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PulteGroup, Inc. Summary of Financial Results Third Quarter 2010 - PowerPoint PPT Presentation

Mar 05, 2023 •870 likes •1.04k views

PulteGroup, Inc. Summary of Financial Results Third Quarter 2010 Forward-Looking Statement This presentation includes forward - looking statements. These statements are subject to a number of risks, uncertainties and other factors that

  1. PulteGroup, Inc. Summary of Financial Results Third Quarter 2010

  2. Forward-Looking Statement This presentation includes “forward - looking statements.” These statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or implied by, these statements. You can identify these statements by the fact that they do not relate to matters of a strictly factual or historical nature and generally discuss or relate to forecasts, estimates or other expectations regarding future events. Generally, the words “believe,” “expect,” “intend,” “esti mat e,” “anticipate,” “project,” “may,” “can,” “could,” “might,” “will” and similar expressions identify forward -looking statements, including statements related to expected operating and performing results, planned transactions, planned objectives of management, future developments or conditions in the industries in which we participate and other trends, developments and uncertainties that may affect our business in the future. Such risks, uncertainties and other factors include, among other things: interest rate changes and the availability of mortgage financing; continued volatility in, and potential further deterioration of, the debt and equity markets; competition within the industries in which PulteGroup operates; the availability and cost of land and other raw materials used by PulteGroup in its homebuilding operations; the availability and cost of insurance covering risks associated with PulteGroup's businesses; shortages and the cost of labor; weather related slowdowns; slow growth initiatives and/or local building moratoria; governmental regulation directed at or affecting the housing market, the homebuilding industry or construction activities; uncertainty in the mortgage lending industry, including revisions to underwriting standards and repurchase requirements associated with the sale of mortgage loans; the interpretation of or changes to tax, labor and environmental laws; economic changes nationally or in PulteGroup’s local markets, including inflation, deflation, changes in consumer confidence and preferences and the state of t he market for homes in general; legal or regulatory proceedings or claims; required accounting changes; terrorist acts and other acts of war; and other factors of national, regional and global scale, including those of a political, economic, business and competitive nature. See PulteGroup’s Annual Report on Form 10 -K for the fiscal year ended December 31, 2009, and other public filings with the Securities and Exchange Commission (the “SEC”) for a further discussion of these and other risks and uncertainties applicable to our businesses. Certain statements in this presentation contain references to non-GAAP financial measures. A reconciliation of the non-GAAP financial measures to the comparable GAAP numbers is included in this presentation. 2

  3. Q3 2010 Consolidated Results  Company’s reported Q3 2010 loss of $2.63 per share inclusive of $986 million, or $2.60 per share, in charges for goodwill impairment, construction and other insurance reserves and land-related charges  Home sales revenue of $1.0 billion reflects benefit of 5% increase in price offset by 7% decrease in unit closings  Home sale gross margin of 16.7% before impact of impairments, interest expense and merger-related expenses  Homebuilding SG&A costs, excluding impact of construction and other insurance reserves, were 14.1% of homes sales revenue  Company restructuring of operations expected to trim 2011 SG&A by approximately $100 million on a year-over-year basis  Backlog of 5,345 homes valued at $1.4 billion  Quarter-end cash balance of $2.7 billion 3

  4. Financial Results 4

  5. Q3 2010 Financial Results  Q3 2010 results reflect Centex  Goodwill impairment charge of $655 merger completed August 18, million in Q3 2010 2009. Prior year results have not  Q3 2010 results include construction been adjusted for the and other insurance reserve charges transaction. of $272 million  Net new home orders of 3,566  Homebuilding SG&A, excluding homes, a decrease of 12% from impact of construction and other prior year and decrease of 15% insurance reserves, was 14.1% of from prior quarter (Q2 2010) homes sales revenue  Home sale gross margin,  Prior year SG&A, excluding merger excluding impairments, interest related costs, was 17.6% of home expense and merger-related sales revenue costs of 16.7%  Pre-tax land charges of $59 million compared with $164 million in the  YOY gross margin increase of 360 basis points prior year 5

  6. 3Q10 Financial Results: Adjusted Margin Analysis PulteGroup Reported 3Q ’10 2Q ’10 1Q ’10 4Q ’09 3Q ’09 Reported Home Sale Gross 7.0% 12.6% 13.0% 1.6% (2.5%) Margin % Home Sale Gross Margin % Before Impairments & Interest 16.6% 17.2% 16.1% 12.9% 12.1% Expense Home Sale Gross Margin % Before Impairments, Interest 16.7% 17.2% 16.3% 14.2% 13.1% Expense & CTX WIP Impact 6

  7. Q3 2010 Selected Financial Data Three Months Ended September 30, 2010 2009 Homebuilding House Sale Revenues ($ millions) $ 1,025 $1,054 Homebuilding Pre-Tax Income (Loss) ($ millions) $ (1,020) $ (292) Homebuilding SG&A Expenditures ($ millions) (1) $ 417 $ 209 Backlog (Units) 5,345 8,383 Backlog (Dollar Value in millions) $ 1,446 $ 2,197 Financial Services Pre-Tax Income (Loss) ($ millions) $ 3 $ (9) Income (Loss) Before Income Taxes ($ millions) $ (1,024) $ (359) Net Income (Loss) Per Share (2) $ (2.63) $ (1.15) (1) Inclusive of $272 million of charges for construction and other insurance reserves in 2010 and $23 million of merger-related costs in 2009 (2) Includes $2.60 per share of charges for goodwill impairment, construction and other insurance reserves and land-related charges 7

  8. Balance Sheet Sept. 30, 2010 Dec. 31, 2009 Debt – to – Cap 65% 57% Net Debt – to – Cap 42% 43% Shareholders’ Equity ($ billions) $2.3 $3.2 8

  9. Supplemental Mortgage Data 9

  10. 3Q10 Financial Results: Mortgage Put-Back Analysis 2005 2006 2007 2008 Total Origination Volumes ($ billions) Units ($ billions) Units ($ billions) Units ($ billions) Units ($ billions) Units PMC Originations $8.5 42,994 $8.7 40,269 $5.3 23,404 $3.4 15,227 $25.9 121,894 CTX Originations * $15.8 70,683 $13.8 57,779 $10.0 45,160 $4.1 20,200 $43.7 193,822 Total Originations $24.3 113,677 $22.5 98,048 $15.3 68,564 $7.5 35,427 $69.6 315,716 * CTX Originations exclude activity related to its subprime business that was sold in 2006 Put-Back Requests Based on Year of Origination ($ millions) Units ($ millions) Units ($ millions) Units ($ millions) Units ($ millions) Units Gross Repurchase Requests Received $54 269 $203 945 $215 920 $56 271 $529 2,405 - Requests as percent of production 0.2% 0.2% 0.9% 1.0% 1.4% 1.3% 0.7% 0.8% 0.8% 0.8% • Almost 80% of put-back requests from mortgages issued in 2006 and 2007 • Approximately half of initial put-back requests are immediately refuted by Pulte Mortgage  Requests not immediately refuted undergo extensive analysis to confirm exposure, attempt to correct underlying issue and, when needed, confirm liability • Most put- backs are “make - whole” on homes that have been foreclosed and sold, some after loan principal had been paid down, further limiting financial impact 10

  11. Mortgage Put-Backs Per Month Volumes for Pulte Mortgage and CTX Mortgage Combined 200 180 160 140 120 Units 100 80 60 40 20 0 11

  12. Supplemental Non-GAAP Data 12

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