Pultegroup, Inc. · NYSE:PHM
Pultegroup — Raymond James 40th Annual Institutional Investors Conference (March 2019)
28 slides from Pultegroup's conference presentation, Mar 4, 2019
Slide 1: Investor Presentation
Investor Presentation March 2019 (c) 2019 PulteGroup 1
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 Strong Business Platform Executing our Playbook Assessing Macro Conditions Conclusion (c) 2019 PulteGroup 3
Slide 4: Strong Business Platform
Strong Business Platform (c) 2019 PulteGroup 4
Slide 5: Building on a Legacy of Success
Building on a Legacy of Success Closings The nation’s 3rd largest builder 25,000 23,107 Delivered ~725,000 homes since 20,000 21,052 founding in 1950 19,951 17,196 17,127 Selling many of the industry’s best 15,000 known brands: Pulte, Centex and Del Webb 10,000 Over 5,000 employees working in 45 mar
Slide 6: With a Diversified Business Platform
With a Diversified Business Platform 2018 Closings West Northeast 20% 7% Southeast 18% Texas 18% Florida 21% Midwest 16% 2018 Revenues 2018 Owned Lots Northeast Northeast 8% West 6% West 27% 20% Southeast 18% Southeast 19% Texas Texas 17% 13% Florida 19% Midwest Florida 15% Midwest 23% 15% (c) 2019
Slide 7: And an Unmatched Ability to Serve All Demographics
And an Unmatched Ability to Serve All Demographics 2018 Closings by Price Under $250K 12% $500K & above 25% $250K - $299K 14% $400K - $499K 19% $300k - $399K 30% (c) 2019 PulteGroup 7
Slide 8: A Strong Corporate Ethic
A Strong Corporate Ethic Gallup survey ranks Company’s culture among the top 5% of companies worldwide Proven commitment to construction quality and buyer experience PHM stock a component of the Dow Jones Sustainability Index Serving our nation’s wounded veterans through our Built to Honor Program •
Slide 9: And an Independent, Experienced & Diverse Board
And an Independent, Experienced & Diverse Board Brian Anderson* Cheryl Grise* Scott Powers* Former CFO, OfficeMax Former EVP, Northeast Former President & CEO, (2005) Utilities (2008) State Street Global Advisors (2016) Bryce Blair* Andre Hawaux* William Pulte* Former Chairman and CEO, Former EVP &
Slide 10: Executing Our Playbook
Executing Our Playbook (c) 2019 PulteGroup 10
Slide 11: Disciplined Land Investment
Disciplined Land Investment (c) 2019 PulteGroup 11
Slide 12: Building a More Efficient Land Pipeline
Building a More Efficient Land Pipeline Lots Under Control Breakdown of Owned Lot Pipeline (as of 12/31/18) 175,000 Owned Optioned Years Owned 8 80,000 150,000 40% 7 70,000 31% 37% 31% 26% 6 60,000 Active Adult 125,000 5 50,000 100,000 4 40,000 Move Up 75,000 3 30,000 50,000 74% 69% 69% 63% 60% 2 20
Slide 13: That is Balanced Across Buyer Groups
That is Balanced Across Buyer Groups Core of business remains serving Lots Under Control by Buyer Group move-up buyers First Time Move Up Active Adult • Ability to spend on options and lot 40% premiums 38% 35% 36% Aging of millennial generation 34% 35% 33% 35% 33% 35% supporting demand among first-
Slide 14: Enhancing Operational Excellence
Enhancing Operational Excellence (c) 2019 PulteGroup 14
Slide 15: By Focusing on Key Performance Drivers
By Focusing on Key Performance Drivers Delivering superior build quality Percent of Closings from Common Plans Production efficiency • Commonly managed plans 90% • Value engineering and should costing 80% 81% • Strategic pricing 70% 77% Local market scale 60% 67% • Unit volume/scale 58% 50% • Relati
Slide 16: And Maintaining Successful Business Practices
And Maintaining Successful Business Practices Intelligently invest in the business through high-returning projects Inventory Turnover • Target smaller, faster turning projects to improve returns and lower market risk 1.0 • Focus on better located land positions 0.98 • Increase use of lot options to
Slide 17: That Can Deliver Increased Cash Flows
That Can Deliver Increased Cash Flows 2018 cash flow from operations of Systematic Return of Capital $1.4 billion $1,200 Share Repurchases ($ millions) Dividends ($ millions) Expanding use of lot options to $1,000 $113 support greater capital efficiency $910 $800 • Expect to maintain recent land spe
Slide 18: And Consistent Capital Allocation
And Consistent Capital Allocation Invest in the business, including M&A when appropriate • Over $10 billion invested 2015 to 2018 Advance a sound dividend policy • Per share payout has more than doubled since reinstating the dividend in 2013 Return excess capital through share repurchases • Bought i
Slide 19: Assessing Macro Conditions
Assessing Macro Conditions (c) 2019 PulteGroup 19
Slide 20: New Home Sales Remain Below Historic Average
New Home Sales Remain Below Historic Average NEW HOME SALES (000) 1,400 1,200 1,000 800 50 Year Average 600 400 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 TTM 11/18 Source: U.S. Census Bureau (c) 2019 PulteGroup 20
Slide 21: With a Healthy Inventory of New Homes
With a Healthy Inventory of New Homes Months Supply of New Home Inventory 16 14 6 months of supply typically viewed as a healthy market 12 10 8 6 4 2 0 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013 2018 Source: U.S. Census Bureau (c) 2019 PulteGroup 21
Slide 22: A Supportive Mortgage Market
A Supportive Mortgage Market Mortgage Rates 12.0 15 Year FRM (%) 30 Year FRM (%) 10.0 8.0 6.0 4.0 2.0 0.0 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 Source: MBA (c) 2019 PulteGroup 22
Slide 23: Great Employment Numbers
Great Employment Numbers Median Weekly Earnings 10.0% Unemployment rate Number of employees (M) 135 $925 Qtr1 Qtr2 Qtr3 Qtr4 9.0% $900 130 8.0% $875 125 $850 7.0% 120 $825 6.0% $800 5.0% 115 $775 4.0% 110 $750 3.0% 105 $725 2.0% $700 100 1.0% $675 0.0% 95 $650 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Slide 24: And Powerful Demographic Drivers
And Powerful Demographic Drivers Births (thousands) 4,500 4,000 3,500 3,000 2,500 2,000 Baby Boomers Gen X Millennials Gen Z 1,500 1,000 1952 1964 1976 1988 2000 2012 Population by Generation (thousands) 100,000 80,000 60,000 40,000 20,000 0 Boomers Gen X Millennials Gen Z Source: U.S. Census Bureau
Slide 25: But Dynamics Need Watching
But Dynamics Need Watching New Home vs. Resale Price Mortgage Rate Volatility $350,000 5.0 15 Year FRM (%) 30 Year FRM (%) Median New Price (NSA, 12mo ave) $330,000 4.8 $310,000 Median Single Family Price (NSA, 12mo ave) 4.6 $290,000 4.4 $270,000 4.2 $250,000 4.0 $230,000 3.8 $210,000 3.6 $190,000 3
Slide 26: As Markets Adjust
As Markets Adjust Home Value Growth vs. Income Growth Home price appreciation has outpaced wages for several years 16% Burns Home Value Index YOY % Income YOY % • Rise in mortgage rates in 2018 stretched affordability in many markets 12% Market working to find new equilibrium within positive macro 8
Slide 27: Summary
Summary Working to Deliver High Returns Over the Housing Cycle (c) 2019 PulteGroup 27
Slide 28: Creating Long-term Shareholder Value
Creating Long-term Shareholder Value 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 cash flow Appropria
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