PHM - Earnings call transcript Q3 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the PulteGroup's 3Q, 2017 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jim Zeumer. Please go ahead, sir.

James Zeumer

Great. good and April, you, morning. Thank welcome I quarter to third participants call. want to earnings PulteGroup's all

Joining Ryan Jim website our today morning's accompanies Vice President, me today's are A at earnings President O'Shaughnessy, CEO; Finance. been presentation and pultegroupinc.com. Executive release Bob call, and CFO; slide of have corporate and copy Ossowski, the Vice Marshall, Senior this President that and to posted

highlight reports. part could to and the today. that audio are the results results Also from webcast future that this call. replay impacts these reported summarized part today's those our is PulteGroup's SEC risk of are in call in I of included review We want we future significant also reconciliation later to materially well results within differ your our about annual We as call encourage our in post an slides detailed analysis accompanying today's you could release that want performance. statements to items. our results. will factors tables of of the certain discussing results risk to reported release quarterly Actual earnings to this assist I A other as within as our a of and our today's be adjusted results accompanying adjusted suggested these presentation to as alert and morning's These affect little slides. will exclude significant information and results presentation forward-looking of participants our factors today. includes key most The comments including today's by all filings,

to Ryan? call me Ryan let turn the over Now Marshall.

Ryan Marshall

results. good opportunity our with I morning. today financial quarter third to and at speak operating the and Jim, Thanks, PulteGroup's strong you appreciate

and priorities years. capital line the to growth strategies executed continue top realize we've several the by allocation business We driven over bottom and past

XX% our in earnings share performance XXX point the per even and increase increase severe attest basis weather margins, strong As deliver. in adjusted QX this with the release, morning's in in to operating financial in able to reported conditions sign-ups, increase were we XX%

our impacts Irma I and on results had about provide are to and the our and hurricanes comments in discuss we Harvey they business. Before having want a detail, few

turn First XX can of any and over lives that foremost, employees employees thankful hurricanes. to members $XXX,XXX we're storms. aid that impacted of safe we in hours our company all actually contributed employees I'm and were to our the PulteGroup well say less which matched disrupted support by than whose the In team by are working the

that While to our significant and I then month X% damage the increase was homes resulting for specifically, a resulted of fell fortunate a days can not of storm potential to companywide in by we that the improved on number the make that caused the the by has by would construction following One the is the little has but our compounded by in at while in Texas, impact the relating certainly the you major from were estimating can from expected, to Two of Florida, the were and these markets. Customer than final labor demand were suffered robust appreciate, consumer leading the we resulting as disruptions see. storms that August Rather our sales process We higher or also and multiple we the and that days better overall varied damage. were communities to were across in storms. over or our up sign-ups These the after none numbers, specific July the bit last flooded I communities Harvey the it was numerous approximately the of outpouring year, storm, takeaways Carolinas. weeks availability communities than said, market. up times Carolinas lost down to More like support coastal selling hurricanes gratifying tell reopening buyer up Depending of still slowdowns to being process couple and within Irma but I'm trade associated are XX% materials. in That operational in models, held the in wind has the disruptions for we're point you all to closing XXX traffic of just days the and various September of at recovery and weeks. incurring sign-ups fully few loss construction, and minimal. prices the surprised once on the quarter Houston, a surpassed were significant. labor of Florida was was roughly the under our centers market that in and sure

have In addition, utility communities been municipal homes resources to needed permitting to bring and for crews strained. power and/or

taken which are the power beginning activities from are Harvey allowing up summary, In to much for several more permitting. the of our homes. municipalities quarter builder did impact to freed resources results. Despite time is new same on hurricanes, being on shift utility so many response continue down and hurricanes been hurricane could the are will damage to but work wind crews be to to the their Fortunately, to and third the much, from related Irma quarters. toward our positives them worse, have we At there connecting feel business

with that year. homebuilder this alignment higher earnings would As our able rather to returns. an meaningful then not sake, share. focus topline the we Bob are for into compound revenues growing a continue in increase and were on we XX% strategic per growth I with realize to business adjusted just increase in emphasize sign-ups in We delivering will are growth our growth detail, prior compared the in X% we operating XX% growth in point with

quarter and increased the by than our more is extremely pleased basis about backlog on and well-positioned performance are results. For third return with our now year-to-date full-year are we XX-year our over points at XX%. equity Overall, period the XX deliver we prior a high ended months our and third strong quarter to year September trailing XXX XXXX with comparable

Now, let thorough to call me results. more quarterly Bob for a of review over the turn our

Robert O'Shaughnessy

everyone. and Thanks morning Ryan good

the performance. were I in sign-ups some our compared our in a hurricanes As impacted the weather severe drop markets. quarter August. with third the with Ryan business Where net result third impact increased of our as the in new growth September prior that year quarter review number discussed, July as worth over quarter we year-over-year important results the by of highlight our areas reiterating sign-ups in orders a as that in homes. of possible, disrupted I'll a meaningful our the in financial Starting is businesses XX% It XXXX and experienced of

Our read may area. sign-ups also the about will rise low by related effectively and reported QX The one be which Boston were raised out have of XX-unit our buildings rebuilt. a fire building impacted need cancellations to at you to in sold was

As months cancel building rather their a elected to customers completed. XX XX result, contracts for be new than to the wait

point. reduced I'll in for housing sign-ups find these by one The also to which percentage these fire cancellations address closings XX other but trying future reported growth will impact our shortly. buyers, options year-over-year are about We

of in decrease active offset higher in by first-time our at XX% buyers little more adults. a increase Looking [indiscernible] a closely, among sign-ups sign-ups QX partially we sales experienced

markets in among increased prior decline decreased move-up Carolina buyers X% sign-ups XXXX QX and over among for XXXX XXXX partially pace The and buyers the to by move-up buyers a sign-ups to costal our related homes. our third while XXXX the sign-ups a largely XX% For to buyers reflects and lower hurricanes. Adjusting gained in buyers among homes quarter X% [ph] over Houston, increase first-time quarter community sales. first-time adult active our offset was count sign-ups X% active due to XX% [indiscernible] and Florida active was the year XX% among absorption increase homes, up adult among of adult

prior by XX% third approvals XX% the closing West we recent group, move-up increased adult. particularly higher XX% In from our were years. X% active we XX,XXX up had expect end down The to driven of the $X.X our lower closing billion closings made to sales of the move QX primarily X% quarter period X% were in storm the under closings to municipal of At in XX% the in a the homes municipal price average were closing processing statement, results. XXXX These Breaking impact assessment first-time, in have in the and active home the to low negatively grew buyer below our markets. revenues combination also delays, days, increased fourth adult. Based production range. of $XX,XXX by buyer continue sale quarter of guidance by XX% quarter volumes reflects Turning in were XX% other year for income increase and construction between capabilities volume QX result construction. as availability and first-time, the impact environment, estimate in homes prior hurricane benefit business or on over currently we homes XXXX XXXX with delays the At This we and end trade lost and quarter. deliver our in current investments the closings affected with $XXX,XXX homes. were by XXXX for a XXXX revenues was of in related increase the permitting

closings from in also had the estimate deliver QX Our quarter. been the all Boston burned building which of to and the in loss reflects that scheduled

mix sales selling quarter was across price was prices modest the higher our move-up with groups. average shift all for driven combined buyer previously, higher price average homes by toward more noted sales the The As $XXX,XXX. realized

buyers $XXX,XXX. For $XXX,XXX, sales X% active price to increased to the increased quarter, adult first-time X% and $XXX,XXX, home average to X% of move-up our increased

Looking I sales sign-ups at that in higher resulted would this California, as to note XX% also quoted particularly $XXX,XXX. mix Northern to our quarter prices. continue higher impacting average is California, ASPs rise geographic from from backlog backlog increasing

is and XX.X% XX.X%. Looking range QX margin in line XX the up at adjusted margins points in reported guidance realized year with our this we gross margin from was our sequentially basis which of gross XX.X% our of to previous

on continue wherever by premium to our ongoing possible. focus Our and more capturing option margins dollars lot be gross revenues supported

basis quarter were quarter option as incentives revenues per third the In percentage second X% gross points XX of quarter compared sequentially For year's increased improved basis sales from over year $XX,XXX premiums the quarter last up or the home. last the approximately to but a this XX and of points year. lot $XXXX

in labor higher markets. and as as Florida, high end quarter material of impact the lower in come range fourth to XX.X%. we This the guidance at margins towards the considers expect of gross will storms which the of building our estimate the in well being will previous Looking delay closing in XX.X& Boston of the loss margin of costs parts certain the of certain result incurred in

our our our in year XXXX significant the quarters this of Looking for highlighted resulting our guidance $XXX home million certain on revenues which insurance the related charge sale operating the first of XX%. of of actions performance and revenues overheads, Based increased Prior to includes or at actions of as improved our of the during from year XX.X% or that restructuring reported the million with three home SG&A of overheads $XX the sale leverage took XX.X% us These costs included on quarter third matters. margin strong third to full resolution as results million shareholder the million to activities. $X track to was keep $XXX operating from of guidance the workforce impact quarter reduce associated XX.X%. a our year. Note resulting achieve operating margin XX.X% charges costs we well to SG&A we items excludes for

quarter capture million with Mortgage first compares pretax pretax last of Turning to year. more XX% last company compared competitive originations. our our financial mortgage of to third decrease with $XX $XXX the third income quarter XX% quarter last the environment reported was the driven In was compared year. The $XXX by for rate million million income total, for pricing we reported in income primarily $XX in service pretax businesses a year. for which million

changes $XX transactions quarter slightly tax The a third other of an the along quarter. employee guidance million rate from driven with expense exercises reported income certain state also XX.X%. tax effective by was benefit tax relative to We which during law of represents stock and tax previous stock rate option lower

million resulted shares per per at Looking $X.XX million XX% for XX% share $X.XX bottom reporting calculated of per increase an count over share shares QX adjusted XXXX. earnings earnings lower repurchase share earnings year QX approximately $X.XX share line XX% increase prior using over were per share The our is which XX of represents prior which per decrease the $X.XX outstanding year which from the activities. the company's our reported represents On we a share. earnings of QX Diluted from of earnings share. company's or XXX was a basis,

$XX.XX Turning on to $XXX at repurchase million XX.X million our hand an per we in $XXX of spending to the balance $XXX Through billion repurchases third worth the the expect price after quarter. quarter sheet shares complete average first of fourth million share the with share. year of ended months and stock the targeted in stock repurchased our we've to of million nine of cash $X

of decision is we repurchase to share modestly the XX%. the activity would quarter that our subject ratio Consistent our market short-term, ended our repurchase a with stock always, prior in As to third leverage debt-to-capital increase with conditions. guidance

we debt-to-cap the subsequent to also the retired move million third our outside the of of we just quarter, I expect XX%, end in bonds remains that this range to want XXXX. to range to of inside XX% matured. back that highlight While $XXX targeted

exercised our bank $XXX feature accordion million also incremental We revolver the us liquidity. of providing of an

increase as with under of construction. XX% as only units the spec by primarily XXX specs to entered quarter XX% quarter to compared we is homes. which quarter an driven sold XX,XXX we homes increase the or The end third moving with of fell over homes at the We backlog operations, disciplined X,XXX end approximately with Finally, regard under spec homes of and remain the production just had finished to inventory was construction of the in XXXX. over higher

the we is in out with the XX% prior quarter an year of over and XXX guidance. line For of which communities increase is operated our

release provide in our we on practice earnings is As we guidance will community XXXX January. when count

repurchases us approximately guidance $XXX share in prior keeps our in to spend with of nine land on billion to and investing used brings capital our XXXX. $XXX acquisitions. addition new million in QX In This we of months million acquisition $X.X track land for

goal deals XX During lots the an of Consistent these of or stated per we quarter wanting Inclusive be will optioned. lots average to put efficient of over return XX% under the community. the X,XXX approved just of covering lots asset and our control approximately be parcels XXX more friendly, with in our own pipeline providing as now XX%. control the lots another lots This increases land future we option to of continue greater successfully flexibility asset build We're quarter support we percentage and under pleased option. and XX,XXX added our under with XX,XXX while controlled land efficiency. to progress to growth our

Ryan? turn me comments. to some back call Now let the Ryan for final

Ryan Marshall

Thanks Bob.

let than change country the seasonally provide Before sales we more we the many in the the adjusted which results our forecasting. and demand overall conditions and that with of felt stronger the but are call questions quarter. in on feedback open comparisons rate Bureau a the divisions The hurricanes the on release market Based X% to growth the demand analysis Census certain in home last the the a comments the in year. suggest for was specific you government line reported would market housing generally last more very the our from we're environment. quarter new at XX% little difficult, tell experienced pleased XXX,XXX to few from little Certainly with demand annual make me we the from and

overall few past the years case benefiting of housing As from for the has economy. is the strength been the demand

And And the buyer historically generally significant that increase higher, we housing rates Irma along growth, would distort XX% have surprise impact with in modest markets. seeing the we good environment in of positive, higher demand. specifically don't the in our no impacted the think Midwest the finally while results. continue still forward we job of particularly Through our in few we market, trends continue will say price to we Arizona the high were weeks quarter into as moved West third had in most although good Nevada. increases the solid pleased come experienced markets. Northern demand In Florida With California, a I and the interest be caused traffic saw October buyer quarter. of the see Going and consider although demand would reported with some to hurricane country demand sign-ups points Southeast heading in in expect a ongoing buyer Coast be England continued confidence typical strongest overall. division an our flooding are certain in little More and wage traffic obviously East with and growth of support the impact New I in that fourth was at the on consumer overall middle demand cancellations can the communities. fire the Texas Sign-ups interest patterns on incredible interest high it among our Western of the The Houston across country that low the seasonal we by with our choppiness to in out QX the demand good should growth but traffic rate and in that first we in markets demand.

challenging the work tremendous your nine to the QX of forward of months our you proud conditions. during customers the a or closing, looking year. experienced I each taking continuation were In extremely I'm and employees the first conditions very of our are We a of good strong care quarter. through thank during demand for their efforts Whether all other to want of some

the to Zeumer. Jim? Jim back turn me call let Now,

James Zeumer

call, during possible one the you'll Ryan. the question for that speak participants get to you one explain limit we'll process remaining now the can time started we so questions that ask as you with call thank and Q&A. this as April, if of Great, we followup. yourselves many open to We'll

Operator

[Operator sir. our Thank we'll you. Mike from first ahead with And Please go Dahl Instructions] question take Barclays.

Michael Dahl

Hi taking my thanks for questions.

and things of storms terms types Just have Florida in were and Houston progressed of starting really the post damage. the quarter, impacting two of so in more the impacts kind kind that in storm different how off pretty of hopefully on the we seeing quarter, disruption

things recover you over faster the guess Florida So and is respective Houston, or those how you I a you're could seeing bit were September color one little markets versus early give markets rebounding your anything us on proactive proceeding more how than progressing us October? give on of course can if

Ryan Marshall

good morning, this Ryan. is Yes Mike,

was kind but done buyer end free I there and our a new for and quite Florida. the normal of drywall, terms in little prepared the labor of both we've with the hook that margin into new being activities leaders remarks up from environment. getting and related permitting we paint being rebound what at we of meters, were we the the up, are there, as trim in grid. to two focused that to labor into to The indicated associated good seeing that work and mentioned, in the we're labor to We're power I remarks of and definitely break is availability are storm of energize as and for as homes, permitting mostly our that's our clean in implications rolled damage characterize related the that on power power standpoint well. we've start prepared As a implications market see for nicely kind to that power actually and back pretty energize municipalities, need as crews very the damage I'll recovery. there Houston, starting paying was geographies. in I'll in those demand seen we're seeing demand remarks Houston Florida, well in different strained community the as landscaping, was move we QX, the and prepared The would a we because kind as the pretty were bit that up grid sites, et a but recover storm of cetera, mentioned related lot

where most Southwest the big highlight, broader expected quite widespread sense we Florida buyer would that it's and damage a one was for hasn't from market some I a a hurricane that made us, recovered of so landfall it in where and the to. that's demand have is particular market would standpoint very

touched So on I had think Mike? that you there everything I

Michael Dahl

and delays margin magnitude as those should relative that XXXX but difficult, but impact I the we did how labor on high of understood you materials, have between you're be look quarter the how is can this Boston is you margin thoughts impacts? is the you I you forecasting Yes, community, communities, there clearly into if if out initial way look and the collectively know one know any of the you out know any XQ about out at and parse those we should thinking we you

Ryan Marshall

parse had didn’t quarter quarter the over we out year basis XX.X% for Yes quarter. the of XX.X%. this We gave had guide a impact. know of sequential points was and you the the it that XX second we second end going But an back to it to the in has at certainly XX.X% of our half improvement

quarter the expecting Bob but impacts loss that guide costs communities. lower staying higher anticipate remarks within as in that guide, those fourth we higher the be margin towards and his from mentioned the and of factors our labor we're end of in will For the still

Operator

take Bank. with go Deutsche We'll Please our from next Sood ahead. question Nishu

Timothy Daley

Daley Nishu. is actually on this Tim for Hi

and X.X land that year Thank for just to I total development it be around how just XXrd on I acquisition So of was allocation still are been XXth? about And wondering the ask secondly, respectively, kind guess to XQ you wanted quarter-to-date X.X? or was that I versus I I and touch have the in a spend on previously to guided share track the much then to first think capital XXXX? was into for repurchases and X.X the bit So through you. October looking then done wanted of

Ryan Marshall

the did buying that we're to We that during provided buyback expect $X the haven't we be would repurchase Yes, update obviously billion we so show fourth any quarter. indicate on going currently the complete share that to in quarter. activity

just under to In we will we'll the million so under had guidance yes the we year. on yes we around brings spend us we at think think beginning million, here be spend, terms there given land the just and development We we've $XXX just of X.X. $XXX to of be of the had spend guided

Operator

our Lovallo next with from we'll of question John Please take Bank America. ahead. And go

John Lovallo

guys Hey on Gallo morning. it's Pete actually [ph] Good for John.

Ryan Marshall

Hey John.

John Lovallo

just focus forward I if kind could Slide owned out detail terms kind Bob really reason and XX% would of going I there long kind that guess of, question there get two-thirds timeline optioned to And target long that is just it wouldn't wondering is was XX% take you or would you organically any to in options giving Six, range? there over that I strategy be, any to of B we on part to the the closer good option guess around from why a level higher how of there term? then

Robert O'Shaughnessy

looking is pretty we time when optionality at think risk fair I question that for over consistent it's been we've we're a look market really and what Yes, transfer.

that And so because putting risk actually it's transfer the source too it if money not between doesn't expensive. that's and us land, market about

really So asset creating risk to to basis affect we where actually able an parties get by able to structure and both that optionality we serves transaction-by-transaction a market is our are manage efficiency. actually what we down are on

but what whatever, great, a nor can there So we that we a to have one get two-thirds be in I that or time targeting I it if were really is dialogue. any at there say - XX% transaction-by-transaction don't we is of sort point at know

Ryan Marshall

Pete, Ryan. this is

tend part options that that we taking the we the XX% bit which is reason on takes just of I consideration into entire of community. The than industry in think Del we need. other the predictability also it XX% that business set is, believe things to things Pulte branded run It gives so I'd there our or entitlements longer little in our Webb Centex longer the a impact owned, one is is, going that land a one of of the thing are a us at the forward assets add and of milestones the

nail So I is What for think on mix. right XX-XX the as is Bob transfer, generally head. your governing is really option for think the guidepost more but risk we hit looking the organization we're better, the

Operator

take Michael JP our Rehaut question from We’ll Morgan. with next

Michael Rehaut

in have does started I XXXX everyone. how place? to that low was you figure It about to yours How overall the think should the morning on we it's prior year of volume more mid, - levers next increase you was one, high, peers maybe how starting this count to single good obviously growth increase, different are Thanks, modest three or or over bit to hoping that targeting understanding and where either create think different of flattish. couple you little XXXX or have prior value, a count there couple two, growth? of plans years bit community kind focus sure years, growth year community that about but double-digit over digit before little growth and into a in as I'm

Ryan Marshall

This is Ryan. Mike morning. Yes, good

our point next as including his you QX any for as ranges do call. remarks provided guide Bob haven't We to at of year count. guidance this part give we’ll that some plan We’ll to mention XXXX community in

land from and know investments you've time. we've over you making been pipeline volume that into growth growing the certainly think community translate been our I will that seen which we've land as count

we increasing slightly market. pretty we'll that that strong for and business. up been about and into a quarter be thinking growth up that's numbers above reflective putting is of how while want this being some to even or the year talked level than investments how We've keeping our growth prospects with XX% we're faster broader another we've with the so for market it's the think have I growth the grow a one I We this a think at or future growing been yet

Michael Rehaut

to hurricanes guess earlier, issue in wanted terms that kind Florida hit? Obviously a Ryan. the markets terms particular any in but cost? have asked been that in of labor availability trends of and inflation change trending early expectations certainly terms you have this the of second Texas the ground or obviously of that have you terms pool those but the that any apologize in now was labor any on materials have labor even I what in pretty year sense appreciate in of if I I days, seen in still probably to changes intelligence an right get question you before it's and how might next are might

Ryan Marshall

Florida, impact some the paying very to close labor before one being XX We've it. given drywall, was to at the job that over Yes, predominantly the on around attention thing there That's the seen Mike, we're we're coming it, that had same the is labor it a favorable pay catastrophic keep certain Houston. trim for even bit parts but XX pretty A been disaster some that to events so we've is the the of and able generally we days. paying last lumber. of paint have natural upward in Mike, we're availability is which I on of Lumber an in but think on recovery on our specifically paid labor. little seeing labor place for we're national I'd up going The premiums has highlight again seeing of premium a efforts. but trend to sites where

think for I to that need one attention be the that's all to So we paying XXXX.

that be in impacts lumber being will think premiums I lasting. the Houston paid for longer that are subside and time. in labor the could Florida

Operator

Stephen from question with next ISI. our take Kim we’ll Evercore And

Stephen Kim

hear guys. Thanks very Can much you me?

Ryan Marshall

you good morning. Stephen, Stephen? there, Are Hey

Stephen Kim

difficulties that, can Yes, had me? hear there, you technical sorry some I about

Ryan Marshall

Yes, good morning.

Stephen Kim

Okay, okay, good morning.

as as to talking to the turn to share which is land it that, that me are earlier you way terms to wanted approach hear answer about think It where your that. spend an I seems agree spent. indicated wasn't that. and the about dollars optioned. simply question your just to was it question with in of and land units to about simple I I land gratified best land Sorry your maybe to the of in

$XXX didn't $XXX you the I get for you but it think probably quarter had to a development you…? around in assume I that I see indicated if spent was number. million, wanted I spend acquisition.

Robert O'Shaughnessy

and was development quarter acquisitions $XXX of it’s land spend million. clarify to Yes, in the XXX

Stephen Kim

Thank that. That's great. for Okay, helpful. you

question of rate? what of you spending year Okay you low think say. land and based my a a so to like maybe that what or need at maintain going amount for let's little looks goals of you're like revenues the year. to do to bit And the which current kind assuming sales take be you revenue your on it growth XX% XX% were indicated you basically would spend give about I'm what for relates is bring So

meet If need to of you our line that level say forward would and on top spend kind able to want basis? business an be to land what that we you of to were carry run ongoing

Robert O'Shaughnessy

cost That's is land a one optioned. much the hard to the in mix how markets points because matters, buying Stephen that of looking you're price answer you're at

to know answer doesn't real how it mix buying. that’s Right that but serve and So I you, depends generically. you're on answer for it not a really

Operator

take We’ll our question Zelman Associates. from and next with Zelman Ivy

Ivy Zelman

strong quarter. a you. guys Congrats Thank on

Ryan Marshall

Ivy. Thanks

Ivy Zelman

just too bit about consumers lot from questions little obviously could you and pushback what incremental us a really seeing any Cal underwriting of which Ryan but about we've around of concern power, pricing maybe areas Western talk despite investors? consumer demand? buy concerning you markets, ability little a thinking any of give that you Northern seeing other most allowing seem and pricing inflation. you're know the on seeing the the any markets to some be is you one price specifically of power of the you're seen it around, mortgage of the maybe a to about and in to with affordability? talk lot your get heard Are color seeing markets know haven't We home Denver the You horn of Are bit the credit we about concerns much is resistance? side strength And a strong to

Ryan Marshall

The it's one to better fact with Yes, exception What the around good specifically credit generally availability programs. tell in XX gotten morning. that days FHA. the unchanged. I is is would okay I you you tell and Ivy FHA GSC over would is it's last

into from a the little credit side come FHA the more seeing terms non-banks. it's that's unchanged. are in FHA availability on We And bit, competition world the of helping but

that if the think underwriting be Act to the I be you False that Claims to the Claims in prosecution will the False think the happens banks needs and the are I full under with availability until continue credit dealt hesitant to to Act, of box. bigger going

I price fully say on credit broader doing So us I you homes. they're That the because keep a for clearly of a at little that's availability or think entire said, availability more broader also business. that in her side the from ceiling the impacting the the that Deb we the they at seeing There's that run being higher have her it in job. side which I company our helps into are stop maximums and of business, spend. look availability. what the price on in it builder world. and opportunity When price can a of mortgage they still of little quickest and lower of and have to is that's team that's going comment points, at resistance going from we bit but points what's the at nice mortgage of look wouldn’t mortgage buyer a affects She my terms We concern the mortgage Bob to an that that's absolute amazing credit group bit and a ability the informed affordability runs very kind company

affordability attention have need pay has think few all we been from country historical have an new places hot that know larger trends resale are a around and are maybe what running the standpoint markets you to. that there between grown the So to premium and I and been there those are than

asking So bit color hopefully little provide that Ivy? helps what of to you're a

Ivy Zelman

you. thank does It

get attractive what's M&A markets, one you looking bolt-on are me maybe seen existing cost your to markets strategic market opportunities opportunities? given that Let the into appetite maybe do acquisitions and ask in other around and question, you some or we've either see new and

Ryan Marshall

of and we've think point land give from we of certainly to to put we opportunity acquisition and if you'll we attractive figure which we well out to capital our land change defined as our know and integration it. the I our M&A. acquisition. allocation but philosophy no in an make business is standpoint challenges, with pipeline integration category land organic our than at to sort lot invest but want so that you how that that extent a make The want I'd opportunity benefits we're that new in that back different really to open some sure makes for to you really Yes, sense. added in land appetite continue the acquisition M&A are challenges no in M&A the makes from We it look happen, change appetite. in sense a think there's to no how We deals, We enough reiterate.

Operator

And go we Evercore ISI. Stephen question from followup with a Kim have Please ahead.

Stephen Kim

if last put K That's just was way know I the options. have us you and you're well. of a again me are could your I I'm Thanks price an about about on Yes books? the the And and move cut when purchase what sweat. have, amount looked number no, X% talk it you're going if that because my there. guys. options wrong, another do Thanks. it you some that down or take on at correct kind option sounds like we off looked that way putting Yes, for got didn't But No, about give options the and things. as your you before your question sorry so total generally to here it on the I'm from I looked in actually to like a to on not answer your on to just willing you I question was cap down whether could context it the commit of thinking you you which there's

Robert O'Shaughnessy

of looked the not kind if XX%. within but we it circumstances, way think you aggregate X% always unique I've and We're you'd go in I just see suggested, as to in the fits XX% typically you as X% at deal-by-deal. don't look but between north going at cases, that. certainly might so the some Yes, There of be us are high

Operator

our RBC Please capital next from with Bob take question go Well Wetenhall ahead. markets.

Robert Wetenhall

disruption. navigating Hey hurricane the good job quarter nice and

on SG&A lot on great a about of thinking control, is cost much quarter. There's we're the next side SG&A incremental You year? guys how did cost runway this and there leverages

Ryan Marshall

Hey Bob, SG&A. Ryan. been for Thanks comment is morning. good on the a It's focus. certainly This

plans job getting it done up. tightened we've that business in for year. a the against we place It think the I nice put would execute

gains always to we're be As come far to substantial the as in the growth future efficiency, improve looking with continued any will that the business. really improvement going of on but

it. to look would I where that's So

the give year. for future We kind make XXXX have quarter. certainly We'll with of provided accounting we guide guidance done and Keep we job XXXX the to that. we're a kind against in change nice of commissions look the for that the fourth of did in at our of beginning proud mind

are So, rolled in at this our fully commissions into time. spend SG&A our point

made on out in So, have that the look have historical I pretty gains we've you that typically terms you it. reported substantial we SG&A at pull it how are and The think front.

Robert Wetenhall

where well over hope Yes, it's which in was you I West and as you XX% to Region demand as markets, good well happening the continues. you're growth done order it favorite luck. wanted of about execution. about I there. progress lot and a Thanks on most strength do your thinking ask are driving regional XXXX up Nice a the basis? what's what see and

Ryan Marshall

West has by Bob. been our Nevada been for very well has that Thanks I some us The prepared remarks performed right I my has really very highlighted in think year strong. Arizona. of competitors. and doing well it's us of not now you've California, is as only this from some California. heard but driven

us driving are are the the current that order those markets for growth in quarter. So

continue As favorite fuel the bet year, to markets any at underlying jobs, and be where demand that's look are you those where next will there and where so think I job we're housing economies for when far because my growing place in that XXXX. for my as growth seeing housing would is markets strong markets added fundamentals is growth

Operator

our take question Please Jack with ahead. We'll go Micenko SIG. from next

Jack Micenko

Hi, good morning.

force you how into would necessary this do and and XXXX dividends fund you or rank force fund think how costs, you're three-three the Looking buybacks lands year? once land Conceptually at the do beyond you strategy. down coming you the development running how business deleverage balance rank sheet

Robert O'Shaughnessy

fourth point. capital minutes release still of XXXX, question that drives put on quarter give ago, but couple making, something into back we'll color Jack and place the for a think to back we generally we you go in Ryan to so and Yes, the fair XXXX about think allocation primary your decision in foremost strategy first certainly some business said that our we'll our as I I

current we look stock. think if XXXX with to we be Next our be the want and able about as want every flow quarter business in candidly influenced we have that dividend will the at that That we cash to think we generates buy by do we'll through we back capital announce so to dividend beyond. fund the we excess that. And then beyond cycle,

the activity year. over I you the have this end about think we've probably consistent forward been think that it last we months that if some repurchase through highlighted of pretty with and pulled XX

we that, I we part think can essentially grow how So operate to so repurchase, us and XX% quickly of XX%, you'll to or being through highlighted there’s exercises range. share dividends same to want we of back And We’ve dialogue. business. earnings. in bit the the availability last like in capabilities for leverage cash will think beyond years get beyond that it a the see highlighted XXXX happens then we've want We've look If outside we'd at becomes that that flow we're followed about above and so. and four the range inside that little so think to

Jack Micenko

in the been in and in hit higher two it that. although months would the the think it sales comments pace said storms seems thanks running storms you did the of but like had up first from a for Ryan and have you then Okay, not headwind growth maybe have you year-over-year And opening September modest XX% were your occurred. I

So are the pace the pace trying I sense on a price mix? I'm more trying always manage. stand on that really to question where a little the or of bit to get you letting the is off of guess a dog is, debate leash we're function just we sales that

Ryan Marshall

XX% think impacts. July it's certainly in we which every Jack by market. view community that's we up our a and that your strength speaks price community From point we to Yes, was decision August I question the in and pay that and the was, make. driven X% related up a is the of something and September equation storm by in truly single the ran great it to pace purely anyway that attention community to

let the we the in best take And think I for that been our focus always be we sense. that In so that’s Our going investors financial we're some dog off to where cases has makes cases shareholder. price, it that's should the looking to that. be is think leash of We're and drive going for to and best return the pace, comfort the shareholders looking can outcome. I possible all some in

same which growth come surprise. a we or just XX% probably maybe as time up of terms first absorption doesn't in In store growth, are

on and think the I state as as active of in because drove entire decline we we've with Houston active there We are with XX% of Florida the two our we between were really Houston down. XX% growth what that's part business and consumer I entire communities of then communities active Florida as put industry that's adult group concentration got Houston, are such and adult well and that think adult well. Del X% that seeing in a I Webb a and as up we've move-up high that is down big

Operator

Fargo. And our with Stephen question next Wells go ahead. Please East take we’ll from

Stephen East

of excluding year-over-year impacts lumber this spoke us deeper could from into give could I margins material also we little if a expectation we if get quarter? then gross wondering this Stephen. Ryan, about [indiscernible] a storm what labor a you're the might you see on for kind you. Actually little and was And basis? is Thank when saying inflect bit you on inflation, core any on bit a

Robert O'Shaughnessy

that felt you were input to labor increases. given the X% had own cost we to into we year coming X.X% we your Well, guidance

about still has Ryan talked and are We trended in that range as higher higher. trending lumber

terrace, mean up. got I of you've You’ve fires got rates lot lumber a in is things driving the Canada, there

business. our next lumber deliveries. what's our relative that's us The got QX way constrained For going buy we've year to impact on we

So having for said that X.X%, the we're current still year. that X% in range

give what quarter year give next we will think on means it for you color some We when our earnings. fourth we

cost The So we Houston Ryan earlier would at core where are increases. that really and where that the call they this on labor through of markets specialized kind the trending are outlier point some increases we cost thought Florida to be. is seeing input walked

Ryan Marshall

the I X.X% of just fact we XX.X% with to XX.X% guide what Paul, that still the we reiterates the year gave are the that, right on X% think the talked back Bob half to guide for at about made margins there, adjustments the that the everything happened of on for direction lower that is the or will based and we've trending quarter we us have towards end of the results. one-time the pull things some guide in that fourth And thought

Stephen East

ROE a call you have goal for up over And that you metric points moving was mentioned earlier XXX the but on the that XX do that past XXXX? you're basis months, into

Ryan Marshall

to like Well, move higher. we'd to continue certainly it

sort We something XXXX. we that for the haven't and of consider guidance full articulated as goal we'll that provide that’s a

Stephen East

Thank you. it. I appreciate

Operator

go with We'll Carl ahead. Please take Reichardt question next BTIG. our from

Carl Reichardt

guys. morning good Thanks,

Ryan Marshall

Hey Carl.

Carl Reichardt

How are you? ask about wanted to land spend year. so I the far this

is change active of mentioned? your that new mix, current Has it you adult land? new been is first-time, of changing? terms is at split million look between $XXX or in sort product spends think product you your matching move-up mix what there and I a If land

Robert O'Shaughnessy

its a it's less there's a moved tectonic, I and We've space think move-up. not percentage first-time little shift see bit with is on would towards larger a you what changing. the emphasis

Ryan Marshall

of me of the start chair that where be consistently is the and since the Carl, market think what wanted heard really over think that the you've you're happen. some reflects in reflective And we opportunity seen to I more from to that last year I've been I commentary

the size started direction operators tectonic portfolio our happy putting are It see against with groups. where the increased market So to take but and first-time to it, that to a of capital to field we point, but opportunity entire we're that and all space. shift, not buyer investment Bob's shift time definitely the a taking assessing move given the in work will

Carl Reichardt

Okay, Is by it talk guess, of very little break seeing? it percentage thanks. just then have out you're And bit Can that seeing inflation the market? not labor kind we've increases. Thanks. overall seen cost maybe talked price about and we I'm which material you what a a and often the land about shrinks of as curious I you're base

Robert O'Shaughnessy

I got Yes, that's interested. hard one. is efficient mean, I a think market the and everybody you've

They So a characteristics the think - the the buying bit those same up much are would gets we and we're said I bid everybody way in still so answer Having that, changed that pretty your land markets are if land little about on more. having dramatically. finding return we finding in, about Certainly interested to is the you quite the think and finding are harder deals, also which pretty positive underwrite Ryan we markets is but at moment. most he are them what said market candidly.

the piece solid. I market say Each So don't versus is market. to that market A pretty is land know another want X% of is up different. I

Operator

take next Housing Please Barron Research Center. And we Alex our ahead. go will with question from

Alex Barron

the quarter. Thanks guys job on nice and

the you kind of guidance quarter? to Just rate if for tax next wanted might on have what like any see look

Robert O'Shaughnessy

For tax a was tax allowed this assets next but below Its QX one of change normalized state a our actually the is quarter. booked were there to deferred law we've We we our became that a that guided because XX.X% valuable rate. little benefit two state more being - us things; in because rate increase.

that used benefits section change rate employees statement. transactions through the through XX.X% year from a still in now in QX. That was a good equity drove stock two earlier but the and option running income which rules actually down, those for highlighted accounting also for through think that the our things go stock We to there rate run we ex- the is

Alex Barron

there And mix of noted as was California general by also any you in quarter, but the just the markets? that other, overall driven one a improvement price increase I changes as that regions far was the Northern or this the that was the drove some think that, is orders in of

Ryan Marshall

run when where Yes at that, the big California price matters driver lot of but the higher you than certainly points looking mix the significantly to you're Alex, a tend was know any Northern opposed in Xs. the starting and more And other with and that to there Xs Xs Xs and prices regions business operate there in. our which concentrated we Area Bay is more as start

Operator

Weintraub next with question go our ahead. from take We'll Research. Please Buckingham Mark

Mark Weintraub

Thank the you. One more products maybe followup and on generally. wood lumber was

raw a affiliated sales, the so but a lumber percentage structural with If installation you including in lumber? products at how of would then is revenues what total that roughly and as themselves materials a percentage said and the much threw panels if just percentage of more it, as if the wood not of looking And labor broadly are the as your you sales? maybe other what represent

Ryan Marshall

to range what would The I XX% would Mark. Yes revenue the total you represent. lumber of is X% give

on can piece or terms house of depending range XX% In the the to cost the run in material the XX% it market.

Mark Weintraub

well stuff that related includes to probably I clarify? installation just Okay. as suspect

Ryan Marshall

does. That's correct it

Mark Weintraub

place. it in a going the of at if ahead being you the some the basis labor little versus thought process? recognize price you're and bit differently Florida when about around are think at how this into that will on but for instance for that be of you on up I pricing pricing you second, you trying pace find be then And temporary in balancing year materials same is then, Okay. you back higher follow you think time the to what maybe look year then as going market to next going then think color versus and power. that to you and is it Do and and up differently you're referenced strategy I to a Do go the issue, I'm through Texas put

Ryan Marshall

value toolset. we've lot we've we've one the pricing the us past creation gains Yes to has lot a is investment a pricing realized margin our we've pricing is and value of five over strategy and that to pricing done And tools dynamic the four efforts dynamic to years realize process that. the three the our of put of last four things around over Mark, done of do we'll creation allowed that to of continue part and gains that years, thought work and into some

pay and increases. is the market price to is input. ability attention do to not for is cost, we market the what market's what price So what's We We certainly opportunity cost an you're those it. and looking absorb to to price the so

a So to. you've it's bit project. certainly the But that's to going a take ultimately unable looking the to if input got what it, of unwilling are given little a the to we're into consumers are and cover costs or take react where that

Robert O'Shaughnessy

to backlog. Yes good add costs thing is visibility our I the our backlog construction of have our into we length pretty on input the only given that would side the of

structure we not we're out that. advance point terms in and cost a year we in buy of so way is in our going to we backlog So the the market sell know our for Ryan's is but materials to

Operator

Please Maklari go ahead. Susan our take with question Credit we'll Suisse. And final from

Susan Maklari

Thank you good morning.

Ryan Marshall

Hi Susan.

Susan Maklari

they to perhaps or closer like that day on have been early longer perhaps from from living Florida could quickly, it's this from anything in in looking are still know that coast how or that you psychological a that perspective? storms know I buyers them of sense any perceive any people change away maybe potential gotten little impact in your there's its but Just kind you following the sales the a probably, term

Ryan Marshall

the is do as love this beach a well. our little may majority and and I I sunshine love water I be because I biased of buyers the the Susan and the think love Ryan. I

in not they're have is little tongue Florida. we buyers bit say impact any a psychological kind in I'd the about how The simple cheek. that of answer thinking a no, of terms in So seen

the In fact to had think for under way XXX-year may a you testament was Florida event I really the which performed that a XXX-year that part way other your sustained five very well. the it standpoint The and is the four, and were the was we're go flooding really category performed From power sometimes Landscaping most structures drainage the and category - grid most. the damaged working. winds systems communities things and wind developing withstood major were that even the or type a are storm way a what control maybe the landscaping was well. those

tell, but on psyche Florida hard well. buyer are So to predict will think the will do, what time still as we I bullish and be buyers will

Susan Maklari

drainage of do And its could think because of patterns to like then the weather with the parts some on just Okay. bigger and construction in country different drainage that that, there building mentioned U.S.? codes sort that a Florida success a start be you especially you of all the use of that adapt that those things changing it and that and as saw that are quickly, becoming that areas basis the other given lots seems issue of systems and

Ryan Marshall

Susan, Yes I things are the parts while expensive The use that common the prevails. of than Florida expensive methodologies there country. hope codes we other more warranted in that and sense are construction and the

is think things that necessarily measure. where overreact don't want required. it to good know all you I overbuild in I want So and not you

it wasn't far of You to drainage as those just things, retention and know water as our and communities. Houston point I'd and some

the all to dealing probably you it the came the managing on think in quite especially sites industry entire construction our well development and when communities water of newer heard newer with I areas. performed from the

some drainage to the continue about out and as expected older bring we that code things housing stock think like to performing things pretty as I'd and of are standards are So believe up well. performing cycle current things and to current I

Operator

time now you, the Thank concludes your Great. would session. Zeumer. I back turn morning. question-and-answer everybody That you call Jim to Zeumer today's this for James like to

you. look questions; have we you certainly day with the speaking forward will We throughout you will be to followup any if otherwise next available Thank quarter.

Operator

your you presentation. This thank participation you We concludes today's for disconnect. may now

PulteGroup (PHM) 24 Oct 172017 Q3 Earnings call transcript