10-QPeriod: Q3 FY2017

HORTON D R INC /DE/ Quarterly Report for Q3 Ended Jun 30, 2017

Filed July 27, 2017For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported a strong performance for the nine months ended June 30, 2017, with significant year-over-year increases in homebuilding revenues, homes closed, and net sales orders. Consolidated pre-tax income rose by 21% to $1.1 billion, and net income increased by 20% to $725.1 million. This growth was driven by robust demand in most of its operating markets, particularly for entry-level homes, and a strategic focus on expanding product offerings and improving operational efficiency. The company maintained a strong balance sheet with a homebuilding debt-to-total capital ratio of 24.8% and ended the period with substantial equity. Key developments include a proposed acquisition of a 75% stake in Forestar Group Inc., aimed at enhancing land development strategies. Despite a slight decrease in home sales gross margin due to increased warranty and construction defect expenses, the company demonstrated effective cost management, with SG&A expenses as a percentage of revenue declining. The financial services segment also showed revenue growth, contributing positively to the overall results. DHI remains well-positioned due to its diversified geographic footprint, product range, and financial strength.

Financial Highlights

37 data points
Beta

Revenue

$3.78B

21.6% Gross Margin

Net Income

$289.00M

7.7% Net Margin

EPS (Diluted)

$0.76

Total Assets

$11.98B

Cash & Equivalents

$512.40M

Free Cash Flow

-$96.00M

Financial Statements
Beta
Revenue$3.78B
Cost of Revenue$2.96B
Gross Profit$815.30M
SG&A Expenses$374.50M
Net Income$289.00M
EPS (Basic)$0.77
EPS (Diluted)$0.76
Shares Outstanding (Basic)374.80M
Shares Outstanding (Diluted)379.40M

Key Highlights

  • 1Homebuilding revenues increased by 18% to $9.7 billion for the nine months ended June 30, 2017.
  • 2Homes closed increased by 16% to 32,586 for the nine months ended June 30, 2017.
  • 3Net sales orders grew by 13% to 36,272 homes, with a 15% increase in value to $10.8 billion for the nine months ended June 30, 2017.
  • 4Consolidated pre-tax income rose by 21% to $1.1 billion for the nine months ended June 30, 2017.
  • 5Net income increased by 20% to $725.1 million for the nine months ended June 30, 2017.
  • 6The company is acquiring a 75% stake in Forestar Group Inc., expected to close in fiscal Q1 2018.
  • 7Homebuilding debt to total capital improved to 24.8% at June 30, 2017, down from 29.2% at September 30, 2016.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in the number of homes closed, up 16% year-over-year, and a slight increase in the average selling price of homes. This was supported by stable to moderately improved market conditions and strong demand, especially for entry-level homes.

D.R. Horton is strategically managing its inventory and land positions. They are increasing the amount of land controlled through option purchase contracts and investing in land development to enhance operational efficiency and returns. The company's owned and controlled lot position grew to 252,100 at June 30, 2017.

The proposed acquisition of 75% of Forestar Group Inc. is part of D.R. Horton's strategy to expand relationships with land developers and increase its optioned land and lot position. This is expected to enhance operational efficiency and returns on investment.

The company maintains a strong balance sheet with a homebuilding debt-to-total capital ratio of 24.8%, which has improved from the previous year. They have sufficient cash resources, a $975 million revolving credit facility, and a mortgage repurchase facility, providing adequate liquidity to fund operations, debt obligations, and the proposed Forestar acquisition.