PulteGroup, Inc. (NYSE: PHM) on Tuesday morning reported net income of $167 million, or $0.59 per share for its first quarter ended March 31, compared to $171 million, or $0.59 per share in the prior year quarter. Analysts polled by Dow Jones were expecting a gain of $0.47 per share.
Home sale revenues for the first quarter increased 2% to $1.9 billion. The increase in revenue for the period was driven by a 2% increase in average selling price to $421,000. The company closed 4,635 homes in the quarter which is a slight increase from the prior year. Home sale gross profit for the quarter was $457 million, or 23.4% of home sale revenues, compared with prior year gross profit of $452 million, or 23.6% of home sale revenues.
SG&A expense for the first quarter was $253 million, or 13.0% of home sale revenues. SG&A expense for the prior year was $241 million, or 12.6% of home sale revenues. Operating margin for the period decreased by 50 basis points to 10.5%.
For the quarter, the company reported net new orders of 6,463 homes, valued at $2.7 billion, compared with prior year net new orders of 6,875 homes valued at $2.9 billion. For the first quarter, the company operated out of 858 communities, which was an increase of 2% over the first quarter of 2018.
The company ended the first quarter with a backlog of 10,550 homes valued at $4.6 billion. Prior year first quarter backlog totaled 11,245 homes valued at $5.0 billion. The average sales price in backlog was $438,000, compared with $441,000 in the prior year.
PulteGroup’s financial services operations generated pretax income of $12 million, compared with pretax income of $14 million in 2018. Consistent with recent trends, higher production volumes were offset by more competitive market conditions that impacted pricing. Mortgage capture rate for the first quarter improved to 80%, up from 78% last year.
The company ended the quarter with $1.1 billion of cash. During the quarter, the company repurchased 0.9 million common shares for $25 million, or an average price of $27.16 per share.
“Helped by the recent decline in mortgage rates, home buyers have been steadily returning to the market after a period of slowing demand that began in the second half of 2018,” said Ryan Marshall, president and CEO of PulteGroup. “In addition to the strong financial results PulteGroup delivered in the quarter, we view the significant increase in consumer traffic into our communities as an important indicator of the overall health of the housing industry.”
“Given the very positive macroeconomic backdrop, we continue to maintain a constructive view on the overall housing cycle and are pleased with our competitive position in the markets in which we operate,” added Marshall.
