Pultegroup, Inc. · NYSE:PHM
Pultegroup — Investor Presentation (May 2014)
24 slides from Pultegroup's investor presentation, May 27, 2014
Slide 1: Investor Presentation May 2014
INVESTOR PRESENTATION MAY 2014
Slide 2: Forward-Looking Statements
PulteGroup Investor Presentation 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 th
Slide 3: Presentation Agenda
PulteGroup Investor Presentation Presentation Agenda • The Evolving Recovery in U.S. Housing • PulteGroup • Company Profile • Improving Long-term Returns • Value Creation and Building a Better Business • Balancing Allocation of Capital 3
Slide 4: Data Point to a Sustained Recovery in Housing
DATA POINT TO A SUSTAINED RECOVERY IN HOUSING 4
Slide 5: Excess Supply Reduced Through Years of Under Building
PulteGroup Investor Presentation Excess Supply Reduced Through Years of Under Building HOUSING STARTS (000) 2,500 Median = 1.5 2,000 Median = 1.5 1,500 1,000 500 0 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 CUMULATIVE EXCESS/DEFICIT (000) 1,000 600 200 -200 -600 -1,00
Slide 6: Limited Supply of New Homes
PulteGroup Investor Presentation Limited Supply of New Homes Completed Unsold New Homes for Sale Completed New Homes for Sale (000) 250 16 Completed Months Supply 14 200 12 Months Supply 150 10 8 100 6 4 50 2 0 0 1989 1992 1995 1998 2001 2004 2007 2010 2013 6
Slide 7: Ongoing Rebound in Housing Demand
PulteGroup Investor Presentation Ongoing Rebound in Housing Demand NEW HOME SALES (000) • Industry experts expect 1,400 period of sustained growth 1,200 in housing demand 1,000 • Favorable demographics and • pent-up demand 800 • Low inventory of new and 600 existing homes 400 • Historically low inte
Slide 8: PulteGroup: An Industry Leader
PulteGroup: An Industry Leader 8
Slide 9: Overview
PulteGroup Investor Presentation PulteGroup Overview • Among the nation’s largest homebuilders with operations in 50 major metro markets • Delivered over 600,000 homes since being founded in Michigan in 1950 • Unique multi-brand strategy • to serve all major customer • groups • Unmatched presence in
Slide 10: Operations Diversified Across the US
PulteGroup Investor Presentation Operations Diversified Across the US 27% 41% 32% ONGOING MIX SHIFT TOWARD PULTE HOMES AND DEL WEBB BUYERS 10
Slide 11: Exposure Across All Major Customer Segments
PulteGroup Investor Presentation Exposure Across All Major Customer Segments 27% 41% 32% Q1 2014 CLOSINGS ONGOING MIX SHIFT TOWARD PULTE HOMES AND DEL WEBB BUYERS 11
Slide 12: Positive Market Opportunity for Active Adult
PulteGroup Investor Presentation Positive Market Opportunity for Active Adult • Expect ongoing recovery in U.S. POPULATION demand within buyer group OVER AGE 55 (in millions) 80 • Improved pricing and ability to sell current home AGE 70 • Recovery of financial portfolio 70-74 60 • Demographics drive
Slide 13: Strategy for Creating Greater Shareholder Value
PulteGroup Investor Presentation Strategy for Creating Greater Shareholder Value • 2010 analysis of 20 years of operating and financial data 9 Return on invested capital over the housing cycle was the key driver to creating greater shareholder value 9 PulteGroup’s performance on the fundamental metr
Slide 14: Gains from Value Creation are Compelling
Gains from Value Creation are Compelling 14
Slide 15: Running a New Playbook
PulteGroup Investor Presentation Running a New Playbook • Rolled out product and purchasing zones 9 Commonly managed plans 9 12 step new product development • Strategic pricing • Building to order • More disciplined land process 9 Defined 13-point scale for risk-weighting projects 9 Increasing use o
Slide 16: Commonly Managed Plans
PulteGroup Investor Presentation Commonly Managed Plans CMP as % of Closings 80% • Series of floor plans developed for each consumer group 70% Expected Range • Driving greater production efficiency through Commonly Managed Plans 60% • 12 Step new product development process includes 4 points of 50%
Slide 17: Actions Driving Improved Gross Margins
PulteGroup Investor Presentation Actions Driving Improved Gross Margins • Reduction of direct house costs GROSS MARGINS • Efficiency gains driven by 25% 23.8% Common Plan Management 23.2% • New pricing model of base 20% 20.9% house with options/upgrades 18.8% 18.0% 17.1% • Emphasis on presales with
Slide 18: Gross Margin vs. Peer Group
PulteGroup Investor Presentation Gross Margin vs. Peer Group 18
Slide 19: Realizing Increased Profitability
Realizing Increased Profitability Pretax Income ($ millions) $600 $528 $400 $200 $184 $0 ‐$200 ‐$310 ‐$400 2011 2012 2013 3 YR Change Closings 15,275 16,505 17,766 16% Gross Margin 12.8% 15.8% 20.5% Up 60% SG&A % of GM 73.6% 54.1% 41.5% Cut 44% Turns .65x .78x .97x Up 49% 19
Slide 20: Focus Remains on Operational Execution & Improvement
PulteGroup Investor Presentation Focus Remains on Operational Execution & Improvement • Build on VC foundation established over prior 3 years • Maximize homebuilding operations at area, division, market and community level to deliver higher pretax and returns • Areas of opportunity on “relative perf
Slide 21: Land Strategy Aligned with ROIC Goals
PulteGroup Investor Presentation Land Strategy Aligned with ROIC Goals • Authorized 2014 land spend LOTS UNDER CONTROL 160,000 increased to $2.0 billion Owned Optioned • In Q1 2014 put 9,700 lots under 140,000 control; invested $325 million in 120,000 land acquisition and development • Capital alloc
Slide 22: Balanced Capital Allocation
PulteGroup Investor Presentation Balanced Capital Allocation • Continuing to allocate capital Debt-to-Cap Ratio across opportunities: • Q1 2014 land investment of $325 million • Retired $246 million of debt • Repurchased 2.2 million shares for $45 million • Paid $19 million of dividends • Q1 2014 ca
Slide 23: Well Positioned for Today and Tomorrow
PulteGroup Investor Presentation PulteGroup: Well Positioned for Today and Tomorrow • Focus on ROIC – improving fundamental performance in margins, overhead leverage, inventory turns and capital efficiency to drive improved returns on invested capital • Land Strategy – capitalizing on existing land
Slide 24: Questions
Questions James P. Zeumer Vice President Investor Relations and Corporate Communications PulteGroup, Inc. 100 Bloomfield Hills Parkway, Bloomfield Hills MI 483043‐8639 (O) 248‐433‐4502 (C) 248‐613‐8639 24