On this page of StockholderLetter.com we present the latest annual shareholder letter from PULTEGROUP INC/MI/ — ticker symbol PHM. Reading current and past PHM letters to shareholders can bring important insights into the investment thesis.

 •  3/14/2025 Letter Continued (Full PDF)
 •  3/21/2023 PHM Stockholder Letter
 •  3/22/2024 PHM Stockholder Letter
 •  More "General Contractors & Builders" Category Stockholder Letters
 •  PHM Benford's Law Stock Score = 95

PHM Shareholder/Stockholder Letter Transcript:

2024
ANNUAL
REPORT

About PulteGroup
PulteGroup, Inc. (NYSE: PHM), based in Atlanta, Georgia, is one of America   s largest homebuilding companies
with operations in more than 45 markets throughout the country. Through its brand portfolio that includes Centex,
Pulte Homes, Del Webb, DiVosta Homes, American West and John Wieland Homes and Neighborhoods, the
company is one of the industry   s most versatile homebuilders able to meet the needs of multiple buyer groups and
respond to changing consumer demand. PulteGroup   s purpose is building incredible places where people can live
their dreams.
For more information about PulteGroup, Inc. and PulteGroup brands, go to pultegroup.com; pulte.com; centex.com;
delwebb.com; divosta.com; jwhomes.com; and americanwesthomes.com. Follow PulteGroup, Inc. on X:
@PulteGroupNews.

PulteGroup   s Annual Letter to Owners, Customers, Team Members and Business Partners
We continue to view the long-term supply and demand dynamics as remaining extremely favorable for
PulteGroup and the broader new home construction industry. Government data suggest that our
country   s housing stock has increased by approximately 100 to 110 million homes over the past 85 years.
Over this same period, our country   s population has increased by more than 200 million people.
More recent data are equally powerful, as it is estimated that over the past three decades our country has
underproduced the number of new homes needed by as many as 5 million houses. There are a variety of
factors that influence homebuying demand in any given year, but these data highlight the tremendous
multi-year market opportunity that we see in new home construction.
It is with an appreciation for serving this unmet need that we have worked to position PulteGroup for
success. In homebuilding, land is the most critical building resource, so in 2020 we made the strategic
decision to increase our investment in land acquisition and development. In the five-year period of 2020
to 2024, we invested a cumulative $21 billion in acquisition and development, as our annual spend
increased from $2.9 billion in 2020 to $5.3 billion in 2024, with plans to invest an additional $5.5 billion in
2025.
The impact of our decision to invest in the growth of our business is clearly visible in our record 2024
operating and financial performance.
Benefitting from community count growth and strong buyer demand in the first half of the year, we
delivered 31,219 homes in 2024, which is an increase of 2,616 homes, or 9%, over the prior year. Higher
home closings in combination with a 2% increase in average selling price allowed PulteGroup to report
record home sale revenues of $17.3 billion. The 11% increase in home sale revenues drove gains in our
income statement, resulting in net income of $3.1 billion and earnings of $14.69 per share.
The Company   s record revenues and earnings, in turn, drove strong performance throughout our financial
statements as cash flow from operations totaled $1.7 billion. Consistent with prior years and our overall
capital allocation priorities, we used our strong cash flow to invest in our business, while returning excess
capital to shareholders through dividends and share repurchases. In 2024, we paid out a record $1.4
billion in share repurchases and dividends, bringing PulteGroup   s total payout over the past five years to
$5.1 billion.
My career with PulteGroup spans 23 years, so I have some perspective on the evolution of our
strategies, tactics and financial metrics. I think the following numbers most clearly define the focus and
discipline with which we run our business today. Over the past five years, after investing $21 billion in
land acquisition and development, we generated cash flow from operations of $7.3 billion. During this
period, we returned $5.1 billion to shareholders through dividends and share repurchases, all while
strengthening our balance sheet and lowering our debt-to-capital ratio to 11.8%. In fact, at the end of
2024 the $1.7 billion of cash on our balance sheet exceeded our outstanding debt. I cannot recall a time
when our company had a stronger financial foundation upon which to build its business.
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Through the combination of strong earnings growth and balance sheet discipline, we again delivered
exceptional returns as the Company generated a return on equity of 27.5%*. Over the past decade,
PulteGroup has delivered an average annual return on equity approaching 22%, while increasing
earnings per share at a compound annual growth rate of 28%. I believe these numbers demonstrate that
our business model is capable of routinely delivering both earnings growth and high returns.
The significant gains in our 2024 operating and financial metrics were achieved despite market conditions
that changed as the year unfolded. Purchasing a home is as much an emotional decision as a financial
one, so a buyer   s overall sense of confidence can be as important as their FICO score. In 2024,
feedback from our sales offices pointed to a consumer base that was carefully assessing the impact of
economic and political conditions which underwent meaningful changes as we moved through the year.
While economic and political dynamics were concerning to consumers, it was the ongoing volatility in
interest rates that created the greatest challenges for homebuyers. We entered 2024 with 30-year
mortgage rates at 6.75%, having fallen from a prior high of 8%. Over the course of 2024, mortgage rates
went on a roller coaster that climbed to a high of 7.3% and plumbed the lows of 6.2%, only to end the
year close to where they started at 7.0%.
Higher rates not only exacerbate affordability challenges consumers have been struggling with, but the
unpredictability makes it difficult for a buyer to feel comfortable signing a contract to purchase a new
home. Pulte Mortgage gives us the platform and expertise to offer solutions to buyers that help to
address this challenge. The mortgage rate incentives we can offer continue to provide a powerful tool in
solving the financial challenge buyers face, but these programs have less of an impact on overall buyer
confidence, which is also critical for someone making such a large purchase.
Acknowledging the Uncertainties of 2025
I am incredibly proud of our organization and our team   s ability to navigate through yet another year of
uncertainties and shifting market dynamics. Looking ahead to 2025, there are important economic and
political forces that have the potential to support or pressure the housing industry.
First, interest rate volatility likely remains part of the housing landscape for the foreseeable future. In just
the first two months of 2025, we have already seen 10-year Treasury Rates (a leading indicator for
mortgage rates) move 25-basis points higher, only to then collapse by 50 basis points as investors
wrestled with rapidly evolving economic expectations. People want to own homes, and lower rates can
help address affordability issues, but such whipsawing of rates creates uncertainty for would-be
homebuyers.
We maintained targeted production of non-contracted homes to better meet buyer demand heading into
the new year, but we are constantly monitoring sales paces and are prepared to adjust production, up or
down, in response to real-time buyer activity. Our willingness to adjust production can enable product
availability while helping to mitigate risks of building too much inventory.
And second, while the federal government is working to reduce bureaucracy, streamline permitting
processes and find solutions to increase our country   s housing supply, it is also implementing policies that
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can create headwinds for our industry. The most notable of these policies are those related to tariffs and
immigration. The former has implications as to the cost and availability of building products, ranging from
lumber to appliances. The latter could impact the availability of construction labor and the industry   s
ability to get homes built in a timely and cost-efficient manner.
As part of our tactical planning work, our procurement teams have undertaken a comprehensive review of
our supply chain and mapped out response scenarios and alternative sourcing strategies. Based on our
planning work and our position as one of the largest homebuilders nationally and within the markets we
serve, we are confident in PulteGroup   s ability to operate through policy changes as and when they are
implemented.
The More Things Change   
The year ahead represents an exciting milestone for PulteGroup as 2025 will be the 75th year since our
founder Bill Pulte built his first home. We have learned a lot over the decades about what it takes to
successfully operate and grow a homebuilding business. We deeply appreciate the importance of our
people, our build quality and the customer experience we must deliver every day. We also understand
the value of having a well-defined strategy and consistently executing against that plan as the business
moves through a housing cycle.
For PulteGroup, we continue to operate against the core tenets which have been instrumental in
delivering superior shareholder value over the past decade:




We continue to follow a structured and disciplined land investment process that has allowed us to
amass a well-positioned land pipeline totaling 235,000 lots. We see our land portfolio as being a
critical component in achieving our long-term goal of growing closing volumes by an average of
5% to 10% annually. We ended the year with 56% of these lots held via option as we work toward
our target mix of 70% optioned and 30% owned. Properly structured, we believe such an
optioned/owned mix offers the potential to enhance returns while helping to mitigate market risks.
Our diversified geographic and brand platform allows us to better navigate dynamic market
conditions. We continue to serve first-time, move-up and active-adult buyers through our national
brand family of Centex, Pulte and Del Webb, and have worked to match our buyer mix to reflect
the opportunity in each of the markets we serve.
Twenty years ago, PulteGroup operated with significantly higher financial leverage as the
Company routinely maintained a debt-to-total capital ratio of approximately 40%. Our current
business model and resulting strong cash flow generation have allowed us to materially reduce
leverage, lowering our debt-to-capital to below 12% at year end, while providing tremendous
financial strength and flexibility going forward. We look to operate with this lower-leverage
position going forward, as it reduces risk and allows us to capitalize on market opportunities as
they develop.
By being willing to consistently allocate capital back to shareholders, our operating divisions are
effectively forced to rank-order their land investments, resulting in our acquiring superior land
parcels. Since establishing our dividend and share repurchase programs in 2013, we have
increased our dividend per share nine times, while buying in more than 50% of the thenoutstanding shares and returning a total of $8.6 billion to shareholders through these two
programs. We remain committed to routinely and systematically returning funds to PulteGroup
shareholders, having just increased our share repurchase authorization by $1.5 billion as we
entered 2025.
The past few years have demonstrated the importance of having clearly defined strategies and tactics,
and being disciplined in adhering to them as market forces swirl around the business. As I consider
PulteGroup   s strong results during the rapidly changing operating conditions we experienced over the
past few years, more than being good or even lucky, it has been a matter of being prepared. Decisions
we have made over the past few years to purposefully invest in and expand our business platform, while
maintaining financial performance and unprecedented balance sheet strength, have helped the Company
successfully navigate through the volatility.
Along with having a solid business model, we have a team of people who come to work every day
committed to developing great communities, taking care of our customers and taking care of each other.
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 3/14/2025 Letter Continued (Full PDF)