PulteGroup, Inc.

Ladies and gentlemen, good morning. 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 third 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 a second time. Thank you, and I will now turn the conference over to Mr. Jim Zumer, Vice President of Investor Relations. Mr. Zumer, you may begin.

Great. Thank you, Abby. We appreciate everyone joining today's call to discuss Polter Group's third quarter operating and financial results. As detailed in this morning's earnings release, Pulte Group delivered another quarter of strong earnings as we continue to capitalize on our competitive strengths and balanced approach to the business. Joining me on today's call to discuss our Q3 results are Ryan Marshall, President and CEO, Bob O'Shaughnessy, Executive Vice President and CFO, and Jim Osowski, Senior Vice President, Finance. A copy of our earnings release and this morning's presentation slides have been posted this call later today. We 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. 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. As we will discuss over the next several minutes, Pulte Group reported another quarter of outstanding, and for a number of key metrics, record financial results. Our financial performance demonstrates once again the importance of Pulte Group's balanced and differentiated operating model. Leveraging our broad geographic footprint and diversified product offering, We are working to maintain significant market share among all major buyer groups. At the same time, we are successfully executing both large-scale spec and build-to-order home building businesses. Our spec business allows us to more cost-efficiently serve first-time buyers, while our build-to-order business caters to move-up and active adult buyers looking to personalize their home location and design features. Specific to our financial results, I am extremely proud of our entire organization for their efforts in delivering third quarter results that include a 43% increase in orders, industry-leading gross margins of 29.5%, record third quarter earnings of $2.90 per share, and a return on equity that exceeded 30%. In the quarter, I would highlight our active adult business as an important contributor to our sign-up growth and our gross margin performance. In an operating environment where rising mortgage rates are creating increasing affordability challenges, 47% of our Delaware purchasers were cash buyers. This is up from 33% just two years ago. Along with largely being cash buyers, these are customers who can afford the premium lots and upgrades that make Active Adult our highest margin business. Just to demonstrate the brand power of the Del Webb name, in June, we opened Del Webb Kensington Ridge in Michigan, not a market you might consider a hotspot for retirees. In a community where base home prices range from $370,000 to north of $600,000, we have already sold 114 houses in just over 100 days. We fully appreciate that to some degree, all buyers are impacted by rising rates and macroeconomic concerns, but buyer groups can absolutely behave differently over the course of a housing cycle. For Pulte Group, we believe being diversified across all buyer groups can enhance both growth and stability. Beyond your diversification across buyer groups, Multigroup's strong third quarter financial performance also benefited from our ability to offer consumers both spec-built and build-to-order homes. As we have discussed on prior calls over the past 24 months, we have transitioned our first-time buyer communities to a spec-build model to better serve these customers. Looking at our first-time business, spec-building allows us to maintain a more consistent cadence of start which drives construction efficiencies and is important in working with our trades. More directly to our quarter, having additional inventory available was important given 49% of our sales in the period were spec sales. I would note that 49% spec sales in the quarter is down from 58% in Q1 of this year. I think the decrease in the relative percentage of spec sales in the quarter reflects two interesting dynamics. On one hand, affordability challenges caused by higher interest rates are pushing some buyers particularly first-time buyers to the sidelines for now on the other hand more affluent buyers who are less fearful about rates are comfortable contracting for a home where they've selected the lot the floor plan and the design options on the construction side i'm pleased to say that we continue to shorten our production cycle just to remind people Pre-COVID, our production cycle was approximately 90 work days. At its worst, this number ballooned to 170 days. By the end of the quarter, we had reduced this number to about 140 days. Our teams continue to shave days and weeks off our build cycle, and we remain optimistic about our ability to get back below 100 days in 2024. As you would expect, cutting more than a month off of our cycle time has positively impacted our cash flow, which we continue to allocate across our key business priorities. Through the first nine months of 2023, we have invested $3 billion in our business through land acquisition and development. Over this same period, we have returned over $800 billion to shareholders through share repurchases and dividends. In this most recent quarter, we even took advantage of market conditions to retire $65 million at prices just below par. Multigroup has delivered outstanding operating and financial performance in the quarter and throughout the first nine months of the year, as we have leveraged our strong competitive position to capitalize on buyer demand. It grows increasingly clear that Federal Reserve actions to raise interest rates are having the desired effect of slowing the economy, although the speed of deceleration has been slower than expected given the unprecedented ramp in rates. While arguably not the most supportive economic backdrop, new home demand in 2023 has benefited from a robust jobs market and rising wages, financially resilient consumers, and a continuing dearth of supply from the existing home market. And finally, as higher rates begin to bite, we responded with adjustments in product, pricing, and incentive programs that successfully address consumers' biggest pain point, affordability. It's difficult to know if the Fed has done hiking rates for this economic cycle, and trying to guess when they will move to cut rates is challenging. So we will remain disciplined in how we manage our business. We'll focus on serving our customers, supporting our employees, turning our assets, and allocating capital appropriately while maintaining a strong and highly flexible capital position. Now let me turn the call over to Bob for a detailed analysis of our Q3 results.