Business Wire | Jul 27, 2021 06:30AM EDT

PulteGroup Reports Second Quarter 2021 Financial Results

Jul. 27, 2021

ATLANTA--(BUSINESS WIRE)--Jul. 27, 2021--PulteGroup, Inc. (NYSE: PHM) announced today financial results for its second quarter ended June 30, 2021. For the quarter, the Company reported net income of $503 million, or $1.90 per share. Adjusted net income for the quarter was $456 million, or $1.72 per share, after excluding a $46 million pre-tax insurance benefit and a tax benefit of $12 million resulting from a change in valuation allowances associated with state net operating loss carryforwards. Prior year reported net income was $349 million, or $1.29 per share. Adjusted net income for the prior year period was $311 million, or $1.15 per share, after excluding a $61 million pre-tax insurance benefit and $10 million of pre-tax charges associated with actions taken in response to the COVID-19 pandemic.

"PulteGroup reported outstanding second quarter financial results, driven by strong top line growth in combination with a 270-basis point increase in our gross margin," said Ryan Marshall, President and Chief Executive Officer of PulteGroup. "With a backlog exceeding 20,000 homes valued at $9.8 billion, I believe the Company is well positioned to realize further gains in the coming quarters as we work to grow our operations and continue to deliver high returns on equity, which totaled 25.7%* for the trailing 12 months."

"We are experiencing very favorable market dynamics, led by strong housing demand and a generally limited inventory of new and existing homes," added Marshall. "With the economy continuing to recover, a very positive job market, low interest rates and high levels of consumer confidence, we remain optimistic about demand conditions and the overall strength of the housing market going forward."

Home sale revenues for the second quarter increased 31% over the second quarter of last year to $3.2 billion. The increase in revenues for the quarter was driven by a 22% increase in closings to 7,232 homes, along with a 7% increase in average sales price to $447,000. The increase in average sales price for the second quarter reflects the benefit of price increases the Company has realized across all buyer groups.

Homebuilding gross margin for the second quarter was 26.6%, which represents an increase of 270 basis points over the comparable prior year period and an increase of 110 basis points from the first quarter of 2021. The Company's reported SG&A expense for the quarter of $272 million, or 8.4% of home sale revenues, included the $46 million pre-tax insurance benefit recorded in the period. Excluding this benefit, the Company's adjusted SG&A expense for the quarter was $319 million, or 9.8% of home sale revenues. The Company's reported SG&A expense for the second quarter of 2020 was $197 million, or 8.0% of home sale revenues, with an adjusted SG&A expense of $247 million, or 10.0% of home sale revenues.

Second quarter net new orders increased 28% over the prior year to 8,322 homes. The dollar value of net new orders was $--4.3 billion, which is an increase of 59% over the comparable prior year period. For the second quarter, the Company operated out of an average of 808 communities.

The Company's unit backlog at the end of the second quarter was 20,056 homes, which represents an increase of 52%, or 6,842 homes, over the prior year backlog of 13,214 homes. The dollar value of homes in backlog was $9.8 billion, which represents an increase of 70% over last year.

Pre-tax income for the Company's financial services operations was $51 million, down from $60 million last year, as higher loan volumes were offset by a more competitive pricing environment. Mortgage capture rate for the second quarter was 86% compared with 87% last year.

Inclusive of the $12 million tax benefit realized in the period, the Company's reported income tax expense was $136 million, representing an effective tax rate of 21.3%.

The Company ended the second quarter with $1.7 billion of cash after using available funds to repurchase 3.6 million of its common shares for $200 million, or an average price of $55.84 per share. At quarter end, the Company had a net debt-to-capital ratio of 4.5%.

A conference call discussing PulteGroup's second quarter 2021 results is scheduled for Tuesday, July 27, 2021, at 8:30 a.m. Eastern Time. Interested investors can access the live webcast via PulteGroup's corporate website at www.pultegroup.com.

* The Company's return on equity is calculated as net income for the trailing twelve months divided by average shareholders' equity, where average shareholders' equity is the sum of ending shareholders' equity balances of the trailing five quarters divided by five.

Forward-Looking Statements

This release includes "forward-looking statements." These statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or implied by, these statements. You can identify these statements by the fact that they do not relate to matters of a strictly factual or historical nature and generally discuss or relate to forecasts, estimates or other expectations regarding future events. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "plan," "project," "may," "can," "could," "might," "should," "will," "seek," and similar expressions identify forward-looking statements, including statements related to any potential impairment charges and the impacts or effects thereof, expected operating and performing results, planned transactions, planned objectives of management, future developments or conditions in the industries in which we participate and other trends, developments and uncertainties that may affect our business in the future.

Such risks, uncertainties and other factors include, among other things: interest rate changes and the availability of mortgage financing; competition within the industries in which we operate; the availability and cost of land and other raw materials used by us in our homebuilding operations; the impact of any changes to our strategy in responding to the cyclical nature of the industry, including any changes regarding our land positions and the levels of our land spend; the availability and cost of insurance covering risks associated with our businesses; shortages and the cost of labor; weather related slowdowns; slow growth initiatives and/or local building moratoria; governmental regulation directed at or affecting the housing market, the homebuilding industry or construction activities; uncertainty in the mortgage lending industry, including revisions to underwriting standards and repurchase requirements associated with the sale of mortgage loans; the interpretation of or changes to tax, labor and environmental laws which could have a greater impact on our effective tax rate or the value of our deferred tax assets than we anticipate; economic changes nationally or in our local markets, including inflation, deflation, changes in consumer confidence and preferences and the state of the market for homes in general; legal or regulatory proceedings or claims; our ability to generate sufficient cash flow in order to successfully implement our capital allocation priorities; required accounting changes; terrorist acts and other acts of war; the negative impact of the COVID-19 pandemic on our financial position and ability to continue our Homebuilding or Financial Services activities at normal levels or at all in impacted areas; the duration, effect and severity of the COVID-19 pandemic; the measures that governmental authorities take to address the COVID-19 pandemic which may precipitate or exacerbate one or more of the above-mentioned and/or other risks and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period of time; and other factors of national, regional and global scale, including those of a political, economic, business and competitive nature. See PulteGroup's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and other public filings with the Securities and Exchange Commission (the "SEC") for a further discussion of these and other risks and uncertainties applicable to our businesses. PulteGroup undertakes no duty to update any forward-looking statement, whether as a result of new information, future events or changes in PulteGroup's expectations.

About PulteGroup

PulteGroup, Inc. (NYSE: PHM), based in Atlanta, Georgia, is one of America's largest homebuilding companies with operations in more than 40 markets throughout the country. Through its brand portfolio that includes Centex, Pulte Homes, Del Webb, DiVosta Homes, American West and John Wieland Homes and Neighborhoods, the company is one of the industry's most versatile homebuilders able to meet the needs of multiple buyer groups and respond to changing consumer demand. PulteGroup's purpose is building incredible places where people can live their dreams.

For more information about PulteGroup, Inc. and PulteGroup's brands, go to pultegroup.com; www.pulte.com; www.centex.com; www.delwebb.com; www.divosta.com; www.jwhomes.com; and www.americanwesthomes.com. Follow PulteGroup, Inc. on Twitter: @PulteGroupNews.

PulteGroup, Inc.

Consolidated Statements of Operations

($000's omitted, except per share data)

(Unaudited)



Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Revenues:

Homebuilding

Home sale $ 3,235,379 $ 2,472,029 $ 5,831,889 $ 4,693,532 revenues

Land sale and 33,076 26,950 60,235 45,877 other revenues

3,268,455 2,498,979 5,892,124 4,739,409

Financial 91,029 94,802 197,150 149,352 Services

Total revenues 3,359,484 2,593,781 6,089,274 4,888,761



HomebuildingCost of Revenues:

Home sale cost (2,375,495 ) (1,880,209 ) (4,311,130 ) (3,575,074 ) of revenues

Land sale andother cost of (31,195 ) (20,041 ) (55,831 ) (35,055 ) revenues

(2,406,690 ) (1,900,250 ) (4,366,961 ) (3,610,129 )



FinancialServices (40,411 ) (34,378 ) (80,086 ) (69,327 ) expenses

Selling,general, and (272,286 ) (196,858 ) (543,973 ) (460,527 ) administrativeexpenses

Loss on debt - - (61,469 ) - retirement

Goodwill - - - (20,190 ) impairment

Other expense, (624 ) (5,286 ) (3,259 ) (7,810 ) net

Income before 639,473 457,009 1,033,526 720,778 income taxes

Income tax (136,074 ) (108,389 ) (226,020 ) (168,447 ) expense

Net income $ 503,399 $ 348,620 $ 807,506 $ 552,331



Per share:

Basic earnings $ 1.91 $ 1.29 $ 3.04 $ 2.03

Diluted $ 1.90 $ 1.29 $ 3.03 $ 2.03 earnings

Cash dividends $ 0.14 $ 0.12 $ 0.28 $ 0.24 declared



Number ofshares used in calculation:

Basic 262,099 268,324 263,744 269,167

Effect ofdilutive 648 701 627 960 securities

Diluted 262,747 269,025 264,371 270,127

PulteGroup, Inc.

Condensed Consolidated Balance Sheets

($000's omitted)

(Unaudited)

June 30,2021

December 31,2020

ASSETS

Cash and equivalents

$

1,663,270

$

2,582,205

Restricted cash

57,852

50,030

Total cash, cash equivalents, and restricted cash

1,721,122

2,632,235

House and land inventory

8,378,951

7,721,798

Land held for sale

38,574

27,962

Residential mortgage loans available-for-sale

581,150

564,979

Investments in unconsolidated entities

44,800

35,562

Other assets

1,020,518

923,270

Intangible assets

153,464

163,425

Deferred tax assets

143,441

136,267

$

12,082,020

$

12,205,498

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:

Accounts payable

$

441,826

$

511,321

Customer deposits

730,995

449,474

Deferred tax liabilities

115,519

103,548

Accrued and other liabilities

1,436,251

1,407,043

Financial Services debt

352,627

411,821

Notes payable

2,046,334

2,752,302

5,123,552

5,635,509

Shareholders' equity

6,958,468

6,569,989

$

12,082,020

$

12,205,498

PulteGroup, Inc.

Condensed Consolidated Balance Sheets

($000's omitted)

(Unaudited)

June 30, December 31, 2021 2020



ASSETS



Cash and equivalents $ 1,663,270 $ 2,582,205

Restricted cash 57,852 50,030

Total cash, cash equivalents, and restricted 1,721,122 2,632,235 cash

House and land inventory 8,378,951 7,721,798

Land held for sale 38,574 27,962

Residential mortgage loans available-for-sale 581,150 564,979

Investments in unconsolidated entities 44,800 35,562

Other assets 1,020,518 923,270

Intangible assets 153,464 163,425

Deferred tax assets 143,441 136,267

$ 12,082,020 $ 12,205,498



LIABILITIES AND SHAREHOLDERS' EQUITY



Liabilities:

Accounts payable $ 441,826 $ 511,321

Customer deposits 730,995 449,474

Deferred tax liabilities 115,519 103,548

Accrued and other liabilities 1,436,251 1,407,043

Financial Services debt 352,627 411,821

Notes payable 2,046,334 2,752,302

5,123,552 5,635,509

Shareholders' equity 6,958,468 6,569,989

$ 12,082,020 $ 12,205,498

PulteGroup, Inc.

Consolidated Statements of Cash Flows

($000's omitted)

(Unaudited)

Six Months Ended

June 30,

2021

2020

Cash flows from operating activities:

Net income

$

807,506

$

552,331

Adjustments to reconcile net income to net cash from operating activities:

Deferred income tax expense

4,781

49,661

Land-related charges

3,254

12,181

Loss on debt retirement

61,469

-

Goodwill impairment

-

20,190

Depreciation and amortization

35,407

31,538

Share-based compensation expense

21,603

16,682

Other, net

(2,922

)

(975

)

Increase (decrease) in cash due to:

Inventories

(632,647

)

101,766

Residential mortgage loans available-for-sale

(16,384

)

114,139

Other assets

(85,049

)

(3,772

)

Accounts payable, accrued and other liabilities

235,050

(85,869

)

Net cash provided by (used in) operating activities

432,068

807,872

Cash flows from investing activities:

Capital expenditures

(31,547

)

(36,746

)

Investments in unconsolidated entities

(15,920

)

(664

)

Distributions of capital from unconsolidated entities

10,500

13,619

Business acquisition

(10,400

)

(83,256

)

Other investing activities, net

(17

)

1,597

Net cash provided by (used in) investing activities

(47,384

)

(105,450

)

Cash flows from financing activities:

Repayments of notes payable

(797,395

)

(10,106

)

Borrowings under revolving credit facility

-

700,000

Repayments under revolving credit facility

-

(700,000

)

Financial Services borrowings (repayments), net

(59,193

)

(70,214

)

Stock option exercises

11

99

Share repurchases

(353,703

)

(95,676

)

Cash paid for shares withheld for taxes

(10,607

)

(14,853

)

Dividends paid

(74,910

)

(65,332

)

Net cash provided by (used in) financing activities

(1,295,797

)

(256,082

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

(911,113

)

446,340

Cash, cash equivalents, and restricted cash at beginning of period

2,632,235

1,251,456

Cash, cash equivalents, and restricted cash at end of period

$

1,721,122

$

1,697,796

Supplemental Cash Flow Information:

Interest paid (capitalized), net

$

11,606

$

3,206

Income taxes paid (refunded), net

$

154,658

$

5,865

PulteGroup, Inc.

Consolidated Statements of Cash Flows

($000's omitted)

(Unaudited)

Six Months Ended

June 30,

2021 2020

Cash flows from operating activities:

Net income $ 807,506 $ 552,331

Adjustments to reconcile net income to net cash from operating activities:

Deferred income tax expense 4,781 49,661

Land-related charges 3,254 12,181

Loss on debt retirement 61,469 -

Goodwill impairment - 20,190

Depreciation and amortization 35,407 31,538

Share-based compensation expense 21,603 16,682

Other, net (2,922 ) (975 )

Increase (decrease) in cash due to:

Inventories (632,647 ) 101,766

Residential mortgage loans available-for-sale (16,384 ) 114,139

Other assets (85,049 ) (3,772 )

Accounts payable, accrued and other 235,050 (85,869 ) liabilities

Net cash provided by (used in) operating 432,068 807,872 activities

Cash flows from investing activities:

Capital expenditures (31,547 ) (36,746 )

Investments in unconsolidated entities (15,920 ) (664 )

Distributions of capital from unconsolidated 10,500 13,619 entities

Business acquisition (10,400 ) (83,256 )

Other investing activities, net (17 ) 1,597

Net cash provided by (used in) investing (47,384 ) (105,450 ) activities

Cash flows from financing activities:

Repayments of notes payable (797,395 ) (10,106 )

Borrowings under revolving credit facility - 700,000

Repayments under revolving credit facility - (700,000 )

Financial Services borrowings (repayments), (59,193 ) (70,214 ) net

Stock option exercises 11 99

Share repurchases (353,703 ) (95,676 )

Cash paid for shares withheld for taxes (10,607 ) (14,853 )

Dividends paid (74,910 ) (65,332 )

Net cash provided by (used in) financing (1,295,797 ) (256,082 ) activities

Net increase (decrease) in cash, cash (911,113 ) 446,340 equivalents, and restricted cash

Cash, cash equivalents, and restricted cash 2,632,235 1,251,456 at beginning of period

Cash, cash equivalents, and restricted cash $ 1,721,122 $ 1,697,796 at end of period



Supplemental Cash Flow Information:

Interest paid (capitalized), net $ 11,606 $ 3,206

Income taxes paid (refunded), net $ 154,658 $ 5,865

PulteGroup, Inc.

Segment Data

($000's omitted)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

HOMEBUILDING:

Home sale revenues

$

3,235,379

$

2,472,029

$

5,831,889

$

4,693,532

Land sale and other revenues

33,076

26,950

60,235

45,877

Total Homebuilding revenues

3,268,455

2,498,979

5,892,124

4,739,409

Home sale cost of revenues

(2,375,495

)

(1,880,209

)

(4,311,130

)

(3,575,074

)

Land sale and other cost of revenues

(31,195

)

(20,041

)

(55,831

)

(35,055

)

Selling, general, and administrative expenses ("SG&A")

(272,286

)

(196,858

)

(543,973

)

(460,527

)

Loss on debt retirement

-

-

(61,469

)

-

Goodwill impairment

-

-

-

(20,190

)

Other expense, net

(1,460

)

(5,286

)

(3,998

)

(7,759

)

Income before income taxes

$

588,019

$

396,585

$

915,723

$

640,804

FINANCIAL SERVICES:

Income before income taxes

$

51,454

$

60,424

$

117,803

$

79,974

CONSOLIDATED:

Income before income taxes

$

639,473

$

457,009

$

1,033,526

$

720,778

OPERATING METRICS:

Gross margin % (a)(b)

26.6

%

23.9

%

26.1

%

23.8

%

SG&A % (a)

(8.4

)

%

(8.0

)

%

(9.3

)

%

(9.8

)

%

Operating margin % (a)

18.2

%

16.0

%

16.7

%

14.0

%

PulteGroup, Inc.

Segment Data

($000's omitted)

(Unaudited)



Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

HOMEBUILDING:

Home sale $ 3,235,379 $ 2,472,029 $ 5,831,889 $ 4,693,532 revenues

Land sale and 33,076 26,950 60,235 45,877 other revenues

TotalHomebuilding 3,268,455 2,498,979 5,892,124 4,739,409 revenues



Home sale cost (2,375,495 ) (1,880,209 ) (4,311,130 ) (3,575,074 ) of revenues

Land sale andother cost of (31,195 ) (20,041 ) (55,831 ) (35,055 ) revenues

Selling,general, andadministrative (272,286 ) (196,858 ) (543,973 ) (460,527 ) expenses ("SG&A")

Loss on debt - - (61,469 ) - retirement

Goodwill - - - (20,190 ) impairment

Other expense, (1,460 ) (5,286 ) (3,998 ) (7,759 ) net

Income before $ 588,019 $ 396,585 $ 915,723 $ 640,804 income taxes



FINANCIAL SERVICES:

Income before $ 51,454 $ 60,424 $ 117,803 $ 79,974 income taxes



CONSOLIDATED:

Income before $ 639,473 $ 457,009 $ 1,033,526 $ 720,778 income taxes





OPERATING METRICS:

Gross margin % 26.6 % 23.9 % 26.1 % 23.8 %(a)(b)

SG&A % (a) (8.4 ) % (8.0 ) % (9.3 ) % (9.8 ) %

Operating 18.2 % 16.0 % 16.7 % 14.0 %margin % (a)

(a)

As a percentage of home sale revenues

(b)

Gross margin represents home sale revenues minus home sale cost of revenues

(a) As a percentage of home sale revenues

(b) Gross margin represents home sale revenues minus home sale cost of revenues

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Home sale revenues

$

3,235,379

$

2,472,029

$

5,831,889

$

4,693,532

Closings - units

Northeast

497

260

814

570

Southeast

1,175

1,104

2,229

2,032

Florida

1,692

1,380

3,112

2,590

Midwest

1,042

808

1,881

1,516

Texas

1,519

1,194

2,744

2,322

West

1,307

1,191

2,496

2,280

7,232

5,937

13,276

11,310

Average selling price

$

447

$

416

$

439

$

415

Net new orders - units

Northeast

475

383

1,083

831

Southeast

1,364

1,095

2,925

2,236

Florida

2,203

1,488

4,607

3,173

Midwest

1,300

896

2,861

1,915

Texas

1,459

1,431

3,351

2,940

West

1,521

1,229

3,347

2,922

8,322

6,522

18,174

14,017

Net new orders - dollars

$

4,258,133

$

2,677,074

$

8,888,450

$

5,945,823

Unit backlog

Northeast

1,222

850

Southeast

3,036

2,069

Florida

5,149

2,889

Midwest

3,179

1,939

Texas

3,660

2,468

West

3,810

2,999

20,056

13,214

Dollars in backlog

$

9,849,743

$

5,788,096

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)



Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020



Home sale revenues $ 3,235,379 $ 2,472,029 $ 5,831,889 $ 4,693,532



Closings - units

Northeast 497 260 814 570

Southeast 1,175 1,104 2,229 2,032

Florida 1,692 1,380 3,112 2,590

Midwest 1,042 808 1,881 1,516

Texas 1,519 1,194 2,744 2,322

West 1,307 1,191 2,496 2,280

7,232 5,937 13,276 11,310

Average selling $ 447 $ 416 $ 439 $ 415 price



Net new orders - units

Northeast 475 383 1,083 831

Southeast 1,364 1,095 2,925 2,236

Florida 2,203 1,488 4,607 3,173

Midwest 1,300 896 2,861 1,915

Texas 1,459 1,431 3,351 2,940

West 1,521 1,229 3,347 2,922

8,322 6,522 18,174 14,017

Net new orders - $ 4,258,133 $ 2,677,074 $ 8,888,450 $ 5,945,823 dollars



Unit backlog

Northeast 1,222 850

Southeast 3,036 2,069

Florida 5,149 2,889

Midwest 3,179 1,939

Texas 3,660 2,468

West 3,810 2,999

20,056 13,214

Dollars in backlog $ 9,849,743 $ 5,788,096

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

MORTGAGE ORIGINATIONS:

Origination volume

5,296

4,474

10,004

8,344

Origination principal

$

1,811,523

$

1,436,103

$

3,376,191

$

2,649,370

Capture rate

85.8

%

86.8

%

86.9

%

86.8

%

PulteGroup, Inc.

Segment Data, continued

($000's omitted)

(Unaudited)



Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

MORTGAGE ORIGINATIONS:

Origination volume 5,296 4,474 10,004 8,344

Origination $ 1,811,523 $ 1,436,103 $ 3,376,191 $ 2,649,370 principal

Capture rate 85.8 % 86.8 % 86.9 % 86.8 %

Supplemental Data

($000's omitted)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Interest in inventory, beginning of period

$

193,352

$

213,425

$

193,409

$

210,383

Interest capitalized

31,476

39,686

66,103

79,599

Interest expensed

(39,395

)

(45,169

)

(74,079

)

(82,040

)

Interest in inventory, end of period

$

185,433

$

207,942

$

185,433

$

207,942

PulteGroup, Inc.Reconciliation of Non-GAAP Financial Measures(Unaudited)

This report contains information about our operating results reflecting certain adjustments, including net income, diluted earnings per share ("EPS"), operating margin, and debt-to-capital ratio. These measures are considered non-GAAP financial measures under the SEC's rules and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measures. We believe that reflecting these adjustments provides investors relevant and useful information for evaluating the comparability of financial information presented and comparing our profitability and liquidity to other companies in the homebuilding industry. Although other companies in the homebuilding industry report similar information, the methods used may differ. We urge investors to understand the methods used by other companies in the homebuilding industry to calculate these measures and any adjustments thereto before comparing our measures to those of such other companies.

The following tables set forth a reconciliation of the non-GAAP financial measures to the GAAP financial measures that management believes to be most directly comparable ($000's omitted, except per share data):

Supplemental Data

($000's omitted)

(Unaudited)



Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020



Interest ininventory, $ 193,352 $ 213,425 $ 193,409 $ 210,383 beginning ofperiod

Interest 31,476 39,686 66,103 79,599 capitalized

Interest expensed (39,395 ) (45,169 ) (74,079 ) (82,040 )

Interest ininventory, end of $ 185,433 $ 207,942 $ 185,433 $ 207,942 period

PulteGroup, Inc.Reconciliation of Non-GAAP Financial Measures(Unaudited)

This report contains information about our operating results reflecting certain adjustments, including net income, diluted earnings per share ("EPS"), operating margin, and debt-to-capital ratio. These measures are considered non-GAAP financial measures under the SEC's rules and should be considered in addition to, rather than as a substitute for, the comparable GAAP financial measures. We believe that reflecting these adjustments provides investors relevant and useful information for evaluating the comparability of financial information presented and comparing our profitability and liquidity to other companies in the homebuilding industry. Although other companies in the homebuilding industry report similar information, the methods used may differ. We urge investors to understand the methods used by other companies in the homebuilding industry to calculate these measures and any adjustments thereto before comparing our measures to those of such other companies.

The following tables set forth a reconciliation of the non-GAAP financial measures to the GAAP financial measures that management believes to be most directly comparable ($000's omitted, except per share data):

Adjusted EPS

Three Months Ended

Results of Operations June 30, Classification 2021 2020



Net income, as reported $ 503,399 $ 348,620

Adjustments to income before income taxes:

Insurance adjustments SG&A (46,215 ) (60,662 )

Severance expense SG&A * 10,328

Income tax effect of the Income tax expense 11,323 12,347 above items

Tax benefit Income tax expense (12,078 ) *

Adjusted net income $ 456,429 $ 310,633



EPS (diluted), as $ 1.90 $ 1.29 reported

Adjusted EPS (diluted) $ 1.72 $ 1.15

Adjusted Operating Margin

Three Months Ended

June 30,

2021

2020

Home sale revenues

$

3,235,379

$

2,472,029

Gross margin (a)

$

859,884

26.6

%

$

591,820

23.9

%

SG&A, as reported

$

272,286

8.4

%

$

196,858

8.0

%

Adjustments:

Insurance adjustments

46,215

1.4

%

60,662

2.5

%

Severance expense

*

*

(10,328

)

(0.4

)

%

Adjusted SG&A

$

318,501

9.8

%

$

247,192

10.0

%

Operating margin, as reported (b)

18.2

%

16.0

%

Adjusted operating margin (c)

16.7

%

13.9

%

*Item not meaningful for the period presented

(a) Gross margin represents home sale revenues minus home sale cost of revenues

(b) Operating margin represents gross margin less SG&A

(c) Adjusted operating margin represents gross margin less adjusted SG&A

Adjusted Operating Margin

Three Months Ended

June 30,

2021 2020



Home sale revenues $ 3,235,379 $ 2,472,029



Gross margin (a) $ 859,884 26.6 % $ 591,820 23.9 %



SG&A, as reported $ 272,286 8.4 % $ 196,858 8.0 %

Adjustments:

Insurance adjustments 46,215 1.4 % 60,662 2.5 %

Severance expense * * (10,328 ) (0.4 ) %

Adjusted SG&A $ 318,501 9.8 % $ 247,192 10.0 %



Operating margin, as reported 18.2 % 16.0 %(b)

Adjusted operating margin (c) 16.7 % 13.9 %



*Item not meaningful for the period presented

(a) Gross margin represents home sale revenues minus home sale cost of revenues

(b) Operating margin represents gross margin less SG&A

(c) Adjusted operating margin represents gross margin less adjusted SG&A

Debt-to-Capital Ratios

June 30,2021

December 31,2020

Notes payable

$

2,046,334

$

2,752,302

Shareholders' equity

6,958,468

6,569,989

Total capital

$

9,004,802

$

9,322,291

Debt-to-capital ratio

22.7

%

29.5

%

Notes payable

$

2,046,334

$

2,752,302

Less: Total cash, cash equivalents, and

restricted cash

(1,721,122

)

(2,632,235

)

Total net debt

$

325,212

$

120,067

Shareholders' equity

6,958,468

6,569,989

Total net capital

$

7,283,680

$

6,690,056

Net debt-to-capital ratio

4.5

%

1.8

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210727005265/en/

CONTACT: Company Contact Investors: Jim Zeumer (404) 978-6434 jim.zeumer@pultegroup.com