2014

PulteGroup, Inc. Reports First Quarter 2012 Financial Results

BLOOMFIELD HILLS, Mich., April 26, 2012 /PRNewswire/ -- 

  • Net Loss of $0.03 Per Share Compared with Prior Year Net Loss of $0.10 Per Share; Company Remains on Track for Full Year Profitability
  • Home Sale Revenues Increased 4% to $814 Million Driven by 5% Increase in Average Selling Price
  • Adjusted Gross Margin Increased 180 Basis Points to 18.7%
  • SG&A Reduced by 13% to $123 Million; Falls 300 Basis Points to 15.2% of Home Sale Revenues
  • 15% Increase in Signups to 4,991 Homes Generated from 6% Fewer Communities
  • Unit Backlog Up 12% to 5,798 Homes With a Value of $1.6 Billion
  • Quarter Ending Cash Balance of $1.3 Billion Up $117 Million From Year End 2011

PulteGroup, Inc. (NYSE: PHM) announced today financial results for its first quarter ended March 31, 2012.  For the quarter, the Company reported a net loss of $12 million, or $0.03 per share.  Reported net loss includes $6 million of land related charges which were offset by $6 million of land-sale gains.  In the prior year the Company reported a net loss of $40 million, or $0.10 per share.  Land-related charges and land sale gains were immaterial in the prior year period.   

"PulteGroup's first quarter financial results demonstrate further success in our efforts to reposition the business and drive better long term financial returns," said Richard J. Dugas, Jr., PulteGroup Chairman, President and CEO.  "For the quarter, improved gross margins and excellent control of overhead costs within our operations, along with better results from our financial services operations, helped to drive a $32 million increase in pretax operating results.  Our first quarter results reflect the benefit of initiatives launched in 2011 which are expected to deliver additional gains as we move through the remainder of 2012 and beyond."

"While overall industry volumes remain well below normal levels, our first quarter sales and traffic patterns suggest a positive shift in buyer sentiment during the period.  The 15% increase in our reported signups reflects broad based gains as we experienced improved signups from all of our brands and across the vast majority of our markets.  We are only one quarter into the year, but the start has exceeded our internal estimates and has us cautiously optimistic that housing demand may have reached a positive inflection point."

Home sale revenues in the first quarter increased 4% to $814 million, compared with $782 million in the prior year.  Higher revenue for the quarter reflects a 5%, or $12,000, increase in average selling price to $261,000, partially offset by a 1% decrease in closings to 3,117 homes.  The increase in average selling price primarily reflects an ongoing shift in the mix of closings towards move-up homes which carry a higher selling price. 

First quarter cost of sales related to home sales was $712 million, compared with prior year costs of $685 million.  Cost of sales for the current quarter included $5 million of impairments, compared with none in the prior year.  Excluding impairments and capitalized interest expense, adjusted gross margin for the quarter would have been 18.7%, compared with 16.9% in the comparable prior year period.  The 180 basis point improvement in adjusted gross margin primarily reflects ongoing shifts in the mix of houses closed to include a greater percentage of move-up homes and an increase in closings from recently opened communities.  

The Company's selling, general and administrative (SG&A) expense for the quarter was $123 million, a decrease of 13% from $142 million in the comparable period last year.  As a percent of homebuilding revenue, SG&A for the quarter fell 300 basis points to 15.2%.   

For the quarter, the Company reported a 15% increase in net signups of 4,991 homes which were generated from 6% fewer communities.  Prior year net signups were 4,345 homes.  The cancellation rate in the first quarter was 15%, down from 16% in the prior year.     

The Company's contract backlog as of March 31, 2012, was 5,798 homes, with a value of $1.6 billion, compared to a prior year contract backlog of 5,188 homes, valued at $1.4 billion.

The Company's financial services operations reported pretax income of $7 million for the quarter, compared with prior year income of $1 million.  Loan originations for the first quarter were 2,021 compared with prior year originations of 1,865.  Mortgage capture rate for the quarter was 78%, compared with 76% for the same quarter last year.   

The Company's quarter-end cash balance of $1.3 billion represents an increase of $117 million over 2011 year end.

A conference call discussing PulteGroup's first quarter results is scheduled for Thursday, April 26, 2012, 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 press 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," "project," "may," "can," "could," "might," "will" and similar expressions identify forward-looking statements, including statements related to 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; continued volatility in the debt and equity markets; competition within the industries in which PulteGroup operates; the availability and cost of land and other raw materials used by PulteGroup in its homebuilding operations; the impact of any changes to our strategy in responding to continuing adverse conditions in the industry, including any changes regarding our land positions; the availability and cost of insurance covering risks associated with PulteGroup's 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; economic changes nationally or in PulteGroup's 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; required accounting changes; terrorist acts and other acts of war; 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, 2011, 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 Bloomfield Hills, Mich., is one of America's largest homebuilding companies with operations in approximately 60 markets throughout the country.  Through its brand portfolio that includes Centex, Pulte Homes and Del Webb, 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 conducts extensive research to provide home buyers with innovative solutions and new homes designed for the way people actually live today.  As the most awarded homebuilder in customer satisfaction, PulteGroup brands have consistently ranked among top homebuilders in third-party customer satisfaction studies.

For more information about PulteGroup, Inc. and PulteGroup brands, go to: www.pultegroupinc.com; www.pulte.com; www.centex.comwww.delwebb.com

PulteGroup, Inc.

Consolidated Results of Operations

($000's omitted, except per share data)

(Unaudited)






Three Months Ended


March 31,


2012


2011

Revenues:




Homebuilding




Home sale revenues

$

813,786



$

782,471


Land sale revenues

38,398



1,296



852,184



783,767


Financial Services

28,852



21,435


Total revenues

881,036



805,202






Homebuilding Cost of Revenues:




Home sale cost of revenues

712,166



685,030


Land sale cost of revenues

33,397



930



745,563



685,960






Financial Services expenses

22,009



20,473


Selling, general, and administrative expenses

123,314



142,446


Other expense (income), net

6,619



3,910


Interest income

(1,199)



(1,437)


Interest expense

217



351


Equity in (earnings) loss of unconsolidated entities

(1,996)



(1,109)


Income (loss) before income taxes

(13,491)



(45,392)


Income tax expense (benefit)

(1,825)



(5,866)


Net income (loss)

$

(11,666)



$

(39,526)






Net income (loss) per share:




Basic

$

(0.03)



$

(0.10)


Diluted

$

(0.03)



$

(0.10)






Number of shares used in calculation:




Basic

380,502



379,544


Diluted

380,502



379,544



 

PulteGroup, Inc.

Condensed Consolidated Balance Sheets

($000's omitted)

(Unaudited)






March 31,
2012


December 31,
2011





ASSETS








Cash and equivalents

$

1,211,735



$

1,083,071


Restricted cash

89,869



101,860


House and land inventory

4,584,416



4,636,468


Land held for sale

136,232



135,307


Land, not owned, under option agreements

26,121



24,905


Residential mortgage loans available-for-sale

184,164



258,075


Investments in unconsolidated entities

34,146



35,988


Income taxes receivable

29,673



27,154


Other assets

404,014



420,444


Intangible assets, net

159,073



162,348



$

6,859,443



$

6,885,620










LIABILITIES AND SHAREHOLDERS' EQUITY








Liabilities:




Accounts payable

$

170,609



$

196,447


Customer deposits

71,580



46,960


Accrued and other liabilities

1,382,330



1,411,941


Income tax liabilities

215,150



203,313


Senior notes

3,090,946



3,088,344






Total liabilities

4,930,615



4,947,005






Shareholders' equity

1,928,828



1,938,615







$

6,859,443



$

6,885,620


 

PulteGroup, Inc.

Consolidating Statements of Cash Flows

($000's omitted)

(Unaudited)


Three Months Ended


March 31,


2012


2011

Cash flows from operating activities:




Net income (loss)

$

(11,666)



$

(39,526)


Adjustments to reconcile net income (loss) to net cash flows

     provided by (used in) operating activities:




Write-down of land and deposits and pre-acquisition costs

5,896



726


Depreciation and amortization

7,393



8,970


Stock-based compensation expense

3,719



5,510


Equity in (earnings) loss of unconsolidated entities

(1,996)



(1,109)


Distributions of earnings from unconsolidated entities

3,518



411


Other, net

103



781


Increase (decrease) in cash due to:




Restricted cash

53



864


Inventories

45,969



(10,315)


Residential mortgage loans available-for-sale

74,073



32,292


Other assets

10,257



79,383


Accounts payable, accrued and other liabilities

(34,466)



(122,825)


Income tax liabilities

11,837



(4,803)


Net cash provided by (used in) operating activities

114,690



(49,641)


Cash flows from investing activities:




Distributions from unconsolidated entities



1,021


Investments in unconsolidated entities

(49)



(1,968)


Net change in loans held for investment

293



255


Change in restricted cash related to letters of credit

11,938



(109,667)


Proceeds from the sale of fixed assets

4,475



2,441


Capital expenditures

(3,758)



(6,128)


Net cash provided by (used in) investing activities

12,899



(114,046)


Cash flows from financing activities:




Net borrowings (repayments) of other borrowings

1,920



(13,312)


Stock repurchases

(845)



(969)


Net cash provided by (used in) financing activities

1,075



(14,281)


Net increase (decrease) in cash and equivalents

128,664



(177,968)


Cash and equivalents at beginning of period

1,083,071



1,483,390


Cash and equivalents at end of period

$

1,211,735



$

1,305,422






Supplemental Cash Flow Information:




Interest paid (capitalized), net

$

(22,808)



$

(23,833)


Income taxes paid (refunded), net

$

(11,142)



$

(2,922)



 

PulteGroup, Inc.

Segment Data

($000's omitted)

(Unaudited)






Three Months Ended


March 31,


2012


2011

HOMEBUILDING:




Home sale revenues

$

813,786



$

782,471


Land sale revenues

38,398



1,296


Total Homebuilding revenues

852,184



783,767






Home sale cost of revenues

712,166



685,030


Land sale cost of revenues

33,397



930


Selling, general, and administrative expenses

123,314



142,446


Equity in (earnings) loss of  unconsolidated entities

(1,978)



(1,098)


Other expense (income), net

6,619



3,910


Interest income, net

(982)



(1,086)


Income (loss) before income taxes

$

(20,352)



$

(46,365)






FINANCIAL SERVICES:




Income (loss) before income taxes

$

6,861



$

973






CONSOLIDATED:




Income (loss) before income taxes

$

(13,491)



$

(45,392)



PulteGroup, Inc.

Segment data, continued

($000's omitted)

(Unaudited)






Three Months Ended



March 31,



2012



2011







Home sale revenues

$

813,786



$

782,471






Closings - units




Northeast

352



348


Southeast

535



589


Florida

476



492


Texas

699



695


North

531



494


Southwest

524



523



3,117



3,141


Average selling price

$

261



$

249






Net new orders - units




Northeast

553



482


Southeast

774



748


Florida

768



736


Texas

1,109



1,048


North

869



658


Southwest

918



673



4,991



4,345


Net new orders - dollars (a)

$

1,339,977



$

1,093,634







March 31,



2012



2011


Unit backlog





Northeast

626



690


Southeast

841



890


Florida

950



839


Texas

1,235



1,227


North

1,047



817


Southwest

1,099



725



5,798



5,188


Dollars in backlog

$

1,585,840



$

1,367,725




(a) Net new order dollars represent a composite of new order dollars combined with other movements
of the dollars in backlog related to cancellations and change orders.

 


 

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)






Three Months Ended


March 31,


2012


2011

MORTGAGE ORIGINATIONS:




Origination volume

2,021



1,865


Origination principal

$

429,465



$

377,972


Capture rate

78.3

%


76.5

%









 

Supplemental Data

($000's omitted)

(Unaudited)






Three Months Ended


March 31,


2012


2011





Interest in inventory, beginning of period

$

355,068



$

323,379


Interest capitalized

51,323



56,191


Interest expensed

(47,186)



(34,816)


Interest in inventory, end of period

$

359,205



$

344,754


Interest incurred

$

51,323



$

56,191


 

PulteGroup, Inc.
Reconciliation of Non-GAAP Financial Measures

This report contains information about our home sale gross margins reflecting certain adjustments.  This measure is considered a non-GAAP financial measure under the SEC's rules and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measure as a measure of our operating performance.  Management and our local divisions use this measure in evaluating the operating performance of each community and in making strategic decisions regarding sales pricing, construction and development pace, product mix, and other daily operating decisions.  We believe it is a relevant and useful measure to investors for evaluating our performance through gross profit generated on homes delivered during a given period and for comparing our operating performance 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 gross margins and any adjustments thereto before comparing our measure to that of such other companies.

The following table sets forth a reconciliation of this non-GAAP financial measure to the GAAP financial measure that management believes to be most directly comparable ($000's omitted):

Home Sale Gross Margin


Three Months Ended


March 31,
2012


December 31,
2011


September 30,
2011


June 30,
2011


March 31,
2011











Home sale revenues

$

813,786



$

1,167,141



$

1,101,368



$

899,763



$

782,471


Home sale cost of revenues

712,166



(1,021,873)



(947,817)



(789,678)



(685,030)


Home sale gross margin

101,620



145,268



153,551



110,085



97,441


Add:










Impairments (a)

3,700



7,885



526



2,046



41


Capitalized interest amortization (a)

47,186



63,979



48,693



41,894



34,816


Adjusted home sale gross margin

$

152,506



$

217,132



$

202,770



$

154,025



$

132,298












Home sale gross margin as a

   percentage of home sale revenues

12.5%



12.4%



13.9%



12.2%



12.5%












Adjusted home sale gross margin as a

   percentage of home sale revenues

18.7%



18.6%



18.4%



17.1%



16.9%




(a) Write-offs of capitalized interest related to impairments are reflected in capitalized interest amortization.


 

SOURCE PulteGroup, Inc.



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