PulteGroup Reports $42M Second Quarter 2012 Results
BLOOMFIELD HILLS — PulteGroup, Inc. announced today financial results for its second quarter ended June 30, 2012. For the quarter, the company reported net income of $42 million, or $0.11 per share, inclusive of land and restructuring charges totaling $8 million, or $0.02 per share. In the prior year, the company reported a net loss of $55 million, or $0.15 per share, inclusive of $41 million, or $0.11 per share, of land, mortgage, restructuring and debt repurchase charges.
"Our second quarter results showed significant gains as homebuilding operating margins expanded by more than 600 basis points, net income improved by $98 million and we continued to benefit from our strategic pricing strategies, improved construction efficiencies and further reductions in finished spec home inventory," said Richard J. Dugas, Jr., Chairman, President and Chief Executive Officer of PulteGroup. "Ongoing success in the execution of our value creation initiatives, combined with a recovery in new home demand, contributed to gains in overall operating results allowing PulteGroup to realize second quarter profitability and post its strongest financial performance in over five years."
"Consistent with our focus on capital discipline, PulteGroup's 32 percent increase in second quarter signups were generated from 7 percent fewer communities. By using our existing land assets more efficiently, allocating capital more effectively and managing finished spec inventory more tightly, we continue to position the Company to deliver improved long-term returns."
Mr. Dugas added, "With each passing quarter, we grow more confident that new home demand has found its footing and is moving along a path toward a gradual recovery. Within this environment, we remain focused on strengthening our local market positions while continuing to implement initiatives designed to increase revenues, expand margins, improve overhead leverage and allocate capital more effectively."
Second Quarter Results
Revenue from home sales in the second quarter increased 14 percent from the prior year to $1.0 billion. Higher revenue for the period was driven by an 8 percent increase in average selling price to $268,000, combined with a 5 percent increase in closings to 3,816 homes.
For the quarter, the company's homebuilding operations generated pretax income of $24 million, compared with a pretax loss of $37 million for the same period last year. Excluding capitalized interest expense and land-related charges, home sale gross margin for the quarter was 20.3 percent, an increase of 320 basis points from the prior year and 160 basis points compared with the first quarter of 2012. PulteGroup's second quarter margins benefitted from a favorable mix of home closings and improved pricing, as well as from the company's value creation initiatives which are focused on capturing greater construction efficiencies and strategic pricing opportunities.
Homebuilding SG&A expense for the quarter decreased 10 percent to $124 million, or 12.1 percent of homebuilding revenue. SG&A for the prior year period was $138 million, inclusive of $5 million of restructuring costs, or 15.4 percent of homebuilding revenue.
Net new orders for the second quarter were 5,578, which is an increase of 32 percent over the prior year and a sequential gain of 12 percent from the first quarter of 2012. The year-over-year increase in signups was generated from 7 percent fewer communities. On a unit basis, PulteGroup's quarter-end backlog was up 31 percent to 7,560 homes with a value of $2.2 billion, compared with a prior year backlog of 5,777 homes with a value of $1.6 billion.
The company's financial services operations reported second quarter pretax income of $16 million, compared with a prior year pretax loss of $17 million. Prior year results included a charge of $19 million related to potential loan repurchase obligations. For the quarter, the company's financial services operations benefitted from increased loan originations and favorable market conditions which drove higher gains on mortgage sales. Mortgage capture rate for the quarter was 82 percent compared with 77 percent for the same quarter last year.
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