PulteGroup, Inc.

Good morning. My name is Julie and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2021 Pulte Group, Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. Jim Sumer, you may begin your conference.

Great. Thank you, Julie, and good morning. I want to welcome you to Pulte Group's earnings call for our third quarter ended September 30th, 2021. Joining me to discuss Pulte Group's strong third quarter results are Ryan Marshall, President and CEO, Bob O'Shaughnessy, Executive Vice President and CFO, Jim Osowski, Senior VP Finance. A copy of this morning's earnings release and the presentation slides that accompany today's call have been posted to our corporate website at PulteGroup.com. We'll also post an audio replay of this call later today. As always, I want to alert everyone that today's presentation includes forward-looking statements about the company's expected future performance. Actual results could differ materially from those suggested by our comments made today. The most significant risk factors that could affect future results are summarized as part of today's earnings release within the accompanying presentation slides. These risk factors and other key information are detailed in our SEC filings, including our annual and quarterly reports. Now let me turn the call over to Ryan. Ryan?

Thanks, Jim, and good morning. I look forward to speaking with you today about Pulte Group's third quarter operating and financial results. In this morning's press release, you read that our home sale revenues in the third quarter increased by 18% over last year to $3.3 billion, while our gross margin expanded 200 basis points to 26.5%. In combination, top-line growth and margin expansion helped drive higher earnings per share of $1.82. This is an increase of 36% over the prior year's third quarter adjusted earnings of $1.34 per share. Inclusive of these strong third quarter numbers through the first nine months of 2021, our home sale revenues are up 22% to $9.2 billion, while our reported earnings per share are up 36% to $4.85. The resulting strong cash flow being generated by our operations continues to put our company in an enviable position in which we can invest in our business, return funds to shareholders, and still maintain outstanding balance sheet strength and overall liquidity. More specifically, consistent with our constructive view on the housing market, we have invested $2.9 billion in land acquisition and development so far this year. Our $2.9 billion of land spend is comparable to what we invested for the full year in both 2020 and in the pre-pandemic year of 2019, and we remain fully on track to invest approximately $4 billion in total for the full year of 2021. I would highlight that while we were investing more into the business, we remained disciplined and focused on building a more efficient and lower-risk land pipeline. At the end of the third quarter, our lots under option had grown to 54% of our total controlled lot position. Compared to when I set the initial 50% option target, we have over 65,000 more lots under option and now view 50% as the floor rather than the ceiling in terms of how we control our land assets. Consistent with our capital allocation priorities, along with investing $948 million more in land acquisition and development, through the first nine months of 2021 compared with last year. We have also returned $726 million to shareholders through share repurchases and dividends and have paid off nearly $800 million in debt this year, leaving us with a net debt-to-capital ratio of only 5.7%. Finally, consistent with our strategic focus, our operating and financial performance has helped drive a return on equity of 26% for the trailing 12 months. Just like the broader economy, our operations continue to be impacted by the pandemic. On one hand, we are managing through the disruptions COVID-19 and the Delta variant have inflicted on our workforce, our trade partners, and the global supply chain. On the other hand, our results have certainly benefited from the remarkable demand and pricing environment the home building industry has experienced over the past 18 months. Either way, to deliver our third quarter numbers during a global pandemic and with a supply chain that is clearly struggling reflects the commitment and tireless efforts of the entire Pulte Group team. Since we updated our production guidance in early September, broader industry comments have validated the challenges within the construction supply chain are significant and don't have any quick fixes. Based on a myriad of calls and questions we have received, I think it's hard for everyone to appreciate the full magnitude of the issues we're facing when you're not dealing with them on a day-to-day basis. For some products, it's simply the materials aren't available. Sometimes you can switch to an alternative, but when you can't, you wait. For others, it's changing lead times where order fulfillment has gone from six weeks to 16 weeks, back to 11 weeks, and then back to 16 weeks. And for others, it's seeing allocations being imposed as manufacturers and distributors do their best to keep their major customers, which I would note we are one, at least partially satisfied. Our local divisions may not get much advance notice of the shortage and resulting allocations, so we have to adjust on the fly. In other cases, it's logistics. When you're forced to ship materials to solve near-term issues, this might be shipping siding from the southeast to the southwest or our trades driving across the state for paint. In one form or another, these issues impacted our third quarter results, and as Bob will detail, we'll put additional pressure on our deliveries and margins in the fourth quarter. As difficult and frustrating as this is, I can say that our suppliers have been outstanding partners and routinely bend over backwards to get us the materials we need to solve our issues. I can say that we've been clear with our teams that we have to over-communicate with customers to keep them informed of any schedule changes. We also have to be flexible and creative in sourcing materials, even if this means spending additional dollars to acquire needed resources. And finally, we must maintain our standards on the quality and completeness of each home that we deliver. Given the varied problems impacting the supply chain, we would expect that solutions will be found over different timelines depending on the supplier's underlying issue. In the interim, we will adjust our production estimates for the fourth quarter and work to position the business for more consistent cadence in the year ahead. We will also continue to work in close partnership with our suppliers to manage through the supply chain issues as quickly and as intelligently as possible. Now let me turn the call over to Bob for a detailed review of our third quarter results.