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PulteGroup (PHM) Q4 Earnings Beat, Revenues Lag, Orders Up
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PulteGroup Inc. (PHM - Free Report) reported mixed results in fourth-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates, but revenues missed the same. Both metrics decreased year over year. Shares of this notable homebuilder lost more than 1% following the earnings release on Jan 30.
Nonetheless, during the latter part of the fourth quarter, PulteGroup observed a notable surge in buyer activity, mainly attributed to declining interest rates. December emerged as the quarter's peak sales month. With the anticipation of sustained lower interest rates in 2024, the company remains optimistic that the enhanced affordability landscape will continue to attract prospective buyers.
The year 2024 could witness heightened demand for homebuying, supported by a robust job market, lower interest rates, and a limited inventory of existing homes. PulteGroup, equipped with a readily available supply of homes and lots, is strategically positioned to leverage these market conditions for business expansion, ensuring robust cash flow and substantial returns.
PulteGroup, Inc. Price, Consensus and EPS Surprise
PHM reported adjusted earnings per share of $3.28, which beat the consensus mark of $3.20 by 2.5% but decreased 14.8% from $3.85 reported a year ago.
Total revenues of $4.29 billion missed the consensus mark of $4.48 billion by 4.2% and decreased 15.5% from the year-ago figure of $5.08 billion.
Segmental Discussion
PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.
Revenues from the Homebuilding segment were down 16.1% year over year to $4.2 billion. Home sale revenues of $4.17 billion declined 16% year over year, mainly due to lower deliveries and average selling price (ASP) of homes closed. Land sale revenues rose 24.1% from a year ago to $34.5 million.
The number of homes closed dropped 13.9% year over year to 7,615 units from the year-ago level. The average selling price of homes delivered was $547,000, down 2.5% year over year.
New home orders gained 57% year over year to 6,214 units for the quarter, benefiting from strong demand and a drop in cancelations. The value of new orders also rose 56% from a year ago to $3.4 billion. The cancelation rate was 9% of the beginning backlog, down 200 basis points (bps) from the prior-year period.
Most importantly, its backlog, which represents orders yet to be closed, was 12,146 units, down 0.2% year over year. In addition, potential housing revenues from the backlog decreased 4.6% from the prior-year quarter to $7.32 billion.
Home sales gross margin was down 50 bps year over year to 28.9% for the reported quarter. SG&A expenses (as a percentage of home sales revenues) grew 40 bps to 7.4% from a year ago.
Revenues from the Financial Services segment increased 30.2% year over year to $93.9 million. Pretax income for the segment increased 83.3% to $44 million from a year ago.
2023 Highlights
Earnings came in at $11.72 per share on revenues of $16.1 billion (up from $16 billion in 2022). During the year, the company delivered 28,603 homes (down 1.7% year over year) with an ASP of $545,000 (down 2.1% year over year).
Financials
At the end of 2023, cash, cash equivalents and restricted cash were $1.85 billion, up from $1.09 billion in 2022-end. Net debt-to-capital was 1.1% at 2023-end, significantly down from 9.6% at 2022-end.
Net cash provided by operating activities was $2.2 billion in 2023 versus $668.5 million in the prior year period.
In 2023, the company repurchased 13.8 million common shares for $1 billion at an average price of $72.50 per share. The company's board of directors has approved a $1.5 billion expansion of the company's share repurchase authorization, resulting in a total share repurchase authorization of $1.8 billion.
D.R. Horton, Inc. (DHI - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) results, wherein earnings missed the Zacks Consensus Estimate, but revenues surpassed the same.
DHI reported adjusted earnings of $2.82 per share for the fiscal first quarter, which missed the Zacks Consensus Estimate of $2.88 by 2.1% but improved 2% from the year-ago figure of $2.76. Total revenues (Homebuilding, Forestar, Rental and Financial Services) came in at $7.73 billion, up 6.5% year over year. The reported figure topped the consensus mark of $7.72 billion by 1.4%.
KB Home (KBH - Free Report) reported better-than-expected results in fourth-quarter fiscal 2023 (ended Nov 30, 2023). Both the earnings and revenues beat the Zacks Consensus Estimate. With this, the company’s earnings and revenues surpassed the consensus mark in four consecutive quarters.
Looking forward to the first quarter and the entirety of 2024, KBH foresees enhanced conditions in the housing market and ongoing positive trends in the supply chain. Leveraging the advantages of its Built to Order model, which provides buyers with choices, flexibility, and affordability, the company is confident in its ability to effectively navigate potential fluctuations in housing market conditions.
Acuity Brands, Inc. (AYI - Free Report) reported impressive results in first-quarter fiscal 2024 (ending Nov 30, 2023), with earnings and revenues surpassing the Zacks Consensus Estimate. Earnings beat the consensus mark for the 15th consecutive quarter.
Despite a year-over-year decline in sales in the lighting business, AYI reported strong fiscal first-quarter performance driven by increased focus on margins and cash generation. This approach resulted in a higher adjusted operating profit margin and increased adjusted diluted earnings per share.
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PulteGroup (PHM) Q4 Earnings Beat, Revenues Lag, Orders Up
PulteGroup Inc. (PHM - Free Report) reported mixed results in fourth-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates, but revenues missed the same. Both metrics decreased year over year. Shares of this notable homebuilder lost more than 1% following the earnings release on Jan 30.
Nonetheless, during the latter part of the fourth quarter, PulteGroup observed a notable surge in buyer activity, mainly attributed to declining interest rates. December emerged as the quarter's peak sales month. With the anticipation of sustained lower interest rates in 2024, the company remains optimistic that the enhanced affordability landscape will continue to attract prospective buyers.
The year 2024 could witness heightened demand for homebuying, supported by a robust job market, lower interest rates, and a limited inventory of existing homes. PulteGroup, equipped with a readily available supply of homes and lots, is strategically positioned to leverage these market conditions for business expansion, ensuring robust cash flow and substantial returns.
PulteGroup, Inc. Price, Consensus and EPS Surprise
PulteGroup, Inc. price-consensus-eps-surprise-chart | PulteGroup, Inc. Quote
Inside the Headlines
PHM reported adjusted earnings per share of $3.28, which beat the consensus mark of $3.20 by 2.5% but decreased 14.8% from $3.85 reported a year ago.
Total revenues of $4.29 billion missed the consensus mark of $4.48 billion by 4.2% and decreased 15.5% from the year-ago figure of $5.08 billion.
Segmental Discussion
PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.
Revenues from the Homebuilding segment were down 16.1% year over year to $4.2 billion. Home sale revenues of $4.17 billion declined 16% year over year, mainly due to lower deliveries and average selling price (ASP) of homes closed. Land sale revenues rose 24.1% from a year ago to $34.5 million.
The number of homes closed dropped 13.9% year over year to 7,615 units from the year-ago level. The average selling price of homes delivered was $547,000, down 2.5% year over year.
New home orders gained 57% year over year to 6,214 units for the quarter, benefiting from strong demand and a drop in cancelations. The value of new orders also rose 56% from a year ago to $3.4 billion. The cancelation rate was 9% of the beginning backlog, down 200 basis points (bps) from the prior-year period.
Most importantly, its backlog, which represents orders yet to be closed, was 12,146 units, down 0.2% year over year. In addition, potential housing revenues from the backlog decreased 4.6% from the prior-year quarter to $7.32 billion.
Home sales gross margin was down 50 bps year over year to 28.9% for the reported quarter. SG&A expenses (as a percentage of home sales revenues) grew 40 bps to 7.4% from a year ago.
Revenues from the Financial Services segment increased 30.2% year over year to $93.9 million. Pretax income for the segment increased 83.3% to $44 million from a year ago.
2023 Highlights
Earnings came in at $11.72 per share on revenues of $16.1 billion (up from $16 billion in 2022). During the year, the company delivered 28,603 homes (down 1.7% year over year) with an ASP of $545,000 (down 2.1% year over year).
Financials
At the end of 2023, cash, cash equivalents and restricted cash were $1.85 billion, up from $1.09 billion in 2022-end. Net debt-to-capital was 1.1% at 2023-end, significantly down from 9.6% at 2022-end.
Net cash provided by operating activities was $2.2 billion in 2023 versus $668.5 million in the prior year period.
In 2023, the company repurchased 13.8 million common shares for $1 billion at an average price of $72.50 per share. The company's board of directors has approved a $1.5 billion expansion of the company's share repurchase authorization, resulting in a total share repurchase authorization of $1.8 billion.
Zacks Rank
PulteGroup currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Construction Releases
D.R. Horton, Inc. (DHI - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) results, wherein earnings missed the Zacks Consensus Estimate, but revenues surpassed the same.
DHI reported adjusted earnings of $2.82 per share for the fiscal first quarter, which missed the Zacks Consensus Estimate of $2.88 by 2.1% but improved 2% from the year-ago figure of $2.76. Total revenues (Homebuilding, Forestar, Rental and Financial Services) came in at $7.73 billion, up 6.5% year over year. The reported figure topped the consensus mark of $7.72 billion by 1.4%.
KB Home (KBH - Free Report) reported better-than-expected results in fourth-quarter fiscal 2023 (ended Nov 30, 2023). Both the earnings and revenues beat the Zacks Consensus Estimate. With this, the company’s earnings and revenues surpassed the consensus mark in four consecutive quarters.
Looking forward to the first quarter and the entirety of 2024, KBH foresees enhanced conditions in the housing market and ongoing positive trends in the supply chain. Leveraging the advantages of its Built to Order model, which provides buyers with choices, flexibility, and affordability, the company is confident in its ability to effectively navigate potential fluctuations in housing market conditions.
Acuity Brands, Inc. (AYI - Free Report) reported impressive results in first-quarter fiscal 2024 (ending Nov 30, 2023), with earnings and revenues surpassing the Zacks Consensus Estimate. Earnings beat the consensus mark for the 15th consecutive quarter.
Despite a year-over-year decline in sales in the lighting business, AYI reported strong fiscal first-quarter performance driven by increased focus on margins and cash generation. This approach resulted in a higher adjusted operating profit margin and increased adjusted diluted earnings per share.