PulteGroup reports Q1 net income of US$74.8M, down from US$81.8M a year earlier, on revenues down 3.8% to US$1.12B, net new orders down 6.5% to 4,863 units; results impacted by income tax expense of US$55M, compared to year-ago income tax expense of US$1M

BLOOMFIELD HILLS, Michigan , April 24, 2014 (press release) –

  • 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

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.

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 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.

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

 
 

 

 

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

 

 

 

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)

 

 

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

 

 

 

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.

 

 

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


SOURCE PulteGroup, Inc.
Company Contact: Investors: Jim Zeumer, (248) 433-4502, Email: jim.zeumer@pultegroup.com

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