PulteGroup, Inc.

Thank you for standing by and welcome to the Pulte Group's second quarter 2024 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'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. I'd now like to turn the call over to Jim Zoomer, Vice President of Investor Relations. You may begin.

Great. Thanks, Rob. I want to welcome everyone to Pulte Group's earnings call to discuss our strong financial performance for our second quarter ended June 30th, 2024. Here to review Pulte Group's Q2 results are Ryan Marshall, President and CEO, excuse me, Bob O'Shaughnessy, Executive Vice President and CFO, Jim Osowski, Senior Vice President of 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. 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. Now let me turn the call over to Ryan Marshall. Ryan?

Thanks, Jim, and thank you to everyone joining today's call. Multigroup delivered another quarter of strong financial results, which reflect an approach to the business in which we seek to balance price, pace, and investment over the long term to generate superior returns. Consistent with this strategy, our financial results continue to show the power of capitalizing on the value of each lot and home we sell. Our divisions work extremely hard to secure, entitle, and develop our land assets and work equally hard to generate exceptional profitability while still turning our portfolio at an appropriate rate. Specific to our second quarter performance, we realized a 2% increase in average sales price, an 8% increase in closings, and a 30 basis point gain in gross margin, which in aggregate helped drive a 19% increase in earnings to a second quarter record of $3.83 per share. Another quarter of overall strong financial performance highlighted by our double-digit earnings growth resulted in Pulte Group generating a return on equity of 27.1% for the trailing 12-month period. Obviously, a key driver of our strong financial results and high returns on invested capital continues to be the company's outstanding gross margins. As Bob will discuss, gross margins in the period benefited from a favorable mix of closings, but I would also highlight the pricing strength evident in our numbers. In Q2, product options and lot premiums averaged $104,000 per home and represented approximately 19% of our average sales price of $549,000. As I'm sure you can all appreciate, options and lot premiums are high margin dollars, and an important contributor to Pulte Group's outsized margins relative to peers. I know how hard our employees work to deliver such outstanding results, and I want to thank our entire organization for their efforts. As good as our second quarter numbers are, it's fair to say that as we navigated through the period, demand was a little less consistent than we experienced in the first quarter of 2024. On our Q1 earnings call, we noted buyer traffic had slowed the first few weeks of April. While subsequent Wall Street channel checks confirm the change in short-term demand, the fact remains that we are operating in a housing market that has been underbuilt relative to population, immigration, and household formation for more than a decade. The resulting housing deficit of several million homes is likely a structural reality for years to come, given the zoning challenges we face in most municipalities. Our country's underlying new home supply issue has been exacerbated by the lock-in effect caused by the dramatic rise in interest rates over the last two years. What the market continues to experience is existing homeowners who are unwilling, or more likely, unable to give up the low-rate mortgages originated several years ago. As a consequence, the inventory of quality existing homes remains below long-term averages in many markets. The supply imbalance is one of the reasons that I am confident in the long-term demand trends for housing in this country. But I do appreciate that buyer demand will fluctuate from quarter to quarter. For example, the bump in interest rates in the second quarter caused some buyers to become more cautious, while others saw affordability stretched beyond their financial capacity. While many cities are facing a limited supply of homes for sale, new home supply in select markets in Florida and Texas. These markets are now in the process of finding the new clearing price needed to work down any excess inventory. Maybe more impactful than rates and inventory, the feedback we are getting points to a lack of confidence among some consumers that now is a good time to buy. High prices, higher interest rates, and the resulting high monthly payments are making potential buyers more cautious in purchasing a new home. To the degree that this lack of confidence among consumers reflects affordability concerns, this isn't new. And in fact, it's something we address on a market by market, even community by community basis every day. It was more than a year ago that you first heard me say that delivering high returns requires that we turn our assets and that we won't be margin proud. In an environment where market conditions are more competitive, We have worked to ensure that our products, prices, and incentives are clearly meeting buyer needs. Consistent with this focus on turning our assets, we continue to build a more efficient and faster-turning land pipeline. In the quarter, lots controlled via option increased to 53% of total lots. We are successfully building on our historic base of lots optioned directly with the land sellers by increasing our use of third-party land bankers. We have entered into transactions representing almost 13,000 lots and $1.5 billion of capital. As with all land-related activities, we are being disciplined in how we expand this part of our portfolio, but we are making steady progress in assembling a more efficient land pipeline. As we sit here at the midpoint of 2024, I would say that it is shaping up to be a very good year for Holti. Relative to our expectations coming into 2024, not only did we raise our initial closing guide by 1,000 homes, but we are clearly on a gross margin path well above our initial guide. For various reasons, market conditions got a little tougher in the second quarter, but we continue to actively manage price, pace, and starts to drive the best business outcome. Based on the current demand conditions and construction cycle times, We continue to start homes at a pace consistent with closing 31,000 homes this year, as well as positioning the company to grow five to 10% in 2025, consistent with the multi-year outlook we have discussed previously. Through the first few weeks of July, traffic to our communities has been solid, but depending on how demand conditions and absorption paces evolve up or down in each market over the balance of the year, We will adjust our start to pace as needed. Now let me turn the call over to Bob for a review of our second quarter results.