe housing demand remains on a
sustained path of recovery fueled by ongoing job creation, low
unemployment, a supportive interest rate environment and a limited
inventory of homes. Given these market dynamics, and in
alignment with our Value Creation strategy, we continue to grow our
operations through continued investment in high returning land
positions, while consistently returning funds to shareholders
through dividends and share repurchases."
Third Quarter Results
Home sale revenues for the third quarter of 2016 increased 29%
over the prior year to $1.9
billion. Higher revenues for the period benefited from
a 16% increase in deliveries to 5,037 homes and an 11%, or
$37,000, increase in average selling
price to $374,000.
Home sale gross margin for the third quarter was 21.1%.
Homebuilding SG&A expense for the quarter was $183 million, or 9.7% of home sale revenues,
including approximately $12 million
of charges for severance costs associated with actions taken to
reduce overhead expenses, and for shareholder activities.
Prior year SG&A of $159 million,
or 10.9% of home sale revenues, included a benefit of $6 million from a litigation-related reserve
adjustment taken in the period.
"The restructuring costs incurred in the third quarter were
driven by actions associated with the Company's previously
announced plans targeting full-year 2017 SG&A expenses of 9% of
revenues, down from an expected 10% in 2016," said Bob O'Shaughnessy, Executive Vice President and
CFO. "We implemented these actions with the goal of realizing
greater overhead efficiency, while still being able to deliver
expected growth in our business in 2017 and beyond."
In the quarter, the Company also recorded charges of
$20 million in Other Expense, net,
resulting from the settlement of a contract dispute associated with
a land transaction the Company terminated a decade ago in response
to the collapse of housing demand and from lease exit and related
costs associated with overhead reduction actions. In the
prior year period, the Company recorded a charge of $20 million in Other Expense, net, to increase
reserves following an unfavorable jury verdict in a contract
dispute.
Net new orders for the third quarter increased 17% to 4,775
homes. The value of orders increased 25% over the prior year
to $1.8 billion. The Company
operated out of 709 communities in the third quarter, which is an
increase of 16% over the third quarter of 2015.
Backlog value increased 20% over the prior year to $3.7 billion, as the number of homes in backlog
increased 8% to 9,417 homes. The average price of homes in
backlog was $393,000, which is up 11%
over last year.
The Company's financial services operations reported third
quarter pretax income of $21 million
compared with $14 million in
2015. Higher pretax income for the period was primarily the
result of higher closing volumes in the Company's homebuilding
operations. Mortgage capture rate for the quarter was 81%,
compared with 83% in the prior year.
During the quarter, the Company issued $1.0 billion of senior notes, the proceeds of
which were used, in part, to repay approximately $500 million of outstanding debt, to fund ongoing
operations and to repurchase 12 million common shares for
$250 million, or an average price of
$20.77 per share.
A conference call discussing PulteGroup's third quarter 2016
results is scheduled for Thursday, October
20, 2016, 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," "plan," "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 and
the rate of growth in land spend; 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; 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
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
|
Homebuilding
|
|
|
|
|
|
|
|
Home sale
revenues
|
$
|
1,881,718
|
|
|
$
|
1,464,131
|
|
|
$
|
5,027,843
|
|
|
$
|
3,795,366
|
|
Land sale
revenues
|
13,167
|
|
|
3,649
|
|
|
20,604
|
|
|
27,651
|
|
|
1,894,885
|
|
|
1,467,780
|
|
|
5,048,447
|
|
|
3,823,017
|
|
Financial
Services
|
48,020
|
|
|
38,967
|
|
|
126,950
|
|
|
97,319
|
|
Total
revenues
|
1,942,905
|
|
|
1,506,747
|
|
|
5,175,397
|
|
|
3,920,336
|
|
|
|
|
|
|
|
|
|
Homebuilding Cost
of Revenues:
|
|
|
|
|
|
|
|
Home sale cost of
revenues
|
1,485,611
|
|
|
1,118,874
|
|
|
3,949,449
|
|
|
2,913,299
|
|
Land sale cost of
revenues
|
11,428
|
|
|
3,301
|
|
|
17,859
|
|
|
21,992
|
|
|
1,497,039
|
|
|
1,122,175
|
|
|
3,967,308
|
|
|
2,935,291
|
|
Financial Services
expenses
|
26,906
|
|
|
24,602
|
|
|
79,204
|
|
|
67,909
|
|
Selling, general,
and administrative expenses
|
183,008
|
|
|
159,361
|
|
|
566,355
|
|
|
450,793
|
|
Other expense
(income), net
|
23,617
|
|
|
21,333
|
|
|
42,402
|
|
|
23,638
|
|
Income before
income taxes
|
212,335
|
|
|
179,276
|
|
|
520,128
|
|
|
442,705
|
|
Income tax
expense
|
83,865
|
|
|
71,507
|
|
|
190,598
|
|
|
176,643
|
|
Net
income
|
$
|
128,470
|
|
|
$
|
107,769
|
|
|
$
|
329,530
|
|
|
$
|
266,062
|
|
|
|
|
|
|
|
|
|
Per
share:
|
|
|
|
|
|
|
|
Basic
earnings
|
$
|
0.37
|
|
|
$
|
0.31
|
|
|
$
|
0.95
|
|
|
$
|
0.74
|
|
Diluted
earnings
|
$
|
0.37
|
|
|
$
|
0.30
|
|
|
$
|
0.94
|
|
|
$
|
0.73
|
|
Cash dividends
declared
|
$
|
0.09
|
|
|
$
|
0.08
|
|
|
$
|
0.27
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
Number of shares
used in calculation:
|
|
|
|
|
|
|
|
Basic
|
340,171
|
|
|
350,147
|
|
|
344,383
|
|
|
359,236
|
|
Effect of dilutive
securities
|
2,250
|
|
|
3,225
|
|
|
2,557
|
|
|
3,273
|
|
Diluted
|
342,421
|
|
|
353,372
|
|
|
346,940
|
|
|
362,509
|
|
PulteGroup,
Inc.
Condensed
Consolidated Balance Sheets
($000's
omitted)
(Unaudited)
|
|
September 30,
2016
|
|
December 31,
2015
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Cash and
equivalents
|
$
|
434,205
|
|
|
$
|
754,161
|
|
Restricted
cash
|
26,984
|
|
|
21,274
|
|
House and land
inventory
|
6,950,242
|
|
|
5,450,058
|
|
Land held for
sale
|
57,468
|
|
|
81,492
|
|
Residential mortgage
loans available-for-sale
|
349,012
|
|
|
442,715
|
|
Investments in
unconsolidated entities
|
51,768
|
|
|
41,267
|
|
Other
assets
|
647,706
|
|
|
660,835
|
|
Intangible
assets
|
158,242
|
|
|
110,215
|
|
Deferred tax assets,
net
|
1,195,905
|
|
|
1,394,879
|
|
|
$
|
9,871,532
|
|
|
$
|
8,956,896
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
Accounts
payable
|
$
|
378,423
|
|
|
$
|
327,725
|
|
Customer
deposits
|
248,302
|
|
|
186,141
|
|
Accrued and other
liabilities
|
1,270,353
|
|
|
1,284,273
|
|
Income tax
liabilities
|
33,562
|
|
|
57,050
|
|
Financial Services
debt
|
158,794
|
|
|
267,877
|
|
Term loan
|
—
|
|
|
498,423
|
|
Senior
notes
|
3,110,066
|
|
|
1,576,082
|
|
|
5,199,500
|
|
|
4,197,571
|
|
Shareholders'
equity
|
4,672,032
|
|
|
4,759,325
|
|
|
$
|
9,871,532
|
|
|
$
|
8,956,896
|
|
PulteGroup,
Inc.
Consolidated
Statements of Cash Flows
($000's
omitted)
(Unaudited)
|
|
Nine Months
Ended
|
|
September
30,
|
|
2016
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
329,530
|
|
|
$
|
266,062
|
|
Adjustments to
reconcile net income to net cash from operating
activities:
|
|
|
|
Deferred income tax
expense
|
198,974
|
|
|
171,364
|
|
Depreciation and
amortization
|
40,218
|
|
|
33,719
|
|
Share-based
compensation expense
|
19,813
|
|
|
20,139
|
|
Other, net
|
17,678
|
|
|
11,300
|
|
Increase (decrease)
in cash due to:
|
|
|
|
Restricted
cash
|
(5,710)
|
|
|
(13,293)
|
|
Inventories
|
(1,100,173)
|
|
|
(835,276)
|
|
Residential mortgage
loans available-for-sale
|
92,649
|
|
|
68,381
|
|
Other
assets
|
11,502
|
|
|
(130,282)
|
|
Accounts payable,
accrued and other liabilities
|
83,303
|
|
|
162,987
|
|
Net cash provided by
(used in) operating activities
|
(312,216)
|
|
|
(244,899)
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(30,551)
|
|
|
(34,049)
|
|
Cash used for
business acquisition
|
(430,458)
|
|
|
—
|
|
Other investing
activities, net
|
(8,576)
|
|
|
13,669
|
|
Net cash used in
investing activities
|
(469,585)
|
|
|
(20,380)
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from debt
issuance
|
1,995,961
|
|
|
498,087
|
|
Repayments of
debt
|
(985,734)
|
|
|
(238,520)
|
|
Borrowings under
revolving credit facility
|
619,000
|
|
|
125,000
|
|
Repayments under
revolving credit facility
|
(619,000)
|
|
|
(125,000)
|
|
Financial Services
borrowings (repayments)
|
(109,083)
|
|
|
(32,733)
|
|
Stock option
exercises
|
5,845
|
|
|
10,371
|
|
Share
repurchases
|
(350,846)
|
|
|
(442,738)
|
|
Dividends
paid
|
(94,298)
|
|
|
(87,897)
|
|
Net cash provided by
(used in) financing activities
|
461,845
|
|
|
(293,430)
|
|
Net increase
(decrease) in cash and equivalents
|
(319,956)
|
|
|
(558,709)
|
|
Cash and equivalents
at beginning of period
|
754,161
|
|
|
1,292,862
|
|
Cash and equivalents
at end of period
|
$
|
434,205
|
|
|
$
|
734,153
|
|
|
|
|
|
Supplemental Cash
Flow Information:
|
|
|
|
Interest paid
(capitalized), net
|
$
|
(11,324)
|
|
|
$
|
(20,304)
|
|
Income taxes paid
(refunded), net
|
$
|
(74)
|
|
|
$
|
740
|
|
PulteGroup,
Inc.
Segment
Data
($000's
omitted)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
HOMEBUILDING:
|
|
|
|
|
|
|
|
Home sale
revenues
|
$
|
1,881,718
|
|
|
$
|
1,464,131
|
|
|
$
|
5,027,843
|
|
|
$
|
3,795,366
|
|
Land sale
revenues
|
13,167
|
|
|
3,649
|
|
|
20,604
|
|
|
27,651
|
|
Total Homebuilding
revenues
|
1,894,885
|
|
|
1,467,780
|
|
|
5,048,447
|
|
|
3,823,017
|
|
|
|
|
|
|
|
|
|
Home sale cost of
revenues
|
1,485,611
|
|
|
1,118,874
|
|
|
3,949,449
|
|
|
2,913,299
|
|
Land sale cost of
revenues
|
11,428
|
|
|
3,301
|
|
|
17,859
|
|
|
21,992
|
|
Selling, general, and
administrative expenses
|
183,008
|
|
|
159,361
|
|
|
566,355
|
|
|
450,793
|
|
Other expense
(income), net
|
23,775
|
|
|
21,333
|
|
|
42,742
|
|
|
23,637
|
|
Income before income
taxes
|
$
|
191,063
|
|
|
$
|
164,911
|
|
|
$
|
472,042
|
|
|
$
|
413,296
|
|
|
|
|
|
|
|
|
|
FINANCIAL
SERVICES:
|
|
|
|
|
|
|
|
Income before income
taxes
|
$
|
21,272
|
|
|
$
|
14,365
|
|
|
$
|
48,086
|
|
|
$
|
29,409
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED:
|
|
|
|
|
|
|
|
Income before income
taxes
|
$
|
212,335
|
|
|
$
|
179,276
|
|
|
$
|
520,128
|
|
|
$
|
442,705
|
|
PulteGroup,
Inc.
Segment Data,
continued
($000's
omitted)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Home sale
revenues
|
$
|
1,881,718
|
|
|
$
|
1,464,131
|
|
|
$
|
5,027,843
|
|
|
$
|
3,795,366
|
|
|
|
|
|
|
|
|
|
Closings -
units
|
|
|
|
|
|
|
|
Northeast
|
317
|
|
|
401
|
|
|
889
|
|
|
965
|
|
Southeast
(a)
|
948
|
|
|
865
|
|
|
2,799
|
|
|
2,249
|
|
Florida
|
836
|
|
|
712
|
|
|
2,348
|
|
|
1,910
|
|
Midwest
|
938
|
|
|
756
|
|
|
2,276
|
|
|
1,984
|
|
Texas
|
948
|
|
|
821
|
|
|
2,646
|
|
|
2,321
|
|
West
|
1,050
|
|
|
801
|
|
|
2,796
|
|
|
2,036
|
|
|
5,037
|
|
|
4,356
|
|
|
13,754
|
|
|
11,465
|
|
Average selling
price
|
$
|
374
|
|
|
$
|
336
|
|
|
$
|
366
|
|
|
$
|
331
|
|
|
|
|
|
|
|
|
|
Net new orders -
units
|
|
|
|
|
|
|
|
Northeast
|
325
|
|
|
346
|
|
|
1,055
|
|
|
1,226
|
|
Southeast
(a)
|
938
|
|
|
780
|
|
|
3,006
|
|
|
2,759
|
|
Florida
|
946
|
|
|
755
|
|
|
2,880
|
|
|
2,471
|
|
Midwest
|
817
|
|
|
639
|
|
|
2,870
|
|
|
2,232
|
|
Texas
|
852
|
|
|
698
|
|
|
3,009
|
|
|
2,808
|
|
West
|
897
|
|
|
874
|
|
|
3,304
|
|
|
2,853
|
|
|
4,775
|
|
|
4,092
|
|
|
16,124
|
|
|
14,349
|
|
Net new orders -
dollars (b)
|
$
|
1,831,339
|
|
|
$
|
1,465,322
|
|
|
$
|
6,087,334
|
|
|
$
|
4,940,560
|
|
|
|
|
|
|
|
|
|
Unit
backlog
|
|
|
|
|
|
|
|
Northeast
|
|
|
|
|
610
|
|
|
722
|
|
Southeast
(a)
|
|
|
|
|
1,669
|
|
|
1,478
|
|
Florida
|
|
|
|
|
1,806
|
|
|
1,563
|
|
Midwest
|
|
|
|
|
1,683
|
|
|
1,436
|
|
Texas
|
|
|
|
|
1,708
|
|
|
1,760
|
|
West
|
|
|
|
|
1,941
|
|
|
1,775
|
|
|
|
|
|
|
9,417
|
|
|
8,734
|
|
Dollars in
backlog
|
|
|
|
|
$
|
3,698,920
|
|
|
$
|
3,089,055
|
|
|
|
|
|
|
|
|
|
(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
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
MORTGAGE
ORIGINATIONS:
|
|
|
|
|
|
|
|
Origination
volume
|
3,417
|
|
|
2,992
|
|
|
9,123
|
|
|
7,615
|
|
Origination
principal
|
$
|
945,859
|
|
|
$
|
766,450
|
|
|
$
|
2,481,177
|
|
|
$
|
1,916,391
|
|
Capture
rate
|
81.1
|
%
|
|
83.5
|
%
|
|
80.9
|
%
|
|
82.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Data
($000's
omitted)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Interest in
inventory, beginning of period
|
$
|
167,488
|
|
|
$
|
164,384
|
|
|
$
|
149,498
|
|
|
$
|
167,638
|
|
Interest
capitalized
|
42,030
|
|
|
28,006
|
|
|
115,545
|
|
|
90,105
|
|
Interest
expensed
|
(32,857)
|
|
|
(36,609)
|
|
|
(88,382)
|
|
|
(101,962)
|
|
Interest in
inventory, end of period
|
$
|
176,661
|
|
|
$
|
155,781
|
|
|
$
|
176,661
|
|
|
$
|
155,781
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/pultegroup-reports-third-quarter-2016-financial-results-300347986.html
SOURCE PulteGroup, Inc.