01—Abstract
Summary
Summary of the 10-K filed February 7, 2022. Cited figures are marked; the original filing is the authoritative source.
PulteGroup, Inc. (NYSE: PHM) reported a strong 2021 in its 10-K filed February 7, 2022.
Consolidated revenues rose to $13.93 billiona from $11.04 billion in 2020, and net income reached $1.95 billion, or $7.43 per diluted share, compared with $1.41 billion, or $5.18 per diluted share, a year earlier. Homebuilding closings increased 17% to 28,894 homes, the average selling price rose 8% to $463,000, and home sale gross margin improved to 26.4% from 24.3%. Net new orders rose 8% in units and 28% in dollars, and backlog ended the year at $9.9 billion (18,003 units), up 45% in dollars.
The filing also highlights ongoing headwinds. Management cited supply chain constraints, rising material prices (lumber more than quadrupled from mid-2020 to mid-2021), and skilled labor shortages in all markets, and noted that production cycle times have lengthened. Average active communities declined 9%b to 799 as the company closed out communities faster than it opened new ones, and management expects active communities to increase meaningfully in 2022.
The filing also flags rising interest rates and the COVID-19 pandemic as risks to future demand and operations. On capital, PulteGroup generated $1.00 billionc of operating cash flow but used $897.3 million to repurchase 17.7 million shares and $147.8 million for dividends. Unsecured senior notes outstanding totaled $2.0 billion, with the next maturity in March 2026, and the company had $1.8 billion of cash and $701.2 million available under its revolving credit facility.
The board increased the repurchase authorization by $1.0 billiond on January 31, 2022. The debt-to-total capitalization ratio, excluding Financial Services debt, was 21.3%.
02—Key points
Key Highlights
- Total revenues of $13.93 billion in 2021, up from $11.04 billion in 2020; homebuilding represented 97% of revenues.
- Net income of $1.95 billion, or $7.43 per diluted share, versus $1.41 billion, or $5.18 per diluted share, in 2020.
- Home closings rose 17% to 28,894 units; average selling price increased 8% to $463,000.
- Home sale gross margin improved to 26.4% from 24.3%, and the cancellation rate fell to 9% from 14%.
- Backlog reached $9.9 billion (18,003 units) at year-end, up 45% in dollars and 19% in units.
- Capital returns of $897.3 million in share repurchases and $147.8 million in dividends paid in 2021; repurchase authorization increased by $1.0 billion on January 31, 2022.
- Liquidity of $1.8 billion in cash and $701.2 million available under the revolving credit facility; debt-to-total capitalization (excluding Financial Services debt) was 21.3%.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 7, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $13.74B$11.04B | +24.5% |
| SG&A Expenses | $1.21B$1.01B | +19.5% |
| Interest Expense | $502K$4.25M | −88.2% |
| Net Income | $1.95B$1.41B | +38.3% |
| EPS (Basic) | $7.44$5.19 | +43.4% |
| EPS (Diluted) | $7.43$5.18 | +43.4% |
| Shares Outstanding (Basic) | 259.29M268.55M | −3.5% |
| Shares Outstanding (Diluted) | 259.93M269.41M | −3.5% |
05—Questions
Frequently Asked Questions
How did PulteGroup's profitability change in 2021?
Income before income taxes rose to $2.51 billion from $1.73 billion, and net income rose to $1.95 billion from $1.41 billion. Homebuilding income before taxes increased 48%, driven by higher revenues and gross margins and improved overhead management. The effective income tax rate was 22.5%, compared with 18.6% in 2020.
What are the main constraints on PulteGroup's operations?
The filing cites supply chain constraints, increases in building material prices, and shortages of skilled labor in all markets. These have lengthened production cycle times and led management to moderate lot releases and the pace of new orders in most communities. The company says it has generally been able to pass cost increases on to customers, though it cannot be certain it will continue to do so.
How much debt does PulteGroup carry and when does it mature?
Unsecured senior notes totaled $2.0 billion at December 31, 2021, with no repayments due until March 2026, when $500.0 million is scheduled to mature. The $1.0 billion revolving credit facility matures in June 2023, and no borrowings were outstanding under it at year-end. Pulte Mortgage had $626.1 million outstanding under its repurchase agreement, which matures July 28, 2022.
What is the company's outlook for active communities and demand?
Average active communities declined 9% to 799 in 2021 because the company closed out communities faster than it opened new ones. Management said it has increased land acquisition and development investment and expects active communities to increase meaningfully in 2022. It also stated that demand for new housing should remain strong through 2022, while noting uncertainty from rising mortgage rates, inflation, and the COVID-19 pandemic.
06—Continue