Revenues Totaled
Net Orders Up 2% to 3,997; Net Order Value Expanded 7% to
“We produced solid results in our 2024 second quarter, with our key metrics above the high end of our guidance ranges,” said
“Our business is generating substantial cash flows, and we are continuing our balanced approach in allocating this capital, focused on both expanding our scale and returning cash to our stockholders. In the 2024 second quarter, we significantly increased our investment in land acquisition and development, repurchased additional shares and raised our quarterly dividend. With a healthy expansion in our owned and controlled lot count, as well as our planned community openings, we are confident we are well positioned for future growth,” concluded Mezger.
Three Months Ended
-
Revenues totaled
$1.71 billion , compared to$1.77 billion . - Homes delivered were 3,523, compared to 3,666.
-
Average selling price increased to
$483,000 , up from$479,500 . -
Homebuilding operating income totaled
$188.2 million , compared to$202.1 million . The homebuilding operating income margin was 11.1%, compared to 11.5%. Excluding total inventory-related charges of$1.2 million for the current quarter and$4.3 million for the year-earlier quarter, the homebuilding operating income margin was 11.1%, compared to 11.7%.- The housing gross profit margin of 21.1% was even with the year-earlier quarter. Excluding the above-mentioned inventory-related charges, the housing gross profit margin was 21.2%, compared to 21.4%.
- Selling, general and administrative expenses as a percentage of housing revenues were 10.1%, compared to 9.6%, mainly reflecting higher costs including marketing and other expenses associated with the Company’s planned increase in its community count during the year to position its operations for growth.
-
Financial services pretax income rose 16% to
$13.3 million , partly due to increased equity in income of the Company’s mortgage banking joint venture. This was largely driven by a higher volume of both interest rate locks and loan originations, as 86% of the buyers financing their home purchases in the current quarter used the joint venture, up from 80%. -
Total pretax income, which included a
$12.5 million gain associated with the sale of a privately held technology company in which the Company held an ownership interest, increased to$221.1 million , compared to$214.9 million . -
Net income rose 2% to
$168.4 million . Diluted earnings per share grew 11% to$2.15 , reflecting the higher net income and the favorable impact of the Company’s common stock repurchases over the past several quarters.- The effective tax rate was 23.8%, compared to 23.5%.
Six Months Ended
-
Revenues totaled
$3.18 billion , compared to$3.15 billion . - Homes delivered of 6,560 were up 2%.
-
Average selling price was
$481,700 , compared to$486,000 . -
Net income increased 6% to
$307.1 million . -
Diluted earnings per share were up 16% to
$3.91 .
Backlog and
-
Net orders for the quarter increased 2% to 3,997. Net order value rose 7% to
$2.03 billion , reflecting the growth in net orders and a higher average selling price of those orders.- Monthly net orders per community increased to 5.5 from 5.2.
- The cancellation rate as a percentage of gross orders improved to 13%, compared to 22%.
-
The Company’s ending backlog homes of 6,270 and ending backlog value of
$3.12 billion were down 14% and 10%, respectively. The year-over-year decreases narrowed for the fourth consecutive quarter. - The Company’s average community count for the quarter was down 4% to 243, and ending community count was essentially flat at 247. On a sequential basis, the ending community count expanded 4%.
Balance Sheet as of
-
The Company had total liquidity of
$1.73 billion , including$643.5 million of cash and cash equivalents and$1.08 billion of available capacity under its unsecured revolving credit facility, with no cash borrowings outstanding. -
Inventories totaled
$5.34 billion , up 4%.-
The Company’s investments in land and land development for the six months ended
May 31, 2024 increased 64% to$1.26 billion , compared to$763.2 million for the year-earlier period. -
The Company’s lots owned or under contract grew 17% to 65,533, of which approximately 61% were owned and 39% were under contract. By comparison, approximately 73% of the Company’s total lots were owned and 27% were under contract as of
November 30, 2023 .
-
The Company’s investments in land and land development for the six months ended
-
Notes payable of
$1.70 billion were essentially unchanged. The Company’s debt to capital ratio improved 90 basis points to 29.8%, compared to 30.7%. -
Stockholders’ equity increased to
$3.99 billion , compared to$3.81 billion , mainly reflecting net income, partly offset by common stock repurchases and cash dividends.-
In
April 2024 , the Company’s board of directors approved an increase in the quarterly cash dividend on the Company’s common stock to$.25 per share from$.20 per share, and authorized the repurchase of up to$1.00 billion of the Company’s outstanding common stock, replacing a prior authorization. -
In the 2024 second quarter, the Company repurchased 764,742 shares of its outstanding common stock at a total cost of
$50.0 million , bringing its total repurchases in the 2024 first half to 1,591,405 shares at a total cost of$100.0 million , or$62.84 per share. As ofMay 31, 2024 , the Company had$950.0 million remaining under its current common stock repurchase authorization. -
Based on the Company’s 75.2 million outstanding shares as of
May 31, 2024 , book value per share of$53.08 increased 14% year over year.
-
In
Guidance
The Company is providing the following guidance for its 2024 full year:
-
Housing revenues in the range of
$6.70 billion to$6.90 billion . -
Average selling price in the range of
$485,000 to$495,000 . -
Homebuilding operating income as a percentage of revenues in the range of 11.0% to 11.4%, assuming no inventory-related charges.
- Housing gross profit margin in the range of 21.1% to 21.5%, assuming no inventory-related charges.
- Selling, general and administrative expenses as a percentage of housing revenues of approximately 10.1%.
- Effective tax rate of approximately 23.0%.
- Ending community count in the range of 250 to 255.
The Company plans to also provide guidance for its 2024 third quarter on its conference call today.
Conference Call
The conference call to discuss the Company’s 2024 second quarter earnings will be broadcast live TODAY at
About
Forward-Looking and Cautionary Statements
Certain matters discussed in this press release, including any statements that are predictive in nature or concern future market and economic conditions, business and prospects, our future financial and operational performance, or our future actions and their expected results are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations and projections about future events and are not guarantees of future performance. We do not have a specific policy or intent of updating or revising forward-looking statements. If we update or revise any such statement(s), no assumption should be made that we will further update or revise that statement(s) or update or revise any other such statement(s). Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The most important risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to the following: general economic, employment and business conditions; population growth, household formations and demographic trends; conditions in the capital, credit and financial markets; our ability to access external financing sources and raise capital through the issuance of common stock, debt or other securities, and/or project financing, on favorable terms; the execution of any securities repurchases pursuant to our board of directors’ authorization; material and trade costs and availability, including building materials and appliances, and delays related to state and municipal construction, permitting, inspection and utility processes, which have been disrupted by key equipment shortages; consumer and producer price inflation; changes in interest rates, including those set by the
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
For the Three Months and Six Months Ended (In Thousands, Except Per Share Amounts – Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Total revenues |
$ |
1,709,813 |
|
|
$ |
1,765,316 |
|
|
$ |
3,177,579 |
|
|
$ |
3,149,630 |
|
Homebuilding: |
|
|
|
|
|
|
|
||||||||
Revenues |
$ |
1,701,512 |
|
|
$ |
1,757,846 |
|
|
$ |
3,163,210 |
|
|
$ |
3,136,383 |
|
Costs and expenses |
|
(1,513,329 |
) |
|
|
(1,555,744 |
) |
|
|
(2,817,351 |
) |
|
|
(2,777,792 |
) |
Operating income |
|
188,183 |
|
|
|
202,102 |
|
|
|
345,859 |
|
|
|
358,591 |
|
Interest income and other |
|
19,449 |
|
|
|
1,729 |
|
|
|
25,306 |
|
|
|
2,196 |
|
Equity in income (loss) of unconsolidated joint ventures |
|
224 |
|
|
|
(313 |
) |
|
|
(221 |
) |
|
|
(1,070 |
) |
Homebuilding pretax income |
|
207,856 |
|
|
|
203,518 |
|
|
|
370,944 |
|
|
|
359,717 |
|
Financial services: |
|
|
|
|
|
|
|
||||||||
Revenues |
|
8,301 |
|
|
|
7,470 |
|
|
|
14,369 |
|
|
|
13,247 |
|
Expenses |
|
(1,473 |
) |
|
|
(1,472 |
) |
|
|
(3,019 |
) |
|
|
(2,830 |
) |
Equity in income of unconsolidated joint venture |
|
6,435 |
|
|
|
5,426 |
|
|
|
13,490 |
|
|
|
7,008 |
|
Financial services pretax income |
|
13,263 |
|
|
|
11,424 |
|
|
|
24,840 |
|
|
|
17,425 |
|
Total pretax income |
|
221,119 |
|
|
|
214,942 |
|
|
|
395,784 |
|
|
|
377,142 |
|
Income tax expense |
|
(52,700 |
) |
|
|
(50,500 |
) |
|
|
(88,700 |
) |
|
|
(87,200 |
) |
Net income |
$ |
168,419 |
|
|
$ |
164,442 |
|
|
$ |
307,084 |
|
|
$ |
289,942 |
|
Earnings per share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
2.21 |
|
|
$ |
2.00 |
|
|
$ |
4.02 |
|
|
$ |
3.49 |
|
Diluted |
$ |
2.15 |
|
|
$ |
1.94 |
|
|
$ |
3.91 |
|
|
$ |
3.38 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
75,653 |
|
|
|
81,764 |
|
|
|
75,773 |
|
|
|
82,607 |
|
Diluted |
|
77,806 |
|
|
|
84,306 |
|
|
|
78,034 |
|
|
|
85,141 |
|
CONSOLIDATED BALANCE SHEETS (In Thousands – Unaudited) |
|||
|
|
|
|
Assets |
|
|
|
Homebuilding: |
|
|
|
Cash and cash equivalents |
|
|
|
Receivables |
371,674 |
|
366,862 |
Inventories |
5,335,185 |
|
5,133,646 |
Investments in unconsolidated joint ventures |
64,319 |
|
59,128 |
Property and equipment, net |
89,228 |
|
88,309 |
Deferred tax assets, net |
114,475 |
|
119,475 |
Other assets |
119,453 |
|
96,987 |
|
6,737,870 |
|
6,591,483 |
Financial services |
67,810 |
|
56,879 |
Total assets |
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
Homebuilding: |
|
|
|
Accounts payable |
|
|
|
Accrued expenses and other liabilities |
720,622 |
|
758,227 |
Notes payable |
1,695,196 |
|
1,689,898 |
|
2,812,402 |
|
2,836,577 |
Financial services |
1,574 |
|
1,645 |
Stockholders’ equity |
3,991,704 |
|
3,810,140 |
Total liabilities and stockholders’ equity |
|
|
|
SUPPLEMENTAL INFORMATION
For the Three Months and Six Months Ended (In Thousands, Except Average Selling Price – Unaudited) |
|||||||||||||||
|
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Homebuilding revenues: |
|
|
|
|
|
|
|
||||||||
Housing |
$ |
1,701,512 |
|
|
$ |
1,757,846 |
|
|
$ |
3,159,638 |
|
|
$ |
3,136,383 |
|
Land |
|
— |
|
|
|
— |
|
|
|
3,572 |
|
|
|
— |
|
Total |
$ |
1,701,512 |
|
|
$ |
1,757,846 |
|
|
$ |
3,163,210 |
|
|
$ |
3,136,383 |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Homebuilding costs and expenses: |
|
|
|
|
|
|
|
||||||||
Construction and land costs |
|
|
|
|
|
|
|
||||||||
Housing |
$ |
1,342,102 |
|
|
$ |
1,386,558 |
|
|
$ |
2,486,529 |
|
|
$ |
2,469,379 |
|
Land |
|
— |
|
|
|
— |
|
|
|
2,101 |
|
|
|
— |
|
Subtotal |
|
1,342,102 |
|
|
|
1,386,558 |
|
|
|
2,488,630 |
|
|
|
2,469,379 |
|
Selling, general and administrative expenses |
|
171,227 |
|
|
|
169,186 |
|
|
|
328,721 |
|
|
|
308,413 |
|
Total |
$ |
1,513,329 |
|
|
$ |
1,555,744 |
|
|
$ |
2,817,351 |
|
|
$ |
2,777,792 |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Interest expense: |
|
|
|
|
|
|
|
||||||||
Interest incurred |
$ |
26,577 |
|
|
$ |
25,995 |
|
|
$ |
53,082 |
|
|
$ |
53,799 |
|
Interest capitalized |
|
(26,577 |
) |
|
|
(25,995 |
) |
|
|
(53,082 |
) |
|
|
(53,799 |
) |
Total |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Other information: |
|
|
|
|
|
|
|
||||||||
Amortization of previously capitalized interest |
$ |
29,189 |
|
|
$ |
31,932 |
|
|
$ |
55,692 |
|
|
$ |
58,068 |
|
Depreciation and amortization |
|
10,377 |
|
|
|
9,886 |
|
|
|
20,572 |
|
|
|
19,433 |
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Average selling price: |
|
|
|
|
|
|
|
||||||||
|
$ |
669,600 |
|
|
$ |
703,700 |
|
|
$ |
671,500 |
|
|
$ |
695,400 |
|
Southwest |
|
447,600 |
|
|
|
431,700 |
|
|
|
449,100 |
|
|
|
437,900 |
|
Central |
|
365,600 |
|
|
|
418,800 |
|
|
|
365,200 |
|
|
|
418,000 |
|
Southeast |
|
417,100 |
|
|
|
398,500 |
|
|
|
417,300 |
|
|
|
396,500 |
|
Total |
$ |
483,000 |
|
|
$ |
479,500 |
|
|
$ |
481,700 |
|
|
$ |
486,000 |
|
SUPPLEMENTAL INFORMATION
For the Three Months and Six Months Ended (Dollars in Thousands – Unaudited) |
|||||||||||
|
|
|
|
|
|
|
|
||||
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
Homes delivered: |
|
|
|
|
|
|
|
||||
|
|
1,043 |
|
|
802 |
|
|
1,871 |
|
|
1,588 |
Southwest |
|
712 |
|
|
778 |
|
|
1,429 |
|
|
1,314 |
Central |
|
1,028 |
|
|
1,302 |
|
|
1,898 |
|
|
2,237 |
Southeast |
|
740 |
|
|
784 |
|
|
1,362 |
|
|
1,315 |
Total |
|
3,523 |
|
|
3,666 |
|
|
6,560 |
|
|
6,454 |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
Net orders: |
|
|
|
|
|
|
|
||||
|
|
1,226 |
|
|
1,299 |
|
|
2,176 |
|
|
2,156 |
Southwest |
|
785 |
|
|
789 |
|
|
1,483 |
|
|
1,259 |
Central |
|
1,300 |
|
|
1,042 |
|
|
2,317 |
|
|
1,453 |
Southeast |
|
686 |
|
|
806 |
|
|
1,344 |
|
|
1,210 |
Total |
|
3,997 |
|
|
3,936 |
|
|
7,320 |
|
|
6,078 |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
Net order value: |
|
|
|
|
|
|
|
||||
|
$ |
902,483 |
|
$ |
870,149 |
|
$ |
1,535,883 |
|
$ |
1,405,688 |
Southwest |
|
362,788 |
|
|
345,340 |
|
|
677,651 |
|
|
522,732 |
Central |
|
485,824 |
|
|
365,213 |
|
|
849,747 |
|
|
504,681 |
Southeast |
|
280,808 |
|
|
318,947 |
|
|
550,813 |
|
|
468,416 |
Total |
$ |
2,031,903 |
|
$ |
1,899,649 |
|
$ |
3,614,094 |
|
$ |
2,901,517 |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
|
|
|
|
||||||||
|
Homes |
|
Value |
|
Homes |
|
Value |
||||
Backlog data: |
|
|
|
|
|
|
|
||||
|
|
1,850 |
|
$ |
1,304,955 |
|
|
1,855 |
|
$ |
1,224,334 |
Southwest |
|
1,433 |
|
|
652,578 |
|
|
1,637 |
|
|
695,613 |
Central |
|
1,686 |
|
|
615,228 |
|
|
2,205 |
|
|
889,379 |
Southeast |
|
1,301 |
|
|
549,374 |
|
|
1,589 |
|
|
647,367 |
Total |
|
6,270 |
|
$ |
3,122,135 |
|
|
7,286 |
|
$ |
3,456,693 |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In Thousands, Except Percentages – Unaudited)
This press release contains, and Company management’s discussion of the results presented in this press release may include, information about the Company’s adjusted housing gross profit margin, which is not calculated in accordance with generally accepted accounting principles (“GAAP”). The Company believes this non-GAAP financial measure is relevant and useful to investors in understanding its operations, and may be helpful in comparing the Company with other companies in the homebuilding industry to the extent they provide similar information. However, because it is not calculated in accordance with GAAP, this non-GAAP financial measure may not be completely comparable to other companies in the homebuilding industry and, thus, should not be considered in isolation or as an alternative to operating performance and/or financial measures prescribed by GAAP. Rather, this non-GAAP financial measure should be used to supplement the most directly comparable GAAP financial measure in order to provide a greater understanding of the factors and trends affecting the Company’s operations.
Adjusted Housing Gross Profit Margin
The following table reconciles the Company’s housing gross profit margin calculated in accordance with GAAP to the non-GAAP financial measure of the Company’s adjusted housing gross profit margin:
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Housing revenues |
$ |
1,701,512 |
|
|
$ |
1,757,846 |
|
|
$ |
3,159,638 |
|
|
$ |
3,136,383 |
|
Housing construction and land costs |
|
(1,342,102 |
) |
|
|
(1,386,558 |
) |
|
|
(2,486,529 |
) |
|
|
(2,469,379 |
) |
Housing gross profits |
|
359,410 |
|
|
|
371,288 |
|
|
|
673,109 |
|
|
|
667,004 |
|
Add: Inventory-related charges (a) |
|
1,210 |
|
|
|
4,287 |
|
|
|
2,508 |
|
|
|
9,576 |
|
Adjusted housing gross profits |
$ |
360,620 |
|
|
$ |
375,575 |
|
|
$ |
675,617 |
|
|
$ |
676,580 |
|
Housing gross profit margin |
|
21.1 |
% |
|
|
21.1 |
% |
|
|
21.3 |
% |
|
|
21.3 |
% |
Adjusted housing gross profit margin |
|
21.2 |
% |
|
|
21.4 |
% |
|
|
21.4 |
% |
|
|
21.6 |
% |
(a) Represents inventory impairment and land option contract abandonment charges associated with housing operations.
Adjusted housing gross profit margin is a non-GAAP financial measure, which the Company calculates by dividing housing revenues less housing construction and land costs excluding housing inventory impairment and land option contract abandonment charges (as applicable) recorded during a given period, by housing revenues. The most directly comparable GAAP financial measure is housing gross profit margin. The Company believes adjusted housing gross profit margin is a relevant and useful financial measure to investors in evaluating the Company’s performance as it measures the gross profits the Company generated specifically on the homes delivered during a given period. This non-GAAP financial measure isolates the impact that housing inventory impairment and land option contract abandonment charges have on housing gross profit margins, and allows investors to make comparisons with the Company’s competitors that adjust housing gross profit margins in a similar manner. The Company also believes investors will find adjusted housing gross profit margin relevant and useful because it represents a profitability measure that may be compared to a prior period without regard to variability of housing inventory impairment and land option contract abandonment charges. This financial measure assists management in making strategic decisions regarding community location and product mix, product pricing and construction pace.
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