10-QPeriod: Q2 FY2018

HORTON D R INC /DE/ Quarterly Report for Q2 Ended Mar 31, 2018

Filed April 30, 2018For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported strong financial results for the quarter ended March 31, 2018. The company demonstrated robust revenue growth, driven by a significant increase in home closings and net sales orders across all its operating regions. This top-line growth, combined with an improvement in home sales gross margin and better management of selling, general, and administrative expenses, led to a substantial increase in profitability. The acquisition of Forestar Group Inc. in late 2017 is beginning to integrate and contribute to the company's strategy of securing land and lot positions. Key financial metrics indicate a healthy operational performance, with rising revenues and net income attributable to D.R. Horton. The company also maintained a strong balance sheet and liquidity position, with controlled debt levels and ample capacity under its revolving credit facility. Despite some cost pressures and the impact of tax reform, DHI's diversified business model and strategic focus on various buyer segments position it well for continued growth in the housing market.

Financial Highlights

38 data points
Beta

Revenue

$3.79B

22.0% Gross Margin

Net Income

$350.80M

9.2% Net Margin

EPS (Diluted)

$0.91

Total Assets

$13.22B

Cash & Equivalents

$1.01B

Free Cash Flow

-$38.00M

Financial Statements
Beta
Revenue$3.79B
Cost of Revenue$2.96B
Gross Profit$833.10M
SG&A Expenses$400.90M
Interest Expense$0
Net Income$350.80M
EPS (Basic)$0.93
EPS (Diluted)$0.91
Shares Outstanding (Basic)376.80M
Shares Outstanding (Diluted)383.90M

Key Highlights

  • 1Total revenues increased by 16% to $3.7 billion for the three months ended March 31, 2018, driven by a 15% increase in homes closed to 12,281.
  • 2Net income attributable to D.R. Horton increased significantly by 53% to $351.0 million, resulting in a 52% rise in diluted earnings per share to $0.91.
  • 3Home sales gross margin improved by 100 basis points to 20.8% due to better cost management relative to selling prices and reduced warranty expenses.
  • 4The acquisition of Forestar Group Inc. is progressing, with Forestar contributing $22.6 million in revenues and $4.6 million in pre-tax income for the quarter.
  • 5Homebuilding debt to total capital remained well-controlled at 24.2%, demonstrating a strong balance sheet.
  • 6The company experienced growth in net sales orders (up 13%) and an increase in its sales order backlog (up 8%), indicating continued demand for new homes.

Frequently Asked Questions

D.R. Horton reported strong financial performance with a 16% increase in homebuilding revenues to $3.7 billion and a 53% rise in net income attributable to the company to $351.0 million. This growth was driven by a 15% increase in homes closed and an improved home sales gross margin of 20.8%.

The acquisition of 75% of Forestar Group Inc. in October 2017 is being integrated into D.R. Horton's strategy to enhance land and lot access. For the quarter, Forestar contributed $22.6 million in revenues and $4.6 million in pre-tax income, with a significant portion of its lots under contract with D.R. Horton, aligning with the company's land acquisition strategy.

The company saw a healthy increase in net sales orders, up 13% to $4.7 billion, and its sales order backlog grew by 8% to $4.8 billion. This indicates continued strong demand for new homes and provides visibility for future revenue generation.

D.R. Horton maintained a strong financial position with a homebuilding debt-to-total capital ratio of 24.2% and ample liquidity from its $1.275 billion revolving credit facility. The company also authorized significant repurchases of debt securities and common stock, demonstrating confidence in its financial health.