10-QPeriod: Q2 FY2020

HORTON D R INC /DE/ Quarterly Report for Q2 Ended Mar 31, 2020

Filed April 29, 2020For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported strong financial results for the six months ended March 31, 2020, with consolidated revenues increasing 11% year-over-year to $8.5 billion and net income attributable to D.R. Horton, Inc. rising 43% to $914.0 million. This growth was driven primarily by the homebuilding segment, which saw a 10% increase in homes closed and an 11% rise in home sales revenue. The company also benefited from improved home sales gross margins and increased sales order backlog. Despite the overall positive performance, the report highlights the emerging impact of the COVID-19 pandemic in the latter part of the second quarter. The company experienced increased sales cancellations and decreased sales orders in late March and April, and noted disruptions in secondary mortgage markets. However, DHI maintained a strong balance sheet and liquidity position, with cash and cash equivalents totaling $1.5 billion at the end of the period. Management expressed confidence in their ability to navigate the uncertain economic environment by adjusting operations, managing inventory, and controlling costs.

Financial Highlights

38 data points
Beta

Revenue

$4.50B

23.3% Gross Margin

Net Income

$484.00M

10.8% Net Margin

EPS (Diluted)

$1.30

Total Assets

$17.13B

Cash & Equivalents

$1.54B

Free Cash Flow

-$307.30M

Financial Statements
Beta
Revenue$4.50B
Cost of Revenue$3.45B
Gross Profit$1.05B
SG&A Expenses$466.80M
Net Income$484.00M
EPS (Basic)$1.32
EPS (Diluted)$1.30
Shares Outstanding (Basic)365.80M
Shares Outstanding (Diluted)370.10M

Key Highlights

  • 1Consolidated revenues grew 11% to $8.5 billion for the six months ended March 31, 2020.
  • 2Net income attributable to D.R. Horton, Inc. increased significantly by 43% to $914.0 million for the six-month period.
  • 3Homebuilding segment revenues increased 11%, with homes closed up 10% and home sales gross margin improving to 21.1%.
  • 4Net sales orders increased 19% in volume and 22% in value for the six-month period, indicating robust demand prior to pandemic impact.
  • 5The company maintained a strong liquidity position with $1.5 billion in cash, cash equivalents, and restricted cash as of March 31, 2020.
  • 6The company experienced a 20% increase in net sales orders for the three months ended March 31, 2020, but noted increased cancellations and decreased orders in late March and April due to COVID-19.
  • 7Forestar segment revenues saw a substantial increase of 292% year-over-year for the six-month period, driven by higher lot sales to D.R. Horton.

Frequently Asked Questions

For the three months ended March 31, 2020, D.R. Horton reported a 10% increase in homebuilding revenues to $4.4 billion and a 37% increase in net income attributable to D.R. Horton to $482.7 million. However, the company noted that impacts from COVID-19 began to be felt in late March, leading to increased sales cancellations and decreased net sales orders in April. Despite this, the company highlighted continued operations in most markets as essential businesses and maintained a strong balance sheet.

As of March 31, 2020, D.R. Horton maintained a strong financial position with total assets of $17.1 billion and total equity of $10.7 billion. The company had $1.5 billion in cash, cash equivalents, and restricted cash, and a debt-to-total capital ratio of 29.2%. This strong liquidity and balance sheet are expected to help the company navigate the uncertainties brought on by the COVID-19 pandemic.

The COVID-19 pandemic began to impact D.R. Horton's operations in late March and April 2020. The company observed an increase in sales cancellations and a decrease in net sales orders during this period. Additionally, the secondary mortgage markets experienced disruptions, affecting pricing and margins for its mortgage subsidiary. The company is taking proactive measures, including managing inventory and limiting land acquisition, to adapt to these conditions.

Forestar, D.R. Horton's majority-owned lot development subsidiary, experienced significant growth. For the six months ended March 31, 2020, Forestar's revenues increased by 292% to $406.4 million, largely driven by increased lot sales to the D.R. Horton homebuilding segment. Forestar sold a total of 4,373 lots during this period, with 4,296 sold to D.R. Horton.