PulteGroup Reports Third Quarter 2021 Financial Results

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.

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 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.

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

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

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

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

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

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

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

(1,624,651

)

(2,632,235

)

Total net debt

$

435,272

$

120,067

Shareholders' equity

7,141,752

6,569,989

Total net capital

$

7,577,024

$

6,690,056

Net debt-to-capital ratio

5.7

%

1.8

%

Contacts:

Company Contact
Investors: Jim Zeumer
(404) 978-6434
jim.zeumer@pultegroup.com

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