10-QPeriod: Q2 FY2017

HORTON D R INC /DE/ Quarterly Report for Q2 Ended Mar 31, 2017

Filed April 25, 2017For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported robust financial results for the quarter and six months ended March 31, 2017, showcasing significant year-over-year growth across key metrics. The company experienced a substantial increase in homebuilding revenues, driven by a 15% rise in homes closed for the quarter and a 16% increase for the six-month period. This top-line growth translated into improved profitability, with consolidated pre-tax income rising 18% for the quarter and 24% for the six months, indicating effective operational leverage and market demand. The company's financial services segment also demonstrated strong performance, with revenues up 30% for the quarter and 35% for the six months, and pre-tax income showing a notable increase of 69% and 81% respectively. This dual strength in both homebuilding and financial services positions DHI favorably within the housing market. The company maintained a healthy balance sheet, with total equity increasing and a stable debt-to-capital ratio, demonstrating a disciplined approach to financial management amidst expansion.

Financial Highlights

37 data points
Beta

Revenue

$3.25B

21.6% Gross Margin

Net Income

$229.20M

7.0% Net Margin

EPS (Diluted)

$0.60

Total Assets

$11.92B

Cash & Equivalents

$993.20M

Free Cash Flow

-$142.80M

Financial Statements
Beta
Revenue$3.25B
Cost of Revenue$2.55B
Gross Profit$701.40M
SG&A Expenses$355.20M
Net Income$229.20M
EPS (Basic)$0.61
EPS (Diluted)$0.60
Shares Outstanding (Basic)374.40M
Shares Outstanding (Diluted)378.90M

Key Highlights

  • 1Homebuilding revenues increased by 17% year-over-year to $3.2 billion for the three months ended March 31, 2017.
  • 2Homes closed increased by 15% to 10,685 units for the three months ended March 31, 2017.
  • 3Net sales orders increased by 14% in volume and 17% in value, reaching $4.2 billion for the three months ended March 31, 2017.
  • 4Financial services and other revenues increased by 30% to $86.9 million for the three months ended March 31, 2017.
  • 5Consolidated pre-tax income grew by 18% to $353.9 million for the three months ended March 31, 2017.
  • 6Homebuilding debt to total capital ratio improved to 28.0% from 33.6% in the prior year period.
  • 7Book value per common share increased to $19.23 as of March 31, 2017.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in the number of homes closed, up 15% year-over-year, and a 2% increase in the average selling price of homes. The company also saw strong performance in its financial services segment, with increased revenues from mortgage origination and title services.

D.R. Horton is actively managing its inventory of owned land, lots, and homes under construction. They utilize land/lot option contracts to control significant lot positions with limited capital investment, reducing land ownership risks. Total owned and controlled land/lots increased to 227,300 as of March 31, 2017.

The company maintains a strong balance sheet with increasing total equity and a declining homebuilding debt-to-total capital ratio (28.0% as of March 31, 2017). They have sufficient liquidity through existing cash resources, a substantial revolving credit facility, and a mortgage repurchase facility to fund near-term needs and debt obligations.

The company is subject to risks common in the homebuilding industry, including economic cycles, credit market conditions, and interest rate fluctuations. Significant contingencies include potential warranty claims and legal actions, particularly related to construction defects, for which the company has established reserves. They are also subject to governmental regulations in both their homebuilding and financial services operations.