• Home Sale Revenues: $17.3 billion for the full year; $4.7 billion in Q4 2024.
• Gross Margin: 28.9% for the full year; 27.5% in Q4 2024.
• Net Operating Margin: 21.3% for the full year.
• SG&A Expenses: 7.6% of home sale revenues for the full year; 4.2% in Q4 2024.
• Pre-Tax Income from Financial Services: $210 million for the full year; $51 million in Q4 2024.
• Net Income: $913 million in Q4 2024.
• Earnings Per Share (EPS): $4.43 in Q4 2024.
• Cash Flow from Operations: $1.7 billion for the full year.
• Land Investment: $5.3 billion for the full year; $1.5 billion in Q4 2024.
• Lots Under Control: 235,000 lots, with 56% under option.
• Debt-to-Capital Ratio: 11.8% at year-end.
• Share Repurchases: $1.2 billion for the full year.
• Dividends Paid: $168 million for the full year.
• Backlog: 10,153 homes, valued at $6.5 billion, down 11% year-over-year.
• Average Sales Price: $581,000 in Q4 2024.
• Community Count: 960 in Q4 2024, up 4% year-over-year.

• Warning! GuruFocus has detected 4 Warning Signs with TER.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• PulteGroup Inc (NYSE:PHM) delivered 31,219 homes in 2024, marking a 9% increase over the previous year.
• The company achieved record home sale revenues of $17.3 billion.
• PulteGroup Inc (NYSE:PHM) reported industry-leading full-year gross margins of 28.9%.
• The financial services operations generated $210 million of pre-tax income, up from $133 million last year.
• The company returned $1.7 billion to investors, including $1.2 billion through share repurchases.

Negative Points

• Net new orders decreased by 1% to 6,167 homes in the fourth quarter.
• The backlog at the end of the quarter was down 16% from the previous year.
• The gross margin for the fourth quarter was 27.5%, down 130 basis points sequentially.
• PulteGroup Inc (NYSE:PHM) anticipates gross margins to be in the range of 25% to 27% for the rest of 2025, indicating potential pressure on profitability.
• Affordability challenges and high living costs are impacting consumer demand, particularly for first-time buyers.

Q & A Highlights

Q: Can you explain the sequential walk from the fourth quarter into the first quarter, and then through the remainder of the year for gross margin? A: Ryan Marshall, President and CEO, explained that the fourth quarter order results were strong despite a challenging environment. The company expects a normal seasonal selling pattern into 2025, with some positive order activity. The margin guide is set at 27% for Q1, with a range of 26.5% to 27% for the rest of the year. This includes assumptions about backlog and anticipated discounts, with incentives expected to remain consistent with Q4.

Q: How do incentives differ between move-up, active adult, and first-time buyers? A: Robert O'Shaughnessy, CFO, noted that first-time buyers, who focus on monthly payments, typically receive richer incentives, especially with government-type loans. Move-up buyers might receive different incentives based on their desires and financial needs, while active adult buyers, often taking small or no mortgages, have a different incentive package.

Q: What is your stance on M&A activity, given the current market conditions? A: Ryan Marshall stated that while PulteGroup prefers organic growth, they remain open to M&A opportunities. The company evaluated over 20 potential acquisitions last year but did not proceed with any. They are selective and disciplined, focusing on maintaining strong market share and underwriting their own land investments.

Q: How does PulteGroup view the current market conditions in Florida, given concerns about inventory and margins? A: Ryan Marshall highlighted that Florida has been a strong market for PulteGroup, driven by move-up and active adult communities. Despite challenges like storms and insurance issues, Florida remains attractive due to factors like job growth and no state income tax. The company is optimistic about its continued performance in the state.

Q: How are you managing your spec inventory levels, and what are your expectations for the spring selling season? A: Ryan Marshall mentioned that PulteGroup has already started to pull back on start rates since Q4 and will continue to adjust based on the sales environment. The company is optimistic about the spring selling season and believes that current inventory levels, though slightly higher than usual, are manageable.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.