PulteGroup, Inc.

Good morning, my name is Abby and I'll be your conference operator today. At this time, I would like to welcome everyone to the Pulte Group Incorporated Q1 2022 earnings conference call. Today's conference is being recorded and 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 would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one once again. Thank you, and Jim Zoomer, you may begin your conference.

Great, thank you, Abby. Good morning. Thanks, everyone, for participating in today's call to discuss Pulte Group's first quarter earnings for the period ended May 31, 2022. Q1 represents another quarter of strong financial results and has gotten the year off to a great start for us. I'm joined on today's call by Ryan Marshall, President and CEO, Bob O'Shaughnessy, Executive Vice President, CFO, Jim Osowski, CNAVP Finance. A copy of our earnings release and this morning's presentation slides have been posted to our corporate website at PulteGroup.com. We'll also post an audio replay of this call later today. Please note that as part of this morning's call, we will review our prior year results as reported and as adjusted to exclude the impact of a $61 million pre-tax charge associated with a bond tender and a $10 million pre-tax insurance benefit recorded in the period. A reconciliation of prior year adjusted results and reported financial results is included in this morning's release and within today's webcast slides. We encourage you to review these tables to assist in your analysis of our business performance. I also 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 and within the accompanying presentation slides. These risk factors and other key information are detailed in our ICC filings, including our annual and quarterly reports. Now let me turn the call over to Ryan Marshall.

Ryan? Thanks Jim and good morning. As Bob will detail shortly, Pulte Group delivered outstanding first quarter financial results with year-over-year growth of 18% home sale revenues and 43% in adjusted earnings per share. The significant increase in our Q1 earnings per share reflects gains in a number of areas including higher selling prices, expanded gross margins, increased overhead leverage, and our active share repurchase program. Pulte Group's first quarter financial results are just the most recent in a string of strong quarters that have raised our return on equity to 29.4% for the trailing 12 months. There is a lot for investors to be excited about in terms of the company's operating and financial performance. Taking a step back from the specifics of our Q1 financial results, I think it's fair to say that the supply-demand dynamics of the first quarter were consistent with the trends the industry has been experiencing for the past year or more. In short, demand was strong, available inventory was scarce, and the incoming supply is limited. Let me take a minute to expand on these thoughts. On the demand side, consumer interest in purchasing a new home remained high throughout the quarter. With few exceptions, demand was strong across all the price points, buyer groups, and markets that we serve. The US housing market continues to benefit from favorable demographics, a strong economy, an outstanding job market, and a rising wage environment. New home sales are also benefiting from ongoing and significant increases in rental rates for single and multifamily dwellings. According to John Burns Real Estate Consulting, their numbers indicate that rental prices for single-family homes increased by upwards of 5% in 2021, while multifamily lease rates were up by approximately 13% over the prior year. Forecasts point to further increases in 2022. Even with today's higher prices and rising rates, owning a home can still make clear economic sense for many consumers. Not only can homebuyers get a comparable or even lower monthly payment, but that payment is more stable over time. Given this demand strength, in the first quarter, we were able to raise prices in effectively all of our communities with sequential price increases in the range of 1% to 5% common across the country. In addition to the fundamental strength in home buyer demand, home price appreciation is benefiting from a lack of available inventory in both new and resale. Similar to buying a new car these days, people who are actively shopping for a home understand how competitive the market is. This brings me to the supply side of the equation. As demonstrated by our first quarter results, our teams did an outstanding job advancing our homes through the construction process, and even surpass the high end of our closing guidance. I want to recognize the efforts of our home building operations to manage through the constraints in the availability of people and materials that are impacting everything from land entitlement and development to home construction. Depending on the specific market, the availability of labor and materials has, at best, remained the same, but in certain areas conditions have gotten a little worse and build cycles have gotten longer. Given these challenging conditions, our production timelines extended by about one week in the first quarter and now stand at 145 to 150 days in most of our divisions. With only a couple of days remaining in April, unless dynamics change dramatically in the next couple of weeks, which does not look likely, any improvement in the supply chain would provide a more meaningful benefit to 2023 production. Bob's comments will include us reaffirming our guide for expected 2022 deliveries of 31,000 homes, and I would highlight that this guidance assumes that the availability of labor and materials does not change for better or worse. With our production cycles remaining extended, we continue to tightly control sales in most of our communities across the country. We appreciate these restrictions can be frustrating for consumers, but it is the right strategic decisions given overall conditions. From both the customer experience and a business risk perspective, it doesn't make sense to extend our backlog out a year or more just to record another signup. Even with all of these challenges, I want to highlight that we started almost 9,000 homes in the first quarter and that we now have approximately 5,200 spec homes in production. The majority of these homes are in the initial start and framing stages, that we would expect these houses to deliver in the back half of 2022. As we've noted on prior calls, our spec production is largely focused in our entry-level communities. In sum, I think it's fair to say that housing demand remains strong, home prices continue to rise, and the supply of new construction homes coming to market is constrained. That being said, the Federal Reserve has been very clear in signaling that interest rates are going higher as they seek to control inflation that has hit 40-year highs. There are a lot of favorable market dynamics that can support ongoing buyer demand in the face of higher rates, but the Fed is intent on slowing down the economy, and this certainly has the potential to impact the housing industry. Given this dynamic, it makes sense for us to take actions to position our business for continued success. For now, this means focusing on our land acquisition practices. Internally, we are committed to increasing our optioned lot position and have set a goal of having 65 to 70% of our future land pipeline controlled under option. Our disciplined land investment process helped us to place some great land positions under control over the past several years and will be closing on in 2022. Going forward, we will continue our thoughtful approach to investing in the business and will be prepared to make adjustments in response to changing market conditions. We certainly expect that our land teams can continue to identify tremendous land opportunities, but we want to make sure that only the best projects ultimately get approved. Now let me turn the call to Bob for additional comments on our first quarter. Bob?