PulteGroup Inc. ( PHM Quick Quote PHM - Free Report) reported solid results for first-quarter 2022. Both earnings and revenues topped the Zacks Consensus Estimate as well as improved year over year on the back of a solid housing market backdrop. An improving economy, a favorable job market and rising wages helped PHM mitigate the impacts of higher home prices and rising mortgage rates. Shares of this homebuilder gained 2.3% in the pre-market trading session following the earnings release. Ryan Marshall, president and CEO of PulteGroup, said, “PulteGroup’s national and local market scale are providing important advantages in getting our homes constructed given today’s challenging environment as supply-chain disruptions continue to impact the market.” Inside the Headlines
Earnings per share came in at $1.83, surpassing the consensus mark of $1.70 by 7.6%. Earnings grew 43% from $1.28 per share a year ago. The upside was driven by gains in revenues, improved gross margin and overhead leverage.
Total revenues of $3.19 billion topped the consensus mark of $3.05 billion by 4.4%. Revenues increased 16.8% from the year-ago figure of $2.73 billion. Segment Discussion
PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.
Revenues from the Homebuilding segment were up 18.3% year over year to $3.1 billion. Home sale revenues of $3.07 billion also improved 18.2% year over year, mainly due to the higher average price of homes closed. Land sale revenues also improved 22.1% from a year ago to $33.2 million. The number of homes closed remained on par with the year-ago level of 6,039 units. Home closings slipped across all operating regions served, barring Florida and Midwest. The average selling price of homes delivered was $508,000, up 18% year over year. Importantly, its backlog — which represents orders yet to be closed — was 19,935 units, up 5.1% year over year. In addition, potential housing revenues from backlog increased 30.5% from the prior-year quarter to $11.5 billion. Yet, new home orders dropped 19% year over year to 7,971 units for the quarter due to a 7% lower average community count and the company’s actions to limit the rate of sales in many of its communities (to match with the pace of production). Home orders were down across all operating regions served. That said, the value of new orders improved 2% from a year ago to $4.7 billion. Margins
Home sales gross margin was up 350 basis points (bps) year over year to 29% for the quarter. Adjusted operating margin grew 360 bps year over year to 18.2%. SG&A expenses (as a percentage of home sales revenues) improved 20 bps to 10.7% from the adjusted SG&A level of 10.9%.
Revenues from the Financial Services segment declined 20.7% year over year to $84.1 million. Pretax income for the segment decreased to $41 million from $66 million a year ago. Benefits from higher mortgage originations resulting from growth in homebuilding operations were offset by the impacts of a more competitive operating environment. Financials
At March 2022-end, cash and cash equivalents were $1.15 billion, down from $1.78 billion at 2021-end. Debt to total capital of 21.5% at first quarter-end was up from 21.3% at 2021-end.
In the first quarter, it repurchased 10.3 million common shares for $500 million. Zacks Rank
PulteGroup currently has a Zacks Rank #4 (Sell).
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