10-QPeriod: Q1 FY2004

HORTON D R INC /DE/ Quarterly Report for Q1 Ended Dec 31, 2003

Filed February 6, 2004For Securities:DHI

Summary

D.R. Horton, Inc. reported a strong second quarter for fiscal year 2004, driven by robust performance in its homebuilding segment. Revenues surged by 26.3% year-over-year, reaching $2.2 billion, with income before taxes increasing by an impressive 68.7% to $301.8 million. This growth was fueled by higher home sales volumes and an increase in the average selling price of homes closed. The company also saw a significant improvement in its homebuilding gross profit margin, which rose to 22.8% from 19.8% in the prior year's quarter, reflecting strong market demand and effective cost control measures. The financial services segment also contributed to revenue growth, though its operating margin declined. Despite a slight increase in consolidated SG&A expenses as a percentage of revenue, the company's ability to leverage fixed costs on higher sales volumes led to an improvement in overall profitability. D.R. Horton ended the quarter with a solid financial position, ample liquidity, and a strong backlog, positioning it well for continued growth in the housing market.

Key Highlights

  • 1Consolidated revenues increased by 26.3% to $2.2 billion in the quarter ended December 31, 2003, compared to the prior year period.
  • 2Income before income taxes grew significantly by 68.7% to $301.8 million.
  • 3Homebuilding revenues rose 26.8% to $2.16 billion, with 9,242 homes closed, up from 7,514 homes in the prior year quarter.
  • 4The average selling price of homes closed increased by 4.1% to $231,000.
  • 5Homebuilding gross profit margin improved to 22.8% from 19.8%, driven by higher prices and lower costs.
  • 6Selling, general, and administrative (SG&A) expenses as a percentage of homebuilding revenue decreased to 9.8% from 10.5%.
  • 7The company ended the quarter with a substantial sales backlog of $3.55 billion, representing 14,480 homes.

Frequently Asked Questions

The primary driver of D.R. Horton's revenue growth was the significant increase in its homebuilding segment. Higher volumes of homes closed, coupled with an increase in the average selling price of those homes, contributed to a 26.8% rise in homebuilding revenues.

D.R. Horton experienced a substantial improvement in profitability. Income before income taxes increased by 68.7% year-over-year. This was largely due to a strong increase in the homebuilding gross profit margin and improved SG&A expense control relative to revenue.

The company's sales backlog stood at $3.55 billion (14,480 homes) as of December 31, 2003. This represents a 24.3% increase from the previous year, indicating strong demand and a positive outlook for future revenue and closings.

D.R. Horton maintains an $805 million unsecured revolving credit facility, which was undrawn at the end of the quarter. The financial services segment utilizes a mortgage warehouse loan facility and a commercial paper conduit facility, both of which are secured by mortgage loans. The company also issued $200 million in new Senior Notes in January 2004 to repay existing debt and for general corporate purposes. The company expects to renew its mortgage warehouse facility prior to maturity.