PulteGroup, Inc.

Good morning and thank you for standing by. My name is Kelvin and I will be your conference operator today. At this time, I would like to welcome everyone to the Pulte Group Inc. Q1 2025 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 followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Jim Zimmer. Please go ahead.

Great, Calvin. Thank you. Good morning, and welcome to today's call. We look forward to discussing our first quarter operating and financial results. With me today are Ryan Marshall, President and CEO, and Jim Osowski, Executive Vice President and CFO. As always, a copy of our earnings release and this morning's presentation have been posted to our corporate website at PulseyGroup.com. We'll also post an audio replay of this call later today. I would highlight 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 colleagues 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. 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.

Thanks, Jim, and good morning. I appreciate the opportunity to speak with everyone today. In addition to discussing Pulte Group's Q1 results this morning, I will also share our views on the current macro environment and how our business model and execution against our strategic initiatives are helping us navigate today's evolving market conditions. Let me start by recognizing the incredible work our teams did in delivering Pulte Group's strong first quarter results. Given the cross-currents the housing industry has encountered in 2025, we believe our results show the value of Pulte Group's proven operating model, balanced portfolio, and the expertise of our local operating teams. In what proved to be a dynamic operating environment, we met or exceeded our guidance in delivering over 6,500 homes, gross margins of 27.5%, net income of $523 million, and most importantly, a trailing 12-month return on equity of 25.4%. As the country moves through economic cycles, the housing industry will inevitably encounter periods when we are experiencing changes in the operating environment. I truly believe that the balanced and highly diversified operating model that we have built over the past decade, in combination with our strategic focus on generating high returns over the housing cycle, offer importance competitive advantages. Our national footprint and strategy of serving all buyer groups with a targeted offering of spec and built-to-order homes, along with our broader capacity to use both price and or pays to drive returns, give our operators more flexibility when navigating periods of economic transition. In the back half of 2024, many of our meetings with analysts and investors included questions about housing demand and the state of the housing cycle. In response to these questions, we indicated that the spring selling season of 2025 would provide the best opportunity to assess the condition of today's home buying consumer. Having reached the midway point of the spring selling season, I wanted to provide a few thoughts on what we've experienced and how we are responding. First and foremost, I strongly believe people still aspire to home ownership, and if you can provide the right value equation, they are excited to get into a new home. We saw this as the first quarter progressed and demonstrated a typical seasonal pattern with traffic, gross orders, and net new orders trending higher as we moved through the quarter. Within the quarter, we also saw the level of home buying activity respond positively to the 30-year mortgage rate dropping below 7%, which allowed roughly 20% of our divisions to increase prices within many of our communities. Consistent with the relative strength we've seen among move up and active adult buyers over the past few quarters, we saw the average spend on options and lot premiums per home climb to $110,000 in Q1. This is up from the $102,000 and $107,000 in the first and fourth quarters respectively of last year. The financial strength of move up and active adult home buyers is why we have purposely aligned 60% of our portfolio to serve these key buyer groups. However, the quarter also saw consumers continuing to face affordability challenges that exist for would-be homebuyers in metro regions across the country. From the high absolute selling prices of today's homes to the resulting high monthly mortgage payments, consumers are struggling with the affordability challenges when it comes to purchasing a home. These headwinds have only been exacerbated recently by growing concerns about the potential for a slowing economy. As one of the nation's largest homebuilders, we have developed and deployed a variety of tools to help consumers overcome their personal homeownership hurdles. This includes offering new product designs and more efficient floor plans, as well as offering meaningful incentives, including programs that can offer consumers a below-market rate on a full 30-year fixed-rate mortgage. We leaned into incentives a little more heavily in the first quarter as we executed on our plan to reduce excess spec inventory by actively selling our in-process and finished spec inventory while also adjusting our start pace to better match current demand. As a result, our incentive rate increased 8% for the period, but we lowered specs to 47% of production down from 53% in the fourth quarter while still reporting strong gross margins of 27.5%. In sum, buyer interest and activity in the first quarter were directionally in line with our planning expectations heading into the period. As we've moved from March to April, however, we have seen consumers at all price points impacted by changing macro conditions and any resulting decline in overall consumer confidence. Whether it's the volatility in the stock market, concerns about tariff-induced inflation, fluctuation in interest rates or the growing talk of recession, demand in April has been more volatile and less predictable day-to-day. We can certainly empathize with our customers' concerns as our business is happy to adapt and manage through constantly changing and shifting tariff landscape, the potential costs of which could be significant. While our Q1 build costs were effectively flat on a year-over-year basis, Proposed tariffs have the potential to add thousands of dollars to the cost of construction. We are a builder with 75 years of experience and a resilient operating model, and as tariffs have been imposed or proposed, our cycle-tested procurement teams have developed and begin implementing response strategies. Let me now turn the call over to Jim Osowski. You will recall that in February, Jim officially assumed his responsibilities as Pulte Group's Chief Financial Officer. I'm excited to have him in his new role, and I know that our organization will benefit greatly from Jim's leadership and experience. After his remarks, I will offer some additional thoughts on how we plan to manage our business, given the current operating environment. Jim?