10-QPeriod: Q1 FY2001

HORTON D R INC /DE/ Quarterly Report for Q1 Ended Dec 31, 2000

Filed February 13, 2001For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported for the quarter ending December 31, 2000, a significant increase in both revenue and net income compared to the prior year's period. Total revenues grew by 9.7% to $887.7 million, driven primarily by a 9.5% increase in homebuilding revenues to $873.6 million. Net income rose to $49.9 million from $42.5 million year-over-year. The company's financial services segment also demonstrated strong growth, with revenues increasing by 24.0%. This robust performance reflects continued demand in the housing market and effective operational execution by DHI. The company's balance sheet shows substantial growth in inventories, with finished homes and construction in progress increasing to $1.16 billion and developed lots to $1.23 billion. This expansion was financed through increased borrowings under the revolving credit facility and retained earnings. Despite the increased debt, DHI maintained a strong liquidity position with $79.1 million in cash and cash equivalents and significant borrowing capacity under its credit facilities. The company also highlighted its strategic investments in e-commerce and diversification efforts.

Key Highlights

  • 1Total revenues increased by 9.7% to $887.7 million for the quarter ended December 31, 2000.
  • 2Net income grew by 17.3% to $49.9 million for the quarter compared to $42.5 million in the prior year.
  • 3Homebuilding segment revenues rose 9.5% to $873.6 million, with an increase in average selling price of homes closed by 14.6% to $199,600.
  • 4Financial services segment revenues increased by 24.0% to $14.1 million, indicating strong growth in ancillary services.
  • 5The company's sales contract backlog increased by 22.0% to $1.58 billion, signaling positive future revenue potential.
  • 6Inventories, including finished homes and lots, saw a substantial increase, reflecting business expansion.
  • 7D.R. Horton reported $79.1 million in cash and cash equivalents as of December 31, 2000, with significant available borrowing capacity.

Frequently Asked Questions

The primary driver of D.R. Horton's revenue growth was the strong performance of its homebuilding segment, which saw revenues increase by 9.5% to $873.6 million. This was supported by a significant increase in the average selling price of homes closed, up 14.6% year-over-year.

The adoption of SFAS No. 133, 'Accounting for Derivative Instruments and Hedging Activities,' on October 1, 2000, resulted in a one-time cumulative effect of a change in accounting principle, increasing net income by $2.1 million. This standard requires derivative instruments, like interest rate swaps, to be recorded at fair value, with changes recognized in income. This led to a $3.3 million 'other expense' in the homebuilding segment due to the fair value adjustment of interest rate swaps.

As of December 31, 2000, D.R. Horton maintained a solid financial position with $79.1 million in cash and cash equivalents. The company has a $825 million unsecured revolving credit facility with $448 million in additional borrowing capacity. Inventories have increased to support business expansion, financed through debt and retained earnings. The company expects to fund future growth through internally generated funds and existing credit facilities.

The company's sales contract backlog increased by 22.0% to $1.58 billion at December 31, 2000, compared to the prior year. This significant growth in backlog indicates strong future demand and provides a positive outlook for continued revenue generation in the coming quarters.