10-QPeriod: Q2 FY2001

HORTON D R INC /DE/ Quarterly Report for Q2 Ended Mar 31, 2001

Filed May 15, 2001For Securities:DHI

Summary

D.R. Horton, Inc. reported robust financial results for the quarter ended March 31, 2001. The company experienced significant revenue growth driven primarily by strong home sales, reflecting a healthy housing market and increased average selling prices. This growth in revenue, coupled with improved gross profit margins in the homebuilding segment, led to a substantial increase in income before income taxes for both the three-month and six-month periods. The company's financial services segment also demonstrated strong performance, with revenues increasing due to the expansion of mortgage and title services offered to its homebuying customers. D.R. Horton's balance sheet shows a healthy increase in inventories to support business expansion, financed through a combination of increased borrowings and retained earnings. The company also secured substantial new financing, including a significant issuance of senior subordinated notes and a new universal shelf registration, positioning it well for future growth and potential acquisitions.

Key Highlights

  • 1Consolidated revenues increased by 13.5% to $906.8 million for the three months ended March 31, 2001, driven by home sales.
  • 2Income before income taxes rose by 29.8% to $82.5 million for the three months ended March 31, 2001, indicating improved profitability.
  • 3Homebuilding gross profit margin improved due to higher average selling prices and cost efficiencies.
  • 4New net sales contracts increased significantly by 36.3% to $1,355.9 million for the quarter, indicating strong future demand.
  • 5Sales backlog at March 31, 2001, increased by 37.8% to $2,083.3 million, providing visibility into future revenue.
  • 6Financial services segment revenues grew by 34.2% to $14.4 million, benefiting from increased mortgage and title services.
  • 7The company secured new financing, including a $200 million issuance of 9.375% Senior Subordinated Notes and a new $750 million universal shelf registration.

Frequently Asked Questions

The primary driver of D.R. Horton's revenue growth was a significant increase in home sales revenues, which benefited from strong housing demand and a rise in the average selling price of homes closed.

The company financed its increased inventories and business expansion through a combination of borrowing an additional $122 million under its revolving credit facility, issuing $200 million of senior subordinated notes, and retaining earnings.

The adoption of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," required the company to record its interest rate swap agreements at fair value and recognize changes in their fair value in the income statement. This resulted in a $2.1 million cumulative effect of a change in accounting principle for the six months ended March 31, 2001, and impacted 'Other expense (income)' for the homebuilding segment.

The significant increase in both new net sales contracts and the sales contract backlog indicates strong future demand for D.R. Horton's homes. The backlog grew by 37.8% year-over-year, suggesting a positive outlook for continued revenue growth.