INVESTOR PRESENTATION MAY 2013

Transcription

1 INVESTOR PRESENTATION MAY 2013

2 Forward-Looking Statements This presentation includes forward-looking statements. These statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or implied by, these statements. You can identify these statements by the fact that they do not relate to matters of a strictly factual or historical nature and generally discuss or relate to forecasts, estimates or other expectations regarding future events. Generally, the words believe, expect, intend, estimate, anticipate, project, may, can, could, might, will and similar expressions identify forward-looking statements, including statements related to expected operating and performing results, planned transactions, planned objectives of management, future developments or conditions in the industries in which we participate and other trends, developments and uncertainties that may affect our business in the future. Such risks, uncertainties and other factors include, among other things: interest rate changes and the availability of mortgage financing; continued volatility in the debt and equity markets; competition within the industries in which PulteGroup operates; the availability and cost of land and other raw materials used by PulteGroup in its homebuilding operations; the impact of any changes to our strategy in responding to continuing adverse conditions in the industry, including any changes regarding our land positions; the availability and cost of insurance covering risks associated with PulteGroup's businesses; shortages and the cost of labor; weather related slowdowns; slow growth initiatives and/or local building moratoria; governmental regulation directed at or affecting the housing market, the homebuilding industry or construction activities; uncertainty in the mortgage lending industry, including revisions to underwriting standards and repurchase requirements associated with the sale of mortgage loans; the interpretation of or changes to tax, labor and environmental laws; economic changes nationally or in PulteGroup s local markets, including inflation, deflation, changes in consumer confidence and preferences and the state of the market for homes in general; legal or regulatory proceedings or claims; required accounting changes; terrorist acts and other acts of war; and other factors of national, regional and global scale, including those of a political, economic, business and competitive nature. See PulteGroup s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and other public filings with the Securities and Exchange Commission (the SEC ) for a further discussion of these and other risks and uncertainties applicable to our businesses. PulteGroup undertakes no duty to update any forward-looking statement, whether as a result of new information, future events or changes in PulteGroup s expectations. Certain statements in this presentation contain references to non-gaap financial measures. A reconciliation of the non-gaap financial measures to the comparable GAAP numbers is included in this presentation. 2

3 Presentation Agenda Signs of a Sustained Recovery in Housing PulteGroup Company Profile Improving Long-term Returns Value Creation and Building a Better Business Review of Q Financial Results 3

4 DATA POINT TO A SUSTAINED RECOVERY IN HOUSING 4

5 Excess Supply Reduced Through Years of Under Building HOUSING STARTS (000) CUMULATIVE EXCESS/DEFICIT (000) Median = 1.5 5

6 A Clear Upturn in Housing Demand March 2013 SAAR exceeds 400k new home sales New homes sales bottomed at 306k in 2011, down 80% from peak Industry experts forecasting growth in 2013 and beyond Favorable demographics and pent-up demand Low housing prices Low interest rates Rising rental rates Source: U.S. Census Bureau; NAHB 1,400 1,200 1, NEW HOME SALES (000) Mar-13 6

7 Pent-up Demand Expected to Return NUMBER OF SHARED HOUSEHOLDS (in thousands) Source: U.S. Census Bureau; NAHB CHANGE IN NUMBER OF HOUSEHOLDS (in millions) 7

8 While New Home Inventory is Limited For Sale New Home Inventory (000) Source: U.S. Census Bureau; NAHB 8

9 OVERVIEW OF PULTEGROUP 9

10 PulteGroup Overview Among the nation s largest homebuilders with operations in 55 major metro markets Delivered over 600,000 homes since being founded in Michigan in 1950 Unique multi-brand strategy to serve all major customer groups Unmatched presence in active adult market through Del Webb brand 10

11 Broad Market Presence in Top Metro Markets 11

12 Exposure Across All Major Customer Segments 31% 43% 26% 2012 CLOSINGS INCREASED DEMAND AMONG MOVE-UP BUYERS IS SHIFTING MIX TOWARD PULTE HOMES 12

13 Positive Market Opportunity for Active Adult Expect ongoing recovery in demand within buyer group Improving ability to sell current home Demographics drive demand Buyer group remains one of the largest and most affluent Almost 40% of Del Webb buyers pay cash for their homes U.S. POPULATION OVER AGE 55 (in millions) AGE

14 VALUE CREATION INITIATIVES DRIVING IMPROVED BUSINESS PERFORMANCE 14

15 Strategy for Creating Greater Shareholder Value Financial goal is to drive improved returns on invested capital over the housing cycle Value Creation initiatives focused on improving fundamental operations: Expand homebuilding gross margin Drive greater overhead leverage Increase inventory turns More effectively allocate capital Actions are already having a meaningful impact on reported operating and financial results 15

16 Actions Driving Improved Gross Margins Reduction of direct house costs Manufacturing approach via Common Plan Management New pricing model of base house with options/upgrades Emphasis on presales with managed spec production Gross margins also benefiting from: An improved demand and pricing environment Shift in mix of closings to include more move-up homes 24% 23% 22% 21% 20% 19% 18% 17% 16% ADJUSTED GROSS MARGINS * 18.7% 20.3% 21.6% 21.8% 22.9% Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 * Home Sale Gross Margin % Before Impairments & Interest Expense. See Supplemental Non-GAAP data for detail. 16

17 Working to Deliver Greater Overhead Leverage 2012 SG&A lowered by 190 bps from prior year to 11.3% of home sale revenues Q SG&A of 11.8% compared with 15.2% in 2011 Focus on volumes within existing communities can support additional upside leverage 13.5% 13.0% 12.5% 12.0% 11.5% 11.0% 10.5% 10.0% SG&A COSTS AS PERCENT OF HOME SALE REVENUES

18 Land Strategy Aligned with ROIC Goals $1.4 billion in land spend authorized for 2013 and 2014 Disciplined land acquisitions and divestitures Capital allocation and land investment practices aligned with ROIC focus More formal risk weighting process in evaluating new investment Greater emphasis on optioning rather than owning land positions Build local market share 180, , , , ,000 80,000 60,000 40,000 20,000 0 LOTS UNDER CONTROL Optioned Owned Q1'13 18

19 Building Greater Financial Flexibility Q cash balance of $1.7 billion, up $183 million from year-end On track to retire $1.0 billion of debt since the start of 2012 Announced early redemption of 2014 maturities Using excess cash on hand to fund redemption Upon redemption, debt-to-cap expected to fall by 400 bps from 52% reported at end of Q DEBT MATURITY SCHEDULE ($ in millions) 19

20 IMPACT OF VALUE CREATION INITIATIVES ON REPORTED FINANCIAL RESULTS 20

21 Q Financial Highlights Q1 earnings of $0.21 per share up from prior year loss of ($0.03) per share Home sale revenues up 35% to $1.1 billion Adjusted gross margin up 420 bps to 22.9% SG&A down 340 bps to 11.8% of home sale revenues 24% 23% 22% 21% 20% 19% 18% 17% 16% ADJUSTED GROSS MARGINS * 22.9% 21.8% 21.6% 20.3% 18.7% Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 * Home Sale Gross Margin % Before Impairments & Interest Expense. See Supplemental Non-GAAP data for detail. 21

22 Q Financial Highlights Net new orders up 4% to 5,200 homes; order dollars up 18% to $1.6 billion Backlog value up 52% to $2.4 billion Quarter-end cash of $1.7 billion, up $183 million from year-end Net debt-to-cap down to 27% from 32% at year-end Announced plans to redeem $399 million of senior notes in May 2013 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 Senior Notes Outstanding ($ billions) * 2013 Adj * Adjusted for announced redemption 22

23 Q Selected Financial Data Three Months Ended March 31, Homebuilding Home Sale Revenues ($ millions) $1,100 $814 Homebuilding Pretax Income (Loss) ($ millions) $68 $(20) Backlog (Units) 7,825 5,798 Backlog (Dollar Value in millions) $2,414 $1,586 Financial Services Pretax Income ($ millions) $14 $7 Income (Loss) Before Income Taxes ($ millions) $82 $(13) Net Income (Loss) Per Share $0.21 ($0.03) 23

24 Q Balance Sheet Analysis ($ millions) Cash and Equivalents (including restricted cash) March 31, 2013 December 31, 2012 $1,660 $1,477 House and Land Inventory $4,113 $4,214 Senior Notes $2,512 $2,510 Shareholders Equity $2,276 $2,190 Debt to Cap 52% 53% Net Debt to Cap (adjusted for cash) 27% 32% 24

25 PulteGroup: Well Positioned for Today and Tomorrow Focus on ROIC improving fundamental performance in margins, overhead leverage, inventory turns and capital efficiency to drive improved returns on invested capital Land Strategy capitalizing on existing land portfolio; increasing planned investment to support future homebuilding operations Unique Market Position defined multi-brand strategy with leadership position in serving Baby Boomers Balance Sheet $1.7 billion in cash and flexibility to support current operations and future growth opportunities Leadership experienced leadership team focused on driving improvements in core homebuilding operations 25

26 Reconciliation of Non-GAAP Data This presentation contains information about home sale gross margin reflecting certain adjustments. This measure is considered a non-gaap financial measure under the SEC s rules and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measure as a measure of our operating performance. Management and our local divisions use this measure in evaluating the operating performance of each community and in making strategic decisions regarding sales pricing, construction and development pace, product mix, and other daily operating decisions. We believe it is a relevant and useful measure to investors for evaluating our performance through gross profit generated on homes delivered during a given period and for comparing our operating performance to other companies in the homebuilding industry. Although other companies in the homebuilding industry report similar information, the methods used may differ. We urge investors to understand the methods used by other companies in the homebuilding industry to calculate gross margins and any adjustments thereto before comparing our measure to that of such other companies. The following table sets forth a reconciliation of this non-gaap financial measure to the GAAP financial measure that management believes to be most directly comparable. 26

27 Supplemental Non-GAAP Data Adjusted Margin Analysis Three Months Ended March 31, 2013 December 31, 2012 September 30, 2012 June 30, 2012 March 31, 2012 ($ thousands) Home sale revenues $ 1,099,752 $ 1,481,517 $ 1,232,704 $ 1,024,405 $ 813,786 Home sale cost of revenues 901,470 1,228,201 1,023, , ,166 Home sale gross margin 198, , , , ,620 Add: Impairments (a) - 2, ,700 Capitalized interest amortization (a) 53,677 67,880 57,155 52,070 47,186 Adjusted home sale gross margin $ 251,959 $ 323,446 $ 266,540 $ 207,729 $ 152,506 Home sale gross margin as a percentage of home sale revenues 18.0% 17.1% 17.0% 15.1% 12.5% Adjusted home sale gross margin as a percentage of home sale revenues 22.9% 21.8% 21.6% 20.3% 18.7% (a) Write-offs of capitalized interest related to impairments are reflected in capitalized interest amortization. 27

28 Questions 28