PulteGroup, Inc.

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pulte Group Inc. Q1 2023 Earnings Conference Call. Today's conference is being recorded. 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 1 again. At this time, I would like to turn the conference over to Jim Zumer, Vice President of Investor Relations. Please go ahead.

Great. Thank you, Audra. Good morning. I want to thank everyone for joining today's call. As you read in this morning's press release, Volta Group had an exceptional first quarter, and we are excited to discuss our operating and financial results. Participating on today's call are Brian Marshall, President and CEO, Bob O'Shaughnessy, Executive Vice President, CFO, and Jim Osowski, Senior Vice President, 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 post an audio replay of this call later today. As noted in this morning's earnings release, to be more consistent with industry reporting practices, effective with our first quarter 2023 reporting, the company has reclassified closing cost incentives from cost of sales to net revenues for all periods presented. This reclassification impacted the company's reported home sale revenues and associated average sales price, as well as home sale gross margin and SG&A percentages, but had no impact on reported earnings. An analysis of the impacts on the current quarter and comparable prior year period is included in this morning's press release and can be found in our web class slides associated with today's call. Our comments today reflect these changes for all periods referenced. Also, I want to inform everyone that today's discussion includes forward-looking statements about the company's expected future performance. Actual results could differ materially from those suggested by our comments 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. Now, let me turn the call over to Ryan. Ryan?

Thanks, Jim, and good morning. Based on the improving demand dynamics we experienced in the fourth quarter of last year, we were cautiously optimistic heading into 2023. I am extremely pleased to report that the market momentum that began building in Q4 continue to expand into the first quarter of 2023. Today's stronger market conditions, combined with actions implemented by our outstanding field teams to enhance our competitive position, helped drive our strong first quarter results that included a 15% growth in home sale revenues, a 100 basis point increase in operating margin, and a 28% increase in earnings per share. Among the actions we've taken has been to increase our production of spec homes, a strategy we began implementing in the back half of 2022. As discussed in previous earnings calls, we made the decision to increase spec starts as we saw the opportunity to realize a number of strategic benefits within our home building operations. With more units in production, we can better meet buyer demand as more consumers are seeking quick move-in homes as a hedge against rising mortgage rates. By maintaining a level of spec starts, we can commit to a more consistent start cadence. This is particularly valuable in today's environment when negotiating with our trades and suppliers. Keeping units in production allows us to turn assets more efficiently, which is critical to delivering high returns over the housing cycle. The importance of having an appropriate inventory of spec homes available can be seen in our first quarter sign-ups, which on a gross basis increased 1% over last year to 8,900 homes. Of these signups, almost 60% were spec sales, so the decision to increase spec starts was the right one. That said, I want to be clear that our strategy is to keep starts directionally in alignment with market demands. We believe this balanced approach is consistent with Holti's historic business practices and allows us to turn our assets while maintaining a better margin profile. Our first quarter results show that we are successfully executing against this strategy as we realize strong sales while still delivering exceptional gross margins of 29.1%. You've heard me say that we won't be margin proud, but we also won't sacrifice profits if we don't have to. By being more measured in our starts cadence, we can meet buyer demand while not oversupplying the market. Case in point, we ended the first quarter with 1,500 fewer specs in production than we started the quarter. This gives us flexibility to maintain or increase production volumes, which in today's market is an important lever when working with trades and suppliers. As it relates to overall housing demand, home sales are benefiting from recent declines in mortgage rates, but I also think just having a general sense of stability in rates is important to consumer confidence. Given improvements in demand conditions and the broader interest rate environment, as well as a generally limited inventory of existing homes, we are starting to see the pressure on selling prices ease in many of our markets. In fact, in well over half our markets, we have found opportunities to pull back on incentives and or move prices higher in many of our communities. While the price changes are modest, it demonstrates the point that people desire homeownership and are willing to buy when they see a value. Earlier this month, there was an article in the Wall Street Journal that looked at the housing shortage in this country. The article raised the point that depending upon which expert you ask, the housing shortage ranges from 2 million to 7 million houses. While there are certainly debates about the number, I think there is broad agreement that we have a housing shortage. I believe this is one of the reasons homebuyers are quick to respond when affordability pressures can be eased. Before turning the call over to Bob, let me take a minute to address impacts on credit availability given recent disruptions in the banking industry, particularly among the regional banks. The short answer is that we have not experienced any disruptions. On the mortgage side, we are advantaged by having a captive financial services operation that routinely originates mortgages for between 75% to 80% of Pulte homebuyers that require financing. On the project side, big builders such as Pulte Group self-fund or have access to capital that smaller builders typically cannot match. In the end, it may be that recent disturbances in the banking sector may create opportunities for Pulte Group to put its more than $2 billion in total liquidity to work. I am very proud of our team, as Pulte Group delivered exceptional operating and financial results in the quarter. I'm also highly encouraged by the improving demand conditions we've been experiencing over the past two quarters. And I would add that buyer demand has remained strong through the first few weeks of April. While we have and will continue to take steps to best position Pulte Group for success within today's changing market dynamics, we remain measured and disciplined in our actions. From production rates and land spend to overheads and share repurchases, We remain focused on delivering performance over the long term. Now let me turn the call over to Bob for a detailed review of the quarter.