10-QPeriod: Q2 FY2013

HORTON D R INC /DE/ Quarterly Report for Q2 Ended Mar 31, 2013

Filed April 26, 2013For Securities:DHI

Summary

D.R. Horton, Inc. reported a significant improvement in financial performance for the quarter ended March 31, 2013, compared to the prior year. The company saw substantial increases in homebuilding revenues, homes closed, and net sales orders, driven by a strengthening housing market. This positive trend is reflected in a nearly threefold increase in homebuilding pre-tax income and a substantial rise in net income and diluted earnings per share. The company's financial services segment also experienced robust growth, with increased revenues and pre-tax income. D.R. Horton's strategic focus on expanding inventory and capitalizing on improving market conditions appears to be paying off, leading to higher average selling prices and improved gross margins across its homebuilding operations. The company's balance sheet remains strong, with increasing equity and a significant cash position, positioning it well for continued growth.

Financial Highlights

33 data points
Beta

Revenue

$1.43B

Net Income

$111.00M

7.8% Net Margin

EPS (Diluted)

$0.32

Total Assets

$8.23B

Cash & Equivalents

$1.15B

Free Cash Flow

-$195.10M

Financial Statements
Beta
Revenue$1.43B
Interest Expense$3.00M
Net Income$111.00M
EPS (Basic)$0.35
EPS (Diluted)$0.32
Shares Outstanding (Basic)321.70M
Shares Outstanding (Diluted)365.40M

Key Highlights

  • 1Homebuilding revenues increased by 47% to $1.4 billion for the three months ended March 31, 2013.
  • 2Homes closed increased by 33% to 5,643, with the average closing price rising by 10% to $242,500.
  • 3Net sales orders increased by 34% to 7,879 homes, and the value of net sales orders grew by 52% to $2.0 billion.
  • 4Home sales gross margins improved by 280 basis points to 20.4%.
  • 5Homebuilding pre-tax income surged by 268% to $127.4 million.
  • 6Consolidated net income rose to $111.0 million from $40.6 million in the prior year period.
  • 7Financial services revenues increased by 61% to $41.2 million, with pre-tax income up 91% to $14.7 million.

Frequently Asked Questions

The primary driver is a recovering housing market, leading to increased demand for new homes. This has resulted in higher sales volumes, increased average selling prices, and improved gross margins for D.R. Horton's homebuilding operations. The financial services segment also benefited from the increased activity in home sales.

The company has significantly increased its investments in land, lot, and home inventories. Owned and controlled lots grew to approximately 175,300, and homes in inventory increased to approximately 15,800, reflecting a strategic response to improved demand and market conditions.

Management believes the company is well-positioned for continued profitable growth due to its strong balance sheet, liquidity, land position, and operational strategy. However, they caution that continued weak economic conditions, restrictive mortgage lending, and localized market shifts could still impact future results.

Homebuilding debt increased to $3.0 billion, with a corresponding rise in leverage ratios. This increase is primarily due to the issuance of new senior notes to fund investments in inventory and expand operations. The company intends to maintain its net homebuilding debt to total capital within a target range.