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PulteGroup (PHM) Q2 Earnings Beat, Orders Up on Strong Demand
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PulteGroup Inc. (PHM - Free Report) reported impressive results in second-quarter 2023. Its earnings and revenues surpassed their respective Zacks Consensus Estimates and increased year over year. The upside was mainly driven by its solid operating model, which strategically aligns the production of build-to-order and quick-move-in homes with applicable demand across consumer groups.
Backed by its disciplined and balanced business model, the company witnessed solid gross closings, orders and margins in the reported quarter and posted a 12-month return on equity of 32%.
Shares of this notable homebuilder fell 1.49% in the pre-market trading session on Jul 25.
Inside the Headlines
Adjusted earnings per share came in at $3.00, topping the consensus mark of $2.47 by 21.5% and increasing by 9.9% from $2.73 reported a year ago.
PulteGroup, Inc. Price, Consensus and EPS Surprise
Total revenues of $4.19 billion also beat the consensus mark of $3.96 billion by 5.9% and increased 8% from the year-ago figure of $3.88 billion.
Segment Discussion
PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.
Revenues from the Homebuilding segment were up 7.9% year over year to $4.1 billion. Home sale revenues of $4.06 billion increased nearly 8% year over year, mainly due to the higher closings and average price of homes closed. Land sale revenues also rose 11.2% from a year ago to $37.6 million.
The number of homes closed increased 5% from the year-ago level to 7,518 units. The average selling price (ASP) of homes delivered was $540,000, up 3% year over year.
Most importantly, its backlog, which represents orders yet to be closed, was 13,558 units, down 29.3% year over year. In addition, potential housing revenues from backlog decreased by 29.5% from the prior-year quarter to $8.2 billion.
New home orders gained 23.8% year over year to 7,947 units for the quarter, benefiting from strong demand and an increased community count. The value of new orders also rose 9.4% from a year ago to $4.3 billion. The cancelation rate was 9% of the beginning backlog, down 350 basis points (bps) from the previous-year period.
Home sales gross margin was down 170 bps year over year to 29.6% for the reported quarter. The metric was up 50 bps sequentially, backed by favorable demand and improved pricing on spec sales. SG&A expenses (as a percentage of home sales revenues) improved 50 bps to 7.8% from 9.3% a year ago.
Revenues from the Financial Services segment increased 11.4% year over year to $92.2 million. Pretax income for the segment increased 16% to $46 million from a year ago.
Financials
At the end of the second quarter, cash, cash equivalents and restricted cash were $1.78 billion, up from $1.09 billion in 2022-end. Net debt-to-capital was 2.6% at second quarter-end, significantly down from 9.6% at 2022-end.
Net cash provided by operating activities was $1.45 billion in the first half of 2023 versus $102.3 million in the first half of 2022.
In second-quarter 2023, the company repurchased 3.7 million common shares for $250 million at an average price of $68.31 per share.
KB Home (KBH - Free Report) reported better-than-expected results for second-quarter fiscal 2023 (ended May 31, 2023). Both earnings and revenues beat the Zacks Consensus Estimate. The company’s earnings and revenues surpassed the consensus mark in two consecutive quarters.
KBH’s net orders grew 1% in the quarter to 3,936 units from the prior year. The value of net orders, however, was down 11% from the year-ago quarter to $1.9 billion due to lower ASP. Sequentially, net orders grew 84% in units and 90% in value, respectively.
D.R. Horton, Inc. (DHI - Free Report) reported third-quarter fiscal 2023 (ended Jun 30, 2023) results, wherein earnings and revenues surpassed their respective Zacks Consensus Estimate.
On a year-over-year basis, although earnings declined, revenues increased. The company highlighted that the supply of both new and existing homes at affordable price points remains limited and that the demographics supporting housing demand remain favorable. This tailwind has helped this Arlington, TX-based homebuilder witness net sales order growth of 37% year over year in the fiscal third quarter.
Lennar Corporation (LEN - Free Report) reported impressive results for second-quarter fiscal 2023, where earnings and revenues beat the Zacks Consensus Estimate.
The housing market condition is normalizing and has been gaining from the pent-up demand, given the shortage of existing homes in the sector. The homebuilder has also lifted its delivery expectations for the year.m
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PulteGroup (PHM) Q2 Earnings Beat, Orders Up on Strong Demand
PulteGroup Inc. (PHM - Free Report) reported impressive results in second-quarter 2023. Its earnings and revenues surpassed their respective Zacks Consensus Estimates and increased year over year. The upside was mainly driven by its solid operating model, which strategically aligns the production of build-to-order and quick-move-in homes with applicable demand across consumer groups.
Backed by its disciplined and balanced business model, the company witnessed solid gross closings, orders and margins in the reported quarter and posted a 12-month return on equity of 32%.
Shares of this notable homebuilder fell 1.49% in the pre-market trading session on Jul 25.
Inside the Headlines
Adjusted earnings per share came in at $3.00, topping the consensus mark of $2.47 by 21.5% and increasing by 9.9% from $2.73 reported a year ago.
PulteGroup, Inc. Price, Consensus and EPS Surprise
PulteGroup, Inc. price-consensus-eps-surprise-chart | PulteGroup, Inc. Quote
Total revenues of $4.19 billion also beat the consensus mark of $3.96 billion by 5.9% and increased 8% from the year-ago figure of $3.88 billion.
Segment Discussion
PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.
Revenues from the Homebuilding segment were up 7.9% year over year to $4.1 billion. Home sale revenues of $4.06 billion increased nearly 8% year over year, mainly due to the higher closings and average price of homes closed. Land sale revenues also rose 11.2% from a year ago to $37.6 million.
The number of homes closed increased 5% from the year-ago level to 7,518 units. The average selling price (ASP) of homes delivered was $540,000, up 3% year over year.
Most importantly, its backlog, which represents orders yet to be closed, was 13,558 units, down 29.3% year over year. In addition, potential housing revenues from backlog decreased by 29.5% from the prior-year quarter to $8.2 billion.
New home orders gained 23.8% year over year to 7,947 units for the quarter, benefiting from strong demand and an increased community count. The value of new orders also rose 9.4% from a year ago to $4.3 billion. The cancelation rate was 9% of the beginning backlog, down 350 basis points (bps) from the previous-year period.
Home sales gross margin was down 170 bps year over year to 29.6% for the reported quarter. The metric was up 50 bps sequentially, backed by favorable demand and improved pricing on spec sales. SG&A expenses (as a percentage of home sales revenues) improved 50 bps to 7.8% from 9.3% a year ago.
Revenues from the Financial Services segment increased 11.4% year over year to $92.2 million. Pretax income for the segment increased 16% to $46 million from a year ago.
Financials
At the end of the second quarter, cash, cash equivalents and restricted cash were $1.78 billion, up from $1.09 billion in 2022-end. Net debt-to-capital was 2.6% at second quarter-end, significantly down from 9.6% at 2022-end.
Net cash provided by operating activities was $1.45 billion in the first half of 2023 versus $102.3 million in the first half of 2022.
In second-quarter 2023, the company repurchased 3.7 million common shares for $250 million at an average price of $68.31 per share.
Zacks Rank
PulteGroup currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Peer Release
KB Home (KBH - Free Report) reported better-than-expected results for second-quarter fiscal 2023 (ended May 31, 2023). Both earnings and revenues beat the Zacks Consensus Estimate. The company’s earnings and revenues surpassed the consensus mark in two consecutive quarters.
KBH’s net orders grew 1% in the quarter to 3,936 units from the prior year. The value of net orders, however, was down 11% from the year-ago quarter to $1.9 billion due to lower ASP. Sequentially, net orders grew 84% in units and 90% in value, respectively.
D.R. Horton, Inc. (DHI - Free Report) reported third-quarter fiscal 2023 (ended Jun 30, 2023) results, wherein earnings and revenues surpassed their respective Zacks Consensus Estimate.
On a year-over-year basis, although earnings declined, revenues increased. The company highlighted that the supply of both new and existing homes at affordable price points remains limited and that the demographics supporting housing demand remain favorable. This tailwind has helped this Arlington, TX-based homebuilder witness net sales order growth of 37% year over year in the fiscal third quarter.
Lennar Corporation (LEN - Free Report) reported impressive results for second-quarter fiscal 2023, where earnings and revenues beat the Zacks Consensus Estimate.
The housing market condition is normalizing and has been gaining from the pent-up demand, given the shortage of existing homes in the sector. The homebuilder has also lifted its delivery expectations for the year.m