10-QPeriod: Q1 FY2012

HORTON D R INC /DE/ Quarterly Report for Q1 Ended Dec 31, 2011

Filed January 27, 2012For Securities:DHI

Summary

D.R. Horton, Inc. reported a profitable first quarter for fiscal year 2012, a significant turnaround from a loss in the prior year's comparable period. The company saw a 16% increase in home sales revenue to $884.3 million and a 13% rise in homes closed to 4,118. This growth was driven by a 13% increase in net sales orders, indicating a stabilization in demand for new homes across most of its operating markets, with notable strength in the East and Southeast regions. The company also demonstrated improved operational efficiency, with home sales gross margins increasing to 16.8% and selling, general, and administrative (SG&A) expenses decreasing as a percentage of revenue. Inventory impairments and land option cost write-offs were substantially lower than the prior year, contributing to the improved profitability. The financial services segment remained stable, contributing $4.2 million in pre-tax income. Overall, D.R. Horton reported a net income of $27.7 million for the quarter, with diluted earnings per share of $0.09.

Financial Highlights

35 data points
Beta

Revenue

$906.60M

Net Income

$27.70M

3.1% Net Margin

EPS (Diluted)

$0.09

Total Assets

$5.36B

Cash & Equivalents

$738.10M

Free Cash Flow

-$4.10M

Financial Statements
Beta
Revenue$906.60M
Interest Expense$7.80M
Net Income$27.70M
EPS (Basic)$0.09
EPS (Diluted)$0.09
Shares Outstanding (Basic)316.30M
Shares Outstanding (Diluted)316.50M

Key Highlights

  • 1Homebuilding revenues increased 15% year-over-year to $885.6 million.
  • 2Homes closed increased 13% to 4,118, with an average selling price of $214,700.
  • 3Net sales orders rose 13% to 3,794 homes, and the sales order backlog grew 18% to $975.0 million.
  • 4Home sales gross margins improved by 120 basis points to 16.8%.
  • 5Inventory impairments and land option cost write-offs decreased significantly to $1.4 million from $8.4 million in the prior year.
  • 6Consolidated net income was $27.7 million, a substantial improvement from a net loss of $20.4 million in the prior year.
  • 7The company maintained a strong balance sheet with $1.0 billion in homebuilding cash and marketable securities.

Frequently Asked Questions

D.R. Horton reported a net income of $27.7 million ($0.09 per diluted share) for the quarter ended December 31, 2011, a significant improvement from a net loss of $20.4 million ($0.06 per diluted share) in the same period of the prior year. This turnaround was driven by increased home sales revenue, improved gross margins, and lower inventory impairments.

The homebuilding segment showed robust growth, with revenues increasing 15% to $885.6 million. The number of homes closed rose 13% to 4,118, and net sales orders increased 13% to 3,794 homes. The sales order backlog also saw a healthy 18% increase to $975.0 million, indicating positive future demand. Gross margins improved due to better cost management and reduced impairments.

The company noted a continuation of improving sales trends experienced in the latter half of fiscal 2011, with net sales orders increasing. While overall demand remains at low levels, the company believes the market may have stabilized. D.R. Horton feels well-positioned for an eventual housing recovery due to its strong balance sheet and liquidity, and will continue to adapt its strategies to market conditions.

D.R. Horton maintained a strong liquidity position with $1.0 billion in homebuilding cash and marketable securities. The company has focused on reducing debt, and its net homebuilding debt to total capital ratio was 17.5% at the end of the quarter, well below its historic target. It believes it can fund near-term obligations from existing cash and its mortgage repurchase facility.