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OFFON

PULTEGROUP, INC.

(PHM)
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PULTEGROUP : REPORTS SECOND QUARTER 2021 FINANCIAL RESULTS (Form 8-K)

07/27/2021 | 08:00am EDT
PULTEGROUP REPORTS SECOND QUARTER 2021 FINANCIAL RESULTS

•Reported Net Income of $1.90 Per Share
•Adjusted Net Income of $1.72 Per Share
•Net New Orders Increased 28% to 8,322 Homes; Net New Order Value Increased 59% to $4.3 Billion
•Closings Increased 22% to 7,232 Homes
•Home Sale Revenues Increased 31% to $3.2 Billion
•Homebuilding Gross Margin Increased 270 Basis Points to 26.6%
•Backlog Increased 52% to 20,056 Homes; Backlog Value Increased 70% to $9.8 Billion
•Company Repurchased $200 Million of Stock in the Period
•Debt-to-Capital Ratio Decreased to 22.7%; Net Debt-to-Capital Ratio of 4.5%

ATLANTA - July 27, 2021 - PulteGroup, Inc. (NYSE: PHM) announced today financial results for its second quarter ended June 30, 2021. For the quarter, the Company reported net income of $503 million, or $1.90 per share. Adjusted net income for the quarter was $456 million, or $1.72 per share, after excluding a $46 million pre-tax insurance benefit and a tax benefit of $12 million resulting from a change in valuation allowances associated with state net operating loss carryforwards. Prior year reported net income was $349 million, or $1.29 per share. Adjusted net income for the prior year period was $311 million, or $1.15 per share, after excluding a $61 million pre-tax insurance benefit and $10 million of pre-tax charges associated with actions taken in response to the COVID-19 pandemic.

'PulteGroup reported outstanding second quarter financial results, driven by strong top line growth in combination with a 270-basis point increase in our gross margin,' said Ryan Marshall, President and Chief Executive Officer of PulteGroup. 'With a backlog exceeding 20,000 homes valued at $9.8 billion, I believe the Company is well positioned to realize further gains in the coming quarters as we work to grow our operations and continue to deliver high returns on equity, which totaled 25.7%* for the trailing 12 months.'

'We are experiencing very favorable market dynamics, led by strong housing demand and a generally limited inventory of new and existing homes,' added Marshall. 'With the economy continuing to recover, a very positive job market, low interest rates and high levels of consumer confidence, we remain optimistic about demand conditions and the overall strength of the housing market going forward.'

Home sale revenues for the second quarter increased 31% over the second quarter of last year to $3.2 billion. The increase in revenues for the quarter was driven by a 22% increase in closings to 7,232 homes, along with a 7% increase in average sales price to $447,000. The increase in average sales price for the second quarter reflects the benefit of price increases the Company has realized across all buyer groups.

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Homebuilding gross margin for the second quarter was 26.6%, which represents an increase of 270 basis points over the comparable prior year period and an increase of 110 basis points from the first quarter of 2021. The Company's reported SG&A expense for the quarter of $272 million, or 8.4% of home sale revenues, included the $46 million pre-tax insurance benefit recorded in the period. Excluding this benefit, the Company's adjusted SG&A expense for the quarter was $319 million, or 9.8% of home sale revenues. The Company's reported SG&A expense for the second quarter of 2020 was $197 million, or 8.0% of home sale revenues, with an adjusted SG&A expense of $247 million, or 10.0% of home sale revenues.

Second quarter net new orders increased 28% over the prior year to 8,322 homes. The dollar value of net new orders was $4.3 billion, which is an increase of 59% over the comparable prior year period. For the second quarter, the Company operated out of an average of 808 communities.

The Company's unit backlog at the end of the second quarter was 20,056 homes, which represents an increase of 52%, or 6,842 homes, over the prior year backlog of 13,214 homes. The dollar value of homes in backlog was $9.8 billion, which represents an increase of 70% over last year.

Pre-tax income for the Company's financial services operations was $51 million, down from $60 million last year, as higher loan volumes were offset by a more competitive pricing environment. Mortgage capture rate for the second quarter was 86% compared with 87% last year.

Inclusive of the $12 million tax benefit realized in the period, the Company's reported income tax expense was $136 million, representing an effective tax rate of 21.3%.

The Company ended the second quarter with $1.7 billion of cash after using available funds to repurchase 3.6 million of its common shares for $200 million, or an average price of $55.84 per share. At quarter end, the Company had a net debt-to-capital ratio of 4.5%.

A conference call discussing PulteGroup's second quarter 2021 results is scheduled for Tuesday, July 27, 2021, 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,' '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
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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.

# # #

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PulteGroup, Inc.
Consolidated Statements of Operations
($000's omitted, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Revenues:
Homebuilding
Home sale revenues $ 3,235,379 $ 2,472,029 $ 5,831,889 $ 4,693,532
Land sale and other revenues 33,076 26,950 60,235 45,877
3,268,455 2,498,979 5,892,124 4,739,409
Financial Services 91,029 94,802 197,150 149,352
Total revenues 3,359,484 2,593,781 6,089,274 4,888,761
Homebuilding Cost of Revenues:
Home sale cost of revenues (2,375,495) (1,880,209) (4,311,130) (3,575,074)
Land sale and other cost of revenues (31,195) (20,041) (55,831) (35,055)
(2,406,690) (1,900,250) (4,366,961) (3,610,129)
Financial Services expenses (40,411) (34,378) (80,086) (69,327)
Selling, general, and administrative expenses (272,286) (196,858) (543,973) (460,527)
Loss on debt retirement - - (61,469) -
Goodwill impairment - - - (20,190)
Other expense, net (624) (5,286) (3,259) (7,810)
Income before income taxes 639,473 457,009 1,033,526 720,778
Income tax expense (136,074) (108,389) (226,020) (168,447)
Net income $ 503,399 $ 348,620 $ 807,506 $ 552,331
Per share:
Basic earnings $ 1.91 $ 1.29 $ 3.04 $ 2.03
Diluted earnings $ 1.90 $ 1.29 $ 3.03 $ 2.03
Cash dividends declared $ 0.14 $ 0.12 $ 0.28 $ 0.24
Number of shares used in calculation:
Basic 262,099 268,324 263,744 269,167
Effect of dilutive securities 648 701 627 960
Diluted 262,747 269,025 264,371 270,127

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PulteGroup, Inc.
Condensed Consolidated Balance Sheets
($000's omitted)
(Unaudited)
June 30,
2021
December 31,
2020
ASSETS
Cash and equivalents $ 1,663,270 $ 2,582,205
Restricted cash 57,852 50,030
Total cash, cash equivalents, and restricted cash 1,721,122 2,632,235
House and land inventory 8,378,951 7,721,798
Land held for sale 38,574 27,962
Residential mortgage loans available-for-sale 581,150 564,979
Investments in unconsolidated entities 44,800 35,562
Other assets 1,020,518 923,270
Intangible assets 153,464 163,425
Deferred tax assets 143,441 136,267
$ 12,082,020 $ 12,205,498
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable $ 441,826 $ 511,321
Customer deposits 730,995 449,474
Deferred tax liabilities 115,519 103,548
Accrued and other liabilities 1,436,251 1,407,043
Financial Services debt 352,627 411,821
Notes payable 2,046,334 2,752,302
5,123,552 5,635,509
Shareholders' equity 6,958,468 6,569,989
$ 12,082,020 $ 12,205,498

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PulteGroup, Inc.
Consolidated Statements of Cash Flows
($000's omitted)
(Unaudited)
Six Months Ended
June 30,
2021 2020
Cash flows from operating activities:
Net income $ 807,506 $ 552,331
Adjustments to reconcile net income to net cash from operating activities:
Deferred income tax expense 4,781 49,661
Land-related charges 3,254 12,181
Loss on debt retirement 61,469 -
Goodwill impairment - 20,190
Depreciation and amortization 35,407 31,538
Share-based compensation expense 21,603 16,682
Other, net (2,922) (975)
Increase (decrease) in cash due to:
Inventories (632,647) 101,766
Residential mortgage loans available-for-sale (16,384) 114,139
Other assets (85,049) (3,772)
Accounts payable, accrued and other liabilities 235,050 (85,869)
Net cash provided by (used in) operating activities 432,068 807,872
Cash flows from investing activities:
Capital expenditures (31,547) (36,746)
Investments in unconsolidated entities (15,920) (664)
Distributions of capital from unconsolidated entities 10,500 13,619
Business acquisition (10,400) (83,256)
Other investing activities, net (17) 1,597
Net cash provided by (used in) investing activities (47,384) (105,450)
Cash flows from financing activities:
Repayments of notes payable (797,395) (10,106)
Borrowings under revolving credit facility - 700,000
Repayments under revolving credit facility - (700,000)
Financial Services borrowings (repayments), net (59,193) (70,214)
Stock option exercises 11 99
Share repurchases (353,703) (95,676)
Cash paid for shares withheld for taxes (10,607) (14,853)
Dividends paid (74,910) (65,332)
Net cash provided by (used in) financing activities (1,295,797) (256,082)
Net increase (decrease) in cash, cash equivalents, and restricted cash (911,113) 446,340
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 $ 1,721,122 $ 1,697,796
Supplemental Cash Flow Information:
Interest paid (capitalized), net $ 11,606 $ 3,206
Income taxes paid (refunded), net $ 154,658 $ 5,865

6


PulteGroup, Inc.
Segment Data
($000's omitted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
HOMEBUILDING:
Home sale revenues $ 3,235,379 $ 2,472,029 $ 5,831,889 $ 4,693,532
Land sale and other revenues 33,076 26,950 60,235 45,877
Total Homebuilding revenues 3,268,455 2,498,979 5,892,124 4,739,409
Home sale cost of revenues (2,375,495) (1,880,209) (4,311,130) (3,575,074)
Land sale and other cost of revenues (31,195) (20,041) (55,831) (35,055)
Selling, general, and administrative expenses ('SG&A') (272,286) (196,858) (543,973) (460,527)
Loss on debt retirement - - (61,469) -
Goodwill impairment - - - (20,190)
Other expense, net (1,460) (5,286) (3,998) (7,759)
Income before income taxes $ 588,019 $ 396,585 $ 915,723 $ 640,804
FINANCIAL SERVICES:
Income before income taxes $ 51,454 $ 60,424 $ 117,803 $ 79,974
CONSOLIDATED:
Income before income taxes $ 639,473 $ 457,009 $ 1,033,526 $ 720,778
OPERATING METRICS:
Gross margin % (a)(b)
26.6 % 23.9 % 26.1 % 23.8 %
SG&A % (a)
(8.4) % (8.0) % (9.3) % (9.8) %
Operating margin % (a)
18.2 % 16.0 % 16.7 % 14.0 %

(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 Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Home sale revenues $ 3,235,379 $ 2,472,029 $ 5,831,889 $ 4,693,532
Closings - units
Northeast 497 260 814 570
Southeast 1,175 1,104 2,229 2,032
Florida 1,692 1,380 3,112 2,590
Midwest 1,042 808 1,881 1,516
Texas 1,519 1,194 2,744 2,322
West 1,307 1,191 2,496 2,280
7,232 5,937 13,276 11,310
Average selling price $ 447 $ 416 $ 439 $ 415
Net new orders - units
Northeast 475 383 1,083 831
Southeast 1,364 1,095 2,925 2,236
Florida 2,203 1,488 4,607 3,173
Midwest 1,300 896 2,861 1,915
Texas 1,459 1,431 3,351 2,940
West 1,521 1,229 3,347 2,922
8,322 6,522 18,174 14,017
Net new orders - dollars $ 4,258,133 $ 2,677,074 $ 8,888,450 $ 5,945,823
Unit backlog
Northeast 1,222 850
Southeast 3,036 2,069
Florida 5,149 2,889
Midwest 3,179 1,939
Texas 3,660 2,468
West 3,810 2,999
20,056 13,214
Dollars in backlog $ 9,849,743 $ 5,788,096

8

PulteGroup, Inc.
Segment Data, continued
($000's omitted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
MORTGAGE ORIGINATIONS:
Origination volume 5,296 4,474 10,004 8,344
Origination principal $ 1,811,523 $ 1,436,103 $ 3,376,191 $ 2,649,370
Capture rate 85.8 % 86.8 % 86.9 % 86.8 %

Supplemental Data
($000's omitted)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Interest in inventory, beginning of period $ 193,352 $ 213,425 $ 193,409 $ 210,383
Interest capitalized 31,476 39,686 66,103 79,599
Interest expensed (39,395) (45,169) (74,079) (82,040)
Interest in inventory, end of period $ 185,433 $ 207,942 $ 185,433 $ 207,942

9

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'), operating margin, 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 June 30,
2021 2020
Net income, as reported $ 503,399 $ 348,620
Adjustments to income before income taxes:
Insurance adjustments SG&A (46,215) (60,662)
Severance expense SG&A * 10,328
Income tax effect of the above items Income tax expense 11,323 12,347
Tax benefit Income tax expense (12,078) *
Adjusted net income $ 456,429 $ 310,633
EPS (diluted), as reported $ 1.90 $ 1.29
Adjusted EPS (diluted) $ 1.72 $ 1.15

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Adjusted Operating Margin
Three Months Ended
June 30,
2021 2020
Home sale revenues $ 3,235,379 $ 2,472,029
Gross margin (a) $ 859,884 26.6 % $ 591,820 23.9 %
SG&A, as reported $ 272,286 8.4 % $ 196,858 8.0 %
Adjustments:
Insurance adjustments 46,215 1.4 % 60,662 2.5 %
Severance expense * * (10,328) (0.4) %
Adjusted SG&A $ 318,501 9.8 % $ 247,192 10.0 %
Operating margin, as reported (b) 18.2 % 16.0 %
Adjusted operating margin (c) 16.7 % 13.9 %
*Item not meaningful for the period presented
(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
June 30,
2021
December 31,
2020
Notes payable $ 2,046,334 $ 2,752,302
Shareholders' equity 6,958,468 6,569,989
Total capital $ 9,004,802 $ 9,322,291
Debt-to-capital ratio 22.7 % 29.5 %
Notes payable $ 2,046,334 $ 2,752,302
Less: Total cash, cash equivalents, and
restricted cash
(1,721,122) (2,632,235)
Total net debt $ 325,212 $ 120,067
Shareholders' equity 6,958,468 6,569,989
Total net capital $ 7,283,680 $ 6,690,056
Net debt-to-capital ratio 4.5 % 1.8 %

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Disclaimer

PulteGroup Inc. published this content on 27 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 July 2021 11:59:02 UTC.


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Financials (USD)
Sales 2021 14 031 M - -
Net income 2021 1 934 M - -
Net cash 2021 103 M - -
P/E ratio 2021 6,39x
Yield 2021 1,19%
Capitalization 12 224 M 12 224 M -
EV / Sales 2021 0,86x
EV / Sales 2022 0,66x
Nbr of Employees 5 249
Free-Float 96,3%
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Number of Analysts 15
Last Close Price 47,10 $
Average target price 69,27 $
Spread / Average Target 47,1%
EPS Revisions
Managers and Directors
Ryan R. Marshall President, Chief Executive Officer & Director
Robert T. O'Shaughnessy Chief Financial Officer & Executive Vice President
Bryce F. Blair Non-Executive Chairman
Joseph L. Droulin Chief Information Officer & Vice President
John James Chadwick Chief Operating Officer & Executive Vice President
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