PulteGroup, Inc.

Good morning, ladies and gentlemen. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the Pulte Group Incorporated second quarter 2023 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 that 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 I will now turn the conference over to Jim Zumer, Vice President of Investor Relations. You may begin.

Good morning. Thank you for joining today's call to discuss Holti Group's exceptional second quarter operating and financial results. Along with affirming the ongoing desire for homeownership and the strength of overall buyer demand, our second quarter numbers demonstrate the strategic value of Pulte Group's balanced and disciplined approach to the business. Joining me on today's call to discuss our Q2 results are Ryan Marshall, President and CEO, Bob O'Shaughnessy, Executive Vice President and CFO, Jim Osowski, Senior VP, Finance. A copy of our earnings release and this morning's presentation slides have been posted to our corporate website at PulteGroup.com. We will post an audio replay of this call later today. I want to inform everyone on today's call 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. 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. Let me turn the call over to Ryan Marshall.

Ryan? Thanks, Jim, and good morning. As you read in this morning's press release, Q2 was an outstanding quarter for Pulte Group as we posted strong financial results throughout our P&L balance sheet and cash flow statement. In fact, our second quarter revenues gross and operating margins and net income were at or approaching all-time highs for our second quarter. Our record financial performance in turn drove strong cash flows that helped raise our cash position to $1.8 billion while dropping our net debt to capital ratio to almost zero. I am really proud of our home building and financial services teams for delivering these great results, which are even more impressive given the variable market conditions we've operated in for the past 12 months. Within these complicated market dynamics, I believe Pulte Group's operating and financial success reflects the balanced and disciplined approach we take in running our home building business. We continue to successfully implement both a bill to order model that serves our MOVA and active adult buyers, in combination with a spec-based model primarily within our first-time buyer communities. Our spec production is most heavily weighted toward our Centex-branded communities, which operate under a managed spec production model. In other words, homes are started as spec, but we have aligned the start's cadence with our sales pace. Given Centex's focus on serving the needs of first-time buyers, our long-term plan is to maintain a spec-build model in these communities. By being more balanced across bill-to-order and spec production, we maintain a more consistent cadence of home starts, meet buyer demand more effectively, and we achieve the critical objective of turning our assets in support of higher returns. You can see the practical application of this managed approach in our Q2 numbers as specs total 36% of units under production at quarter end. Of these units, we average just over one finished spec per community, which is in line with our stated goal. Along with being balanced between our bill-to-order and spec production, we were appropriately diversified across all the buyer groups consistent with our long-term goal of having 40% first-time, 35% move-up, and 25% active adult. Why is this important? The different financial profiles associated with each buyer group can mean different responses to changing market dynamics, such as today's rising rate environment, which may hinder first-time buyers but be less of a headwind among active adult consumers. Being balanced across bill-to-order, spec, and buyer groups is also an important underpinning to the extremely high gross margins we've been able to maintain, more directly, We have enough production to meet buyer demand, but not so much that we are no longer selling from a position of strength. I think we've achieved the right mix as we increased orders and closings, all while two thirds of our divisions were still able to raise prices in the quarter. Along these same lines, we continue to see pricing opportunities within our core bill to order business that primarily serves our move up and active adult buyers. In our most recent quarter, options and lot premiums exceeded one hundred thousand dollars per home these are high margin dollars that are not as prevalent among first-time buyers and certainly were an important driver of the strong 29.6 percent gross margin we reported in q2 when the market started slowing in 2022 i said that we couldn't be margin proud but rather we had to find price and turn our assets delivering 24 growth in q2 orders And as Bob will detail, guiding to margins of 29% or better for the remainder of the year, we are achieving both high margins and high asset turns, which drove our 32% return on equity. Beyond the company-specific benefits we are realizing from how we run our business, we appreciate the favorable supply-demand dynamics resulting from the limited stock of existing houses available for sale. National Association of Realtors data for June showed seasonally adjusted existing home sales of 4.2 million, which is down a staggering 1 million homes from June of last year. As has been well reported, there are millions of existing homeowners who are sitting on low-rate mortgages established before the most recent cycle of Fed rate hikes. I recently saw an FHA graph that showed that more than 50% of current mortgage holders have a rate below 4%. I haven't seen any rate forecasts that show the country getting back to 4% mortgages anytime soon. So it's likely that existing homes remain in short supply for the foreseeable future. FHA data, along with mortgage rate forecasts, suggest that there may be an extended period during which mortgage rates stay above 5%, which likely prevents an oversupply of existing homes being released into the market. Through the first six months of 2023, we generated $1.3 billion of net income and $1.5 billion of cash flow from operations. As a result, we increased our cash position by almost $700 million, while returning almost $500 million to shareholders through share repurchases and dividends. I think these numbers clearly demonstrate the powerful results our company is delivering. With a backlog of $8.2 billion worth of homes to be built, improving cycle times, and a solid land supply, we are well positioned to deliver even stronger performance over the remainder of 2023. Now, let me turn the call over to Bob for a detailed review of the quarter. Bob?