What changed in this filing

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Item 1. Financial Statements

2024-04-23 compared with 2023-10-24 · 109 added, 196 removed, 471 unchanged (39% of the section changed)

3 unchanged sentences

($000’s omitted)

September 30,

2024 December 31,

25 unchanged sentences

(000’s omitted, except per share data)

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended

Home sale revenues $ 3,819,586 $ 3,487,637

10 unchanged sentences

Equity income from unconsolidated entities, net 37,902 2,513

Gain on debt retirement 362 — 362 —

Other income (expense), net 16,729 ( 25,640 ) 32,134 ( 33,220 )

Other income, net 16,683 1,818

Income before income taxes 868,643 702,122

10 unchanged sentences

PULTEGROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

($000’s omitted)

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Net income $ 638,775 $ 627,928 $ 1,891,379 $ 1,735,086

Other comprehensive income, net of tax:

Change in value of derivatives — — — 45

Other comprehensive income — — — 45

Comprehensive income $ 638,775 $ 627,928 $ 1,891,379 $ 1,735,131

See accompanying Notes to Condensed Consolidated Financial Statements.

PULTEGROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(000's omitted)

Capital Accumulated

Comprehensive

(Loss) Retained

Capital Retained

Earnings Total

Shareholders' equity, June 30, 2023 219,892 $ 2,199 $ 3,354,318 $ — $ 6,348,508 $ 9,705,025

Share issuances 1 — — — — —

Dividends declared — — — — ( 35,020 ) ( 35,020 )

Share repurchases ( 3,758 ) ( 38 ) — — ( 299,962 ) ( 300,000 )

Excise tax on share repurchases — — — — ( 3,000 ) ( 3,000 )

Cash paid for shares withheld for taxes — — — — ( 20 ) ( 20 )

Share-based compensation — — 6,741 — — 6,741

Net income — — — — 638,775 638,775

Shareholders' equity, September 30, 2023 216,135 $ 2,161 $ 3,361,059 $ — $ 6,649,281 $ 10,012,501

Shareholders' equity, December 31, 2023 212,558 $ 2,126 $ 3,368,407 $ 7,012,724 $ 10,383,257

6 unchanged sentences

Net income — — — 662,976 662,976

Shareholders' equity, September 30, 2023 216,135 $ 2,161 $ 3,361,059 $ — $ 6,649,281 $ 10,012,501

Capital Accumulated

Comprehensive

(Loss) Retained

Shareholder's equity, March 31, 2024 210,658 $ 2,107 $ 3,392,199 $ 7,367,647 $ 10,761,953

Capital Retained

Earnings Total

Shareholders' equity, June 30, 2022 232,570 $ 2,326 $ 3,319,150 $ — $ 4,423,740 $ 7,745,216

Share issuances 41 — — — — —

Dividends declared — — — — ( 34,624 ) ( 34,624 )

Share repurchases ( 4,379 ) ( 44 ) — — ( 180,402 ) ( 180,446 )

Cash paid for shares withheld for taxes — — — — ( 711 ) ( 711 )

Share-based compensation — — 6,640 — — 6,640

Net income — — — — 627,928 627,928

Shareholders' equity, September 30, 2022 228,232 $ 2,282 $ 3,325,790 $ — $ 4,835,931 $ 8,164,003

Shareholders' equity, December 31, 2022 225,840 $ 2,258 $ 3,330,138 $ 5,581,702 $ 8,914,098

2 unchanged sentences

Share repurchases ( 2,761 ) ( 27 ) — ( 149,973 ) ( 150,000 )

Excise tax on share repurchases — — — ( 1,221 ) ( 1,221 )

Cash paid for shares withheld for taxes — — — ( 10,059 ) ( 10,059 )

1 unchanged sentence

Net income — — — 532,259 532,259

Other comprehensive income — — — 45 — 45

Shareholders' equity, September 30, 2022 228,232 $ 2,282 $ 3,325,790 $ — $ 4,835,931 $ 8,164,003

Shareholder's equity, March 31, 2023 223,522 $ 2,235 $ 3,345,005 $ 5,916,569 $ 9,263,809

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

($000’s omitted)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

3 unchanged sentences

Land-related charges 4,018 5,683

Gain on debt retirement ( 362 ) —

Depreciation and amortization 21,061 19,139

8 unchanged sentences

Accounts payable, accrued and other liabilities ( 13,069 ) ( 83,404 )

Net cash provided by (used in) operating activities 1,908,344 ( 303,925 )

Net cash provided by operating activities 239,787 711,368

Cash flows from investing activities:

2 unchanged sentences

Distributions of capital from unconsolidated entities 3,398 2,216

Business acquisition — ( 10,400 )

Other investing activities, net ( 2,256 ) ( 1,570 )

2 unchanged sentences

Repayments of notes payable ( 11,140 ) ( 4,500 )

Borrowings under revolving credit facility — 1,925,000

Repayments under revolving credit facility — ( 1,606,000 )

Financial Services repayments, net ( 161,254 ) ( 287,933 )

Debt issuance costs ( 1,500 ) ( 11,167 )

Financial Services borrowings (repayments), net 34,708 ( 262,264 )

Proceeds from liabilities related to consolidated inventory not owned 19,077 18,449

30 unchanged sentences

Actual results could differ from those estimates.

Reclassifications

Effective with our first quarter 2023 reporting, we reclassified our closing cost incentives provided to customers, including seller-paid financing costs, from home sale cost of revenues to home sale revenues.

All prior period amounts have been reclassified to conform to the current presentation.

As a result, all sales incentives provided to customers are classified as a reduction of home sale revenues.

This reclassification had the effect of reducing both home sale revenues and home sale cost of revenues by the amount of such closing cost incentives, which totaled $ 48.8 million and $ 133.3 million for the three and nine months ended September 30, 2022, respectively.

Subsequent events

We evaluated subsequent events up until the time the financial statements were filed with the Securities and Exchange Commission (the "SEC").

Other income (expense), net

Other income (expense), net consists of the following ($000’s omitted):

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Other income, net

Other income, net consists of the following ($000’s omitted):

Three Months Ended

Write-offs of deposits and pre-acquisition costs $ ( 3,990 ) $ ( 5,683 )

Amortization of intangible assets ( 2,540 ) ( 2,670 )

Loss on debt retirement ( 64 ) —

Interest income 17,379 7,096

1 unchanged sentence

Miscellaneous, net 6,013 3,182

Other income (expense), net $ 16,729 $ ( 25,640 ) $ 32,134 $ ( 33,220 )

Other income, net $ 16,683 $ 1,818

PULTEGROUP, INC.

3 unchanged sentences

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 $ 769.9 million and $ 783.6 million at September 30, 2023 and December 31, 2022, respectively.

Contract liabilities include customer deposits related to sold but undelivered homes, which totaled $ 698.8 million and $ 675.1 million at March 31, 2024 and December 31, 2023, 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.

7 unchanged sentences

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.

Mortgage servicing fees represent fees earned for servicing loans, and are accrued from the date a mortgage loan is originated until the servicing rights are sold.

Servicing fees are based on a contractual percentage of the outstanding principal balance and are credited to income when related mortgage payments are received.

2 unchanged sentences

Our performance obligations for policy renewal commissions are considered satisfied upon issuance of the initial policy.

The related contract assets for estimated future renewal commissions are included in other assets and totaled $ 70.6 million and $ 57.3 million at September 30, 2023 and December 31, 2022, respectively.

The related contract assets for estimated future renewal commissions are included in other assets and totaled $ 77.8 million and $ 74.0 million at March 31, 2024 and December 31, 2023, respectively.

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 September 30, 2023 and December 31, 2022, residential mortgage loans available-for-sale had an aggregate fair value of $ 414.4 million and $ 677.2 million, respectively, and an aggregate outstanding principal balance of $ 423.2 million and $ 680.5 million, respectively.

Net gains from the sale of mortgages were $ 33.7 million and $ 34.4 million for the three months ended September 30, 2023 and 2022, respectively, and $ 102.8 million and $ 131.9 million for the nine months ended September 30, 2023 and 2022, respectively, and have been included in Financial Services revenues.

At March 31, 2024 and December 31, 2023, residential mortgage loans available-for-sale had an aggregate fair value of $ 570.8 million and $ 516.1 million, respectively, and an aggregate outstanding principal balance of $ 573.7 million and $ 508.5 million, respectively.

Net gains from the sale of mortgages were $ 50.6 million and $ 20.6 million for the three months ended March 31, 2024 and 2023, respectively, and have been included in Financial Services revenues.

Derivative instruments and hedging activities

We are party to IRLCs with customers resulting from our mortgage origination operations.

At September 30, 2023 and December 31, 2022, we had aggregate IRLCs of $ 674.0 million and $ 653.2 million, respectively, which were originated at interest rates prevailing at the date of commitment.

At March 31, 2024 and December 31, 2023, we had aggregate IRLCs of $ 706.7 million and $ 404.7 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.

1 unchanged sentence

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 September 30, 2023 and December 31, 2022, we had unexpired forward contracts of $ 944.0 million and $ 1.0 billion, respectively, and whole loan investor

At March 31, 2024 and December 31, 2023, we had unexpired forward contracts of $ 990.0 million and $ 745.0 million, respectively, and whole loan investor commitments of $ 315.5 million and $ 207.9 million, respectively.

Changes in the fair value of IRLCs and other derivative financial

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

commitments of $ 145.2 million and $ 285.9 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.

We evaluate the creditworthiness of these transactions through our normal credit policies.

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.

2 unchanged sentences

The fair values of derivative instruments and their locations in the Condensed Consolidated Balance Sheets are summarized below ($000’s omitted):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Other Assets Accrued and Other Liabilities Other Assets Accrued and Other Liabilities

8 unchanged sentences

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.

Certain of 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):

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

A decreasing number of our outstanding restricted share units are considered participating securities such that there was no impact for the three months ended March 31, 2024.

The following table presents a reconciliation of the Numerator used in the earnings per share calculation for the three months ended March 31, 2023 (000's omitted, except per share data):

Net income $ 532,259

5 unchanged sentences

Numerator for diluted earnings per share $ 529,998

Basic shares outstanding 218,288 230,967 221,832 237,639

Effect of dilutive securities 1,394 1,333 1,152 1,240

Diluted shares outstanding 219,682 232,300 222,984 238,879

Earnings per share:

Basic $ 2.92 $ 2.70 $ 8.49 $ 7.26

Diluted $ 2.90 $ 2.69 $ 8.45 $ 7.22

Credit losses

1 unchanged sentence

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 September 30, 2023 and December 31, 2022, we reported $ 207.2 million and $ 222.9 million, respectively, of assets in-scope under ASC 326, "Financial Instruments - Credit Losses".

These assets consist primarily of insurance receivables, contract assets related to insurance brokerage commissions, and vendor rebate receivables.

Our assets exposed to credit losses consist primarily of insurance receivables, contract assets related to insurance agency commissions, accounts receivable, and vendor rebate receivables.

Counterparties associated with these assets are generally highly rated.

Allowances on the aforementioned in-scope assets were not material as of September 30, 2023.

New accounting pronouncements

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)", as amended by ASU 2021-01 in January 2021, which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions affected by the cessation of the London Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued.

The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2024.

The adoption of ASU 2020-04 did not have a material impact on the Company's condensed consolidated financial statements.

Allowances on the aforementioned in-scope assets were not material as of March 31, 2024.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

New accounting pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures" ("ASU 2023-07"), which requires expanded disclosure of significant segment expenses and other segment items on an annual and interim basis.

ASU 2023-07 is effective for us for annual periods beginning on or after January 1, 2024 and interim periods beginning on or after January 1, 2025.

We are currently evaluating the impact ASU 2023-07 will have on our financial statement disclosures.

In December 2023, FASB issued ASU 2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures" ("ASU 2023-09"), which requires expanded disclosure of our income rate reconciliation and income taxes paid.

ASU 2023-09 is effective for us for annual periods beginning on or after January 1, 2025.

We are currently evaluating the impact ASU 2023-09 will have on our financial statement disclosures.

Major components of inventory were as follows ($000’s omitted):

September 30,

2024 December 31,

9 unchanged sentences

Information related to interest capitalized into inventory is as follows ($000’s omitted):

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended

Interest in inventory, beginning of period $ 139,078 $ 137,262

5 unchanged sentences

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.

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 may serve to reduce 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.

1 unchanged sentence

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 income (expense), net ( Note 1 ).

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 September 30, 2023 or December 31, 2022 because we determined that we were not any VIE's 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 September 30, 2023 and December 31, 2022 ($000’s omitted):

Such decisions take into

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023 December 31, 2022

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 income, 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 March 31, 2024 or December 31, 2023 because we determined that we were not any VIE's 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 March 31, 2024 and December 31, 2023 ($000’s omitted):

March 31, 2024 December 31, 2023

Pre-acquisition

7 unchanged sentences

Land-related charges

Our evaluations for land impairments, net realizable value adjustments, and write-offs of deposits and pre-acquisition costs are based on our best estimates of the future cash flows of our communities.

Our evaluations for land-related charges are based on our best estimates of the future cash flows for 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.

6 unchanged sentences

Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio

Arizona, California, Colorado, Nevada, New Mexico, Washington

Arizona, California, Colorado, Nevada, New Mexico, Oregon, Utah, Washington

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.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Operating Data by Segment

($000’s omitted)

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Revenues (a) :

Three Months Ended

Northeast $ 200,451 $ 220,648

7 unchanged sentences

Consolidated revenues $ 3,949,160 $ 3,575,641

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Operating Data by Segment

($000’s omitted)

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Income (loss) before income taxes (a) :

Income (loss) before income taxes:

Northeast $ 39,899 $ 46,797

4 unchanged sentences

West 89,483 99,577

Other homebuilding (b)

Other homebuilding (a)

54,755 ( 13,163 )

2 unchanged sentences

Consolidated income before income taxes $ 868,643 $ 702,122

(a) All periods reflect the reclassification of closing cost incentives to homes sale revenues from home sale cost of revenues ( Note 1 ).

(b) Other homebuilding includes the amortization of intangible assets and capitalized interest and other items not allocated to the other segments.

Other homebuilding also includes insurance reserve reversals of $ 66.2 million in the nine months ended September 30, 2023.

(a) Other homebuilding includes the amortization of intangible assets and capitalized interest and other items not allocated to the other segments.

Other homebuilding also includes insurance reserve reversals of $ 26.8 million for the three months ended March 31, 2024 (see Note 8 ) and a gain of $ 37.7 million for the three months ended March 31, 2024 related to the sale of our minority interest in a joint venture.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Operating Data by Segment

($000’s omitted)

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended

Land-related charges (a) :

9 unchanged sentences

Other homebuilding consists primarily of write-offs of capitalized interest related to such land-related charges.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Operating Data by Segment

($000's omitted)

September 30, 2023

March 31, 2024

Construction Land Under

12 unchanged sentences

$ 5,589,782 $ 5,865,321 $ 546,215 $ 105,894 $ 12,107,212 $ 16,496,230

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Operating Data by Segment

($000's omitted)

December 31, 2023

16 unchanged sentences

Other homebuilding also includes goodwill of $ 40.4 million.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Notes payable

Our notes payable are summarized as follows ($000’s omitted):

September 30,

2024 December 31,

18 unchanged sentences

(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.

In the three months ended September 30, 2023, we completed open market repurchases of $ 22.0 million and $ 43.0 million of our unsecured senior notes scheduled to mature in 2026 and 2027, respectively.

In the three months ended March 31, 2024, we completed open market repurchases of $ 10.2 million of our unsecured senior notes scheduled to mature in 2026.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other notes payable

Other notes payable include non-recourse and limited recourse notes with third parties that totaled $ 54.8 million and $ 55.2 million at September 30, 2023 and December 31, 2022, respectively.

These notes have maturities ranging up to four years , are secured by the applicable land positions to which they relate, and generally have no recourse to other assets.

Other notes payable include non-recourse and limited recourse notes with third parties that totaled $ 75.4 million and $ 71.0 million at March 31, 2024 and December 31, 2023, respectively.

These notes have maturities ranging up to six years , are secured by the applicable land positions to which they relate, and generally have no recourse to other assets.

The stated interest rates on these notes range up to 6 %.

We recorded $ 35.3 million and $ 19.9 million of inventory financed by sellers in the nine months ended September 30, 2023 and 2022, respectively.

We recorded inventory through seller financing of $ 5.4 million and $ 6.7 million in the three months ended March 31, 2024 and 2023, respectively.

Revolving credit facility

3 unchanged sentences

The Revolving Credit Facility contains financial covenants that require us to maintain a minimum Tangible Net Worth and a maximum Debt-to-Capitalization Ratio (as each term is defined in the Revolving Credit Facility).

As of September 30, 2023, we were in compliance with all covenants.

We were in compliance with all covenants and requirements as of March 31, 2024.

Outstanding balances under the Revolving Credit Facility are guaranteed by certain of our wholly-owned subsidiaries.

At September 30, 2023, we had no borrowings outstanding, $ 304.6 million of letters of credit issued, and $ 945.4 million of remaining capacity under the Revolving Credit Facility.

At March 31, 2024, we had no borrowings outstanding, $ 298.6 million of letters of credit issued, and $ 951.4 million of remaining capacity under the Revolving Credit Facility.

At December 31, 2023, we had no borrowings outstanding, $ 312.7 million of letters of credit issued, and $ 937.3 million of remaining capacity under the Revolving Credit Facility.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Joint venture debt

At September 30, 2023, aggregate outstanding debt of unconsolidated joint ventures was $ 79.5 million, of which $ 40.3 million was related to one joint venture in which we have a 50 % interest.

At March 31, 2024, aggregate outstanding debt of unconsolidated joint ventures was $ 58.2 million, of which $ 19.4 million was related to one joint venture in which we have a 50 % interest.

In connection with this loan, we and our joint venture partner provided customary limited recourse guaranties in which our maximum financial loss exposure is limited to our pro rata share of the debt outstanding.

Financial Services debt

Pulte Mortgage entered into a master repurchase agreement (the "Repurchase Agreement") in August 2023 that matures on August 14, 2024.

The Repurchase Agreement replaced a substantially similar agreement that previously existed with different lenders.

The maximum aggregate commitment under the Repurchase Agreement was $ 560.0 million at September 30, 2023, and will increase to $ 850.0 million during the seasonally high borrowing period from December 27, 2023 to January 15, 2024.

Thereafter, the maximum aggregate commitment ranges from $ 600.0 million to $ 700.0 million.

In August 2023, Pulte Mortgage entered into a master repurchase agreement (the "Repurchase Agreement"), which matures on August 14, 2024.

The maximum aggregate commitment under the Repurchase Agreement was $ 600.0 million at March 31, 2024, and will increase to $ 700.0 million on June 26, 2024, which continues until maturity.

The Repurchase Agreement also contains an accordion feature that could increase the commitment by $ 50.0 million above its active commitment level.

1 unchanged sentence

The Repurchase Agreement contains various affirmative and negative covenants applicable to Pulte Mortgage, including quantitative thresholds related to net worth, net income, and liquidity.

At September 30, 2023, Pulte Mortgage had $ 425.5 million outstanding at a weighted average interest rate of 7.01 % and $ 134.5 million of remaining capacity under the Repurchase Agreement.

At December 31, 2022, Pulte Mortgage had $ 586.7 million outstanding at a weighted average interest rate of 5.39 % and $ 213.3 million of remaining capacity under the prior agreement replaced by the Repurchase Agreement.

Pulte Mortgage was in compliance with all of its covenants and requirements as of such dates.

At March 31, 2024, Pulte Mortgage had $ 534.3 million outstanding at a weighted-average interest rate of 7.13 % and $ 65.7 million of remaining capacity under the Repurchase Agreement.

At December 31, 2023, Pulte Mortgage had $ 499.6 million outstanding at a weighted-average interest rate of 7.15 % and $ 350.4 million of remaining capacity under the Repurchase Agreement.

Pulte Mortgage was in compliance with all covenants and requirements as of March 31, 2024.

Shareholders’ equity

In the nine months ended September 30, 2023, we declared cash dividends totaling $ 106.8 million and repurchased 10.2 million shares under our repurchase authorization for $ 700.0 million.

In the nine months ended September 30, 2022, we declared cash dividends totaling $ 106.7 million and repurchased 21.8 million shares under our repurchase authorization for $ 974.7 million.

On April 24, 2023, the Board of Directors increased our share repurchase authorization by $ 1.0 billion.

At September 30, 2023, we had remaining authorization to repurchase $ 682.9 million of common shares.

In the three months ended March 31, 2024, we declared cash dividends totaling $ 42.6 million and repurchased 2.3 million shares under our repurchase authorization for $ 245.8 million.

In the three months ended March 31, 2023, we declared cash dividends totaling $ 36.1 million and repurchased 2.8 million shares under our repurchase authorization for $ 150.0 million.

On January 30, 2024, the Board of Directors increased our share repurchase authorization by $ 1.5 billion.

At March 31, 2024, we had remaining authorization to repurchase $ 1.6 billion of common shares.

Under our share-based compensation plans, we accept shares as payment under certain conditions related to the vesting of shares, generally related to the payment of minimum tax obligations.

In the nine months ended September 30, 2023 and 2022, participants surrendered shares valued at $ 10.4 million and $ 14.3 million, respectively, under these plans.

In the three months ended March 31, 2024 and 2023,

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

participants surrendered shares valued at $ 17.6 million and $ 10.1 million, respectively, under these plans.

Such share transactions are excluded from the above noted share repurchase authorization.

Our effective tax rate was 24.6 % and 24.4 % for the three and nine months ended September 30, 2023, respectively, compared with 22.6 % and 23.8 %, respectively, for the same periods in 2022.

Our effective tax rate was 23.7 % for the three months ended March 31, 2024, compared with 24.2 % for the three months ended March 31, 2023.

Our effective tax rate for each of these periods differs from the federal statutory rate primarily due to state income tax expense.

The 2023 effective income tax rate for each of these periods was higher than the rate for the same period in 2022 due to the change in qualification standards for federal energy efficient home tax credits.

On August 16, 2022, the Inflation Reduction Act of 2022 (the "Inflation Reduction Act") was signed into law.

Notably, the Inflation Reduction Act retroactively extended the federal energy efficient home tax credits to January 1, 2022 using the same standards as prior years.

For 2023 through 2032, the credit is based on EnergyStar or Zero Energy Ready standards.

At September 30, 2023 and December 31, 2022, we had net deferred tax liabilities of $ 265.5 million and $ 133.1 million, respectively.

At March 31, 2024 and December 31, 2023, we had net deferred tax liabilities of $ 274.8 million and $ 237.4 million, respectively.

The accounting for deferred taxes is based upon estimates of future results.

1 unchanged sentence

Changes in existing tax laws could also affect actual tax results and the realization of deferred tax assets over time.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 $ 58.7 million and $ 23.6 million of gross unrecognized tax benefits at September 30, 2023 and December 31, 2022, respectively.

Additionally, we had accrued interest and penalties of $ 5.7 million and $ 4.1 million at September 30, 2023 and December 31, 2022, respectively.

We had $ 58.2 million of gross unrecognized tax benefits at both March 31, 2024 and December 31, 2023.

Additionally, we had accrued interest and penalties of $ 7.0 million and $ 6.3 million at March 31, 2024 and December 31, 2023, respectively.

Fair value disclosures

4 unchanged sentences

Level 3 Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our assets and liabilities measured or disclosed at fair value are summarized below ($000’s omitted):

1 unchanged sentence

Hierarchy Fair Value

September 30,

2024 December 31,

18 unchanged sentences

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 $ 1.9 billion at September 30, 2023 and $ 2.0 billion at December 31, 2022.

The carrying value of senior notes was $ 1.9 billion at both March 31, 2024 and December 31, 2023.

PULTEGROUP, INC.

4 unchanged sentences

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 $ 304.6 million and $ 2.3 billion, respectively, at September 30, 2023 and $ 303.4 million and $ 2.2 billion, respectively, at December 31, 2022.

We had outstanding letters of credit and surety bonds totaling $ 298.6 million and $ 2.6 billion, respectively, at March 31, 2024 and $ 312.7 million and $ 2.4 billion, respectively, at December 31, 2023.

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.

20 unchanged sentences

Changes to warranty liabilities were as follows ($000’s omitted):

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended

Warranty liabilities, beginning of period $ 120,393 $ 108,348

25 unchanged sentences

IBNR represents losses related to claims incurred but not yet reported plus development on reported claims.

Our recorded reserves for all such claims totaled $ 623.0 million and $ 635.9 million at September 30, 2023 and December 31, 2022, respectively.

Our recorded reserves for all such claims totaled $ 547.6 million and $ 563.1 million at March 31, 2024 and December 31, 2023, 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 74 % of the total general liability reserves at both September 30, 2023 and December 31, 2022.

Liabilities related to IBNR and related claim expenses represented approximately 77 % of the total general liability reserves at both March 31, 2024 and December 31, 2023.

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.

6 unchanged sentences

Adjustments to reserves are recorded in the period in which the change in estimate occurs.

We reduced general liability reserves by $ 66.2 million during the nine months ended September 30, 2023 as a result of changes in estimates resulting from actual claim experience being less than anticipated in previous actuarial projections.

We reduced general liability reserves by $ 26.8 million during the three months ended March 31, 2024 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.

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended

Balance, beginning of period $ 563,103 $ 635,857

1 unchanged sentence

Adjustments to previously recorded reserves ( 26,845 ) ( 564 )

Payments, net (a)

( 2,000 ) ( 2,358 ) ( 16,717 ) ( 24,339 )

Payments, net ( 8,603 ) ( 6,669 )

Balance, end of period $ 547,621 $ 652,745

(a) Includes net changes in amounts expected to be recovered from our insurance carriers, which are recorded in other assets (see below).

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 $ 39.7 million and $ 43.7 million at September 30, 2023 and December 31, 2022, 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.

We lease certain office space and equipment for use in our operations.

8 unchanged sentences

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

ROU assets and lease liabilities were $ 69.9 million and $ 84.8 million at September 30, 2023, respectively, and $ 73.5 million and $ 90.1 million at December 31, 2022, respectively.

In the three and nine months ended September 30, 2023, we recorded an additional $ 1.3 million and $ 9.6 million, respectively, of lease liabilities under operating leases, and $ 3.3 million and $ 7.5 million in the comparable prior year periods.

Payments on lease liabilities in the three and nine months ended September 30, 2023 totaled $ 6.1 million and $ 17.4 million, respectively, and $ 5.0 million and $ 16.1 million in the comparable prior year periods.

ROU assets and lease liabilities were $ 76.5 million and $ 90.3 million at March 31, 2024, respectively, and $ 77.4 million and $ 91.6 million at December 31, 2023, respectively.

In the three months ended March 31, 2024 and 2023, we recorded an additional $ 3.7 million and $ 3.9 million of lease liabilities under operating leases, respectively.

Payments on lease liabilities in the three months ended March 31, 2024 and 2023 totaled $ 5.9 million and $ 5.4 million, respectively.

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.

In the three and nine months ended September 30, 2023 our total lease expense was $ 13.5 million and $ 42.0 million, respectively, and $ 14.3 million and $ 40.5 million in the comparable prior year periods.

Our total lease expense is inclusive of variable lease costs of $ 2.7 million and $ 8.9 million in the three and nine months ended September 30, 2023, respectively, and $ 3.3 million and $ 7.7 million in the comparable prior year periods, as well as short-term lease costs of $ 4.0 million and $ 12.8 million in the three and nine months ended September 30, 2023, respectively, and $ 5.2 million and $ 15.8 million in the comparable prior year periods.

In the three months ended March 31, 2024 and 2023, our total lease expense was $ 15.0 million and $ 14.2 million, respectively, inclusive of variable lease costs of $ 3.6 million and $ 3.0 million, respectively, as well as short-term lease costs of $ 4.8 million and $ 4.2 million, respectively.

Sublease income was de minimis.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The future minimum lease payments required under our leases as of September 30, 2023 were as follows ($000's omitted):

The future minimum lease payments required under our leases as of March 31, 2024 were as follows ($000's omitted):

Years Ending December 31,

2 unchanged sentences

Present value of lease liabilities (d)

(a) Remaining payments are for the three months ending December 31, 2023.

(b) Lease payments include options to extend lease terms that are reasonably certain of being exercised and exclude $ 6.2 million of legally binding minimum lease payments for leases signed but not yet commenced at September 30, 2023.

(a) Remaining payments are for the nine months ending December 31, 2024.

(b) Lease payments include options to extend lease terms that are reasonably certain of being exercised and exclude $ 33.6 million of legally binding minimum lease payments for leases signed but not yet commenced at March 31, 2024.

As a result, 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 4.8 years and 3.8 %, respectively, at September 30, 2023.

(d) The weighted-average remaining lease term and weighted-average discount rate used in calculating our lease liabilities were 4.0 years and 4.0 %, respectively, at March 31, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements