FOR IMMEDIATE RELEASE
Investor Relations
Contact: James Zeumer
Vice President
(248) 433-4597
email: jim.zeumer@pulte.com
Media Relations
Contact: Mark Marymee
Corporate Communications
(248) 433-4648
email: mark.marymee@pulte.com
PULTE HOMES REPORTS RECORD FOURTH QUARTER AND
FULL YEAR 2004 FINANCIAL RESULTS
• | Fourth Quarter Earnings from Continuing Operations Increase 64% to $3.20 Per Diluted Share; Consolidated Revenues Climb to $4.2 Billion | |||
• | U.S. Deliveries in the Quarter Climb 20% to 13,424 Homes, Driving Domestic Homebuilding Settlement Revenues to $3.9 Billion | |||
• | Backlog Value Increases 24% to $5.2 Billion; Unit Backlog Up 14% to 15,916 Homes | |||
• | Record 2004 Consolidated Revenues of $11.7 Billion | |||
• | Full Year Earnings from Continuing Operations Increase 56% to a Record $7.67 Per Diluted Share | |||
• | Company Reaffirms Guidance for 2005 Earnings from Continuing Operations in the Range of $9.00 to $9.50 Per Diluted Share |
Bloomfield Hills, MI, February 2, 2005- Pulte Homes, Inc. (NYSE: PHM) today announced record financial results for its fourth quarter and year ended December 31, 2004. For the quarter, income from continuing operations increased 68% to a record $418.2 million, compared with $248.5 million in 2003. Fourth quarter earnings from continuing operations increased 64% to $3.20 per diluted share, compared with prior year earnings from continuing operations of $1.95 per diluted share. Consolidated fourth quarter revenues for the Company increased 35% to a record $4.2 billion.
For the year, Pulte Homes reported record consolidated revenues of $11.7 billion, an increase of 30% over the prior year and the first time the Company’s revenues have topped $11 billion. Full year earnings from continuing operations rose 56% to $7.67 per diluted share, compared with $4.93 in the prior year. Pulte’s financial results for the fourth quarter and the full years of 2004 and 2003 have been adjusted to reflect the previously announced sale of the Company’s Argentina operations in early January 2005. As of December 31, 2004, Pulte’s Argentina operations have been classified as held for sale and presented as discontinued operations.
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“Pulte’s fourth quarter results complete a record breaking year in which our revenues increased 30% to more than $11.7 billion, while our earnings from continuing operations increased 56% to a record $7.67 per diluted share,” said Richard J. Dugas, Jr., President and Chief Executive Officer. “As strong as 2004 was, Pulte is entering 2005 in an even better position with a record backlog valued at $5.2 billion and a strong land pipeline capable of supporting our growth targets for 2005.”
“Given our record backlog, solid demand environment and robust community pipeline, we are reaffirming previous guidance for 2005 earnings from continuing operations of $9.00 to $9.50 per diluted share, representing a year-over-year increase of 17% to 24%,” said Dugas.
Fourth Quarter Results
Revenues from domestic homebuilding settlements for the fourth quarter increased 35% to a record $3.9 billion. Higher revenues for the period were the result of a 13% increase in average selling price to $294,000 combined with a 20% increase in total home deliveries to a fourth quarter record of 13,424 homes. The higher average selling price for the period reflects a combination of price increases realized during the quarter and changes in the mix of homes delivered.
Fourth quarter domestic homebuilding pretax income increased 66% to $663.2 million, compared with prior year pretax income of $399.7 million. Pretax income for the period benefited from a 180 basis point increase in gross margins from home settlements resulting from higher prices, a favorable product mix and an improvement in overall operating efficiencies. Selling, General & Administrative expenses as a percent of home settlement revenues dropped 110 basis points to 7.5%.
Land sales during the quarter generated $157.5 million in revenues and $62.9 million in gross profits, compared with $115.3 million and $40.8 million, respectively, in 2003. Land sales are an important component of the Company’s domestic homebuilding operations, but can fluctuate quarter-to-quarter depending upon the timing of individual land transactions.
Domestic net new home orders for the quarter were 8,940, up 6% from the prior year fourth quarter orders of 8,465 homes. “Demand remained strong during the quarter, with our domestic operations delivering a 6% increase in net new sign ups,” said Dugas. “Order activity in Las Vegas responded as planned following price adjustments announced in October, but the anticipated higher cancellation rates experienced during the period distort reported fourth quarter net sign ups. Excluding the Las Vegas market, Pulte’s fourth quarter net new home orders increased 17% over the prior year.”
Pulte’s ending backlog for its domestic operations was valued at $5.2 billion, an increase of 24% over the prior year. Year end unit backlog was 15,916 homes, an increase of 14% compared with 13,952 at the end of 2003.
Fourth quarter pretax income for the Company’s financial services operations totaled $17.7 million, up slightly from prior year pretax income of $17.5 million as gains associated with increased loan origination volumes were partially offset by a less favorable interest rate environment and higher overhead costs associated with initiatives to drive better customer service. Higher homebuilding volumes, combined with a 550 basis point increase in capture rate
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to 88.8%, helped drive loan production for the period to 12,316 loans, representing $2.4 billion in principal value.
For the fourth quarter, Pulte’s International operations reported pretax income of $6.6 million, compared with $4 million in 2003. Increased unit closings and revenues in the Company’s Mexico and Puerto Rico operations drove the improved performance for the quarter. Pulte continues to evaluate different strategic alternatives with regard to its International operations as part of a broader initiative to drive enhanced financial results. As part of this process, Pulte Homes sold all of its Argentina operations in early January 2005. Although the sale was completed subsequent to the close of 2004, as a result of this transaction, the Company reported Pulte Argentina as a Discontinued Operation in the fourth quarter and recorded an after-tax charge of approximately $20.6 million.
Full Year Results
For the year ended December 31, 2004, Pulte Homes’ income from continuing operations increased 61% to $998 million, compared with prior year income of $619.2 million. Earnings from continuing operations for 2004 were $7.67 per diluted share, an increase of 56% over prior year earnings from continuing operations of $4.93 per diluted share. Consolidated revenues for 2004 were a record $11.7 billion, up from $9 billion in 2003. Pulte’s earnings for the fourth quarter and the full years of 2004 and 2003 have been adjusted to reflect the sale of the Company’s Argentina operations, which are now reported as held for sale and presented as discontinued operations.
Revenues from domestic homebuilding settlements for 2004 increased 31% to $11.1 billion. Higher revenues for the period resulted from an 11% increase in average selling price to $287,000 combined with an 18% increase in the number of homes closed which totaled a record 38,612 homes. The increase in average selling price for the period reflects a combination of price increases and a favorable change in the mix of product closed during the period.
Domestic homebuilding pretax income for the year increased 64% to a record $1.6 billion, compared with prior year pretax income of $998.8 million. Gross margins from home sales for the period increased 200 basis points to 22.6%, while Selling, General & Administrative costs as a percentage of settlement revenues dropped 90 basis points to 8.8%. Land sales for the year generated $99.8 million in gross margin, compared with $65.9 million in 2003.
For 2004, Pulte’s financial services operations reported pretax income of $47.4 million, a decrease of 31% from prior year pretax income of $68.8 million, as gains associated with increased loan origination volumes were offset by a less favorable interest rate environment and higher overhead costs associated with initiatives to drive better customer service. Higher homebuilding volumes, combined with a 580 basis point increase in capture rate to 87.8%, helped drive loan originations for the period to 35,232 loans, representing $6.7 billion in principal value.
Pulte’s International operations reported pretax income for 2004 was $10.4 million, compared with pretax income of $6.3 million in 2003. Increased unit closings and revenues in the Company’s Mexico and Puerto Rico operations drove the improved performance for the year.
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A conference call discussing Pulte Homes’ fourth quarter results will be held Thursday, February 3, 2005, at 8:30 a.m. Eastern Time, and web cast live via Pulte.com. Interested investors can access the call via the Company’s home page at www.pulte.com.
Certain statements in this release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (1) general economic and business conditions; (2) interest rate changes and the availability of mortgage financing; (3) the relative stability of debt and equity markets; (4) competition; (5) the availability and cost of land and other raw materials used by the Company in its homebuilding operations; (6) the availability and cost of insurance covering risks associated with our business; (7) shortages and the cost of labor; (8) weather related slowdowns; (9) slow growth initiatives and/or local building moratoria; (10) governmental regulation, including the interpretation of tax, labor and environmental laws; (11) changes in consumer confidence and preferences; (12) required accounting changes; (13) terrorist acts and other acts of war; and (14) other factors over which the Company has little or no control. All forward-looking statements made are made as of the date hereof, and the risk that actual results will differ materially from expectations will increase with the passage of time. Pulte undertakes no duty to update any forward-looking statement whether as a result of new information, future events or changes in Pulte’s expectations.
About Pulte Homes
Pulte Homes, Inc., (NYSE: PHM) based in Bloomfield Hills, Mich., has operations in 45 markets across the U.S. Under its Del Webb (www.delwebb.com) brand, the company is the nation’s leading builder of active adult communities for people age 55 and older. Over its history, the company has constructed more than 370,000 homes. In 2004, J.D. Power and Associates ranked Pulte Homes No. 1 in customer satisfaction in 14 U.S. markets, and among the top three homebuilders in 23 of 25 total markets surveyed. J.D. Power and Associates also named Pulte Homes the inaugural recipient of its Platinum Award for Excellence in Customer Service among the nation’s largest new homebuilders in 2004. Pulte Mortgage LLC is a nationwide lender committed to meeting the financing needs of Pulte Homes’ customers by offering a wide variety of loan products and superior customer service.
Websites:www.pulte.com;www.delwebb.com
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Pulte Homes, Inc.
Condensed Consolidated Results
Of Operations
(000’s omitted, except per share data)
(Unaudited)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
CONSOLIDATED RESULTS: | ||||||||||||||||
Revenues: | ||||||||||||||||
Homebuilding | $ | 4,167,789 | $ | 3,093,406 | $ | 11,596,748 | $ | 8,892,786 | ||||||||
Financial Services | 36,567 | 30,626 | 112,719 | 115,847 | ||||||||||||
Corporate | 165 | 438 | 1,749 | 3,281 | ||||||||||||
Total Revenues | $ | 4,204,521 | $ | 3,124,470 | $ | 11,711,216 | 9,011,914 | |||||||||
Pretax income (loss): | ||||||||||||||||
Homebuilding | $ | 669,778 | $ | 403,705 | $ | 1,643,793 | $ | 1,005,124 | ||||||||
Financial Services | 17,677 | 17,491 | 47,429 | 68,846 | ||||||||||||
Corporate | (22,019 | ) | (20,335 | ) | (90,685 | ) | (75,351 | ) | ||||||||
Income from continuing operations before income taxes | 665,436 | 400,861 | 1,600,537 | 998,619 | ||||||||||||
Income taxes | 247,199 | 152,341 | 602,529 | 379,376 | ||||||||||||
Income from continuing operations | 418,237 | 248,520 | 998,008 | 619,243 | ||||||||||||
Income(loss) from discontinued operations | (20,864 | ) | (626 | ) | (11,467 | ) | 5,391 | |||||||||
Net income | $ | 397,373 | $ | 247,894 | $ | 986,541 | $ | 624,634 | ||||||||
EARNINGS PER SHARE - ASSUMING DILUTION: | ||||||||||||||||
Income from continuing operations | $ | 3.20 | $ | 1.95 | $ | 7.67 | $ | 4.93 | ||||||||
Income (loss) from discontinued operations | (.16 | ) | (.01 | ) | (.09 | ) | .04 | |||||||||
Net income | $ | 3.04 | $ | 1.94 | $ | 7.58 | $ | 4.97 | ||||||||
Shares used in per share calculations | 130,706 | 127,464 | 130,117 | 125,730 | ||||||||||||
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Pulte Homes, Inc.
Condensed Consolidated Balance Sheets
($000’s omitted)
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Cash and equivalents | $ | 314,634 | $ | 401,883 | ||||
Unfunded settlements | 118,471 | 122,271 | ||||||
House and land inventories | 7,390,791 | 5,510,756 | ||||||
Land held for sale | 230,743 | 251,237 | ||||||
Land, not owned, under option agreements | 106,380 | 73,256 | ||||||
Residential mortgage loans available-for-sale | 697,077 | 541,502 | ||||||
Investment in unconsolidated entities | 258,868 | 69,502 | ||||||
Goodwill | 307,693 | 307,693 | ||||||
Intangible assets | 135,454 | 143,704 | ||||||
Other assets | 815,020 | 641,548 | ||||||
Deferred income tax assets | 31,766 | 8,799 | ||||||
$ | 10,406,897 | $ | 8,072,151 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Accounts payable, accrued and other liabilities | $ | 2,203,101 | $ | 1,914,378 | ||||
Collateralized short-term debt, recourse solely to applicable subsidiary assets | 617,415 | 479,287 | ||||||
Income taxes | 202,557 | 79,391 | ||||||
Senior notes and subordinated debentures | 2,861,550 | 2,150,972 | ||||||
Total Liabilities | 5,884,623 | 4,624,028 | ||||||
Shareholders’ Equity | 4,522,274 | 3,448,123 | ||||||
$ | 10,406,897 | $ | 8,072,151 | |||||
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Pulte Homes, Inc.
Segment Data
($000’s omitted)
(Unaudited)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
HOMEBUILDING: | ||||||||||||||||
Pretax income: | ||||||||||||||||
Domestic | $ | 663,159 | $ | 399,706 | $ | 1,633,415 | $ | 998,822 | ||||||||
International | 6,619 | 3,999 | 10,378 | 6,302 | ||||||||||||
Total Homebuilding | $ | 669,778 | $ | 403,705 | $ | 1,643,793 | $ | 1,005,124 | ||||||||
Domestic Homebuilding: | ||||||||||||||||
Home sales (settlements) | $ | 3,941,238 | $ | 2,916,448 | $ | 11,094,617 | $ | 8,482,341 | ||||||||
Land sales | 157,494 | 115,332 | 305,391 | 219,320 | ||||||||||||
Domestic Homebuilding Revenue | 4,098,732 | 3,031,780 | 11,400,008 | 8,701,661 | ||||||||||||
Home cost of sales | (3,046,554 | ) | (2,306,319 | ) | (8,583,551 | ) | (6,731,834 | ) | ||||||||
Land cost of sales | (94,601 | ) | (74,570 | ) | (205,589 | ) | (153,415 | ) | ||||||||
Selling, general & administrative expense | (294,647 | ) | (252,185 | ) | (973,629 | ) | (820,951 | ) | ||||||||
Other income (expense), net | 229 | 1,000 | (3,824 | ) | 3,361 | |||||||||||
Pretax income | $ | 663,159 | $ | 399,706 | $ | 1,633,415 | $ | 998,822 | ||||||||
International Homebuilding: | ||||||||||||||||
Home sales (settlements) | $ | 69,057 | $ | 61,626 | $ | 196,740 | $ | 191,125 | ||||||||
Cost of sales | (55,341 | ) | (49,533 | ) | (158,972 | ) | (152,445 | ) | ||||||||
Selling, general & administrative expense | (7,102 | ) | (8,132 | ) | (28,459 | ) | (34,259 | ) | ||||||||
Other income (expense), net | (331 | ) | 413 | (2,362 | ) | (203 | ) | |||||||||
Minority Interest | (2,167 | ) | (1,427 | ) | (3,242 | ) | (1,382 | ) | ||||||||
Equity in income of joint venture operations | 2,503 | 1,052 | 6,673 | 3,466 | ||||||||||||
Pretax income | $ | 6,619 | $ | 3,999 | $ | 10,378 | $ | 6,302 | ||||||||
FINANCIAL SERVICES: | ||||||||||||||||
Pretax income | $ | 17,677 | $ | 17,491 | $ | 47,429 | $ | 68,846 | ||||||||
CORPORATE: | ||||||||||||||||
Pretax loss: | ||||||||||||||||
Net interest expense | $ | (11,445 | ) | $ | (10,653 | ) | $ | (47,372 | ) | $ | (39,364 | ) | ||||
Other Corporate expense, net | (10,574 | ) | (9,682 | ) | (43,313 | ) | (35,987 | ) | ||||||||
Total Corporate | $ | (22,019 | ) | $ | (20,335 | ) | $ | (90,685 | ) | $ | (75,351 | ) | ||||
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Pulte Homes, Inc.
Business Operating Data
($000’s omitted)
(Unaudited)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
HOMEBUILDING SETTLEMENT | ||||||||||||||||
REVENUES: | ||||||||||||||||
Domestic | $ | 3,941,238 | $ | 2,916,448 | $ | 11,094,617 | $ | 8,482,341 | ||||||||
International | 69,057 | 61,626 | 196,740 | 191,125 | ||||||||||||
Total settlement revenues | $ | 4,010,295 | $ | 2,978,074 | $ | 11,291,357 | $ | 8,673,466 | ||||||||
HOMEBUILDING UNIT | ||||||||||||||||
SETTLEMENTS: | ||||||||||||||||
Domestic | 13,424 | 11,159 | 38,612 | 32,693 | ||||||||||||
International | 2,735 | 2,445 | 7,713 | 6,889 | ||||||||||||
Total settlement units | 16,159 | 13,604 | 46,325 | 39,582 | ||||||||||||
Domestic Homebuilding: | ||||||||||||||||
Unit settlements: | ||||||||||||||||
Northeast | 1,166 | 1,087 | 3,249 | 2,692 | ||||||||||||
Southeast | 3,306 | 2,621 | 9,362 | 8,234 | ||||||||||||
Midwest | 2,137 | 1,631 | 5,520 | 4,936 | ||||||||||||
Central | 2,347 | 2,024 | 6,066 | 5,283 | ||||||||||||
West | 4,468 | 3,796 | 14,415 | 11,548 | ||||||||||||
13,424 | 11,159 | 38,612 | 32,693 | |||||||||||||
Average selling price | $ | 294 | $ | 261 | $ | 287 | $ | 259 | ||||||||
Unit net new orders*: | ||||||||||||||||
Northeast | 778 | 687 | 3,197 | 3,098 | ||||||||||||
Southeast | 2,887 | 1,994 | 10,941 | 9,021 | ||||||||||||
Midwest | 1,145 | 1,077 | 5,396 | 4,736 | ||||||||||||
Central | 1,288 | 1,231 | 5,987 | 5,125 | ||||||||||||
West | 2,842 | 3,476 | 15,055 | 13,009 | ||||||||||||
8,940 | 8,465 | 40,576 | 34,989 | |||||||||||||
Unit net new orders — dollars* | $ | 2,650,000 | $ | 2,410,000 | $ | 12,101,000 | $ | 9,555,000 | ||||||||
Unit backlog: | ||||||||||||||||
Northeast | 1,483 | 1,535 | ||||||||||||||
Southeast | 5,305 | 3,726 | ||||||||||||||
Midwest | 1,277 | 1,401 | ||||||||||||||
Central | 1,077 | 1,156 | ||||||||||||||
West | 6,774 | 6,134 | ||||||||||||||
15,916 | 13,952 | |||||||||||||||
Dollars in backlog | $ | 5,154,000 | $ | 4,147,000 | ||||||||||||
* Unit net new orders for the year ended December 31, 2003 do not include 1,051 units of backlog acquired and the related dollars.
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Pulte Homes, Inc.
Business Operating Data, continued
($000’s omitted)
(Unaudited)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
MORTGAGE ORIGINATIONS: | ||||||||||||||||
Origination volume | 12,316 | 9,083 | 35,232 | 28,655 | ||||||||||||
Origination principal | $ | 2,384,800 | $ | 1,621,100 | $ | 6,739,200 | $ | 4,989,500 | ||||||||
Capture rate percentage | 88.8 | % | 83.3 | % | 87.8 | % | 82.0 | % | ||||||||
Pulte Homes, Inc.
Supplemental Information
($000’s omitted)
(Unaudited)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Interest expense: | ||||||||||||||||
Homebuilding (included in home cost of sales) | $ | 45,688 | $ | 27,999 | $ | 133,049 | $ | 78,708 | ||||||||
Corporate | 11,610 | 11,091 | 49,121 | 42,645 | ||||||||||||
Financial Services | 2,592 | 1,963 | 7,241 | 7,386 | ||||||||||||
Total interest expense | $ | 59,890 | $ | 41,053 | $ | 189,411 | $ | 128,739 | ||||||||
Depreciation & amortization | $ | 12,831 | $ | 10,545 | $ | 46,296 | $ | 39,419 | ||||||||
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