PulteGroup Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

PulteGroup (NYSE: PHM) reported strong Q2 2024 financial results, with earnings increasing 19% to $3.83 per share. Home sale revenues rose 10% to $4.4 billion, driven by an 8% increase in closings to 8,097 homes and a 2% increase in average sales price to $549,000. The company's gross margin improved by 30 basis points to 29.9%. Net new orders totaled 7,649 homes with a value of $4.4 billion. PulteGroup's backlog stood at 12,982 homes valued at $8.1 billion. The company repurchased $314 million of common shares and $300 million of senior notes in the quarter, demonstrating strong cash flow management.

Positive

• Earnings per share increased 19% to $3.83
• Home sale revenues grew 10% to $4.4 billion
• Closings increased 8% to 8,097 homes
• Average sales price rose 2% to $549,000
• Gross margin improved by 30 basis points to 29.9%
• Financial services pre-tax income increased 36% to $63 million
• Mortgage capture rate improved from 80% to 86%
• Return on equity reached 27.1% for the past 12 months

Negative

• Net new orders decreased from 7,947 to 7,649 homes compared to the prior year period
• SG&A expense as a percentage of home sale revenues increased from 7.8% to 8.1%

Insights

Financial Analyst

With PulteGroup reporting a 19% increase in earnings to $3.83 per share, it's clear there's robust financial health. Home sale revenues jumped 10% to $4.4 billion, which indicates strong demand and effective pricing strategies. The rise in closings by 8% and a 2% increase in average sales price to $549,000 reflect resilience in the housing market, despite potential economic uncertainties. The gross margin improvement to 29.9% is a positive sign, although modest, it hints at operational efficiencies or cost management strategies. With $1.4 billion in cash and a low debt-to-capital ratio of 12.8%, the company is in a strong liquidity position, giving it ample flexibility for future investments or shareholder returns. Share repurchases and debt reductions further strengthen the financial outlook. Retail investors should note the company's proactive capital management and strong operational performance, which are key indicators of sustained profitability.

Market Research Analyst

PulteGroup's performance highlights some key market trends. The 2% increase in average sales price to $549,000 is notable. It suggests that despite fluctuations in interest rates, there’s still solid demand for homes, likely driven by the structural shortage mentioned by the CEO. The unit backlog of 12,982 homes valued at $8.1 billion shows strong future sales potential, indicating continued consumer demand. Also, an increase in the number of communities by 3% over the same period last year illustrates expansion efforts, which can drive future revenue growth. Investors should be optimistic about the long-term market dynamics, as the underlying shortage of homes can sustain demand. However, they should also watch for potential interest rate hikes that could impact short-term buying decisions.

Tech Analyst

From a technological perspective, PulteGroup’s ability to maintain and slightly improve its gross margin to 29.9% might be indicative of successful integration of technology in their operations. Technology in homebuilding can mean anything from smarter construction methods, better project management tools, to efficient customer relationship management systems. These improvements can drive down costs and improve margins. Additionally, the 36% increase in pre-tax income from their financial services operations, which includes mortgage and insurance, suggests that PulteGroup is leveraging technology effectively in these domains. This aspect might not be immediately visible in the headline numbers but is important for sustained long-term efficiency and profitability. Therefore, tech-savvy investors might find this an appealing facet of PulteGroup's operations.

• Earnings Increased 19% to $3.83 Per Share
• Home Sale Revenues Increased 10% to $4.4 Billion
• Closings Increased 8% to 8,097 Homes; Average Sales Price Increased 2% to $549,000
• Home Sale Gross Margin Increased 30 Basis Points to 29.9%
• Net New Orders Totaled 7,649 Homes with a Value of $4.4 Billion
• Unit Backlog of 12,982 Homes with a Value of $8.1 Billion
• Repurchased $314 Million of Common Shares and $300 Million of Senior Notes in the Quarter

ATLANTA--(BUSINESS WIRE)-- PulteGroup, Inc. (NYSE: PHM) announced today financial results for its second quarter ended June 30, 2024. For the quarter, the Company reported net income of $809 million, or $3.83 per share. Reported net income for the quarter includes a $52 million pre-tax, or $0.19 per share, insurance benefit recorded in the period, and a $13 million, or $0.06 per share, benefit related to the favorable resolution of certain state tax matters. Prior year reported net income of $720 million, or $3.21 per share, included a $65 million pre-tax, or $0.21 per share, insurance benefit recorded in the period.

“PulteGroup’s balanced operating model continues to deliver outstanding financial results as increases in closings, average sales price and gross margin were key drivers of the 19% increase in our earnings to $3.83 per share,” said Ryan Marshall, President and Chief Executive Officer of PulteGroup. “The resulting strong cash flows are providing us with tremendous flexibility as we continued to intelligently allocate capital in the quarter to invest in our business growth, while returning funds to shareholders and further strengthening our overall capital structure.

“While interest rate movements can impact short-term homebuying demand, long-term market dynamics continue to benefit from a structural shortage of homes caused by years of underbuilding,” added Mr. Marshall. “As demonstrated by our 27.1% return on equity* for the past 12 months, we continue to successfully navigate these conditions by actively managing sales price, pace and starts on a community-by-community basis with the goal of realizing high returns on invested capital and equity over time.”

Home sale revenues for the second quarter increased 10% over the prior year to $4.4 billion. Higher revenues in the quarter were driven by an 8% increase in closings to 8,097 homes, combined with a 2% increase in average sales price to $549,000.

The Company reported second quarter homebuilding gross margins of 29.9%, which is an increase of 30 basis points over both last year and the first quarter of 2024. The Company’s reported second quarter SG&A expense of $361 million, or 8.1% of home sale revenues, includes the $52 million pre-tax insurance benefit recorded in the quarter. Prior year reported SG&A expense of $315 million, or 7.8% of home sale revenues, includes a $65 million pre-tax insurance benefit recorded in the second quarter of 2023.

In the second quarter, the Company reported net new orders of 7,649, compared with 7,947 homes in the comparable prior year period. The dollar value of net new orders in the second quarter increased 2% over the prior year to $4.4 billion. The Company operated out of an average of 934 communities in the period, which is an increase of 3% over the second quarter of 2023.

At the end of the second quarter, the Company’s backlog was 12,982 homes with a value of $8.1 billion.

The Company's financial services operations reported second quarter pre-tax income of $63 million, compared with prior year pre-tax income of $46 million. The 36% increase in pre-tax income was driven by gains across all business lines within financial services: mortgage, title and insurance. Mortgage capture rate for the second quarter was 86%, up from 80% last year.

The Company’s reported income tax expense for the second quarter was $239 million, representing an effective tax rate of 22.8%. The Company’s effective tax rate is inclusive of the $13 million benefit related to the favorable resolution of certain state tax matters realized in the quarter.

In the second quarter, the Company repurchased 2.8 million of its outstanding common shares for $314 million, or an average price of $113.79 per share. The Company also completed a tender offer in the period for $300 million of its outstanding senior notes, lowering its quarter-end outstanding notes payable to $1.7 billion. Inclusive of these transactions, the Company ended the second quarter with $1.4 billion of cash and a debt-to-capital ratio of 12.8%.

A conference call discussing PulteGroup's second quarter 2024 results is scheduled for Tuesday, July 23, 2024, at 8:30 a.m. Eastern Time. Interested investors can access the live webcast via PulteGroup's corporate website at www.pultegroup.com.

* 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; the impact of any changes to our strategy in responding to the cyclical nature of the industry or deteriorations in industry changes or downward changes in general economic or other business conditions, including any changes regarding our land positions and the levels of our land spend; 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; labor supply shortages and the cost of labor; the availability and cost of land and other raw materials used by us in our homebuilding operations; a decline in the value of the land and home inventories we maintain and resulting possible future writedowns of the carrying value of our real estate assets; competition within the industries in which we operate; governmental regulation directed at or affecting the housing market, the homebuilding industry or construction activities, slow growth initiatives and/or local building moratoria; the availability and cost of insurance covering risks associated with our businesses, including warranty and other legal or regulatory proceedings or claims; damage from improper acts of persons over whom we do not have control or attempts to impose liabilities or obligations of third parties on us; weather related slowdowns; the impact of climate change and related governmental regulation; adverse capital and credit market conditions, which may affect our access to and cost of capital; the insufficiency of our income tax provisions and tax reserves, including as a result of changing laws or interpretations; the potential that we do not realize our deferred tax assets; our inability to sell mortgages into the secondary market; uncertainty in the mortgage lending industry, including revisions to underwriting standards and repurchase requirements associated with the sale of mortgage loans, and related claims against us; risks related to information technology failures, data security issues, and the effect of cybersecurity incidents and threats; the impact of negative publicity on sales; failure to retain key personnel; the impairment of our intangible assets; the disruptions associated with the COVID-19 pandemic (or another epidemic or pandemic or similar public threat or fear of such an event), and the measures taken to address it; and other factors of national, regional and global scale, including those of a political, economic, business and competitive nature. See Item 1A – Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for a further discussion of these and other risks and uncertainties applicable to our businesses. We undertake no duty to update any forward-looking statement, whether as a result of new information, future events or changes in our expectations.

About PulteGroup

PulteGroup, Inc. (NYSE: PHM), based in Atlanta, Georgia, is one of America’s largest homebuilding companies with operations in more than 45 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 brands, go to pultegroup.com; pulte.com; centex.com; delwebb.com; divosta.com; jwhomes.com; and americanwesthomes.com. Follow PulteGroup, Inc. on X: @PulteGroupNews.

PulteGroup, Inc.
Consolidated Statements of Operations
($000's omitted, except per share data)
(Unaudited)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Revenues:
Homebuilding
Home sale revenues		$	4,448,168			$	4,058,930			$	8,267,754			$	7,546,567
Land sale and other revenues			39,825				37,604				77,042				67,671
			4,487,993				4,096,534				8,344,796				7,614,238
Financial Services			111,662				92,219				204,019				150,156
Total revenues			4,599,655				4,188,753				8,548,815				7,764,394
Homebuilding Cost of Revenues:
Home sale cost of revenues			(3,117,482	)			(2,856,361	)			(5,806,569	)			(5,328,690	)
Land sale and other cost of revenues			(38,873	)			(32,494	)			(75,917	)			(57,461	)
			(3,156,355	)			(2,888,855	)			(5,882,486	)			(5,386,151	)
Financial Services expenses			(49,334	)			(46,778	)			(100,712	)			(90,813	)
Selling, general, and administrative expenses			(361,145	)			(314,637	)			(718,739	)			(651,156	)
Equity income from unconsolidated entities, net			2,167				944				40,069				3,456
Other income, net			13,324				13,586				30,008				15,405
Income before income taxes			1,048,312				953,013				1,916,955				1,655,135
Income tax expense			(239,179	)			(232,668	)			(444,846	)			(402,531	)
Net income		$	809,133			$	720,345			$	1,472,109			$	1,252,604
Per share:
Basic earnings		$	3.86			$	3.23			$	6.99			$	5.58
Diluted earnings		$	3.83			$	3.21			$	6.93			$	5.55
Cash dividends declared		$	0.20			$	0.16			$	0.40			$	0.32
Number of shares used in calculation:
Basic			209,547				222,160				210,692				223,635
Effect of dilutive securities			1,654				1,232				1,682				1,031
Diluted			211,201				223,392				212,374				224,666

PulteGroup, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
(Unaudited)
		June 30, 2024			December 31, 2023
ASSETS
Cash and equivalents		$	1,392,902		$	1,806,583
Restricted cash			53,064			42,594
Total cash, cash equivalents, and restricted cash			1,445,966			1,849,177
House and land inventory			12,302,301			11,795,370
Land held for sale			21,559			23,831
Residential mortgage loans available-for-sale			569,387			516,064
Investments in unconsolidated entities			210,246			166,913
Other assets			1,820,092			1,545,667
Goodwill			68,930			68,930
Other intangible assets			51,300			56,338
Deferred tax assets			54,288			64,760
		$	16,544,069		$	16,087,050
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable		$	651,580		$	619,012
Customer deposits			654,427			675,091
Deferred tax liabilities			381,021			302,155
Accrued and other liabilities			1,459,998			1,645,690
Financial Services debt			524,042			499,627
Notes payable			1,650,178			1,962,218
			5,321,246			5,703,793
Shareholders' equity			11,222,823			10,383,257
		$	16,544,069		$	16,087,050

PulteGroup, Inc.
Consolidated Statements of Cash Flows
($000's omitted)
(Unaudited)
		Six Months Ended
		June 30,
		2024				2023
Cash flows from operating activities:
Net income		$	1,472,109			$	1,252,604
Adjustments to reconcile net income to net cash from operating activities:
Deferred income tax expense			89,321				93,389
Land-related charges			7,798				10,110
Depreciation and amortization			42,891				39,204
Equity income from unconsolidated entities			(40,069	)			(3,456	)
Distributions of income from unconsolidated entities			2,358				4,564
Share-based compensation expense			29,084				27,960
Other, net			120				(161	)
Increase (decrease) in cash due to:
Inventories			(473,665	)			52,001
Residential mortgage loans available-for-sale			(55,346	)			244,516
Other assets			(294,335	)			(6,602	)
Accounts payable, accrued and other liabilities			(123,002	)			(263,546	)
Net cash provided by operating activities			657,264				1,450,583
Cash flows from investing activities:
Capital expenditures			(55,317	)			(45,076	)
Investments in unconsolidated entities			(9,096	)			(7,858	)
Distributions of capital from unconsolidated entities			3,474				2,216
Other investing activities, net			(5,262	)			(3,278	)
Net cash used in investing activities			(66,201	)			(53,996	)
Cash flows from financing activities:
Repayments of notes payable			(318,288	)			(17,305	)
Financial Services borrowings (repayments), net			24,416				(271,128	)
Proceeds from liabilities related to consolidated inventory not owned			32,721				91,354
Payments related to consolidated inventory not owned			(70,608	)			(33,577	)
Share repurchases			(559,999	)			(400,000	)
Cash paid for shares withheld for taxes			(17,623	)			(10,389	)
Dividends paid			(84,893	)			(72,315	)
Net cash used in financing activities			(994,274	)			(713,360	)
Net increase (decrease) in cash, cash equivalents, and restricted cash			(403,211	)			683,227
Cash, cash equivalents, and restricted cash at beginning of period			1,849,177				1,094,553
Cash, cash equivalents, and restricted cash at end of period		$	1,445,966			$	1,777,780
Supplemental Cash Flow Information:
Interest paid (capitalized), net		$	13,215			$	2,757
Income taxes paid (refunded), net		$	365,061			$	380,527

PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
HOMEBUILDING:
Home sale revenues		$	4,448,168			$	4,058,930			$	8,267,754			$	7,546,567
Land sale and other revenues			39,825				37,604				77,042				67,671
Total Homebuilding revenues			4,487,993				4,096,534				8,344,796				7,614,238
Home sale cost of revenues			(3,117,482	)			(2,856,361	)			(5,806,569	)			(5,328,690	)
Land sale and other cost of revenues			(38,873	)			(32,494	)			(75,917	)			(57,461	)
Selling, general, and administrative expenses			(361,145	)			(314,637	)			(718,739	)			(651,156	)
Equity income (loss) from unconsolidated entities, net			1,117				(110	)			39,019				2,402
Other income, net			13,324				13,586				30,008				15,405
Income before income taxes		$	984,934			$	906,518			$	1,812,598			$	1,594,738
FINANCIAL SERVICES:
Income before income taxes		$	63,378			$	46,495			$	104,357			$	60,397
CONSOLIDATED:
Income before income taxes		$	1,048,312			$	953,013			$	1,916,955			$	1,655,135

PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2024			2023			2024			2023
Home sale revenues		$	4,448,168		$	4,058,930		$	8,267,754		$	7,546,567
Closings - units
Northeast			378			315			663			652
Southeast			1,499			1,405			2,944			2,573
Florida			2,150			2,067			4,067			3,819
Midwest			1,196			918			2,186			1,675
Texas			1,472			1,511			2,800			2,819
West			1,402			1,302			2,532			2,374
			8,097			7,518			15,192			13,912
Average selling price		$	549		$	540		$	544		$	542
Net new orders - units
Northeast			400			400			841			785
Southeast			1,396			1,556			2,790			2,903
Florida			1,746			1,910			3,718			3,788
Midwest			1,265			1,253			2,539			2,336
Texas			1,275			1,388			2,729			2,812
West			1,567			1,440			3,411			2,677
			7,649			7,947			16,028			15,301
Net new orders - dollars		$	4,358,508		$	4,271,008		$	9,057,167		$	8,061,001
Unit backlog
Northeast									745			607
Southeast									2,092			2,236
Florida									3,443			4,610
Midwest									2,045			2,011
Texas									1,566			1,782
West									3,091			2,312
									12,982			13,558
Dollars in backlog								$	8,109,128		$	8,188,502

PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
MORTGAGE ORIGINATIONS:
Origination volume			5,105				4,539				9,437				8,408
Origination principal		$	2,140,103			$	1,790,977			$	3,895,150			$	3,307,427
Capture rate			86.5	%			79.7	%			85.4	%			79.1	%

Supplemental Data
($000's omitted)
(Unaudited)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Interest in inventory, beginning of period		$	148,101			$	141,271			$	139,078			$	137,262
Interest capitalized			29,284				31,927				59,903				63,729
Interest expensed			(28,023	)			(31,204	)			(49,619	)			(58,997	)
Interest in inventory, end of period		$	149,362			$	141,994			$	149,362			$	141,994

PulteGroup, Inc.
Reconciliation of Non-GAAP Financial Measures

This report contains information about our debt-to-capital ratios. These measures could be considered non-GAAP financial measures under the SEC's rules and should be considered in addition to, rather than as a substitute for, comparable GAAP financial measures. We calculate total net debt by subtracting total cash, cash equivalents, and restricted cash from notes payable to present the amount of assets needed to satisfy the debt. We use the debt-to-capital and net debt-to-capital ratios as indicators of our overall leverage and believe they are useful financial measures in understanding the leverage employed in our operations. We believe that these measures provide 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 table sets forth a reconciliation of the debt-to-capital ratios ($000's omitted):

Debt-to-Capital Ratios
		June 30, 2024				December 31, 2023
Notes payable		$	1,650,178			$	1,962,218
Shareholders' equity			11,222,823				10,383,257
Total capital		$	12,873,001			$	12,345,475
Debt-to-capital ratio			12.8	%			15.9	%
Notes payable		$	1,650,178			$	1,962,218
Less: Total cash, cash equivalents, and restricted cash			(1,445,966	)			(1,849,177	)
Total net debt		$	204,212			$	113,041
Shareholders' equity			11,222,823				10,383,257
Total net capital		$	11,427,035			$	10,496,298
Net debt-to-capital ratio			1.8	%			1.1	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240723461528/en/

Investors: Jim Zeumer

(404) 978-6434

jim.zeumer@pultegroup.com

Source: PulteGroup, Inc.

FAQ

What was PulteGroup's (PHM) earnings per share in Q2 2024?

PulteGroup reported earnings of $3.83 per share in Q2 2024, a 19% increase from the previous year.

How much did PulteGroup's (PHM) home sale revenues increase in Q2 2024?

PulteGroup's home sale revenues increased by 10% to $4.4 billion in Q2 2024 compared to the same period last year.

What was PulteGroup's (PHM) gross margin in Q2 2024?

PulteGroup's gross margin in Q2 2024 was 29.9%, an increase of 30 basis points over both the previous year and Q1 2024.

How many homes did PulteGroup (PHM) close in Q2 2024?

PulteGroup closed 8,097 homes in Q2 2024, representing an 8% increase from the same quarter in the previous year.

What was the value of PulteGroup's (PHM) backlog at the end of Q2 2024?

PulteGroup's backlog at the end of Q2 2024 was valued at $8.1 billion, consisting of 12,982 homes.