Despite Corporate Infighting, PulteGroup Posts Strong Earnings

ATLANTA, GA -- Despite an ugly and very public battle over the company's corporate direction, Buckhead-based PulteGroup posted strong first quarter earnings late last week.

For the quarter, the company reported net income of $83 million, or $0.24 per share, compared with prior year net income of $55 million, or $0.15 per share.

"PulteGroup has gotten off to a strong start in 2016, with increased investment driving growth in the business as the value of net new orders increased 24% to $2.1 billion and our backlog expanded by 31% to $3.4 billion," said Richard J. Dugas, Jr., Chairman and CEO of PulteGroup.

Home sale revenues for the first quarter were $1.4 billion, an increase of 28% over the prior year. Higher revenues for the quarter were driven by a 17% increase in closings to 3,945 homes in combination with a 9% increase in average selling price to $353,000.

PulteGroup has operations in about 50 markets throughout the country. Its brand portfolio includes Centex, Pulte Homes, Del Webb, DiVosta Homes and John Wieland Homes and Neighborhoods.

But earlier this month, founder William Pulte called for Dugas' resignation, saying that he was "disappointed" in Dugas's leadership and that the company needed new leadership. Pulte resigned as chairman in 2009 but still owns 8.87% of PulteGroup stock.

Shortly after Pulte's statement, Dugas announced that he would retire in 2017. Pulte responded by saying that Dugas should retire sooner.

"I recently approached Dugas and the board and conveyed my disappointment in Dugas' leadership and the need for an immediate change," Pulte said. "Based on ensuing discussions, I understood the board was seriously considering my concerns, and I hoped that they would take steps to implement a near-term change for the benefit of PulteGroup shareholders.

"This morning, however, I learned that PulteGroup announced that Richard Dugas had informed the Board of his intention to retire over a year from now. This falls far short of the short-term leadership change that PulteGroup shareholders and PulteGroup employees need."

Since then, PulteGroup's leadership has defended Dugas' record and retirement timeline. Last week, PulteGroup said, "it is disappointing that the Pultes have decided to publicly play out their personal vendetta against him, and attempt to hijack the Board's succession planning."

On Monday, PulteGroup issued a statement saying the company was "disappointed that the Pultes continue to attempt to destabilize the company's leadership and derail our successful value creation strategy through their public statements. Their attacks bear little resemblance to the facts.

"Since 2011, PulteGroup has generated $2.2 billion of pre-tax income, including pre-tax income of $816 millionin 2015. In addition, PulteGroup's leadership team and Board have been responsible stewards of capital, reducing the company's debt-to-capital ratio from 60% at the end of 2011 to 30% at the end of 2015, and, in 2015 alone, returning $559 million to shareholders through dividends and share repurchases."