10-QPeriod: Q1 FY2016

HORTON D R INC /DE/ Quarterly Report for Q1 Ended Dec 31, 2015

Filed January 28, 2016For Securities:DHI

Summary

D.R. Horton, Inc. reported solid financial results for the first quarter of fiscal year 2016, demonstrating continued growth and operational strength in the homebuilding sector. Total revenues increased by 4.6% year-over-year to $2.42 billion, driven by a 4% rise in home sales revenues to $2.34 billion. The company saw a modest increase in homes closed, up 1% to 8,061 units, with an average selling price of $290,400, a 3% increase from the prior year. Net sales orders also showed healthy growth, increasing by 9% in volume and 12% in value, indicating strong future demand. The company maintained a stable home sales gross margin of 19.9%, reflecting effective cost management and pricing strategies. Financial services revenue also saw an increase of 11% to $55.3 million, though pre-tax income in this segment decreased by 16% due to higher general and administrative expenses. Overall, net income rose by 11% to $157.7 million, and diluted earnings per share increased to $0.42. The company ended the quarter with a strong liquidity position, holding $1.2 billion in homebuilding cash and cash equivalents and maintaining a healthy debt-to-capital ratio. Management expressed confidence in the company's strategic positioning, diverse market presence, and product offerings to navigate future market conditions.

Financial Highlights

32 data points
Beta

Revenue

$2.42B

Net Income

$157.70M

6.5% Net Margin

EPS (Diluted)

$0.42

Total Assets

$11.18B

Cash & Equivalents

$1.27B

Free Cash Flow

-$21.60M

Financial Statements
Beta
Revenue$2.42B
Net Income$157.70M
EPS (Basic)$0.43
EPS (Diluted)$0.42
Shares Outstanding (Basic)369.30M
Shares Outstanding (Diluted)373.50M

Key Highlights

  • 1Homebuilding revenues increased 4% year-over-year to $2.34 billion, driven by a 1% increase in homes closed and a 3% rise in average selling price.
  • 2Net sales orders increased by 9% in volume and 12% in value, indicating strong demand for future closings.
  • 3Sales order backlog grew by 15% in volume and 16% in value, providing visibility into future revenue.
  • 4Home sales gross margin remained stable at 19.9%, with management expecting continued stability.
  • 5Financial services revenues increased by 11% to $55.3 million, though pre-tax income for the segment declined by 16%.
  • 6Net income grew by 11% to $157.7 million, and diluted EPS increased by 8% to $0.42.
  • 7The company maintained a strong liquidity position with $1.2 billion in homebuilding cash and cash equivalents and a solid debt-to-capital ratio.

Frequently Asked Questions

D.R. Horton reported increased revenues and net income in the first quarter of fiscal year 2016 compared to the prior year. Total revenues grew to $2.42 billion, and net income rose to $157.7 million, leading to a diluted EPS of $0.42. The homebuilding segment showed growth in revenues and sales orders, while the financial services segment saw revenue growth but a decrease in pre-tax income.

The homebuilding segment experienced a 4% increase in revenues to $2.34 billion, supported by a 1% rise in homes closed and a 3% increase in the average selling price. Key drivers include stable to improving market conditions in most operating regions, a growing number of net sales orders (up 9% in volume), and a strong sales order backlog (up 15% in volume). The company also maintained a consistent home sales gross margin of 19.9%.

Management expressed optimism about the company's position as the largest and most geographically diverse homebuilder, with stable to moderately improved demand expected. The strategy focuses on leveraging its financial strength and market presence to increase returns on inventory investments, grow profitability, and generate strong cash flows. Initiatives include managing inventory, diversifying product offerings, controlling costs, and increasing land control through option contracts.

The financial services segment, primarily DHI Mortgage and title services, contributed $55.3 million in revenues, an 11% increase year-over-year. However, pre-tax income for this segment decreased by 16% to $12.3 million, mainly due to higher general and administrative expenses associated with increased homebuilding volume and new regulatory compliance costs. The segment's capture rate for D.R. Horton homebuyers improved to 51%.