PulteGroup, Inc. Reports First Quarter 2022 Financial Results
PulteGroup (PHM) reported a robust first quarter for 2022, with net income of $455 million, or $1.83 per share, up 43% year-over-year. Home sale revenues surged 18% to $3.1 billion, driven by an 18% increase in average sales price to $508,000. Gross margin expanded by 350 basis points to 29.0%. Despite a 19% decrease in net new orders to 7,971 homes, their value rose 2% to $4.7 billion. The company repurchased 10.3 million shares for $500 million and had a strong debt-to-capital ratio of 21.5%. Moody's upgraded its credit rating, reflecting solid financial health.
- Net income increased 43% to $455 million, or $1.83 per share.
- Home sale revenues rose by 18% to $3.1 billion.
- Gross margin improved 350 basis points to 29.0%.
- Net new order value increased 2% to $4.7 billion despite a 19% decrease in units.
- Repurchased 10.3 million shares for $500 million.
- Moody's upgraded credit rating to Baa2.
- Net new orders decreased 19% to 7,971 homes.
- Mortgage capture rate fell to 81% from 88% in the prior year.
-
Net Income of
Per Share Increased$1.83 43% Over Prior Year Adjusted Net Income of Per Share$1.28 -
Home Sale Revenues Increased
18% to$3.1 Billion -
Closings of 6,039 Homes Consistent with Prior Year; Average Sales Price Increased
18% to$508,000 -
Home Sale Gross Margin Expanded by
350 Basis Points to29.0% -
Net New Orders Lower by19% to 7,971 Homes; Net New Order Value Increased2% to$4.7 Billion -
Unit Backlog Increased
5% to 19,935 Homes with a Value of$11.5 Billion -
Company Repurchased 10.3
Million Shares , or4% of Outstanding Shares, for$500 Million -
Return on Equity for Trailing Twelve Months Increased to
29.4% *
“Our quarterly financial results reflect the favorable operating conditions the homebuilding industry has experienced for multiple quarters, as
“In the first quarter, we continued to realize strong demand across our buyer groups and geographic markets, as a growing economy, an outstanding job market and rising wages helped to mitigate impacts from higher home prices and rising mortgage rates,” added Marshall. “Within today’s dynamic housing market, we remain disciplined in our operating practices and allocation of capital and remain focused on achieving high returns on our investments.”
First Quarter Financial Results
Home sale revenues for the first quarter increased
The Company’s home sale gross margin in the first quarter was
Net new orders for the first quarter decreased
At the end of the quarter, the Company had a contract backlog of 19,935 sold homes valued at
First quarter pretax income for PulteGroup’s financial services operations was
The Company ended the first quarter with
Following the close of the Company’s first quarter, Moody's Investors Service upgraded PulteGroup’s senior unsecured notes ratings to Baa2 from Baa3. In upgrading
After quarter end, it was announced that
A conference call to discuss
* The Company's return on equity is calculated as net income for the trailing twelve months divided by average shareholders' equity, where average shareholders' equity is the sum of ending shareholders' equity balances of the trailing five quarters divided by five.
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” 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
About
For more information about
Consolidated Statements of Operations
( (Unaudited)
|
||||||||
|
Three Months Ended |
|||||||
|
|
|||||||
|
2022 |
|
2021 |
|||||
Revenues: |
|
|
|
|||||
Homebuilding |
|
|
|
|||||
Home sale revenues |
$ |
3,070,313 |
|
|
$ |
2,596,510 |
|
|
Land sale and other revenues |
|
33,159 |
|
|
|
27,159 |
|
|
|
|
3,103,472 |
|
|
|
2,623,669 |
|
|
Financial Services |
|
84,143 |
|
|
|
106,122 |
|
|
Total revenues |
|
3,187,615 |
|
|
|
2,729,791 |
|
|
|
|
|
|
|||||
Homebuilding Cost of Revenues: |
|
|
|
|||||
Home sale cost of revenues |
|
(2,181,074 |
) |
|
|
(1,935,635 |
) |
|
Land sale and other cost of revenues |
|
(32,002 |
) |
|
|
(24,636 |
) |
|
|
|
(2,213,076 |
) |
|
|
(1,960,271 |
) |
|
|
|
|
|
|||||
Financial Services expenses |
|
(43,486 |
) |
|
|
(39,674 |
) |
|
Selling, general, and administrative expenses |
|
(329,022 |
) |
|
|
(271,686 |
) |
|
Loss on debt retirement |
|
— |
|
|
|
(61,469 |
) |
|
Other expense, net |
|
(2,138 |
) |
|
|
(2,639 |
) |
|
Income before income taxes |
|
599,893 |
|
|
|
394,052 |
|
|
Income tax expense |
|
(145,170 |
) |
|
|
(89,945 |
) |
|
Net income |
$ |
454,723 |
|
|
$ |
304,107 |
|
|
|
|
|
|
|||||
Per share: |
|
|
|
|||||
Basic earnings |
$ |
1.84 |
|
|
$ |
1.14 |
|
|
Diluted earnings |
$ |
1.83 |
|
|
$ |
1.13 |
|
|
Cash dividends declared |
$ |
0.15 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|||||
Number of shares used in calculation: |
|
|
|
|||||
Basic |
|
245,796 |
|
|
|
265,407 |
|
|
Effect of dilutive securities |
|
1,069 |
|
|
|
605 |
|
|
Diluted |
|
246,865 |
|
|
|
266,012 |
|
Condensed Consolidated Balance Sheets
( (Unaudited)
|
||||||||
|
|
|
|
|||||
|
|
|
|
|||||
ASSETS |
|
|
|
|||||
|
|
|
|
|||||
Cash and equivalents |
$ |
1,145,007 |
|
$ |
1,779,088 |
|||
Restricted cash |
|
66,863 |
|
|
|
54,477 |
|
|
Total cash, cash equivalents, and restricted cash |
|
1,211,870 |
|
|
|
1,833,565 |
|
|
House and land inventory |
|
9,869,889 |
|
|
|
9,047,569 |
|
|
Land held for sale |
|
23,362 |
|
|
|
29,276 |
|
|
Residential mortgage loans available-for-sale |
|
510,275 |
|
|
|
947,139 |
|
|
Investments in unconsolidated entities |
|
106,058 |
|
|
|
98,155 |
|
|
Other assets |
|
1,167,055 |
|
|
|
1,110,966 |
|
|
Intangible assets |
|
144,102 |
|
|
|
146,923 |
|
|
Deferred tax assets |
|
131,629 |
|
|
|
139,038 |
|
|
|
$ |
13,164,240 |
|
|
$ |
13,352,631 |
|
|
|
|
|
|
|||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|||||
|
|
|
|
|||||
Liabilities: |
|
|
|
|||||
Accounts payable |
$ |
628,820 |
|
|
$ |
621,168 |
|
|
Customer deposits |
|
998,936 |
|
|
|
844,785 |
|
|
Deferred tax liabilities |
|
171,525 |
|
|
|
165,519 |
|
|
Accrued and other liabilities |
|
1,525,448 |
|
|
|
1,576,478 |
|
|
Financial Services debt |
|
396,139 |
|
|
|
626,123 |
|
|
Notes payable |
|
2,030,108 |
|
|
|
2,029,043 |
|
|
|
|
5,750,976 |
|
|
|
5,863,116 |
|
|
Shareholders' equity |
|
7,413,264 |
|
|
|
7,489,515 |
|
|
|
$ |
13,164,240 |
|
|
$ |
13,352,631 |
|
Consolidated Statements of Cash Flows
( (Unaudited)
|
||||||||
|
Three Months Ended |
|||||||
|
|
|||||||
|
2022 |
|
2021 |
|||||
Cash flows from operating activities: |
|
|
|
|||||
Net income |
$ |
454,723 |
|
|
$ |
304,107 |
|
|
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
|||||
Deferred income tax expense |
|
13,407 |
|
|
|
11,391 |
|
|
Land-related charges |
|
3,510 |
|
|
|
1,368 |
|
|
Loss on debt retirement |
|
— |
|
|
|
61,469 |
|
|
Depreciation and amortization |
|
16,181 |
|
|
|
17,142 |
|
|
Share-based compensation expense |
|
16,615 |
|
|
|
11,630 |
|
|
Other, net |
|
(1,173 |
) |
|
|
(687 |
) |
|
Increase (decrease) in cash due to: |
|
|
|
|||||
Inventories |
|
(814,768 |
) |
|
|
(243,947 |
) |
|
Residential mortgage loans available-for-sale |
|
436,865 |
|
|
|
69,930 |
|
|
Other assets |
|
(35,344 |
) |
|
|
(54,303 |
) |
|
Accounts payable, accrued and other liabilities |
|
117,650 |
|
|
|
(1,352 |
) |
|
Net cash provided by operating activities |
|
207,666 |
|
|
|
176,748 |
|
|
Cash flows from investing activities: |
|
|
|
|||||
Capital expenditures |
|
(30,686 |
) |
|
|
(14,752 |
) |
|
Investments in unconsolidated entities |
|
(6,681 |
) |
|
|
(8,169 |
) |
|
Distributions of capital from unconsolidated entities |
|
— |
|
|
|
5,000 |
|
|
Business acquisition |
|
(10,400 |
) |
|
|
(10,400 |
) |
|
Other investing activities, net |
|
(199 |
) |
|
|
698 |
|
|
Net cash used in investing activities |
|
(47,966 |
) |
|
|
(27,623 |
) |
|
Cash flows from financing activities: |
|
|
|
|||||
Repayments of notes payable |
|
— |
|
|
|
(794,435 |
) |
|
Financial Services repayments, net |
|
(229,985 |
) |
|
|
(141,002 |
) |
|
Stock option exercises |
|
— |
|
|
|
11 |
|
|
Share repurchases |
|
(500,000 |
) |
|
|
(153,703 |
) |
|
Cash paid for shares withheld for taxes |
|
(13,614 |
) |
|
|
(10,566 |
) |
|
Dividends paid |
|
(37,796 |
) |
|
|
(37,611 |
) |
|
Net cash used in financing activities |
|
(781,395 |
) |
|
|
(1,137,306 |
) |
|
Net decrease in cash, cash equivalents, and restricted cash |
|
(621,695 |
) |
|
|
(988,181 |
) |
|
Cash, cash equivalents, and restricted cash at beginning of period |
|
1,833,565 |
|
|
|
2,632,235 |
|
|
Cash, cash equivalents, and restricted cash at end of period |
$ |
1,211,870 |
|
|
$ |
1,644,054 |
|
|
|
|
|
|
|||||
Supplemental Cash Flow Information: |
|
|
|
|||||
Interest paid (capitalized), net |
$ |
5,157 |
|
|
$ |
17,368 |
|
|
Income taxes paid (refunded), net |
$ |
1,915 |
|
|
$ |
15,574 |
|
Segment Data
( (Unaudited)
|
||||||||
|
Three Months Ended |
|||||||
|
|
|||||||
|
2022 |
|
2021 |
|||||
HOMEBUILDING: |
|
|
|
|||||
Home sale revenues |
$ |
3,070,313 |
|
|
$ |
2,596,510 |
|
|
Land sale and other revenues |
|
33,159 |
|
|
|
27,159 |
|
|
Total Homebuilding revenues |
|
3,103,472 |
|
|
|
2,623,669 |
|
|
|
|
|
|
|||||
Home sale cost of revenues |
|
(2,181,074 |
) |
|
|
(1,935,635 |
) |
|
Land sale and other cost of revenues |
|
(32,002 |
) |
|
|
(24,636 |
) |
|
Selling, general, and administrative expenses ("SG&A") |
|
(329,022 |
) |
|
|
(271,686 |
) |
|
Loss on debt retirement |
|
— |
|
|
|
(61,469 |
) |
|
Other expense, net |
|
(2,074 |
) |
|
|
(2,539 |
) |
|
Income before income taxes |
$ |
559,300 |
|
|
$ |
327,704 |
|
|
|
|
|
|
|||||
FINANCIAL SERVICES: |
|
|
|
|||||
Income before income taxes |
$ |
40,593 |
|
|
$ |
66,348 |
|
|
|
|
|
|
|||||
CONSOLIDATED: |
|
|
|
|||||
Income before income taxes |
$ |
599,893 |
|
|
$ |
394,052 |
|
Segment Data, continued
( (Unaudited)
|
||||||||
|
Three Months Ended |
|||||||
|
|
|||||||
|
2022 |
|
2021 |
|||||
|
|
|
|
|||||
Home sale revenues |
$ |
3,070,313 |
|
$ |
2,596,510 |
|||
|
|
|
|
|||||
Closings - units |
|
|
|
|||||
Northeast |
|
262 |
|
|
|
317 |
|
|
Southeast |
|
1,026 |
|
|
|
1,054 |
|
|
|
|
1,433 |
|
|
|
1,420 |
|
|
Midwest |
|
944 |
|
|
|
839 |
|
|
|
|
1,210 |
|
|
|
1,225 |
|
|
West |
|
1,164 |
|
|
|
1,189 |
|
|
|
|
6,039 |
|
|
|
6,044 |
|
|
Average selling price |
$ |
508 |
|
|
$ |
430 |
|
|
|
|
|
|
|||||
Net new orders - units |
|
|
|
|||||
Northeast |
|
425 |
|
|
|
608 |
|
|
Southeast |
|
1,331 |
|
|
|
1,561 |
|
|
|
|
1,873 |
|
|
|
2,404 |
|
|
Midwest |
|
1,163 |
|
|
|
1,561 |
|
|
|
|
1,514 |
|
|
|
1,892 |
|
|
West |
|
1,665 |
|
|
|
1,826 |
|
|
|
|
7,971 |
|
|
|
9,852 |
|
|
Net new orders - dollars |
$ |
4,731,272 |
|
|
$ |
4,630,317 |
|
|
|
|
|
|
|||||
Unit backlog |
|
|
|
|||||
Northeast |
|
951 |
|
|
|
1,244 |
|
|
Southeast |
|
2,781 |
|
|
|
2,847 |
|
|
|
|
5,870 |
|
|
|
4,638 |
|
|
Midwest |
|
2,907 |
|
|
|
2,921 |
|
|
|
|
3,403 |
|
|
|
3,720 |
|
|
West |
|
4,023 |
|
|
|
3,596 |
|
|
|
|
19,935 |
|
|
|
18,966 |
|
|
Dollars in backlog |
$ |
11,519,770 |
|
|
$ |
8,826,989 |
|
Segment Data, continued
( (Unaudited)
|
||||||||
|
Three Months Ended |
|||||||
|
|
|||||||
|
2022 |
|
2021 |
|||||
MORTGAGE ORIGINATIONS: |
|
|
|
|||||
Origination volume |
|
4,057 |
|
|
|
4,708 |
|
|
Origination principal |
$ |
1,539,897 |
|
|
$ |
1,564,668 |
|
|
Capture rate |
|
81.0 |
% |
|
|
88.3 |
% |
Supplemental Data
( (Unaudited)
|
||||||||
|
Three Months Ended |
|||||||
|
|
|||||||
|
2022 |
|
2021 |
|||||
|
|
|
|
|||||
Interest in inventory, beginning of period |
$ |
160,756 |
|
|
$ |
193,409 |
|
|
Interest capitalized |
|
31,583 |
|
|
|
34,627 |
|
|
Interest expensed |
|
(33,669 |
) |
|
|
(34,684 |
) |
|
Interest in inventory, end of period |
$ |
158,670 |
|
|
$ |
193,352 |
|
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"), operating margin, and debt-to-capital ratio. These measures are considered non-GAAP financial measures under the
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 (
Adjusted EPS |
||||||||||
|
|
|
Three Months Ended |
|||||||
|
Results of Operations |
|
|
|||||||
|
Classification |
|
2022 |
|
2021 |
|||||
|
|
|
|
|
|
|||||
Net income, as reported |
|
|
$ |
454,723 |
|
$ |
304,107 |
|
||
Loss on debt retirement |
Loss on debt retirement |
|
|
— |
|
|
|
61,469 |
|
|
Insurance benefit |
SG&A |
|
|
— |
|
|
|
(10,382 |
) |
|
Income tax effect of the above items |
Income tax expense |
|
|
— |
|
|
|
(12,435 |
) |
|
Adjusted net income |
|
|
$ |
454,723 |
|
|
$ |
342,759 |
|
|
|
|
|
|
|
|
|||||
EPS (diluted), as reported |
|
|
$ |
1.83 |
|
|
$ |
1.13 |
|
|
Adjusted EPS (diluted) |
|
|
$ |
1.83 |
|
|
$ |
1.28 |
|
Adjusted Operating Margin |
||||||||||||||
|
Three Months Ended |
|||||||||||||
|
|
|||||||||||||
|
2022 |
|
2021 |
|||||||||||
|
|
|
|
|
|
|||||||||
Home sale revenues |
$ |
3,070,313 |
|
|
$ |
2,596,510 |
|
|||||||
|
|
|
|
|
|
|||||||||
Gross margin (a) |
$ |
889,239 |
|
29.0 |
% |
|
$ |
660,875 |
|
25.5 |
% |
|||
|
|
|
|
|
|
|||||||||
SG&A, as reported |
$ |
329,022 |
|
10.7 |
% |
|
$ |
271,686 |
|
10.5 |
% |
|||
Insurance benefit |
|
— |
|
— |
% |
|
|
10,382 |
|
0.4 |
% |
|||
Adjusted SG&A |
$ |
329,022 |
|
10.7 |
% |
|
$ |
282,068 |
|
10.9 |
% |
|||
|
|
|
|
|
|
|||||||||
Operating margin, as reported (b) |
|
18.2 |
% |
|
|
15.0 |
% |
|||||||
Adjusted operating margin (c) |
|
18.2 |
% |
|
|
14.6 |
% |
|||||||
|
|
|
|
|
|
|||||||||
(a) Gross margin represents home sale revenues minus home sale cost of revenues |
||||||||||||||
(b) Operating margin represents gross margin less SG&A |
||||||||||||||
(c) Adjusted operating margin represents gross margin less adjusted SG&A |
Debt-to-Capital Ratios |
||||||||
|
|
|
|
|
||||
|
|
|
|
|
||||
Notes payable |
|
$ |
2,030,108 |
|
|
$ |
2,029,043 |
|
Shareholders' equity |
|
|
7,413,264 |
|
|
|
7,489,515 |
|
Total capital |
|
$ |
9,443,372 |
|
|
$ |
9,518,558 |
|
Debt-to-capital ratio |
|
|
21.5 |
% |
|
|
21.3 |
% |
|
|
|
|
|
||||
Notes payable |
|
$ |
2,030,108 |
|
|
$ |
2,029,043 |
|
Less: Total cash, cash equivalents, and restricted cash |
|
|
(1,211,870 |
) |
|
|
(1,833,565 |
) |
Total net debt |
|
$ |
818,238 |
|
|
$ |
195,478 |
|
Shareholders' equity |
|
|
7,413,264 |
|
|
|
7,489,515 |
|
Total net capital |
|
$ |
8,231,502 |
|
|
$ |
7,684,993 |
|
Net debt-to-capital ratio |
|
|
9.9 |
% |
|
|
2.5 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220428005072/en/
Investors:
(404) 978-6434
Email: jim.zeumer@pultegroup.com
Source:
FAQ
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