10-KPeriod: FY2017

HORTON D R INC /DE/ Annual Report, Year Ended Sep 30, 2017

Filed November 15, 2017For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported strong performance for the fiscal year ending September 30, 2017, with significant growth in home closings and revenues. As the largest homebuilder in the U.S., the company benefited from stable to moderately improved market conditions across most of its operating regions. DHI demonstrated growth across all its reporting segments, with particular strength noted in the Southwest region, driven by increased closings and average selling prices. The company's financial services segment also saw revenue growth, supported by increased mortgage originations for its homebuyers. Looking ahead, DHI is focused on leveraging its financial strength and broad geographic footprint to drive profitability and manage risks. Strategic initiatives include expanding its product offerings to cater to a wider range of buyers, optimizing inventory investments, and controlling operational costs. The company's robust land and lot position, largely controlled through option contracts, provides flexibility and mitigates risk. DHI's financial health is supported by a strong balance sheet, ample liquidity, and a commitment to capital allocation, including share repurchases and dividend payments.

Financial Highlights

40 data points
Beta

Revenue

$14.09B

21.6% Gross Margin

Net Income

$1.04B

7.4% Net Margin

EPS (Diluted)

$2.74

Total Assets

$12.18B

Cash & Equivalents

$1.01B

Free Cash Flow

$337.50M

Financial Statements
Beta
Revenue$14.09B
Cost of Revenue$11.04B
Gross Profit$3.05B
SG&A Expenses$1.47B
Net Income$1.04B
EPS (Basic)$2.77
EPS (Diluted)$2.74
Shares Outstanding (Basic)374.30M
Shares Outstanding (Diluted)378.90M

Key Highlights

  • 1D.R. Horton closed 45,751 homes, a 14% increase year-over-year, with revenues rising 16% to $13.7 billion, solidifying its position as the largest U.S. homebuilder.
  • 2The company reported significant growth in its Southwest region, with revenues up 54% and pre-tax income increasing substantially, driven by strong performance in Phoenix.
  • 3Sales order backlog grew by 8% to $3.7 billion, indicating a healthy pipeline of future sales.
  • 4Homebuilding pre-tax income increased by 18% to $1.5 billion, with a pre-tax operating margin of 10.8%, showing improved profitability.
  • 5The company's financial services segment experienced an 18% revenue increase, with DHI Mortgage handling financing for 56% of DHI homes closed.
  • 6D.R. Horton maintained a strong balance sheet with a homebuilding debt-to-total capital ratio of 24.0%, an improvement from the previous year.
  • 7Post-fiscal year end, DHI acquired 75% of Forestar Group Inc. for $558.3 million to enhance its access to quality land and lot positions.

Frequently Asked Questions

D.R. Horton experienced strong growth in fiscal year 2017. Home closings increased by 14% to 45,751 homes, and home sales revenues rose by 16% to $13.7 billion. The company's pre-tax income grew by 18% to $1.6 billion, and diluted earnings per share increased by 16% to $2.74.

D.R. Horton manages its inventory and land acquisition through a strategy that prioritizes controlling land and lots via option purchase contracts, which increased to 50% of total lots owned and controlled. This approach limits capital investment and reduces land ownership risks. The company aims to align its inventory levels with anticipated future home closing levels and local market demand.

The acquisition of 75% of Forestar Group Inc. (completed after the fiscal year-end) is a strategic move to increase D.R. Horton's access to high-quality optioned land and lot positions. This is expected to enhance operational efficiency and returns, further supporting the company's growth strategy by expanding its land development opportunities and securing a large portion of finished lots through a master supply agreement.

D.R. Horton's financial services segment, primarily through DHI Mortgage, provides mortgage financing and title agency services to its homebuyers. In fiscal year 2017, this segment saw an 18% increase in revenues, with DHI Mortgage financing 56% of the company's home closings. This segment complements the homebuilding operations by facilitating the sales process and contributing to overall profitability.