10-QPeriod: Q1 FY2010

HORTON D R INC /DE/ Quarterly Report for Q1 Ended Dec 31, 2009

Filed February 2, 2010For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported a significant return to profitability for the quarter ended December 31, 2009, with net income of $192.0 million, a substantial improvement from a net loss of $62.6 million in the prior year's comparable period. This turnaround was driven by a 25% increase in home sales revenue to $1.1 billion, fueled by a 36% rise in homes closed to 5,529. The company also experienced a notable 45% increase in net sales orders, indicating stronger demand. The company's financial services segment also saw improvement, with revenues increasing 32% and moving to profitability with pre-tax income of $6.7 million. Management highlighted stabilizing housing market conditions, supported by increased affordability and government policies, as key factors for the improved performance. However, they remain cautious about the uncertain recovery timeline and the impact of expiring government support programs.

Financial Highlights

18 data points
Beta

Revenue

$1.13B

16.6% Gross Margin

Net Income

$192.00M

17.0% Net Margin

EPS (Diluted)

$0.56

Cash & Equivalents

$1.94B

Free Cash Flow

$217.50M

Financial Statements
Beta
Revenue$1.13B
Gross Profit$188.30M
Net Income$192.00M
EPS (Basic)$0.60
EPS (Diluted)$0.56

Key Highlights

  • 1Reported net income of $192.0 million, a significant turnaround from a net loss of $62.6 million in the prior year's quarter.
  • 2Homebuilding revenues increased by 25% to $1.1 billion, driven by a 36% increase in homes closed to 5,529.
  • 3Net sales orders surged by 45% to 4,037 homes, indicating improved demand in the housing market.
  • 4Home sales gross profit margin improved by 160 basis points to 17.1%, benefiting from lower costs and improved lot acquisition strategies.
  • 5Inventory impairments and land option cost write-offs significantly decreased to $1.2 million from $56.2 million year-over-year.
  • 6Financial services segment revenues increased by 32% to $23.3 million, achieving pre-tax income of $6.7 million compared to a loss in the prior year.
  • 7The company ended the quarter with a strong cash position of $1.9 billion, reinforcing its liquidity.

Frequently Asked Questions

The primary driver was a significant increase in homebuilding activity, evidenced by a 25% rise in home sales revenue and a 36% increase in the number of homes closed. This was complemented by improved gross profit margins and a substantial reduction in inventory impairment charges compared to the prior year.

The financial services segment showed strong improvement, with revenues up 32% to $23.3 million. It also shifted from a net loss in the prior year's quarter to a pre-tax income of $6.7 million, indicating effective cost management and increased mortgage origination and sales activities.

Management expressed cautious optimism, noting signs of stabilization in the housing market due to factors like affordability and government support. However, they remain watchful of economic uncertainties and the scheduled expiration of key government programs like the homebuyer tax credit, which could impact future performance.

Yes, the company ended the quarter with a substantial cash and cash equivalents balance of $1.9 billion, demonstrating strong liquidity. They also managed their debt effectively, with homebuilding debt decreasing and a focus on maintaining a healthy net homebuilding debt to total capital ratio.