Slide 1: Investor Presentation – Citi Basic Materials Conference
Alamo Ranch | San Antonio TX Investor Presentation Citi Basic Materials Conference November 30, 2016
Slide 2: Forward-Looking Statements
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 s
Slide 3: Presentation Agenda
Presentation Agenda • Favorable Market Dynamics • PulteGroup Overview Company Profile and Strategic Focus Defined Land Investment Process • Unmatched Capacity to Serve Distinct Buyer Groups 2 2
Slide 4: Favorable Market Dynamics
Onyx | San Jose, CA Favorable Market Dynamics 3
Slide 5: Housing Recovery Remains on Track
Housing Recovery Remains on Track NEW HOME SALES (000) 1,300 • 2016 sales on track toward a 1,200 YOY increase of 10-15% 1,100 Nov 2016 new home sales of 1,000 563,000 is more than 10% 900 below 50 year average 800 • Factors continue to support 700 50 Year Avg sustained growth in housing 600 deman
Slide 6: Unique Housing Opportunities Across Demographic Spectrum
Unique Housing Opportunities Across Demographic Spectrum U.S. 2015 Population by Age 73.6M 75.3M 65.7M 74.9M 28.0M *Census.gov – projected population by single age, 2014 – 2060 (2015 Projection) 5
Slide 7: Supports for Sustained Growth in Demand
Supports for Sustained Growth in Demand Share of Children Ages 18 - 34 U.S. Household Estimates Still Living With Parents (millions) 31% 30% 29% 28% 27% 26% 25% 2007 2015 6 6
Slide 8: PulteGroup Overview
PulteGroup Overview The Aldredge | Atlanta, GA
Slide 9: • Among the nation’s largest homebuilders • Delivered over 655,000 homes since • Diversified
• Among the nation’s largest homebuilders with operations in approximately 50 major metro markets • Delivered over 655,000 homes since being founded in 1950 • Diversified product offering serving all major buyer groups Portfolio of strong brand helps to define product offerings in the marketplace
Slide 10: Leadership Transition Completed
Leadership Transition Completed • Company President Ryan Marshall named CEO effective Sept 8, 2016 Strong operations background built during 15 year career with PulteGroup Managed many of the Company’s largest homebuilding operations Most recently served as Company President with responsibilit
Slide 11: Experienced Homebuilding Team
Experienced Homebuilding Team Ryan Marshall President and CEO (15 Years) Harmon Smith COO Bob O’Shaughnessy CFO (6 Years) (26 Years) Tony Barbee Midwest Area (17 Years) John Chadwick West Area (24 Years) Greg Huff Southeast Area (14 Years) Peter Keane Florida Area (22 Years) Steve Schlageter East Ar
Slide 12: Operating in 50 of the Country's Top Metro Markets
Operating in 50 of the Country’s Top Metro Markets 9-Month 9-Month Lots Owned 2016 2016 as of Closings Revenues 9/30/2016 Northeast 7% 8% 7% Southeast 20% 21% 16% 27% 41% 32% Florida 17% 17% 21% Midwest 17% 16% 12% Texas 19% 15% 14% West 20% 23% 30% 11 11
Slide 13: Diversified Across Primary Consumer Groups
Diversified Across Primary Consumer Groups First Time Move Up Active Adult 29% 43% 28% 9-Month 2016 Closings by Buyer Group 12 12
Slide 14: Capital Allocation Priorities Aligned with Delivering Strong Returns
Capital Allocation Priorities Aligned with Delivering Strong Returns Over the Housing Cycle Share Repurchase ($ millions) $500 $400 • Priority #1: Invest in core business, including opportunistic M&A, to $300 maintain or grow relative market share $200 • Priority #2: Return funds through an $100 est
Slide 15: Land Pipeline Supports Business Growth
Land Pipeline Supports Business Growth Increased investment beginning in 2013 Lots Owned enabling growth in 2016 120,000 9 5.2 years of supply based on TTM closings Lots Years Owned 8 Additional 43,000 lots controlled via options 100,000 Q3 2016 investment of $266 million for 7 land acquisit
Slide 16: Disciplined Land Investment Process
Disciplined Land Investment Process • Project Feasibility Report • Feasibility report completed for every project Comprehensive review and analysis completed for every • Asset Management Committee transaction reviews and approves every 1. Project overview transaction to validate assumptions, stres
Slide 17: Consistent Assessment of Project Risk
Consistent Assessment of Project Risk IRR Threshold 18% 18% 18% 18% 18% 19% 19% 20% 20% 21% 21% 22% 22% 23% 24% 25% 26% 27% 28% 29% 30% Score 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 • Four major categories to determine risk profile 1. Strategic Marketing Location, marketabil
Slide 18: Unmatched Capacity to Serve Distinct Buyer Groups
Unmatched Capacity to Serve Distinct Buyer Groups
Slide 19: First-Time Buyer Strategy
First-Time Buyer Strategy • Investing in first-time buyer projects that generate acceptable returns Focus on closer-in communities; not betting on outlying, albeit lower cost, land positions • Ongoing work to lower overall product costs, but not targeting the lower price points of the segment • Gr
Slide 20: Sustained Strength of the Move-Up Buyer
Sustained Strength of the Move-Up Buyer • Multiyear strength as buyer group realizes better wage growth and credit availability • Majority of Company’s land investment targeted toward move-up buyers Ongoing mix shift toward the move-up buyer continues to raise ASP’s Wieland assets target move-up
Slide 21: Expanding Penetration of Active Adult Market
Expanding Penetration of Active Adult Market • Changing profile of active adult projects; Interest in Age Restricted Lifestyle 500 to 1,500 lots with right-sized amenity Communities Faster turning and less capital intensive communities • Legacy investment in large, highly amenitized New Opportun
Slide 22: In Summary
In Summary • Among the nation’s largest and most diversified homebuilders • Operating in a market demonstrating favorable overall dynamics • Articulated strategy focused on long-term success with disciplined land investment practices • Unmatched ability to serve all major buyer groups 21
Slide 23: Corkscrew Shores | Estero, FL
Corkscrew Shores| Estero, FL