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PulteGroup Inc. PHM has reported better-than-expected first-quarter 2024 results, wherein adjusted earnings and total revenues handily beat the Zacks Consensus Estimate. The company's performance continues to benefit from its diversified operations and strategic focus on balancing sales price and pace to maintain strong returns.
President and CEO Ryan Marshall noted that while declining interest rates have helped stimulate buyer interest, affordability remains a challenge due to high home prices and stretched monthly payments. Despite short-term economic uncertainty affecting consumer demand, Marshall expressed confidence in the long-term strength of housing demand. He emphasized that PulteGroup’s balanced operating model and financial discipline position the company well to navigate a dynamic market environment and continue delivering value to stakeholders.
Shares of this notable homebuilder gained 2.03% on Tuesday, following the earnings release.
PulteGroup, Inc. Price, Consensus and EPS Surprise
PulteGroup, Inc. price-consensus-eps-surprise-chart | PulteGroup, Inc. Quote
Inside PHM’s Headlines
The company reported adjusted earnings of $2.57 per share, which topped the Zacks Consensus Estimate of $2.47 by 4.1%. In the year-ago quarter, PHM reported adjusted earnings per share of $2.87. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)
Total revenues of $3.89 billion also surpassed the consensus mark of $3.86 billion but decreased 1.4% from the year-ago figure of $3.95 billion.
Segmental Discussion of PulteGroup
PulteGroup primarily operates through two business segments — Homebuilding and Financial Services.
Homebuilding: Revenues from this segment were down 1.4% year over year to $3.8 billion. We had expected Homebuilding revenues to decrease 0.8% year over year to $3.83 billion. Home sale revenues decreased 1.8% year over year to $3.75 billion. Land sale and other revenues increased 41.2% to $52.6 million from a year ago.
The number of homes closed dropped 7% to 6,583 units (versus our projection of 6,754 units) from the year-ago level. The ASP of homes delivered was $570,000, up 6% year over year. We had predicted ASP of homes delivered to be $560,200.
Net new home orders declined 7.3% year over year to 7,765 units (versus our expectation of 8,752 units). Yet, the value of new orders declined 4.7% from a year ago to $4.48 billion. The decline in net new orders was largely due to a drop in gross orders, as consumers continued to grapple with affordability pressures and heightened macroeconomic uncertainty.
PHM’s backlog, which represents orders yet to be closed, was 11,335 units, down from 13,430 units a year ago. In addition, potential housing revenues from the backlog were down year over year to $7.22 billion from $8.2 billion.
Home sales gross margin was down 210 basis points (bps) year over year to 27.5%. SG&A expenses (as a percentage of home sales revenues) expanded 110 bps to 10.5% from a year ago.
Financial Services: Revenues from this segment dropped 1.7% year over year to $90.8 million. Pretax income for the segment declined to $36 million from $41 million a year ago, due to lower closing volumes in the company’s homebuilding operations.