PulteGroup Inc. (NYSE:PHM) reported first-quarter results on Thursday that fell slightly short of analyst expectations, as the homebuilder faced margin pressure driven by higher incentives in a challenging housing market.
The company posted earnings of $1.79 per share, below the consensus estimate of $1.82. Revenue came in at $3.3 billion, missing forecasts of $3.39 billion and declining 12% from $3.7 billion a year earlier.
Shares were little changed in premarket trading, rising 0.04% following the release.
Lower pricing and incentives weigh on profitability
PulteGroup closed 6,102 homes during the quarter, down 7% year-on-year, with the average selling price falling 5% to $542,000.
Home sale gross margin narrowed to 24.4%, compared with 27.5% in the same period last year, reflecting increased incentives aimed at reducing excess speculative inventory in a competitive market.
Selling, general, and administrative expenses totaled $380 million, or 11.5% of home sale revenue, up from 10.5% a year earlier.
Orders and backlog show resilience
Despite the softer top-line performance, net new orders rose 3% to 8,034 homes, valued at $4.6 billion, compared with 7,765 homes worth $4.5 billion in the prior-year period.
The company operated an average of 1,043 communities, up 9% year-on-year. Backlog stood at 10,427 homes valued at $6.5 billion at the end of the quarter.
“Our first quarter results reflect PulteGroup’s ability to successfully navigate current market conditions as we work to meet buyer demand, turn our assets and drive high returns,” said Ryan Marshall, President and CEO. “Within a demand environment impacted by domestic and global dynamics, we see a consumer with concerns about affordability and the economy, but still desirous of homeownership.”
Investment and shareholder returns
During the quarter, PulteGroup invested $1.3 billion in land acquisition and development and returned $360 million to shareholders through $308 million in share repurchases and dividends.
The board also approved an additional $1.5 billion for its share buyback program, bringing total authorization to $2.1 billion.
PulteGroup ended the quarter with $1.8 billion in cash and a debt-to-capital ratio of 12.3%.