10-KPeriod: FY2009

HORTON D R INC /DE/ Annual Report, Year Ended Sep 30, 2009

Filed November 20, 2009For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) in its fiscal year 2009 10-K filing, reveals a company navigating a severe downturn in the U.S. homebuilding industry, now in its fourth year. Despite a significant reduction in revenues and a substantial net loss, the company has focused on maintaining liquidity and managing inventory. Revenues for the year ended September 30, 2009, were $3.7 billion, a sharp decrease from previous years, reflecting a 45% drop in homebuilding revenues. The company closed 16,703 homes, with an average selling price of $213,400, down 9% year-over-year. Key strategic initiatives included aggressive inventory reduction, increased cash balances through operational cash flow and capital markets access, and careful management of sales prices and incentives. The company's financial services segment also experienced a revenue decline, contributing to an overall net loss of $545.3 million. Despite these challenges, D.R. Horton emphasizes its strong operational foundation, geographic diversification, and economies of scale as factors that position it to weather the downturn and capitalize on future market recovery. The company is actively managing its land and lot positions, primarily through option contracts, to mitigate real estate inventory risks.

Financial Highlights

31 data points
Beta

Revenue

$3.66B

Net Income

-$549.80M

-15.0% Net Margin

EPS (Diluted)

$-1.73

Total Assets

$6.76B

Cash & Equivalents

$1.96B

Free Cash Flow

$1.14B

Financial Statements
Beta
Revenue$3.66B
Net Income-$549.80M
EPS (Basic)$-1.73
EPS (Diluted)$-1.73
Shares Outstanding (Basic)316.90M
Shares Outstanding (Diluted)316.90M

Key Highlights

  • 1Significant decline in homebuilding revenue, down 45% to $3.6 billion in FY2009, reflecting a challenging industry environment.
  • 2The company reported a net loss of $545.3 million for FY2009, a substantial improvement from the $2.6 billion net loss in FY2008.
  • 3D.R. Horton successfully generated $1.1 billion in net cash from operations, driven by inventory reductions and a tax refund, significantly improving its liquidity position with $1.9 billion in homebuilding cash.
  • 4Homes closed decreased by 37% to 16,703, with the average selling price declining 9% to $213,400.
  • 5Sales order cancellation rates improved year-over-year to 30% in FY2009, though still elevated compared to pre-downturn levels.
  • 6Inventory impairments and land option cost write-offs decreased significantly to $407.7 million in FY2009, down from $2.48 billion in FY2008.
  • 7The company terminated its $1.65 billion unsecured revolving credit facility in May 2009, relying on existing cash and other arrangements for liquidity.

Frequently Asked Questions

D.R. Horton experienced a severe downturn in the homebuilding industry, leading to a significant reduction in revenues and a net loss of $545.3 million for fiscal year 2009. However, the company successfully generated substantial operating cash flow, ending the year with $1.9 billion in homebuilding cash and equivalents, indicating a strong liquidity position to manage its operations through the challenging market.

The company has aggressively reduced its inventory levels and is primarily managing its land and lot positions through option contracts to limit capital investment and mitigate real estate inventory risks. They are also carefully managing the costs of goods and adjusting product offerings to more affordable options.

D.R. Horton's financial services segment, which includes mortgage financing and title agency services, also saw a decline in revenues. Total financial services revenues decreased by 58% to $53.7 million, and the segment reported a pre-tax loss of $15.5 million, reflecting the broader challenges in the housing market impacting mortgage origination volumes.

D.R. Horton remains cautious about the near-term outlook, expecting challenging housing market conditions to persist. Key strategies include maintaining a strong cash balance and liquidity, managing sales prices and incentives, entering into new finished lot option contracts, and controlling SG&A expenses to align with production levels. The company believes long-term fundamentals for housing demand remain positive.