PULTEGROUP INC/MI/ Q1 FY2025 earnings call

• Ryan Marshall highlighted Q1 results, noting the balanced portfolio and expertise of local teams. He discussed seasonal demand, affordability challenges, and the use of incentives to reduce spec inventory. - Jim Ossowski reviewed financial results, including net income of $523 million, SG&A expense, tax rate, share repurchases, and land investment. He emphasized the balanced approach between price and pace to drive returns. - The company noted the Del Webb buyer group remains strong, despite macro volatility, and the focus on high returns over the housing cycle.

In the first quarter, PulteGroup's net new orders totaled 7,765 homes, a 7% decrease from Q1 2024. Home sale revenues were $3.7 billion, down 2% y-o-y, with closings at 6,583 homes (down 7%) and average sales price at $570,000 (up 6% y-o-y). Gross margin was 27.5%. Backlog ended the quarter at 11,335 homes, down 16% y-o-y. Land investment, originally planned at $5.5B, is now expected to be around $5B.

• Full-year closings guidance revised to 29,000-30,000 homes, down from prior 31,000. - Gross margin guidance: Q2 26.5%-27.0%, Q3-Q4 26.0%-26.5%, assuming elevated incentives. - Land spend adjusted to approximately $5B from the original $5.5B plan.

• Macroeconomic uncertainties, including economic cycles and affordability challenges. - Tariff impacts on construction costs, with proposed tariffs potentially adding thousands to construction costs. - Supply chain disruptions and volatility in the stock market affecting consumer confidence.

Q: John Lovallo asked about second half margin expectations and share repurchases.

A: Ryan Marshall stated incentive load assumed is consistent with Q1's 8%, and tariff impact is estimated at 1% of average selling price, with procurement teams working to mitigate. On share repurchases, remaining authorization is $1.9B and they'll check back in on Q2 repurchases.

Q: Stephen Kim inquired about cash flow guide and tariff negotiations.

A: Jim Ossowski said cash flow guide assumes homes needed for current closing plan, and tariff impact is expected in mid to late Q4, with no major impact on already produced or on-water items.

Q: Sam Reid asked about Del Webb traffic and early April data.

A: Ryan Marshall mentioned Del Webb buyers are a strong segment, but April had seasonal shifts and macro volatility affected sign-ups.

Q: Michael Rehaut questioned guidance change and tariff buckets.

A: Ryan Marshall said guidance change reflects April volatility, and tariff impact is across categories like plumbing, HVAC, etc., with 1% of ASP impact in back half of Q4.

Q: Matthew Bouley asked about land spend and incentives.

A: Ryan Marshall said land spend adjustment is a delay, not cancellation, and incentives may be eased as spec inventory is reduced.

Q: Michael Dahl asked about order cadence and land market opportunities.

A: Ryan Marshall noted April sales volatility, and potential land market opportunities if distressed situations emerge, but no immediate major reset seen.

Q: Carl Reichardt asked about April volatility impact and cycle times.

A: Ryan Marshall said volatility is in daily sales rate, cycle times are at target (100 days for single family), and land optionality focus is on risk mitigation and capital efficiency.

Q: Alan Ratner asked about Florida market and supply chain tariffs.

A: Ryan Marshall said Florida business is down 5% y-o-y, and while supply chain may have disruptions, procurement team is prepared to mitigate them.

Q: Kenneth Zener asked about inventory and incentives by segment.

A: Ryan Marshall said inventory is trending towards target range, and incentives vary by segment, with first-time buyers needing more financing help.