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PulteGroup (PHM) Q2 Earnings & Revenues Beat, Backlog Strong

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PulteGroup Inc.’s (PHM - Free Report) second-quarter 2017 adjusted earnings of 47 cents per share beat the Zacks Consensus Estimate of 45 cents by 4.4%. Also, quarterly earnings reflected a solid 27% jump from the year-ago quarter’s adjusted figure of 37 cents.

Earnings in the quarter under review were adjusted for 15 cents per share, related to land and corporate office relocation charges.

The company benefitted from higher demand thanks to positive U.S. housing market dynamics accompanied by an improving economy and job market. Also, high consumer confidence, low interest rates and a generally limited supply of homes across the nation bode well.

PulteGroup’s total revenue of $2.02 billion missed the Zacks Consensus Estimate of $2.03 billion by a meager 0.5%. Revenues, however, increased 12.3% year over year owing to a rise in the number of homes delivered.

Segment Details

The company conducts operations through two primary business segments – Homebuilding and Financial Services.

Homebuilding revenues increased 12.3% year over year to $1.97 billion.

Home sale revenues of $1.96 billion escalated 12.2% year over year on increased home closings and average selling price. Land sale revenues of $7.93 million decreased 60.2% from $4.95 million a year ago.

The number of homes closed increased 5.7% year over year to 5,044. Home closings increased across all operating regions of the company – Florida, Midwest and Texas – barring Northeast, Southeast and West. Average selling price (ASP) of homes delivered was $395,000, reflecting an increase of 6.3% year over year.

The company’s backlog, which represents orders yet to be closed, was 10,674, up 10.3% year over year. Potential housing revenues from backlog increased 11.7% to $4.46 billion. Backlog value was driven by a 19% increase in average sales price of backlogs.

New home orders increased 12% year over year to 6,395 in the quarter. Home orders increased across all operating regions, including Northeast. Value of new orders increased 23% year over year to $2.63 billion.

Margins

Home sales’ gross margin decreased 40 basis points year over year to 21.1%. Adjusted gross margin in the quarter was 23.4%.

SG&A expenses, as percentage of home sale revenues, were 11 %, same as the prior-year quarter. Adjusted SG&A expenses, as percentage of home sale revenues, came in at 12% in the second quarter.

Revenues from the Financial Services segment increased 9.7% year over year to $47.3 million. The segment generated pre-tax income of $18.9 million, higher than $17 million in the prior-year quarter, driven by higher closing volumes in homebuilding operations and higher average size loan. Mortgage capture rate in the quarter was 79%, compared with 81% in the prior-year quarter.

Financials

As of Jun 30, 2017, cash and cash equivalents were $208.2 million, down from $698.9 million at the end of 2016.

During the quarter, PulteGroup repurchased 12.8 million common shares for $300 million, at an average price of $23.42 per share.

Zacks Rank

PulteGroup carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

NVR, Inc. (NVR - Free Report) , one of the country’s largest homebuilding and mortgage-banking companies, reported second-quarter 2017 earnings of $35.19 per share, surpassing the Zacks Consensus Estimate of $28.63 by 22.9%.

Upcoming Release in the Construction Sector

Masco Corporation (MAS - Free Report) is slated to release its quarterly results on Jul 27. The Zacks Consensus Estimate for earnings is pegged at 60 cents, reflecting an increase of 29.8% year over year.

Louisiana-Pacific Corp. (LPX - Free Report) is scheduled to release its quarterly numbers on Aug 1. The Zacks Consensus Estimate for earnings is pegged at 61 cents, reflecting an increase of 116.7% on a year-over-year basis.

PulteGroup, Inc. Price, Consensus and EPS Surprise

 

PulteGroup, Inc. Price, Consensus and EPS Surprise | PulteGroup, Inc. Quote

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