PulteGroup(US:PHM)2025-07-22 20:13PART I FINANCIAL INFORMATION Financial Statements The financial statements present PulteGroup's financial position as of June 30, 2025, and its performance for the three and six months then ended, highlighting a decrease in total revenues and net income compared to the prior year, while total assets and shareholders' equity increased Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $17.59 billion from $17.36 billion at year-end 2024, driven by a rise in house and land inventory, while total liabilities decreased slightly to $5.01 billion, and shareholders' equity grew to $12.57 billion from $12.12 billion Condensed Consolidated Balance Sheet Highlights ($000's) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and equivalents | $1,234,158 | $1,613,327 | | House and land inventory | $13,216,008 | $12,692,820 | | Total Assets | $17,587,811 | $17,363,763 | | Liabilities & Equity | | | | Total Liabilities | $5,012,869 | $5,241,799 | | Total Shareholders' equity | $12,574,942 | $12,121,964 | | Total Liabilities and Shareholders' Equity | $17,587,811 | $17,363,763 | Consolidated Statements of Operations For the second quarter of 2025, total revenues decreased to $4.40 billion from $4.60 billion in Q2 2024, with net income falling to $608.5 million, or $3.03 per diluted share, compared to $809.1 million, or $3.83 per diluted share, in the prior-year period, and similar declines for the six-month period Consolidated Statements of Operations Highlights ($000's, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $4,403,755 | $4,599,655 | $8,296,406 | $8,548,815 | | Income before income taxes | $807,156 | $1,048,312 | $1,488,294 | $1,916,955 | | Net income | $608,483 | $809,133 | $1,131,282 | $1,472,109 | | Diluted earnings per share | $3.03 | $3.83 | $5.60 | $6.93 | Consolidated Statements of Shareholders' Equity Shareholders' equity increased from $12.12 billion at the end of 2024 to $12.57 billion at June 30, 2025, driven by $1.13 billion in net income, partially offset by $600.0 million in share repurchases and $88.7 million in dividends declared during the first six months of 2025 - For the six months ended June 30, 2025, the company repurchased 5.8 million shares for $600.0 million and declared dividends of $88.7 million1166 Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $421.7 million, a decrease from $657.3 million in the same period of 2024, primarily due to lower net income and a larger increase in inventories, while net cash used in financing activities was $768.9 million, mainly for share repurchases and dividends Consolidated Cash Flow Summary ($000's) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $421,733 | $657,264 | | Net cash used in investing activities | ($39,182) | ($66,201) | | Net cash used in financing activities | ($768,905) | ($994,274) | | Net (decrease) in cash | ($386,354) | ($403,211) | Notes to Condensed Consolidated Financial Statements The notes provide details on accounting policies and financial statement line items, including revenue recognition, house and land inventory composition, segment performance, debt structure, fair value measurements, and commitments and contingencies such as warranty liabilities and self-insured risks - House and land inventory increased to $13.2 billion at June 30, 2025, from $12.7 billion at year-end 2024, with homes under construction and land under development being the largest components39 - The company utilizes land option agreements to control future land supply, with a remaining purchase price of $10.1 billion under these options as of June 30, 202543116 - Total debt, including senior notes and other notes payable, was approximately $1.62 billion as of June 30, 2025, and the company also maintains a $1.3 billion revolving credit facility, which was undrawn5860 - Reserves for self-insured risks, primarily related to general liability and construction defects, totaled $273.4 million at June 30, 202584 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses continued consumer demand weakness in Q2 2025 due to affordability challenges, leading to a 7% decrease in net new orders and a decline in home sale gross margins to 27.0% from 29.9% year-over-year, while the company adjusts sales prices and manages production cadence, maintaining a strong liquidity position and returning capital to shareholders - Consumer demand weakness continued in Q2 2025 due to affordability challenges, leading to a 7% decrease in net new orders for both the three and six-month periods97 - Gross margin from home sales for Q2 2025 decreased to 27.0% from 29.9% in the prior year, primarily due to higher land costs and sales incentives98 - The company is focused on a measured capital allocation strategy, including increasing lot optionality, managing spec inventory levels, and returning capital to shareholders, with $600.0 million spent on share repurchases in the first half of 2025100 Homebuilding Operations Homebuilding operations saw a decline in performance for the first half of 2025, with home sale revenues decreased by 3% to $8.0 billion due to a 6% drop in closings, partially offset by a 4% rise in average selling price, while gross margin from home sales contracted by 260 basis points to 27.2%, and net new orders fell 7% in units and 8% in dollars, leading to a 16% decrease in backlog value to $6.8 billion at quarter-end Homebuilding Operations Summary (Six Months Ended June 30) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Home sale revenues | $8,017.2M | $8,267.8M | (3)% | | Gross margin from home sales | 27.2% | 29.8% | (260) bps | | SG&A as % of home sale revenues | 9.8% | 8.7% | 110 bps | | Closings (units) | 14,222 | 15,192 | (6)% | | Average selling price | $564k | $544k | 4% | | Net new orders (units) | 14,848 | 16,028 | (7)% | | Backlog (dollars) | $6,843.2M | $8,109.1M | (16)% | - The number of homes in production decreased by 5% year-over-year to 17,778 units, reflecting lower backlog and improved production cycle times113114 - The company increased its use of land options, with 60% of its 249,645 total lots controlled via option agreements as of June 30, 2025, up from 56% at year-end 2024115 Homebuilding Segment Operations For the first six months of 2025, performance varied significantly across segments, with the Northeast and Midwest segments reporting revenue growth of 31% and 8%, respectively, while Texas, Florida, and Southeast segments experienced revenue declines of 21%, 17%, and 7%, respectively, and the West segment saw a 17% increase in revenue, with the most pronounced declines in income before taxes in Texas (-47%) and Florida (-36%) Segment Revenue & Income Before Tax (Six Months Ended June 30, 2025 vs 2024) | Segment | Revenue % Change | Income Before Tax % Change | | :--- | :--- | :--- | | Northeast | 31% | 54% | | Southeast | (7)% | (19)% | | Florida | (17)% | (36)% | | Midwest | 8% | 15% | | Texas | (21)% | (47)% | | West | 17% | 3% | - Net new orders for the first six months showed weakness primarily in the West (-22%) and Texas (-15%) segments, while other regions were relatively flat120 Financial Services Operations Financial Services revenues for the first six months of 2025 decreased by 6% to $192.0 million, reflecting lower homebuilding volume, while income before income taxes saw a more significant decline of 25% to $78.7 million, impacted by lower revenues and a 14% increase in expenses, though the mortgage capture rate remained strong and stable at 85.5% Financial Services Performance (Six Months Ended June 30) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $191,986k | $204,019k | (6)% | | Income before income taxes | $78,655k | $104,357k | (25)% | | Mortgage Capture Rate | 85.5% | 85.4% | 0.1 p.p. | - Insurance agency commissions saw a significant decline, falling 52% in the first six months of 2025 due to lower policy retention and commission rates as carriers adjust to the evolving home insurance market137138 Liquidity and Capital Resources The company maintained a strong liquidity position with $1.2 billion in cash and equivalents and $908.8 million available under its revolving credit facility as of June 30, 2025, with the ratio of debt-to-total capitalization (excluding Financial Services debt) improved slightly to 11.4%, and current resources are believed sufficient to fund business needs for the next 12 months and beyond - As of June 30, 2025, the company had $1.2 billion in unrestricted cash and $908.8 million available under its Revolving Credit Facility142 - The debt-to-total capitalization ratio, excluding Financial Services debt, was 11.4% at June 30, 2025142 - In the first six months of 2025, the company repurchased $600.0 million of common shares and paid $90.1 million in dividends150159 Quantitative and Qualitative Disclosures About Market Risk The company is primarily exposed to market risk from interest rate fluctuations affecting its debt instruments, with approximately $1.63 billion in fixed-rate debt and $498.4 million in variable-rate debt as of June 30, 2025, and no material changes to qualitative disclosures about market risk from the 2024 Annual Report Debt Obligations as of June 30, 2025 ($000's) | Debt Type | Total Principal | Average Interest Rate | | :--- | :--- | :--- | | Fixed rate debt | $1,628,842 | 6.09% | | Variable rate debt | $498,357 | 6.12% | Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - 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, 2025178 PART II OTHER INFORMATION Legal Proceedings There have been No material developments in legal proceedings since the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material developments in legal proceedings were reported for the period181 Risk Factors There have been No material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors were reported for the period182 Unregistered Sales of Equity Securities and Use of Proceeds During the second quarter of 2025, the company repurchased a total of 2,983,862 shares at an average price of $100.54 per share, with approximately $1.6 billion remaining available for future repurchases under the authorized program as of June 30, 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 1,003,005 | $97.76 | | May 2025 | 1,013,465 | $102.02 | | June 2025 | 967,392 | $101.88 | | Total | 2,983,862 | $100.54 | - As of June 30, 2025, approximately $1.6 billion remained available under the company's share repurchase authorization185 Other Information During the quarter, No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the reporting period184 Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, certifications by the CEO and CFO, and XBRL data files