PulteGroup, Inc.

Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Paltry Group Inc. Q2 2022 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 would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star one again. Thank you. Jim Zoomer, you may begin.

Great, thank you, Chris, and good morning. I appreciate everyone joining today to review our Pulte Group conference call to review our second quarter results for the period ended June 30th, 2022. Joining me to discuss Pulte Group's strong second quarter are Ryan Marshall, President and CEO, Bob O'Shaughnessy, Executive Vice President and CFO, Jim Osowski, Senior Vice President, 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. I want to highlight that in addition to reviewing our reported Q2 results, we will also be reviewing adjusted results for the second quarter of last year. Adjusted results exclude the impact of a $46 million pretax insurance benefit, as well as a tax benefit of $12 million resulting from a change in valuation allowances associated with state net operating loss carry forwards. A reconciliation of our adjusted results to our reported financials 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. 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 and within the accompanying presentation slides. These risk factors and other key information are detailed in our SEC filings, including our annual and quarterly reports. Thank you, and now let me turn the call over to Ryan. Ryan?

Thanks, Jim, and good morning. As you read in this morning's press release, Pulte Group delivered another quarter of exceptional and, in many cases, record-setting financial results. Led by price appreciation and a 430 basis point expansion in gross margin, our second quarter earnings of $2.73 per share increased by 44% and 59%, respectively, over last year's reported and adjusted earnings per share. Our strong earnings performance helped to further reduce our debt to capital ratio to below 21%, while raising our return on equity for the trailing 12 months to north of 30%. We have talked in the past about wanting to deliver high returns over the housing cycle and building the financial strength to safely navigate changing market conditions. I'm proud to say that we are accomplishing both. I would also note that consistent with our stated plans, We continue to return funds to shareholders, having repurchased an additional 3% of our shares during the quarter. As we approach the 10-year anniversary of reinstating our share repurchase program, I think it's worth noting that we have reduced our share count from roughly 387 million shares at the end of 2012 to the current 233 million shares, a decrease of almost 40%. Bob will detail the rest of the quarterly numbers, so let me spend some time reviewing the demand dynamics we experienced during the quarter. Between national housing data and Wall Street analyst surveys, I suspect my comments may only serve to reaffirm your understanding of the changing market conditions. It is clear that the 200 basis point increase in interest rates over the past several months finally caught up with consumers. After two years of meaningful home price appreciation, the jump in mortgage rates created sticker shock and pushed affordability out of reach for some first-time buyers. At the same time, rising inflation, falling consumer confidence, and the drumbeat of a possible recession caused some move-up buyers to hit the pause button. As for our active adult consumers, the drop in the stock market combined with the overall uncertainty has created some to slow their home search process as they wait for conditions to settle down. While demand has slowed, it is by no means stopped as we continue to work with buyers to sell homes. At the right price, where consumers see value, they remain engaged in the home buying process. Consumers who are in the market right now are obviously accepting of and making decisions based on current mortgage rates. What we are experiencing with these customers is that given the volatility in mortgage rates, a higher percentage of these buyers are interested in spec homes that can close in the coming 30 to 60 or even 90 days rather than building to order. Given the shorter time to close, buyers are using their own funds or available incentives to lock in a mortgage rate or buy the rate down to an acceptable level. In other words, during this period of rate volatility, Some buyers are willing to trade the opportunity to personalize the home for greater financial certainty. Reinforcing this point, I can tell you that the majority of incentives in the second quarter took the form of longer term rate locks or rate buy downs. Many of today's home buyers can still afford the price of a new home, but some need a little help on the rate or want the mortgage rate certainty for a home that will close later in the year. After 18 months of exceptional demand, we entered the second quarter with only 64 finished specs. And while we have successfully increased spec production to our historic range of 25 to 30% of units, we had a limited supply of quick move-in homes available. We have taken actions to improve our inventory position and now have specs that have advanced in the build process and will be available to sell and close in the third and fourth quarters of this year. During this period of interest rate volatility, our strategy is to start specs consistent with buyer demand. As market conditions evolve, we are prepared to continue starting specs, reemphasize build-to-order homes, or slow starts entirely as demand conditions warrant. The Fed has been clear in articulating their intention to fight inflation through higher rates, and we recognize the housing market has been and will continue to be impacted by these actions. While consumers are being understandably cautious, people still desire home ownership. Aging millennials still need homes, and there remains a long-term deficit in U.S. housing stock after years of underbuilding. Let me turn the call over to Bob for a review of our second quarter results.