PulteGroup, Inc. announced financial results for its fourth quarter ended December 31, 2018. For the quarter, the Company’s reported net income was $238 million, or $0.84 per share. Adjusted net income for the period was $314 million, or $1.11 per share, after excluding $85 million of pre-tax land charges and a $16 million pre-tax Financial Services reserve adjustment.

Reported net income for the prior year fourth quarter was $77 million, or $0.26 per share. Adjusted net income for the prior year fourth quarter was $253 million, or $0.85 per share, after excluding a $66 million pre-tax benefit associated with insurance related adjustments, a $57 million pre-tax charge relating to land adjustments, and $181 million of income tax charges relating to the revaluation of the Company’s deferred tax assets.

“PulteGroup’s fourth quarter results complete an outstanding year in which we dramatically increased top and bottom line financial results, while achieving key operating performance metrics consistent with our stated business strategies,” said Ryan Marshall, President and CEO of PulteGroup. “We ended the year with $1.1 billion of cash after investing $2.6 billion to support the ongoing success of the business and returning almost $400 million to shareholders in 2018.”

“The Company delivered strong financial results, but market conditions grew more challenging as 2018 progressed, with homebuying demand softening in response to affordability challenges and general market uncertainty,” added Marshall. “While continued strength in the economy, jobs and consumer confidence supports maintaining a positive long-term view on housing demand, we maintain our disciplined approach to the business that we believe will help us to better navigate today’s more volatile market conditions.”

Fourth Quarter Results

Home sale revenues for the fourth quarter increased 6% over the prior year to $2.9 billion. Higher revenues for the period reflect a 5%, or $20,000, increase in average sales price to $430,000, in combination with a 1% increase in closings to 6,709 homes.

The Company’s reported home sale gross margin for the fourth quarter was 21.5%. The Company’s fourth quarter adjusted home sale gross margin, which excludes $67 million of pre-tax land charges, was 23.8%. Prior year reported and adjusted gross margins were 21.6% and 23.8%, respectively.

For the fourth quarter, the Company’s reported SG&A expense was $292 million, or 10.1% of home sale revenues. Prior year fourth quarter reported SG&A expense of $202 million, or 7.4% of home sale revenues, included a $66 million pre-tax benefit from an insurance-related adjustment. Exclusive of this insurance benefit, prior year adjusted SG&A expense was $268 million, or 9.8% of home sale revenues.

Net new orders for the quarter totaled 4,267, which is a decrease of 11% from the prior year. The value of net new orders was $1.8 billion, compared with $2.0 billion in the fourth quarter of 2017. For the fourth quarter, the Company operated out of 815 communities which is an increase of 3% over the fourth quarter of 2017.

At the end of the quarter, the Company’s backlog of sold houses totaled 8,722 homes with a value of $3.8 billion. The comparable prior year backlog totals were 8,996 homes with a value of $4.0 billion. The average price of homes in backlog was essentially unchanged at $440,000.

Fourth quarter Financial Services pre-tax income was $5 million compared with $23 million in the prior year. Lower pre-tax income for the period was driven primarily by a $16 million pre-tax charge associated with a reserve adjustment taken in the period, as well as more competitive operating conditions which continue to impact overall profitability. Reflective of the more competitive market, mortgage capture rate was 77%, down from 81% in the prior year.

During the quarter, the Company repurchased 5.1 million common shares for $122 million, or an average price of $24.13 per share. For the year, the Company repurchased a total of 10.9 million common shares, or 4% of its outstanding shares, for $295 million, or an average price of $27.00 per share.

At year end, the Company had $1.1 billion of cash and a debt-to-total capitalization of 39%, which is down from 42% at the end of 2017.