10-QPeriod: Q1 FY2020

HORTON D R INC /DE/ Quarterly Report for Q1 Ended Dec 31, 2019

Filed January 28, 2020For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported a strong first quarter of fiscal year 2020, demonstrating robust growth in its homebuilding, financial services, and lot development segments. Consolidated revenues surged 14% year-over-year to $4.0 billion, driven by a 13% increase in both homes closed and home sales revenues. This top-line growth, coupled with improved home sales gross margins and controlled SG&A expenses, led to a significant 50% increase in net income attributable to D.R. Horton, Inc., reaching $431.3 million ($1.16 per diluted share). The company's strategic focus on operational execution, maintaining a strong balance sheet, and managing inventory effectively continues to yield positive results. Forestar, its majority-owned lot development subsidiary, experienced substantial revenue growth, indicating successful execution of its land development strategy. The financial services segment also showed healthy revenue and pre-tax income increases, benefiting from higher home closings and a growing capture rate of DHI Mortgage financing.

Financial Highlights

37 data points
Beta

Revenue

$4.02B

23.3% Gross Margin

Net Income

$432.50M

10.8% Net Margin

EPS (Diluted)

$1.16

Total Assets

$16.32B

Cash & Equivalents

$1.60B

Free Cash Flow

-$135.40M

Financial Statements
Beta
Revenue$4.02B
Cost of Revenue$3.08B
Gross Profit$936.50M
SG&A Expenses$455.80M
Net Income$432.50M
EPS (Basic)$1.17
EPS (Diluted)$1.16
Shares Outstanding (Basic)368.30M
Shares Outstanding (Diluted)373.40M

Key Highlights

  • 1Consolidated revenues increased 14% to $4.0 billion, driven by a 13% rise in homes closed and home sales revenue.
  • 2Net income attributable to D.R. Horton, Inc. grew 50% to $431.3 million, with diluted EPS reaching $1.16.
  • 3Homebuilding pre-tax income increased by 30% to $461.6 million, supported by a higher home sales gross margin of 21.0%.
  • 4Forestar, the lot development subsidiary, saw revenues jump 542% to $247.2 million, with lot sales up 368%.
  • 5Financial services revenues increased 21% to $102.9 million, and pre-tax income grew 29% to $30.5 million.
  • 6Net sales orders increased 19% in volume, reflecting strong demand across most of the company's regions.
  • 7The company maintained a strong liquidity position with $1.2 billion in homebuilding cash and cash equivalents and $1.4 billion in available capacity under its revolving credit facility.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in the number of homes closed (up 13%) and a slight increase in the average selling price of homes. The company also benefited from significant revenue growth in its Forestar lot development segment and its financial services operations.

Profitability saw a substantial improvement. Net income attributable to D.R. Horton, Inc. increased by 50% to $431.3 million, and diluted earnings per share rose to $1.16. This was due to higher revenues, improved home sales gross margins, and a favorable tax benefit from the reinstatement of the federal energy efficient homes tax credit.

Forestar showed exceptionally strong growth, with revenues up 542%. This indicates a successful execution of its strategy to increase its controlled finished lot pipeline, which supports D.R. Horton's homebuilding operations. The company continues to invest in land acquisition and development, with a significant portion of its lots under contract with D.R. Horton.

The financial services segment, primarily DHI Mortgage, experienced a 21% increase in revenues and a 29% increase in pre-tax income. This growth is attributed to a higher volume of home closings and an increased capture rate of DHI Mortgage financing by D.R. Horton homebuyers, partly due to a program offering below-market interest rates.