• Homes Delivered: Over 6,500 homes delivered in Q1 2025.
• Gross Margin: 27.5% for Q1 2025.
• Net Income: $523 million for Q1 2025.
• Return on Equity: 25.4% trailing 12 months.
• Net New Orders: 7,765 homes, a 7% decrease from Q1 2024.
• Revenue: $3.7 billion in Q1 2025, down 2% from Q1 2024.
• Average Sales Price: $570,000, a 6% increase from the previous year.
• Backlog: 11,335 homes, down 16% from last year.
• SG&A Expense: $393 million or 10.5% of home sale revenues.
• Share Repurchase: 2.8 million shares repurchased for $300 million.
• Land Investment: $1.2 billion in Q1 2025.
• Operating Cash Flow: Expected to be approximately $1.4 billion for the full year 2025.
• Debt to Capital Ratio: 11.7% at the end of Q1 2025.

• Warning! GuruFocus has detected 2 Warning Sign with DCOM.

Release Date: April 22, 2025

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

Positive Points

• PulteGroup Inc (NYSE:PHM) delivered strong first quarter results, exceeding guidance with over 6,500 homes delivered and a gross margin of 27.5%.
• The company reported a net income of $523 million and a trailing 12-month return on equity of 25.4%.
• PulteGroup Inc (NYSE:PHM) has a balanced and diversified operating model, serving all buyer groups with a mix of stock and built-to-order homes.
• The company successfully reduced its speculative inventory from 53% to 47% of production, moving closer to its target range of 40% to 45%.
• PulteGroup Inc (NYSE:PHM) maintains a strong financial position with a debt to capital ratio of 11.7% and $1.3 billion in cash, allowing flexibility in capital allocation and share repurchases.

Negative Points

• Net new orders decreased by 7% compared to the first quarter of 2024, driven by a 10% decrease in net new orders per store.
• The company faced affordability challenges for consumers due to high selling prices and mortgage payments, impacting home buying activity.
• PulteGroup Inc (NYSE:PHM) experienced increased volatility in consumer demand in April, influenced by macroeconomic factors such as stock market fluctuations and recession concerns.
• Tariffs are expected to increase house costs by an estimated 1% of average selling price, impacting gross margins in the latter part of the year.
• The company lowered its full-year delivery guidance to between 29,000 and 30,000 homes, down from the prior guidance of 31,000, due to changing market conditions.

Q & A Highlights

Q: Were the incentives on orders in the first quarter consistent with the 8% that were on deliveries? Can you also provide any color on the second half tariff impact that you're expecting? A: Yes, the incentive load assumed is consistent with the 8% realized in Q1, embedded in the margin guide throughout the year. Regarding tariffs, it's estimated to be 1% of average sales price, impacting every price point and consumer group. Our procurement teams are working to minimize this impact, which is significantly less than what is seen in the broader homebuilding universe. Ryan Marshall, President, CEO

Q: Why not lean in more on share repurchases as the stock pulled back? A: We repurchased $300 million in shares, which is significant. Our Board authorized an additional $1.5 billion in share repurchase authorization in January, leaving $1.9 billion remaining. We believe the equity is of value today and will update on Q2 repurchases at the end of the quarter. Ryan Marshall, President, CEO

Q: Does the cash flow guide of $1.4 billion assume no reduction in homes under construction? A: The $1.4 billion assumes the homes needed to be put into production to hit our 30,000 guide. We have the capability to do more if the opportunity arises. We've adjusted our land spend, factoring it into the operating cash flow guide. Jim Ossowski, CFO

Q: Can you provide more detail on the tariff impact and its effect on gross margins? A: The tariff impact is expected primarily in the fourth quarter, estimated at 1% of ASP. Key categories affected include plumbing, HVAC parts, tile flooring, and electrical components. The margin guide reflects this updated tariff information and the incentive load. Ryan Marshall, President, CEO

Q: How did traffic trend in Del Webb communities in early April, especially with equity market volatility? A: The Del Webb buyer remains strong, despite being sensitive to macro volatility. April saw typical seasonal shifts, but day-to-day volatility was unusual due to macro concerns. We remain confident in long-term demand and our operating platform. Ryan Marshall, President, CEO

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