PHM - PulteGroup Inc. (PHM) Q4 2023 Earnings Call Transcript

2024-01-30 13:07:02 ET

PulteGroup Inc. (PHM)

Q4 2023 Earnings Conference Call

January 30, 2024, 8:30 a.m. ET

Company Participants

Ryan Marshall - President & CEO

Bob O’Shaughnessy - EVP & CFO

Jim Ossowski - SVP, Finance

Jim Zeumer - VP, IR

Conference Call Participants

Carl Reichardt - BTIG

Matthew Bouley - Barclays

John Lovallo - UBS

Stephen Kim - Evercore ISI

Joe Ahlersmeyer - Deutsche Bank

Michael Rehaut - J.P. Morgan

Sam Reid - Wells Fargo

Ken Zener - Seaport Research Partners

Alan Ratner - Zelman & Associates

Susan Maklari - Goldman Sachs

Rafe Jadrosich - Bank of America

Presentation

Operator

Thank you for standing, and welcome to the PulteGroup Inc. Q4 2023 earnings conference call. I would now like to welcome Jim Zeumer, Vice President of Investor Relations, to begin the call. Jim, over to you.

Jim Zeumer

Thanks, Mandeep. Good morning, and let me welcome participants to today’s call. We look forward to discussing PulteGroup’s strong fourth quarter and full-year financial results, the period ended December 31, 2203. I’m joined on today’s call by Ryan Marshall, President and CEO, Bob O’Shaughnessy, Executive Vice President and CFO, and Jim Ossowski, Senior Vice President, Finance. A copy of our earnings release and this morning’s presentation slides, have been posted to our corporate website at pultegroup.com. We’ll post an audio replay of this call later today.

. Please note that consistent with this morning's earnings release, we'll be discussing our debt ratio on both a gross and net basis. A reconciliation of our adjusted results to our reported financials is included in this morning's release and within today's webcast slides. And finally, I want to alert everyone that today’s presentation includes forward-looking statements about the company’s expected future performance. Actual results could differ materially from those suggested by our comments made today. The most significant risk factors that could affect future results are summarized as part of today’s earnings release and within the accompanying presentation slides. These risk factors and other key information are detailed in our SEC filings, including our annual and quarterly reports.

Now, let me turn the call over to Ryan. Ryan?

Ryan Marshall

Thanks, Jim, and good morning. I'm excited to speak with you today about PulteGroup's outstanding fourth quarter and full-year financial results. Over the past few years, we have faced macro challenges ranging from COVID, to supply chain disruptions, to skyrocketing mortgage rates. Through it all, we've remained disciplined and consistent in running our operations, but when needed, have quickly adjusted key business practices to position PulteGroup for ongoing success. The benefits of this approach can be seen in the strength of our reported results. Bob will detail our Q4 performance, so let me highlight several of our key operating and financial achievements for the full year of 2023. By strategically increasing our spec production, we had more inventory available to meet the demand of first time home buyers and those consumers worried about mortgage rate volatility. Increased house inventory was a critical support to PulteGroup delivering 28,600 homes in 2023, and record home sale revenues of $15.6 billion. In the face of increased costs for land, labor, and materials, we carefully managed product offerings, pricing, incentives, and absorption paces to maintain high profitability, while ensuring we continue to turn our assets. The result, we reported outstanding full-year gross margins of 29.3%, which helped drive a 6% increase in earnings per share to a record $11.72 per share, and a 27% return on equity. We also continue to efficiently increase our land pipeline as we completed transactions to put approximately 40,000 new lots under control. Inclusive of these lots, 53% of our total land pipeline is under option, either with the land sellers or through our expanding land banking structures. Since making the decision to expand our use of land banking starting 15 months ago, we have placed approximately 25 communities representing $1.5 billion worth of future land and development spend into such structures. And finally, consistent with our stated capital allocation priorities, we invested $4.3 billion into the business through land acquisition and development spend in 2023, and returned $1.2 billion to investors through share repurchases, dividends, and debt paydown. Inclusive of our 2023 spend, we have repurchased almost half of the 2013 shares outstanding since initiating the program over a decade ago. ...

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