10-KPeriod: FY2023

HORTON D R INC /DE/ Annual Report, Year Ended Sep 30, 2023

Filed November 17, 2023For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported solid performance in fiscal year 2023, despite a softening housing market due to rising interest rates. As the largest homebuilder in the U.S. by homes closed, DHI saw consolidated revenues increase by 6% to $35.5 billion. However, pre-tax income decreased by 17% to $6.3 billion, and diluted earnings per share fell to $13.82 from $16.51 in the prior year. This was primarily driven by a lower home sales gross margin (23.5% vs. 28.7%) stemming from increased use of incentives and pricing adjustments to maintain sales volume amidst higher mortgage rates. The company demonstrated resilience by increasing net sales orders by 3% in volume, though the value decreased by 3% due to lower average selling prices. DHI's strategic focus on affordability, combined with a strong land and lot position controlled through purchase contracts and its relationship with Forestar Group Inc., positions it well to navigate market fluctuations. The company also reported significant growth in its rental segment and continued to return capital to shareholders through dividends and share repurchases.

Financial Highlights

39 data points
Beta

Revenue

$35.46B

26.4% Gross Margin

Net Income

$4.80B

13.5% Net Margin

EPS (Diluted)

$13.82

Total Assets

$32.58B

Cash & Equivalents

$3.90B

Free Cash Flow

$4.16B

Financial Statements
Beta
Revenue$35.46B
Cost of Revenue$26.11B
Gross Profit$9.35B
SG&A Expenses$3.25B
Net Income$4.80B
EPS (Basic)$13.93
EPS (Diluted)$13.82
Shares Outstanding (Basic)340.70M
Shares Outstanding (Diluted)343.30M

Key Highlights

  • 1Consolidated revenues increased 6% year-over-year to $35.5 billion, driven by a slight increase in homes closed.
  • 2Home sales gross margin decreased to 23.5% from 28.7% in the prior year, attributed to increased incentives and pricing adjustments to counter higher mortgage rates.
  • 3Net sales orders increased by 3% in volume (78,342 homes) but decreased by 3% in value ($29.5 billion) due to lower average selling prices.
  • 4Sales order backlog decreased by 26% in value to $5.9 billion (15,197 homes) compared to the previous year.
  • 5The company's rental segment experienced substantial growth, with revenues increasing significantly.
  • 6D.R. Horton repurchased $1.2 billion of its common stock in fiscal year 2023 and declared a quarterly dividend of $0.30 per share.
  • 7DHI Mortgage financed 76% of homes closed, up from 69% in the prior year, demonstrating strong integration with the homebuilding operations.

Frequently Asked Questions

In fiscal year 2023, D.R. Horton reported consolidated revenues of $35.5 billion, a 6% increase from the prior year. However, net income decreased to $4.7 billion from $5.9 billion in fiscal 2022, and diluted earnings per share fell to $13.82 from $16.51, primarily due to a lower home sales gross margin resulting from increased pricing adjustments and incentives to address higher mortgage rates.

Rising interest rates led to reduced housing affordability, prompting D.R. Horton to implement pricing adjustments and offer incentives to maintain sales volume. This strategy, while effective in driving a 3% increase in home order volume, led to a decrease in the home sales gross margin to 23.5% from 28.7% in the prior year.

D.R. Horton maintains a strong land and lot position, with 75% of its lots controlled through purchase contracts. This strategy, along with its significant investment in Forestar Group Inc., provides a strategic advantage in managing land acquisition and development costs and aligning supply with anticipated homebuyer demand.

D.R. Horton continues to return capital to shareholders through dividends and share repurchases. In fiscal year 2023, the company repurchased approximately $1.2 billion of its common stock and declared a quarterly cash dividend of $0.30 per share. An additional $1.5 billion share repurchase authorization was approved in October 2023.

The rental segment experienced substantial growth, with revenues increasing significantly due to expanded investments in single-family and multi-family rental properties. DHI Mortgage, the financial services arm, financed 76% of the homes closed by D.R. Horton in fiscal 2023, up from 69% in the prior year, highlighting effective integration and contribution to core operations.