QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) | |
OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) | |
OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code) |
Registrant’s telephone number, including area code: |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Accelerated filer | Non-accelerated filer | Smaller reporting company | Emerging growth company | ||||
☒ | ☐ | ☐ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ] |
Yes | No | ☒ |
Page No. | ||
PART I | ||
Item 1 | ||
Item 2 | ||
Item 3 | ||
Item 4 | ||
PART II | ||
Item 1A | ||
Item 2 | ||
Item 6 | ||
June 30, 2020 | December 31, 2019 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Cash and equivalents | $ | $ | |||||
Restricted cash | |||||||
Total cash, cash equivalents, and restricted cash | |||||||
House and land inventory | |||||||
Land held for sale | |||||||
Residential mortgage loans available-for-sale | |||||||
Investments in unconsolidated entities | |||||||
Other assets | |||||||
Intangible assets | |||||||
Deferred tax assets, net | |||||||
$ | $ | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Liabilities: | |||||||
Accounts payable | $ | $ | |||||
Customer deposits | |||||||
Accrued and other liabilities | |||||||
Income tax liabilities | |||||||
Financial Services debt | |||||||
Notes payable | |||||||
Shareholders' equity | |||||||
$ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues: | |||||||||||||||
Homebuilding | |||||||||||||||
Home sale revenues | $ | $ | $ | $ | |||||||||||
Land sale and other revenues | |||||||||||||||
Financial Services | |||||||||||||||
Total revenues | |||||||||||||||
Homebuilding Cost of Revenues: | |||||||||||||||
Home sale cost of revenues | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Land sale and other cost of revenues | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Financial Services expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Selling, general, and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Goodwill impairment | ( | ) | |||||||||||||
Other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Income before income taxes | |||||||||||||||
Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net income | $ | $ | $ | $ | |||||||||||
Per share: | |||||||||||||||
Basic earnings | $ | $ | $ | $ | |||||||||||
Diluted earnings | $ | $ | $ | $ | |||||||||||
Cash dividends declared | $ | $ | $ | $ | |||||||||||
Number of shares used in calculation: | |||||||||||||||
Basic | |||||||||||||||
Effect of dilutive securities | |||||||||||||||
Diluted |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other comprehensive income, net of tax: | |||||||||||||||
Change in value of derivatives | |||||||||||||||
Other comprehensive income | |||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total | ||||||||||||||||||
Shares | $ | |||||||||||||||||||||
Shareholders' equity, March 31, 2020 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Stock option exercises | — | — | ||||||||||||||||||||
Share issuances | — | — | ||||||||||||||||||||
Dividends declared | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Cash paid for shares withheld for taxes | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Share-based compensation | — | — | — | — | ||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||
Other comprehensive income | — | — | — | — | ||||||||||||||||||
Shareholders' equity, June 30, 2020 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Shareholders' equity, December 31, 2019 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
— | — | — | — | ( | ) | ( | ) | |||||||||||||||
Stock option exercises | — | — | ||||||||||||||||||||
Share issuances | — | — | ||||||||||||||||||||
Dividends declared | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Share repurchases | ( | ) | ( | ) | — | — | ( | ) | ( | ) | ||||||||||||
Cash paid for shares withheld for taxes | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Share-based compensation | — | — | — | — | ||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||
Other comprehensive income | — | — | — | — | ||||||||||||||||||
Shareholders' equity, June 30, 2020 | $ | $ | $ | ( | ) | $ | $ |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total | ||||||||||||||||||
Shares | $ | |||||||||||||||||||||
Shareholders' equity, March 31, 2019 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Stock option exercises | — | — | ||||||||||||||||||||
Share issuances | ( | ) | — | — | ||||||||||||||||||
Dividends declared | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Share repurchases | ( | ) | ( | ) | — | — | ( | ) | ( | ) | ||||||||||||
Cash paid for shares withheld for taxes | — | — | — | — | ||||||||||||||||||
Share-based compensation | — | — | — | — | ||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||
Other comprehensive income | — | — | — | — | ||||||||||||||||||
Shareholders' equity, June 30, 2019 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Shareholders' equity, December 31, 2018 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||
Stock option exercises | — | — | ||||||||||||||||||||
Share issuances | — | — | ||||||||||||||||||||
Dividends declared | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Share repurchases | ( | ) | ( | ) | — | — | ( | ) | ( | ) | ||||||||||||
Cash paid for shares withheld for taxes | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Share-based compensation | — | — | — | — | ||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||
Other comprehensive income | — | — | — | — | ||||||||||||||||||
Shareholders' equity, June 30, 2019 | $ | $ | $ | ( | ) | $ | $ |
Six Months Ended | |||||||
June 30, | |||||||
2020 | 2019 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Deferred income tax expense | |||||||
Land-related charges | |||||||
Goodwill impairment | |||||||
Depreciation and amortization | |||||||
Share-based compensation expense | |||||||
Other, net | ( | ) | |||||
Increase (decrease) in cash due to: | |||||||
Inventories | ( | ) | |||||
Residential mortgage loans available-for-sale | |||||||
Other assets | ( | ) | |||||
Accounts payable, accrued and other liabilities | ( | ) | |||||
Net cash provided by (used in) operating activities | |||||||
Cash flows from investing activities: | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Investments in unconsolidated entities | ( | ) | |||||
Business acquisition | ( | ) | ( | ) | |||
Other investing activities, net | |||||||
Net cash provided by (used in) investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Repayments of notes payable | ( | ) | ( | ) | |||
Borrowings under revolving credit facility | |||||||
Repayments under revolving credit facility | ( | ) | |||||
Financial Services borrowings (repayments) | ( | ) | ( | ) | |||
Stock option exercises | |||||||
Share repurchases | ( | ) | ( | ) | |||
Cash paid for shares withheld for taxes | ( | ) | ( | ) | |||
Dividends paid | ( | ) | ( | ) | |||
Net cash provided by (used in) financing activities | ( | ) | ( | ) | |||
Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | ) | |||||
Cash, cash equivalents, and restricted cash at beginning of period | |||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ | |||||
Supplemental Cash Flow Information: | |||||||
Interest paid (capitalized), net | $ | $ | |||||
Income taxes paid (refunded), net | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Write-offs of deposits and pre-acquisition costs | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Amortization of intangible assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Loss on debt retirement | ( | ) | ( | ) | |||||||||||
Interest income | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Equity in earnings of unconsolidated entities | |||||||||||||||
Miscellaneous, net | |||||||||||||||
Total other expense, net | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Numerator: | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Less: earnings distributed to participating securities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Less: undistributed earnings allocated to participating securities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Numerator for basic earnings per share | $ | $ | $ | $ | |||||||||||
Add back: undistributed earnings allocated to participating securities | |||||||||||||||
Less: undistributed earnings reallocated to participating securities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Numerator for diluted earnings per share | $ | $ | $ | $ | |||||||||||
Denominator: | |||||||||||||||
Basic shares outstanding | |||||||||||||||
Effect of dilutive securities | |||||||||||||||
Diluted shares outstanding | |||||||||||||||
Earnings per share: | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | $ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||
Other Assets | Accrued and Other Liabilities | Other Assets | Accrued and Other Liabilities | ||||||||||||
Interest rate lock commitments | $ | $ | $ | $ | |||||||||||
Forward contracts | |||||||||||||||
Whole loan commitments | |||||||||||||||
$ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||
Homes under construction | $ | $ | |||||
Land under development | |||||||
Raw land | |||||||
$ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Interest in inventory, beginning of period | $ | $ | $ | $ | |||||||||||
Interest capitalized | |||||||||||||||
Interest expensed | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Interest in inventory, end of period | $ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||
Deposits and Pre-acquisition Costs | Remaining Purchase Price | Deposits and Pre-acquisition Costs | Remaining Purchase Price | ||||||||||||
Land options with VIEs | $ | $ | $ | $ | |||||||||||
Other land options | |||||||||||||||
$ | $ | $ | $ |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2020 | June 30, 2019 | |||||||||||||||
Statement of Operations Classification | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Land impairments | Home sale cost of revenues | $ | $ | $ | $ | |||||||||||
Net realizable value ("NRV") adjustments - land held for sale | Land sale and other cost of revenues | |||||||||||||||
Write-offs of deposits and pre-acquisition costs | Other expense, net | |||||||||||||||
$ | $ | $ | $ |
Northeast: | Connecticut, Maryland, Massachusetts, New Jersey, Pennsylvania, Virginia | |
Southeast: | Georgia, North Carolina, South Carolina, Tennessee | |
Florida: | Florida | |
Midwest: | Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio | |
Texas: | Texas | |
West: | Arizona, California, Nevada, New Mexico, Washington |
Operating Data by Segment ($000’s omitted) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues: | |||||||||||||||
Northeast | $ | $ | $ | $ | |||||||||||
Southeast | |||||||||||||||
Florida | |||||||||||||||
Midwest | |||||||||||||||
Texas | |||||||||||||||
West | |||||||||||||||
Financial Services | |||||||||||||||
Consolidated revenues | $ | $ | $ | $ | |||||||||||
Income (loss) before income taxes: | |||||||||||||||
Northeast | $ | $ | $ | $ | |||||||||||
Southeast | |||||||||||||||
Florida (a) | |||||||||||||||
Midwest | |||||||||||||||
Texas | |||||||||||||||
West | |||||||||||||||
Other homebuilding (b) | ( | ) | ( | ) | ( | ) | |||||||||
Financial Services | |||||||||||||||
Consolidated income before income taxes | $ | $ | $ | $ |
(a) | Includes goodwill impairment charge totaling $ |
(b) | Other homebuilding includes the amortization of intangible assets and capitalized interest and other items not allocated to the operating segments. Other homebuilding also includes net insurance reserve reversals of $ |
Operating Data by Segment ($000’s omitted) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Land-related charges*: | |||||||||||||||
Northeast | $ | $ | $ | $ | |||||||||||
Southeast | |||||||||||||||
Florida | |||||||||||||||
Midwest | |||||||||||||||
Texas | |||||||||||||||
West | |||||||||||||||
Other homebuilding | |||||||||||||||
$ | $ | $ | $ |
* | Land-related charges include land impairments, NRV adjustments on land held for sale, and write-offs of deposits and pre-acquisition costs for land option contracts we elected not to pursue. |
Operating Data by Segment | |||||||||||||||||||
($000's omitted) | |||||||||||||||||||
June 30, 2020 | |||||||||||||||||||
Homes Under Construction | Land Under Development | Raw Land | Total Inventory | Total Assets | |||||||||||||||
Northeast | $ | $ | $ | $ | $ | ||||||||||||||
Southeast | |||||||||||||||||||
Florida | |||||||||||||||||||
Midwest | |||||||||||||||||||
Texas | |||||||||||||||||||
West | |||||||||||||||||||
Other homebuilding (a) | |||||||||||||||||||
Financial Services | |||||||||||||||||||
$ | $ | $ | $ | $ |
Operating Data by Segment | |||||||||||||||||||
($000's omitted) | |||||||||||||||||||
December 31, 2019 | |||||||||||||||||||
Homes Under Construction | Land Under Development | Raw Land | Total Inventory | Total Assets | |||||||||||||||
Northeast | $ | $ | $ | $ | $ | ||||||||||||||
Southeast | |||||||||||||||||||
Florida | |||||||||||||||||||
Midwest | |||||||||||||||||||
Texas | |||||||||||||||||||
West | |||||||||||||||||||
Other homebuilding (a) | |||||||||||||||||||
Financial Services | |||||||||||||||||||
$ | $ | $ | $ | $ |
(a) | Other homebuilding primarily includes cash and equivalents, capitalized interest, intangibles, deferred tax assets, and other corporate items that are not allocated to the operating segments. |
June 30, 2020 | December 31, 2019 | ||||||
4.250% unsecured senior notes due March 2021 (a) | $ | $ | |||||
5.500% unsecured senior notes due March 2026 (a) | |||||||
5.000% unsecured senior notes due January 2027 (a) | |||||||
7.875% unsecured senior notes due June 2032 (a) | |||||||
6.375% unsecured senior notes due May 2033 (a) | |||||||
6.000% unsecured senior notes due February 2035 (a) | |||||||
Net premiums, discounts, and issuance costs (b) | ( | ) | ( | ) | |||
Total senior notes | |||||||
Other notes payable | |||||||
Notes payable | $ | $ | |||||
Estimated fair value | $ | $ |
(a) | Redeemable prior to maturity; guaranteed on a senior basis by certain wholly-owned subsidiaries. |
(b) | The carrying value of senior notes reflects the impact of premiums, discounts, and issuance costs that are amortized to interest cost over the respective terms of the senior notes. |
Level 1 | Fair value determined based on quoted prices in active markets for identical assets or liabilities. | |
Level 2 | Fair value determined using significant observable inputs, generally either quoted prices in active markets for similar assets or liabilities or quoted prices in markets that are not active. | |
Level 3 | Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques. |
Financial Instrument | Fair Value Hierarchy | Fair Value | ||||||||
June 30, 2020 | December 31, 2019 | |||||||||
Measured at fair value on a recurring basis: | ||||||||||
Residential mortgage loans available-for-sale | Level 2 | $ | $ | |||||||
Interest rate lock commitments | Level 2 | |||||||||
Forward contracts | Level 2 | ( | ) | ( | ) | |||||
Whole loan commitments | Level 2 | ( | ) | |||||||
Measured at fair value on a non-recurring basis: | ||||||||||
House and land inventory | Level 3 | $ | $ | |||||||
Land held for sale | Level 2 | |||||||||
Disclosed at fair value: | ||||||||||
Cash, cash equivalents, and restricted cash | Level 1 | $ | $ | |||||||
Financial Services debt | Level 2 | |||||||||
Senior notes payable | Level 2 | |||||||||
Other notes payable | Level 2 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Warranty liabilities, beginning of period | $ | $ | $ | $ | |||||||||||
Reserves provided | |||||||||||||||
Payments | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other adjustments | ( | ) | ( | ) | |||||||||||
Warranty liabilities, end of period | $ | $ | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Balance, beginning of period | $ | $ | $ | $ | |||||||||||
Reserves provided | |||||||||||||||
Adjustments to previously recorded reserves | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Payments, net (a) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Balance, end of period | $ | $ | $ | $ |
(a) | Includes net changes in amounts expected to be recovered from our insurance carriers, which are recorded in other assets (see below). |
Years Ending December 31, | |||
2020 (a) | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total lease payments (b) | |||
Less: Interest (c) | |||
Present value of lease liabilities (d) | $ |
(a) | Remaining payments are for the six months ending December 31, 2020. |
(b) | Lease payments include options to extend lease terms that are reasonably certain of being exercised. There were $ |
(c) | Our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our discount rate for such leases to determine the present value of lease payments at the lease commencement date. |
(d) | The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were |
Unconsolidated | Eliminating Entries | Consolidated PulteGroup, Inc. | |||||||||||||||||
PulteGroup, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | |||||||||||||||||
ASSETS | |||||||||||||||||||
Cash and equivalents | $ | $ | $ | $ | $ | ||||||||||||||
Restricted cash | |||||||||||||||||||
Total cash, cash equivalents, and restricted cash | |||||||||||||||||||
House and land inventory | |||||||||||||||||||
Land held for sale | |||||||||||||||||||
Residential mortgage loans available- for-sale | |||||||||||||||||||
Investments in unconsolidated entities | |||||||||||||||||||
Other assets | |||||||||||||||||||
Intangible assets | |||||||||||||||||||
Deferred tax assets, net | ( | ) | |||||||||||||||||
Investments in subsidiaries and intercompany accounts, net | ( | ) | |||||||||||||||||
$ | $ | $ | $ | ( | ) | $ | |||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||
Liabilities: | |||||||||||||||||||
Accounts payable, customer deposits, accrued and other liabilities | $ | $ | $ | $ | $ | ||||||||||||||
Income tax liabilities | |||||||||||||||||||
Financial Services debt | |||||||||||||||||||
Notes payable | |||||||||||||||||||
Total liabilities | |||||||||||||||||||
Total shareholders’ equity | ( | ) | |||||||||||||||||
$ | $ | $ | $ | ( | ) | $ |
Unconsolidated | Eliminating Entries | Consolidated PulteGroup, Inc. | |||||||||||||||||
PulteGroup, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | |||||||||||||||||
ASSETS | |||||||||||||||||||
Cash and equivalents | $ | $ | $ | $ | $ | ||||||||||||||
Restricted cash | |||||||||||||||||||
Total cash, cash equivalents, and restricted cash | |||||||||||||||||||
House and land inventory | |||||||||||||||||||
Land held for sale | |||||||||||||||||||
Residential mortgage loans available- for-sale | |||||||||||||||||||
Investments in unconsolidated entities | |||||||||||||||||||
Other assets | |||||||||||||||||||
Intangible assets | |||||||||||||||||||
Deferred tax assets, net | ( | ) | |||||||||||||||||
Investments in subsidiaries and intercompany accounts, net | ( | ) | |||||||||||||||||
$ | $ | $ | $ | ( | ) | $ | |||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||
Liabilities: | |||||||||||||||||||
Accounts payable, customer deposits, accrued and other liabilities | $ | $ | $ | $ | $ | ||||||||||||||
Income tax liabilities | |||||||||||||||||||
Financial Services debt | |||||||||||||||||||
Notes payable | |||||||||||||||||||
Total liabilities | |||||||||||||||||||
Total shareholders’ equity | ( | ) | |||||||||||||||||
$ | $ | $ | $ | ( | ) | $ |
Unconsolidated | Consolidated PulteGroup, Inc. | ||||||||||||||||||
PulteGroup, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminating Entries | ||||||||||||||||
Revenues: | |||||||||||||||||||
Homebuilding | |||||||||||||||||||
Home sale revenues | $ | $ | $ | $ | $ | ||||||||||||||
Land sale and other revenues | |||||||||||||||||||
Financial Services | |||||||||||||||||||
Homebuilding Cost of Revenues: | |||||||||||||||||||
Home sale cost of revenues | ( | ) | ( | ) | ( | ) | |||||||||||||
Land sale and other cost of revenues | ( | ) | ( | ) | ( | ) | |||||||||||||
( | ) | ( | ) | ( | ) | ||||||||||||||
Financial Services expenses | ( | ) | ( | ) | ( | ) | |||||||||||||
Selling, general, and administrative expenses | ( | ) | ( | ) | ( | ) | |||||||||||||
Goodwill impairment | |||||||||||||||||||
Other income (expense), net | ( | ) | ( | ) | ( | ) | |||||||||||||
Intercompany interest | ( | ) | |||||||||||||||||
Income (loss) before income taxes and equity in income (loss) of subsidiaries | ( | ) | |||||||||||||||||
Income tax (expense) benefit | ( | ) | ( | ) | ( | ) | |||||||||||||
Income (loss) before equity in income (loss) of subsidiaries | ( | ) | |||||||||||||||||
Equity in income (loss) of subsidiaries | ( | ) | |||||||||||||||||
Net income (loss) | ( | ) | |||||||||||||||||
Other comprehensive income | |||||||||||||||||||
Comprehensive income (loss) | $ | $ | $ | $ | ( | ) | $ |
Unconsolidated | Consolidated PulteGroup, Inc. | ||||||||||||||||||
PulteGroup, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminating Entries | ||||||||||||||||
Revenues: | |||||||||||||||||||
Homebuilding | |||||||||||||||||||
Home sale revenues | $ | $ | $ | $ | $ | ||||||||||||||
Land sale and other revenues | |||||||||||||||||||
Financial Services | |||||||||||||||||||
Homebuilding Cost of Revenues: | |||||||||||||||||||
Home sale cost of revenues | ( | ) | ( | ) | ( | ) | |||||||||||||
Land sale and other cost of revenues | ( | ) | ( | ) | |||||||||||||||
( | ) | ( | ) | ( | ) | ||||||||||||||
Financial Services expenses | ( | ) | ( | ) | ( | ) | |||||||||||||
Selling, general, and administrative expenses | ( | ) | ( | ) | ( | ) | |||||||||||||
Other income (expense), net | ( | ) | ( | ) | ( | ) | |||||||||||||
Intercompany interest | ( | ) | |||||||||||||||||
Income (loss) before income taxes and equity in income (loss) of subsidiaries | ( | ) | |||||||||||||||||
Income tax (expense) benefit | ( | ) | ( | ) | ( | ) | |||||||||||||
Income (loss) before equity in income (loss) of subsidiaries | ( | ) | |||||||||||||||||
Equity in income (loss) of subsidiaries | ( | ) | |||||||||||||||||
Net income (loss) | ( | ) | |||||||||||||||||
Other comprehensive income | |||||||||||||||||||
Comprehensive income (loss) | $ | $ | $ | $ | ( | ) | $ |
Unconsolidated | Consolidated PulteGroup, Inc. | ||||||||||||||||||
PulteGroup, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminating Entries | ||||||||||||||||
Revenues: | |||||||||||||||||||
Homebuilding | |||||||||||||||||||
Home sale revenues | $ | $ | $ | $ | $ | ||||||||||||||
Land sale and other revenues | |||||||||||||||||||
Financial Services | |||||||||||||||||||
Homebuilding Cost of Revenues: | |||||||||||||||||||
Home sale cost of revenues | ( | ) | ( | ) | ( | ) | |||||||||||||
Land sale and other cost of revenues | ( | ) | ( | ) | ( | ) | |||||||||||||
( | ) | ( | ) | ( | ) | ||||||||||||||
Financial Services expenses | ( | ) | ( | ) | ( | ) | |||||||||||||
Selling, general, and administrative expenses | ( | ) | ( | ) | ( | ) | |||||||||||||
Goodwill impairment | ( | ) | ( | ) | |||||||||||||||
Other income (expense), net | ( | ) | ( | ) | ( | ) | |||||||||||||
Intercompany interest | ( | ) | |||||||||||||||||
Income (loss) before income taxes and equity in income (loss) of subsidiaries | ( | ) | |||||||||||||||||
Income tax (expense) benefit | ( | ) | ( | ) | ( | ) | |||||||||||||
Income (loss) before equity in income (loss) of subsidiaries | ( | ) | |||||||||||||||||
Equity in income (loss) of subsidiaries | ( | ) | |||||||||||||||||
Net income (loss) | ( | ) | |||||||||||||||||
Other comprehensive income | |||||||||||||||||||
Comprehensive income (loss) | $ | $ | $ | $ | ( | ) | $ |
Unconsolidated | Consolidated PulteGroup, Inc. | ||||||||||||||||||
PulteGroup, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminating Entries | ||||||||||||||||
Revenues: | |||||||||||||||||||
Homebuilding | |||||||||||||||||||
Home sale revenues | $ | $ | $ | $ | $ | ||||||||||||||
Land sale and other revenues | |||||||||||||||||||
Financial Services | |||||||||||||||||||
Homebuilding Cost of Revenues: | |||||||||||||||||||
Home sale cost of revenues | ( | ) | ( | ) | ( | ) | |||||||||||||
Land sale and other cost of revenues | ( | ) | ( | ) | ( | ) | |||||||||||||
( | ) | ( | ) | ( | ) | ||||||||||||||
Financial Services expenses | ( | ) | ( | ) | ( | ) | |||||||||||||
Selling, general, and administrative expenses | ( | ) | ( | ) | ( | ) | |||||||||||||
Other income (expense), net | ( | ) | ( | ) | ( | ) | |||||||||||||
Intercompany interest | ( | ) | |||||||||||||||||
Income (loss) before income taxes and equity in income (loss) of subsidiaries | ( | ) | |||||||||||||||||
Income tax (expense) benefit | ( | ) | ( | ) | ( | ) | |||||||||||||
Income (loss) before equity in income (loss) of subsidiaries | ( | ) | |||||||||||||||||
Equity in income (loss) of subsidiaries | ( | ) | |||||||||||||||||
Net income (loss) | ( | ) | |||||||||||||||||
Other comprehensive income | |||||||||||||||||||
Comprehensive income (loss) | $ | $ | $ | $ | ( | ) | $ |
Unconsolidated | Consolidated PulteGroup, Inc. | ||||||||||||||||||
PulteGroup, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminating Entries | ||||||||||||||||
Net cash provided by (used in) operating activities | $ | $ | $ | $ | $ | ||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Capital expenditures | ( | ) | ( | ) | ( | ) | |||||||||||||
Investments in unconsolidated entities | ( | ) | |||||||||||||||||
Other investing activities, net | |||||||||||||||||||
Business acquisition | ( | ) | ( | ) | |||||||||||||||
Net cash provided by (used in) investing activities | ( | ) | ( | ) | ( | ) | |||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Financial Services borrowing (repayments), net | ( | ) | ( | ) | |||||||||||||||
Repayments of debt | ( | ) | ( | ) | |||||||||||||||
Borrowings under revolving credit facility | |||||||||||||||||||
Repayments under revolving credit facility | ( | ) | ( | ) | |||||||||||||||
Stock option exercises | |||||||||||||||||||
Share repurchases | ( | ) | ( | ) | |||||||||||||||
Cash paid for shares withheld for taxes | ( | ) | ( | ) | |||||||||||||||
Dividends paid | ( | ) | ( | ) | |||||||||||||||
Intercompany activities, net | ( | ) | |||||||||||||||||
Net cash provided by (used in) financing activities | ( | ) | ( | ) | ( | ) | |||||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | ) | |||||||||||||||||
Cash, cash equivalents, and restricted cash at beginning of year | |||||||||||||||||||
Cash, cash equivalents, and restricted cash at end of year | $ | $ | $ | $ | $ |
Unconsolidated | Consolidated PulteGroup, Inc. | ||||||||||||||||||
PulteGroup, Inc. | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminating Entries | ||||||||||||||||
Net cash provided by (used in) operating activities | $ | $ | $ | $ | $ | ||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Capital expenditures | ( | ) | ( | ) | ( | ) | |||||||||||||
Investments in unconsolidated entities | ( | ) | ( | ) | ( | ) | |||||||||||||
Other investing activities, net | |||||||||||||||||||
Business acquisition | ( | ) | ( | ) | |||||||||||||||
Net cash provided by (used in) investing activities | ( | ) | ( | ) | ( | ) | |||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Financial Services borrowings (repayments), net | ( | ) | ( | ) | |||||||||||||||
Repayments of debt | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Stock option exercises | |||||||||||||||||||
Share repurchases | ( | ) | ( | ) | |||||||||||||||
Cash paid for shares withheld for taxes | ( | ) | ( | ) | |||||||||||||||
Dividends paid | ( | ) | ( | ) | |||||||||||||||
Intercompany activities, net | ( | ) | ( | ) | |||||||||||||||
Net cash provided by (used in) financing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | ) | ( | ) | ( | ) | |||||||||||||
Cash, cash equivalents, and restricted cash at beginning of year | |||||||||||||||||||
Cash, cash equivalents, and restricted cash at end of year | $ | $ | $ | $ | $ |
• | Placed restrictions on business travel for our employees and imposed mandatory quarantine periods for employees who traveled to areas impacted by the pandemic; |
• | Closed our sales centers, model homes, and design centers to the general public and shifted to appointment-only interactions with our customers where permitted, following recommended distancing and other health and safety protocols when meeting in person with a customer; |
• | Enhanced our virtual sales tools to give customers the ability to shop for a new home from their mobile device or personal computer; |
• | Closed the public gathering spaces of our amenity centers as well as community pools and athletic facilities; |
• | Modified our corporate and division office functions in order to allow all of our employees to work remotely except for essential minimum basic operations which could only be done in an office setting; |
• | Eliminated non-emergency warranty work in our customers’ homes; |
• | Modified much of our customer interactions around the mortgage origination and closing process to be virtual and minimize in-person interactions; and |
• | Modified our construction operations to enforce enhanced safety protocols around social distancing, hygiene, and health screening. |
• | Delaying the acquisition of certain land parcels and slowing land development where practical; |
• | Limiting our investment in house construction, including strictly limiting production of new unsold "speculative" homes, and contacting backlog customers to reconfirm status before beginning construction of sold homes; |
• | As a precautionary measure, proactively drawing $700.0 million under the Revolving Credit Facility in March; |
• | Suspending the repurchase of shares under our share repurchase program; and |
• | Reducing headcount and other overhead expenses. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Income before income taxes: | |||||||||||||||
Homebuilding | $ | 396,585 | $ | 295,698 | $ | 640,804 | $ | 499,993 | |||||||
Financial Services | 60,424 | 25,078 | 79,974 | 37,486 | |||||||||||
Income before income taxes | 457,009 | 320,776 | 720,778 | 537,479 | |||||||||||
Income tax expense | (108,389 | ) | (79,735 | ) | (168,447 | ) | (129,681 | ) | |||||||
Net income | $ | 348,620 | $ | 241,041 | $ | 552,331 | $ | 407,798 | |||||||
Per share data - assuming dilution: | |||||||||||||||
Net income | $ | 1.29 | $ | 0.86 | $ | 2.03 | $ | 1.45 |
• | Homebuilding income before income taxes for the three and six months ended June 30, 2020 increased 34% and 28% compared with the same periods in 2019, respectively. The results include $60.7 million and $59.4 million of insurance reserve reversals for the three and six months ended June 30, 2020, respectively, compared to $12.8 million and $16.6 million for the three and six months ended June 30, 2019, respectively, as well as increased closings, higher gross margins, and improved overhead leverage. These increases were partially offset by severance expense of $10.3 million during the three and six months ended June 30, 2020 and a goodwill impairment charge totaling $20.2 million during the six months ended June 30, 2020 (see Note 1). |
• | Financial Services income before income taxes for the three and six months ended June 30, 2020 increased 141% and 113%, respectively, compared with the same periods in 2019 as the result of higher volumes, which largely resulted from increased homebuilding volumes combined with an improved capture rate, and improved margin per loan. Interest rates declined during the six months ended June 30, 2020, which led to enhanced margins contributing to improved capture rate and higher gains from sales of mortgages. |
• | Our effective tax rate for the three and six months ended June 30, 2020 was 23.7% and 23.4%, respectively, compared to 24.9% and 24.1% for the same periods in 2019, respectively. |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2020 | 2020 vs. 2019 | 2019 | 2020 | 2020 vs. 2019 | 2019 | ||||||||||||||||
Home sale revenues | $ | 2,472,029 | 3 | % | $ | 2,403,559 | $ | 4,693,532 | 8 | % | $ | 4,353,415 | |||||||||
Land sale and other revenues | 26,950 | (9 | )% | 29,469 | 45,877 | 41 | % | 32,445 | |||||||||||||
Total Homebuilding revenues | 2,498,979 | 3 | % | 2,433,028 | 4,739,409 | 8 | % | 4,385,860 | |||||||||||||
Home sale cost of revenues (a) | (1,880,209 | ) | 2 | % | (1,848,155 | ) | (3,575,074 | ) | 7 | % | (3,340,946 | ) | |||||||||
Land sale and other cost of revenues | (20,041 | ) | (24 | )% | (26,214 | ) | (35,055 | ) | 24 | % | (28,265 | ) | |||||||||
Selling, general, and administrative expenses ("SG&A") (b) | (196,858 | ) | (24 | )% | (259,440 | ) | (460,527 | ) | (10 | )% | (512,166 | ) | |||||||||
Goodwill impairment | — | (c) | — | (20,190 | ) | (c) | — | ||||||||||||||
Other expense, net | (5,286 | ) | 50 | % | (3,521 | ) | (7,759 | ) | 73 | % | (4,490 | ) | |||||||||
Income before income taxes | $ | 396,585 | 34 | % | $ | 295,698 | $ | 640,804 | 28 | % | $ | 499,993 | |||||||||
Supplemental data: | |||||||||||||||||||||
Gross margin from home sales | 23.9 | % | 80 bps | 23.1 | % | 23.8 | % | 50 bps | 23.3 | % | |||||||||||
SG&A as a percentage of home sale revenues | 8.0 | % | (280) bps | 10.8 | % | 9.8 | % | (200) bps | 11.8 | % | |||||||||||
Closings (units) | 5,937 | 6 | % | 5,589 | 11,310 | 11 | % | 10,224 | |||||||||||||
Average selling price | $ | 416 | (3 | )% | $ | 430 | $ | 415 | (3 | )% | $ | 426 | |||||||||
Net new orders (d): | |||||||||||||||||||||
Units | 6,522 | (4 | )% | 6,792 | 14,017 | 6 | % | 13,255 | |||||||||||||
Dollars | $ | 2,677,074 | (7 | )% | $ | 2,890,709 | $ | 5,945,823 | 6 | % | $ | 5,626,561 | |||||||||
Cancellation rate | 19 | % | 14 | % | 16 | % | 13 | % | |||||||||||||
Average active communities | 887 | 1 | % | 877 | 880 | 2 | % | 860 | |||||||||||||
Backlog at June 30: | |||||||||||||||||||||
Units | 13,214 | 12 | % | 11,793 | |||||||||||||||||
Dollars | $ | 5,788,096 | 13 | % | $ | 5,109,293 |
(a) | Includes the amortization of capitalized interest. |
(b) | Includes insurance reserve reversals of $60.7 million and $59.4 million for the three and six months ended June 30, 2020, respectively, and $12.8 million and $16.6 million for the three and six months ended June 30, 2019, respectively, and severance expense of $10.3 million for the three months ended June 30, 2020. |
(c) | Percentage not meaningful |
(d) | Net new order dollars represent a composite of new order dollars combined with other movements of the dollars in backlog related to cancellations and change orders. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Write-offs of deposits and pre-acquisition costs | $ | (2,311 | ) | $ | (2,516 | ) | $ | (6,643 | ) | $ | (5,433 | ) | |||
Amortization of intangible assets | (5,045 | ) | (3,550 | ) | (9,602 | ) | (7,000 | ) | |||||||
Loss on debt retirement | — | (4,843 | ) | — | (4,843 | ) | |||||||||
Interest income | 1,326 | 4,471 | 5,133 | 9,420 | |||||||||||
Interest expense | (3,000 | ) | (146 | ) | (3,796 | ) | (290 | ) | |||||||
Equity in earnings of unconsolidated entities | 334 | 129 | 902 | 165 | |||||||||||
Miscellaneous, net | 3,410 | 2,934 | 6,247 | 3,491 | |||||||||||
Total other expense, net | $ | (5,286 | ) | $ | (3,521 | ) | $ | (7,759 | ) | $ | (4,490 | ) |
June 30, 2020 | June 30, 2019 | ||||
Sold | 8,825 | 8,528 | |||
Unsold | |||||
Under construction | 1,626 | 2,316 | |||
Completed | 495 | 610 | |||
2,121 | 2,926 | ||||
Models | 1,279 | 1,235 | |||
Total | 12,225 | 12,689 |
June 30, 2020 | December 31, 2019 | ||||||||||||||||
Owned | Optioned | Controlled | Owned | Optioned | Controlled | ||||||||||||
Northeast | 4,711 | 4,697 | 9,408 | 4,999 | 4,240 | 9,239 | |||||||||||
Southeast | 14,981 | 13,966 | 28,947 | 16,174 | 12,802 | 28,976 | |||||||||||
Florida | 19,726 | 20,767 | 40,493 | 20,281 | 17,802 | 38,083 | |||||||||||
Midwest | 9,560 | 12,661 | 22,221 | 10,016 | 12,027 | 22,043 | |||||||||||
Texas | 15,215 | 13,026 | 28,241 | 16,256 | 10,573 | 26,829 | |||||||||||
West | 24,073 | 9,768 | 33,841 | 25,633 | 7,459 | 33,092 | |||||||||||
Total | 88,266 | 74,885 | 163,151 | 93,359 | 64,903 | 158,262 | |||||||||||
Developed (%) | 43 | % | 22 | % | 33 | % | 39 | % | 22 | % | 32 | % |
Northeast: | Connecticut, Maryland, Massachusetts, New Jersey, Pennsylvania, Virginia | |
Southeast: | Georgia, North Carolina, South Carolina, Tennessee | |
Florida: | Florida | |
Midwest: | Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio | |
Texas: | Texas | |
West: | Arizona, California, Nevada, New Mexico, Washington |
Operating Data by Segment ($000's omitted) | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2020 | 2020 vs. 2019 | 2019 | 2020 | 2020 vs. 2019 | 2019 | ||||||||||||||||
Home sale revenues: | |||||||||||||||||||||
Northeast | $ | 141,299 | (24 | )% | $ | 186,006 | $ | 303,679 | 3 | % | $ | 296,269 | |||||||||
Southeast | 456,788 | 13 | % | 405,960 | 838,929 | 7 | % | 780,415 | |||||||||||||
Florida | 559,275 | 5 | % | 530,534 | 1,049,303 | 13 | % | 926,665 | |||||||||||||
Midwest | 337,797 | (2 | )% | 345,670 | 628,730 | (2 | )% | 638,522 | |||||||||||||
Texas | 364,996 | 7 | % | 342,626 | 709,504 | 16 | % | 611,367 | |||||||||||||
West | 611,874 | 3 | % | 592,763 | 1,163,387 | 6 | % | 1,100,177 | |||||||||||||
$ | 2,472,029 | 3 | % | $ | 2,403,559 | $ | 4,693,532 | 8 | % | $ | 4,353,415 | ||||||||||
Income (loss) before income taxes (a): | |||||||||||||||||||||
Northeast | $ | 18,944 | (28 | )% | $ | 26,212 | $ | 37,553 | 10 | % | $ | 34,140 | |||||||||
Southeast | 72,780 | 71 | % | 42,499 | 127,524 | 59 | % | 80,355 | |||||||||||||
Florida (b) | 97,263 | 21 | % | 80,066 | 152,596 | 18 | % | 129,662 | |||||||||||||
Midwest | 43,607 | 2 | % | 42,962 | 75,069 | 9 | % | 69,120 | |||||||||||||
Texas | 59,909 | 22 | % | 49,144 | 113,504 | 42 | % | 80,115 | |||||||||||||
West | 90,164 | (5 | )% | 94,443 | 157,419 | (15 | )% | 184,625 | |||||||||||||
Other homebuilding (c) | 13,918 | 135 | % | (39,628 | ) | (22,861 | ) | 71 | % | (78,024 | ) | ||||||||||
$ | 396,585 | 34 | % | $ | 295,698 | $ | 640,804 | 28 | % | $ | 499,993 | ||||||||||
(a) | Includes land-related charges as summarized in the table below. |
(b) | Includes goodwill impairment charge totaling $20.2 million in the six months ended June 30, 2020. |
(c) | Other homebuilding includes the amortization of intangible assets and capitalized interest and other items not allocated to the operating segments. Other homebuilding also includes insurance reserve reversals of $60.7 million and $59.4 million for the three and six months ended June 30, 2020, respectively, and $12.8 million and $16.6 million for the three and six months ended June 30, 2019, respectively. |
Operating Data by Segment ($000's omitted) | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2020 | 2020 vs. 2019 | 2019 | 2020 | 2020 vs. 2019 | 2019 | ||||||||||||||||
Closings (units): | |||||||||||||||||||||
Northeast | 260 | (26 | )% | 349 | 570 | — | % | 568 | |||||||||||||
Southeast | 1,104 | 16 | % | 951 | 2,032 | 10 | % | 1,848 | |||||||||||||
Florida | 1,380 | 10 | % | 1,252 | 2,590 | 15 | % | 2,260 | |||||||||||||
Midwest | 808 | (2 | )% | 822 | 1,516 | (2 | )% | 1,548 | |||||||||||||
Texas | 1,194 | 7 | % | 1,119 | 2,322 | 18 | % | 1,968 | |||||||||||||
West | 1,191 | 9 | % | 1,096 | 2,280 | 12 | % | 2,032 | |||||||||||||
5,937 | 6 | % | 5,589 | 11,310 | 11 | % | 10,224 | ||||||||||||||
Average selling price: | |||||||||||||||||||||
Northeast | $ | 543 | 2 | % | $ | 533 | $ | 533 | 2 | % | $ | 522 | |||||||||
Southeast | 414 | (3 | )% | 427 | 413 | (2 | )% | 422 | |||||||||||||
Florida | 405 | (4 | )% | 424 | 405 | (1 | )% | 410 | |||||||||||||
Midwest | 418 | (1 | )% | 421 | 415 | 1 | % | 412 | |||||||||||||
Texas | 306 | — | % | 306 | 306 | (2 | )% | 311 | |||||||||||||
West | 514 | (5 | )% | 541 | 510 | (6 | )% | 541 | |||||||||||||
$ | 416 | (3 | )% | $ | 430 | $ | 415 | (3 | )% | $ | 426 | ||||||||||
Net new orders - units: | |||||||||||||||||||||
Northeast | 383 | (16 | )% | 455 | 831 | 2 | % | 816 | |||||||||||||
Southeast | 1,095 | (10 | )% | 1,214 | 2,236 | (2 | )% | 2,287 | |||||||||||||
Florida | 1,488 | 2 | % | 1,460 | 3,173 | 13 | % | 2,806 | |||||||||||||
Midwest | 896 | (8 | )% | 975 | 1,915 | (4 | )% | 1,999 | |||||||||||||
Texas | 1,431 | 8 | % | 1,323 | 2,940 | 9 | % | 2,689 | |||||||||||||
West | 1,229 | (10 | )% | 1,365 | 2,922 | 10 | % | 2,658 | |||||||||||||
6,522 | (4 | )% | 6,792 | 14,017 | 6 | % | 13,255 | ||||||||||||||
Net new orders - dollars: | |||||||||||||||||||||
Northeast | $ | 203,532 | (17 | )% | $ | 244,346 | $ | 459,544 | 4 | % | $ | 440,644 | |||||||||
Southeast | 449,511 | (11 | )% | 502,970 | 923,392 | (4 | )% | 957,358 | |||||||||||||
Florida | 597,382 | (1 | )% | 600,738 | 1,290,099 | 12 | % | 1,151,043 | |||||||||||||
Midwest | 373,390 | (6 | )% | 399,199 | 819,747 | (1 | )% | 824,841 | |||||||||||||
Texas | 417,675 | 2 | % | 407,927 | 873,464 | 7 | % | 819,970 | |||||||||||||
West | 635,584 | (14 | )% | 735,529 | 1,579,577 | 10 | % | 1,432,705 | |||||||||||||
$ | 2,677,074 | (7 | )% | $ | 2,890,709 | $ | 5,945,823 | 6 | % | $ | 5,626,561 |
Operating Data by Segment ($000's omitted) | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2020 | 2020 vs. 2019 | 2019 | 2020 | 2020 vs. 2019 | 2019 | ||||||||||||||||
Cancellation rates: | |||||||||||||||||||||
Northeast | 12 | % | 13 | % | 12 | % | 12 | % | |||||||||||||
Southeast | 13 | % | 10 | % | 12 | % | 11 | % | |||||||||||||
Florida | 19 | % | 12 | % | 16 | % | 12 | % | |||||||||||||
Midwest | 15 | % | 12 | % | 13 | % | 11 | % | |||||||||||||
Texas | 22 | % | 16 | % | 19 | % | 15 | % | |||||||||||||
West | 25 | % | 17 | % | 19 | % | 16 | % | |||||||||||||
19 | % | 14 | % | 16 | % | 13 | % | ||||||||||||||
Unit backlog: | |||||||||||||||||||||
Northeast | 850 | 18 | % | 718 | |||||||||||||||||
Southeast | 2,069 | 1 | % | 2,049 | |||||||||||||||||
Florida | 2,889 | 19 | % | 2,435 | |||||||||||||||||
Midwest | 1,939 | 5 | % | 1,853 | |||||||||||||||||
Texas | 2,468 | 12 | % | 2,213 | |||||||||||||||||
West | 2,999 | 19 | % | 2,525 | |||||||||||||||||
13,214 | 12 | % | 11,793 | ||||||||||||||||||
Backlog dollars: | |||||||||||||||||||||
Northeast | $ | 503,562 | 25 | % | $ | 402,186 | |||||||||||||||
Southeast | 867,932 | (1 | )% | 875,973 | |||||||||||||||||
Florida | 1,219,057 | 19 | % | 1,024,429 | |||||||||||||||||
Midwest | 842,993 | 9 | % | 774,739 | |||||||||||||||||
Texas | 754,827 | 9 | % | 694,816 | |||||||||||||||||
West | 1,599,725 | 20 | % | 1,337,150 | |||||||||||||||||
$ | 5,788,096 | 13 | % | $ | 5,109,293 |
Operating Data by Segment ($000’s omitted) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Land-related charges*: | |||||||||||||||
Northeast | $ | 92 | $ | 130 | $ | 4,845 | $ | 454 | |||||||
Southeast | 929 | 2,015 | 1,676 | 2,587 | |||||||||||
Florida | 459 | 765 | 981 | 1,246 | |||||||||||
Midwest | 499 | 203 | 1,275 | 1,306 | |||||||||||
Texas | 329 | 414 | 986 | 482 | |||||||||||
West | 145 | 216 | 1,674 | 647 | |||||||||||
Other homebuilding | — | 88 | 744 | 88 | |||||||||||
$ | 2,453 | $ | 3,831 | $ | 12,181 | $ | 6,810 |
* | Land-related charges include land inventory impairments, net realizable value adjustments on land held for sale, and write-offs of deposits and pre-acquisition costs for land option contracts we elected not to pursue. Other homebuilding consists primarily of write-offs of capitalized interest related to such land-related charges. |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2020 | 2020 vs. 2019 | 2019 | 2020 | 2020 vs. 2019 | 2019 | ||||||||||||||||
Mortgage revenues | $ | 77,411 | 94 | % | $ | 39,833 | $ | 118,145 | 65 | % | $ | 71,706 | |||||||||
Title services revenues | 14,323 | 8 | % | 13,210 | 26,525 | 15 | % | 23,052 | |||||||||||||
Insurance brokerage commissions | 3,068 | 5 | % | 2,914 | 4,682 | (7 | )% | 5,061 | |||||||||||||
Total Financial Services revenues | 94,802 | 69 | % | 55,957 | 149,352 | 50 | % | 99,819 | |||||||||||||
Expenses | (34,378 | ) | 11 | % | (30,901 | ) | (69,327 | ) | 11 | % | (62,350 | ) | |||||||||
Other income (expense), net | — | (a) | 22 | (51 | ) | (a) | 17 | ||||||||||||||
Income before income taxes | $ | 60,424 | 141 | % | $ | 25,078 | $ | 79,974 | 113 | % | $ | 37,486 | |||||||||
Total originations: | |||||||||||||||||||||
Loans | 4,474 | 20 | % | 3,720 | 8,344 | 24 | % | 6,718 | |||||||||||||
Principal | $ | 1,436,103 | 24 | % | $ | 1,161,906 | $ | 2,649,370 | 28 | % | $ | 2,076,617 |
(a) | Percentage not meaningful |
Six Months Ended | |||||
June 30, | |||||
2020 | 2019 | ||||
Supplemental data: | |||||
Capture rate | 86.8 | % | 80.4 | % | |
Average FICO score | 751 | 750 | |||
Funded origination breakdown: | |||||
Government (FHA, VA, USDA) | 22 | % | 20 | % | |
Other agency | 70 | % | 71 | % | |
Total agency | 92 | % | 91 | % | |
Non-agency | 8 | % | 9 | % | |
Total funded originations | 100 | % | 100 | % |
As of June 30, 2020 for the Years ending December 31, | |||||||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | Total | Fair Value | ||||||||||||||||||||||||
Rate-sensitive liabilities: | |||||||||||||||||||||||||||||||
Fixed rate debt | $ | 11,329 | $ | 463,016 | $ | 10,295 | $ | — | $ | — | $ | 2,300,000 | $ | 2,784,640 | $ | 2,811,823 | |||||||||||||||
Average interest rate | 3.80 | % | 4.04 | % | 0.39 | % | — | % | — | % | 5.90 | % | 5.56 | % | |||||||||||||||||
Variable rate debt (a) | $ | 256,359 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 256,359 | $ | 256,359 | |||||||||||||||
Average interest rate | 2.16 | % | — | % | — | % | — | % | — | % | — | % | 2.16 | % |
• | Placed restrictions on business travel for our employees and imposed mandatory quarantine periods for employees who traveled to areas impacted by the pandemic; |
• | Closed our sales centers, model homes, and design centers to the general public and shifted to appointment-only interactions with our customers where permitted, following recommended distancing and other health and safety protocols when meeting in person with a customer; |
• | Enhanced our virtual sales tools to give customers the ability to shop for a new home from their mobile device or personal computer; |
• | Closed the public gathering spaces of our amenity centers as well as community pools and athletic facilities; |
• | Modified our corporate and division office functions in order to allow all of our employees to work remotely except for essential minimum basic operations which could only be done in an office setting; |
• | Eliminated non-emergency warranty work in our customers’ homes; |
• | Modified much of our customer interactions around the mortgage origination and closing process to be virtual and minimize in-person interactions; and |
• | Modified our construction operations to enforce enhanced safety protocols around social distancing, hygiene, and health screening. |
Total number of shares purchased (1) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Approximate dollar value of shares that may yet be purchased under the plans or programs ($000’s omitted) (2) | ||||||||||
April 1, 2020 to April 30, 2020 | — | $ | — | — | $ | 429,872 | |||||||
May 1, 2020 to May 31, 2020 | — | $ | — | — | $ | 429,872 | |||||||
June 1, 2020 to June 30, 2020 | — | $ | — | — | $ | 429,872 | |||||||
Total | — | $ | — | — |
(1) | During the six months ended June 30, 2020, participants surrendered 0.3 million shares for payment of minimum tax obligations upon the vesting or exercise of previously granted share-based compensation awards. Such shares were not repurchased as part of our publicly-announced share repurchase programs and are excluded from the table above. |
(2) | The Board of Directors approved a share repurchase authorization totaling $500.0 million in January 2018 and an increase of $500.0 million to such authorization in May 2019. There is no expiration date for this program, under which $429.9 million remained as of June 30, 2020. During the six months ended June 30, 2020, we repurchased 2.8 million shares for a total of $95.7 million under this program. |
3 | (a) | |||
(b) | ||||
(c) | ||||
(d) | ||||
(e) | ||||
4 | (a) | Any instrument with respect to long-term debt, where the securities authorized thereunder do not exceed 10% of the total assets of PulteGroup, Inc. and its subsidiaries, has not been filed. The Company agrees to furnish a copy of such instruments to the SEC upon request. | ||
(b) | ||||
(c) | ||||
(d) | ||||
(e) | ||||
(f) | ||||
31 | (a) | |||
(b) | ||||
32 | ||||
101.INS | Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||
104 | The cover page from this Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL |
PULTEGROUP, INC. | ||
/s/ Robert T. O'Shaughnessy | ||
Robert T. O'Shaughnessy | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer and duly authorized officer) | ||
Date: | July 23, 2020 |
1. | I have reviewed this quarterly report on Form 10-Q of PulteGroup, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | July 23, 2020 | /s/ Ryan R. Marshall |
Ryan R. Marshall | ||
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of PulteGroup, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | July 23, 2020 | /s/ Robert T. O'Shaughnessy |
Robert T. O'Shaughnessy | ||
Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | July 23, 2020 |
/s/ Ryan R. Marshall |
Ryan R. Marshall |
President and Chief Executive Officer |
/s/ Robert T. O'Shaughnessy |
Robert T. O'Shaughnessy |
Executive Vice President and Chief Financial Officer |
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
ASSETS | ||
Cash and equivalents | $ 1,658,530 | $ 1,217,913 |
Restricted cash | 39,266 | 33,543 |
Total cash, cash equivalents, and restricted cash | 1,697,796 | 1,251,456 |
House and land inventory | 7,584,739 | 7,680,614 |
Land held for sale | 29,409 | 24,009 |
Residential mortgage loans available-for-sale | 394,288 | 508,967 |
Investments in unconsolidated entities | 47,707 | 59,766 |
Other assets | 910,271 | 895,686 |
Intangible assets | 173,507 | 124,992 |
Deferred tax assets, net | 120,768 | 170,107 |
Total assets | 10,958,485 | 10,715,597 |
Liabilities: | ||
Accounts payable | 295,249 | 435,916 |
Customer deposits | 335,040 | 294,427 |
Accrued and other liabilities | 1,302,822 | 1,399,368 |
Income tax liabilities | 146,729 | 36,093 |
Financial Services debt | 256,359 | 326,573 |
Notes payable | 2,770,618 | 2,765,040 |
Total liabilities | 5,106,817 | 5,257,417 |
Shareholders' equity | 5,851,668 | 5,458,180 |
Total liabilities and shareholders' equity | $ 10,958,485 | $ 10,715,597 |
Consolidated Statements Of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Revenues: | ||||
Total revenues | $ 2,593,781 | $ 2,488,985 | $ 4,888,761 | $ 4,485,679 |
Homebuilding Cost of Revenues: | ||||
Selling, general, and administrative expenses | (196,858) | (259,440) | (460,527) | (512,166) |
Goodwill impairment | 0 | 0 | (20,190) | 0 |
Other income (expense), net | (5,286) | (3,499) | (7,810) | (4,473) |
Income before income taxes | 457,009 | 320,776 | 720,778 | 537,479 |
Income tax expense | (108,389) | (79,735) | (168,447) | (129,681) |
Net income | $ 348,620 | $ 241,041 | $ 552,331 | $ 407,798 |
Per share: | ||||
Basic earnings (usd per share) | $ 1.29 | $ 0.86 | $ 2.03 | $ 1.46 |
Diluted earnings (usd per share) | 1.29 | 0.86 | 2.03 | 1.45 |
Cash dividends declared (usd per share) | $ 0.12 | $ 0.11 | $ 0.24 | $ 0.22 |
Number of shares used in calculation: | ||||
Basic shares outstanding (shares) | 268,324 | 276,652 | 269,167 | 277,142 |
Effect of dilutive securities (shares) | 701 | 932 | 960 | 967 |
Diluted shares outstanding (shares) | 269,025 | 277,584 | 270,127 | 278,109 |
Home sale | ||||
Revenues: | ||||
Revenues | $ 2,472,029 | $ 2,403,559 | $ 4,693,532 | $ 4,353,415 |
Homebuilding Cost of Revenues: | ||||
Cost of revenues | (1,880,209) | (1,848,155) | (3,575,074) | (3,340,946) |
Land sale and other | ||||
Revenues: | ||||
Revenues | 26,950 | 29,469 | 45,877 | 32,445 |
Homebuilding Cost of Revenues: | ||||
Cost of revenues | (20,041) | (26,214) | (35,055) | (28,265) |
Total Homebuilding | ||||
Revenues: | ||||
Revenues | 2,498,979 | 2,433,028 | 4,739,409 | 4,385,860 |
Homebuilding Cost of Revenues: | ||||
Financial services expenses | (1,900,250) | (1,874,369) | (3,610,129) | (3,369,211) |
Financial Services | ||||
Revenues: | ||||
Revenues | 94,802 | 55,957 | 149,352 | 99,819 |
Homebuilding Cost of Revenues: | ||||
Financial services expenses | $ (34,378) | $ (30,901) | $ (69,327) | $ (62,350) |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Net income | $ 348,620 | $ 241,041 | $ 552,331 | $ 407,798 |
Other comprehensive income, net of tax: | ||||
Change in value of derivatives | 25 | 25 | 50 | 50 |
Other comprehensive income | 25 | 25 | 50 | 50 |
Comprehensive income (loss) | $ 348,645 | $ 241,066 | $ 552,381 | $ 407,848 |
Basis of Presentation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of presentation | Basis of presentation PulteGroup, Inc. is one of the largest homebuilders in the United States ("U.S."), and our common shares trade on the New York Stock Exchange under the ticker symbol “PHM”. Unless the context otherwise requires, the terms "PulteGroup", the "Company", "we", "us", and "our" used herein refer to PulteGroup, Inc. and its subsidiaries. While our subsidiaries engage primarily in the homebuilding business, we also engage in mortgage banking operations, conducted through Pulte Mortgage LLC (“Pulte Mortgage”), and title and insurance brokerage operations. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Subsequent events We evaluated subsequent events up until the time the financial statements were filed with the Securities and Exchange Commission (the "SEC"). Business acquisition In January 2020, we acquired the operations of Innovative Construction Group ("ICG"), an offsite construction framing company located in Jacksonville, Florida, for $104.0 million, of which $83.3 million was paid in January 2020 while additional payments of $10.4 million will be settled in 2021 and 2022, respectively. The acquired net assets were recorded at their estimated fair values, including intangible assets of $27.8 million associated with customer relationships and $1.8 million associated with the ICG tradename, which are being amortized over seven- and five-year useful lives, respectively. The acquisition also resulted in $48.7 million of goodwill. The acquisition of these assets was not material to our results of operations or financial condition. Goodwill impairment In accordance with ASC 350, management evaluates the recoverability of goodwill by comparing the carrying value of the Company’s reporting units to their fair value. Fair value is determined using accepted valuation methods, including the use of discounted cash flows supplemented by market-based assessments of fair value. As a result of the significant decline in equity market valuations that occurred during the period between our acquisition of ICG in January 2020 and March 31, 2020, we determined that an event-driven goodwill impairment test was appropriate for the ICG goodwill, which resulted in an impairment totaling $20.2 million in the first quarter of 2020. This impairment was not the result of any unique factors specific to ICG's operations but, rather, reflected the broad-based declines in the market capitalizations of publicly-traded construction companies in the short period of time between the acquisition and the March 31, 2020 valuation date. Restructuring costs We recorded severance expense of $10.3 million during the three months ended June 30, 2020, as we took actions to reduce overhead expenses in response to lower demand resulting from the COVID-19 pandemic. Other expense, net Other expense, net consists of the following ($000’s omitted):
Revenue recognition Home sale revenues - Home sale revenues and related profit are generally recognized when title to and possession of the home are transferred to the buyer at the home closing date. Our performance obligation to deliver the agreed-upon home is generally satisfied at the home closing date. Home sale contract assets consist of cash from home closings held in escrow for our benefit, typically for less than five days, which are considered deposits in-transit and classified as cash. Contract liabilities include customer deposits related to sold but undelivered homes, which totaled $335.0 million and $294.4 million at June 30, 2020 and December 31, 2019, respectively. Substantially all of our home sales are scheduled to close and be recorded to revenue within one year from the date of receiving a customer deposit. See Note 8 for information on warranties and related obligations. Land sale and other revenues - We periodically elect to sell parcels of land to third parties in the event such assets no longer fit into our strategic operating plans or are zoned for commercial or other development. Land sales are generally outright sales of specified land parcels with cash consideration due on the closing date, which is generally when performance obligations are satisfied. Revenues related to our construction services operations are generally recognized as materials are delivered and installation services are completed. Financial services revenues - Loan origination fees, commitment fees, and certain direct loan origination costs are recognized as incurred. Expected gains and losses from the sale of residential mortgage loans and their related servicing rights are included in the measurement of written loan commitments that are accounted for at fair value through Financial Services revenues at the time of commitment. Subsequent changes in the fair value of these loans are reflected in Financial Services revenues as they occur. Interest income is accrued from the date a mortgage loan is originated until the loan is sold. Mortgage servicing fees represent fees earned for servicing loans. Servicing fees are based on a contractual percentage of the outstanding principal balance and are credited to income when related mortgage payments are received. Revenues associated with our title operations are recognized as closing services are rendered and title insurance policies are issued, both of which generally occur as each home is closed. Insurance brokerage commissions relate to commissions on homeowner and other insurance policies placed with third party carriers through various agency channels. Our performance obligations for policy renewal commissions are satisfied upon issuance of the initial policy, and related contract assets for estimated future renewal commissions are included in other assets and totaled $36.0 million and $35.1 million at June 30, 2020 and December 31, 2019, respectively. Earnings per share Basic earnings per share is computed by dividing income available to common shareholders (the “Numerator”) by the weighted-average number of common shares outstanding, adjusted for unvested shares (the “Denominator”) for the period. Computing diluted earnings per share is similar to computing basic earnings per share, except that the Denominator is increased to include the dilutive effects of stock options, unvested restricted share units, unvested restricted share units, and other potentially dilutive instruments. Any stock options that have an exercise price greater than the average market price are considered to be anti-dilutive and are excluded from the diluted earnings per share calculation. In accordance with Accounting Standards Codification ("ASC") 260, "Earnings Per Share", the two-class method determines earnings per share for each class of common stock and participating securities according to an earnings allocation formula that adjusts the Numerator for dividends or dividend equivalents and participation rights in undistributed earnings. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, are included in computing earnings per share pursuant to the two-class method. Our outstanding restricted share units and deferred shares are considered participating securities. The following table presents the earnings per common share (000's omitted, except per share data):
Residential mortgage loans available-for-sale Substantially all of the loans originated by us are sold in the secondary mortgage market within a short period of time after origination, generally within 30 days. At June 30, 2020 and December 31, 2019, residential mortgage loans available-for-sale had an aggregate fair value of $394.3 million and $509.0 million, respectively, and an aggregate outstanding principal balance of $378.0 million and $494.1 million, respectively. The net loss resulting from changes in fair value of these loans totaled $3.6 million and $0.2 million for the three months ended June 30, 2020 and 2019, respectively, and $1.4 million and $1.3 million for the six months ended June 30, 2020 and 2019, respectively. These changes in fair value were substantially offset by changes in the fair value of corresponding hedging instruments. Net gains from the sale of mortgages were $66.3 million and $30.4 million for the three months ended June 30, 2020 and 2019, respectively, and $97.2 million and $54.3 million for the six months ended June 30, 2020 and 2019, respectively, and have been included in Financial Services revenues. Derivative instruments and hedging activities We are party to interest rate lock commitments ("IRLCs") with customers resulting from our mortgage origination operations. At June 30, 2020 and December 31, 2019, we had aggregate IRLCs of $454.4 million and $255.3 million, respectively, which were originated at interest rates prevailing at the date of commitment. Since we can terminate a loan commitment if the borrower does not comply with the terms of the contract, and some loan commitments may expire without being drawn upon, these commitments do not necessarily represent future cash requirements. We evaluate the creditworthiness of these transactions through our normal credit policies. We hedge our exposure to interest rate market risk relating to residential mortgage loans available-for-sale and IRLCs using forward contracts on mortgage-backed securities, which are commitments to either purchase or sell a specified financial instrument at a specified future date for a specified price, and whole loan investor commitments, which are obligations of an investor to buy loans at a specified price within a specified time period. Forward contracts on mortgage-backed securities are the predominant derivative financial instruments we use to minimize market risk during the period from the time we extend an interest rate lock to a loan applicant until the time the loan is sold to an investor. At June 30, 2020 and December 31, 2019, we had unexpired forward contracts of $551.0 million and $518.2 million, respectively, and whole loan investor commitments of $225.1 million and $200.7 million, respectively. Changes in the fair value of IRLCs and other derivative financial instruments are recognized in Financial Services revenues, and the fair values are reflected in other assets or other liabilities, as applicable. There are no credit-risk-related contingent features within our derivative agreements, and counterparty risk is considered minimal. Gains and losses on IRLCs and residential mortgage loans available-for-sale are substantially offset by corresponding gains or losses on forward contracts on mortgage-backed securities and whole loan investor commitments. We are generally not exposed to variability in cash flows of derivative instruments for more than approximately 60 days. The fair values of derivative instruments and their locations in the Condensed Consolidated Balance Sheets are summarized below ($000’s omitted):
Credit losses We are exposed to credit losses primarily through our vendors and insurance carriers. We assess and monitor each counterparty’s ability to pay amounts owed by considering contractual terms and conditions, the counterparty’s financial condition, macroeconomic factors, and business strategy. At June 30, 2020, we reported $198.0 million of assets in-scope under Accounting Standards Codification 326, "Financial Instruments - Credit Losses" ("ASC 326"). These assets consist primarily of insurance receivables, contract assets related to insurance brokerage commissions, and vendor rebates. Counterparties associated with these assets are generally highly rated. Allowances on the aforementioned in-scope assets were de minimis as of June 30, 2020. New accounting pronouncements On January 1, 2020, we adopted ASC 326, which changed the impairment model for most financial assets and certain other instruments from an "incurred loss" approach to a new "expected credit loss" methodology. We adopted ASC 326 using the modified retrospective transition method. The amendment requires entities to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses. Our adoption of ASC 326 resulted in a $0.7 million decrease to retained earnings as of January 1, 2020. In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment", which removed the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. Under the new standard, goodwill impairment is determined by evaluating the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. We adopted the standard for annual and interim periods beginning January 1, 2020, and the standard was followed in the previously mentioned assessment of the ICG goodwill.
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Inventory |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory Major components of inventory were as follows ($000’s omitted):
We capitalize interest cost into inventory during the active development and construction of our communities. In all periods presented, we capitalized substantially all Homebuilding interest costs into inventory because the level of our active inventory exceeded our debt levels. Information related to interest capitalized into inventory is as follows ($000’s omitted):
Land option agreements We enter into land option agreements in order to procure land for the construction of homes in the future. Pursuant to these land option agreements, we generally provide a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices. Such contracts enable us to defer acquiring portions of properties owned by third parties or unconsolidated entities until we have determined whether and when to exercise our option, which reduces our financial risks associated with long-term land holdings. Option deposits and pre-acquisition costs (such as environmental testing, surveys, engineering, and entitlement costs) are capitalized if the costs are directly identifiable with the land under option, the costs would be capitalized if we owned the land, and acquisition of the property is probable. Such costs are reflected in other assets and are reclassified to inventory upon taking title to the land. We write off deposits and pre-acquisition costs when it becomes probable that we will not go forward with the project or recover the capitalized costs. Such decisions take into consideration changes in local market conditions, the timing of required land purchases, the availability and best use of necessary incremental capital, and other factors. We record any such write-offs of deposits and pre-acquisition costs within other expense, net. If an entity holding the land under option is a variable interest entity ("VIE"), our deposit represents a variable interest in that entity. No VIEs required consolidation at either June 30, 2020 or December 31, 2019 because we determined that we were not the VIEs' primary beneficiary. Our maximum exposure to loss related to these VIEs is generally limited to our deposits and pre-acquisition costs under the land option agreements. The following provides a summary of our interests in land option agreements as of June 30, 2020 and December 31, 2019 ($000’s omitted):
Land-related charges We recorded the following land-related charges ($000's omitted):
As explained in Note 1, we periodically elect to sell parcels of land to third parties in the event such assets no longer fit into our strategic operating plans or are zoned for commercial or other development. NRV adjustments occur when circumstances indicate that the carrying value of land held for sale will not be fully recovered. Our evaluations for land impairments, NRV adjustments, and write-offs of deposits and pre-acquisition costs are based on our best estimates of the future cash flows of our communities. Due to uncertainties in the estimation process, the significant volatility in demand for new housing, the long life cycles of certain of our communities, and potential changes in our strategy related to certain communities, actual results could differ significantly from such estimates.
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment information | Segment information Our Homebuilding operations are engaged in the acquisition and development of land primarily for residential purposes within the U.S. and the construction of housing on such land. For reporting purposes, our Homebuilding operations are aggregated into six reportable segments:
We also have a reportable segment for our Financial Services operations, which consist principally of mortgage banking, title, and insurance brokerage operations that operate generally in the same markets as the Homebuilding segments.
(a) Other homebuilding primarily includes cash and equivalents, capitalized interest, intangibles, deferred tax assets, and other corporate items that are not allocated to the operating segments.
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Notes payable Our notes payable are summarized as follows ($000’s omitted):
Other notes payable include non-recourse and limited recourse secured notes with third parties that totaled $58.7 million and $53.4 million at June 30, 2020 and December 31, 2019, respectively. These notes have maturities ranging up to three years, are secured by the applicable land positions to which they relate, and have no recourse to any other assets. The stated interest rates on these notes range up to 8%. Revolving credit facility We maintain a revolving credit facility (the "Revolving Credit Facility") maturing in 2023 that has a maximum borrowing capacity of $1.0 billion and contains an uncommitted accordion feature that could increase the capacity to $1.5 billion, subject to certain conditions and availability of additional bank commitments. The Revolving Credit Facility also provides for the issuance of letters of credit that reduce the available borrowing capacity under the Revolving Credit Facility, with a sublimit of $500.0 million at June 30, 2020. The interest rate on borrowings under the Revolving Credit Facility may be based on either the London Interbank Offered Rate ("LIBOR") or a base rate plus an applicable margin, as defined therein. As a precautionary measure during the initial phase of the COVID-19 pandemic, we made the decision in March 2020 to draw $700.0 million under the Revolving Credit Facility. In June 2020, we repaid the full outstanding balance of $700.0 million. As a result, we had no borrowings outstanding at both June 30, 2020 and December 31, 2019, and $244.8 million and $262.8 million of letters of credit issued under the Revolving Credit Facility at June 30, 2020 and December 31, 2019, respectively. The Revolving Credit Facility contains financial covenants that require us to maintain a minimum Tangible Net Worth, a minimum Interest Coverage Ratio, and a maximum Debt-to-Capitalization Ratio (as each term is defined in the Revolving Credit Facility). As of June 30, 2020, we were in compliance with all covenants. Our available and unused borrowings under the Revolving Credit Facility, net of outstanding letters of credit, amounted to $755.2 million and $737.2 million at June 30, 2020 and December 31, 2019, respectively. Financial Services debt Pulte Mortgage maintains a master repurchase agreement with third party lenders (the "Repurchase Agreement") that matures on July 30, 2020. The maximum aggregate commitment was $270.0 million at June 30, 2020 and continues through maturity. The Repurchase Agreement contains various affirmative and negative covenants applicable to Pulte Mortgage, including quantitative thresholds related to net worth, net income, and liquidity. Pulte Mortgage had $256.4 million and $326.6 million outstanding under the Repurchase Agreement at June 30, 2020 and December 31, 2019, respectively, and was in compliance with all of its covenants and requirements as of such dates.
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Shareholders' Equity |
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Jun. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Shareholders’ equity | Shareholders’ equity During the six months ended June 30, 2020, we declared cash dividends totaling $65.1 million and repurchased 2.8 million shares under our repurchase authorization for $95.7 million. For the six months ended June 30, 2019, we declared cash dividends totaling $61.5 million and repurchased 3.5 million shares under our repurchase authorization for $108.5 million. In May 2019, our board of directors approved a $500.0 million increase in our share repurchase authorization. At June 30, 2020, we had remaining authorization to repurchase $429.9 million of common shares. Under our share-based compensation plans, we accept shares as payment under certain conditions related to stock option exercises and vesting of shares, generally related to the payment of minimum tax obligations. During the six months ended June 30, 2020 and 2019, participants surrendered shares valued at $14.9 million and $10.4 million, respectively, under these plans. Such share transactions are excluded from the above noted share repurchase authorization.
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Income Taxes |
6 Months Ended |
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Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes Our effective tax rate for the three and six months ended June 30, 2020 was 23.7% and 23.4%, respectively, compared to 24.9% and 24.1%, respectively, for the same periods in 2019. Our effective tax rate differs from the federal statutory rate primarily due to state income tax expense. At June 30, 2020 and December 31, 2019, we had deferred tax assets, net of deferred tax liabilities and valuation allowance, of $120.8 million and $170.1 million, respectively. The accounting for deferred taxes is based upon estimates of future results. Differences between estimated and actual results could result in changes in the valuation of deferred tax assets that could have a material impact on our consolidated results of operations or financial position. Changes in existing tax laws could also affect actual tax results and the realization of deferred tax assets over time. Unrecognized tax benefits represent the difference between tax positions taken or expected to be taken in a tax return and the benefits recognized for financial statement purposes. We had $45.1 million and $40.3 million of gross unrecognized tax benefits at June 30, 2020 and December 31, 2019, respectively. Additionally, we had accrued interest and penalties of $7.0 million and $6.5 million at June 30, 2020 and December 31, 2019, respectively. It is reasonably possible within the next twelve months that our gross unrecognized tax benefits may decrease by up to $24.2 million, excluding interest and penalties, primarily due to potential audit settlements.
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Fair Value Disclosures |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value disclosures | Fair value disclosures ASC 820, “Fair Value Measurements and Disclosures,” provides a framework for measuring fair value in generally accepted accounting principles and establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy can be summarized as follows:
Our assets and liabilities measured or disclosed at fair value are summarized below ($000’s omitted):
Fair values for agency residential mortgage loans available-for-sale are determined based on quoted market prices for comparable instruments. Fair values for non-agency residential mortgage loans available-for-sale are determined based on purchase commitments from whole loan investors and other relevant market information available to management. Fair values for interest rate lock commitments, including the value of servicing rights, and forward contracts on mortgage-backed securities are valued based on market prices for similar instruments. Fair values for whole loan commitments are based on market prices for similar instruments from the specific whole loan investor. Certain assets are required to be recorded at fair value on a non-recurring basis when events and circumstances indicate that the carrying value may not be recoverable. The non-recurring fair values included in the above table represent only those assets whose carrying values were adjusted to fair value as of the respective balance sheet dates. The carrying amounts of cash and equivalents, Financial Services debt and other notes payable approximate their fair values due to their short-term nature and/or floating interest rate terms. The fair values of senior notes are based on quoted market prices, when available. If quoted market prices are not available, fair values are based on quoted market prices of similar issues. The carrying value of senior notes was $2.7 billion at both June 30, 2020 and December 31, 2019.
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Commitments and Contingencies |
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Commitments and contingencies | Commitments and contingencies Loan origination liabilities Our mortgage operations may be responsible for losses associated with mortgage loans originated and sold to investors in the event of errors or omissions relating to representations and warranties made by us that the loans met certain requirements, including representations as to underwriting standards, the existence of primary mortgage insurance, and the validity of certain borrower representations in connection with the loan. If a loan is determined to be faulty, we either indemnify the investor for potential future losses, repurchase the loan from the investor, or reimburse the investor's actual losses. In addition, certain trustees and investors continue to attempt to collect damages based on losses from loans that originated prior to 2009. Some of our mortgage subsidiaries are currently defendants in litigation related to such claims. CTX Mortgage Company, LLC ("CTX Mortgage") was the mortgage subsidiary of Centex and ceased originating loans in December 2009. In the matter Lehman Brothers Holdings, Inc. ("Lehman") in the U.S. Bankruptcy Court in the Southern District of New York, Lehman has initiated an adversary proceeding against CTX Mortgage seeking indemnity for loans sold to it by CTX Mortgage prior to 2009. This claim is part of a broader action by Lehman in U.S. Bankruptcy Court against more than 100 mortgage originators and brokers. On August 13, 2018, the court denied a motion to dismiss filed by CTX Mortgage and other defendants, and on December 17, 2018, Lehman filed an amended adversary complaint against CTX Mortgage. Lehman's complaint alleges claims for indemnifiable losses of up to $261 million due from CTX Mortgage. We believe that CTX Mortgage has meritorious defenses and CTX Mortgage will continue to vigorously defend itself in this matter. We have recorded a liability for an amount that we consider to be the best estimate within a range of potential losses. In addition, both CTX Mortgage and Pulte Mortgage sold certain loans originated prior to 2009 to financial institutions that were subsequently included in residential mortgage-backed securities or other securitizations issued by such financial institutions. In connection with such sales, CTX Mortgage and Pulte Mortgage have been put on notice of potential direct and / or third-party claims for indemnification arising out of litigation relating to certain of these residential mortgage-backed securities or other securitizations and, in some instances, such claims have resulted in legal proceedings against CTX Mortgage and Pulte Mortgage. We cannot yet quantify CTX Mortgage's or Pulte Mortgage's potential liability as a result of these matters. We do not believe, however, that these matters will have a material adverse impact on the results of operations, financial position, or cash flows of the Company. Our recorded liabilities for all such claims totaled $25.3 million and $25.2 million at June 30, 2020 and December 31, 2019, respectively. Determining the liabilities for anticipated losses requires a significant level of management judgment. Given the unsettled litigation, changes in values of underlying collateral over time, unpredictable factors inherent in litigation, and other uncertainties regarding the ultimate resolution of these claims, actual costs could differ from our current estimates. Letters of credit and surety bonds In the normal course of business, we post letters of credit and surety bonds pursuant to certain performance-related obligations, as security for certain land option agreements, and under various insurance programs. The majority of these letters of credit and surety bonds are in support of our land development and construction obligations to various municipalities, other government agencies, and utility companies related to the construction of roads, sewers, and other infrastructure. We had outstanding letters of credit and surety bonds totaling $244.8 million and $1.3 billion, respectively, at June 30, 2020 and $262.8 million and $1.4 billion, respectively, at December 31, 2019. In the event any such letter of credit or surety bond is drawn, we would be obligated to reimburse the issuer of the letter of credit or surety bond. Our surety bonds generally do not have stated expiration dates; rather we are released from the surety bonds as the underlying contractual performance is completed. Because significant construction and development work has been performed related to projects that have not yet received final acceptance by the respective counterparties, the aggregate amount of surety bonds outstanding is in excess of the projected cost of the remaining work to be performed. We do not believe that a material amount, if any, of the letters of credit or surety bonds will be drawn. Litigation and regulatory matters We are involved in various litigation and legal claims in the normal course of our business operations, including actions brought on behalf of various classes of claimants. We are also subject to a variety of local, state, and federal laws and regulations related to land development activities, house construction standards, sales practices, mortgage lending operations, employment practices, and protection of the environment. As a result, we are subject to periodic examination or inquiry by various governmental agencies that administer these laws and regulations. We establish liabilities for litigation, legal claims, and regulatory matters when such matters are both probable of occurring and any potential loss is reasonably estimable. We accrue for such matters based on the facts and circumstances specific to each matter and revise these estimates as the matters evolve. In such cases, there may exist an exposure to loss in excess of any amounts currently accrued. In view of the inherent difficulty of predicting the outcome of these legal and regulatory matters, we generally cannot predict the ultimate resolution of the pending matters, the related timing, or the eventual loss. While the outcome of such contingencies cannot be predicted with certainty, we do not believe that the resolution of such matters will have a material adverse impact on our results of operations, financial position, or cash flows. However, to the extent the liability arising from the ultimate resolution of any matter exceeds the estimates reflected in the recorded reserves relating to such matter, we could incur additional charges that could be significant. Product warranty Home purchasers are provided with a limited warranty against certain building defects, including a one-year comprehensive limited warranty and coverage for certain other aspects of the home’s construction and operating systems for periods of up to and, in limited instances, exceeding 10 years. We estimate the costs to be incurred under these warranties and record liabilities in the amount of such costs at the time product revenue is recognized. Factors that affect our warranty liabilities include the number of homes sold, historical and anticipated rates of warranty claims, and the projected cost per claim. We periodically assess the adequacy of the warranty liabilities for each geographic market in which we operate and adjust the amounts as necessary. Actual warranty costs in the future could differ from the current estimates. Changes to warranty liabilities were as follows ($000’s omitted):
Self-insured risks We maintain, and require our subcontractors to maintain, general liability insurance coverage. We also maintain builders' risk, property, errors and omissions, workers' compensation, and other business insurance coverage. These insurance policies protect us against a portion of the risk of loss from claims. However, we retain a significant portion of the overall risk for such claims either through policies issued by our captive insurance subsidiaries or through our own self-insured per occurrence and aggregate retentions, deductibles, and claims in excess of available insurance policy limits. Our general liability insurance includes coverage for certain construction defects. While construction defect claims can relate to a variety of circumstances, the majority of our claims relate to alleged problems with siding, plumbing, foundations and other concrete work, windows, roofing, and heating, ventilation and air conditioning systems. The availability of general liability insurance for the homebuilding industry and its subcontractors has become increasingly limited, and the insurance policies available require us to maintain significant per occurrence and aggregate retention levels. In certain instances, we may offer our subcontractors the opportunity to purchase insurance through one of our captive insurance subsidiaries or participate in a project-specific insurance program provided by us. Policies issued by our captive insurance subsidiaries represent self-insurance of these risks by us. This self-insured exposure is limited by reinsurance policies that we purchase. General liability coverage for the homebuilding industry is complex, and our coverage varies from policy year to policy year. Our insurance coverage requires a per occurrence deductible up to an overall aggregate retention level. Beginning with the first dollar, amounts paid to satisfy insured claims generally apply to our per occurrence and aggregate retention obligations. Any amounts incurred in excess of the occurrence or aggregate retention levels are covered by insurance up to our purchased coverage levels. Our insurance policies, including the captive insurance subsidiaries' reinsurance policies, are maintained with highly-rated underwriters for whom we believe counterparty default risk is not significant. At any point in time, we are managing over 1,000 individual claims related to general liability, property, errors and omissions, workers' compensation, and other business insurance coverage. We reserve for costs associated with such claims (including expected claims management expenses) on an undiscounted basis at the time revenue is recognized for each home closing and periodically evaluate the recorded liabilities based on actuarial analyses of our historical claims. The actuarial analyses calculate estimates of the ultimate net cost of all unpaid losses, including estimates for incurred but not reported losses ("IBNR"). IBNR represents losses related to claims incurred but not yet reported plus development on reported claims. Our recorded reserves for all such claims totaled $640.0 million and $709.8 million at June 30, 2020 and December 31, 2019, respectively. The recorded reserves include loss estimates related to both (i) existing claims and related claim expenses and (ii) IBNR and related claim expenses. Liabilities related to IBNR and related claim expenses represented approximately 69% and 68% of the total general liability reserves at June 30, 2020 and December 31, 2019, respectively. The actuarial analyses that determine the IBNR portion of reserves consider a variety of factors, including the frequency and severity of losses, which are based on our historical claims experience supplemented by industry data. The actuarial analyses of the reserves also consider historical third party recovery rates and claims management expenses. Housing market conditions can be volatile, and we believe such conditions can affect the frequency and cost of construction defect claims. Additionally, IBNR estimates comprise the majority of our liability and are subject to a high degree of uncertainty due to a variety of factors, including changes in claims reporting and resolution patterns, third party recoveries, insurance industry practices, the regulatory environment, and legal precedent. State regulations vary, but construction defect claims are typically reported and resolved over an extended period, often exceeding ten years. Changes in the frequency and timing of reported claims and estimates of specific claim values can impact the underlying inputs and trends utilized in the actuarial analyses, which could have a material impact on the recorded reserves. Additionally, the amount of insurance coverage available for each policy period also impacts our recorded reserves. Because of the inherent uncertainty in estimating future losses and the timing of such losses related to these claims, actual costs could differ significantly from estimated costs. Adjustments to reserves are recorded in the period in which the change in estimate occurs. We reduced general liability reserves by $60.7 million and $59.4 million during the three and six months ended June 30, 2020, respectively, and $12.8 million and $16.6 million during the three and six months ended June 30, 2019, respectively, as a result of changes in estimates resulting from actual claim experience being less than anticipated in previous actuarial projections. The changes in actuarial estimates were driven by changes in actual claims experience that, in turn, impacted actuarial estimates for potential future claims. These changes in actuarial estimates did not involve any changes in actuarial methodology but did impact the development of estimates for future periods, which resulted in adjustments to the IBNR portion of our recorded liabilities. Costs associated with our insurance programs are classified within selling, general, and administrative expenses. Changes in these liabilities were as follows ($000's omitted):
Estimates of anticipated recoveries of our costs under various insurance policies or from subcontractors or other third parties are recorded when recovery is considered probable. Such receivables are recorded in other assets and totaled $82.4 million and $118.4 million at June 30, 2020 and December 31, 2019, respectively. Those receivables relate to costs incurred to perform corrective repairs, settle claims with customers, and other costs related to the continued progression of construction defect claims that we believe are insured. Given the complexity inherent with resolving construction defect claims in the homebuilding industry described above, there generally exists a significant lag between our payment of claims and our reimbursements from applicable insurance carriers or third parties. In addition, disputes between homebuilders and insurance carriers or third parties over coverage positions relating to construction defect claims are common. Resolution of claims involves the exchange of significant amounts of information and frequently involves legal action. During the three and six months ended June 30, 2019, we wrote-off $12.6 million and $24.2 million, respectively, of insurance receivables in connection with the settlement of an arbitration with one of our carriers, pursuant to which we received the majority of the coverage under the policy. Leases We lease certain office space and equipment for use in our operations. We recognize lease expense for these leases on a straight-line basis over the lease term and combine lease and non-lease components for all leases. Right-of-use ("ROU") assets and lease liabilities are recorded on the balance sheet for all leases with an expected term of at least one year. Some leases include one or more options to renew. The exercise of lease renewal options is generally at our discretion. The depreciable lives of ROU assets and leasehold improvements are limited to the expected lease term. Certain of our lease agreements include rental payments based on a pro-rata share of the lessor’s operating costs which are variable in nature. Our lease agreements do not contain any residual value guarantees or material restrictive covenants. ROU assets are classified within other assets on the balance sheet, while lease liabilities are classified within accrued and other liabilities. Leases with an initial term of 12 months or less are not recorded on the balance sheet. ROU assets and lease liabilities were $76.7 million and $98.1 million at June 30, 2020, respectively, and $70.0 million and $91.4 million at December 31, 2019, respectively. During the three and six months ended June 30, 2020, we recorded an additional $3.4 million and $13.0 million of lease liabilities under operating leases, respectively, and $1.0 million and $8.8 million in the comparable prior year periods. Payments on lease liabilities during the three and six months ended June 30, 2020 totaled $4.2 million and $10.1 million, respectively, and $5.7 million and $11.5 million in the comparable prior year periods. Lease expense includes costs for leases with terms in excess of one year as well as short-term leases with terms of less than one year. For the three and six months ended June 30, 2020, our total lease expense was $8.8 million and $18.7 million, respectively, and $9.1 million and $17.9 million in the comparable prior year periods. Our total lease expense is inclusive of variable lease costs of $1.5 million and $3.4 million for the three and six months ended June 30, 2020, respectively, and $1.6 million and $3.2 million in the comparable prior year periods, as well as short-term lease costs of $1.8 million and $4.0 million for the three and six months ended June 30, 2020, respectively, and $2.6 million and $4.8 million in the comparable prior year periods. Sublease income was de minimis. The future minimum lease payments required under our leases as of June 30, 2020 were as follows ($000's omitted):
(d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 5.6 years and 5.7%, respectively, at June 30, 2020.
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Supplemental Guarantor Information |
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Supplemental Guarantor Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Guarantor information | Supplemental guarantor information All of our senior notes are guaranteed jointly and severally on a senior basis by certain of our wholly-owned Homebuilding subsidiaries and certain other wholly-owned subsidiaries (collectively, the “Guarantors”). Such guaranties are full and unconditional. Our subsidiaries comprising the Financial Services segment along with certain other subsidiaries (collectively, the "Non-Guarantor Subsidiaries") do not guarantee the senior notes. In accordance with Rule 3-10 of Regulation S-X, supplemental consolidating financial information of the Company, including such information for the Guarantors, is presented below. Investments in unconsolidated entities are presented using the equity method of accounting. CONDENSED CONSOLIDATING BALANCE SHEET June 30, 2020 ($000’s omitted)
CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2019 ($000’s omitted)
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the three months ended June 30, 2020 ($000’s omitted)
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the three months ended June 30, 2019 ($000’s omitted)
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the six months ended June 30, 2020 ($000’s omitted)
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the six months ended June 30, 2019 ($000’s omitted)
CONSOLIDATING STATEMENT OF CASH FLOWS For the six months ended June 30, 2020 ($000’s omitted)
CONSOLIDATING STATEMENT OF CASH FLOWS For the six months ended June 30, 2019 ($000’s omitted)
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Basis of Presentation (Policy) |
6 Months Ended |
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Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Consolidation policy | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. These financial statements should be read in conjunction with our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019.
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Use of estimates | Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
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Subsequent events | Subsequent events We evaluated subsequent events up until the time the financial statements were filed with the Securities and Exchange Commission (the "SEC").
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Revenue recognition | Revenue recognition Home sale revenues - Home sale revenues and related profit are generally recognized when title to and possession of the home are transferred to the buyer at the home closing date. Our performance obligation to deliver the agreed-upon home is generally satisfied at the home closing date. Home sale contract assets consist of cash from home closings held in escrow for our benefit, typically for less than five days, which are considered deposits in-transit and classified as cash. Contract liabilities include customer deposits related to sold but undelivered homes, which totaled $335.0 million and $294.4 million at June 30, 2020 and December 31, 2019, respectively. Substantially all of our home sales are scheduled to close and be recorded to revenue within one year from the date of receiving a customer deposit. See Note 8 for information on warranties and related obligations. Land sale and other revenues - We periodically elect to sell parcels of land to third parties in the event such assets no longer fit into our strategic operating plans or are zoned for commercial or other development. Land sales are generally outright sales of specified land parcels with cash consideration due on the closing date, which is generally when performance obligations are satisfied. Revenues related to our construction services operations are generally recognized as materials are delivered and installation services are completed. Financial services revenues - Loan origination fees, commitment fees, and certain direct loan origination costs are recognized as incurred. Expected gains and losses from the sale of residential mortgage loans and their related servicing rights are included in the measurement of written loan commitments that are accounted for at fair value through Financial Services revenues at the time of commitment. Subsequent changes in the fair value of these loans are reflected in Financial Services revenues as they occur. Interest income is accrued from the date a mortgage loan is originated until the loan is sold. Mortgage servicing fees represent fees earned for servicing loans. Servicing fees are based on a contractual percentage of the outstanding principal balance and are credited to income when related mortgage payments are received. Revenues associated with our title operations are recognized as closing services are rendered and title insurance policies are issued, both of which generally occur as each home is closed. Insurance brokerage commissions relate to commissions on homeowner and other insurance policies placed with third party carriers through various agency channels. Our performance obligations for policy renewal commissions are satisfied upon issuance of the initial policy, and related contract assets for estimated future renewal commissions are included in other assets and totaled $36.0 million and $35.1 million at June 30, 2020 and December 31, 2019, respectively.
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Earnings per share | Earnings per share Basic earnings per share is computed by dividing income available to common shareholders (the “Numerator”) by the weighted-average number of common shares outstanding, adjusted for unvested shares (the “Denominator”) for the period. Computing diluted earnings per share is similar to computing basic earnings per share, except that the Denominator is increased to include the dilutive effects of stock options, unvested restricted share units, unvested restricted share units, and other potentially dilutive instruments. Any stock options that have an exercise price greater than the average market price are considered to be anti-dilutive and are excluded from the diluted earnings per share calculation. |
Residential mortgage loans available-for-sale | Residential mortgage loans available-for-sale Substantially all of the loans originated by us are sold in the secondary mortgage market within a short period of time after origination, generally within 30 days. At June 30, 2020 and December 31, 2019, residential mortgage loans available-for-sale had an aggregate fair value of $394.3 million and $509.0 million, respectively, and an aggregate outstanding principal balance of $378.0 million and $494.1 million, respectively. The net loss resulting from changes in fair value of these loans totaled $3.6 million and $0.2 million for the three months ended June 30, 2020 and 2019, respectively, and $1.4 million and $1.3 million for the six months ended June 30, 2020 and 2019, respectively. These changes in fair value were substantially offset by changes in the fair value of corresponding hedging instruments. Net gains from the sale of mortgages were $66.3 million and $30.4 million for the three months ended June 30, 2020 and 2019, respectively, and $97.2 million and $54.3 million for the six months ended June 30, 2020 and 2019, respectively, and have been included in Financial Services revenues. |
Derivative instruments and hedging activities | Derivative instruments and hedging activities We are party to interest rate lock commitments ("IRLCs") with customers resulting from our mortgage origination operations. At June 30, 2020 and December 31, 2019, we had aggregate IRLCs of $454.4 million and $255.3 million, respectively, which were originated at interest rates prevailing at the date of commitment. Since we can terminate a loan commitment if the borrower does not comply with the terms of the contract, and some loan commitments may expire without being drawn upon, these commitments do not necessarily represent future cash requirements. We evaluate the creditworthiness of these transactions through our normal credit policies. We hedge our exposure to interest rate market risk relating to residential mortgage loans available-for-sale and IRLCs using forward contracts on mortgage-backed securities, which are commitments to either purchase or sell a specified financial instrument at a specified future date for a specified price, and whole loan investor commitments, which are obligations of an investor to buy loans at a specified price within a specified time period. Forward contracts on mortgage-backed securities are the predominant derivative financial instruments we use to minimize market risk during the period from the time we extend an interest rate lock to a loan applicant until the time the loan is sold to an investor. At June 30, 2020 and December 31, 2019, we had unexpired forward contracts of $551.0 million and $518.2 million, respectively, and whole loan investor commitments of $225.1 million and $200.7 million, respectively. Changes in the fair value of IRLCs and other derivative financial instruments are recognized in Financial Services revenues, and the fair values are reflected in other assets or other liabilities, as applicable. |
New accounting pronouncements | New accounting pronouncements On January 1, 2020, we adopted ASC 326, which changed the impairment model for most financial assets and certain other instruments from an "incurred loss" approach to a new "expected credit loss" methodology. We adopted ASC 326 using the modified retrospective transition method. The amendment requires entities to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses. Our adoption of ASC 326 resulted in a $0.7 million decrease to retained earnings as of January 1, 2020. |
Inventory interest capitalization | We capitalize interest cost into inventory during the active development and construction of our communities. In all periods presented, we capitalized substantially all Homebuilding interest costs into inventory because the level of our active inventory exceeded our debt levels. |
Fair value of financial instruments | Fair values for agency residential mortgage loans available-for-sale are determined based on quoted market prices for comparable instruments. Fair values for non-agency residential mortgage loans available-for-sale are determined based on purchase commitments from whole loan investors and other relevant market information available to management. Fair values for interest rate lock commitments, including the value of servicing rights, and forward contracts on mortgage-backed securities are valued based on market prices for similar instruments. Fair values for whole loan commitments are based on market prices for similar instruments from the specific whole loan investor. Certain assets are required to be recorded at fair value on a non-recurring basis when events and circumstances indicate that the carrying value may not be recoverable. The non-recurring fair values included in the above table represent only those assets whose carrying values were adjusted to fair value as of the respective balance sheet dates. The carrying amounts of cash and equivalents, Financial Services debt and other notes payable approximate their fair values due to their short-term nature and/or floating interest rate terms. The fair values of senior notes are based on quoted market prices, when available. If quoted market prices are not available, fair values are based on quoted market prices of similar issues. The carrying value of senior notes was $2.7 billion at both June 30, 2020 and December 31, 2019.
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Letters of credit and surety bonds | Letters of credit and surety bonds |
Litigation and regulatory matters | Litigation and regulatory matters We are involved in various litigation and legal claims in the normal course of our business operations, including actions brought on behalf of various classes of claimants. We are also subject to a variety of local, state, and federal laws and regulations related to land development activities, house construction standards, sales practices, mortgage lending operations, employment practices, and protection of the environment. As a result, we are subject to periodic examination or inquiry by various governmental agencies that administer these laws and regulations. We establish liabilities for litigation, legal claims, and regulatory matters when such matters are both probable of occurring and any potential loss is reasonably estimable. We accrue for such matters based on the facts and circumstances specific to each matter and revise these estimates as the matters evolve. In such cases, there may exist an exposure to loss in excess of any amounts currently accrued. In view of the inherent difficulty of predicting the outcome of these legal and regulatory matters, we generally cannot predict the ultimate resolution of the pending matters, the related timing, or the eventual loss. While the outcome of such contingencies cannot be predicted with certainty, we do not believe that the resolution of such matters will have a material adverse impact on our results of operations, financial position, or cash flows. However, to the extent the liability arising from the ultimate resolution of any matter exceeds the estimates reflected in the recorded reserves relating to such matter, we could incur additional charges that could be significant. |
Allowance for warranties | |
Self insured risks | <div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Self-insured risks</font></div><div style="line-height:120%;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">We maintain, and require our subcontractors to maintain, general liability insurance coverage. We also maintain builders' risk, property, errors and omissions, workers' compensation, and other business insurance coverage. These insurance policies protect us against a portion of the risk of loss from claims. However, we retain a significant portion of the overall risk for such claims either through policies issued by our captive insurance subsidiaries or through our own self-insured per occurrence and aggregate retentions, deductibles, and claims in excess of available insurance policy limits. </font></div><div style="line-height:120%;text-align:left;padding-left:24px;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Our general liability insurance includes coverage for certain construction defects. While construction defect claims can relate to a variety of circumstances, the majority of our claims relate to alleged problems with siding, plumbing, foundations and other concrete work, windows, roofing, and heating, ventilation and air conditioning systems. The availability of general liability insurance for the homebuilding industry and its subcontractors has become increasingly limited, and the insurance policies available require us to maintain significant per occurrence and aggregate retention levels. In certain instances, we may offer our subcontractors the opportunity to purchase insurance through one of our captive insurance subsidiaries or participate in a project-specific insurance program provided by us. Policies issued by our captive insurance subsidiaries represent self-insurance of these risks by us. This self-insured exposure is limited by reinsurance policies that we purchase. General liability coverage for the homebuilding industry is complex, and our coverage varies from policy year to policy year. Our insurance coverage requires a per occurrence deductible up to an overall aggregate retention level. Beginning with the first dollar, amounts paid to satisfy insured claims generally apply to our per occurrence and aggregate retention obligations. Any amounts incurred in excess of the occurrence or aggregate retention levels are covered by insurance up to our purchased coverage levels. Our insurance policies, including the captive insurance subsidiaries' reinsurance policies, are maintained with highly-rated underwriters for whom we believe counterparty default risk is not significant.</font></div><div style="line-height:120%;text-align:left;padding-left:24px;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">At any point in time, we are managing over </font><font style="font-family:inherit;font-size:10pt;">1,000</font><font style="font-family:inherit;font-size:10pt;"> individual claims related to general liability, property, errors and omissions, workers' compensation, and other business insurance coverage. We reserve for costs associated with such claims (including expected claims management expenses) on an undiscounted basis at the time revenue is recognized for each home closing and periodically evaluate the recorded liabilities based on actuarial analyses of our historical claims. The actuarial analyses calculate estimates of the ultimate net cost of all unpaid losses, including estimates for incurred but not reported losses ("IBNR"). IBNR represents losses related to claims incurred but not yet reported plus development on reported claims.</font></div><div style="line-height:120%;text-align:left;padding-left:24px;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Our recorded reserves for all such claims totaled </font><font style="font-family:inherit;font-size:10pt;">$640.0 million</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">$709.8 million</font><font style="font-family:inherit;font-size:10pt;"> at </font><font style="font-family:inherit;font-size:10pt;">June 30, 2020</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">December 31, 2019</font><font style="font-family:inherit;font-size:10pt;">, respectively. The recorded reserves include loss estimates related to both (i) existing claims and related claim expenses and (ii) IBNR and related claim expenses. Liabilities related to IBNR and related claim expenses represented approximately </font><font style="font-family:inherit;font-size:10pt;">69%</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">68%</font><font style="font-family:inherit;font-size:10pt;"> of the total general liability reserves at </font><font style="font-family:inherit;font-size:10pt;">June 30, 2020</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">December 31, 2019</font><font style="font-family:inherit;font-size:10pt;">, respectively. The actuarial analyses that determine the IBNR portion of reserves consider a variety of factors, including the frequency and severity of losses, which are based on our historical claims experience supplemented by industry data. The actuarial analyses of the reserves also consider historical third party recovery rates and claims management expenses. </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Housing market conditions can be volatile, and we believe such conditions can affect the frequency and cost of construction defect claims. Additionally, IBNR estimates comprise the majority of our liability and are subject to a high degree of uncertainty due to a variety of factors, including changes in claims reporting and resolution patterns, third party recoveries, insurance industry practices, the regulatory environment, and legal precedent. State regulations vary, but construction defect claims are typically reported and resolved over an extended period, often exceeding ten years. Changes in the frequency and timing of reported claims and estimates of specific claim values can impact the underlying inputs and trends utilized in the actuarial analyses, which could have a material impact on the recorded reserves. Additionally, the amount of insurance coverage available for each policy period also impacts our recorded reserves. Because of the inherent uncertainty in estimating future losses and the timing of such losses related to these claims, actual costs could differ significantly from estimated costs. </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Adjustments to reserves are recorded in the period in which the change in estimate occurs. We reduced general liability reserves by </font><font style="font-family:inherit;font-size:10pt;">$60.7 million</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">$59.4 million</font><font style="font-family:inherit;font-size:10pt;"> during the </font><font style="font-family:inherit;font-size:10pt;">three and six months ended</font><font style="font-family:inherit;font-size:10pt;"> </font><font style="font-family:inherit;font-size:10pt;">June 30, 2020</font><font style="font-family:inherit;font-size:10pt;">, respectively, and </font><font style="font-family:inherit;font-size:10pt;">$12.8 million</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">$16.6 million</font><font style="font-family:inherit;font-size:10pt;"> during the </font><font style="font-family:inherit;font-size:10pt;">three and six months ended</font><font style="font-family:inherit;font-size:10pt;"> </font><font style="font-family:inherit;font-size:10pt;">June 30, 2019</font><font style="font-family:inherit;font-size:10pt;">, respectively, </font><font style="font-family:inherit;font-size:10pt;color:#212529;">as a result of changes in estimates resulting from actual claim experience being less than anticipated in previous actuarial projections. The changes in actuarial estimates were driven by changes in actual claims experience that, in turn, impacted actuarial estimates for potential future claims. These changes in actuarial estimates did not involve any changes in actuarial methodology but did impact the development of estimates for future periods, which resulted in adjustments to the IBNR portion of our recorded liabilities. </font><font style="font-family:inherit;font-size:10pt;">Costs associated with </font></div></div> |
Basis of Presentation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Expense (Income), Net | Other expense, net consists of the following ($000’s omitted):
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Schedule of Earnings Per Share | The following table presents the earnings per common share (000's omitted, except per share data):
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The fair values of derivative instruments and their locations in the Condensed Consolidated Balance Sheets are summarized below ($000’s omitted):
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Inventory (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Inventory | Major components of inventory were as follows ($000’s omitted):
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Capitalized Interest Rollforward | Information related to interest capitalized into inventory is as follows ($000’s omitted):
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Schedule Of Company Interests In Land Option Agreements | The following provides a summary of our interests in land option agreements as of June 30, 2020 and December 31, 2019 ($000’s omitted):
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Schedule Of Impairment Losses | We recorded the following land-related charges ($000's omitted):
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Reportable Segments | For reporting purposes, our Homebuilding operations are aggregated into six reportable segments:
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Operating Data By Reporting Segment |
* Land-related charges include land impairments, NRV adjustments on land held for sale, and write-offs of deposits and pre-acquisition costs for land option contracts we elected not to pursue.
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Total Assets And Inventory By Reporting Segment |
(a) Other homebuilding primarily includes cash and equivalents, capitalized interest, intangibles, deferred tax assets, and other corporate items that are not allocated to the operating segments.
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Senior Notes | Our notes payable are summarized as follows ($000’s omitted):
(b) The carrying value of senior notes reflects the impact of premiums, discounts, and issuance costs that are amortized to interest cost over the respective terms of the senior notes.
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Fair Value Disclosures Fair Value Disclosures (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis | Our assets and liabilities measured or disclosed at fair value are summarized below ($000’s omitted):
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Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Warranty Liability | Changes to warranty liabilities were as follows ($000’s omitted):
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Summary of Changes in Self-Insurance Liability | hanges in these liabilities were as follows ($000's omitted):
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Schedule of Future Minimum Lease Payments Required Under Leases | The future minimum lease payments required under our leases as of June 30, 2020 were as follows ($000's omitted):
(d) The weighted average remaining lease term and weighted average discount rate used in calculating our lease liabilities were 5.6 years and 5.7%, respectively, at June 30, 2020.
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Supplemental Guarantor Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Supplemental Guarantor Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidating Balance Sheet | CONDENSED CONSOLIDATING BALANCE SHEET June 30, 2020 ($000’s omitted)
CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2019 ($000’s omitted)
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Consolidating Statement of Operations and Comprehensive Income (Loss) | CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the three months ended June 30, 2020 ($000’s omitted)
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the three months ended June 30, 2019 ($000’s omitted)
CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME For the six months ended June 30, 2020 ($000’s omitted)
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Consolidating Statement Of Cash Flows | CONSOLIDATING STATEMENT OF CASH FLOWS For the six months ended June 30, 2020 ($000’s omitted)
CONSOLIDATING STATEMENT OF CASH FLOWS For the six months ended June 30, 2019 ($000’s omitted)
|
Basis of Presentation (Other Expense (Income), Net) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Accounting Policies [Abstract] | ||||
Write-offs of deposits and pre-acquisition costs | $ (2,311) | $ (2,516) | $ (6,643) | $ (5,433) |
Amortization of intangible assets | (5,045) | (3,550) | (9,602) | (7,000) |
Loss on debt retirement (see Note 4) | 0 | (4,843) | 0 | (4,843) |
Interest income | 1,326 | 4,471 | 5,133 | 9,420 |
Interest expense | (3,000) | (146) | (3,796) | (290) |
Equity in earnings of unconsolidated entities | 334 | 129 | 902 | 165 |
Miscellaneous, net | 3,410 | 2,956 | 6,196 | 3,508 |
Total other expense, net | $ (5,286) | $ (3,499) | $ (7,810) | $ (4,473) |
Basis of Presentation (Earnings per share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Numerator: | ||||
Net income | $ 348,620 | $ 241,041 | $ 552,331 | $ 407,798 |
Less: earnings distributed to participating securities | (265) | (305) | (538) | (613) |
Less: undistributed earnings allocated to participating securities | (2,602) | (2,089) | (4,358) | (3,588) |
Numerator for basic earnings per share | 345,753 | 238,647 | 547,435 | 403,597 |
Add back: undistributed earnings allocated to participating securities | 2,602 | 2,089 | 4,358 | 3,588 |
Less: undistributed earnings reallocated to participating securities | (2,595) | (2,082) | (4,342) | (3,576) |
Numerator for diluted earnings per share | $ 345,760 | $ 238,654 | $ 547,451 | $ 403,609 |
Denominator: | ||||
Basic shares outstanding (shares) | 268,324 | 276,652 | 269,167 | 277,142 |
Effect of dilutive securities (shares) | 701 | 932 | 960 | 967 |
Diluted shares outstanding (shares) | 269,025 | 277,584 | 270,127 | 278,109 |
Earnings per share: | ||||
Basic earnings (usd per share) | $ 1.29 | $ 0.86 | $ 2.03 | $ 1.46 |
Diluted earnings (usd per share) | $ 1.29 | $ 0.86 | $ 2.03 | $ 1.45 |
Basis of Presentation (Fair Value Of the Company's Derivative Instruments) (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Other Assets | $ 20,360 | $ 9,530 |
Accrued and Other Liabilities | 7,240 | 1,805 |
Interest rate lock commitments | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Other Assets | 19,934 | 8,351 |
Accrued and Other Liabilities | 1,811 | 149 |
Forward contracts | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Other Assets | 236 | 299 |
Accrued and Other Liabilities | 3,624 | 1,372 |
Whole loan commitments | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Other Assets | 190 | 880 |
Accrued and Other Liabilities | $ 1,805 | $ 284 |
Basis of Presentation Payments to Acquire Businesses, Net of Cash Acquired (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Business Acquisitions [Abstract] | ||
Payments for business acquisitions | $ (83,256) | $ (163,724) |
Inventory (Major Components Of Inventory) (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Homes under construction | $ 3,125,369 | $ 2,899,016 |
Land under development | 4,076,492 | 4,347,107 |
Raw land | 382,878 | 434,491 |
Total Inventory | $ 7,584,739 | $ 7,680,614 |
Inventory (Information Related To Interest Capitalized Into Homebuilding Inventory) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Real Estate Inventory, Capitalized Interest Costs [Roll Forward] | ||||
Interest in inventory, beginning of period | $ 213,425 | $ 235,313 | $ 210,383 | $ 227,495 |
Interest capitalized | 39,686 | 41,650 | 79,599 | 84,031 |
Interest expensed | (45,169) | (42,254) | (82,040) | (76,817) |
Interest in inventory, end of period | $ 207,942 | $ 234,709 | $ 207,942 | $ 234,709 |
Inventory (Summary of Interests in Land Option Agreements) (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Variable Interest Entity [Line Items] | ||
Deposits and Pre-acquisition Costs | $ 301,404 | $ 299,437 |
Remaining Purchase Price | 3,532,626 | 3,221,962 |
Land options with VIEs | ||
Variable Interest Entity [Line Items] | ||
Deposits and Pre-acquisition Costs | 118,138 | 123,775 |
Remaining Purchase Price | 1,451,952 | 1,466,585 |
Other land options | ||
Variable Interest Entity [Line Items] | ||
Deposits and Pre-acquisition Costs | 183,266 | 175,662 |
Remaining Purchase Price | $ 2,080,674 | $ 1,755,377 |
Inventory Inventory (Summary of Land-related Charges) (Details) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Inventory Disclosure [Abstract] | ||||
Land impairments | $ 0 | $ 88 | $ 5,386 | $ 88 |
Net realizable value adjustments (NRV) - land held for sale | 142 | 1,227 | 152 | 1,289 |
Write-offs of deposits and pre-acquisition costs | 2,311 | 2,516 | 6,643 | 5,433 |
Total land-related charges | $ 2,453 | $ 3,831 | $ 12,181 | $ 6,810 |
Inventory - Fair Value Unobservable Inputs (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Inventory Disclosure [Abstract] | ||||
Impairment Charges | $ 0 | $ 88 | $ 5,386 | $ 88 |
Segment Information Narrative (Details) |
6 Months Ended |
---|---|
Jun. 30, 2020
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 6 |
Segment Information (Land-Related Charges by Segment) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Land-related charges | $ 2,453 | $ 3,831 | $ 12,181 | $ 6,810 |
Northeast | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Land-related charges | 92 | 130 | 4,845 | 454 |
Southeast | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Land-related charges | 929 | 2,015 | 1,676 | 2,587 |
Florida | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Land-related charges | 459 | 765 | 981 | 1,246 |
Midwest | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Land-related charges | 499 | 203 | 1,275 | 1,306 |
Texas | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Land-related charges | 329 | 414 | 986 | 482 |
West | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Land-related charges | 145 | 216 | 1,674 | 647 |
Other homebuilding | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Land-related charges | $ 0 | $ 88 | $ 744 | $ 88 |
Shareholders' Equity (Details) - USD ($) shares in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
May 31, 2019 |
|
Class of Stock [Line Items] | |||||
Dividends | $ 32,447,000 | $ 30,633,000 | $ 65,056,000 | $ 61,463,000 | |
Payments for repurchase of common stock | $ 95,676,000 | $ 108,471,000 | |||
Increase in share repurchase authorization | $ 500,000,000.0 | ||||
Share repurchase plan | |||||
Class of Stock [Line Items] | |||||
Share repurchases (shares) | 2.8 | 3.5 | |||
Payments for repurchase of common stock | $ 95,700,000 | $ 108,500,000 | |||
Remaining value of stock repurchase programs authorization | $ 429,900,000 | 429,900,000 | |||
Shares withheld to pay taxes | |||||
Class of Stock [Line Items] | |||||
Payments for repurchase of common stock | $ 14,900,000 | $ 10,400,000 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Abstract] | |||||
Effective income tax | 23.70% | 24.90% | 23.40% | 24.10% | |
Deferred tax assets, net | $ 120.8 | $ 120.8 | $ 170.1 | ||
Gross unrecognized tax benefits | 45.1 | 45.1 | 40.3 | ||
Accrued interest and penalties on unrecognized tax benefits | 7.0 | 7.0 | $ 6.5 | ||
Possible decrease in unrecognized tax benefits | $ 24.2 | $ 24.2 |
Fair Value Disclosures - Narrative (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Carrying value of senior notes | $ 2,711,932 | $ 2,711,659 |
Commitments and Contingencies (Narrative) (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Dec. 17, 2018
USD ($)
party
|
Jun. 30, 2020
USD ($)
claim
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2020
USD ($)
claim
|
Jun. 30, 2019
USD ($)
|
Mar. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
Mar. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Loss Contingencies [Line Items] | |||||||||
Loss contingency accrual | $ 25,300 | $ 25,300 | $ 25,200 | ||||||
Letters of credit outstanding | 244,800 | 244,800 | 262,800 | ||||||
Surety bonds outstanding | $ 1,300,000 | $ 1,300,000 | 1,400,000 | ||||||
Maximum product warranty in years | 10 years | ||||||||
Number of individual claims managed | claim | 1,000 | 1,000 | |||||||
Self-insurance liabilities | $ 640,014 | $ 716,218 | $ 640,014 | $ 716,218 | $ 719,172 | $ 709,798 | $ 729,170 | $ 737,013 | |
Incurred but not reported percentage of liability reserves | 69.00% | 69.00% | 68.00% | ||||||
Adjustments to previously recorded reserves | $ (60,662) | (12,763) | $ (59,362) | (16,638) | |||||
Write-off of insurance receivables | 12,600 | 24,200 | |||||||
ROU assets | 76,700 | 76,700 | $ 70,000 | ||||||
Operating lease liabilities | 98,113 | 98,113 | 91,400 | ||||||
Additional ROU assets under operating leases | 3,400 | 1,000 | 13,000 | 8,800 | |||||
Payments on lease liabilities | 4,200 | 5,700 | 10,100 | 11,500 | |||||
Total lease expense | 8,800 | 9,100 | 18,700 | 17,900 | |||||
Variable lease costs | 1,500 | 1,600 | 3,400 | 3,200 | |||||
Short-term lease costs | 1,800 | $ 2,600 | 4,000 | $ 4,800 | |||||
Other Assets | |||||||||
Loss Contingencies [Line Items] | |||||||||
Recorded insurance receivables | $ 82,400 | $ 82,400 | $ 118,400 | ||||||
Lehman Complaint | CTX Mortgage Company LLC | |||||||||
Loss Contingencies [Line Items] | |||||||||
Number of mortgage originators involved in bankruptcy claim | party | 100 | ||||||||
Damages sought, value | $ 261,000 |
Commitments and Contingencies (Changes To Warranty Liability) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Warranty liabilities, beginning of period | $ 88,395 | $ 79,747 | $ 91,389 | $ 79,154 |
Reserves provided | 17,005 | 14,646 | 32,044 | 26,908 |
Payments | (15,914) | (17,931) | (34,189) | (34,061) |
Other adjustments | (3,208) | 4,980 | (2,966) | 9,441 |
Warranty liabilities, end of period | $ 86,278 | $ 81,442 | $ 86,278 | $ 81,442 |
Commitments and Contingencies (Changes in Self-insurance Liability) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Changes in Self-insurance Liability [Roll Forward] | ||||
Balance, beginning of period | $ 719,172 | $ 729,170 | $ 709,798 | $ 737,013 |
Reserves provided | 20,177 | 20,270 | 38,626 | 37,666 |
Adjustments to previously recorded reserves | (60,662) | (12,763) | (59,362) | (16,638) |
Payments, net | (38,673) | (20,459) | (49,048) | (41,823) |
Balance, end of period | $ 640,014 | $ 716,218 | $ 640,014 | $ 716,218 |
Commitments and Contingencies (Future Minimum Lease Payments Required Under Leases) (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Remainder of 2019 | $ 10,603 | |
2020 | 22,651 | |
2021 | 20,755 | |
2022 | 19,424 | |
2023 | 13,755 | |
Thereafter | 28,687 | |
Total lease payments | 115,875 | |
Less: Interest | 17,762 | |
Present value of lease liabilities | 98,113 | $ 91,400 |
Legally binding minimum lease payments for leases signed but not yet commenced | $ 1,700 | |
Weighted average remaining lease term | 5 years 7 months 6 days | |
Weighted average discount rate | 5.70% |
Commitments and Contingencies Increase (Decrease) in Liability for Claims and Claims Adjustment Expense Reserve (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Increase (Decrease) in Liability for Claims and Claims Adjustment Expense Reserve [Abstract] | ||||
Adjustments to previously recorded reserves | $ (60,662) | $ (12,763) | $ (59,362) | $ (16,638) |
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