PulteGroup’s (PHM - Analyst Report) fourth quarter 2012 adjusted earnings (excluding tax benefit) of 34 cents per share beat the Zacks Consensus Estimate of 31 cents by 9.7% and was significantly better than adjusted earnings of 11 cents in the prior-year quarter, driven by strong top-line growth.
PulteGroup reported total revenue of $1.57 billion in the quarter, up 24.6% year over year, owing to double-digit revenue growth in the homebuilding segment. Total revenue beat the Zacks Consensus Estimate of $1.46 billion.
The company benefited from stabilizing recovery in the housing market. This was backed by low home prices and moderating interest rates as renting became a more expensive option luring buyers to new homes. A recovering homebuilding market combined with PulteGroup’s cost reduction initiatives and operating efficiency led to the comprehensive beat in the quarter.
Pulte’s homebuilding revenues, derived from popular brands like Pulte Homes, Centex and Del Webb, rose 23.6% to $1.52 billion, driven by an increase in number of homes closed and average selling prices.
New home orders were up 27% year over year to 3,926 homes in the quarter, attributable to rising home demand in all the regions. All the segments reported growth in new orders in the quarter, although there was a 4% decline in the number of communities. The value of new orders grew 41% year over year to $1.17 billion in the quarter.
Home sales increased 27% to $1.5 billion, driven by rise in volume and prices. Home closings were up 20% year over year to 5,154 homes in the reported quarter owing to increase in sales in most segments excluding Northeast. The average sales price of homes delivered stood at $287,000, up 6% year over year attributable to a change in mix towards move-up homes and price appreciation.
Quarter-end sales order backlog rose 65% to 6,458 homes as of Dec 31, 2012 from 3,924 homes as of Dec 31, 2011. The value of the backlog rose 82.0% to $1.93 billion as of Dec 31, 2012 from $1.06 billion as of Dec 31, 2011. The backlog rose owing to significant net sales order increase.
Financial Services segment revenue was $48.5 million in the fourth quarter of 2012, up 54.5% year over year, owing to higher loans origination and increased gains on mortgage sales.
Adjusted gross margins expanded 320 basis points year over year and 20 basis points sequentially to 21.8%. It was driven by pricing benefits, improved operating efficiency and a better mix of sales, particularly of move-up homes.
The company intends to invest $250 million per year in land and related development in 2013 and 2014.
We appreciate Pulte’s consistent year-over-year growth in homebuilding revenues driven by an increase in new home orders and average selling prices. Moreover, improving homebuilding revenues combined with the company’s cost control initiatives are boosting margins.
PulteGroup carries a Zacks Rank #2 (Buy).
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