PHM - Earnings call transcript Q1 2019

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

Operator

Good morning. My name is Jack and I will be your conference operator today. At this time, I’d like to welcome everyone to the Q1 2019 PulteGroup Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator may conference. you begin Zeumer, your Jim

Jim Zeumer

Great. morning’s quarter call Jack. We XXXX. financial joining this appreciate everyone XX, to March for period Thank the you, results ended discuss PulteGroup’s first

call me Executive Vice audio earnings O’Shaughnessy, and President, today Joining A President We’ll to slides of an the release today’s are Marshall, of CEO; Vice posted website Ossowski, President Jim accompanies and copy a Ryan CFO; Finance. presentation call Bob later replay and been Senior morning’s for that today. our and also at little pultegroup.com. the have call corporate this post today’s on

summarized Before forward-looking materially suggested by we all includes in results These presentation statements of that alert reports. about detailed are The to and are earnings our affect comments factors PulteGroup’s from our including accompanying risk those as could made the and slides. Actual discussion, significant begin and differ I today. annual risk release future factors our filings, want could part presentation quarterly participants SEC that information most today’s within performance. the key results future today’s other

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

Ryan Marshall

purchase communities with over but morning. driven in increasing as was in cautious slowed. and conversion interest years remain quarter rates that part by XXXX issues along more consensus to as It to discussed Jim housing that homebuyers traffic the by market across been last the the increases The conditions challenging become traffic high, measured sign were of good Thanks year particularly in that progressed. believe contract We few the mortgage affordability last that extensively cause XXXX of half to fourth buyer back has and the housing price industry. sustain

been spring there’s of XXXX. have behaving homebuyers been season exiting in lot selling in Given these this interest how XXXX of a conditions

start I at about can in Before high of the first what few here’s weeks points level, the tell of parsing a XXXX variety you April. a of inclusive data

are first the experiencing XXXX generally progressed. housing demand another seeing. are We backdrop that consistent and of level typical the with there’s Further results upswing industry. are communities for increased year believe activity each selling as be mortgage Overall, on and we’re environment, strong quarter the our a throughout an basis in season, by quarter of buyer encouraged improving to sequential reason the with more the can every traffic economic spring with good seasonal a the the quarter visiting consumers very recent decline rates, typical month our that reflective

More importantly, in month when adjusted traffic numbers year communities, into both same for also community absolute month was each a per last community the on higher our and basis up our over below it during count. start XXXX. level. said, last that worth remain although has experienced With pace noting also they is quarter, Absorption very that strong to we the improved year’s a

comps the year-over-year challenging for year. more So first of this half the are

building in a that serve this can and year, another The are end At we calling XX that industry first times look forward – momentum cycle of double-digit see building we’re cyclical continue calling we volatile. an the end could is year the were forecasts the the in fall. volumes optimistic clear predicting some of the this at demand to of and result, XXXX total By and the industry experienced months a XXXX housing start we trends seasonal As for industry reminder growth. quarter operate XXXX as across of improving that progresses. at past

rates yet housing the months, re-acceleration over some one expectations of lower Now, and demand. basis XX changing X quarter are a calling roughly points into with mortgage again, XXXX for past on

sure we exactly how stress and buyers, market the orders wanting our across pipeline key first markets local consisted the balanced indexed disciplined within run is our XX% generally buyer the capital what that our adults. balanced have and on assemble drivers groups. lots, to seeking meeting dynamics consumers to and we and focused we are and making targeted active of changeable focused have quarter, a talked metrics. allocating the offering serve. first-time we about In to to view, mix we our organization, alignment performance continue of approach communities. that XX% adult is more and first with to XX% with being of needed Stay At move buyers, Take we Adjusting opportunity the stated QX and future needs priorities. up operations our and product of the be were XX% market XX% the for business. serve doing. Given this end buyers I we is balanced to in Central are up need our Consistent remain disciplined for for XX% move requires are which the active buyers that lot our first-time, the

in facing. to challenges should Our exactly, buyer transition some our won’t balanced of and our a percentage larger first to percentages these rates next mix lower solve business how closing help years. more lots are that over it priced homebuyers evolve the Certainly affordability of be show recent does the mortgage time match the today’s but couple can decline of

just our first-time and our house engineering costs, However, processes utilizing common and plan, but are identify portfolio. to end, for in that entire lies we not should costing our costs. areas opportunity lower lowering value across opportunities planned to real help To buyers, our build

and everything plan processes that initiatives We and to associated offerings, build offsite floor go-to-market are basic option from also strategies. at and designs onsite advancing looking are

and the QX to position. done I to remain activities overall and improve in we’ve finding with all plans these for on think our to future. us expectations ways the past, a areas have good our focused well but I year, in results these in off Relative like of competitive start the

pressure homes meet of not heavy inventory lots appropriate to and building and units. we’re but an demand, have move We to feeling inventory

continue as we high detail, gross superior deliver margins will Bob manage realize to community we each to As returns.

to turning weeks be retire I John to Officer. also to promoted Operating new press with Before everyone’s exceptional issued career Harman his had over ago PulteGroup’s company. Chief be President to as draw a in we release our attention Smith, announcing to for has complex a most his and past XX-year Chadwick John within operations, for spent replaces which operator. an after income that has PulteGroup, accounted announced leader John years has who led plans with most serving call several the organization. our Bob, our our had want and amazing an roles career operations, having the XX% to highly XXXX. of outstanding largest himself skilled proven including West He XX homebuilding of John some an almost in Area recent pre-tax role the key

and has you culture, to quality As expect would want someone Smith success. outstanding deep company’s experience corporate our welcome the delivering Harmon and inside passion John of decades I home and from construction years for thank office to our to John to a and has commitment customers. to buying our commitment an who spent to service three our his

to the quarter. turn Bob me of for detailed review let Bob? over the a Now call

Bob O’Shaughnessy

were I the expected business plan. comments, results next performance. spring season on our be execute of part see how want We prepared QX progresses here be to selling will providing call. guidance and our to provide earnings our guidance from to full-year slightly our Ryan, first continue better the Thanks, as note we’ll would that quarter for with to the PulteGroup’s I like than period morning. their in operations or generally guidance and good line company’s even successfully on

orders new at last Let with and quarter results. me now totaled year. the $X.X of begin homes quarter are review of detailed my Net X,XXX for which down first X% the our first billion, respectively, compared first quarter X% valued

noted, Ryan conversion but high quarter, was slow. buyer traffic As remained rates the in

our result, a lower in quarter groups. each of across As first were orders buyer the

was follows: pace XX%, time pace down were X% was X,XXX group X% count in XX% adult resulted first increase the our X% decline quarter, to the an Absorption adult down was community For these active down the Adjusting up, year-over-year and first-time X% homes. X,XXX quarter. buyer in X%. for Move to move-up down X% was by absorption down homes. and was as active was for X,XXX homes figures to orders down

approximately our $XXX,XXX. to by $XXX,XXX quarter driven in or our $X,XXX was and buyers up $XXX,XXX. sales price income guidance was prices X% the as to prior pricing home X% billion. revenues slightly among QX XX% active by $XXX,XXX. sale of price by average increase successfully adults up down to increased of to average operation homes quarter ahead X% statement, $X.X X,XXX X% their to primarily our is growth and our driven closings build in our over up sales Revenue Move-up this Moving by manage to increase last first-time year The for cycles. in was higher

were buyer just production active last adult than given XX% adult. from group last under the buyers, had quarter with fourth quarter, being homes from approximately included quarter spec we XX% by QX decision after of move-up are from spec for buyers. Consistent made the of strategic year, year. year. At more spec XX% our first-time, spec. move-up of first XX,XXX in start under homes the XX% This on of in QX, to first tapering included fourth For XX% comments end compares Last and our homes the first-time XX% our we active XX% of buyers closings to more closings starts our and call, quarter XX% construction having under construction which reasons

the volume homes. quarter, was homes homes the X,XXX second sales in price be our backlog we homes of average of in range Given the quarter end in deliveries to $XXX,XXX. of X,XXX of production, the the to expect the At currently under

in This second homes backlog Given $XXX,XXX the in of to sales to year. with range price sales expect we quarter price compares the our will of of our the second $XXX,XXX $XXX,XXX. we average deliver in an be per last average quarter pricing,

compared quarter gross margin first first last XX.X% of XX.X% was year. quarter the in with Our

quarter XX fourth in our on impacted capitalized XXXX basis approximately higher by margins earnings gross discussed As points. interest our call, expense

geographic our as in in well homes strategic dynamics. prior quarter unit guidance execution the efforts Our success pricing programs. The be from better as pricing can our of above gross of mix our benefited of of margin continued seen the came a closed

able approximately option sales X% of first closing. XX offset over totaled This the increase quarter, On with premiums quarter $XX,XXX increase year-over-year lot For which was increased sales and just a the for the quarter, up revenues to in of to price. or per compared first points. basis, last discounts were sales much year discounts $XX,XXX X% our basis

While pricing this higher or lower challenging we as remains time worked maximize high, last than were which buyer returns adjust community, environment appropriate. in more year. price to is means each We the to interest overall prepared

given to increase XX.X% market Working second this quarter approximately slightly Relative the XX.X%. and of dynamics, large spend Given year, leverage be guidance. current margin the sale compensation compared than $XXX SG&A commission, XX% declined closings we income the the in points was basis in in home impacts which gross guidance, at quarter higher million expect our in cost revenues, our down to better our the or slightly to to of range our is by overhead to part insurance-based last XX quarter. statement,

look million XX% SG&A $XX quarter, on we compared as continue financial lose for our in opportunities revenues. overhead the the below be services and We $XX expenditures we year, between year. and be business With will million to last that expectations costs. reduce closing first home leverage our eye In to QX will XX.X% overhead with generated keep currently income a to pretax of close sale of prior again some for project

continues impacted Our exist the the mortgage space. negatively was XX%, capture to quarter percentage pricing rate to in X that in by environment competitive increased points profitability the

$XXX As result, income pretax quarter compares $XXX was year. for which the million to last a our million,

million. our expense effective of income to for an which XX%, $XX first compares our the at quarter XX.X% taxes, last tax reported rate Looking represents was tax year. This

recorded to of was Our expect Consistent as our certain related state the in our benefits resolution QX matters. tax income rate quarter our be rate tax and approximately we first to QX. XX.X% guidance favorable below we guide, with compensation tax equity

quarter Finally, for $X.XX was net $XXX which million, share per the $XXX our earnings first last year. year, were are with million last consistent income as compares with

share first XX X more decrease repurchase the X% shares year last in from share using lower calculated per to than share year. over a XXX earnings diluted The is past million due shares, is count over this was approximately of million executed or of which months. quarter just Our activities primarily the

had end cash shares our At $X.X was quarter is billion quarter, we the approximately ratio XX% price the During first of down XX%. or year. ratio this per share. last of balance an on and million the from year, of repurchased Adjusting the $XX.XX for for first XXX,XXX XX%, of the we net debt-to-capital debt-to-capital average $XX which of cash sheet,

comments metrics. Let operating a me few with out my close

For which the from quarter, is we operate from year. last X% XXX up communities,

than of rather from option component. of under community communities acquisition – is the XX% and first basis last count close put the community acceleration in the the quarter variation we reflect quarter, we the from continues quarter million the some control, guide for an flat $XXX quarters experienced be million, In X,XXX roughly Our existing to will lots slower that a likely for that, Any for year-over-year out as up openings. each spend year. will just in form totaled year in new we quarter. Land had over of about be on which which $XX

the faster turning that, in to transaction, controlled as we under this communities the remaining scale on approximately of being with We lots we options. lots will continue lots. American larger size to the via Having communities terms approximately under X,XXX lots complete said in of market, expect the finished Vegas control acquired deal XX average X,XXX West be the which focus put XXX Las project X,XXX smaller, with a was will

with of been projected the of that not are transaction, less would with to we these we the years transaction from own Together then in market, will lots control At land. quarter we related XX,XXX two Based realize local option. which business XXX,XXX first via on the owned the enable first and we XX XX% XX% market supply, months closings current this or the paces, communities in expect our years we’ve in and trailing making had of Las or roughly XX,XXX our XXXX. the us based we note While to dramatically of increase first additional X.X lots on approximately closings, end were share investments terms XXXX. existing providing quarter, of our owned our Vegas, represents beginning in an held the under than of of I

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

Ryan Marshall

the our California. the our than helping much of relative the repeating back Again Arizona, conditions better offset that that middle of I continues demand feels would continue regional the of actually open to demand I at challenging eastern in for see level, market at in in our half third Thanks, And ongoing experienced risk to high the provide growth conditions of In slower operations, Florida the best demand of comments held we call XXXX. the a in Across operating quarter the Bob. what country, I At strength before environment of well the in stronger made say Texas Q&A. where generally number were color, year-over-year of some reporting in with a a our markets. the up remarks, we areas. third we prepared will among the to outset variation areas country. basis, be performance overall On country, the of western showing the to the meaningful pretty

consumer can optimistic confidence. unemployment, overall favorable. allowing to by the jobs expected and historic good wage with are inflation stay the for for With remains We lows continued environment be the high and housing year is rates, and demand low, XXXX turnout some supported mortgage a which to industry operating strong

our great Let trade by delivering a an job our superior who and to homes experience partners, and thank outstanding Jim. close to saying me employees to customers. continue you do building our

Jim Zeumer

any one Jack be the as get good Ryan. so a and during questions do on open speak will that We for to question time they started. as work noise, for the the call I elevators, as one yourself with apologize process decided back picking some ground follow that would the we said, maybe limit and call. apologize we’ll the Great, of I possible With up. to participants day today explain up that. can ask you will many remaining for adjacent thank you, that we

Operator

Mike comes from first Instructions] Capital the line question with [Operator RBC Your Markets. of Dahl

line is open. Your

Mike Dahl

for Good a with to and color the absorption I comments you’re morning, wanted talking you’ve from can that but improving about far? April any follow-up us the And given just my Ryan, sense quarter, improvement so thanks remaining through standpoint? lower a monthly quantification questions. you taking the around about on just curious, any question give of

Ryan Marshall

than get have we’re things I add February, February to season a prepared move on I remarks. typical the to than Traffic basis. January into not really continued been spring also Mike, other think Yes, both we shared more we has better can from sequential a where But selling but whole with bunch in seeing year-over-year strong, March. you what as our

So that. with we’re pleased very

and the that that prepared highlighted last XX of in I some or points the mortgage think remarks we’ve I so the decline really stability seen basis it’s months. rates, five over in been my

where to all an see XXXX. those we’re about optimistic things what for think are helping environment I create we

As I It the to of mentioned, a time spectacular comp industry. company we had really XXXX. first relative a quarter and for the was the tough

So that We positioned, as our we’re the like communities how are we we’ve out. made. at we investments like where look

I well. think is very team operating our

the in eyes We’re of consumer. the competing favorably

of we that’s optimistic that part in coming have we’re about the So year. reason what the

Mike Dahl

us of breaking guide? than down core then was assumed know margin, And previously typically what deliveries question terms that strength us real standpoint, kind strength versus bridge respect my higher related was the with of what of and a sense in can kind from could a to of you of regional you sense a I gross that discounting give margins guidance, even West a hear. your prior carries was it’s give and versus West to mix to stronger on encouraging Okay, there – some second relates clearly you the

Bob O’Shaughnessy

you’ve at relative the we Mike, you expecting remarks, on had which able look quarter, prior than margin margin which the first Bob. as more in in was matters Webb Also certainly we Yes, in mix relative the on the to year, always it’s And with prepared richer homes Del basis. benefited in mix our margin benefits were the been business, close a bit the to with touch highlighted, and it than if it were guide. we Yes. California tried to of also little it a

little thing heavier then other out, the about came we’re We’ve forecasting. in we were those that down outcomes, bit and and on better The year see, a we into spec. fourth talked sold on that XX% is, I bit happened we think that the you quarter those to we a did little can

discount So same XX which amount. was we our under basis discount didn’t $X,XXX. and just almost much. about time, up equivalent was highlighted quite We is as at rate that But option lot the the revenue premium that up points,

I to the we also would better which than so tell our margin thought sales little And the the you, quarter. we at did guide beginning of benefited on spec relative

Operator

the Evercore You’re comes Stephen of from line with next ISI. question Kim

line is Your open.

Stephen Kim

Thanks guys. much Yes. very

would. pursue this spec aggressive you say, historically success, the recent did then would the if as any that or of quarter. future you’ve you not taking we were the had about on there’s curious to your to learned period may just on rate light and In lessons it’s of inclined let’s program a experience be to is in of better that whether I that in comment be posture or – you kind was something from more looking volatility, normally there, So most past in you for how temporary then another in That expected. you spec were

Bob O’Shaughnessy

Yes, Stephen.

on remember, expected, we we margins coming important just higher specs higher I didn’t quarter. to that the those sales, think see than the into it’s were

value to And so that in inventory less having and highlighted is ground. we over finished the some on time. continue spec We’ve we’ve one though got there believe than that

bunch a want inventory around. don’t we so And standing of

that and production we relative to I end want you expect should at running spec opportunistic year environment we can think than I to drive us it, of at the keep think sold So back depends percentage see over we and – important to the leave line it the the the are the the on half I because back the down or sales where But getting that of return XXs it again, into is high think weeks. those eight today, sales is – environment before they to homes on next it to finish us. four focus but

Stephen Kim

Got it.

kind And Okay, the be a equal talk a what secondly, communities in us year-over-year could little curious up get the just half will was obviously the bit absorptions bit trending of on that’s able it to basis. be until have be of you’re likely would to absorption to be when communities easier, I look you’re Are created basis, you then base, you comp might absorptions in continue XQ, year-over-year you a get that the absorptions, anticipating Is also to fine. about are? you back the to for flat a expecting if mix all reasonable that with little not of on year? at negative that that the are to expect and

Bob O’Shaughnessy

challenge it’s guide to to a for absorption. Yes, us

it haven’t We Stephen done candidly.

how I April think, after we’ll environment we saw of so a the in selling tapering sales year. Yes, goes. last And see

on goes. sales Again, how And see a can on the depend basis, it’s relative going it season to strong so flat. sales you remain

Stephen Kim

great. Okay,

Operator

comes Zelman Associates. & question the line Ratner next Your from with Alan of

Your open. line is

Alan Ratner

quarter. Hi, good morning, nice

margin But what So quarter. little quarter, this maybe you very on in going you’re result well sequential you to the above – a hit guidance obviously bit seems gross this still the of expecting XQ. were thought like strong pressure

unwind that kind just you saw from pieces benefit the around price. where talk and on you low that just that sequential what little tepid, going are is type costs up XQ mix mix pretty guide, Is about your bit rate price pressure? currently single-digit cost see versus a of of the Or kind power? quarter? is dynamic a goes results know that at You and moving this into still cost and which you pricing this the Can in meaning any of here moving

Ryan Marshall

ahead. Go

Bob O’Shaughnessy

we’re Yes, near to Alan, XX%. remember important still

Price profile on lot a is now. challenging more have but companies of much the through. margin is we trying to harder to is come that right pretty the the work inventory ground a bit strong, little by, market have they’re So that

so we in remarks, And highlighted we’ve – selling are we working prepared in homes. are interested the

also willing does highlighted we to we’re toggle so highlighted close we’re we – you And closings to and matter, that that we mix degree, in do to price a pulled to California. homes able some that are

So in than on a between relative made in moderate of QX, margin did And less bit. basis, a adult have higher we those will we’ll business matter. which closings percentage the the QX traditional then active and the little relative

pretty is we’re so quarter. reflective of the margins the right that that And challenging we’re little the candidly pleased market with for now fact price. it again, is for expecting And a the second

Alan Ratner

it. very absolute helpful. better understand into just your kind strong. the are thought Yes, Got wanted margins of that That’s certainly there. what went on I to process

deal there right was of or Vegas? specific follow-up positioning wanted or there going I Second, it that. active coming confirm that’s I sounds questions That’s like deliveries West because of type then about not is attractive the And I the forward? why more just if this why price you’re just point should expect there there communities we position a anticipating to until couple their And the XXXX. no that American deal on Is this you of guys. is could, to Las something backlog over. housekeeping lot correct, guess that’s deal,

Ryan Marshall

Good of couple A things Yes. Ryan. Alan, there. it’s morning.

did acquire We backlog. American acquire West, active did not communities. with First, we

that start highlighted XXXX. closing we why that’s in will so And homes early

your we we of these communities they communities. the price, a value the Las a to core, communities and consumers American Second We’ve network you’re a in favorable these positioning – very there. relative paying. these is have operation located, the a we of like success West that are you done part got second think and like the are where positioning job like frankly, secondarily, town We very Vegas. they historic per – price so had to We’ve offered in question, transportation what We nice job a Vegas, that. get foot on to like the for nice

nature to And the that our us share as so is highlighted something that our that two key attractive success. of we highlight this it future third option. Las like relative we a what and get like And pipeline years of items is finally, a in market in to the under and we lots lots, great we that to worth that have how I’d little which of maybe was than transaction are fourth we’ve constructed Vegas, less well, does was owned

family. of a we’re think kind So part brand we the all have it things and good American to of excited transaction, West was very considered, our

Operator

the Your Zener next question comes from Ken line of with KeyBanc.

is line Your open.

Ryan Marshall

Ken, good morning.

Ken Zener

Hello, yes, now? hear can me you

Ryan Marshall

Yes.

Ken Zener

Excellent.

you the weeks, down So play it Ryan, did just guys orders were when – through, model did coming you being talked these orders comfortable We March, start really have you that Bob, my to know look it in do about I sequentially, That’s ended a you order then pricing of only you at pace how out but coming did A? year-over-year. And long history up why here. pace up Why within basically. in really did talk focus about you question you want about deviation than a units California? couple B, on spec when higher XX% of And standard I April, that better? more in have might so that don’t a the XQ, don’t -- Thank dynamic you. feel sequentially it and about seen going to deliver was XX%,

Ryan Marshall

them. all in there, Ken, I I’ll embedded think fairness, were three of answer Yes, but there in

in that question, buildings complicated great of assessing so some built closed. associated maybe the First California a risks and off, that nice got just homes our California to and getting team entitlement speak some a let those getting in planning internal me complicated we’ve own has market with and job done a was

nice So a that. I did with think we job

think of The to be of continue really that accelerate, start I has the other started to Super the when kind the said as maybe yes, year and and of year and of we long held selling we’ve two And then season pricing kind tends start things saw move strengthen spring we terms in. that to said see things industry see time quarter. the we to throughout pieces Bowl in – to when you the true this kick long

we’re that of we’re we’re there Bob making have as things there So getting point out the we and buyers far are consumers QX, I to so of I’d on absorptions we’ve back and attractive power, to we discounts the healthy that, pace in sell profile. with the of associated some that and think competitive buy. we touched price, pleased able that margin its by between And environment, ground and balance that I and And put within sure willing lot the as a some think incentives, share as are But that have where there such right to competitors pricing kind a are struck out choices. that of homes. on, inventory the also I our think we’re we’re toggling got demonstrated

Operator

Your next of question Nishu Deutsche comes from the Bank. line with Sood

Your is line open.

Nishu Sood

you. Thank

with of last sheet looks balance year. now generation shape flow great cash in Your the

that kind or keep the pace some to obviously with How to prevent indicate returns be cap about either kind flow to acquisition West expect allocated? acquisitions maybe to up that cash sub the West American shareholders additional of dividends Do remainder of American and through debt to cash deployment buybacks you come? or the expect acquisition year, of net of it. cash thinking flow XX, Your this do of will you consume

Bob O’Shaughnessy

would dividend, that, at last that leverage of the at so way will we as if buy it American after American spend that, we’ve allocation it’s $X now, back guided change saying business, years point question. the to to we look about have, in Obviously, we’ll Bob. us no of $X have to acquisition the West on always is you, billion, land you in which first our that. we’ll excludes this year. great same top been excess, strategy look our stock, billion which had we sense. did for Thank pay makes back capital Nishu, capital West what same to and spend certainly is year, Yes, expect invest And a or processes be our we our we I we’ll

new when opposed in think really to of report there land. on as what anything as guidance than we’ve going done terms and told nothing tell so we’ve -- other spent do, So to we’re we’ll folks, you, to dollars it we nothing the no also

Nishu Sood

it. it, got Got

XXXX? for that to believe were seems deleveraging factors it we Or the like modest down and in and in XQ, how in that? significant but there some driving you in saw XX.X%, XQ XX% about XQ, Are Okay, the I SG&A than acceleration know be that mentioned the should more more of one-off I year-over-year, any little kind what SG&A, deleveraging there think a will on are closings XQ. deleveraging we

Bob O’Shaughnessy

typically quarter. think word I Well, of pretty are first closed can a the we lumpy, that to kind quarter, aspects close thought unique whereas it’s than to and guide better in there no ratably really relative a little structure the warehouses -- our in for lack comes expense our other that of second be the would so closings we

a of bit was it forward pull a little of QX. revenue really into so And

is the still spend the QX. QX, some there, but dollars revenue in came of So

Operator

And from of your of comes Lovallo with America. line next the Bank John question

is open. line Your

John Lovallo

my you as Thank guys. questions well. for taking Hey,

saw to first to on kind our was into tax may The one Texas you idea for other of Can send spot areas, versus be an expectations. bright perhaps rollout the strength, us receptivity of markets? what a opportunities the give most and Centex you

Ryan Marshall

four is creation Austin Dallas, really well created all are job driven Texas cities in need. it’s the jobs I arguably four, quality cities the the that think performed is Ryan. being housing a and which Austin, would and us, spot being for bright feeling continued further that’s was I Antonio. by major high strongest in of John, San four we’re Houston, that tell in Texas, all Yes, Austin, you

team Second I’d in just Houston, Texas Bob I, our to senior and highlight Austin, markets we were a couple ago. weeks of the

hand and stable well. being really hurricanes seeing a seen run-up lots the steady strong, nice saw then So economically certainly also first there, economy, the not the we to are in some city it think what like San at equation going goes continuing people business is jobs that we a in Houston flooding its very has that Dallas And I it And experienced good on And finally ago. market year the they that on there you’re get see half but back feet things to a is as and following But a there really of there. created. she a affordability as as and pricing, be. attractive kind is Antonio we’re then used affordability has of been as

whole, you favorable highlighted. for So, spot a us on was as Texas the bright

John Lovallo

quarter? you about side, loosening helpful. any trade And kind general, labor just is that’s number if or in there any in then same? cost update of the did Okay, seeing benefit there guys then you’re the on on from And the

Bob O’Shaughnessy

lumber a one labor highlighted our not Important and a highlighted total us. increase costs. the the of element or QX of lumber it’s so is we for X% to will case vertical more the significant an of us. the we benefit the little and that of in a that X% the as into only benefit that increase And And roughly remember of well, – we issue house be year QX It’s is a overly was for it still expectation material costs, year. input labor will fourth certainly our Yes, bit the to QX quarter cost, for obviously ones. – had construction is had coming in of call X% see construction balance on larger

lumber So, yes, that’s year. with save the the later relative in on

working the and to of and down, our try we’re being teams labor environment, one at. not costs So pricing really areas we’ve got those obviously drive aggressive looking

Operator

comes question line Michael the of from with JPMorgan. Your next Rehaut

Your line is open.

Michael Rehaut

Hi. morning, Thanks, good everyone.

guess, you I how time during on but wanting The quarter, question continue the to the I to same more spring will of at guidance, was the the came appreciate you together giving because had XQ or see trends full-year it held first the off together. guidance, on come

so If any pace, obviously volatility, somewhat improving seems more traffic And stability month had decent to some a indicated And sales on a kind month get I it the there color word. X% you’ve of right because particular an to of let’s volatility would year-over-year know love of basis in every close result any of Was that up progressed out. But orderly is little I amount the just other continued I average pace that of question volatility quarter, in the January, that areas March? that know you on seems during month like year-over-year. color bit want things I’d itself. helpful. down highlight, was it as metric to like your a – kind you around of don’t was even mark with of progressed for it might believe, was cadence, if as curious type on we pace say, of there things any February, kind be you implied so a or the that sales quarter be we of

Ryan Marshall

It’s Mike. Yes, Ryan.

point I’ll where of reiterate the saw a the comments think stronger, comments made basis. I the play out We prepared sequentially some or really and quarter got month I each the some back in to of remarks. year-over-year on both

you on The see the XXXX. year. quarter was As year, that reflective Xrd strong we would our last a one probably point give absorption slowdown. much of volatility our is our April as thing that QX, we end of would when We’ve that still talked at quarter full-year of And that I guide that I we’ll down were about was for Xth of QX, last but No the you a to. the of given for highlight note that guide April, we kind QX. rates highlighted call it highlighted we’ve relative QX very to to intra-quarter started

watch So one to continuing kind that’s that probably to. of the attention pay thing we’re and

that, and competitive I it’s there. both Bob to mentioned, addition In have still out as

on. there is inventory, So is there we like how is the some market But going performing. some discounting

reasons, QX. wait so the to elected end we’ve until those And for of

Michael Rehaut

that. clarify, I that sales get the throughout back appreciate just when around pace to quarter. And then I just year-over-year a American I currently see dozen improvement West well. guess the to second, basis you a can Okay. a operating improving are I as on there If to going just believe And that applies If communities. clarification. for

we’re right. closings as at annualized the XXXX over that about, little has you type that Builder talking they think basis. least an on contribute could XXX, number, Magazine Just if wanted about to in what get And how of it was of terms scale a from

Ryan Marshall

there. things in XX what XXXX see to communities, Yes, plan Mike we that mentioned, business. we to And will is when from we as see start is active closings have we’ll

move as down see year-over-year. question quarter, rates of absorption the kind on we we terms In through of your do what we were in

but was things decline, there move the through stronger as a So quarter. we got

Operator

of line next the Carl BTIG. comes Your with question Reichardt from

open. is line Your

Carl Reichardt

ask there different just the incentive about pricing is what Good product to or Thanks. wanted I morning, guys. power among types. of lack or

and we have in seeing think in you Ryan, of perhaps the you if of pricing of mix. move from performance a or compare a incentives it I standpoint. active power. So But sense the terms geographic where best up adult first-time are lack

Ryan Marshall

fared And as well nearly performer highlight a us rates as economically is group. sensitive is think buyer continue generally active I as the in that we’d not think they on that adult, in I Carl, for are interest current offering that to A, got unique that’s best environment, Well, the communities buyer wealth. us our think Del two typically a Webb I are And of differentiated gives is in the other accumulation and what some groups an we’ve think power. compelling offering that then with got marketplace. very pricing the we

groups, generally them two buyer I’d different has choice other terms in the the characterize to probably for as for move-up equal more that inventory discounting The there’s speaking reasons. but With from. ground and got on choose buyer of that

incentives. that’s creating need is an of with first there is think I And affordability more the buyer time the incentives. for added So there, level for pinch entry a driver that

probably being active the best two So equal. adult, other

Carl Reichardt

Thanks Thanks, That’s I Great. guys. Ryan. all got.

Operator

Your Matthew Bouley the with question comes from Barclays. of next line

Your line is open.

Matthew Bouley

around Hi, you margins. thanks for follow-up the wanted my spec comments made to taking on questions. I

spec up what XX year-over-year. disclose quarter the the carried to you points Specifically, you sales discount degree that basis you higher into say the that into played would X%

the implication as what I so now incentives, the would to position normalize you Thank And started you. to guess spec going forward. be

Bob O’Shaughnessy

before, we that thing margins I I being is on we have don’t level have realized homes I’d to in we we degradation basically for where is what today. think you discount if Even the of seen for is of as we over granularity if Yes, think as we time highlight that same. you margin it part and Xrd The was a this, frame spec, get we if sell are when start see it roughly started or the final. it them sell

of year. you quarter, the And have XX over or I was as finished ton so last ground, the is which end tell, of up final back think don’t a XXX the it we can XX inventory at on maybe

let lot that. didn’t of to So we a it get

a And the so discount spec driver on question, differential a not answering not is you significant I your production. non-spec versus in driver, probably it’s it’s significant would tell

Matthew Bouley

Okay. picture That’s just land And bigger on then spend comments. the secondly helpful.

in spend the quarter, American keeping but land the you’re $X.X like West. your grew billion guidance You XXXX it before sounds around

in unit any the just So your targets of I that since be cycle? thoughts growth initial or upside ongoing there at target? Thank around would improved are this to has that I perhaps land stage guess kind mean market rethinking What you. given guidance. spend the

Ryan Marshall

American would investment point land, I an so get or in guide transaction we’ve finished At in is any that highlighted. billion Yes. beyond essentially, will another we’re time, lots. West this today of that X,XXX plus and not X,XXX given But minus the lots or that note additional $X.X the kind option

had we also So, initially be those and that guy are incremental incremental the beyond lots spend. given will

we I optimistic that and the are future. I on think into would So read bullish

Operator

comes the of line Credit with Suisse. from Maklari question Susan next Your

Your open. line is

Susan Maklari

morning. Good you. Thank

Ryan Marshall

Susan. Hi,

Susan Maklari

question around first My is Del Webb.

this You lot or and work in the area more of business done it a strength definitely year of where saw call it’s over the last some two. part an that quarter you’ve

those And of extent. some redesigning sort or to communities repositioning

specific strength in versus of market much shift the and attribute the how the So would efforts broader the company’s you demand? just quarter, to this

Ryan Marshall

out which say our first commonly we That rolled five manage initial that Yes. happened of This half. timeframe. in highlighted specifically plans, just are to is Webb that kind years of very Susan, to broader an a really goes to for probably back than XXXX now the be year communities. last after work goes We’ve XXXX, designed Del roll-out. when I end we think our that effort it’s and back

the Webb plans. process We’re of in rolling out next Del generation our

of So buyer, think really particular are smaller were we this the And communities. to meeting you we’ve a alluding that the these of reflective nice when done of job of product X,XXX, to with I smaller, XXX size say some needs order units, from think on larger things Webb where of some size in I relative X,XXX, we a to as that scale. Del large had they homes as X,XXX are X,XXX prior timeframe be communities the the could and the

work a out how The family different the brand amenities, an entertainment So to that combination to home their to and selling country the as of the to smaller driven desire has these they’re and opposed I longer, buyer with think how access to of to communities has the little evolved. state it’s have up a their that’s are a the market for destinations. being continued entirely clubs, churches, used moving by and buyers current to that evolve keep really

down last So the a really years. evolution six, seven or timeframe it six the to hard XX but been of months, to pinpoint it’s over an XX to last

Susan Maklari

in us? could next see then lot you in terms And people quarter. premiums you’ve question just, you what you. terms to any share the Thank strength you the change are in that Is some did of Okay. a the there that bit of any talked versus sort in thing choosing the you would of that little of seen is one say over my or options there preference with another

Ryan Marshall

would than that other the that pricing we model. highlight running our way we think Nothing I are

giving Lot number consumers spend that things typically something to lot choice there are consumer that nice them a and we as we think in out given the value. they small only the job Unique money on of be benefit does to well. continue doing great and premiums premiums those community. allowing of a We’re get a of

see spend, opportunity an things to and probably most some those. to consumers the of value for their counter-tops are home. or things money. the of customize us the those, buyer certainly sell so, the cabinets, they there where And items has personal Option consumer some for continue if we’re we that in around around buyer are popular as the want choice buy flooring, we be structural spend personalize kind things seeing options Those a as

Operator

Your next SIG. question comes Jack from the of Micenko line with

line Your open. is

Jack Micenko

Bob, sense I’m incentive April. of any up incentives But get XX are trends could morning. the that terms think quarter. said maybe pricing, directional you or environment maybe us said points year-over-year. you still about and even you you and the give basis if Good is through into tough. curious Ryan give I color us you more could is sense pricing of on I in know what there a

Ryan Marshall

of differential nothing quarter Jack terms the meaningful candidly. during in

Jack Micenko

call I on it’s Okay. in ‘XXs the side, it option think slide, then think years. components XX% a the in in and And land prior I the been

us over we America give know an working XX% number still year to the as but with of around down, that inclusive owned, mix. do you can see just say? next you’re number two I or update but three that doing Where more year you So option. getting to of West

Bob O’Shaughnessy

option but give So America obviously we I and two controlled target, of bought, the finished. are of years highlighted their don’t the a want Ryan XX% via West the that supply X,XXX to lots

you’re total years the that Webb option. and have option. out owned to at via of in you years, positions closer take if X.X But owned controlled XX:XX we Del those versus book, XX% of at Looking some were almost X.X highlighted legacy

But not opportunities. there think significant movement So here. are I from

allowed West back than look three seek you years that little at we’ve think an owned forward. you last better to five bit other will go American us that us Obviously going opportunities three see four or continued forward. to we’ll years do we opportunity from I think if is continue to you And the I close that – and operating years, options, was that. been as

Operator

Fargo. line of Your from Przybylski Wells Paul comes next question with the

open. Your line is

Paul Przybylski

Thank you.

to seasonality April, into maybe to the and Or buyer later this season did was back given a Webb, normal see Del you that some quarter? loss selling there March XQ Going and had? start through orders carry the

Ryan Marshall

unique Nothing Yes. highlight would I abnormal. that or Paul, it’s

Paul Przybylski

had price peak? then Okay. what versus And of communities percent increases your

Bob O’Shaughnessy

a do We little try to work for you. know don’t can Paul. that I

Paul Przybylski

right. appreciate you. I it. Okay. Thank All

Operator

our There over to turn remarks. questions the to I’d for presenters at this are call no like back closing time. further

Jim Zeumer

Thank Jack. Appreciate time morning. Great. you, this everybody’s

We’re certainly day available as the goes along.

For on will with to our forward additional questions speaking next look and any you conference call. we

Operator

participation. for We thank concludes QX earnings XXXX the This you call. PulteGroup, conference Inc. your

You may now disconnect.

PulteGroup (PHM) 23 Apr 192019 Q1 Earnings call transcript