PHM
$23.49
Pultegroup
$.07
.30%
Earnings Details
4th Quarter December 2016
Thursday, January 26, 2017 6:30:00 AM
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Summary

Pultegroup Beats

Pultegroup (PHM) reported 4th Quarter December 2016 earnings of $0.67 per share on revenue of $2.5 billion. The consensus earnings estimate was $0.58 per share on revenue of $2.3 billion. The Earnings Whisper number was $0.60 per share. Revenue grew 20.9% on a year-over-year basis.

PulteGroup Inc is engaged in homebuilding business. Its business includes the acquisition and development of land for residential purposes within the U.S. It is also engaged in mortgaging banking operations.

Results
Reported Earnings
$0.67
Earnings Whisper
$0.60
Consensus Estimate
$0.58
Reported Revenue
$2.49 Bil
Revenue Estimate
$2.33 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

PulteGroup Reports Financial Results For 2016 Fourth Quarter

PulteGroup, Inc. (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. (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,
December 31,
2016
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.

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