PULTEGROUP REPORTS THIRD QUARTER 2021 FINANCIAL RESULTS
•Net Income of $1.82 Per Share Up 36% Over Prior Year Adjusted Net Income of $1.34 Per Share
•Closings Increased 9% to 7,007 Homes
•Home Sale Revenues Increased 18% to $3.3 Billion
•Homebuilding Gross Margin Increased 200 Basis Points to 26.5%
•Net New Orders Totaled 6,796 Homes Valued at $3.8 Billion
•Unit Backlog Increased 33% to 19,845 Homes; Backlog Value Increased 56% to $10.3 Billion
•Repurchased 2% of Outstanding Common Shares for $261 Million
ATLANTA - Oct. 26, 2021 - PulteGroup, Inc. (NYSE: PHM) announced today financial results for its third quarter ended September 30, 2021. For the quarter, the Company reported net income of $476 million, or $1.82 per share. In the prior year, the Company reported net income of $416 million, or $1.54 per share, and adjusted net income of $363 million, or $1.34 per share, which excludes a tax benefit of $53 million resulting from energy tax credits recorded in the period.
“PulteGroup’s third quarter financial results reflect the strong demand environment as higher prices across all buyer segments helped drive a year-over-year increase in home sale revenues of 18%, along with a 36% increase in reported earnings per share over last year’s adjusted earnings per share,” said Ryan Marshall, PulteGroup President and CEO. “Our strong operating results and resulting cash flow also allowed the Company to invest $1.1 billion in land acquisition and development in the quarter, while returning $261 million to our shareholders through share repurchases.”
“The housing industry continues to experience robust demand, but significant disruptions in the manufacture and supply of many building products are extending overall build cycles,” added Marshall. “We are working closely with our homebuyers and supply partners as we manage through today’s challenging conditions.”
Third Quarter Results
Home sale revenues for the third quarter increased 18% over the prior year to $3.3 billion. Higher revenues for the period were driven by a 9% increase in closings to 7,007 homes, combined with an 8% increase in the average price of homes closed to $474,000.
The Company’s home sale gross margin for the third quarter was 26.5%, which is an increase of 200 basis points over the prior year gross margin of 24.5%. For the third quarter, the Company’s homebuilding SG&A expense was $321 million, or 9.6% of home sale revenues. SG&A expense for the prior year period was $271 million, or a comparable 9.6 % of home sale revenues.
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Net new orders for the third quarter decreased 17% from the prior year to 6,796 homes. Lower orders for the period were driven primarily by a 14% reduction in community count in combination with Company actions to strategically manage the pace of sales to better align with current production levels. The value of net new orders in the third quarter increased 4% to $3.8 billion. In the third quarter, the Company operated out of an average of 768 communities, which is a decrease of 14% from the prior year average community count of 892.
The Company’s unit backlog at the end of the third quarter increased 33% over last year to 19,845 homes. Backlog value at the end of the period was $10.3 billion, which is up 56% over the prior year.
Pre-tax income for the Company's financial services operations was $49 million, down from $64 million last year. For the period, higher loan volumes were offset by a more competitive pricing environment. Mortgage capture rate for the third quarter was 85% compared with 86% last year.
The Company’s pre-tax income for the third quarter increased 28% over last year to $620 million. Income tax expense for the Company’s third quarter was $145 million, or an effective tax rate of 23.3%. In the prior year, the Company’s effective tax rate was 14.0% as the Company realized a tax benefit of $53 million resulting from energy tax credits recognized in the period.
The Company ended the quarter with $1.6 billion of cash after using available funds to repurchase 5.1 million, or 2% of its common shares for $261 million, at an average price of $51.07 per share. At quarter end, the Company had a debt-to-capital ratio of 22.4% and a net debt-to-capital ratio of 5.7%.
A conference call discussing PulteGroup's third quarter 2021 results is scheduled for Tuesday, October 26, 2021, 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 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,” “seek,” and similar expressions identify forward-looking statements, including statements related to any potential impairment charges and the impacts or effects thereof, 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 which could have a greater impact on our effective tax rate or the value of our deferred tax assets than we anticipate; 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
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capital allocation priorities; required accounting changes; terrorist acts and other acts of war; the negative impact of the COVID-19 pandemic on our financial position and ability to continue our Homebuilding or Financial Services activities at normal levels or at all in impacted areas; the duration, effect and severity of the COVID-19 pandemic; the measures that governmental authorities take to address the COVID-19 pandemic which may precipitate or exacerbate one or more of the above-mentioned and/or other risks and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period of time; 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, 2020, 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 more than 40 markets throughout the country. Through its brand portfolio that includes Centex, Pulte Homes, Del Webb, DiVosta Homes, American West 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’s purpose is building incredible places where people can live their dreams.
For more information about PulteGroup, Inc. and PulteGroup’s brands, go to pultegroup.com; www.pulte.com; www.centex.com; www.delwebb.com; www.divosta.com; www.jwhomes.com; and www.americanwesthomes.com. Follow PulteGroup, Inc. on Twitter: @PulteGroupNews.
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PulteGroup, Inc.
Consolidated Statements of Operations
($000's omitted, except per share data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Revenues:
Homebuilding
Home sale revenues
$
3,324,483
$
2,823,921
$
9,156,371
$
7,517,453
Land sale and other revenues
63,085
24,165
123,321
70,042
3,387,568
2,848,086
9,279,692
7,587,495
Financial Services
91,482
106,871
288,632
256,223
Total revenues
3,479,050
2,954,957
9,568,324
7,843,718
Homebuilding Cost of Revenues:
Home sale cost of revenues
(2,443,074)
(2,131,741)
(6,754,204)
(5,706,814)
Land sale and other cost of revenues
(47,483)
(20,502)
(103,313)
(55,558)
(2,490,557)
(2,152,243)
(6,857,517)
(5,762,372)
Financial Services expenses
(42,835)
(42,807)
(122,921)
(112,135)
Selling, general, and administrative expenses
(320,506)
(271,257)
(864,478)
(731,785)
Loss on debt retirement
—
—
(61,469)
—
Goodwill impairment
—
—
—
(20,190)
Other expense, net
(4,750)
(4,483)
(8,011)
(12,292)
Income before income taxes
620,402
484,167
1,653,928
1,204,944
Income tax expense
(144,853)
(67,769)
(370,873)
(236,216)
Net income
$
475,549
$
416,398
$
1,283,055
$
968,728
Per share:
Basic earnings
$
1.83
$
1.54
$
4.86
$
3.57
Diluted earnings
$
1.82
$
1.54
$
4.85
$
3.56
Cash dividends declared
$
0.14
$
0.12
$
0.42
$
0.36
Number of shares used in calculation:
Basic
258,147
268,363
261,854
268,892
Effect of dilutive securities
752
598
668
839
Diluted
258,899
268,961
262,522
269,731
4
PulteGroup, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
(Unaudited)
September 30, 2021
December 31, 2020
ASSETS
Cash and equivalents
$
1,568,324
$
2,582,205
Restricted cash
56,327
50,030
Total cash, cash equivalents, and restricted cash
1,624,651
2,632,235
House and land inventory
8,917,440
7,721,798
Land held for sale
18,585
27,962
Residential mortgage loans available-for-sale
601,408
564,979
Investments in unconsolidated entities
64,284
35,562
Other assets
1,053,871
923,270
Intangible assets
149,854
163,425
Deferred tax assets
141,758
136,267
$
12,571,851
$
12,205,498
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable
$
490,717
$
511,321
Customer deposits
823,545
449,474
Deferred tax liabilities
121,905
103,548
Accrued and other liabilities
1,457,505
1,407,043
Financial Services debt
476,504
411,821
Notes payable
2,059,923
2,752,302
5,430,099
5,635,509
Shareholders' equity
7,141,752
6,569,989
$
12,571,851
$
12,205,498
5
PulteGroup, Inc.
Consolidated Statements of Cash Flows
($000's omitted)
(Unaudited)
Nine Months Ended
September 30,
2021
2020
Cash flows from operating activities:
Net income
$
1,283,055
$
968,728
Adjustments to reconcile net income to net cash from operating activities:
Deferred income tax expense
12,842
89,492
Land-related charges
6,820
13,930
Loss on debt retirement
61,469
—
Goodwill impairment
—
20,190
Depreciation and amortization
53,023
48,536
Share-based compensation expense
28,439
25,010
Other, net
(3,274)
(1,136)
Increase (decrease) in cash due to:
Inventories
(1,137,351)
84,253
Residential mortgage loans available-for-sale
(36,816)
108,178
Other assets
(114,879)
(17,627)
Accounts payable, accrued and other liabilities
394,897
(72,929)
Net cash provided by (used in) operating activities
548,225
1,266,625
Cash flows from investing activities:
Capital expenditures
(52,134)
(46,925)
Investments in unconsolidated entities
(35,812)
(663)
Distributions of capital from unconsolidated entities
11,500
19,939
Business acquisition
(10,400)
(83,251)
Other investing activities, net
378
3,721
Net cash provided by (used in) investing activities
(86,468)
(107,179)
Cash flows from financing activities:
Repayments of notes payable
(797,395)
(10,993)
Borrowings under revolving credit facility
—
700,000
Repayments under revolving credit facility
—
(700,000)
Financial Services borrowings (repayments), net
64,684
(77,527)
Stock option exercises
11
111
Share repurchases
(614,303)
(95,676)
Cash paid for shares withheld for taxes
(10,642)
(14,853)
Dividends paid
(111,696)
(97,756)
Net cash provided by (used in) financing activities
(1,469,341)
(296,694)
Net increase (decrease) in cash, cash equivalents, and restricted cash
(1,007,584)
862,752
Cash, cash equivalents, and restricted cash at beginning of period
2,632,235
1,251,456
Cash, cash equivalents, and restricted cash at end of period
$
1,624,651
$
2,114,208
Supplemental Cash Flow Information:
Interest paid (capitalized), net
$
16,483
$
16,297
Income taxes paid (refunded), net
$
335,487
$
195,494
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PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
HOMEBUILDING:
Home sale revenues
$
3,324,483
$
2,823,921
$
9,156,371
$
7,517,453
Land sale and other revenues
63,085
24,165
123,321
70,042
Total Homebuilding revenues
3,387,568
2,848,086
9,279,692
7,587,495
Home sale cost of revenues
(2,443,074)
(2,131,741)
(6,754,204)
(5,706,814)
Land sale and other cost of revenues
(47,483)
(20,502)
(103,313)
(55,558)
Selling, general, and administrative expenses ("SG&A")
(320,506)
(271,257)
(864,478)
(731,785)
Loss on debt retirement
—
—
(61,469)
—
Goodwill impairment
—
—
—
(20,190)
Other expense, net
(4,742)
(4,483)
(8,742)
(12,242)
Income before income taxes
$
571,763
$
420,103
$
1,487,486
$
1,060,906
FINANCIAL SERVICES:
Income before income taxes
$
48,639
$
64,064
$
166,442
$
144,038
CONSOLIDATED:
Income before income taxes
$
620,402
$
484,167
$
1,653,928
$
1,204,944
OPERATING METRICS:
Gross margin % (a)(b)
26.5
%
24.5
%
26.2
%
24.1
%
SG&A % (a)
(9.6)
%
(9.6)
%
(9.4)
%
(9.7)
%
Operating margin % (a)
16.9
%
14.9
%
16.8
%
14.4
%
(a)As a percentage of home sale revenues
(b)Gross margin represents home sale revenues minus home sale cost of revenues
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PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Home sale revenues
$
3,324,483
$
2,823,921
$
9,156,371
$
7,517,453
Closings - units
Northeast
472
428
1,286
998
Southeast
1,278
1,057
3,507
3,089
Florida
1,502
1,427
4,614
4,017
Midwest
1,123
950
3,004
2,466
Texas
1,276
1,162
4,020
3,484
West
1,356
1,430
3,852
3,710
7,007
6,454
20,283
17,764
Average selling price
$
474
$
438
$
451
$
423
Net new orders - units
Northeast
368
591
1,451
1,422
Southeast
1,085
1,255
4,010
3,491
Florida
1,844
1,868
6,451
5,041
Midwest
1,075
1,243
3,936
3,158
Texas
1,117
1,673
4,468
4,613
West
1,307
1,572
4,654
4,494
6,796
8,202
24,970
22,219
Net new orders - dollars
$
3,780,354
$
3,634,158
$
12,668,805
$
9,579,982
Unit backlog
Northeast
1,118
1,013
Southeast
2,843
2,267
Florida
5,491
3,330
Midwest
3,131
2,232
Texas
3,501
2,979
West
3,761
3,141
19,845
14,962
Dollars in backlog
$
10,305,614
$
6,598,334
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PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
MORTGAGE ORIGINATIONS:
Origination volume
5,078
4,858
15,082
13,202
Origination principal
$
1,810,722
$
1,625,250
$
5,186,913
$
4,274,619
Capture rate
84.6
%
86.0
%
86.1
%
86.5
%
Supplemental Data
($000's omitted)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Interest in inventory, beginning of period
$
185,433
$
207,942
$
193,409
$
210,383
Interest capitalized
31,707
40,044
97,809
119,643
Interest expensed
(41,897)
(46,841)
(115,975)
(128,881)
Interest in inventory, end of period
$
175,243
$
201,145
$
175,243
$
201,145
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PulteGroup, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
This report contains information about our operating results reflecting certain adjustments, including net income, diluted earnings per share ("EPS"), and debt-to-capital ratio. These measures are considered non-GAAP financial measures under the SEC's rules and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measures. We believe that reflecting these adjustments provides investors relevant and useful information for evaluating the comparability of financial information presented and comparing our profitability and liquidity 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 these measures and any adjustments thereto before comparing our measures to those of such other companies.
The following tables set forth a reconciliation of the non-GAAP financial measures to the GAAP financial measures that management believes to be most directly comparable ($000's omitted, except per share data):
Adjusted EPS
Three Months Ended
Results of Operations Classification
September 30,
2021
2020
Net income, as reported
$
475,549
$
416,398
Energy tax credits
Income tax expense
—
(53,210)
Adjusted net income
$
475,549
$
363,188
EPS (diluted), as reported
$
1.82
$
1.54
Adjusted EPS (diluted)
$
1.82
$
1.34
Debt-to-Capital Ratios
September 30, 2021
December 31, 2020
Notes payable
$
2,059,923
$
2,752,302
Shareholders' equity
7,141,752
6,569,989
Total capital
$
9,201,675
$
9,322,291
Debt-to-capital ratio
22.4
%
29.5
%
Notes payable
$
2,059,923
$
2,752,302
Less: Total cash, cash equivalents, and restricted cash
