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PulteGroup (PHM) Q3 Earnings Beat, Revenues Lag, Orders Up
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PulteGroup Inc. (PHM - Free Report) reported mixed results in third-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates, but revenues missed the same. Both metrics increased year over year.
The company has been banking on a 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 orders in the reported quarter and posted a 12-month return on equity of 30.1%.
Shares of this notable homebuilder fell 2.03% in the pre-market trading session on Oct 24.
Inside the Headlines
PHM reported adjusted earnings per share of $2.90, beating the consensus mark of $2.78 by 4.3% and increasing by 7.8% from $2.69 reported a year ago.
PulteGroup, Inc. Price, Consensus and EPS Surprise
Total revenues of $4.004 billion missed the consensus mark of $4.044 billion by 1% but increased 2.8% from the year-ago figure of $3.895 billion.
Segmental Discussion
PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.
Revenues from the Homebuilding segment were up 2.7% year over year to $3.93 billion. Home sale revenues of $3.89 billion increased nearly 2.5% year over year, mainly due to the average price of homes closed. Land sale revenues rose 30.2% from a year ago to $39.9 million.
The number of homes closed increased slightly to 7,076 units from the year-ago level of 7,047 units. The average selling price of homes delivered was $549,000, up 2% year over year.
New home orders gained 43.5% year over year to 7,065 units for the quarter, benefiting from strong demand and an increased community count. The value of new orders also rose 36.2% from a year ago to $3.82 billion. The cancelation rate was 9% of the beginning backlog, down 350 basis points (bps) from the prior-year period.
Most importantly, its backlog, which represents orders yet to be closed, was 13,547 units, down 20.6% year over year. In addition, potential housing revenues from the backlog decreased by 23.2% from the prior-year quarter to $8.13 billion.
Home sales gross margin was down 100 bps year over year to 29.5% for the reported quarter. SG&A expenses (as a percentage of home sales revenues) improved 10 bps to 9.1% from 9.2% a year ago.
Revenues from the Financial Services segment increased 5.5% year over year to $76.7 million. Pretax income for the segment increased 5% to $29 million from a year ago.
Financials
At the end of the third quarter, cash, cash equivalents and restricted cash were $1.9 billion, up from $1.09 billion in 2022-end. Net debt-to-capital was 0.8% at the third quarter-end, significantly down from 9.6% at 2022-end.
Net cash provided by operating activities was $1.91 billion in the first nine months of 2023 versus net cash used in operating activities of $303.9 million in the prior year period.
In third-quarter 2023, the company repurchased 3.8 million common shares for $300 million at an average price of $79.84 per share.
Watsco, Inc. (WSO - Free Report) reported better-than-expected third-quarter 2023 results, with earnings and revenues topping the Zacks Consensus Estimate.
Watsco delivered record sales and earnings per share, driven by solid HVAC equipment sales growth, improved residential unit volumes and strong price realization. Also, the commercial end markets remained healthy in the quarter.
Acuity Brands, Inc. (AYI - Free Report) reported mixed results for fourth-quarter fiscal 2023 (ended Aug 31, 2023), with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. Earnings beat the consensus mark for the 14th consecutive quarter. Revenues missed the same for four quarters in a row following six straight quarters of beat.
Despite a sales decline in the lighting business, AYI reported strong fiscal fourth-quarter performance, driven by an increased focus on margins and cash generation. This approach resulted in a higher adjusted operating profit margin and increased adjusted diluted earnings per share.
RPM International Inc. (RPM - Free Report) reported first-quarter fiscal 2024 (ended Aug 31, 2023) results, with earnings and sales beating the Zacks Consensus Estimate.
The company reported solid quarterly results, with record-breaking sales and an all-time high in adjusted EBIT. This remarkable achievement represents the seventh consecutive quarter of setting new records in both quarterly sales and adjusted EBIT. Its growth was driven by its focus on achieving the margin goals outlined in MAP 2025 and effectively utilizing its competitive advantages.
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PulteGroup (PHM) Q3 Earnings Beat, Revenues Lag, Orders Up
PulteGroup Inc. (PHM - Free Report) reported mixed results in third-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates, but revenues missed the same. Both metrics increased year over year.
The company has been banking on a 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 orders in the reported quarter and posted a 12-month return on equity of 30.1%.
Shares of this notable homebuilder fell 2.03% in the pre-market trading session on Oct 24.
Inside the Headlines
PHM reported adjusted earnings per share of $2.90, beating the consensus mark of $2.78 by 4.3% and increasing by 7.8% from $2.69 reported a year ago.
PulteGroup, Inc. Price, Consensus and EPS Surprise
PulteGroup, Inc. price-consensus-eps-surprise-chart | PulteGroup, Inc. Quote
Total revenues of $4.004 billion missed the consensus mark of $4.044 billion by 1% but increased 2.8% from the year-ago figure of $3.895 billion.
Segmental Discussion
PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.
Revenues from the Homebuilding segment were up 2.7% year over year to $3.93 billion. Home sale revenues of $3.89 billion increased nearly 2.5% year over year, mainly due to the average price of homes closed. Land sale revenues rose 30.2% from a year ago to $39.9 million.
The number of homes closed increased slightly to 7,076 units from the year-ago level of 7,047 units. The average selling price of homes delivered was $549,000, up 2% year over year.
New home orders gained 43.5% year over year to 7,065 units for the quarter, benefiting from strong demand and an increased community count. The value of new orders also rose 36.2% from a year ago to $3.82 billion. The cancelation rate was 9% of the beginning backlog, down 350 basis points (bps) from the prior-year period.
Most importantly, its backlog, which represents orders yet to be closed, was 13,547 units, down 20.6% year over year. In addition, potential housing revenues from the backlog decreased by 23.2% from the prior-year quarter to $8.13 billion.
Home sales gross margin was down 100 bps year over year to 29.5% for the reported quarter. SG&A expenses (as a percentage of home sales revenues) improved 10 bps to 9.1% from 9.2% a year ago.
Revenues from the Financial Services segment increased 5.5% year over year to $76.7 million. Pretax income for the segment increased 5% to $29 million from a year ago.
Financials
At the end of the third quarter, cash, cash equivalents and restricted cash were $1.9 billion, up from $1.09 billion in 2022-end. Net debt-to-capital was 0.8% at the third quarter-end, significantly down from 9.6% at 2022-end.
Net cash provided by operating activities was $1.91 billion in the first nine months of 2023 versus net cash used in operating activities of $303.9 million in the prior year period.
In third-quarter 2023, the company repurchased 3.8 million common shares for $300 million at an average price of $79.84 per share.
Zacks Rank
PulteGroup currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Recent Construction Releases
Watsco, Inc. (WSO - Free Report) reported better-than-expected third-quarter 2023 results, with earnings and revenues topping the Zacks Consensus Estimate.
Watsco delivered record sales and earnings per share, driven by solid HVAC equipment sales growth, improved residential unit volumes and strong price realization. Also, the commercial end markets remained healthy in the quarter.
Acuity Brands, Inc. (AYI - Free Report) reported mixed results for fourth-quarter fiscal 2023 (ended Aug 31, 2023), with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. Earnings beat the consensus mark for the 14th consecutive quarter. Revenues missed the same for four quarters in a row following six straight quarters of beat.
Despite a sales decline in the lighting business, AYI reported strong fiscal fourth-quarter performance, driven by an increased focus on margins and cash generation. This approach resulted in a higher adjusted operating profit margin and increased adjusted diluted earnings per share.
RPM International Inc. (RPM - Free Report) reported first-quarter fiscal 2024 (ended Aug 31, 2023) results, with earnings and sales beating the Zacks Consensus Estimate.
The company reported solid quarterly results, with record-breaking sales and an all-time high in adjusted EBIT. This remarkable achievement represents the seventh consecutive quarter of setting new records in both quarterly sales and adjusted EBIT. Its growth was driven by its focus on achieving the margin goals outlined in MAP 2025 and effectively utilizing its competitive advantages.