PulteGroup (NYSE:PHM) Q4 2025 Earnings call January 29, 2026 08:30 AM ET Company ParticipantsJim Ossowski - Senior VP of FinanceJim Zeumer - Head of Investor RelationsRyan Marshall - President and CEOStephen Kim - Senior Managing Director and Head of Housing ResearchConference Call ParticipantsAlan Ratner - AnalystAnthony Pettinari - AnalystJay McCanless - Equity Research AnalystJohn Lovallo - AnalystKenneth Zener - AnalystMatthew Bouley - AnalystMichael Dahl - AnalystMichael Rehaut - AnalystSam Reid - Anal ...

PulteGroup (NYSE:PHM) Q4 2025 Earnings call January 29, 2026 08:30 AM ET Speaker1Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the PulteGroup, Inc., Fourth Quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star followed by the n ...

Financial Data and Key Metrics Changes - PulteGroup generated third quarter home sale revenues of $4.2 billion, down 2% from $4.3 billion in the same quarter last year [15] - Operating margins were reported at 16.8%, with earnings of $2.96 per share, reflecting a return on equity of 21% for the trailing twelve months [5] - The company reported net income of $568 million, or $2.96 per share, compared to $698 million, or $3.35 per share, in the third quarter of the previous year [21] Business Line Data and Key Metrics Changes - Net new orders totaled 6,638 homes, a 6% decrease year-over-year, with a 10% decrease in absorption pace [12] - Active adult business saw a 7% increase in net new orders, representing 24% of Q3 net new orders, while first-time buyers decreased by 14% and move-up buyers by 3% [14] - The average sales price (ASP) increased by 3% to $564,000, despite a 5% decrease in closing volumes to 7,529 homes [15] Market Data and Key Metrics Changes - The company operates across 47 major markets, with better home buying demand noted in parts of the Midwest, Northeast, and Southeast, particularly in Florida [26] - The cancellation rate for the third quarter was 12%, up from 10% last year, indicating that most home buyers remain committed once under contract [12] - The absorption rate was 2.2 homes per month, down from 2.4 homes per month in the same quarter last year [13] Company Strategy and Development Direction - PulteGroup is focusing on aligning production levels with sales volumes, having started 6,557 homes in Q3, matching the sales pace [10] - The company plans to invest approximately $5 billion in land acquisition and development, down 5% from last year, while maintaining a healthy land pipeline [11] - The Del Webb brand is being leveraged to attract Gen X buyers through new Del Webb Explore communities, aiming to serve a broader demographic [8] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer confidence is weak, impacting first-time buyers, while demand remains resilient in the active adult segment [7] - The company expects to close between 7,200 to 7,600 homes in Q4, with a full-year closing estimate of 29,000 to 29,400 homes [17] - Management expressed optimism about the potential for improved housing demand if consumer confidence increases alongside lower interest rates [61] Other Important Information - The gross margin for Q3 was reported at 26.2%, down 80 basis points from Q2, influenced by higher incentives due to competitive market dynamics [18] - The company repurchased 2.4 million common shares for $300 million in Q3, with $1.3 billion remaining under the share repurchase authorization [22] - PulteGroup ended the quarter with $1.5 billion in cash and a debt-to-capital ratio of 11.2% [24] Q&A Session Summary Question: What is the right path forward for PulteGroup in the home building industry? - Management indicated that addressing the structural housing shortage requires a coordinated effort involving federal, state, and local leaders [33] Question: Can you elaborate on the strategy regarding spec production? - Management clarified that while they aim for spec production to be 40-45%, current market conditions have led to a higher percentage of specs due to lower sales of to-be-built homes [36] Question: What are the current market conditions in Florida and the Southeast? - Management confirmed stabilization in demand and pricing in Florida and the Southeast, highlighting strong locations and favorable tax policies [42] Question: How are incentives trending and what is their impact on margins? - Management noted that incentives were consistent throughout the quarter, with financial incentives making up about one-third of the total incentive package [69] Question: What is the impact of lower development costs on future lot costs? - Management indicated that lower land development costs would positively impact lot costs in 2026 and beyond, as current developments will influence future pricing [96]

Financial Data and Key Metrics Changes - In Q3, PulteGroup generated home sale revenues of $4.2 billion, operating margins of 16.8%, and earnings of $2.96 per share, reflecting a 2% decline in revenues from $4.3 billion in Q3 of the previous year [4][15][23] - The return on equity for the trailing twelve months was 21% [5] - The net income for Q3 was $568 million, down from $698 million in the same quarter last year [23] Business Line Data and Key Metrics Changes - Net new orders totaled 6,638 homes, a 6% decrease year-over-year, with a 10% decrease in absorption pace [13] - The active adult business saw a 7% increase in net new orders, representing 24% of Q3 net new orders [15] - The cancellation rate for Q3 was 12%, up from 10% last year, indicating that most homebuyers remain committed once under contract [14] Market Data and Key Metrics Changes - Demand conditions varied by market, with stronger demand in the active adult segment and weaker demand among first-time buyers [6][10] - The absorption rate was 2.2 homes per month, down from 2.4 homes per month in Q3 of the previous year [10][14] - Florida operations showed a 2% increase in net new orders, indicating relative strength in that market [31] Company Strategy and Development Direction - The company is focused on aligning production levels with sales volumes, having started 6,557 homes in Q3, matching the sales pace [10][11] - PulteGroup plans to invest approximately $5 billion in land acquisition and development, down 5% from the previous year, while maintaining a healthy land pipeline [11][25] - The company is capitalizing on the Del Webb brand to attract Gen X buyers through new Del Webb Explore communities [6][7] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer confidence is weak, affecting first-time buyers, while demand remains resilient in the active adult segment [6][10] - The company expects to close between 7,200 to 7,600 homes in Q4, with full-year closings likely in the range of 29,000 to 29,400 homes [18] - Management expressed optimism about the potential for lower interest rates to energize housing demand in 2026 [70] Other Important Information - The gross margin for Q3 was 26.2%, down 80 basis points from Q2, influenced by higher incentives due to competitive market dynamics [19] - The effective tax rate for Q3 was 23.7%, benefiting from renewable energy tax credits [23] - The company ended Q3 with approximately 240,000 lots under control, down 9,000 lots from the previous quarter [26] Q&A Session Summary Question: What is the right path forward for Pulte in the homebuilding industry? - Management acknowledged the complexity of the housing shortage issue and emphasized the need for a coordinated effort to address it [38] Question: Is the increase in spec production a market-driven approach? - Management clarified that while they aim for spec inventory to be 40% to 45%, current market conditions have led to a higher percentage of specs [42] Question: What are the current consumer sentiments regarding home buying? - Management indicated that consumer confidence is low, impacting the home buying process, but there is a desire for homeownership [68] Question: How are incentives trending and what is their impact on margins? - Management reported that incentives were consistent throughout the quarter, with financial incentives making up about one-third of the total incentive package [78][94] Question: What is the expected impact of lower development costs on future lot costs? - Management noted that lower development costs would positively impact lot costs, with effects expected to be seen in 2026 and beyond [108]