10-KPeriod: FY2016

HORTON D R INC /DE/ Annual Report, Year Ended Sep 30, 2016

Filed November 18, 2016For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported strong performance for the fiscal year ended September 30, 2016, solidifying its position as the largest homebuilder in the U.S. The company saw significant growth in homebuilding revenues, up 12% to $11.9 billion, driven by a 10% increase in homes closed to 40,309 and a 2% rise in the average closing price. This growth was supported by an expanding product offering catering to entry-level, move-up, and luxury buyers, with a particular emphasis on the strong demand in the entry-level segment. The company's financial services segment also showed increased revenues. DHI Mortgage's capture rate improved, indicating strong integration with the homebuilding operations. D.R. Horton maintained a healthy balance sheet, with a decrease in homebuilding debt to total capital ratio, demonstrating a focus on financial discipline alongside growth. The company's strategic focus on leveraging its scale, diversifying its geographic presence, and managing inventory efficiently positions it well for continued success in the housing market.

Financial Highlights

39 data points
Beta

Revenue

$12.16B

21.8% Gross Margin

Net Income

$886.30M

7.3% Net Margin

EPS (Diluted)

$2.36

Total Assets

$11.56B

Cash & Equivalents

$1.30B

Free Cash Flow

$545.80M

Financial Statements
Beta
Revenue$12.16B
Cost of Revenue$9.50B
Gross Profit$2.65B
SG&A Expenses$1.32B
Net Income$886.30M
EPS (Basic)$2.39
EPS (Diluted)$2.36
Shares Outstanding (Basic)371.00M
Shares Outstanding (Diluted)375.10M

Key Highlights

  • 1Homebuilding revenues increased by 12% to $11.9 billion in fiscal year 2016.
  • 2The company closed 40,309 homes, a 10% increase year-over-year, with an average closing price of $292,300.
  • 3Net sales orders increased by 9% in volume and 12% in value, reaching $12.0 billion, indicating strong future demand.
  • 4Sales order backlog grew by 8% to 11,475 homes, valued at $3.4 billion.
  • 5Home sales gross margins improved to 20.2%, up 40 basis points.
  • 6Homebuilding SG&A expenses as a percentage of revenue decreased by 20 basis points to 9.3%.
  • 7Consolidated pre-tax income increased by 20% to $1.4 billion, with diluted EPS rising 16% to $2.36.

Frequently Asked Questions

D.R. Horton, Inc. is the largest homebuilding company in the United States, measured by the number of homes closed and revenues. The company operates through various brand names, including D.R. Horton, America's Builder, Emerald Homes, Express Homes, Freedom Homes, and Pacific Ridge Homes, in 78 markets across 26 states.

In fiscal year 2016, D.R. Horton achieved significant growth, with homebuilding revenues increasing by 12% to $11.9 billion. The company closed 40,309 homes, up 10%, and saw a 2% increase in the average closing price to $292,300. Net income grew by 18% to $886.3 million, and diluted earnings per share increased by 16% to $2.36. The company also reported an improved homebuilding pre-tax margin of 10.7%.

D.R. Horton's strategy focuses on leveraging its financial strength and market position to increase inventory returns while generating strong profitability and cash flows. Key initiatives include maintaining robust liquidity, actively managing inventory across its diverse markets, offering a broad range of home products to appeal to various buyer segments, utilizing option purchase contracts to mitigate land ownership risks, and controlling operating costs by leveraging its scale.

The company faces risks inherent to the homebuilding industry, including the cyclical nature of the market influenced by economic conditions, interest rates, and consumer confidence. Other significant risks include potential supply shortages for materials and labor, increased construction costs due to inflation, regulatory compliance, competition, and potential liabilities related to home warranties and construction defects. The company also highlights risks associated with its financial services segment, such as changes in mortgage financing availability and regulations.