10-QPeriod: Q2 FY2021

HORTON D R INC /DE/ Quarterly Report for Q2 Ended Mar 31, 2021

Filed April 26, 2021For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported strong financial results for the quarter and six months ended March 31, 2021, demonstrating significant growth across its homebuilding, financial services, and Forestar lot development segments. Driven by robust demand fueled by historically low interest rates and limited housing supply, the company saw substantial increases in revenues, net sales orders, and homes closed. The homebuilding segment, in particular, experienced a significant rise in revenues and gross profit margins, indicating effective pricing and cost management. The company's financial services segment also showed remarkable performance, with revenues and pre-tax income nearly doubling, driven by increased loan originations and gains on the sale of mortgage loans. Forestar, its lot development subsidiary, also contributed significantly with increased revenues and profitability. D.R. Horton maintained a strong balance sheet with a decreasing debt-to-capital ratio and ample liquidity, positioning it well for continued growth and shareholder returns.

Financial Highlights

38 data points
Beta

Revenue

$6.45B

27.9% Gross Margin

Net Income

$933.90M

14.5% Net Margin

EPS (Diluted)

$2.53

Total Assets

$21.08B

Cash & Equivalents

$2.23B

Free Cash Flow

$83.00M

Financial Statements
Beta
Revenue$6.45B
Cost of Revenue$4.65B
Gross Profit$1.80B
SG&A Expenses$621.50M
Net Income$933.90M
EPS (Basic)$2.57
EPS (Diluted)$2.53
Shares Outstanding (Basic)362.30M
Shares Outstanding (Diluted)367.20M

Key Highlights

  • 1Consolidated revenues surged by 45% to $12.4 billion for the six months ended March 31, 2021, compared to the prior year, driven by strong performance across all segments.
  • 2Homebuilding revenues increased by 41% to $6.2 billion in the three months ended March 31, 2021, with homes closed up 36% to 19,701 units and home sales gross margin improving to 24.6%.
  • 3Net sales orders for the six months ended March 31, 2021, increased by 43% to 47,477 homes, valued at $15.3 billion, reflecting strong buyer demand.
  • 4The financial services segment experienced a substantial 115% increase in revenues to $225.1 million for the three months ended March 31, 2021, with pre-tax income soaring by 336%.
  • 5Forestar's revenues grew by 80% to $287.1 million in the three months ended March 31, 2021, with pre-tax income increasing significantly to $37.6 million.
  • 6The company's balance sheet remains strong, with total equity increasing to $13.3 billion and a debt-to-total capital ratio of 25.7% as of March 31, 2021.
  • 7D.R. Horton continues to return capital to shareholders, with cash dividends declared and ongoing share repurchases.

Frequently Asked Questions

Revenue growth was primarily driven by a strong increase in the number of homes closed across all reporting segments, particularly in the homebuilding division. This was supported by robust demand for new homes, fueled by historically low mortgage interest rates and a persistent shortage of available housing inventory. The financial services segment also contributed significantly due to higher loan origination volumes and gains on mortgage loan sales.

The home sales gross profit margin in the homebuilding segment improved significantly, reaching 24.6% for the three months ended March 31, 2021, up from 21.3% in the prior year period. This improvement was attributed to the average selling price of homes closed increasing at a faster rate than the average cost of those homes, along with efficiencies in capitalized interest and a decrease in purchase accounting adjustments. Management noted that the margin can fluctuate based on pricing, incentives, and sales pace.

D.R. Horton continues to emphasize controlling its lot supply through land and lot purchase contracts. At March 31, 2021, approximately 75% of its owned and controlled lots were under such contracts, up from 70% at September 30, 2020. This strategy, supported by its relationship with Forestar and other land developers, allows for greater capital efficiency and flexibility in managing land inventory relative to market demand.

D.R. Horton maintains a strong capital structure with a decreasing debt-to-total capital ratio, which stood at 25.7% as of March 31, 2021. The company has access to significant liquidity through its revolving credit facilities and ample cash reserves. It also actively manages its debt through refinancing and opportunistic repurchases, while continuing to return capital to shareholders through dividends and stock buybacks.