10-QPeriod: Q1 FY2013

HORTON D R INC /DE/ Quarterly Report for Q1 Ended Dec 31, 2012

Filed January 29, 2013For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported a strong financial performance for the quarter ended December 31, 2012, demonstrating significant year-over-year improvement across key metrics. The company experienced substantial growth in homebuilding revenues, which increased by 38% to $1.2 billion, driven by a 26% rise in homes closed and a 10% increase in the average closing price. Net sales orders saw a robust 39% increase in volume and a 60% increase in value, indicating growing demand in the housing market. Profitability also saw a marked improvement, with consolidated pre-tax income reaching $107.9 million, a significant jump from $29.2 million in the prior year period. This was supported by improved home sales gross margins, which rose to 18.8%, and a reduction in SG&A expenses as a percentage of revenue. The company's financial services segment also performed well, with revenues doubling and pre-tax income increasing over threefold. D.R. Horton's strong balance sheet and strategic investments in inventory position it to capitalize on the ongoing housing recovery.

Financial Highlights

33 data points
Beta

Revenue

$1.28B

Net Income

$66.30M

5.2% Net Margin

EPS (Diluted)

$0.20

Total Assets

$7.35B

Cash & Equivalents

$566.90M

Free Cash Flow

-$670.50M

Financial Statements
Beta
Revenue$1.28B
Interest Expense-$4.20M
Net Income$66.30M
EPS (Basic)$0.21
EPS (Diluted)$0.20
Shares Outstanding (Basic)321.10M
Shares Outstanding (Diluted)364.10M

Key Highlights

  • 1Homebuilding revenues surged 38% to $1.2 billion, driven by a 26% increase in homes closed and a 10% rise in average selling price.
  • 2Net sales orders increased by 39% in volume and 60% in value, signaling strong demand for new homes.
  • 3Consolidated pre-tax income grew significantly to $107.9 million, compared to $29.2 million in the prior year quarter.
  • 4Home sales gross margins improved by 200 basis points to 18.8%, reflecting better pricing and reduced incentives.
  • 5SG&A expenses decreased by 200 basis points as a percentage of homebuilding revenues, indicating improved operational efficiency.
  • 6The financial services segment doubled its revenues and more than quadrupled its pre-tax income, contributing positively to overall results.
  • 7Sales order backlog increased by 62% to $1.8 billion, indicating a healthy pipeline of future sales.

Frequently Asked Questions

The primary driver of the significant increase in revenue was the substantial growth in homebuilding operations. This was fueled by an increase in the number of homes closed (up 26%) and a higher average selling price per home (up 10%), indicating both higher sales volume and improved pricing power in the housing market.

Profitability saw a marked improvement. Consolidated pre-tax income increased from $29.2 million in the prior year's quarter to $107.9 million in the current quarter. This was supported by improved gross margins in home sales (up to 18.8%), a reduction in SG&A as a percentage of revenue, and strong performance from the financial services segment.

The report suggests a positive outlook, driven by improving housing market conditions, increasing demand, and the company's strategic investments in inventory. The significant increase in net sales orders and sales order backlog indicates a strong pipeline for future revenue and earnings. However, the company acknowledges potential risks from weakening economic conditions and restrictive mortgage lending.

Homebuilding inventories increased significantly, totaling $5.0 billion at the end of the quarter, up from $4.2 billion at the end of the previous quarter. This increase reflects the company's strategy to invest in land, lots, and homes under construction in response to improved market conditions and increased housing demand, aiming to capitalize on the growing market.