Pultegroup, Inc. · NYSE:PHM
Pultegroup — JP Morgan Homebuilding & Building Products Conference 2019
27 slides from Pultegroup's conference presentation, May 15, 2019
Slide 1: JP Morgan Homebuilding & Building Products Conference
JP Morgan Homebuilding & Building Products Conference May 15, 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 over 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 42
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 West 8% West 6% 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 3/31/19) 80,000 175,000 Owned Optioned Years Owned 8 70,000 150,000 40% 39% 7 Active Adult 31% 31% 37% 60,000 6 125,000 50,000 5 100,000 Move Up 40,000 4 Move Up 75,000 30,000 3 50,000 69% 69% 63% 60% 6
Slide 13: That is Balanced Across Buyer Groups
That is Balanced Across Buyer Groups Composition of land pipeline Lots Under Control by Buyer Group will gradually impact closing mix First Time Move Up Active Adult 40% Core of business remains 35% 36% serving move-up buyers 35% 33% 35% 33% 35% 35% 34% 30% 31% 32% 30% • Ability to spend on options
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 90% • Commonly managed plans 80% • Value engineering and should costing 77% 81% 82% 70% • Strategic pricing 67% 60% Local market scale 58% 50% Actively assessing oppor
Slide 16: And Maintaining Successful Business Practices
And Maintaining Successful Business Practices Intelligently invest in the business Inventory Turnover through high-returning projects 1.0 • Target smaller, faster turning projects 0.98 • Increase use of lot options 0.9 Remain diversified across markets 0.87 and balanced across buyer groups 0.8 0.82
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 2018 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 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 Source: U.S. Census Bureau (c) 2019 PulteGroup 21
Slide 22: An Increasingly Supportive Mortgage Market
An Increasingly 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 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 $950 Qtr1 Qtr2 Qtr3 Qtr4 9.0% $925 130 8.0% $900 125 7.0% $875 120 6.0% $850 5.0% 115 $825 4.0% 110 $800 3.0% 105 $775 2.0% 100 $750 1.0% $725 0.0% 95 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 Apr $
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 Home Value Growth vs. Income Growth $350,000 16% Burns Home Value Index YOY % Income YOY % Median New Price (NSA, 12mo ave) $330,000 $310,000 Median Single Family Price (NSA, 12mo ave) 12% $290,000 8% $270,000 4% $250,000 $230,000 0% $210,000 -4%
Slide 26: Summary
Summary Working to Deliver High Returns Over the Housing Cycle (c) 2019 PulteGroup 26
Slide 27: 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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