Skip to main content

PulteGroup Reports Third Quarter 2022 Financial Results

  • Earnings Increased 48% to $2.69 Per Share
  • Home Sale Revenues Increased 16% to $3.8 Billion
  • Homebuilding Gross Margin Expanded by 360 Basis Points to 30.1%
  • Net New Orders of 4,924 Homes with a Value of $2.8 Billion
  • Unit Backlog Totaled 17,053 Homes; Backlog Value Increased 3% to $10.6 Billion
  • Repurchased 2% of Outstanding Common Shares for $180 Million

PulteGroup, Inc. (NYSE: PHM) announced today financial results for its third quarter ended September 30, 2022. For the quarter, the Company reported net income of $628 million, or $2.69 per share. In the prior year, the Company reported net income of $476 million, or $1.82 per share.

“Reflective of the strong demand conditions that existed earlier this year, PulteGroup’s third quarter financial results include a 16% increase in revenues and a 410 basis point expansion in the Company’s operating margin,” said Ryan Marshall, PulteGroup President and CEO. “These gains helped us to deliver a 48% increase in earnings per share, while allowing us to continue returning funds to shareholders as we repurchased $180 million of stock in the quarter.”

“While we reported significant growth in our third quarter earnings, demand clearly slowed in the period as dramatically higher interest rates created financial and psychological hurdles for potential homebuyers,” said Marshall. “In response to today’s more challenging market conditions, we continue to adjust our sales, construction and investment practices as we work to turn inventory and balance our housing starts to appropriately match the pace of sales.”

Third Quarter Results

Home sale revenues for the third quarter increased 16% over the prior year to $3.8 billion. Higher revenues for the period were driven by a 15% increase in the average sales price of homes closed to $545,000, along with a 1% increase in closings to 7,047 homes.

In the third quarter, the Company’s home sale gross margin was 30.1%, an increase of 360 basis points over the prior year gross margin of 26.5%. The Company’s homebuilding SG&A expense for the period was $350 million, or 9.1% of home sale revenues. SG&A expense for the prior year period was $321 million, or 9.6 % of home sale revenues.

Net new orders for the third quarter decreased 28% from the prior year to 4,924 homes. The value of net new orders in the third quarter was $2.8 billion. The Company’s cancelation rate in the third quarter was 24%, up from 10% in the prior year period and 15% in the second quarter of 2022. In the third quarter, the Company operated out of an average of 823 communities, compared with an average community count of 768 in the prior year period.

The Company’s unit backlog at the end of the third quarter was 17,053 homes, which is a decrease of 14% from the prior year. Backlog value at the end of the third quarter was $10.6 billion, which is an increase of 3% over the comparable prior year period.

Given changing industry dynamics resulting primarily from Federal Reserve actions to raise interest rates, PulteGroup continues to reassess all pending transactions prior to completing the purchase of the underlying land asset. As a result of this ongoing review process, in the third quarter the Company elected to terminate a number of pending land transactions and wrote off $24 million of deposits and preacquisition expenses associated with the deals. The write-off of these costs is recorded in the Other expense, net line of the income statement.

“For the past several years, we have systematically increased our use of land options with the dual objectives of enhancing returns and helping to mitigate market risks,” said Bob O’Shaughnessy, Executive Vice President and CFO. “With today’s more challenging market conditions, in the third quarter we chose to walk from certain options tied to future land investment where returns no longer met required performance metrics.”

Pre-tax income for the Company's financial services operations was $28 million, down from $49 million last year. The decrease in pre-tax income for the period reflects both a reduction in loan volumes and the more competitive pricing environment that has existed for much of 2022. The reduction in loan volumes for the quarter was driven, in part, by a decline in capture rate to 77% compared with 85% last year.

Pre-tax income for the Company’s third quarter was $811 million, an increase of 31% over the prior year. Income tax expense for the Company’s third quarter was $183 million, or an effective tax rate of 22.6%. The Company’s effective tax rate benefitted from federal energy efficient home credits recognized in the period resulting from the extension of such credits by the Inflation Reduction Act enacted into law in August.

During the third quarter, PulteGroup repurchased 4.4 million, or 2% of its common shares for $180 million, at an average price of $41.20 per share. The Company ended the quarter with a debt-to-capital ratio of 22.5%.

A conference call discussing PulteGroup's third quarter 2022 results is scheduled for Tuesday, October 25, 2022, 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 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 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; including as it relates to our ability to take pricing actions to offset rising expenses; 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 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, 2021, 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.

PulteGroup, Inc.

Consolidated Statements of Operations

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

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2022

 

2021

 

2022

 

2021

Revenues:

 

 

 

 

 

 

 

Homebuilding

 

 

 

 

 

 

 

Home sale revenues

$

3,840,449

 

 

$

3,324,483

 

 

$

10,720,364

 

 

$

9,156,371

 

Land sale and other revenues

 

30,658

 

 

 

63,085

 

 

 

97,626

 

 

 

123,321

 

 

 

3,871,107

 

 

 

3,387,568

 

 

 

10,817,990

 

 

 

9,279,692

 

Financial Services

 

72,709

 

 

 

91,482

 

 

 

239,627

 

 

 

288,632

 

Total revenues

 

3,943,816

 

 

 

3,479,050

 

 

 

11,057,617

 

 

 

9,568,324

 

 

 

 

 

 

 

 

 

Homebuilding Cost of Revenues:

 

 

 

 

 

 

 

Home sale cost of revenues

 

(2,685,596

)

 

 

(2,443,074

)

 

 

(7,498,027

)

 

 

(6,754,204

)

Land sale and other cost of revenues

 

(26,314

)

 

 

(47,483

)

 

 

(89,971

)

 

 

(103,313

)

 

 

(2,711,910

)

 

 

(2,490,557

)

 

 

(7,587,998

)

 

 

(6,857,517

)

 

 

 

 

 

 

 

 

Financial Services expenses

 

(45,323

)

 

 

(42,835

)

 

 

(132,655

)

 

 

(122,921

)

Selling, general, and administrative expenses

 

(350,112

)

 

 

(320,506

)

 

 

(1,030,391

)

 

 

(864,478

)

Loss on debt retirement

 

 

 

 

 

 

 

 

 

 

(61,469

)

Other expense, net

 

(25,194

)

 

 

(4,750

)

 

 

(30,830

)

 

 

(8,011

)

Income before income taxes

 

811,277

 

 

 

620,402

 

 

 

2,275,743

 

 

 

1,653,928

 

Income tax expense

 

(183,349

)

 

 

(144,853

)

 

 

(540,657

)

 

 

(370,873

)

Net income

$

627,928

 

 

$

475,549

 

 

$

1,735,086

 

 

$

1,283,055

 

 

 

 

 

 

 

 

 

Per share:

 

 

 

 

 

 

 

Basic earnings

$

2.70

 

 

$

1.83

 

 

$

7.26

 

 

$

4.86

 

Diluted earnings

$

2.69

 

 

$

1.82

 

 

$

7.22

 

 

$

4.85

 

Cash dividends declared

$

0.15

 

 

$

0.14

 

 

$

0.45

 

 

$

0.42

 

 

 

 

 

 

 

 

 

Number of shares used in calculation:

 

 

 

 

 

 

 

Basic

 

230,967

 

 

 

258,147

 

 

 

237,639

 

 

 

261,854

 

Effect of dilutive securities

 

1,333

 

 

 

752

 

 

 

1,240

 

 

 

668

 

Diluted

 

232,300

 

 

 

258,899

 

 

 

238,879

 

 

 

262,522

 

PulteGroup, Inc.

Condensed Consolidated Balance Sheets

($000's omitted)

(Unaudited)

 

 

September 30,

2022

 

December 31,

2021

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Cash and equivalents

$

231,301

 

$

1,779,088

Restricted cash

 

60,097

 

 

54,477

Total cash, cash equivalents, and restricted cash

 

291,398

 

 

1,833,565

House and land inventory

 

11,773,077

 

 

9,047,569

Land held for sale

 

36,997

 

 

29,276

Residential mortgage loans available-for-sale

 

438,205

 

 

947,139

Investments in unconsolidated entities

 

158,085

 

 

98,155

Other assets

 

1,266,360

 

 

1,110,966

Intangible assets

 

138,571

 

 

146,923

Deferred tax assets

 

109,151

 

 

139,038

 

$

14,211,844

 

$

13,352,631

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Liabilities:

 

 

 

Accounts payable

$

599,357

 

$

621,168

Customer deposits

 

979,528

 

 

844,785

Deferred tax liabilities

 

179,141

 

 

165,519

Accrued and other liabilities

 

1,587,458

 

 

1,576,478

Financial Services debt

 

338,190

 

 

626,123

Revolving credit facility

 

319,000

 

 

Notes payable

 

2,045,167

 

 

2,029,043

 

 

6,047,841

 

 

5,863,116

Shareholders' equity

 

8,164,003

 

 

7,489,515

 

$

14,211,844

 

$

13,352,631

PulteGroup, Inc.

Consolidated Statements of Cash Flows

($000's omitted)

(Unaudited)

 

 

Nine Months Ended

 

September 30,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

Net income

$

1,735,086

 

 

$

1,283,055

 

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

 

 

 

Deferred income tax expense

 

43,485

 

 

 

12,842

 

Land-related charges

 

32,475

 

 

 

6,820

 

Loss on debt retirement

 

 

 

 

61,469

 

Depreciation and amortization

 

51,934

 

 

 

53,023

 

Share-based compensation expense

 

39,520

 

 

 

28,439

 

Other, net

 

(160

)

 

 

(3,274

)

Increase (decrease) in cash due to:

 

 

 

Inventories

 

(2,706,142

)

 

 

(1,137,351

)

Residential mortgage loans available-for-sale

 

507,861

 

 

 

(36,816

)

Other assets

 

(127,173

)

 

 

(114,879

)

Accounts payable, accrued and other liabilities

 

119,189

 

 

 

394,897

 

Net cash provided by (used in) operating activities

 

(303,925

)

 

 

548,225

 

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(88,585

)

 

 

(52,134

)

Investments in unconsolidated entities

 

(58,154

)

 

 

(35,812

)

Distributions of capital from unconsolidated entities

 

3,413

 

 

 

11,500

 

Business acquisition

 

(10,400

)

 

 

(10,400

)

Other investing activities, net

 

(964

)

 

 

378

 

Net cash used in investing activities

 

(154,690

)

 

 

(86,468

)

Cash flows from financing activities:

 

 

 

Repayments of notes payable

 

(4,856

)

 

 

(797,395

)

Borrowings under revolving credit facility

 

1,925,000

 

 

 

 

Repayments under revolving credit facility

 

(1,606,000

)

 

 

 

Financial Services borrowings (repayments), net

 

(287,933

)

 

 

64,684

 

Debt issuance costs

 

(11,167

)

 

 

 

Stock option exercises

 

 

 

 

11

 

Share repurchases

 

(974,673

)

 

 

(614,303

)

Cash paid for shares withheld for taxes

 

(14,326

)

 

 

(10,642

)

Dividends paid

 

(109,597

)

 

 

(111,696

)

Net cash used in financing activities

 

(1,083,552

)

 

 

(1,469,341

)

Net decrease in cash, cash equivalents, and restricted cash

 

(1,542,167

)

 

 

(1,007,584

)

Cash, cash equivalents, and restricted cash at beginning of period

 

1,833,565

 

 

 

2,632,235

 

Cash, cash equivalents, and restricted cash at end of period

$

291,398

 

 

$

1,624,651

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

Interest paid (capitalized), net

$

5,642

 

 

$

16,483

 

Income taxes paid (refunded), net

$

493,559

 

 

$

335,487

 

PulteGroup, Inc.

Segment Data

($000's omitted)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2022

 

2021

 

2022

 

2021

HOMEBUILDING:

 

 

 

 

 

 

 

Home sale revenues

$

3,840,449

 

 

$

3,324,483

 

 

$

10,720,364

 

 

$

9,156,371

 

Land sale and other revenues

 

30,658

 

 

 

63,085

 

 

 

97,626

 

 

 

123,321

 

Total Homebuilding revenues

 

3,871,107

 

 

 

3,387,568

 

 

 

10,817,990

 

 

 

9,279,692

 

 

 

 

 

 

 

 

 

Home sale cost of revenues

 

(2,685,596

)

 

 

(2,443,074

)

 

 

(7,498,027

)

 

 

(6,754,204

)

Land sale and other cost of revenues

 

(26,314

)

 

 

(47,483

)

 

 

(89,971

)

 

 

(103,313

)

Selling, general, and administrative expenses ("SG&A")

 

(350,112

)

 

 

(320,506

)

 

 

(1,030,391

)

 

 

(864,478

)

Loss on debt retirement

 

 

 

 

 

 

 

 

 

 

(61,469

)

Other expense, net

 

(25,322

)

 

 

(4,742

)

 

 

(32,039

)

 

 

(8,742

)

Income before income taxes

$

783,763

 

 

$

571,763

 

 

$

2,167,562

 

 

$

1,487,486

 

 

 

 

 

 

 

 

 

FINANCIAL SERVICES:

 

 

 

 

 

 

 

Income before income taxes

$

27,514

 

 

$

48,639

 

 

$

108,181

 

 

$

166,442

 

 

 

 

 

 

 

 

 

CONSOLIDATED:

 

 

 

 

 

 

 

Income before income taxes

$

811,277

 

 

$

620,402

 

 

$

2,275,743

 

 

$

1,653,928

 

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

Home sale revenues

$

3,840,449

 

$

3,324,483

 

$

10,720,364

 

$

9,156,371

 

 

 

 

 

 

 

 

Closings - units

 

 

 

 

 

 

 

Northeast

 

378

 

 

472

 

 

1,026

 

 

1,286

Southeast

 

1,295

 

 

1,278

 

 

3,406

 

 

3,507

Florida

 

1,628

 

 

1,502

 

 

4,840

 

 

4,614

Midwest

 

1,104

 

 

1,123

 

 

3,179

 

 

3,004

Texas

 

1,431

 

 

1,276

 

 

4,124

 

 

4,020

West

 

1,211

 

 

1,356

 

 

3,688

 

 

3,852

 

 

7,047

 

 

7,007

 

 

20,263

 

 

20,283

Average selling price

$

545

 

$

474

 

$

529

 

$

451

 

 

 

 

 

 

 

 

Net new orders - units

 

 

 

 

 

 

 

Northeast

 

237

 

 

368

 

 

1,046

 

 

1,451

Southeast

 

1,081

 

 

1,085

 

 

3,716

 

 

4,010

Florida

 

1,471

 

 

1,844

 

 

4,898

 

 

6,451

Midwest

 

655

 

 

1,075

 

 

2,660

 

 

3,936

Texas

 

979

 

 

1,117

 

 

3,718

 

 

4,468

West

 

501

 

 

1,307

 

 

3,275

 

 

4,654

 

 

4,924

 

 

6,796

 

 

19,313

 

 

24,970

Net new orders - dollars

$

2,807,308

 

$

3,780,354

 

$

11,442,579

 

$

12,668,805

 

 

 

 

 

 

 

 

Unit backlog

 

 

 

 

 

 

 

Northeast

 

 

 

 

 

808

 

 

1,118

Southeast

 

 

 

 

 

2,786

 

 

2,843

Florida

 

 

 

 

 

5,488

 

 

5,491

Midwest

 

 

 

 

 

2,169

 

 

3,131

Texas

 

 

 

 

 

2,693

 

 

3,501

West

 

 

 

 

 

3,109

 

 

3,761

 

 

 

 

 

 

17,053

 

 

19,845

Dollars in backlog

 

 

 

 

$

10,581,026

 

$

10,305,614

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2022

 

2021

 

2022

 

2021

MORTGAGE ORIGINATIONS:

 

 

 

 

 

 

 

Origination volume

 

4,369

 

 

 

5,078

 

 

 

12,994

 

 

 

15,082

 

Origination principal

$

1,715,344

 

 

$

1,810,722

 

 

$

5,009,957

 

 

$

5,186,913

 

Capture rate

 

77.2

%

 

 

84.6

%

 

 

78.7

%

 

 

86.1

%

Supplemental Data

($000's omitted)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

Interest in inventory, beginning of period

$

151,554

 

 

$

185,433

 

 

$

160,756

 

 

$

193,409

 

Interest capitalized

 

33,235

 

 

 

31,707

 

 

 

96,156

 

 

 

97,809

 

Interest expensed

 

(41,120

)

 

 

(41,897

)

 

 

(113,243

)

 

 

(115,975

)

Interest in inventory, end of period

$

143,669

 

 

$

175,243

 

 

$

143,669

 

 

$

175,243

 

PulteGroup, Inc.

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

 

This report contains information about our debt-to-capital ratios. This measure could be 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 measures. We believe that this measure 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 table sets forth a reconciliation of the debt to capital ratios:

Debt-to-Capital Ratios

 

 

 

 

 

 

 

September 30,

2022

 

December 31,

2021

Notes payable

 

$

2,045,167

 

 

$

2,029,043

 

Revolving credit facility

 

 

319,000

 

 

 

 

Total debt

 

$

2,364,167

 

 

$

2,029,043

 

 

 

 

 

 

Shareholders' equity

 

 

8,164,003

 

 

 

7,489,515

 

Total capital

 

$

10,528,170

 

 

$

9,518,558

 

Debt-to-capital ratio

 

 

22.5

%

 

 

21.3

%

 

Contacts

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.