10-QPeriod: Q2 FY2022

HORTON D R INC /DE/ Quarterly Report for Q2 Ended Mar 31, 2022

Filed April 27, 2022For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported strong financial results for the third quarter of fiscal year 2022, demonstrating robust revenue growth and profitability across its core homebuilding segment, as well as significant expansion in its rental operations. Consolidated revenues increased by 24% year-over-year to $8.0 billion, driven by a 22% surge in home sales revenue, largely attributable to a 21% increase in the average selling price per home. Despite a 10% decrease in the number of net sales orders, the value of these orders grew by 10% due to higher pricing. The company maintained a healthy home sales gross margin of 28.9%, an improvement from the prior year, reflecting effective pricing strategies and cost management. While the homebuilding segment continues to be the primary revenue driver, D.R. Horton is also experiencing rapid growth in its rental segment, which reported $222.9 million in revenues compared to minimal revenue in the prior year, and significant pre-tax income. The company's strategic focus on affordable housing, combined with supply chain constraints and inflationary pressures, has led to a deliberate slowdown in sales pace to align with production capabilities. D.R. Horton maintains a strong balance sheet and liquidity position, enabling it to navigate market conditions and continue returning capital to shareholders through dividends and stock repurchases.

Financial Highlights

38 data points
Beta

Revenue

$8.00B

32.1% Gross Margin

Net Income

$1.44B

18.0% Net Margin

EPS (Diluted)

$4.03

Total Assets

$26.69B

Cash & Equivalents

$1.69B

Free Cash Flow

-$702.10M

Financial Statements
Beta
Revenue$8.00B
Cost of Revenue$5.43B
Gross Profit$2.57B
SG&A Expenses$695.10M
Net Income$1.44B
EPS (Basic)$4.07
EPS (Diluted)$4.03
Shares Outstanding (Basic)353.10M
Shares Outstanding (Diluted)356.30M

Key Highlights

  • 1Consolidated revenues grew 24% to $8.0 billion, primarily driven by homebuilding segment strength.
  • 2Home sales revenue increased 22% to $7.5 billion, with average selling price up 21% to $378,200.
  • 3Home sales gross margin improved to 28.9% from 24.6% year-over-year.
  • 4The rental segment showed significant growth, with revenues of $222.9 million compared to almost none in the prior year period.
  • 5Net income attributable to D.R. Horton increased 55% to $1.4 billion.
  • 6Diluted earnings per share increased 59% to $4.03.
  • 7The company maintained strong inventory management, with lots controlled through purchase contracts representing 77% of the total owned and controlled lots.

Frequently Asked Questions

The primary driver of D.R. Horton's revenue growth is its homebuilding segment, which saw a 22% increase in home sales revenue year-over-year. This growth is mainly attributed to a significant rise in the average selling price of homes, reflecting strong market demand and pricing power, despite a slight decrease in the number of homes closed.

D.R. Horton is managing these challenges by deliberately slowing its home sales pace to better align with production levels and reduce uncertainty regarding closing dates. They are also focusing on pricing strategies and cost management to maintain healthy gross margins, and they are increasing their reliance on land and lots controlled through purchase contracts rather than outright ownership to manage inventory risks.

The rapid growth of the rental segment, with revenues of $222.9 million in the current quarter compared to minimal revenue in the prior year, indicates a strategic expansion into rental property development and leasing. This diversification could provide an additional stream of revenue and profit, complementing the core homebuilding business and potentially offering stability through different market cycles.

D.R. Horton is returning capital to shareholders through the payment of quarterly cash dividends and through share repurchases. The company declared a quarterly dividend of $0.225 per common share and continued its stock repurchase program, indicating confidence in its financial position and a commitment to enhancing shareholder value.