Pultegroup, Inc. · NYSE:PHM
Pultegroup — UBS Building and Building Products Annual CEO Conference 2016
31 slides from Pultegroup's conference presentation, Nov 9, 2016
Slide 1: Investor Presentation November 2016
Alamo Ranch | San Antonio TX Investor Presentation November 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 • PulteGroup Company Profile and Strategic Focus • Strong 2016 Financial Performance • Favorable Operating Conditions • Defined Land Investment Process • Unmatched Capacity to Serve Distinct Buyer Groups 2 2
Slide 4: PulteGroup Overview
PulteGroup Overview • 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 • Unmatched presence in active adult market through Del Webb
Slide 5: 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 6: 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 7: 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% 6 6
Slide 8: 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 7 7
Slide 9: Capital Allocation Priorities Aligned with Value Creation Strategy
Capital Allocation Priorities Aligned with Value Creation Strategy Share Repurchase ($ millions) • Priority #1: Invest in core business, including opportunistic M&A, to maintain or grow relative market share • Priority #2: Return funds through an established dividend • Priority #3: Routinely return
Slide 10: Announced Actions in Support of Value Creation 2.0
Announced Actions in Support of Value Creation 2.0 • As part of Q2 earnings, PulteGroup announced the following actions as it advances to the next phase of its Value Creation strategy Company to slow the rate of growth in land spend and use expected strong cash flows to help fund the repurchase of
Slide 11: Review of Q3 2016 Results
Onyx | San Jose, CA Review of Q3 2016 Results 10
Slide 12: Q3 2016 Highlights
Q3 2016 Highlights EPS of $0.37, inclusive of $0.06 per share Quarterly Closings of charges for a land contract settlement, actions to reduce overhead expenses, and costs relating to shareholder activities Prior year EPS of $0.30 included charges of $0.03 per share from litigation-related adjust
Slide 13: Q3 2016 Highlights
Q3 2016 Highlights Q3 Backlog Value Dollar value of net new ($ billions) orders increased 25% to $1.8 billion Net new orders increased 17% to 4,775 homes Backlog value of $3.7 billion up 20% over prior year Quarterly Signups Unit backlog up 8% to 9,417 homes 12
Slide 14: Land Pipeline Supports Business Growth
Land Pipeline Supports Business Growth Increased investment beginning Lots Owned in 2013 enabling growth in 2016 5.2 years of supply based on TTM closings Additional 43,000 lots controlled via options Q3 2016 investment of $266 million for land acquisition Approved 3,100 lots for purchase
Slide 15: Consistent Return of Excess Capital to Shareholders
Consistent Return of Excess Capital to Shareholders Share Repurchase ($ millions) Repurchased 12 million shares in Q3 for $250 million, or $20.77 per share Issued $1.0 billion of bonds in the quarter with proceeds used to: % of Float Purchased • Repay approximately $500 million of debt • Fund op
Slide 16: Q3 2016 Selected Financial Data
Q3 2016 Selected Financial Data Three Months Ended September 30, 2016 2015 Change Home Sale Revenues ($ millions) $1,882 1,464 29% Homebuilding Pretax Income ($ millions) (1) $191 $165 16% Backlog (Units) 9,417 8,734 8% Backlog (Dollar Value in millions) $3,699 $3,089 20% Financial Services Pretax I
Slide 17: Q3 2016 Selected Balance Sheet Data
Q3 2016 Selected Balance Sheet Data September 30, 2016 December 31, 2015 ($ millions) Cash and Equivalents $461 $775 (including restricted cash) House and Land Inventory $6,950 $5,450 Debt $3,110 $2,075 Shareholders’ Equity $4,672 $4,759 Debt – to – Capitalization 40% 30% 16
Slide 18: Favorable Operating Conditions
Favorable Operating Conditions Atwater Ranchers| Naperville, IL
Slide 19: Housing Recovery Remains on Track
Housing Recovery Remains on Track NEW HOME SALES (000) 1,300 • 2015 new home sales of 1,200 500,000 up 15% over 2014, 1,100 but well below historic average 1,000 2016 sales on tracking toward a 900 YOY increase of 10-15% 800 • Factors continue to support 700 50 Year Avg sustained growth in housing
Slide 20: 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) 19
Slide 21: 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) 20 20
Slide 22: Defined Land Investment Process
Defined Land Investment Process The Aldredge | Atlanta, GA
Slide 23: 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 24: 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 25: Land Pipeline Supportive of Volume Growth
Land Pipeline Supportive of Volume Growth • Land investment focused on shorter, Lots Under Control faster turning positions Project size averaging 125 lots Investment continues to be weighed toward communities serving move-up buyers • First-time buyers focus on closer-in and more urban locations
Slide 26: Unmatched Capacity to Serve Distinct Buyer Groups
Unmatched Capacity to Serve Distinct Buyer Groups
Slide 27: 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 28: 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 29: 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 30: In Summary
In Summary • Among the nation’s largest and most diversified homebuilders • Articulated strategy focused on long-term success • Unmatched ability to serve all major buyer groups • Value Creation strategy goal to deliver better ROIC over the housing cycle and top quartile TSR over time • Return exces
Slide 31: Corkscrew Shores | Estero, FL
Corkscrew Shores| Estero, FL
PulteGroup — UBS Building and Building Products Annual CEO Conference 2016 on 6ix