10-QPeriod: Q3 FY2016

HORTON D R INC /DE/ Quarterly Report for Q3 Ended Jun 30, 2016

Filed July 26, 2016For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported strong performance for the third quarter of fiscal year 2016, demonstrating robust growth in its homebuilding segment. Revenues increased by 9% to $3.1 billion, driven by a 9% rise in homes closed to 10,739 units and a 13% increase in net sales orders to 11,714 homes. The company also saw an improvement in its home sales gross margin, which rose to 20.3%. Despite a slight decrease in financial services pre-tax income, consolidated pre-tax income saw a healthy increase of 13% to $378.6 million, resulting in a 10% rise in diluted earnings per share to $0.66. The company maintains a strong financial position with total equity growing to $6.5 billion. DHI continues to focus on strategic initiatives including managing inventory, offering diverse product lines, and controlling costs, which positions it well for continued growth in a stable to moderately improving housing market. The increase in homes closed and sales orders across most regions highlights the company's strong market presence and ability to meet demand.

Financial Highlights

33 data points
Beta

Revenue

$3.23B

Net Income

$249.80M

7.7% Net Margin

EPS (Diluted)

$0.66

Total Assets

$11.33B

Cash & Equivalents

$906.80M

Free Cash Flow

$36.90M

Financial Statements
Beta
Revenue$3.23B
Net Income$249.80M
EPS (Basic)$0.67
EPS (Diluted)$0.66
Shares Outstanding (Basic)371.80M
Shares Outstanding (Diluted)375.90M

Key Highlights

  • 1Homebuilding revenues grew 9% year-over-year to $3.1 billion.
  • 2Homes closed increased 9% to 10,739 units, with a slight increase in average closing price.
  • 3Net sales orders surged 13% to 11,714 homes, indicating strong future demand.
  • 4Home sales gross margin improved by 40 basis points to 20.3%.
  • 5Consolidated pre-tax income rose 13% to $378.6 million.
  • 6Diluted earnings per share increased 10% to $0.66.
  • 7The company's homebuilding debt to total capital ratio improved to 30.0%.

Frequently Asked Questions

The primary driver of D.R. Horton's revenue growth was the significant increase in home sales, with a 9% rise in homes closed and a corresponding 9% increase in homebuilding revenues. This was supported by a strong increase in net sales orders, indicating robust future demand.

The homebuilding segment showed strong growth with increased revenues and pre-tax income. The financial services segment experienced a slight decrease in pre-tax income by 7% to $29.4 million, although its revenues increased by 12% due to higher loan originations and sales, and an improved capture rate.

D.R. Horton expects demand for new homes to continue reflecting stable to moderately improved trends, tied to the economic strength of its operating markets, particularly job growth. The company believes its diverse geographic operations and product offerings position it well for future growth, while acknowledging that market conditions can vary and could be impacted by economic downturns or interest rate changes.

D.R. Horton is actively managing its inventory of owned land, lots, and homes under construction relative to demand in each market. The company utilizes land and lot option purchase contracts to control significant lot positions with limited capital investment and plans to continue offering a broad range of homes to appeal to different buyer segments.