PulteGroup(PHM) - 2024 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents PulteGroup's unaudited financial statements for Q2 and H1 2024, including balance sheets, operations, equity, cash flows, MD&A, market risk, and internal controls disclosures Item 1. Financial Statements The financial statements detail PulteGroup's financial position and performance, showing $16.5 billion in total assets, $4.6 billion in Q2 revenues, and $1.47 billion in H1 net income, alongside equity changes and cash flows | Financial Metric | June 30, 2024 (Unaudited) (in thousands of USD) | December 31, 2023 (in thousands of USD) | | :--- | :--- | :--- | | Total cash, cash equivalents, and restricted cash | $1,445,966 | $1,849,177 | | House and land inventory | $12,302,301 | $11,795,370 | | Total Assets | $16,544,069 | $16,087,050 | | Notes payable | $1,650,178 | $1,962,218 | | Total Shareholders' equity | $11,222,823 | $10,383,257 | | Metric (Q2) | 2024 (in thousands of USD) | 2023 (in thousands of USD) | % Change | | :--- | :--- | :--- | :--- | | Total revenues | $4,599,655 | $4,188,753 | +9.8% | | Net income | $809,133 | $720,345 | +12.3% | | Diluted EPS | $3.83 | $3.21 | +19.3% | | Metric (Six Months) | 2024 (in thousands of USD) | 2023 (in thousands of USD) | % Change | | :--- | :--- | :--- | :--- | | Total revenues | $8,548,815 | $7,764,394 | +10.1% | | Net income | $1,472,109 | $1,252,604 | +17.5% | | Diluted EPS | $6.93 | $5.55 | +24.9% | | Activity (Six Months Ended June 30) | 2024 (in thousands of USD) | 2023 (in thousands of USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | $657,264 | $1,450,583 | | Net cash used in investing activities | ($66,201) | ($53,996) | | Net cash used in financing activities | ($994,274) | ($713,360) | | Net (decrease) increase in cash | ($403,211) | $683,227 | - For the six months ended June 30, 2024, the company repurchased 5.1 million shares for $560.0 million and declared dividends of $84.7 million, compared to repurchasing 6.4 million shares for $400.0 million and declaring dividends of $71.8 million in the same period of 2023[77] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses weakening demand in Q2 2024 due to higher interest rates, improved production efficiency, and strong liquidity, detailing performance across Homebuilding and Financial Services segments - Demand for new homes began to weaken during the second quarter of 2024, with net new orders decreasing 4% YoY for the quarter, attributed to challenged affordability from higher interest rates, price increases, and inflation[107] - The company improved production efficiency, with home construction time approximately nine weeks shorter at the end of Q2 2024 compared to the prior year, contributing to an 8% increase in Q2 closings[109] | Metric | Q2 2024 (in millions of USD) | Q2 2023 (in millions of USD) | % Change | | :--- | :--- | :--- | :--- | | Home sale revenues | $4,448.2 | $4,058.9 | +10% | | Gross margin from home sales | 29.9% | 29.6% | +30 bps | | Closings (units) | 8,097 | 7,518 | +8% | | Net new orders (units) | 7,649 | 7,947 | -4% | | Backlog (units) | 12,982 | 13,558 | -4% | - The company maintains a strong liquidity position with $1.4 billion in cash and equivalents and $952.6 million available under its Revolving Credit Facility as of June 30, 2024, with the debt-to-total capitalization ratio improving to 12.8% from 15.9% at year-end 2023[154] Item 3. Quantitative and Qualitative Disclosures About Market Risk PulteGroup's primary market risk is interest rate fluctuations affecting its $1.66 billion fixed-rate and $524 million variable-rate debt, with no material changes from the prior year-end report | Debt Type | Total Principal (in thousands of USD) | Fair Value (in thousands of USD) | Weighted-Avg Interest Rate | | :--- | :--- | :--- | :--- | | Fixed rate debt | $1,657,048 | $1,734,524 | 6.04% | | Variable rate debt | $524,042 | $524,042 | 7.14% | - The company is subject to market risk from interest rate fluctuations, primarily impacting the fair value of fixed-rate debt and the earnings and cash flows related to variable-rate debt[182] Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting - The President and CEO, along with the Executive VP and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2024[189] - No changes occurred during the quarter ended June 30, 2024, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[189] PART II OTHER INFORMATION This section provides supplementary information, confirming no material developments in legal proceedings or risk factors, detailing Q2 2024 share repurchase activity, and listing exhibits Item 1. Legal Proceedings The company reports no material developments regarding legal proceedings since its Annual Report on Form 10-K for the year ended December 31, 2023 - There have been no material developments in legal proceedings since the 2023 year-end 10-K filing[190] Item 1A. Risk Factors The company states there have been no material changes to its risk factors from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes have occurred in the company's risk factors since the 2023 year-end 10-K filing[191] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activities, with 2.76 million shares bought back in Q2 2024, and $1.3 billion remaining for future repurchases | Period | Total Shares Purchased | Average Price Paid (USD) | | :--- | :--- | :--- | | April 2024 | 758,165 | $111.83 | | May 2024 | 1,025,947 | $116.20 | | June 2024 | 976,727 | $112.79 | | Q2 Total | 2,760,839 | $113.79 | - As of June 30, 2024, $1.3 billion remained under the company's share repurchase authorization, which was increased by $1.5 billion on January 30, 2024, and has no expiration date[194] Item 5. Other Information The company reports that no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the second quarter of 2024 - No director or officer of the company adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter[192] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, debt instruments, certifications, and XBRL data files