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PulteGroup Reports Fourth Quarter 2023 Financial Results

  • Net Income of $3.28 Per Share
  • Net New Orders Increased 57% to 6,214 Homes
  • Closings of 7,615 Homes Drove Home Sale Revenues of $4.2 Billion
  • Home Sale Gross Margin of 28.9%
  • Unit Backlog of 12,146 Homes with a Value of $7.3 Billion
  • Repurchased 3.6 Million Common Shares in the Quarter for $300 Million
  • Year End Cash Balance of $1.8 Billion and a Debt-to-Capital Ratio of 15.9%
  • Announces $1.5 Billion Increase to Share Repurchase Authorization

PulteGroup, Inc. (NYSE: PHM) announced today financial results for its fourth quarter ended December 31, 2023. For the quarter, the Company reported net income of $711 million, or $3.28 per share, compared to prior year reported net income of $882 million, or $3.85 per share.

“PulteGroup’s strong fourth quarter financial results complete a record setting year, while the 57% increase in net new orders provides tremendous momentum heading into 2024,” said Ryan Marshall, PulteGroup President and CEO. “For the full year, PulteGroup generated nearly $16 billion in revenues and net income of $2.6 billion, while delivering a return on equity* of 27.0% and returning over $1.1 billion to shareholders through stock repurchases and dividends.

“As the fourth quarter progressed, we experienced a significant increase in buyer activity as interest rates moved lower, resulting in December being the highest sales month of the quarter. With expectations for interest rates to remain lower in 2024, we are optimistic that improved affordability dynamics will continue attracting buyers into the market.

“After multiple years of variable macroeconomic activity, expectations are that 2024 can be a year of increased homebuying demand given a strong job market, lower interest rates and a limited inventory of existing homes. With a ready supply of homes and lots, I believe PulteGroup is extremely well positioned to capitalize on such market conditions as we seek to grow our business, while delivering strong cash flow and high returns.”

Fourth Quarter Results

For the fourth quarter, home sale revenues totaled $4.2 billion, compared with $5.0 billion in the prior year. Revenues in the quarter reflect closings of 7,615 homes at an average sales price of $547,000. Closings in the fourth quarter of 2022 totaled 8,848 homes at an average sales price of $561,000.

The Company’s home sale gross margin for the fourth quarter was 28.9%, compared with 29.4% in the prior year period. Fourth quarter SG&A expense was $308 million, or 7.4% of home sale revenues, compared with $351 million, or 7.1%, in the prior year. Reported SG&A expense reflects a $65 million pre-tax insurance benefit recorded in the fourth quarter of both 2023 and 2022.

Net new orders in the fourth quarter increased 57% over the prior year to 6,214 homes, while the dollar value of these orders increased 56% to $3.4 billion. The increase in net new orders reflects both an improved selling environment and a decrease in cancelations. Cancelations in the quarter were 9% of starting backlog, down from 11% in the comparable prior year period.

The average community count in the fourth quarter increased 8% from the prior year to 919 communities.

The Company’s Financial Services operations reported fourth quarter pre-tax income of $44 million, up from $24 million in the prior year. Higher pre-tax income for the period reflects more favorable market conditions that developed this year across our financial services platform, coupled with higher capture rates, including an increase to 85%, up from 75% last year, in our mortgage operations.

In the fourth quarter, the Company repurchased 3.6 million of its common shares for $300 million, or an average price of $83.03 per share. For full year 2023, the Company repurchased 13.8 million common shares for $1.0 billion, or an average price of $72.50 per share. The 13.8 million common shares repurchased represent approximately 6.1% of shares outstanding at the beginning of 2023.

The Company ended the year with $1.8 billion of cash and a debt-to-capital ratio of 15.9%.

In a separate release, the Company announced that its Board of Directors approved a $1.5 billion increase to the Company’s share repurchase authorization, bringing its total share repurchase authorization to $1.8 billion.

“Having repurchased almost 50% of our stock since initiating the program in 2013, this new authorization reflects our Company’s ongoing commitment to returning excess funds to our shareholders,” said Marshall.

A conference call discussing PulteGroup's fourth quarter 2023 results is scheduled for Tuesday, January 30, 2024, at 8:30 a.m. Eastern Time. Interested investors can access the live webcast via PulteGroup's corporate website at www.pultegroup.com.

* The Company's return on equity is calculated as net income for the trailing twelve months divided by average shareholders' equity, where average shareholders' equity is the sum of ending shareholders' equity balances of the trailing five quarters divided by five.

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; the impact of any changes to our strategy in responding to the cyclical nature of the industry or deteriorations in industry changes or downward changes in general economic or other business conditions, including any changes regarding our land positions and the levels of our land spend; 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; labor supply shortages and the cost of labor; the availability and cost of land and other raw materials used by us in our homebuilding operations; a decline in the value of the land and home inventories we maintain and resulting possible future writedowns of the carrying value of our real estate assets; competition within the industries in which we operate; governmental regulation directed at or affecting the housing market, the homebuilding industry or construction activities, slow growth initiatives and/or local building moratoria; the availability and cost of insurance covering risks associated with our businesses, including warranty and other legal or regulatory proceedings or claims; damage from improper acts of persons over whom we do not have control or attempts to impose liabilities or obligations of third parties on us; weather related slowdowns; the impact of climate change and related governmental regulation; adverse capital and credit market conditions, which may affect our access to and cost of capital; the insufficiency of our income tax provisions and tax reserves, including as a result of changing laws or interpretations; the potential that we do not realize our deferred tax assets; our inability to sell mortgages into the secondary market; uncertainty in the mortgage lending industry, including revisions to underwriting standards and repurchase requirements associated with the sale of mortgage loans, and related claims against us; risks related to information technology failures or data security issues; failure to retain key personnel; the disruptions associated with the COVID-19 pandemic (or another epidemic or pandemic or similar public threat or fear of such an event), and the measures taken to address it; the effect of cybersecurity incidents and threats; and other factors of national, regional and global scale, including those of a political, economic, business and competitive nature. See Item 1A – Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for a further discussion of these and other risks and uncertainties applicable to our businesses. We undertake no duty to update any forward-looking statement, whether as a result of new information, future events or changes in our 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 Results of Operations

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

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

2023

 

2022

 

2023

 

2022

Revenues:

 

 

 

 

 

 

 

Homebuilding

 

 

 

 

 

 

 

Home sale revenues

$

4,165,231

 

 

$

4,961,040

 

 

$

15,598,707

 

 

$

15,548,119

 

Land sale and other revenues

 

34,540

 

 

 

45,518

 

 

 

142,116

 

 

 

143,144

 

 

 

4,199,771

 

 

 

5,006,558

 

 

 

15,740,823

 

 

 

15,691,263

 

Financial Services

 

93,881

 

 

 

72,089

 

 

 

320,755

 

 

 

311,716

 

Total revenues

 

4,293,652

 

 

 

5,078,647

 

 

 

16,061,578

 

 

 

16,002,979

 

 

 

 

 

 

 

 

 

Homebuilding Cost of Revenues:

 

 

 

 

 

 

 

Home sale cost of revenues

 

(2,961,920

)

 

 

(3,503,137

)

 

 

(11,030,206

)

 

 

(10,867,879

)

Land sale and other cost of revenues

 

(32,139

)

 

 

(29,936

)

 

 

(124,607

)

 

 

(119,906

)

 

 

(2,994,059

)

 

 

(3,533,073

)

 

 

(11,154,813

)

 

 

(10,987,785

)

 

 

 

 

 

 

 

 

Financial Services expenses

 

(50,036

)

 

 

(48,040

)

 

 

(187,280

)

 

 

(180,696

)

Selling, general, and administrative expenses

 

(308,319

)

 

 

(350,831

)

 

 

(1,312,642

)

 

 

(1,381,222

)

Equity income from unconsolidated entities, net

 

213

 

 

 

48,291

 

 

 

4,561

 

 

 

50,680

 

Gain on debt retirement

 

301

 

 

 

 

 

 

663

 

 

 

 

Other income (expense), net

 

5,066

 

 

 

(31,179

)

 

 

37,200

 

 

 

(64,398

)

Income before income taxes

 

946,818

 

 

 

1,163,815

 

 

 

3,449,267

 

 

 

3,439,558

 

Income tax expense

 

(235,825

)

 

 

(281,584

)

 

 

(846,895

)

 

 

(822,241

)

Net income

$

710,993

 

 

$

882,231

 

 

$

2,602,372

 

 

$

2,617,317

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

3.30

 

 

$

3.86

 

 

$

11.79

 

 

$

11.07

 

Diluted

$

3.28

 

 

$

3.85

 

 

$

11.72

 

 

$

11.01

 

Cash dividends declared

$

0.20

 

 

$

0.16

 

 

$

0.68

 

 

$

0.61

 

 

 

 

 

 

 

 

 

Number of shares used in calculation:

 

 

 

 

 

 

 

Basic

 

214,399

 

 

 

227,200

 

 

 

219,958

 

 

 

235,010

 

Effect of dilutive securities

 

1,364

 

 

 

902

 

 

 

1,205

 

 

 

1,156

 

Diluted

 

215,763

 

 

 

228,102

 

 

 

221,163

 

 

 

236,166

 

 

PulteGroup, Inc.

Condensed Consolidated Balance Sheets

($000's omitted)

(Unaudited)

 

 

December 31,

2023

 

December 31,

2022

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Cash and equivalents

$

1,806,583

 

$

1,053,104

Restricted cash

 

42,594

 

 

41,449

Total cash, cash equivalents, and restricted cash

 

1,849,177

 

 

1,094,553

House and land inventory

 

11,795,370

 

 

11,326,017

Land held for sale

 

23,831

 

 

42,254

Residential mortgage loans available-for-sale

 

516,064

 

 

677,207

Investments in unconsolidated entities

 

166,913

 

 

146,759

Other assets

 

1,545,667

 

 

1,291,572

Goodwill

 

68,930

 

 

68,930

Intangible assets

 

56,338

 

 

66,875

Deferred tax assets

 

64,760

 

 

82,348

 

$

16,087,050

 

$

14,796,515

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Liabilities:

 

 

 

Accounts payable

$

619,012

 

$

565,975

Customer deposits

 

675,091

 

 

783,556

Deferred tax liabilities

 

302,155

 

 

215,446

Accrued and other liabilities

 

1,645,690

 

 

1,685,202

Financial Services debt

 

499,627

 

 

586,711

Notes payable

 

1,962,218

 

 

2,045,527

Total liabilities

 

5,703,793

 

 

5,882,417

Shareholders' equity

 

10,383,257

 

 

8,914,098

 

$

16,087,050

 

$

14,796,515

 

PulteGroup, Inc.

Consolidated Statements of Cash Flows

($000's omitted)

(Unaudited)

 

 

 

Year Ended

 

December 31,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net income

$

2,602,372

 

 

$

2,617,317

 

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

 

 

 

Deferred income tax expense

 

104,266

 

 

 

106,584

 

Land-related charges

 

43,115

 

 

 

66,656

 

Gain on debt retirement

 

(663

)

 

 

 

Depreciation and amortization

 

80,824

 

 

 

70,918

 

Equity income from unconsolidated entities

 

(4,561

)

 

 

(50,680

)

Distributions of earnings from unconsolidated entities

 

4,564

 

 

 

49,151

 

Share-based compensation expense

 

48,200

 

 

 

42,989

 

Other, net

 

(758

)

 

 

1,431

 

Increase (decrease) in cash due to:

 

 

 

Inventories

 

(354,016

)

 

 

(2,256,690

)

Residential mortgage loans available-for-sale

 

160,934

 

 

 

266,310

 

Other assets

 

(290,631

)

 

 

(140,761

)

Accounts payable, accrued and other liabilities

 

(196,884

)

 

 

(104,759

)

Net cash provided by operating activities

 

2,196,762

 

 

 

668,466

 

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(92,201

)

 

 

(112,661

)

Investments in unconsolidated entities

 

(23,403

)

 

 

(64,701

)

Distributions of capital from unconsolidated entities

 

3,265

 

 

 

21,704

 

Business acquisition

 

 

 

 

(10,400

)

Other investing activities, net

 

(16,756

)

 

 

(5,685

)

Net cash used in investing activities

 

(129,095

)

 

 

(171,743

)

Cash flows from financing activities:

 

 

 

Repayments of notes payable

 

(123,290

)

 

 

(4,856

)

Borrowings under revolving credit facility

 

 

 

 

2,869,000

 

Repayments under revolving credit facility

 

 

 

 

(2,869,000

)

Financial Services borrowings (repayments), net

 

(87,084

)

 

 

(39,412

)

Debt issuance costs

 

(1,572

)

 

 

(11,167

)

Proceeds from liabilities related to consolidated inventory not owned

 

129,656

 

 

 

58,729

 

Payments related to consolidated inventory not owned

 

(76,303

)

 

 

(5,915

)

Share repurchases

 

(1,000,000

)

 

 

(1,074,673

)

Cash paid for shares withheld for taxes

 

(11,991

)

 

 

(14,326

)

Dividends paid

 

(142,459

)

 

 

(144,115

)

Net cash used in financing activities

 

(1,313,043

)

 

 

(1,235,735

)

Net increase (decrease)

 

754,624

 

 

 

(739,012

)

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

 

1,094,553

 

 

 

1,833,565

 

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

$

1,849,177

 

 

$

1,094,553

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

Interest paid (capitalized), net

$

10,786

 

 

$

1,797

 

Income taxes paid, net

$

784,453

 

 

$

641,948

 

 

PulteGroup, Inc.

Segment Data

($000's omitted)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

2023

 

2022

 

2023

 

2022

HOMEBUILDING:

 

 

 

 

 

 

 

Home sale revenues

$

4,165,231

 

 

$

4,961,040

 

 

$

15,598,707

 

 

$

15,548,119

 

Land sale and other revenues

 

34,540

 

 

 

45,518

 

 

 

142,116

 

 

 

143,144

 

Total Homebuilding revenues

 

4,199,771

 

 

 

5,006,558

 

 

 

15,740,823

 

 

 

15,691,263

 

 

 

 

 

 

 

 

 

Home sale cost of revenues

 

(2,961,920

)

 

 

(3,503,137

)

 

 

(11,030,206

)

 

 

(10,867,879

)

Land sale cost of revenues

 

(32,139

)

 

 

(29,936

)

 

 

(124,607

)

 

 

(119,906

)

Selling, general, and administrative expenses

 

(308,319

)

 

 

(350,831

)

 

 

(1,312,642

)

 

 

(1,381,222

)

Equity income from unconsolidated entities

 

213

 

 

 

48,291

 

 

 

3,506

 

 

 

49,403

 

Gain on debt retirement

 

301

 

 

 

 

 

 

663

 

 

 

 

Other income (expense), net

 

5,066

 

 

 

(31,179

)

 

 

38,538

 

 

 

(64,331

)

Income before income taxes

$

902,973

 

 

$

1,139,766

 

 

$

3,316,075

 

 

$

3,307,328

 

 

 

 

 

 

 

 

 

FINANCIAL SERVICES:

 

 

 

 

 

 

 

Income before income taxes

$

43,845

 

 

$

24,049

 

 

$

133,192

 

 

$

132,230

 

 

 

 

 

 

 

 

 

CONSOLIDATED:

 

 

 

 

 

 

 

Income before income taxes

$

946,818

 

 

$

1,163,815

 

 

$

3,449,267

 

 

$

3,439,558

 

 

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

Home sale revenues

$

4,165,231

 

$

4,961,040

 

$

15,598,707

 

$

15,548,119

 

 

 

 

 

 

 

 

Closings - units

 

 

 

 

 

 

 

Northeast

 

421

 

 

588

 

 

1,417

 

 

1,614

Southeast

 

1,337

 

 

1,699

 

 

5,201

 

 

5,105

Florida

 

1,940

 

 

2,088

 

 

7,742

 

 

6,928

Midwest

 

1,262

 

 

1,400

 

 

3,955

 

 

4,579

Texas

 

1,265

 

 

1,568

 

 

5,295

 

 

5,692

West

 

1,390

 

 

1,505

 

 

4,993

 

 

5,193

 

 

7,615

 

 

8,848

 

 

28,603

 

 

29,111

Average selling price

$

547

 

$

561

 

$

545

 

$

534

 

 

 

 

 

 

 

 

Net new orders - units

 

 

 

 

 

 

 

Northeast

 

349

 

 

254

 

 

1,510

 

 

1,300

Southeast

 

1,264

 

 

819

 

 

5,541

 

 

4,535

Florida

 

1,507

 

 

1,241

 

 

6,893

 

 

6,139

Midwest

 

871

 

 

581

 

 

4,297

 

 

3,241

Texas

 

1,073

 

 

664

 

 

5,143

 

 

4,382

West

 

1,150

 

 

405

 

 

5,196

 

 

3,680

 

 

6,214

 

 

3,964

 

 

28,580

 

 

23,277

Net new orders - dollars

$

3,359,733

 

$

2,146,813

 

$

15,244,353

 

$

13,589,392

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

 

 

2023

 

2022

Unit backlog

 

 

 

 

 

 

 

Northeast

 

 

 

 

 

567

 

 

474

Southeast

 

 

 

 

 

2,246

 

 

1,906

Florida

 

 

 

 

 

3,792

 

 

4,641

Midwest

 

 

 

 

 

1,692

 

 

1,350

Texas

 

 

 

 

 

1,637

 

 

1,789

West

 

 

 

 

 

2,212

 

 

2,009

 

 

 

 

 

 

12,146

 

 

12,169

Dollars in backlog

 

 

 

 

$

7,319,714

 

$

7,674,068

 

 

 

 

 

 

 

 

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

2023

 

2022

 

2023

 

2022

MORTGAGE ORIGINATIONS:

 

 

 

 

 

 

 

Origination volume

 

4,657

 

 

 

5,192

 

 

 

17,427

 

 

 

18,186

 

Origination principal

$

1,871,531

 

 

$

2,095,529

 

 

$

6,924,910

 

 

$

7,105,486

 

Capture rate

 

84.6

%

 

 

74.8

%

 

 

81.6

%

 

 

77.6

%

 

Supplemental Data

($000's omitted)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

Interest in inventory, beginning of period

$

140,010

 

 

$

143,669

 

 

$

137,262

 

 

$

160,756

 

Interest capitalized

 

30,652

 

 

 

33,894

 

 

 

126,040

 

 

 

130,051

 

Interest expensed

 

(31,584

)

 

 

(40,301

)

 

 

(124,224

)

 

 

(153,545

)

Interest in inventory, end of period

$

139,078

 

 

$

137,262

 

 

$

139,078

 

 

$

137,262

 

 

PulteGroup, Inc.

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

This report contains information about our debt-to-capital ratios. These measures could be considered non-GAAP financial measures under the SEC's rules and should be considered in addition to, rather than as a substitute for, comparable GAAP financial measures. We calculate total net debt by subtracting total cash, cash equivalents, and restricted cash from notes payable to present the amount of assets needed to satisfy the debt. We use the debt-to-capital and net debt-to-capital ratios as indicators of our overall leverage and believe they are useful financial measures in understanding the leverage employed in our operations. We believe that these measures provide 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 ($000's omitted):

 

Debt-to-Capital Ratios

 

 

December 31,

 

 

2023

 

2022

Notes payable

 

$

1,962,218

 

 

$

2,045,527

 

Shareholders' equity

 

 

10,383,257

 

 

 

8,914,098

 

Total capital

 

$

12,345,475

 

 

$

10,959,625

 

Debt-to-capital ratio

 

 

15.9

%

 

 

18.7

%

 

 

 

 

 

Notes payable

 

$

1,962,218

 

 

$

2,045,527

 

Less: Total cash, cash equivalents, and restricted cash

 

 

(1,849,177

)

 

 

(1,094,553

)

Total net debt

 

$

113,041

 

 

$

950,974

 

Shareholders' equity

 

 

10,383,257

 

 

 

8,914,098

 

Total net capital

 

$

10,496,298

 

 

$

9,865,072

 

Net debt-to-capital ratio

 

 

1.1

%

 

 

9.6

%

 

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