Pultegroup, Inc. · NYSE:PHM
Pultegroup — J.P. Morgan Homebuilding & Building Products Conference 2017
26 slides from Pultegroup's conference presentation, May 18, 2017
Slide 1: Investor Presentation May 2017
Investor Presentation May 2017
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: Industry is Benefiting from Favorable Market Dynamics
Industry is Benefiting from Favorable Market Dynamics
Slide 4: Housing Recovery Remains on Track
Housing Recovery Remains on Track NEW HOME SALES (000) 1,300 • 2016 new home sales up 12% 1,200 over 2015, but still almost 15% 1,100 below 50 year average 1,000 ü April 2017 SAAR 612,000 900 • Factors continue to support 800 sustained growth in housing 50 Year 700 demand Avg 600 ü Favorable demogra
Slide 5: 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) 5 5
Slide 6: Inventory Stable as Demand Continues to Expand
Inventory Stable as Demand Continues to Expand 1,600 New Homes Sales (000) New Home Sales Available for Sale 1,400 1,200 1,000 800 600 400 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: The U.S. Census Bureau 66
Slide 7: Millennials Provide Opportunity for Sustained Growth in Demand
Millennials Provide Opportunity for Sustained Growth in Demand Number of Employed Persons Aged 25 – 29 Number of Employed Persons Aged 30 – 34 (millions) (millions) 18.0 17.5 17.5 17.0 17.0 16.5 16.5 16.0 16.0 15.5 15.5 15.0 14.5 15.0 14.0 14.5 13.5 13.0 14.0 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-0
Slide 8: PulteGroup Overview
PulteGroup Overview
Slide 9: PulteGroup: We Build Consumer Inspired Homes and Communities to Make Lives Better
PulteGroup: We Build Consumer Inspired Homes and Communities to Make Lives Better • Experienced management throughout the organization • Broad, geographically diverse operating platform • Brand-based approach to serving all primary buyer segments: first time, move up and active adult • Strong operat
Slide 10: Experienced Leadership Team
Experienced Leadership Team Ryan Marshall President and CEO (16 Years) Harmon Smith COO Bob O’Shaughnessy CFO (27 Years) (7 Years) Tony Barbee Midwest Area (18 Years) John Chadwick West Area (25 Years) Greg Huff Southeast Area (15 Years) Peter Keane Florida Area (23 Years) Steve Schlageter East Area
Slide 11: Operating Platform Diversified Across Markets
Operating Platform Diversified Across 50 Markets Based on FY 2016 Closings Revenues Lots Owned Northeast 7% 9% 6% Southeast 20% 20% 27%16% 41% 32% Florida 17% 17% 22% Midwest 17% 17% 12% Texas 19% 14% 14% West 20% 23% 30% 11
Slide 12: Brand-Based Approach to Serving Distinct Buyer Groups
Brand-Based Approach to Serving Distinct Buyer Groups 2016 Closings by Buyer Group Active Adult First Time 28% 29% Move Up 43% 12
Slide 13: Driving Top and Bottom Line Growth
Driving Top and Bottom Line Growth Delivering Bottom-Line Results Revenues ($ millions) Pretax $10,000 $1,000 • Focus on creating Pretax Up $8,000 $800 long-term shareholder 409% Revenue Up 59% value $6,000 $600 $4,000 $400 ü Deliver high returns on $2,000 $200 invested capital by focusing on key $-
Slide 14: Delivering Strong Operating Performance
Delivering Strong Operating Performance Gross Margins (TTM) • Margins benefitting from key 30% initiatives including: 25% ü Commonly managed plans which enable greater construction efficiency 20% • Approaching the Company’s target of 70% of closings from commonly 15% managed plans ü Value engineerin
Slide 15: Opportunities to Realize Greater Overhead Efficiency
Opportunities to Realize Greater Overhead Efficiency SG&A % of Revenues (LTM) • Working to drive greater 14.0% 12.0% overhead leverage in 10.0% support of pretax margins 8.0% 6.0% • Reduced our workforce by 4.0% approximately 10% in Q3 2.0% 2016 0.0% DHI LEN CAA TOL KBH PHM* • Targeting 2017 SG&A in
Slide 16: Focused on Delivering High Returns with Lower Risk
Focused on Delivering High Returns with Lower Risk Return on Invested Capital (LTM) (a) • Improved operating results 20.0% driving better overall 15.0% returns 10.0% • Opportunities for additional 5.0% improvement as we slow 0.0% DHI PHM CAA LEN TOL KBH the rate of investment growth 20.0% Return on
Slide 17: Capital Allocation Priorities
Capital Allocation Priorities
Slide 18: Defined Capital Investment Priorities
Defined Capital Investment Priorities Land Investment ($ millions) $3,000 • Priority #1 Acquisition Development ü Invest in the business through $2,500 high returning projects • Includes opportunistic M&A $2,000 • Slowing growth rate of land spend and shifting emphasis to development of existing $1,
Slide 19: Return-Focused Land Investment Process
Return-Focused Land Investment Process IRR Threshold 18% 18% 18% 18% 18% 19% 19% 20% 20% 21% 21% 22% 22% 23% 24% 25% 26% 27% 28% 29% 30% Score 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 • Project Feasibility Report ü Comprehensive review and analysis completed for every transacti
Slide 20: Increasingly Efficient Land Pipeline
Increasingly Efficient Land Pipeline Lots Owned • Focused on driving greater 120,000 8 asset efficiency Lots Years Owned 7 ü Owned lot position of less than 100,000 5.0 years based on TTM 6 closings 80,000 5 ü Additional 42,000 lots controlled 60,000 4 via options ü Long-term goal to own 3/option 3
Slide 21: Defined Capital Investment Priorities
Defined Capital Investment Priorities Dividends ($ millions) $150 • Priority #2 $125 ü Pay dividend through the $100 housing cycle $75 $50 • Priority #3 $25 ü Return excess capital to $0 2013 2014 2015 2016 shareholders via systematic share buyback program Share Repurchase ($ millions) ü Company exe
Slide 22: Balance Sheet Supportive of Planned Growth
Balance Sheet Supportive of Planned Growth Debt Maturities ($ millions) • Company operating within $800 its debt-to-cap guidance $700 range of 30% to 40% $600 • Debt maturity schedule $500 provides flexibility to $400 pursue business objectives $300 • Expected land investment $200 dynamics should re
Slide 23: Concluding Comments
2) _ Cc ® E = fe) O 5d) i xe) = iS) c fe) O
Slide 24: Summary
Summary • Geographic and customer diversity provides growth opportunities while reducing risk • Focused on driving greater operational and asset efficiency in support of delivering higher returns on invested capital over the housing cycle • Continuing to invest in the business to support future grow
Slide 25: Questions
Questions ftp. Ite
Slide 26: Reconciliation of Non-GAAP Financial Measures
PulteGroup, Inc. Reconciliation of Non-GAAP Financial Measures Page 12 of this presentation contains information about our fiscal year 2013 earnings per share (EPS) reflecting an adjustment to exclude the reversal of a deferred tax asset valuation allowance, which is considered a non-GAAP financial
PulteGroup — J.P. Morgan Homebuilding & Building Products Conference 2017 on 6ix