10-KPeriod: FY2018

HORTON D R INC /DE/ Annual Report, Year Ended Sep 30, 2018

Filed November 16, 2018For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported a strong fiscal year ending September 30, 2018, demonstrating significant growth and solid financial performance. As the largest homebuilder in the U.S. by homes closed, the company benefited from robust demand, particularly for affordable housing, supported by favorable economic conditions and limited new home supply in many of its 81 markets across 27 states. The company's strategic acquisition of a 75% stake in Forestar Group Inc. in October 2017 further bolstered its land and lot development capabilities, aligning with its strategy to enhance operational efficiency and returns. DHI's financial results reflected this operational strength, with revenues increasing by 14% to $16.1 billion, and net income attributable to D.R. Horton, Inc. growing by 41% to $1.5 billion. The company's homebuilding segment saw a 13% increase in homes closed and a 130 basis point improvement in home sales gross margin, leading to a 31% rise in homebuilding pre-tax income. The financial services segment also contributed positively, though its pre-tax income saw a slight decrease due to competitive pressures. The company maintained a strong balance sheet, with debt to total capital improving, and continued to return value to shareholders through dividends and share repurchases.

Financial Highlights

41 data points
Beta

Revenue

$16.07B

22.8% Gross Margin

Net Income

$1.46B

9.1% Net Margin

EPS (Diluted)

$3.81

Total Assets

$14.11B

Cash & Equivalents

$1.47B

Free Cash Flow

$477.10M

Financial Statements
Beta
Revenue$16.07B
Cost of Revenue$12.40B
Gross Profit$3.67B
SG&A Expenses$1.68B
Interest Expense$0
Net Income$1.46B
EPS (Basic)$3.88
EPS (Diluted)$3.81
Shares Outstanding (Basic)376.60M
Shares Outstanding (Diluted)383.40M

Key Highlights

  • 1D.R. Horton closed 51,857 homes in fiscal year 2018, a 13% increase year-over-year, solidifying its position as the largest U.S. homebuilder by volume.
  • 2Total revenues reached $16.1 billion, a 14% increase compared to the prior year, driven by strong demand across most markets.
  • 3Net income attributable to D.R. Horton, Inc. increased by 41% to $1.5 billion, with diluted earnings per share rising to $3.81.
  • 4Home sales gross margin improved by 130 basis points to 21.3%, reflecting effective pricing and cost management.
  • 5The company acquired a 75% controlling interest in Forestar Group Inc., a residential lot development company, enhancing its land and lot pipeline.
  • 6Homebuilding SG&A expenses as a percentage of revenue decreased by 30 basis points to 8.6%, indicating improved operational leverage.
  • 7The sales order backlog grew by 8% to $4.0 billion, providing visibility into future revenue.

Frequently Asked Questions

In fiscal year 2018, D.R. Horton reported total revenues of $16.1 billion, a 14% increase from the previous year. Net income attributable to D.R. Horton, Inc. rose by 41% to $1.5 billion, resulting in diluted earnings per share of $3.81. The company saw a 13% increase in homes closed and improved home sales gross margins.

In October 2017, D.R. Horton acquired a 75% stake in Forestar Group Inc. This strategic acquisition is intended to enhance D.R. Horton's access to optioned land and lot positions, improve operational efficiency, and strengthen overall returns by integrating lot development with its homebuilding operations.

The company focused on controlling costs through efficient home design and competitive bidding for materials and labor. They also leveraged their scale for volume discounts. For fiscal year 2018, home sales gross margin increased to 21.3%, and selling, general, and administrative expenses as a percentage of revenue decreased to 8.6%, demonstrating effective cost management and operational leverage.

Key risks include the cyclical nature of the homebuilding industry, sensitivity to economic conditions, interest rate fluctuations, availability of mortgage financing, competition, and potential supply chain disruptions for materials and labor. The company also faces risks related to its land and lot inventory and potential litigation or regulatory issues.