PulteGroup, Inc. announced today financial results for its first quarter ended March 31, 2023. For the quarter, the Company reported net income of $532 million, or $2.35 per share, up from prior year net income of $455 million, or $1.83 per share.

“As interest rates increased in 2022, we adjusted business practices to support a consistent start cadence and an appropriate inventory of quick move-in homes as we focused on turning our assets and delivering high returns,” said PulteGroup President and CEO Ryan Marshall. “By achieving an effective balance of price and pace, we realized strong orders, closings and margins in the first quarter, while delivering a 28% increase in earnings per share and a 12-month return on equity* of 32%.”

Mr. Marshall added, “Within an evolving macro environment, consumers across all buyer segments and price points continue to demonstrate a strong desire for homeownership. With interest rates more stable and the supply of new and existing homes generally in balance with demand, we remain optimistic about the housing industry as we navigate this phase of the housing cycle.”

First Quarter Financial Results

The Company has reclassified closing cost incentives from cost of sales to net revenues for all periods presented to be more consistent with industry reporting practices. This reclassification impacted the Company’s reported home sales revenue and associated average sales price, as well as home sale gross margin and SG&A percentages, but had no impact on reported earnings. An analysis of the impacts on the current quarter and prior year period is included in the accompanying financial tables. The discussion in this release gives effect to such reclassification both for the current and prior year quarter.

The Company’s first quarter home sale revenues increased 15% over the prior year to $3.5 billion. Higher revenues for the period reflect a 9% increase in average sales price to $545,000, in combination with a 6% increase in closings to 6,394 homes. First quarter closings benefited from the Company’s decision to modestly increase the availability of quick move-in homes, as well as the ongoing resolution of supply chain issues caused by the pandemic.

The Company’s home sale gross margin in the first quarter was 29.1%, compared with 29.3% in the prior year. SG&A expense in the period totaled $337 million, or 9.6% of home sale revenues. Prior year SG&A expense was $329 million, or 10.9% of home sale revenues. The Company’s operating margin in the first quarter was 19.5%, up from 18.5% in the first quarter of 2022.

First quarter gross orders totaled 8,898 homes, an increase of 1% over prior year gross orders of 8,767 homes. Net new orders for the first quarter decreased 8% from the prior year to 7,354 homes. As a percentage of 2022 year-end backlog, the cancelation rate in the first quarter was 13% which is up from 4% in the comparable prior year period. The dollar value of net new orders in the first quarter decreased 20% from the prior year to $3.8 billion. The Company operated from an average of 879 communities in the quarter, an increase of 13% over the prior year.

The Company’s quarter end backlog was 13,129 homes valued at $8.0 billion. The average sales price in backlog was $608,000, an increase of 5% over the prior year.

PulteGroup’s financial services operations reported first quarter pre-tax income of $14 million, down from $41 million in the prior year period. The decrease in financial services pre-tax income for the quarter reflects lower loan volumes, the more competitive pricing environment and the industry-wide increase in mortgage incentives experienced in the period. Lower loan volumes for the first quarter were impacted by a decline in capture rate to 78%, down from 81% last year.

In the first quarter, the Company repurchased 2.8 million of its common shares outstanding for $150 million, or an average price of $54.30 per share. At quarter end, the Company had a debt-to-capital ratio of 18.1%. Adjusting for the $1.3 billion of cash on its balance sheet at quarter end, the Company’s net debt-to-capital ratio was 7.2%.

In a separate press release, PulteGroup announced that its Board of Directors approved a $1.0 billion increase to the Company’s share repurchase authorization. “Over the past decade, we have returned over $5.0 billion to shareholders through share repurchases which has contributed to a more than 40% reduction in the Company’s shares outstanding,” said Bob O’Shaughnessy, PulteGroup Executive Vice President and CFO. “Today’s $1.0 billion increase in our repurchase authorization reflects the strength of our financial results and our commitment to the ongoing return of excess funds to our shareholders.”

A conference call to discuss PulteGroup's first quarter results is scheduled for Tuesday April 25, 2023, at 8:30 a.m. Eastern Time. Interested investors can access the live webcast via PulteGroup's corporate website at www.pultegroup.com.

* The Company's return on equity is calculated as net income for the trailing twelve months divided by average shareholders' equity, where average shareholders' equity is the sum of ending shareholders' equity balances of the trailing five quarters divided by five.