10-QPeriod: Q2 FY2002

HORTON D R INC /DE/ Quarterly Report for Q2 Ended Mar 31, 2002

Filed May 15, 2002For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported a significant increase in revenues and income for the quarter and six months ended March 31, 2002, compared to the prior year. This growth was primarily driven by a substantial rise in home sales, fueled by strong housing demand across most of its markets and the impact of recent acquisitions, including Fortress-Florida, Emerald Builders, and most notably, the merger with Schuler Homes, Inc. The company's strategic acquisitions have broadened its geographic reach and contributed significantly to revenue growth and an increase in the average selling price of homes. While revenues surged, the cost of sales as a percentage of home sales revenues also increased, largely due to purchase accounting adjustments related to the Schuler acquisition, specifically the inventory valuation. Despite this, improved fixed cost leverage from higher closing volumes helped reduce selling, general, and administrative expenses as a percentage of revenue. The financial services segment also showed robust growth in revenues, supported by the expanded homebuilding operations. The company ended the period with a strong liquidity position and adequate access to capital, positioning it to fund future growth and potential acquisitions.

Key Highlights

  • 1Total revenues increased by 76.4% to $1,600.1 million for the three months ended March 31, 2002, compared to $906.8 million in the prior year.
  • 2Income before income taxes rose by 72.4% to $142.3 million for the three months ended March 31, 2002, compared to $82.5 million in the prior year.
  • 3The merger with Schuler Homes, Inc. was completed on February 21, 2002, significantly contributing to the increase in homebuilding revenues and average selling price.
  • 4Homebuilding revenues increased by 76.6% to $1,576.2 million, with 6,639 homes closed compared to 4,330 homes in the prior year.
  • 5The financial services segment experienced a 65.4% revenue increase to $23.9 million for the three months ended March 31, 2002.
  • 6The company's sales contract backlog at March 31, 2002, stood at $2,663.7 million, representing a 27.9% increase from the prior year.
  • 7D.R. Horton entered into a new $805 million unsecured revolving credit facility maturing in January 2006.

Frequently Asked Questions

The primary driver of D.R. Horton's revenue growth was a significant increase in home sales, bolstered by strong housing demand across most of its markets and the impact of recent acquisitions, most notably the merger with Schuler Homes, Inc. The company also benefited from the inclusion of Fortress-Florida and Emerald Builders, acquired in the prior fiscal year.

The acquisition of Schuler Homes, Inc., completed in February 2002, significantly contributed to the increase in homebuilding revenues and the average selling price of homes closed. However, it also led to an increase in the cost of sales as a percentage of home sales revenues due to purchase accounting adjustments, specifically the recording of Schuler's inventory at fair value.

The financial services segment showed strong growth in revenues, increasing by 65.4% for the quarter. This growth is attributed to the expansion of mortgage loan and title services supporting the company's homebuilding segment and the contributions from recent acquisitions. The segment's revenue growth helped absorb fixed costs, leading to improved profitability as a percentage of revenue.

D.R. Horton ended the quarter with $189.7 million in cash and cash equivalents. The company has access to a new $805 million unsecured revolving credit facility maturing in January 2006, which provides significant borrowing capacity. The company also has ongoing strategies to fund future growth and acquisitions through internally generated funds, existing credit facilities, and potential issuance of new debt or equity securities.