PULTEGROUP INC/MI/ (PHM)·Q4 2024 Earnings Summary

Executive Summary

• Q4 delivered strong top-line and EPS growth: total revenues $4.92B (+23% YoY) and diluted EPS $4.43, aided by higher closings, ASP, and a $255M pre-tax insurance benefit ($0.93 per share) .
• Home sale gross margin compressed to 27.5% (Q3: 28.8%, Q2: 29.9%) on higher incentives and rising land costs, while SG&A leverage was unusually low at 4.2% due to insurance benefits .
• Orders were stable YoY (6,167 units; +4% dollars to $3.51B), backlog declined to 10,153 units ($6.49B), and mix shifted toward move-up (raising ASP) .
• Capital returns accelerated: $320M buybacks in Q4, a $1.5B increase to repurchase authorization (remaining $2.1B), and dividend up 10% to $0.22; balance sheet leverage at 11.8% gross, net debt negative .
• 2025 setup: management guides Q1 gross margin ~27%, FY gross margin 25–27% (structurally 26.5–27% assuming flat incentives), closings ~31,000 for FY, Q1 6,400–6,800; key near-term catalyst is spring selling season and buyback capacity .

What Went Well and What Went Wrong

What Went Well

• Record Q4 and FY results; CEO: “record-setting year,” with ~$18B FY revenues, $3.1B net income, ROE 27.5% TTM .
• ASP increased 6% to $581K, closings +6% to 8,103; mix skewed to move-up supported pricing vs guide .
• Strong capital returns and authorization: $1.4B returned in 2024, $1.5B authorization increase to $2.1B remaining; since 2013, over 50% of shares repurchased .

What Went Wrong

• Gross margin down sequentially and YoY (27.5% vs 28.8% in Q3, 28.9% in Q4’23) as incentives rose and land costs inflated ~10% YoY .
• Backlog fell 16% units and 11% dollars YoY (to 10,153 units/$6.49B), with first-time buyer orders -14% amid affordability constraints .
• Spec inventory elevated (53% of production; ~1.9 finished spec per community), requiring pricing discipline to normalize to 40–45% by YE 2025 .

Financial Results

Segment and Regional Details

Key KPIs

Balance Sheet and Capital Returns

• Cash $1.65B; debt-to-capital 11.8%; net debt-to-capital -0.3% .
• Q4 buybacks: $320M at $129.90/sh; FY buybacks $1.2B (10.1M shares, 4.7% outstanding) .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “PulteGroup’s strong fourth quarter financial results completed a record-setting year… nearly $18 billion in revenues and net income of $3.1 billion, while generating a return on equity of 27.5%.” — Ryan Marshall .
• “We are managing our starts activity… targeting our total spec inventory to be between 40% and 45% of our total units under production.” — Ryan Marshall .
• “Based on our current production pipeline, we expect to deliver 31,000 closings in 2025 including between 6,400 and 6,800 closings in the first quarter.” — Robert Shaughnessy .
• “Land costs are up about 10% year-over-year… [gross margin guide] includes a flat incentive from the exit from Q4.” — Robert Shaughnessy .
• “We will not be margin proud and will find pricing to make sure our standing inventory moves.” — Ryan Marshall .

Q&A Highlights

• Gross margin walk: Q1 ~27%, Q2–Q4 25–27%; structural view 26.5–27% assuming flat incentives and pricing; land +10% YoY, house costs low single-digit .
• Incentives vary by buyer type: richer for first-time/government loans; lower for move-up/active adult with smaller/no mortgages .
• Spec strategy: already pulled back starts in Q4; plan to reduce spec % toward 40–45% by YE; spec can be advantageous in supply shocks .
• Regional/affordability: Midwest/Northeast resilient; Texas weaker on first-time demand; Florida sign-ups flat; focus on spring season .
• Capital returns/leverage: no fixed leverage target; $1.5B authorization increase; discipline continues, tender optionality; net debt below zero .

Estimates Context

• We attempted to retrieve S&P Global consensus estimates for PHM’s Q4 2024 revenue and EPS, but SPGI returned rate-limit errors; therefore, estimate comparisons are unavailable for this recap. We recommend revisiting once access is restored to quantify beats/misses versus consensus [GetEstimates errors].

Key Takeaways for Investors

• Strong quarter with EPS $4.43, revenue $4.92B, ASP strength and higher closings; reported figures benefited from a $255M insurance gain .
• Margin compression is the central watch item; management’s 2025 margin framework (Q1 ~27%, FY 25–27%) hinges on flat incentives and ASP mix—spring selling season is the key catalyst .
• Elevated spec (53%) will be actively reduced; pricing discipline and selective starts should temper standing inventory risk while protecting ROIC .
• Cost inflation (land +10%) and affordability pressures (mortgage >7%) are headwinds; ASP +3% and operational improvements (cycle times) targeted to offset .
• Capital return runway is sizable (remaining authorization $2.1B; dividend $0.22); with net debt negative and robust cash flows, buybacks are a potential stock support .
• Regional mix matters: resilience in Midwest/Northeast vs first-time softness in Texas; Florida stable sign-ups—monitor orders and incentives by region in spring .
• Active Adult margin tailwind likely a 2026 story as replacement communities ramp mid/late 2025 .

Additional Source Documents for Q4 2024

• Q4 earnings press release (financials, segment data): .
• Form 8-K 2.02 (press release and exhibits): .
• Share repurchase authorization increase: .
• Earnings call transcript (prepared remarks and Q&A): .
• Prior quarters’ press releases for trend analysis (Q3, Q2): .