press-release-details

Press Release Details

PulteGroup Reports Financial Results For 2016 Fourth Quarter

01/26/2017

- Q4 Net Income of $0.83 Per Share Includes $0.16 Per Share of Insurance and Tax Benefits; Prior Year Net Income of $0.64 Per Share Included Benefit of $0.07 Per Share from Insurance and Mortgage Reserve Reversals
- Net New Orders Increased 15% to 4,202 Homes; Value of Net New Orders Increased 22% to $1.7 Billion
- Closings Increased 9% to 6,197 Homes; Average Sales Price Up 11% to $391,000
- Home Sale Revenues Higher by 21% to $2.4 Billion
- Unit Backlog Increased 10% to 7,422 Homes; Backlog Value Up 20% to $2.9 Billion
- Year-end Cash Balance of $723 Million After Repurchasing $252 Million of Shares in the Quarter

ATLANTA, Jan. 26, 2017 /PRNewswire/ -- PulteGroup, Inc. (NYSE: PHM) announced today financial results for its fourth quarter ended December 31, 2016.  For the quarter, PulteGroup reported net income of $273 million, or $0.83 per share, inclusive of $0.16 per share of insurance and income tax benefits.  Prior year reported net income of $228 million, or $0.64 per share, included $0.07 per share of benefits associated with the reversal of certain mortgage and insurance reserves. 

"With the gains achieved in our fourth quarter results, PulteGroup completed a year in which it realized significant growth, including double-digit year-over-year increases in orders, closings, revenues, net income and backlog," said Ryan Marshall, President and CEO of PulteGroup.  "Consistent with the Company's long-term objectives, our outstanding 2016 operating results drove strong returns on invested capital, which we view as an important component to delivering increased shareholder value over the housing cycle.

"The gains PulteGroup realized for the quarter and full year reflect the successful investments we are making into our business, in combination with the positive demand conditions that continue in the housing market.  We believe that continued favorable trends in the economy, job growth, demographics and consumer confidence can more than offset the impact of modestly higher rates, allowing the housing recovery to continue at a steady pace."

 

Fourth Quarter Results

Home sale revenues for the fourth quarter totaled $2.4 billion, an increase of 21% over the prior year.  Higher revenues for the period were driven by a 9% increase in closings to 6,197 homes, combined with an 11% increase in average selling price to $391,000.  The Company's average selling price continues to benefit from a shift in the mix of homes closed, along with price increases realized by all three of the Company's national brands: Centex, Pulte Homes and Del Webb.

Beginning with this quarter's reporting, the Company reclassified internal and external sales commission expense from home sale cost of revenues to SG&A in order to be more consistent with a majority of its peers. Based on this reclassification of commission expense, the Company's reported home sale gross margin was 24.8% in the fourth quarter.  Commission expense was 3.5% of revenue in the quarter.   

SG&A expense in the fourth quarter, including commissions, was $208 million, or 8.6% of home sale revenues. Fourth quarter SG&A includes a $55 million benefit relating to a reversal of construction related insurance reserves in the period.  SG&A expense, including commissions, in the fourth quarter of 2015 was $210 million, or 10.5% of home sale revenues. Prior year SG&A included a $30 million benefit relating to a reversal of construction related insurance reserves. 

For the quarter, net new orders increased 15% over the prior year to 4,202 homes.  The dollar value of fourth quarter orders increased 22% over the prior year to $1.7 billion.  The Company ended the year with 726 active communities, which represents an increase of 17% over the comparable prior year period.

PulteGroup's year-end backlog of 7,422 homes, valued at $2.9 billion, compares with prior year backlog of 6,731 homes, valued at $2.5 billion.  The average selling price in backlog increased 9% over the prior year to $396,000, which reflects a continued mix shift toward higher priced homes and moderate price increases.

The Company's financial services operations reported pretax income for the quarter of $25 million.  Prior year financial services pretax income of $29 million included a $12 million benefit relating to a reversal of mortgage repurchase reserves.  Financial services pretax income primarily benefitted from higher closing volumes in the Company's homebuilding operations and a fourth quarter capture rate of 82%. 

For the quarter, the Company reported $141 million of income tax expense, representing an effective tax rate of 34%.  The Company's effective tax rate for the quarter was lower than its previous guidance of 38%, due to the recognition of energy efficient home credits, as well as a deferred tax benefit relating to a legal entity restructuring.

During the fourth quarter, the Company repurchased 13.2 million common shares for $252 million, or an average price of $19.07 per share.  The Company ended the year with a cash balance of $723 million.

A conference call discussing PulteGroup's fourth quarter results will be held Thursday, January 26, 2017, at 8:30 a.m. Eastern Time, and webcast live via www.pultegroupinc.com.  Interested investors can access the call via the Company's home page at www.pultegroupinc.com, and are encouraged to download the available slides that provide additional details on the Company's fourth quarter results.

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," "plan," "project," "may," "can," "could," "might," "should," "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; 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; 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; 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, 2015, 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 approximately 50 markets throughout the country.  Through its brand portfolio that includes Centex, Pulte Homes, Del Webb, DiVosta Homes 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 conducts extensive research to provide homebuyers with innovative solutions and consumer inspired homes and communities to make lives better.

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

 

 

 

 

PulteGroup, Inc.

Consolidated Results of Operations

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

(Unaudited)










Three Months Ended


Year Ended


December 31,


December 31,


2016


2015


2016


2015

Revenues:








Homebuilding








  Home sale revenues

$

2,423,472



$

1,997,309



$

7,451,315



$

5,792,675


  Land sale revenues

15,431



20,885



36,035



48,536



2,438,903



2,018,194



7,487,350



5,841,211


Financial Services

54,175



43,434



181,126



140,753


Total revenues

2,493,078



2,061,628



7,668,476



5,981,964










Homebuilding Cost of Revenues:








Home sale cost of revenues

(1,821,672)



(1,456,186)



(5,587,974)



(4,235,945)


Land sale cost of revenues

(14,256)



(13,867)



(32,115)



(35,858)



(1,835,928)



(1,470,053)



(5,620,089)



(4,271,803)










Financial Services expenses

(29,370)



(14,138)



(108,573)



(82,047)


Selling, general, and administrative expenses

(207,647)



(210,398)



(957,150)



(794,728)


Other expense, net

(6,412)



6,276



(48,814)



(17,363)


Income before income taxes

413,721



373,315



933,850



816,023


Income tax expense

(140,549)



(145,288)



(331,147)



(321,933)


Net income

$

273,172



$

228,027



$

602,703



$

494,090










Net income per share:








Basic

$

0.83



$

0.65



$

1.76



$

1.38


Diluted

$

0.83



$

0.64



$

1.75



$

1.36


Cash dividends declared

$

0.09



$

0.09



$

0.36



$

0.33










Number of shares used in calculation:








Basic

325,975



348,699



339,747



356,576


Effect of dilutive securities

1,834



3,047



2,376



3,217


Diluted

327,809



351,746



342,123



359,793


 

 

 

PulteGroup, Inc.

Condensed Consolidated Balance Sheets

($000's omitted)

(Unaudited)



December 31,
 2016


December 31,
 2015





ASSETS








Cash and equivalents

$

698,882



$

754,161


Restricted cash

24,366



21,274


Total cash, cash equivalents, and restricted cash

723,248



775,435


House and land inventory

6,770,655



5,450,058


Land held for sale

31,728



81,492


Residential mortgage loans available-for-sale

539,496



442,715


Investments in unconsolidated entities

51,447



41,267


Other assets

857,426



893,345


Intangible assets

154,792



110,215


Deferred tax assets, net

1,049,408



1,394,879



$

10,178,200



$

9,189,406










LIABILITIES AND SHAREHOLDERS' EQUITY








Liabilities:




Accounts payable

$

405,455



$

327,725


Customer deposits

187,891



186,141


Accrued and other liabilities

1,448,994



1,516,783


Income tax liabilities

34,860



57,050


Financial Services debt

331,621



267,877


Term loan



498,423


Senior notes

3,110,016



1,576,082


  Total liabilities

5,518,837



4,430,081


Shareholders' equity

4,659,363



4,759,325



$

10,178,200



$

9,189,406


 

 

 

 

 

PulteGroup, Inc.

Consolidated Statements of Cash Flows

($000's omitted)

(Unaudited)


Year Ended


December 31,


2016


2015

Cash flows from operating activities:




Net income

$

602,703



$

494,090


Adjustments to reconcile net income to net cash from operating activities:




Deferred income tax expense

334,787



311,699


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

19,357



11,467


Depreciation and amortization

54,007



46,222


Share-based compensation expense

22,228



24,752


Loss on debt retirements

657




Other, net

1,614



(4,865)


Increase (decrease) in cash due to:




Inventories

(897,092)



(917,298)


Residential mortgage loans available-for-sale

(99,527)



(104,609)


Other assets

(45,721)



(175,150)


Accounts payable, accrued and other liabilities

75,257



(23,898)


Net cash provided by (used in) operating activities

68,270



(337,590)


Cash flows from investing activities:




Capital expenditures

(39,295)



(45,440)


Investment in unconsolidated subsidiaries

(14,539)



(454)


Cash used for business acquisition

(430,458)




Other investing activities, net

13,100



11,330


Net cash used in investing activities

(471,192)



(34,564)


Cash flows from financing activities:




Proceeds from debt issuance

1,995,937



498,087


Repayments of debt

(986,919)



(239,193)


Borrowings under revolving credit facility

619,000



125,000


Repayments under revolving credit facility

(619,000)



(125,000)


Financial Services borrowings

63,744



127,636


Stock option exercises

5,845



10,535


Share repurchases

(603,206)



(442,738)


Dividends paid

(124,666)



(115,958)


Net cash provided by (used in) financing activities

350,735



(161,631)


Net increase (decrease)

(52,187)



(533,785)


Cash, cash equivalents and restricted cash at beginning of period

775,435



1,309,220


Cash, cash equivalents and restricted cash at end of period

$

723,248



$

775,435






Supplemental Cash Flow Information:




Interest paid (capitalized), net

$

(26,538)



$

(4,193)


Income taxes paid (refunded), net

$

2,743



$

(5,654)


 

 

 

PulteGroup, Inc.

Segment Data

($000's omitted)

(Unaudited)










Three Months Ended


Year Ended


December 31,


December 31,


2016


2015


2016


2015

HOMEBUILDING:








Home sale revenues

$

2,423,472



$

1,997,309



$

7,451,315



$

5,792,675


Land sale revenues

15,431



20,885



36,035



48,536


Total Homebuilding revenues

2,438,903



2,018,194



7,487,350



5,841,211










Home sale cost of revenues

(1,821,672)



(1,456,186)



(5,587,974)



(4,235,945)


Land sale cost of revenues

(14,256)



(13,867)



(32,115)



(35,858)


Selling, general, and administrative expenses

(207,647)



(210,398)



(957,150)



(794,728)


Other income (expense), net

(6,604)



6,276



(49,345)



(17,363)


Income before income taxes

$

388,724



$

344,019



$

860,766



$

757,317










FINANCIAL SERVICES:








Income before income taxes

$

24,997



$

29,296



$

73,084



$

58,706










CONSOLIDATED:








Income before income taxes

$

413,721



$

373,315



$

933,850



$

816,023


 

 

 

 

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)










Three Months Ended


Year Ended


December 31,


December 31,


2016


2015


2016


2015









Home sale revenues

$

2,423,472



$

1,997,309



$

7,451,315



$

5,792,675










Closings - units








Northeast

529



531



1,418



1,496


Southeast (a)

1,102



1,027



3,901



3,276


Florida

1,093



986



3,441



2,896


Midwest

1,142



977



3,418



2,961


Texas

1,080



1,036



3,726



3,357


West

1,251



1,105



4,047



3,141



6,197



5,662



19,951



17,127


Average selling price

$

391



$

353



$

373



$

338










Net new orders - units








Northeast

306



253



1,361



1,479


Southeast (a)

804



695



3,810



3,454


Florida

705



697



3,585



3,168


Midwest

766



630



3,636



2,862


Texas

784



621



3,793



3,429


West

837



763



4,141



3,616



4,202



3,659



20,326



18,008


Net new orders - dollars (b)

$

1,666,066



$

1,364,821



$

7,753,399



$

6,305,380















December 31,






2016


2015

Unit backlog








Northeast





387



444


Southeast (a)





1,371



1,146


Florida





1,418



1,274


Midwest





1,307



1,089


Texas





1,412



1,345


West





1,527



1,433







7,422



6,731


Dollars in backlog





$

2,941,512



$

2,456,565










(a)       Southeast includes the acquisition in January 2016 of substantially all of the assets of JW Homes ("Wieland").

(b)       Net new orders excludes backlog acquired from Wieland in January 2016. 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


Year Ended


December 31,


December 31,


2016


2015


2016


2015

MORTGAGE ORIGINATIONS:








Origination volume

4,250



3,820



13,373



11,435


Origination principal

$

1,225,568



$

1,013,140



$

3,706,745



$

2,929,531


Capture rate

81.8

%


82.8

%


81.2

%


82.9

%

















































Supplemental Data

($000's omitted)

(Unaudited)










Three Months Ended


Year Ended


December 31,


December 31,


2016


2015


2016


2015









Interest in inventory, beginning of period

$

176,661



$

155,781



$

149,498



$

167,638


Interest capitalized

44,961



29,896



160,506



120,001


Interest expensed

(35,525)



(36,179)



(123,907)



(138,141)


Interest in inventory, end of period

$

186,097



$

149,498



$

186,097



$

149,498


 

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/pultegroup-reports-financial-results-for-2016-fourth-quarter-300396850.html

SOURCE PulteGroup, Inc.

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

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