Pultegroup, Inc. · NYSE:PHM
Pultegroup — 2016 RBC Global Industrials Conference
24 slides from Pultegroup's conference presentation, Sep 7, 2016
Slide 1: Investor Presentation September 2016
Alamo Ranch | San Antonio TX Investor Presentation September 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 • 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: Experienced Homebuilding Team
Experienced Homebuilding Team Richard Dugas Chairman & CEO (22 Years) Ryan Marshall President (15 Years) Bob O’Shaughnessy CFO (6 Years) Harmon Smith COO (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
Slide 6: Operating in 50 of the Country's Top Metro Markets
Operating in 50 of the Country’s Top Metro Markets Lots Under 1H 2016 Control as of Revenues 6/30/2016 Northeast 9% 8% Southeast 22% 17% 27% 41% 32% Florida 17% 21% Midwest 15% 14% Texas 15% 15% West 22% 25% 5
Slide 7: Diversified Across Primary Consumer Groups
Diversified Across Primary Consumer Groups First Time Move Up Active Adult 29% 43% 28% 6-Month 2016 Closings by Buyer Group 66
Slide 8: Capital Allocation Priorities Aligned with Value Creation Strategy
Capital Allocation Priorities Aligned with Value Creation Strategy Share Repurchase ($ millions) $500 • Priority #1: Invest in core business, $400 including opportunistic M&A, to $300 maintain or grow relative market share $200 • Priority #2: Return funds through an $100 established dividend $0 • Pr
Slide 9: Strong Growth Continues as Reflected in Q2 2016 Financials
Strong Growth Continues as Reflected in Q2 2016 Financials Home sale revenues up 41% to $1.8 Q2 Backlog Value ($ billions) billion; closings up 27% to 4,772 homes $4.0 Year-over-year ASP up 11% with higher prices across all buyer groups: $3.5 First-time up 5% to $270,000 Move-up increased 11
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: Favorable Operating Conditions
Favorable Operating Conditions Atwater Ranchers| Naperville, IL
Slide 12: 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 • Factors continue to support 900 sustained growth in housing 800 demand 50 Year 700 Favorable demographics and Avg pent-up demand 600
Slide 13: 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) 11
Slide 14: 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) 31% 30% 29% 28% 27% 26% 25% 2007 2015 13 12
Slide 15: Defined Land Investment Process
Defined Land Investment Process The Aldrege | Atlanta, GA
Slide 16: Disciplined Land Investment Process
Disciplined Land Investment Process • Project Feasibility Report • Feasibility report completed for Comprehensive review and every project analysis completed for every • Asset Management Committee transaction reviews and approves every 1. Project overview transaction to validate assumptions, 2. Fi
Slide 17: 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 18: Land Pipeline Supportive of Volume Growth
Land Pipeline Supportive of Volume Growth • Land investment focused on Lots Under Control 160,000 9 shorter, faster turning positions Owned Optioned Years Owned Project size averaging 125 lots 140,000 8 Investment continues to be weighed 7 toward communities serving move- 120,000 up buyers 6 • F
Slide 19: Unmatched Capacity to Serve Distinct Buyer Groups
Unmatched Capacity to Serve Distinct Buyer Groups
Slide 20: 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 21: 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 22: 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 23: 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 24: Corkscrew Shores | Estero, FL
Corkscrew Shores| Estero, FL