Pultegroup, Inc. · NYSE:PHM
Pultegroup — Raymond James 43rd Annual Institutional Investors Conference (March 2022)
28 slides from Pultegroup's conference presentation, Mar 7, 2022
Slide 1: Investor Presentation February 2022
Investor Presentation February 2022
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: Agenda
AGENDA Thoughts on the State of the Industry A Proven Record of Success Summary 3
Slide 4: Favorable Demand Dynamics
Favorable Demand Dynamics
Slide 5: Ongoing Market Opportunity
Ongoing Market Opportunity •Housing Starts (000) • Estimate housing need at 1.5 million starts annually Single Family Multi-Family 2,200 • Demand benefiting from favorable 2,000 demographics, expanding economy, 1,800 strong job market and wage 1,600 1,400 growth, and ongoing need to work 1,200 remot
Slide 6: Support For Sustained Buyer Demand
Support For Sustained Buyer Demand •% of Age 25 -34 Living in Parents’ Household •Homeownership Rates 18.0% 70% 16.0% 69% 14.0% 68% 67% 12.0% 66% 10.0% 65% 8.0% 64% 6.0% 63% 4.0% 62% 2.0% 61% 0.0% 60% 1997 2000 2003 2006 2009 2012 2015 2018 2021 1997 2000 2003 2006 2009 2012 2015 2018 2021 Source: U
Slide 7: Assessing a Rising Rate Environment
Assessing a Rising Rate Environment 10 Year Treasury Rate • Favorable market dynamics 2.5% – Expanding economy – Excellent job market 2.0% – Wage rate is rising – Personal balance sheets are strong 1.5% – Pandemic has increased the desire for homeownership 1.0% • Rate of increase matters 0.5% • Impa
Slide 8: Supply Chain Remains Challenging
Supply Chain Remains Challenging • Even for large builders, many products seeing long lead times and allocations – Given breadth of issues, expect conditions to remain challenging through much of 2022 – Average build cycle currently running 140 – 145 days • COVID impacting labor availability at plan
Slide 9: A Proven Record of Success
A Proven Record of Success
Slide 10: Build-to-Order Business Model
Build-to-Order Business Model • Target BTO starts of ~75% and spec starts of 25% • BTO model – Can respond faster to changing market conditions – Buyers can select the floor plan and square footage that best matches their needs, wants and budget – Buyers can adjust lot and option selections to lower
Slide 11: Delivering High Returns Over the Housing Cycle
Delivering High Returns Over the Housing Cycle • Improve profitability of homebuilding ops Return on Equity * – Disciplined underwriting process 30% 25% 28% – BTO operating model 20% 15% 23% 20% 24% – More efficient homebuilding operations 10% 5% 10% – Strategic pricing methodology 0% 2017 2018 2019
Slide 12: Focused on Generating Returns and Shareholder Value
Focused on Generating Returns and Shareholder Value PulteGroup’s focus on delivering higher returns over the cycle allows for a more balanced capital allocation Option Invest in the business Focus vs. on Own Return Faster Shorter Common Plans Turning Risk Duration VE & Should Costing Adjusted Strate
Slide 13: Defined Capital Allocation Priorities
Defined Capital Allocation Priorities Invest in the business Return excess capital to shareholders Expect 2022 land acquisition and through share repurchase development investment of $4.5 to $5.0 Company repurchased $897 million of billion common shares in 2021 - Development of existing asse
Slide 14: Industry Leading Brand Names
Industry Leading Brand Names ©2022 PulteGroup 14
Slide 15: Serving a Variety of Price Points
Serving a Variety of Price Points 2021 Closings by Price Point 7% 16% Under $300K 25% $300K - $399K $400K - $499K $500K - $749K $750K and Above 29% 23% 15 ©2022 PulteGroup 15
Slide 16: With a Broad and Balanced Geographic Footprint
With a Broad and Balanced Geographic Footprint % for 2021 % for 2021 % of Company SEATTLE Closings 15% BOSTON Revenue 15% NEW HAVEN Lots 13% MINNEAPOLIS DETROIT PHILADELPHIA % of Company CLEVELAND CHICAGO Closings 7% COLUMBUS SAN FRANCISCO WASHINGTON D.C. Revenue 8% INDIANAPOLIS SAN JOSE DENVER LOUI
Slide 17: Integrating Advanced Off-site Production Capabilities
Integrating Advanced Off-site Production Capabilities • Multi-year strategy to increase use of off-site manufacturing – Automated production of wall panels, roof trusses and flooring systems – Solving ongoing labor shortage – Improves efficiency and quality, while reducing waste • Acquired ICG plant
Slide 18: Building a Bigger and More Efficient Land Pipeline
Building a Bigger and More Efficient Land Pipeline •Lots Under Control • Expected 11% increase in YOY 250,000 Owned Optioned Option % 60% community count by year end 225,000 119,218 2022 55% 200,000 • Targeted 2022 land investment 175,000 88,989 52% of 50% of $4.5 to $5.0 billion 150,000 60,047 64,9
Slide 19: Superior Balance Sheet Strength and Flexibility
Superior Balance Sheet Strength and Flexibility • Ended 2021 with $1.8 billion of cash •Debt-to-Capital Ratio • In 2021, repurchased 18 million Debt to Cap Net Debt to cap shares, representing a 6% reduction 42% 39% 39% 34% in shares outstanding 28% 22% 30% 21% – Feb 2022, increased repurchase 2% 3%
Slide 20: PulteGroup's SFR Strategy
PulteGroup’s SFR Strategy • Focus on constructing houses, not on being an owner/operator • Strategy is to build homes for SFR companies • Announced strategic relationship with Invitation Homes – Expect to design and build approximately 7,500 new homes over multiple years for sale to INVH for inclusi
Slide 21: Delivered Outstanding 2021 Results
Delivered Outstanding 2021 Results 2021 Results Change from Prior Year Signups 31,739 Up 8% Closings 28,894 Up 17% Home Sale Revenues $13.4 B Up 26% Gross Margin 26.4% Up 210 bps Net Income $1.9 B Up 38% EPS (diluted) $7.43 Up 43% ROE 28% Up 420 bps ©2022 PulteGroup 21
Slide 22: Opportunity for Ongoing Gains in 2022
Opportunity for Ongoing Gains in 2022 2021 Results Change Guidance for 2022 Community Count 785 11% 870 (at year end) (at year end) Closings 28,894 7% 31,000 Average Sales Price $463,000 11% $515,000 210 bps – Gross Margin 26.4% 260 bps… 28.5% to 29.0% SG&A 9.0% * 9.3% to 9.5% * Note: 2021 SG&A incl
Slide 23: Summary
Summary Working to Deliver High Returns Over the Housing Cycle
Slide 24: Working to Create Long-term Value for our Shareholders
Working to Create Long-term Value for our Shareholders FOCUS on the customer: deliver superior build quality and home buying experience INVEST in high-returning, shorter duration land positions MAINTAIN disciplined business practices IMPROVE asset efficiency to increase inventory turns and enhance c
Slide 25: Appendix
Appendix Key Financial Metrics
Slide 26: Driving Growth and Improved Financial Results
Driving Growth and Improved Financial Results • Closings • Homes Sale Revenues ($B) CAGR 8% CAGR 10% $13.4 28,894 $10.6 24,624 $9.8 $9.9 21,052 23,107 23,232 $8.3 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 • Gross Margin Percentage of Home Sale Revenues • EPS (diluted) Increase of 400 bps CAG
Slide 27: Operating a High-Returning Business
Operating a High-Returning Business • Cash Flow from Operating Activities ($M) • Land Acquisition & Development Spend ($M) $4,236 $2,978 $2,856 $1,784 $2,553 $2,633 $1,448 $1,076 $1,004 $663 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 • Return on Equity * • Share Repurchases & Dividends ($M) $
Slide 28: Investor Presentation
Investor Presentation Investor Presentation February 2022 ©2021 PulteGroup 28
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