10-KPeriod: FY2014

HORTON D R INC /DE/ Annual Report, Year Ended Sep 30, 2014

Filed November 18, 2014For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported a strong fiscal year ended September 30, 2014, demonstrating significant growth in its core homebuilding operations. The company, the largest homebuilder by volume in the U.S., saw substantial increases in home sales revenues, homes closed, and net sales orders, driven by improving market conditions and strategic expansion. This growth was supported by effective cost management and increased market share across its geographically diverse operations. The company's financial services segment also contributed, though with a decrease in pre-tax income. DHI continues to focus on a strategy of leveraging its scale, expanding its product offerings to cater to different buyer segments (entry-level, move-up, and luxury), and managing its inventory and capital effectively. The company's solid balance sheet and liquidity position provide a strong foundation for continued growth, while risk factors remain concentrated in potential economic downturns and industry-specific challenges.

Financial Highlights

35 data points
Beta

Revenue

$8.02B

Net Income

$533.50M

6.6% Net Margin

EPS (Diluted)

$1.50

Total Assets

$10.19B

Cash & Equivalents

$661.80M

Free Cash Flow

-$761.60M

Financial Statements
Beta
Revenue$8.02B
Interest Expense$0
Net Income$533.50M
EPS (Basic)$1.57
EPS (Diluted)$1.50
Shares Outstanding (Basic)340.50M
Shares Outstanding (Diluted)366.60M

Key Highlights

  • 1Homebuilding revenues increased by 29% to $7.9 billion in fiscal 2014.
  • 2The number of homes closed rose by 19% to 28,670, with an average closing price of $272,200, up 9%.
  • 3Net sales orders increased by 18% in volume and 27% in value, reaching $8.3 billion.
  • 4Sales order backlog grew by 21% to 9,888 homes, valued at $2.9 billion, indicating strong future demand.
  • 5Home sales gross margins improved by 50 basis points to 21.3%.
  • 6The company expanded its operations through acquisitions, notably Crown Communities and Regent Homes.
  • 7DHI Mortgage's capture rate decreased to 50% from 56%, impacting the financial services segment's revenue contribution relative to home closings.

Frequently Asked Questions

D.R. Horton experienced significant growth in fiscal year 2014. Homebuilding revenues increased by 29% to $7.9 billion, with a 19% rise in homes closed. Net income grew by 15% to $533.5 million, and diluted earnings per share increased by 13% to $1.50. This performance reflects a strengthening housing market and the company's strategic initiatives.

Operating in 27 states and 79 metropolitan markets provides D.R. Horton with geographic diversification, which is considered to lower operational risks by mitigating the effects of local economic cycles and enhancing earnings potential. This broad reach allowed the company to capitalize on varying market strengths across the country.

D.R. Horton's strategy includes maintaining a strong cash and liquidity position, actively managing inventory investments across its markets for optimized returns, offering a diverse range of home communities for various buyer segments (entry-level, move-up, luxury), and controlling costs, including SG&A expenses. The company also focuses on land/lot option contracts to mitigate land ownership risks and selectively pursues opportunistic acquisitions.

While the financial services segment, primarily DHI Mortgage and title services, contributed to overall revenues, its pre-tax income decreased by 31% to $45.4 million in fiscal 2014. This decline was attributed to a lower mortgage capture rate (50% vs. 56% in the prior year) and pricing pressures in the mortgage origination market, despite an increase in home closings.