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PulteGroup Reports Third Quarter 2015 Financial Results

ATLANTA, Oct. 22, 2015 /PRNewswire/ -- PulteGroup, Inc. (NYSE: PHM) announced today financial results for its third quarter ended September 30, 2015. For the quarter, the Company reported net income of $108 million, or $0.30 per share, inclusive of $9 million, or $0.03 per share, of net charges resulting from litigation-related reserve adjustments taken in the quarter. Prior year net income for the quarter was $141 million, or $0.37 per share.

"PulteGroup's third quarter results demonstrate our continued focus on delivering higher returns on invested capital over the housing cycle as we realized an improved sales pace while expanding gross margins," said Richard J. Dugas, Jr., Chairman, President and Chief Executive Officer of PulteGroup. "We also continued to allocate capital in alignment with our stated priorities as we invested $586 million in the business, keeping us on track to invest approximately $2.3 billion for the year, while still returning $149 million to shareholders in the quarter through dividends and share repurchases.

"Demand in the quarter and through the first nine months of 2015 show a U.S. housing industry that continues on a sustained recovery path benefitting from an improving economy, low interest rates and a generally balanced inventory of homes available for sale. At just over 500,000 new home sales annually, however, the industry is operating well below its 50-year average, so we remain optimistic that demand can continue to increase in the coming years and are investing in our business accordingly.

"With a backlog approaching 9,000 homes, more capital being invested in the business and expectations for a sustained housing recovery, PulteGroup is in a very strong position to capitalize on future market opportunities."

Third Quarter Results

Home sale revenues for the third quarter totaled $1.5 billion, compared with prior year revenue of $1.6 billion. The 6% decrease in revenue reflects a 6% decline in closings to 4,356 homes, partially offset by a 1% increase in average selling price to $336,000.

For the third quarter, pretax income from homebuilding operations was $165 million, compared with prior year pretax income of $214 million. The Company's home sale gross margin for the period was 23.6%, an increase of 70 basis points over the prior year. On a sequential basis, gross margins increased 30 basis points from the second quarter of 2015. Homebuilding SG&A expense for the quarter was $159 million, or 10.9% of home sale revenues. SG&A expense for the period includes a benefit of $6 million from a reserve adjustment associated with a recent legal settlement.

In the quarter, the Company recorded a charge of $20 million in Other Expense, net, to increase reserves following a recent unfavorable jury verdict in a contract dispute. The Company has already filed post-trial motions seeking to, among other things, overturn the verdict, but given the decision the Company believes a reserve adjustment is appropriate.

Net new orders for the third quarter totaled 4,092 homes, which is up 8% from prior year orders of 3,779 homes. On a dollar basis, third quarter signup value was $1.5 billion, which is an increase of 17% from the third quarter 2014 signup value of $1.3 billion. For the quarter, the Company operated from 611 active communities, which is up 2% from the prior year.

PulteGroup's quarter-end backlog values of $3.1 billion and 8,734 homes, are up 18% and 10%, respectively, over prior year backlog values of $2.6 billion and 7,934 homes. The Company's average selling price in backlog is $354,000, which is up 7% over the prior year and up 5% from the average price of homes closed in the third quarter of 2015.

The Company's financial services operations reported third quarter pretax income of $14 million, which is up from pretax income of $11 million in the comparable prior year quarter. Mortgage capture rate for the quarter increased to 83%, up from 80% in the same quarter last year.

In the third quarter, PulteGroup invested $586 million in land acquisition and development, raising its total land spend through the first nine months to $1.5 billion, as it remains on track to invest approximately $2.3 billion for the full year. The Company also repurchased 5.9 million common shares for $121 million, or an average price of $20.29 per share.

During the quarter, PulteGroup entered into a new $500 million term loan agreement with proceeds expected to be used for working capital and general corporate purposes. Inclusive of these funds, the Company ended the quarter with $760 million of cash and a debt-to-capital ratio of 31%.

A conference call discussing PulteGroup's third quarter 2015 results is scheduled for Thursday, October 22, 2015, 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...


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