10-QPeriod: Q1 FY2015

HORTON D R INC /DE/ Quarterly Report for Q1 Ended Dec 31, 2014

Filed January 27, 2015For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported solid performance for the quarter ended December 31, 2014, demonstrating continued growth in its core homebuilding business and improved profitability in its financial services segment. Homebuilding revenues surged by 38% year-over-year, driven by a 29% increase in homes closed and a 7% rise in the average closing price, indicating a strong demand environment. Net sales orders also saw a substantial increase of 40% in value, and the sales order backlog grew by 29%, signaling robust future sales. While the company experienced a decrease in home sales gross profit margins to 19.8% from 22.3% due to rising costs outpacing price increases, this was partially offset by improved operating efficiencies, with selling, general, and administrative expenses decreasing as a percentage of revenue. The financial services segment also showed strong momentum, with revenues up 42% and pre-tax income nearly doubling, reflecting successful integration and operational leverage. Overall, DHI reported a 16% increase in consolidated pre-tax income, showcasing its ability to navigate market dynamics and expand its market share.

Financial Highlights

31 data points
Beta

Revenue

$2.30B

Net Income

$142.50M

6.2% Net Margin

EPS (Diluted)

$0.39

Total Assets

$10.34B

Cash & Equivalents

$541.00M

Free Cash Flow

-$140.30M

Financial Statements
Beta
Revenue$2.30B
Net Income$142.50M
EPS (Basic)$0.39
EPS (Diluted)$0.39
Shares Outstanding (Basic)364.90M
Shares Outstanding (Diluted)368.10M

Key Highlights

  • 1Homebuilding revenues increased by 38% to $2.3 billion, driven by a 29% rise in homes closed and a 7% increase in average closing price.
  • 2Net sales orders increased by 40% in value to $2.1 billion, with a 35% increase in the number of homes ordered, indicating strong future demand.
  • 3The sales order backlog grew by 29% in value to $2.7 billion, reflecting a healthy pipeline of future sales.
  • 4Home sales gross profit margin decreased to 19.8% from 22.3% due to rising costs outpacing price increases, but SG&A expenses as a percentage of revenue improved.
  • 5The financial services segment revenue increased by 42% to $49.6 million, and pre-tax income surged by 87% to $14.6 million.
  • 6Consolidated pre-tax income grew by 16% to $220.7 million, with diluted earnings per share increasing to $0.39 from $0.36.
  • 7The company maintained a strong balance sheet with total equity increasing to $5.3 billion, up from $4.2 billion in the prior year period.

Frequently Asked Questions

The primary driver of revenue growth was the significant increase in home closings, up 29% year-over-year, coupled with a 7% rise in the average selling price of homes. This indicates strong demand for D.R. Horton's products and successful market penetration.

While home sales gross profit margins decreased from 22.3% to 19.8%, this was attributed to rising land and construction costs that outpaced average selling price increases. However, the company managed its selling, general, and administrative (SG&A) expenses effectively, decreasing them as a percentage of homebuilding revenues by 60 basis points, thereby improving overall operational efficiency.

The financial services segment demonstrated robust growth, with revenues increasing by 42% and pre-tax income nearly doubling (up 87%). This segment, primarily DHI Mortgage, benefits from the company's homebuilding operations, providing mortgage financing and title services to homebuyers. Its strong performance contributed significantly to the consolidated results.

The outlook for future sales appears strong. Net sales orders increased by 40% in value and 35% in volume, and the sales order backlog grew by 29% in value and 21% in volume. This suggests continued demand and a healthy pipeline for future revenue generation.