PulteGroup, Inc. (NYSE: PHM) announced today financial results for its first quarter ended March 31, 2016. For the quarter, the Company reported net income of $83 million, or $0.24 per share, compared with prior year net income of $55 million, or $0.15 per share.
"PulteGroup has gotten off to a strong start in 2016, with increased investment driving growth in the business as the value of net new orders increased 24% to $2.1 billion and our backlog expanded by 31% to $3.4 billion," said Richard J. Dugas, Jr., Chairman and CEO of PulteGroup. "We continued to deliver strong margin performance through our focus on better community locations, strategic pricing and construction efficiencies, while enhancing our overall liquidity and maintaining a superior balance sheet that gives us the flexibility to capitalize on market opportunities as they develop."
"Looking to the broader housing market, we remain pleased with overall demand and expect new home sales will continue to move higher over the coming years as the industry benefits from an improving economy, ongoing employment and wage gains, low interest rates, a limited supply of homes and the gradual release of pent-up demand," added Dugas. "We believe our business is extremely well positioned to be successful in this type of operating environment given our disciplined investment practices and focus on investing in high returning projects."
Home sale revenues for the first quarter were $1.4 billion, an increase of 28% over the prior year. Higher revenues for the quarter were driven by a 17% increase in closings to 3,945 homes in combination with a 9% increase in average selling price to $353,000.
Home sale gross margin for the quarter was 21.9%, in line with Company guidance. Margins for the period were reduced by approximately 80 basis points associated with the Company's recent purchase of substantially all of the assets of John Wieland Homes and Neighborhoods.
Homebuilding SG&A expense for the period was $191 million, or 13.7% of home sale revenues, compared with $161 million, or 14.8% of home sale revenues, in the prior year.
"Our SG&A increased due to our investment in the incremental workforce necessary to manage the 41% increase in homes we have under construction and the $4 million of transaction costs associated with the Wieland transaction, but has importantly decreased 110 basis points as a percentage of revenue as we gained overhead leverage due to the increase in our deliveries this quarter," said Bob O'Shaughnessy, Executive Vice President and CFO. "We expect a slight decline in our quarterly SG&A spend through the balance of 2016, and currently project our full year SG&A to be approximately $730 million, or approximately 10% of our revenues."
For the quarter, the dollar value of net new orders increased 24% over the prior year to $2.1 billion, while net new orders increased 10% to 5,652 homes. For the quarter, the Company operated out of 709 communities, which represents an increase of 16% over last year. Community count for the quarter included 49 communities acquired as part of the Wieland transaction. Excluding the acquired Wieland communities, absorption paces in the first quarter were comparable with the prior year quarter.
PulteGroup's backlog at quarter end totaled 8,755 homes valued at $3.4 billion, compared with prior year backlog of 7,624 homes valued at $2.6 billion. The average sales price in backlog of $384,000, which is up 14% over the prior year, reflects the ongoing shift in the mix of homes sold toward more move-up product, as well as the inclusion of luxury homes offered in Wieland communities.