10-QPeriod: Q2 FY2014

HORTON D R INC /DE/ Quarterly Report for Q2 Ended Mar 31, 2014

Filed April 24, 2014For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported a strong first quarter of 2014, driven by robust performance in its homebuilding segment. The company saw significant increases in homebuilding revenues, homes closed, and average selling prices, reflecting a recovering housing market and favorable supply-demand dynamics. Gross margins in homebuilding improved notably due to higher prices and controlled costs. While the financial services segment experienced a revenue and income decline, this was largely offset by the strength in homebuilding. The company maintains a solid balance sheet and liquidity position, with substantial cash on hand and available credit facilities. DHI is strategically expanding its operations and inventory to capitalize on market improvements, positioning itself for continued profitable growth.

Financial Highlights

32 data points
Beta

Revenue

$1.74B

Net Income

$131.00M

7.6% Net Margin

EPS (Diluted)

$0.38

Total Assets

$9.37B

Cash & Equivalents

$993.40M

Free Cash Flow

-$272.60M

Financial Statements
Beta
Revenue$1.74B
Interest Expense$0
Net Income$131.00M
EPS (Basic)$0.40
EPS (Diluted)$0.38
Shares Outstanding (Basic)324.30M
Shares Outstanding (Diluted)366.30M

Key Highlights

  • 1Homebuilding revenues increased by 22% to $1.7 billion for the three months ended March 31, 2014, compared to the prior year period.
  • 2The average selling price of homes closed increased by 12% to $271,200, indicating strong pricing power.
  • 3Home sales gross margins improved by 210 basis points to 22.5%, driven by higher sales prices and controlled costs.
  • 4Net sales orders grew by 9% in volume and 20% in value, signaling continued demand for DHI's homes.
  • 5Homebuilding pre-tax income saw a substantial 50% increase, reaching $191.7 million.
  • 6The company ended the quarter with a strong cash position of $930.8 million in its homebuilding segment.
  • 7Despite a decrease in financial services revenue and pre-tax income, the overall consolidated pre-tax income increased by 42% to $201.9 million.

Frequently Asked Questions

D.R. Horton demonstrated significant year-over-year improvement in the first quarter of 2014. Homebuilding revenues increased by 22% to $1.7 billion, and net income rose by 18% to $131.0 million. Diluted earnings per share also saw a healthy increase of 19% to $0.38. This growth was primarily driven by a recovering housing market, leading to higher sales volumes, increased average selling prices, and improved gross margins in the homebuilding segment.

The outlook for DHI's homebuilding business appears positive, supported by improving housing market conditions and a favorable supply-demand environment. The company reported increased net sales orders and a growing backlog, indicating sustained demand. Management anticipates continued growth, though at a potentially more moderate pace as supply and demand become more balanced. DHI's strategy includes expanding inventory investments and product offerings to capitalize on market opportunities.

The financial services segment experienced a decline in revenues and pre-tax income during the first quarter of 2014, with revenues down 7% and pre-tax income down 31%. This was attributed to increased competition and a slowdown in refinancing activity. However, the impact on overall company results was mitigated by the strong performance of the homebuilding segment. Consolidated pre-tax income still rose significantly by 42% due to the substantial contributions from homebuilding operations.

D.R. Horton maintains a strong liquidity position. As of March 31, 2014, the company had $930.8 million in homebuilding cash and cash equivalents. It also has a $725 million revolving credit facility, with no outstanding borrowings at the end of the quarter. The company's homebuilding debt to total capital ratio was 45.5%. While debt has increased to fund inventory growth, the company aims to manage its leverage within its target range.