What changed in this filing

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Item 1. Financial Statements

2025-04-22 compared with 2024-10-22 · 169 added, 177 removed, 444 unchanged (44% of the section changed)

3 unchanged sentences

($000’s omitted)

September 30,

2025 December 31,

3 unchanged sentences

House and land inventory 12,959,499 12,692,820

Land held for sale 24,914 23,831

Residential mortgage loans available-for-sale 642,793 629,582

19 unchanged sentences

(000’s omitted, except per share data)

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Home sale revenues $ 3,749,269 $ 3,819,586

27 unchanged sentences

Earnings Total

Shareholders' equity, June 30, 2024 207,905 $ 2,079 $ 3,403,327 $ 7,817,417 $ 11,222,823

Share issuances 9 — — — —

Dividends declared — — — ( 41,551 ) ( 41,551 )

Share repurchases ( 2,539 ) ( 25 ) — ( 319,975 ) ( 320,000 )

Excise tax on share repurchases — — — ( 3,189 ) ( 3,189 )

Cash paid for shares withheld for taxes — — — ( 840 ) ( 840 )

Share-based compensation — — 9,056 — 9,056

Net income — — — 697,914 697,914

Shareholders' equity, September 30, 2024 205,375 $ 2,054 $ 3,412,383 $ 8,149,776 $ 11,564,213

Shareholders' equity, December 31, 2024 202,913 $ 2,029 $ 3,425,384 $ 8,694,551 $ 12,121,964

6 unchanged sentences

Net income — — — 522,799 522,799

Shareholders' equity, September 30, 2024 205,375 $ 2,054 $ 3,412,383 $ 8,149,776 $ 11,564,213

Shareholder's equity, March 31, 2025 200,565 $ 2,005 $ 3,452,228 $ 8,846,739 $ 12,300,972

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

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

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:

23 unchanged sentences

Financial Services borrowings (repayments), net ( 100,055 ) 34,708

Debt issuance costs — ( 1,500 )

Proceeds from liabilities related to consolidated inventory not owned 11,060 19,077

34 unchanged sentences

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

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Write-offs of deposits and pre-acquisition costs $ ( 4,335 ) $ ( 3,990 )

Amortization of intangible assets ( 2,367 ) ( 2,540 )

Gain (loss) on debt retirement — 362 ( 222 ) 362

Interest income 10,262 17,379

7 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 $ 597.8 million and $ 675.1 million at September 30, 2024 and December 31, 2023, respectively.

Contract liabilities include customer deposits related to sold but undelivered homes, which totaled $ 541.5 million and $ 512.6 million at March 31, 2025 and December 31, 2024, 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.

2 unchanged sentences

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 provided.

Other revenues related to our construction services operations are generally recognized as materials are delivered and installation services are provided.

Financial Services revenues - Loan origination fees, commitment fees, and discount points are recognized upon loan origination.

2 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, and are accrued from the date a mortgage loan is originated until the date that the servicing rights are sold.

Mortgage servicing fees represent fees earned for servicing loans until the loans 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.

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 agency commissions relate to commissions on homeowner and other insurance policies placed with third-party carriers through various agency channels.

Insurance agency commissions relate to commissions on home and other insurance policies placed with third-party carriers through various agency channels.

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 $ 87.2 million and $ 74.0 million at September 30, 2024 and December 31, 2023, respectively.

The related contract assets for estimated future renewal commissions are included in other assets and totaled $ 93.5 million and $ 91.1 million at March 31, 2025 and December 31, 2024, 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, 2024 and December 31, 2023, residential mortgage loans available-for-sale had an aggregate fair value of $ 556.7 million and $ 516.1 million, respectively, and an aggregate outstanding principal balance of $ 554.1 million and $ 508.5 million, respectively.

Net gains from the sale of mortgages were $ 62.0 million and $ 33.7 million for the three months ended September 30, 2024 and 2023, respectively, and $ 173.2 million and $ 102.8 million for the nine months ended September 30, 2024 and 2023, respectively, and have been included in Financial Services revenues.

At March 31, 2025 and December 31, 2024, residential mortgage loans available-for-sale had an aggregate fair value of $ 642.8 million and $ 629.6 million, respectively, and an aggregate outstanding principal balance of $ 648.0 million and $ 645.7 million, respectively.

These changes in fair value were substantially offset by changes in fair value of the corresponding derivative instruments.

Net gains from the sale of mortgages were $ 49.8 million and $ 50.6 million for the three months ended March 31, 2025 and 2024, 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, 2024 and December 31, 2023, we had aggregate IRLCs of $ 724.1 million and $ 404.7 million, respectively.

At March 31, 2025 and December 31, 2024, we had aggregate IRLCs of $ 780.2 million and $ 469.4 million, respectively.

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, 2024 and December 31, 2023, we had unexpired forward contracts of $ 1.1 billion and $ 745.0 million, respectively, and whole loan investor commitments of $ 298.7 million and $ 207.9 million, respectively.

Changes in the fair value of IRLCs and other derivative

At March 31, 2025 and December 31, 2024, we had unexpired forward contracts of $ 1.3 billion and $ 977.0 million, respectively, and whole loan investor commitments of

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

financial instruments are recognized in Financial Services revenues, and the fair values are reflected in other assets or other liabilities, as applicable.

$ 327.1 million and $ 237.1 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.

Gains and losses on IRLCs 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 90 days.

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

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

4 unchanged sentences

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.

Basic earnings per share is computed by dividing income available to common shareholders 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 unvested restricted share units and other potentially dilutive instruments.

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.

A decreasing number of our outstanding restricted share units are considered participating securities such that there was no impact for the three and nine months ended September 30, 2024.

The following table presents a reconciliation of the Numerator used in the earnings per share calculation for the three and nine months ended September 30, 2023 (000's omitted, except per share data):

Three Months Ended Nine Months Ended

September 30, September 30,

Net income $ 638,775 $ 1,891,379

earnings distributed to participating securities ( 121 ) ( 369 )

undistributed earnings allocated to participating securities ( 2,083 ) ( 6,685 )

Numerator for basic earnings per share $ 636,571 $ 1,884,325

undistributed earnings allocated to participating securities 2,083 6,685

undistributed earnings reallocated to participating securities ( 2,066 ) ( 6,636 )

Numerator for diluted earnings per share $ 636,588 $ 1,884,374

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Credit losses

3 unchanged sentences

Counterparties associated with these assets are generally highly rated.

Allowances on the aforementioned in-scope assets were not material as of September 30, 2024.

Allowances on the aforementioned assets were not material as of March 31, 2025.

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):

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, "Income Taxes (Topic 740):

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

1 unchanged sentence

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

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses” ("ASU 2024-03"), which requires disaggregated disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements.

ASU 2024-03 is effective for us for annual periods beginning after December 31, 2026.

We are currently evaluating the impact ASU 2024-03 will have on our financial statement disclosures.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

House and land inventory

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

September 30,

2025 December 31,

4 unchanged sentences

96,618 102,865

Land held for sale 16,103 27,007

$ 12,959,499 $ 12,692,820

3 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,

2024 2023 2024 2023

Three Months Ended

Interest in inventory, beginning of period $ 139,960 $ 139,078

2 unchanged sentences

Interest in inventory, end of period $ 139,541 $ 148,101

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Land option agreements

7 unchanged sentences

We record any such write-offs of deposits and pre-acquisition costs within other income, net.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, 2024 or December 31, 2023 because we determined that we were not any VIE's primary beneficiary.

No VIEs required consolidation at either March 31, 2025 or December 31, 2024 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, 2024 and December 31, 2023 ($000’s omitted):

September 30, 2024 December 31, 2023

The following provides a summary of our interests in land option agreements as of March 31, 2025 and December 31, 2024 ($000’s omitted):

March 31, 2025 December 31, 2024

Pre-acquisition

7 unchanged sentences

Land-related charges

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

See Note 3 for a summary of such charges by reportable segment.

Segment information

6 unchanged sentences

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 agency operations that operate generally in the same markets as the Homebuilding segments.

We also have a reportable segment for our Financial Services operations, which consist principally of mortgage banking, title, and insurance agency operations.

The Financial Services segment operates generally in the same markets as the Homebuilding segments.

Evaluation of segment performance is generally based on income before income taxes.

Each reportable segment generally follows the same accounting policies described in Note 1 .

In 2024, we adopted ASU 2023-07, which requires expanded disclosure of significant segment expenses and other segment items on an annual and interim basis.

The adoption of ASU 2023-07 impacted the presentation of the performance measures presented in the below tables.

Information for previous periods in the below tables conforms with the current year presentation.

PULTEGROUP, INC.

2 unchanged sentences

($000’s omitted)

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Northeast $ 249,733 $ 200,404

4 unchanged sentences

West 888,797 704,165

Other homebuilding (a)

49,170 34,016

3,801,823 3,856,803

Financial Services 90,827 92,357

Consolidated revenues $ 3,892,650 $ 3,949,160

Income (loss) before income taxes:

Cost of revenues

Northeast $ ( 163,032 ) $ ( 138,394 )

4 unchanged sentences

West ( 706,595 ) ( 541,334 )

Other homebuilding (a)

Other homebuilding (b)

( 74,744 ) ( 55,742 )

$ ( 2,770,070 ) $ ( 2,726,130 )

Selling, general, and administrative expenses:

Northeast $ ( 23,906 ) $ ( 21,292 )

Southeast ( 68,105 ) ( 66,980 )

Florida ( 98,453 ) ( 99,753 )

Midwest ( 61,114 ) ( 54,266 )

Texas ( 55,768 ) ( 60,443 )

West ( 84,753 ) ( 73,820 )

Other homebuilding (c)

( 1,238 ) 18,960

$ ( 393,337 ) $ ( 357,594 )

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Operating Data by Segment

($000’s omitted)

Three Months Ended

Other segment items (d) :

Northeast $ ( 1,574 ) $ ( 2,079 )

Southeast ( 5,332 ) ( 3,025 )

Florida ( 5,702 ) ( 2,725 )

Midwest ( 1,888 ) ( 1,653 )

Texas ( 2,899 ) ( 1,909 )

West ( 4,872 ) ( 6,467 )

Other homebuilding (e)

29,131 72,443

Financial Services ( 54,970 ) ( 51,378 )

$ ( 48,106 ) $ 3,207

Income before income taxes (f) :

Northeast $ 61,221 $ 38,639

Southeast 129,792 165,914

Florida 202,928 286,903

Midwest 105,581 92,354

Texas 50,862 91,633

West 92,577 82,544

Other homebuilding 2,319 69,677

645,280 827,664

Financial Services 35,857 40,979

Consolidated income before income taxes $ 681,137 $ 868,643

(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 $ 78.7 million for the nine months ended September 30, 2024, and $ 66.2 million for the nine months ended September 30, 2023, (see N ote 8 ), and a gain of $ 37.7 million for the nine months ended September 30, 2024 related to the sale of our minority interest in a joint venture.

(a) Other homebuilding includes revenues from land sales and construction services.

(b) Other homebuilding includes cost of revenues related to land sales, construction services, and amortization of capitalized interest.

(c) Other homebuilding includes insurance reserve reversals of $ 26.8 million for the three months ended March 31, 2024 (see Note 8 ).

Other homebuilding also includes eliminations of corporate overhead allocated to the operating segments.

(d) Other Segment Items reflects other sources of income and expense, including internal capital charge allocations that are eliminated within Other homebuilding.

(e) Other homebuilding includes income from unconsolidated entities, interest, the amortization of intangible assets, and other items not allocated to the operating segments.

Other homebuilding also includes 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.

(f) Includes certain land-related charges (see the following table and Note 2 ).

PULTEGROUP, INC.

2 unchanged sentences

($000’s omitted)

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Land-related charges (a) :

11 unchanged sentences

($000’s omitted)

September 30, 2024

Construction Land Under

Development Raw Land Consolidated Inventory Not Owned Total

Inventory Total

Three Months Ended

Depreciation and amortization

Northeast $ 930 $ 679

Southeast 2,204 1,568

1,372,237 1,444,069 134,885 22,815 2,974,006 3,613,361

Florida 4,647 3,646

Midwest 2,143 1,975

1 unchanged sentence

West 4,357 3,478

Other homebuilding (b)

32,359 379,416 8,101 — 419,876 1,682,875

Other homebuilding 5,890 5,896

22,079 18,840

5 unchanged sentences

($000's omitted)

December 31, 2023

Construction Land Under

Development Raw Land Consolidated Inventory Not Owned Total

March 31, 2025 December 31, 2024

Inventory Total

Northeast $ 725,455 $ 812,576 $ 716,530 $ 807,922

Southeast 2,155,680 2,481,605 2,006,958 2,298,692

1,405,934 1,211,087 205,843 48,139 2,871,003 3,420,924

Florida 3,327,049 3,765,235 3,246,588 3,676,910

Midwest 1,383,745 1,530,358 1,401,747 1,529,602

1 unchanged sentence

West 3,770,150 4,323,075 3,684,393 4,212,636

Other homebuilding (b)

Other homebuilding (a)

( 88,459 ) 1,568,203 ( 8,609 ) 1,934,728

2 unchanged sentences

$ 12,959,499 $ 17,336,546 $ 12,692,820 $ 17,363,763

(a) Florida includes goodwill of $ 28.6 million, net of cumulative impairment charges of $ 20.2 million.

(b) 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.

Other homebuilding also includes goodwill of $ 40.4 million.

(a) Other homebuilding primarily includes cash and equivalents, capitalized interest, intangibles, deferred tax assets, other corporate items that are not allocated to the operating segments, and eliminations of certain inventory not owned allocated to the operating segments.

Other homebuilding also includes goodwill of $ 68.9 million, net of cumulative impairment charges of $ 20.2 million at March 31, 2025 and December 31, 2024.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Notes payable

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

September 30,

2025 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 nine months ended September 30, 2024, we completed repurchases of $ 193.4 million and $ 106.6 million aggregate principal amount of our unsecured senior notes scheduled to mature in 2026 and 2027, respectively, through a cash tender offer.

Our total repurchases in the nine months ended September 30, 2024, including open market repurchases, were $ 310.2 million.

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 $ 41.1 million and $ 71.0 million at September 30, 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.

Other notes payable include non-recourse and limited recourse notes with third parties that totaled $ 42.6 million and $ 35.8 million at March 31, 2025 and December 31, 2024, respectively.

These notes have maturities ranging up to five 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 9 %.

We recorded $ 10.8 million and $ 35.3 million of inventory through seller financing in the nine months ended September 30, 2024 and 2023, respectively.

We recorded $ 9.5 million and $ 5.4 million of inventory through seller financing in the three months ended March 31, 2025 and 2024, 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).

We were in compliance with all covenants and requirements as of September 30, 2024.

We were in compliance with all covenants and requirements as of March 31, 2025.

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

At September 30, 2024, we had no borrowings outstanding, $ 310.9 million of letters of credit issued, and $ 939.1 million of remaining capacity under the Revolving Credit Facility.

At March 31, 2025, we had no borrowings outstanding, $ 307.7 million of letters of credit issued, and $ 942.3 million of remaining capacity under the Revolving Credit Facility.

At December 31, 2024, we had no borrowings outstanding, $ 321.1 million of letters of credit issued, and $ 928.9 million of remaining capacity under the Revolving Credit Facility.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Joint venture debt

At September 30, 2024, aggregate outstanding debt of unconsolidated joint ventures was $ 35.2 million.

At March 31, 2025, aggregate outstanding debt of unconsolidated joint ventures was $ 34.9 million.

Financial Services debt

Pulte Mortgage maintains a master repurchase agreement with third-party lenders (as amended, the "Repurchase Agreement") that matures on August 13, 2025.

The maximum aggregate commitment under the Repurchase Agreement was $ 675.0 million at September 30, 2024 and will decrease to $ 650.0 million on January 14, 2025, which continues until maturity.

The maximum aggregate commitment under the Repurchase Agreement was $ 650.0 million at March 31, 2025, 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, 2024, Pulte Mortgage had $ 524.1 million outstanding at a weighted-average interest rate of 6.65 % and $ 150.9 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 prior agreement replaced by the Repurchase Agreement.

Pulte Mortgage was in compliance with all covenants and requirements as of September 30, 2024.

At March 31, 2025, Pulte Mortgage had $ 426.9 million outstanding at a weighted-average interest rate of 6.12 % and $ 223.1 million of remaining capacity under the Repurchase Agreement.

At December 31, 2024, Pulte Mortgage had $ 526.9 million outstanding at a weighted-average interest rate of 6.13 % and $ 148.1 million of remaining capacity under the Repurchase Agreement.

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

Shareholders’ equity

In the nine months ended September 30, 2024, we declared cash dividends totaling $ 126.2 million and repurchased 7.6 million shares under our repurchase authorization for $ 880.0 million.

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 three months ended March 31, 2025, we declared cash dividends totaling $ 44.7 million and repurchased 2.8 million shares under our share repurchase authorization for $ 300.0 million.

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

On January 29, 2025, the Board of Directors increased our share repurchase authorization by $ 1.5 billion.

At September 30, 2024, we had remaining authorization to repurchase $ 1.0 billion of common shares.

At March 31, 2025, we had remaining authorization to repurchase $ 1.9 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, 2024 and 2023, participants surrendered shares valued at $ 18.5 million and $ 10.4 million, respectively, under these plans.

In the three months ended March 31, 2025 and 2024, participants surrendered shares valued at $ 23.4 million and $ 17.6 million, respectively, under these plans.

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

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our effective tax rate was 23.0 % and 23.1 % for the three and nine months ended September 30, 2024, respectively, compared with 24.6 % and 24.4 % for the same periods in 2023.

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

Income tax expense for the three and nine months ended September 30, 2024 also includes a benefit of $ 14.3 million associated with the purchase of transferable federal renewable energy tax credits.

Income tax expense for the nine months ended September 30, 2024 also reflects a reduction in income tax liabilities totaling $ 13.2 million related to the favorable resolution of uncertain state tax positions.

At September 30, 2024 and December 31, 2023, we had net deferred tax liabilities of $ 353.4 million and $ 237.4 million, respectively.

Our effective tax rate was 23.2 % for the three months ended March 31, 2025, compared with 23.7 % for the three months ended March 31, 2024.

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

At March 31, 2025 and December 31, 2024, we had net deferred tax liabilities of $ 408.9 million and $ 388.5 million, respectively.

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

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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 $ 40.7 million and $ 58.2 million of gross unrecognized tax benefits at September 30, 2024 and December 31, 2023, respectively.

Additionally, we had accrued interest and penalties of $ 1.8 million and $ 6.3 million at September 30, 2024 and December 31, 2023, respectively.

We had $ 38.5 million and $ 38.7 million of gross unrecognized tax benefits at March 31, 2025 and December 31, 2024, respectively.

Additionally, we had accrued interest and penalties of $ 2.0 million and $ 1.9 million at March 31, 2025 and December 31, 2024, respectively.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

Accounting Standards Codification 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:

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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):

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Hierarchy Fair Value

September 30,

2025 December 31,

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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 $ 1.6 billion and $ 1.9 billion at September 30, 2024 and December 31, 2023, respectively.

The carrying value of senior notes was $ 1.6 billion at both March 31, 2025 and December 31, 2024.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Commitments and contingencies

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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 $ 310.9 million and $ 2.8 billion, respectively, at September 30, 2024 and $ 312.7 million and $ 2.4 billion, respectively, at December 31, 2023.

We had outstanding letters of credit and surety bonds totaling $ 307.7 million and $ 3.0 billion, respectively, at March 31, 2025, and $ 321.1 million and $ 2.9 billion, respectively, at December 31, 2024.

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.

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We do not believe that a material amount, if any, of the letters of credit or surety bonds will be drawn.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Litigation and regulatory matters

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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 such cases, an exposure to loss in excess of any amounts currently accrued may exist.

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.

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

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Warranty liabilities, beginning of period $ 130,538 $ 120,393

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Warranty liabilities, end of period $ 132,287 $ 122,742

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

We also maintain builders' risk, property, errors and omissions, workers compensation, and other business insurance coverages.

These insurance policies protect us against a portion of the risk of loss from potential claims.

However, we retain a significant portion of the overall risk for such claims either through our own self-insured per occurrence and aggregate retentions, deductibles, policies issued by our captive insurance subsidiaries, and any potential 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.

A portion of this self-insured exposure is limited by reinsurance policies that we purchase.

While construction defect claims may relate to a variety of issues, the majority of our claims relate to alleged problems with siding, windows, roofing, and foundations.

The availability of general liability insurance for the homebuilding industry and its subcontractors has become increasingly limited, and the insurance policies available require companies to retain significant per occurrence and aggregate retention levels.

In certain instances, we may offer our subcontractors the opportunity to purchase general liability insurance through one of our captive insurance subsidiaries or participate in a project-specific insurance program.

Policies issued by our captive insurance subsidiaries represent self-insurance of these risks by us, 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.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our insurance coverage typically requires a per occurrence retention 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 numerous 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.

Our insurance coverage requires a per occurrence retention as well as an overall aggregate amount.

Amounts paid to resolve insured claims 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 the purchased coverage levels.

Our insurance policies, including the captive insurance subsidiaries' reinsurance policies, are maintained with highly-rated carriers for whom we believe counterparty default risk is not significant.

At any point in time, we are managing numerous individual claims related to general liability, property, errors and omission, workers compensation, and other business insurance coverages.

We reserve for costs associated with these claims (including expected claims management expenses) on an undiscounted basis at the time revenue is recognized for each home closing and 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 $ 517.7 million and $ 563.1 million at September 30, 2024 and December 31, 2023, respectively.

Our recorded reserves for all such claims totaled $ 276.3 million and $ 267.5 million at March 31, 2025 and December 31, 2024, 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 76 % and 77 % of the total general liability reserves at September 30, 2024 and December 31, 2023, respectively.

Liabilities related to IBNR and related claim expenses represented approximately 71 % and 68 % of the total general liability reserves at March 31, 2025 and December 31, 2024, 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.

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Volatility in both national and local housing market conditions may 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.

Additionally, IBNR estimates comprise the substantial 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 time period often exceeding ten years.

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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.

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

We reduced general liability reserves by $ 78.7 million during the nine months ended September 30, 2024, and $ 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.

Our lower ending reserve balance at March 31, 2025 compared with March 31, 2024 results primarily from adjustments made during 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.

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Changes in these liabilities were as follows ($000's omitted):

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Balance, beginning of period $ 267,474 $ 563,103

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Balance, end of period $ 276,294 $ 547,621

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

ROU assets and lease liabilities were $ 72.7 million and $ 85.5 million at September 30, 2024, respectively, and $ 77.4 million and $ 91.6 million at December 31, 2023, respectively.

In the three and nine months ended September 30, 2024 we recorded an additional $ 3.6 million and $ 9.1 million, respectively, of lease liabilities under operating leases, and $ 1.3 million and $ 9.6 million in the comparable prior year periods.

Payments on lease liabilities in the three and nine months ended September 30, 2024 totaled $ 5.9 million and $ 17.6 million, respectively, and $ 6.1 million and $ 17.4 million in the comparable prior year periods.

ROU assets and lease liabilities were $ 105.8 million and $ 121.1 million at March 31, 2025, respectively, and $ 93.9 million and $ 109.0 million at December 31, 2024, respectively.

In the three months ended March 31, 2025 and 2024 we recorded an additional $ 19.6 million and $ 3.7 million of lease liabilities under operating leases, respectively.

Payments on lease liabilities in the three months ended March 31, 2025 and 2024 totaled $ 5.8 million and $ 5.9 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, 2024 our total lease expense was $ 15.3 million and $ 45.5 million, respectively, and $ 13.5 million and $ 42.0 million in the comparable prior year periods.

Our total lease expense is inclusive of variable lease costs of $ 2.3 million and $ 8.4 million in the three and nine months ended September 30, 2024, respectively, and $ 2.7 million and $ 8.9 million in the comparable prior year periods, as well as short-term lease costs of $ 6.2 million and $ 17.0 million in the three and nine months ended September 30, 2024, respectively, and $ 4.0 million and $ 12.8 million in the comparable prior year periods.

In the three months ended March 31, 2025 and 2024 our total lease expense was $ 15.7 million and $ 15.0 million, respectively, inclusive of variable lease costs of $ 5.3 million and $ 3.6 million, respectively, as well as short-term lease costs of $ 3.8 million and $ 4.8 million, respectively.

Sublease income was de minimis.

The future minimum lease payments required under our leases as of September 30, 2024 were as follows ($000's omitted):

PULTEGROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The future minimum lease payments required under our leases as of March 31, 2025 were as follows ($000's omitted):

Years Ending December 31,

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Present value of lease liabilities (d)

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

(b) Lease payments include options to extend lease terms that are reasonably certain of being exercised and exclude $ 53.5 million of legally binding minimum lease payments for leases signed but not yet commenced at September 30, 2024.

(a) Remaining payments are for the nine months ending December 31, 2025.

(b) Lease payments include options to extend lease terms that are reasonably certain of being exercised and exclude $ 19.2 million of legally binding minimum lease payments for leases signed but not yet commenced at March 31, 2025.

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 4.2 %, respectively, at September 30, 2024.

(d) The weighted-average remaining lease term and weighted-average discount rate used in calculating our lease liabilities were 5.8 years and 4.5 %, respectively, at March 31, 2025.

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