Pultegroup, Inc. · NYSE:PHM
Pultegroup — Raymond James 38th Annual Institutional Investors Conference (March 2017)
25 slides from Pultegroup's conference presentation, Mar 6, 2017
Slide 1: Investor Presentation March 2017
Lake Pickett Reserve| Orlando, FL Investor Presentation March 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: Presentation Agenda
Presentation Agenda • Favorable Market Dynamics • PulteGroup Overview Company Profile and Strategic Focus Defined Land Investment Process • Unmatched Capacity to Serve Distinct Buyer Groups 22
Slide 4: Favorable Market Dynamics
Miller’s Farm | Cleveland, OH Favorable Market Dynamics 3
Slide 5: 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 • Factors continue to support 900 sustained growth in housing 800 demand 50 Year 700 Avg Favorable demographics and pent-up demand 600
Slide 6: 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) 55
Slide 7: Inventory Stable as Demand Continues to Expand
Inventory Stable as Demand Continues to Expand New Homes Sales & Inventory New Home Months Sales Supply Months of Supply Homes (000) Available for Sale 66
Slide 8: 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‐13 Jan‐14 Jan‐15 Jan‐16 Jan‐02 Jan‐0
Slide 9: PulteGroup Overview
PulteGroup Overview The Valiant | Irvine, CA 8
Slide 10: PulteGroup: An Industry Leader
PulteGroup: An Industry Leader • Among the nation’s largest and most experienced homebuilders Portfolio of strong brand helps to define product offerings in the marketplace Operations across 25 states and ~50 major metro markets Diversified product offering serving all major buyer groups: firs
Slide 11: With an Experienced Leadership Team
With an 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 E
Slide 12: Large, Diversified Operating Platform
Large, Diversified Operating Platform 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% 1111
Slide 13: Balanced Business Across Major Buyer Groups
Balanced Business Across Major Buyer Groups 2016 Closings by Buyer Group Active Adult First Time Move Up 1212
Slide 14: Driving Top and Bottom Line Growth
Driving Top and Bottom Line Growth Delivering Bottom-Line Results • Focus on creating long-term ($ millions) shareholder value Deliver high returns on Pretax Up 408% invested capital by focusing Consolidated Revenues on key performance drivers: Pretax Income Revenue • Operating Margins Up 59% • In
Slide 15: Capital Allocation Priorities Aligned with Delivering Strong Returns Over the Housing Cycle
Capital Allocation Priorities Aligned with Delivering Strong Returns Over the Housing Cycle Share Repurchase ($ millions) • Priority #1: Invest in core $1.4 Billion Repurchased business, including opportunistic M&A, to maintain or grow relative market share • Priority #2: Return funds through an est
Slide 16: Financial Position Supportive of Planned Growth
Financial Position Supportive of Planned Growth Debt Maturities ($ millions) • Company operating within its debt-to-cap guidance range of 30% to 40% • Debt maturity schedule provides flexibility to pursue business objectives • Expected land investment dynamics should result in improving cash flows 1
Slide 17: Increasingly Efficient Land Pipeline
Increasingly Efficient Land Pipeline • Focused on driving greater asset Lots Owned efficiency Owned lot position of less than 5.0 years based on 2016 closings Additional 44,000 lots controlled via options • Expect 2017 land acquisition spend of $1.1 billion Planned 2017 land acquisition spend
Slide 18: 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 19: 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 20: Unmatched Capacity to Serve Distinct Buyer Groups
Unmatched Capacity to Serve Distinct Buyer Groups 19
Slide 21: 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 22: 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 23: 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 24: In Summary
In Summary • Among the nation’s largest and most diversified homebuilders • Operating in a market demonstrating favorable overall dynamics • Articulated strategy focused on long-term success with disciplined land investment practices • Unmatched ability to serve all major buyer groups 23
Slide 25: Corkscrew Shores | Estero, FL
Corkscrew Shores| Estero, FL 24
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