PulteGroup announced financial results for its first quarter ended March 31, 2016. Net income was $83 million, or $0.24 per share, compared with prior year net income of $55 million, or $0.15 per share.
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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.
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.
Benefitting from increased closing volumes, the company's financial services operations reported pretax income of $10 million for the quarter, compared with pretax income of $5 million in the prior year. Mortgage capture rate for the quarter was 81% compared with 82% in the comparable prior year period.
The company's reported income tax expense of $35 million, which represents an effective tax rate of 29.5%, includes a reduction of approximately $10 million relating to the favorable resolution of certain state income matters.
The company currently estimates that its normalized tax rate for future quarters will be in line with its previous guidance of 38%.
The company ended the quarter with $1.0 billion of cash, of which $465 million will be used to retire bonds maturing in May 2016. On a pro forma basis, adjusting for the repayment of these bonds, the company's debt-to-total capital ratio falls to 35%, down from the 39% currently reported.
During the quarter, the company repurchased 3.1 million common shares for $50 million, or an average price of $16.36 per share. ■