PHM - Earnings call transcript Q4 2019

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

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2019 PulteGroup, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session [Operator instructions].

I will now like to hand the conference over to your speaker today Jim Zeumer. Sir. ahead go Please

Jim Zeumer

President morning and morning's I outstanding call and joined XXXX James CEO; President participants Jim posted accompanies Bob that Executive fourth at copy have VP been to to operating A our Ossowski, today's of corporate pultegroup.com. slides this Vice O'Shaughnessy, I'm this results. this the morning's to presentation financial Senior Finance. Ryan to website of earnings good you, and Marshall, CFO; release and want and morning. welcome quarter by Thank discuss call PulteGroup's

of We later call will also post an our audio little replay a today's website to today.

want as We assist items. of release, these I accompanying our well results discussing adjusted reported be adjusted results to this slides of A call. reconciliation to impact review in we tables is your morning's highlight you significant this to our results. included exclude in will certain within as reported to results our results webcast these today the encourage analysis the that of

from and risk annual factors our release other part our reports. including made turn presentation key significant and Before in today's want suggested alert results factors I to that are SEC slides. over performance. the results differ quarterly Ryan, comments most earnings expected to filings, that Actual could materially call risk statements could by information future as of within board presentation today's everyone affect company's today. looking are includes summarized The the about those These the our and accompanying I detailed

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

Ryan Marshall

Thanks Jim and morning. good

out company release. which high ahead. greater press in for I the in closed believe this As PulteGroup's a fourth the morning's note, quarter successes year even positions on detailed XXXX results

have housing homebuilding Our outstanding What strength ongoing of fundamental the is base acceleration positions the and reflect our in market. housing and of demand. is the QX broad you particularly strength with market combination operations an encouraging overall results

rates increased Reflective were each stores order confidence underpinned our QX the serve. to favorable areas, demand our consumer and years. each the up this was of numbers, year, traffic our of Housing XX%. which geographic and higher As and we employment, across of strength groups market XX% order across buyer over for from demographic including dynamics while the last strong have prior benefit demand several rates continues to

markets I buying is home to support affordability now allowing incremental many process. and think across more actively adding improved engaged in get consumers the

returned deliver having year $X shareholders flow. a that in to that clear of repurchases. We in And the $XXX strengthening And through last XXXX and While over that's our the full were operating revenues per after share, in to financial having cash our we business. position, dividends generated billion also $X.X start and year, almost we slow into successful increased to still invested closings enter slightly resulted to share earnings over billion our backlog retired up only being even also grow million I all deliver business it's $XXX million with the positioned debt decade. results and highest the this financial with in XX.X%. XXXX. extremely were Couple we're net And of only Year mature to think ending in cap well scheduled helping a to this XXXX, New of us our bonds with greater in

acquisition he with results. going so Bob speak call over to While of Bob? about first I'm the Construction this finish to reviewing turn you announced excited am I morning Group, our Innovative this can morning's financial to

Bob O'Shaughnessy

decade. volume everyone. quarter morning, good and more absorption highest have rate Thank PulteGroup's were we you the in fourth generated a in order and the than

increase X,XXX totaled the period homes, net of which over an the is XX% prior For orders new year.

demand we strong buyer groups. geographies As and across all indicated, experienced Ryan

XX% increased while to XX% our XX% For time active orders quarter, to X,XXX orders adult orders increased buyer X,XXX homes. X,XXX homes, move-up the first to increased homes;

over an year over In realized an among up across from we communities, average Adjusting XX% which adult rates X% we among of increase quarter higher is Consistent absorption pace XX% counts operated absorptions increased among community XXX prior for count buyers buyers, portfolio entire as was community the of absorption the of time with our first year. last and move-up orders XX% buyers. XXX. XX% active our

X% in driven than contributed was sale closings to the a environment strong company's X% $X.X by as average revenues $XXX,XXX. quarter, sales increase less Higher homes, home to period price operating the the X,XXX as down improved billion. increased in were financial to to performance in The revenues our

and business, Texas. price for combination our while price and worth move-up to reflects time for homes our first average reflects the and X% in in particularly realized sale southeast increased the mix that the a pricing period. period closings for and by adult time decreased first average $XXX,XXX active sales dynamics ASP Our just to specifically, of ongoing respectively, $XXX,XXX. pricing $XXX,XXX X% level decrease the It's and Florida purposeful in of noting expansion entry More the

is By XX% and in XX% of year. in were active comprised quarter the with of last group time the our the XX% of buyer adult, adult active move-up in as compared mix XX% also quarter move-up expansion first time, XX% fourth fourth closings business successful first This and first our demonstrated time, XX% quarter closings.

closing more the the from homes time of first quarter include results this last These quarter fourth XXX year.

we buyer well our investment business. believe been positioned an this expanding that increased element of group, this have we serve the Given are we making continue to asset

environment same year The order homes. increase XX,XXX to contributed strong over the last a XX% backlog to also has in period our

a XX,XXX the the end sold, that up last over the quarter, the had XX% homes our of As homes we year. spec. such which at increasing construction XX% production are Of is remaining production are we've XX% under under result, been while

efficiencies, ready that we largely group. to basis On introduction the of communities production production and of This percentage the down spec our sequentially. seek but year, moving last on up level a buyer units spec entry incremental meet from reflects as expectations

quarter under midpoint XX% an of the range represent this deliveries we deliveries strong introduction, the first X,XXX quarter expect XX,XXX in in increase the and homes. we year, of full expect start we the of be to would have contract Given the this in to to At year range to X,XXX homes XXXX. first With of XX,XXX to over be XXXX. homes the

with our range to Based closing the communities, we quarter on strength will $XXX,XXX price the ASP full the relative be to expect first year of the of of first average $XXX,XXX. in range time the in sales $XXX,XXX of $XXX,XXX, through

of respectively. adjusted quarter in Continuing down the and margin gross was compared year gross with XX.X% reported XX.X% margin statement, fourth income prior the XX.X%, reported our and

California, for than of pricing to pressure previous delivered quarter factors. lower in the we margin the guidance gross came than we of Our much due year. under expected in Notably, our homes was a where more number

In closed addition, of previously we Well, minor communities they of higher couple items drag number act margin realized the these as none Together of we warranty period. in a recorded did than inventory significant. were a expected at a and costs limited impairments. individually

ongoing the range be of first Demonstrating in business, increase quarter and to strength XX.X% to real our the gross XX.X%. sequentially we of our margin to expect

expect there as full the range to is potential further XX.X%. for currently progresses. improve to we of the And year the in to margins XX.X% be year fact, gross margins In

a SG&A adjusted period. an pre-tax recorded insurance Reported million, expense $XX benefit million $XXX reserve of revenues or fourth quarter the in included of from sale X.X% home

SG&A sale $XXX expense or our revenues. benefit Excluding this was XX% adjusted million of home

realize the SG&A overhead believe in expense home leverage. we $XXX of revenues. for was XXXX, or higher incremental year for volumes prior can we With quarter million XX.X% fourth expectations sale closing

XX.X% As such we for in expect home XX.X% revenues. XXXX to expense to be SG&A of of range sale the

services results of million income reserve million the the included financial a year. charge of generated $XX Our for with fourth compared a year's fourth in of recorded million, quarter quarter Last last operations adjustment pre-tax in $XX period. $X

resulting strong improved also year's well rate. building from from as a benefited higher performance environment, growth a our operations This as capture margin home volumes in financial higher loan

In mortgage rate increased fact, XX% from to our last XX% capture year.

for expense of our effective fourth with year. rate XX.X% income effective $XX tax of million XX% rate tax was tax quarter $XXX an last million an the for In compared

rate as approval benefit related quarter credit. the of tax as recent lower an we was evaluation from with allowance than associated as our guide well adjustment in to the energy certain the assets, tax fourth Our previous benefited deferred

rate XXXX, for base approximately expect ahead we our tax be XX%. to effective Looking

$X.XX In quarter. or million per share. In the total, income in for prior income are million adjusted an our reported On reported share $XXX per $XXX quarter net was $XXX share the share. basis million income or or per million well while net $X.XX fourth $XXX adjusted $X.XX net year quarter was our or was $X.XX the net income was in the per

the from shares, million X was year. roughly using down fourth Our fourth last X% or XXX diluted EPS million calculated quarter quarter which shares is of approximately

activities. Our ongoing is primarily to due our repurchase lower count share share

fourth land spend quarter, in to XXX,XXX year invested total land $XXX for acquisition with we approximately the via our and XX% control, We lots XXXX million of with $X ended spend billion. under held them option. the During bringing development

to Looking approximately $X.X our spend total to land increase to expect XXXX, we billion.

full X% land of count will of last community the acquisition. X% X% year's XXXX first year, X% our in to be the existing quarter West Given expect the pipeline, year to of over to we benefit Growth growth closer XXXX. American reflecting

$XX.XX In shares price per repurchased an for of quarter, common fourth we million for XXX,XXX $XX approximately the average share.

$XX.XX shares we share. $XXX for for year, per average million For of the full million repurchased price X.X an

After points basis, which of activity, to ended ratio is of last to we cash mentioned XXX as XX.X%, capital from and On this year. a a all XX.X%. our basis debt billion $X.X net with ratio capital XXXX down debt is Ryan gross

back Ryan? Let additional for call me some now turn the Ryan comments. to

Ryan Marshall

among environment saw in demand much Bob. stronger of strong deliver Texas increase in country time obviously improved eastern in operations Consistent last exceptional orders, quarter much increased Demand XX% with Midwest also Texas than with benefiting third from our continuing with the buyers. was year. the the the in We particular, was Florida demand to and fourth first business our in the performance. generally business Thanks

the its year demand, certainly January, to plus highlight last ahead. which a months. west into of Northern high at backdrop in California XX good quarter first buyer that has heading the much XXXX continued into footing a that finding this after interest year. optimistic appears would us than higher fourth in the has out was we Demand tough We're I macroeconomic better cautiously weeks quarter and and time Strong stronger keep much should few with had affordability expectations be

review discuss and PulteGroup's Construction acquisition Innovative Complete, to results Now, I financial of ICG. of Group or with want operating the our

you've For costs heard this and times. talk a adding to years, cycle several the how tight and is about labor market industry our construction construction

you've of use to discuss conditions, heard these efforts our offsite operations. also expand construction in the Given us manufacturing

managed better platform XXXX commonly simplify and purchasing plan offering our launched in construction product we and to As our standardize our processes.

were from closings our of our common XX% plan XXXX, In portfolio.

of success this capturing next have the With offsite step. benefits viewed manufacturing as a of logical the platform, we

Over contractors the floor is that in offering trusses met a and roof shell commercial ICG bring around panels, identified last to wall businesses offsite working work that to XX automation numerous through manufacturing this are frame to onsite solution It and and ICG's with full installation design provide we months, residential Jacksonville includes provides we've solutions construction which market. framing the services, process. increased and homebuilding. systems to

to to In evaluating the forward, include floor operations remain customer who acquisition materials. and to were their Working and very plan and of windows, a clients. efficiency use Jacksonville mechanical, continue continue This we company plumbing. operations. precision ICG has lead standalone the savings management and our serving the and with lumber by wall ICG, on to preassembled production team, quality, structural innovation extend of will and through other and ICG the founders, production product we systems benefit the capabilities closely existing operation prep going the base faster factories times, with potential cycle and to build will electrical plant's expand along its the for installed overall impressed components

for we More facility a this PulteGroup divisions. as importantly, increased offsite other model integrating see production in

a into support is to one road, production develop years there do of ICG and just plants factory. markets important our in continue scale down the comparable offsite areas the While likely opportunity we encouraged to is the is operations today offers partner a to dedicated in production and a adjacent that where with key of we're potential North in our market, This but the factory serving is one greatly suppliers other plant move setting. to production markets by our enhance Florida one to strategy, note as component It can few future. more

and to while look We this produce develop. related forward see with quality opportunity activities components providing the work greater We partners. to more to high its as with trade allowing on efficiency, venture updates effectively PulteGroup they

thank questions, the the opening work call family strong, company of with and and PulteGroup tremendous outstanding and is want into financially efforts, XXXX. your in for welcome the momentum. ICG to Before their XXXX entire into I head Thanks team the operationally to our to employees we

me Now Jim Zeumer. the turn call let to back

Jim Zeumer

we Okay, you explain as We'll so now and follow that up. We the to of remaining question can during that started. get ask limit this possible one thanks, James yourself Ryan. the participants again. for speak questions as call. one you open many to time We'll the process call

Operator

Instructions] And question Go Michael ahead, of [Operator the comes Morgan. our from with first line please. JP Rehaut

open. line Your is

Michael Rehaut

everyone. Thanks, morning, good

about costs, The the was for bigger pricing, little expecting of drivers on XXXX hoping drivers margin inflation and just of how are can the components either down I those first gross there? by question what the cost you break was that had – different I of improvement. mix, thinking drivers a you're bit the

Bob O'Shaughnessy

it's Mike, going project look start placed a the at we first We've want our into the backlog. backlog start strong we the when year. margins the – place we've Bob. got our we is and coming how Yeah, business Obviously forward, to first

the embedded that backlog. in about we've as over think last three the performed know pricing largely we has months, We that business So built that. how

And bit we've bit a more so seen as firmer little out pricing an a we've there, example, seen volume. get California, little

as simply And we fiscal price on look see as you so our assuming costs about I what see I not say, vertical in guess, I at We're it's backlog. can increase. a construction based tell X% 'XX, in that appreciation. we as could we

again, obviously modest inflation, costs we are all as in, factored relatively get in But of that's more into So expensive recent we're more to lot the surface a going a the that doing guide. little but price move of not appreciation portfolio.

Michael Rehaut

some I versus your outright own that in the for as investment appreciate the adding benefits structure just kind apologize, relationship remarks. an away guess terms prepared the a for the of or equity or fully to of a the company additional ICG rationale reaping about to the of was of was pulled making efficiencies question you company behind again, customer it. as during this acquisition, second I but addressed speak customer is and rationale the allow business to The I I if apologize Okay, my and I moment curious kind already, buying grow of a business being simply cost of so the consolidating perhaps further and without the and an it onto book.

Ryan Marshall

Ryan it's Thanks question. morning. good Hey, Mike, and for the

at that the of ICG, – different I offsite a were of number with think looked we potentially that at benefits could explain reaped as the we the way looked associated there as ways some have think we manufacturing. I'd I

look to that country, as call. probably type did on we at of acquisition go was going suppliers suppliers cases, will take highlighted across continue for factory the this our can. leverage I Where What as of relationships to other those. right table. chosen is You to where elected operation those we're as technology it the on of with tell in a opportunity. particular to particular we've production with the the path of we our we're is are And number existing many number that which we to will bringing route for to move much automated into looking settings be reasons, I entire We this that get a you into won't this

standing Jacksonville have plants right use the road own, right to the we'll certainly up to look going support to at where of learnings learnings those potentially volume enhance of our this new from And those. the use we point amount away our are operations. We to down

in excited we this next does. a when really And what commonly been started we're since this managed our journey, So It's about frankly, making is portfolio. step. logical the XXXX, the plan

industry. So to about more we're for what the opportunity it pretty but come, suffice to say holds excited this

Operator

line ahead, the of question next ISI. Kim comes Evercore with our And from please. Stephen Go

is open. line Your

Stephen Kim

lot a guys. thanks Yeah,

Or maybe your I'm it on one. that mechanicals, the follow you as systems, that's as you the the much a like something the saving? about have that you're across of on just – this think whether I you plans, number would of raw going to you the you Are opportunity a which integrated them about question all to it's saving that the they kind more market, curious an along sense more you thinking me say are skeleton Mike's and there's take country bare estimate can here think as be opportunities? you can of and how of with in expand? Let And term ICG. think integrated lines take increase windows the longer these Jacksonville give can the us for – to questions or

Ryan Marshall

question, take first really as Yeah, mentioned, the cetera. plumbing, the see this it far is in piece to we electrical, and et the going Stephen, I to you the of window as I'll where first it's future, take the which that level later or installation, think

Even think in what's from I I today just with of frame level So markets think readily manufacturing, an available, shell. the most raw advanced

But to those benefit is the So today benefits going some offsite that of opportunity manufacturing coming where walls manufacturing. is kind really to the we the we we down to more the advanced into look of we kind floor get places components ICG cassettes, think shell trusses. this of advanced plus in existing is We're already manufacturing. from more frame in And is the starting see real get operation the techniques. level which certainly as road, advanced more do think to and

But certainly would impact so kind there. of or in will modest. a we the we're to that I Stephen, overall that this kind big plant excited for I of there's years. be reported take single company a and our journey that the the single two results you in for over a any terms step a it's market, highlight benefits, three believe In really is of next think benefit

Stephen Kim

Excellent, there. well, guys amount I tremendous work a done know of have you

one been of I've So best know. probably to positions the

we've at to the last could relates even policy were curious to question done level seen what to lower that there change the the I'm seen look Whether of the in the over to coming entry have a We morning level have with the of lot or they're there's continued to any or start segment the changes Second at know that seen which market. in some or market you've helpful changes as housing respect you of entry whether not segment be market, this moderate like highlighted of of into years. couple We beyond folks way end level, curious the the or not you that see entry and way. that was I of to market. been more it moving serious least any if a in other strength

you're about your – in the at So market. marketplace just commentary what the the a of lower seeing end from

Ryan Marshall

the it's Stephen, of Ryan, piece first I'll take Yeah, that.

I quarter numbers fourth growth, reported continued our is our on for We We year-over-year signup space. had which the robust. strength seeing entry think are XX% in pretty it's evidenced and first level time

position really first and are We're specifically half control that this time space over we've the meaningfully the how we're excited that we our about a been there. and excited two continued targeted investment to move so the number I So that like to that. about years the lots of last making

think seeing even the changes situation you And financing speak I the to we're the certainly helped overall buyer. level I accessible have affordability in Some entry the all first equation that from and into think that with overall factored attractive buyers. is that to more demand providing time of

Operator

Bouley Barclays. from next Matthew with the comes please. Our of Go line ahead, question

line Your open. is

Matthew Bouley

your you wanted ask and as well harder questions. business, Thank about obviously And morning. for I competitors level. many Good into taking absorption are to the the quarter. the move-up leaning strong my in entry there growth obviously

don't at competitors of and do acquisition much. of Pulte's much leaning position point because power land on guess you think as even just how move-up you. at part you move-up competitively, simply hear in into pricing this quite the So both potentially about that as your communities about business Thank I terms

Ryan Marshall

that if late about an the level. it's see balanced shift I XXXX, take and take started Matt, I to or to talking that good an yields. business reiterate reason you're we've mix in to approach question with our kind maybe it gives a What we think was of business. the you – that to and to entry of from we our starting that about have our balanced the opportunity back the opportunity move-up tried mix of home five closed me effort. And out into results where points and And highlights

fourth Just to from our numbers, specific signups quarter business. our the some in give of you XX% move-up were

Homes. largest be to very our piece of our profitable carries it So of of it our the kind business and business. brand a piece flagship continues It's Pulte of

So our we position. like

that we've the take time to Suffice like to don't of position well. one abandoned first we reflective counterbalance at we more that not market be the have opportunity – single think to it is gotten better We it any that appropriately we've all that. all. We business of size basket we in think also say, eggs Rather, we've the opportunity. of to of and have as advantage shaped I the think

Matthew Bouley

secondly, to Okay, I wanted on appreciate then And ask that SG&A color. the side.

the leverage. might some leverage to were backlog we But flat the additional from relatively guess, SG&A any of obviously, you up aware were just leverage XXXX, of Thank of prevent quarter, I a around spending slight guiding IT There expenses? are standpoint there be in some you, midpoint. are last set kind about well You're maybe growth. should the you talking that other that of of revenue

Bob O'Shaughnessy

the come for around XX.X%. year, adjust you in when obviously, – current We Bob. it's Matt, Yeah, we

actually some put them we've now. of we've our on over talked that upgrades Certainly the journey starting a we're that the systems, over years systems even midpoint shows of at those range given on to the depreciate improvement couple get in IT the place, last we've about some the – been So side, as that.

really that, being some nothing costs the new that. or so just of the leverage really increased with It's we've in business. to So unusual scale able associated got

Operator

question Go line the comes from please. next ahead, Dahl our RBC Capital from And Markets. of Mike

Your line is open.

Mike Dahl

thanks for my questions. great, Hi, taking

First are margins. momentum and gross power a around pricing with start question one to of and kind the

you if could a still starting I'm just power that for not raise that if price, margins magnitude I about of there. within the Maybe was full sure pricing could giving over about construct of months? any that you've the think that talk talk past seen? as that Bob and or the compares of point, to of on. percentage be to improve But communities potential from you there few the you goes as been can year guidance able you're give suggesting year upside kind you've how sense that the the year-on-year

Bob O'Shaughnessy

improvement clarify, not the Yeah. was to outside included Mike, just in the Hey, guide. guide, that

that the a reflecting than first actually for quarter. just prepared what the that's range the for So goes year little higher we bit

But actually at a it's during quarter, think say the matters of price sensitive. there. it's into on But if flat that. if where has year two. there real is isn't probably entry a the X% although insight around the There's markets, the – pricing got gives think think that market, some showed types what any actually more of providing that delivering. the it last the I they of the would think you've and is for adult, ASP, our on comes product power about I look mix pricing entry I you level, aggregate are I from we're think power real terms which the up change pricing, and really level, been you in it the to the you've roughly substantive got We I in assets on balance, always pricing price But move-up there's basis. or in reflection a all we're In an power power, in there decrease active I so

the little there's of you to the up seeing can So far in go bit But prices balance a limit business. a push holding how we're that.

Ryan Marshall

the inventory that and on that only side, starting Yeah, seeing some volume that and I'd strength think the add reduced Mike, with other I is see we're to thing you're to the levels.

think builders all think environment the in us thing key I think certainly became where and builders so affordability the certainly saw the have the be of all We all of see more pricing levers you'll power. what when create equation. challenged cautious that that happened mix, back one an would with we'll The is pricing and I in I of to pay that to of 'XX want that. half is and kind affordability attention will

Mike Dahl

thanks second question. Okay, And that. for

Just ends was as of the what that at this lost situation – more have learnings discussed the position where and you a existing first have customer just them want another base, you access had some terms could maybe an you've this are dynamic ICG since any customer a this more you external differentiating being or you other that there versus ICG be just not want follow play relationship. still to this into it serve to but appreciate a of supplier and, kind true Ryan, you press up owning or taken others were could you'll have question to continue I as get to a its on is why up details, that just having traditional don't differentiation just did but the Pulte partnership, of things of explain customer on for kind of to the in hand of again Is assets?

Ryan Marshall

shell great as of partner the to Number founders one, frame Yeah, into of innovation more I see the up twofold. here, opportunity some is with really advanced speed a to current it the techniques. we Mike moving opportunity version the manufacturing think from the

about, see coming provide out really market. or other so business then We know plant of talking you've what something years Florida in North to XX% we other there's tremendous been a is we've our managed the the with opportunity of you this parts going opportunity portfolio. really applying of to closings commonly it's that our our So besides for that's the two just us about there. And last that think heard piece talk

ICG So with about that's enough, think and from Mike can really the labor. of can't of and country. is something parts we The this benefit founders working biggest other this overemphasize reason that the we I

We shortages been in There availability labor. to structurally talking going the for of seem take. doesn't to XX that's this industry labor anything about change have years, be the give last or

the benefit one the us unlock easily ramp have it the to logical gives a – think we benefit. off to labor on see more truly is getting easiest ramp huge so can that a housing And from the only see that operation that is production. And as or the that we efficient. the most accessible avenues supplies we off that is tight offsite of And

Operator

question America. And Go of Lovallo next line from your from ahead, John of please. the comes Bank

open. Your line is

John Lovallo

Hey taking my for guys, questions. thank you

on of first an The is frankly, this one see the And I and future opportunity. we this home incredible is think ICG building.

So that your on the with cetera. of of here approach And going move complete prefab more modeling, excellent some solution. ICG like just fully they have full solution. parts you're a manufacturing, of start looks information I installations, deliver taking more looks piecemeal kind et it part. the for mean, component think this building a like to is instead But offsite to ability an integrated I

here fully off question the little market of onsite pivot just being really integrated the Jacksonville kind could quickly bit and guess this to conservative solution. is, deliver site I the on So how is a in a you

Ryan Marshall

it's Hey, John, Ryan.

But think I certainly highlight that's on. focused that what what opportunity level you is. the detail And We of what we're haven't is yet. real given

that one attractive. level some existing of that in my of things of mentioned of it inside I it remarks, innovation that was As – the ICG made really was is prepared the

got precision the So components, ability have with manufacturing services, design they to we've those components to the labor. onsite your precision or assemble point,

of And logical the way type do step some next then can incremental investment. volume in that in so is a And to kind you systematize a setting. it

And so, on. the what that's we're and is squarely certainly what focused opportunity

John Lovallo

each think those? California maybe I that's kind the impairments. item guys of of margin Okay, the helpful. can highlighted a quarter bucket inventory from of quarter, in Anywhere gross housekeeping here, you the you warranty incentives, more then And in impact just the had in

Bob O'Shaughnessy

as If the the points get, margin them. would significant. we we of on total they none of being because the characterize would I wouldn't, were somewhere walked impact I basis quarter. it of individually are have Yeah, XX neighborhood it of them in through

Operator

the from please. Ratner of Associates. ahead, comes Zelman Alan question next with Our line Go &

open. Your line is

Alan Ratner

morning. congrats Nice on and good acquisition. guys, Hey, the quarter

Ryan Marshall

Alan. Thanks

Alan Ratner

first the things. just the from one ICG, that can you the pre-installed. One the especially your closed and hear of going windows the thing main stream this reason panels comments transportation that and with we My already windows hearing associated were as things XXs cetera and in some know with hasn't installing a stuff, that products job the and very about on more typically the I plumbing why costs were electrical bringing even the et that and is back site I mean, become XXs as is high the where builders future those with see to that perhaps builders breakage. well experimenting

and make in affordable process anything that or that is there that got they're actually team the just the more of code building right is makes pursue that efficient to you've place think quite perspective the yet? you but that, that is from there to math something perhaps that now, a not cracked So done sense ICG has kind

Ryan Marshall

I appreciate thanks it. for the Alan question. Yeah.

what's be out there's we opportunity wall today, et mentioned cassettes, has of panels, closed manufacturer we on As go the Work done got floor of that. windows, to and investment inclusive are the the wall electrical, panels ICG coming an and cetera. plumbing, think trusses, to to

site all highlight this I its the transportation. of that kind not to just manufacturing off second challenge think you and stage applies

have you've the that get components from you such in building transportation And what that costs efficient volume the enough that way. so more close relatively a offset proximity don't to got those within that a means savings is

be investment figure been done work to other to out, to be So done that done, places it in other applications. has in

that And I so a question labor is back few do answered to ability back the why be goes there. we next that this question to then think it which the labor see don't is, to I well, is just we And going logical the what is a time think and direction of we a to And opportunity it efficiencies the is labor, do but that because going will that of be the happened really gained which the new persistent manufacturing view in rates are a shortage as as in challenge different. to I something has going past, think this environment, a different? from

Alan Ratner

for kind about at second this and helpful, Got thinking here. thinking I'm just Bob, question, allocation, it, maybe the that's Ryan of capital point

at level the year quarter the and few years. down to cap this lowest meaningfully And at Your the fairly many prior net we're the from is debt years. we've seen in time for decelerated same buybacks

sheet, that's point? that Is use is allocation commentary balance it kind of where another you of prices at the a are and the capital this about of the there? at earmarked being point? Or give thinking stock there how can function you cash So this any

Bob O'Shaughnessy

a you'll an be activity. bit we've dividend, front sound just invested indicated the repurchase and think the we'll years. last the year, We investing all we've We and think obviously those windshield. we've beyond we'll I 'XX. new of and bought is news pulled the cash mine, and What playbook still we of working been we on year, But retired to we've for we've increased some be continue made every been this pretty with highlighted things report several consistent going those same nothing of it's to think we stock, ICG it's lever boring, generation Yeah, investment strong I our our any this the I but in to different in in of from redundant all share fiscal more kind got but expect little see report or that. debt, business, obviously, an we are

Operator

from ahead, with Go comes of next our please. SIG. Jack the question line Micenko And

is line open. Your

Jack Micenko

Hi, good morning.

entry for First for seems thinking than little one, picture the be bit a the little this uptick. the expected this Ryan, you'd level, bit maybe about occurring may it and pivot faster a or bigger success

level then level how you've the positioning or bones you've you've really bigger end you've business standpoint, see you build curious of other be mix? included On got and got to order gets Pulte real the gamut part as of side, your that bare everything somewhere between competition, got entry and product, entry product a on a got competing an

Ryan Marshall

appreciate morning, the Yeah, good Jack. I question.

the level going the entry end higher see price of point. on us play You're to

little We built of inventory. demand. an in we that That's there heard reflective a typical a so you bit model prepared level and specs to meet our uptick of that of that total more the it's and business, business. saw entry have in And in you of as specs our percentage specs kind order made largely some comments that more in modifications to are to Bob's building

the first model desire. our the turn affordability the to efficiencies of this really drive in Centex to limiting choice We creates value which are buyer time the within some that passing on were that consumer the in

square the of think that's just our see bones don't the think money. for. So home less and known bare that the probably but the the footage with choice, give really and consumer. go home less customer to communities you're model we deliver well offering customize, really a you continue brands quality, small we of we is. – the all I great of magic location think where that's part nice the to getting for the model high a have been think of I to won't quality experience, don't you'll lot ability us And We'll the

Jack Micenko

pivot, number or you a expand be you that think quarter, a that Okay, Are the of we book entry door business? does last the third the want expand? can look given for leaving in thanks or margins entry balanced And on then were all that at the to for move you five seen that to the is we five I perhaps uptick of say the really the point And want hey, points side. said and that. you've healthy the open

Ryan Marshall

Yeah, Jack.

balanced want we key that message the that think I business. I'd emphasize a is

see maybe points as up go a may a it points, few go may it you'll few think I down arise. opportunities it

Our overall the on return drive to be housing space. the cycle investment continue is residential within through going focus to

we'll take being where they we balanced, as so the focus more opportunities And see with But present certainly trends on emerge, themselves.

going future in to bets outsized I place don't think anticipation you're trend. see of us some

at at would minute the I close we seen What question, pretty we place some emphasize like adult. look margin want the to that And at attractive we far the as that's we've I as about with our be, probably leave we're Bob on is, of We They're shared, ability made price really that to that it's level is the space. and the message focuses Jack look underwriting ago expansion. return. other you. the which same go of getting move-up business to margins. look a we're I same get to probably entry we where And So the margins profile as what out the reflective really your active where is comment the to as

So consumer invested the comes certainly we at return gross margins look And story, of are when real but our part on the it same is all capital. segments prize the return. of to

Operator

question please. Go our from Ken KeyBanc. comes line next And ahead, with Zener the of

Your is line open.

Ken Zener

gentlemen. morning, Good

My question where ago level, years sense. entry, seem is concerned is, Del to the so putting demand that entry few because that's your it people moving were be rest. Webb, So this, makes around to in you if you're

Is Why approach it your homes. do it that controlling is short? categories? hesitancy you're categories you in there? like that have that is because other gets spec it to? seeing some that that the profile that labor is risk over more talked given in more building you're have what You're builders you for What to Is other return it risk other – your

Ryan Marshall

it. just its eyes Ken part Yeah, consumer. in Risk the value is really of about Ryan. of It's the

different the model the entry and think level move-up this is to to active adult And that's so they things at driver. value. risk proud profile profitable, affordability margin and of willing more biggest we And looked manage value choose of. that as that We things part and pay that that with is the that with strategic believe contributed better the what efficient, and when have they our we pricing the we're we've very they to more access opportunity consumer, get today probably buyer consumers the for, we're

operate They this out coming buying And of cycle so we having buyer. deliver is by a choice an active those specs, and in different limiting just quicker than a the adult our that apartment. few on building give, to amount little because of move-up bit our buyer theory more homes

more risk need. and things they value about giving And so the consumer less about the and it's and maximizing that want

Ken Zener

move. think and understand I a it's good

you north a perspective coastal it bit California? gross being you expand question, specifically. a your something south, called out very inland us since since talk drag Second little Thank cetera? about you much. Just it just mentioned as give you could you was et that margin Could

Ryan Marshall

been to – a as the hardest think and XX last I being been to inland. whole for it's California probably it's also think south the happens and slowest. we're it's hit had severity, tougher really coastal coastal It to come be see and where secret of starting order been place California north, a the some I the and months, start into drag environment a Ken – northern In the back Yeah, has selling the market. strength

in particular. so we're business Northern in very a cautiously the got a positioned we've California optimistic as strong Area Bay And business or nicely in

to given the to had drag homes continue be Northern months. that the were incentives on discounts probably more sell So to XX and that or last – California in

Operator

with line Fargo. next Patterson from Wells ahead, the Go question Truman please. of comes Our

open. is line Your

Truman Patterson

for guys. my questions. Thanks morning, good taking Hi,

the follow that. wanted a just bit more market, up to color get on little on First, move-up

Are do research market, kind recently think But the in up do edge rates our field what you driving Is the healthy that? see earnest move-up millennials purchase revealed has driving think frankly. I'll you the leading you it prior breaking market? just of is say improvement? has been Really expectations, which in starting Our a lower rate the is really of in that ahead up to lock? move what quite

Bob O'Shaughnessy

so rate benefiting, it first think you price there's helps economy, wage else, inflation, certainly foremost, those the things of health I have together. – slower Yeah, you've it's if so coupled appreciation, like relatively got all the is everything and

the the of to level, earlier of which One competitive entry lot the move degree the than to has questions builders big about a sort set. for of talked the a doubt,

in pretty biggest supply in and in shape, is which for our on a we're operating perspective healthy So days both about we've where terms of competitor. every build got just new market is supply market good from today a resale,

price is I to nice. a for all business absorption So at nice us think pretty those things increase, have X% appreciation pretty themselves lent together XX%

investing being and So time big I'll it's of we Florida there making at parts operate than operating. that in one in to or way we other. Midwest, parts through the Ryan the and are looking earlier, it's we're where like in serve is and what bet able going reason each business of so to be to instance, in some the we're that we're some it a a markets what different, for think said the – each not of that where consumers the We market balanced parent right, market of the serve portfolio

Truman Patterson

Okay, okay. Absolutely with agree that.

On expecting? mentioned guys brick this outlook you outlook for up your think materials? you just you inflation And what you cost labor I X% accelerates not whether the Could land, break for XXXX, likely occur were XXXX? or know versus stick and was and to

Bob O'Shaughnessy

Yeah, it's interesting.

On the side competitive market. it's land a

this You've it before, heard say always is. us

pressure. think it you'll don't and is we're the sale. But closing country see certain more through being think see I and land classes coming think I continued parts certain going And to others. competitive land We of on asset land in today. than the see I

market. real in reflective the In a which materials, the got which the other terms rate. of a way just lot little to and largely always ICG we we than better reason on to That's overall. but side of tick last benign obviously, the the as the that'll XX material the on the will of of pressure Once labor – wild decreasing year concrete, think seen of year. half now. about is But the investment, little the year. us a about again, behaving. material we and up is so think local expectation is a the you've rate. labor affect not a in that's see package the by see been lumber and tailwind we've a heard given other of and up materials lumber closings months bit bit vary going so pretty don't that the last Labor bit market, talk to that first our a bit half of the bad, is market a little we X% All going little of lumber be a price moderate card. It's inflation back labor, we've for But our always through

Operator

question Reichardt our Go from ahead the with Carl And next comes please. BTIG. line of

Your line is open.

Carl Reichardt

you. kind cruise to one Thanks. I miles, just you're Webb Good off. about way Jack With old so Del a got of looking inventory of thinking pick of of couple has I'm for moved meaningfully? years, metric driver how you ship about what you? three by that return? Are is up important year throughout and you expecting first curious move-up numbers. time how of turn metric has the important one Truman that come better guys. to stuff mix morning your a image have that time next that to couple turns You And all is as my

Ryan Marshall

it's driver a big of Yeah, Carl, look return.

the And equation. deals what do being is we heart at And get on duration think with that's turns because it the XX look of a the odd move right so heard it's you drives the way side house our the why get turns. on land land, with the you've at reason big that the inventory in inventory more about some side, inventory can percent down balance sheet needle overall talk land lever on shorter and us I options that of do we really turns breaking what doing

Del hope would mentioned roll the some we'd look that our off of you inventory in the that as options cruise that, roll to more be we turn. can accelerate as Webb's continue grow opportunity So to we we for ship land

balance time, On those. a ICG, in the because product. I side, really that's it's And it much labor between of think why a high speaks cycle made we've quality delivering another is reason all the investment available to and house how is

sitting rain You've opportunity and the more an out components build in with precise the to got that are snow.

modeling the cut as well. into BIM You've And ability we of got of can the technology time the some that. factors cycle think and we that

kind with more there cost efficient. higher levers more pull the of to think opportunity we an quality efficient materials, there's all being labor, So

goodness. a there's of we So lot think

Carl Reichardt

that, appreciate Thanks. We'd Ryan.

Operator

And ladies and – questions time all gentlemen, that's for today. the we the that questions have

So some back Zeumer to closing to the Jim I'd remarks. call turn for like

Jim Zeumer

questions of Great, for follow day speaking we the remainder We're you our appreciate we with this and to next everybody's on morning. time look the any over forward available certainly call. up

Operator

Ladies conference. and today's this concludes gentlemen,

You may now disconnect.

PulteGroup (PHM) 28 Jan 202019 Q4 Earnings call transcript