10-QPeriod: Q1 FY2023

HORTON D R INC /DE/ Quarterly Report for Q1 Ended Dec 31, 2022

Filed January 25, 2023For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported its financial results for the quarter ended December 31, 2022. Consolidated revenues increased slightly by 3% to $7.3 billion year-over-year, driven by growth in its rental segment and a modest increase in home sales revenue. However, pre-tax income saw a decline of 15% to $1.3 billion, and net income attributable to D.R. Horton decreased by 16% to $958.7 million, with diluted EPS falling to $2.76 from $3.17 in the prior year. The company experienced a significant slowdown in its homebuilding segment, with net sales orders down 38% and the sales order backlog decreasing by 46%. This was attributed to rising mortgage interest rates and economic uncertainty. Despite this, DHI maintained a strong balance sheet with a debt-to-total capital ratio of 22.0%. The company also continued its commitment to returning capital to shareholders through dividends and share repurchases.

Financial Highlights

38 data points
Beta

Revenue

$7.26B

27.1% Gross Margin

Net Income

$968.30M

13.3% Net Margin

EPS (Diluted)

$2.76

Total Assets

$30.26B

Cash & Equivalents

$2.61B

Free Cash Flow

$781.60M

Financial Statements
Beta
Revenue$7.26B
Cost of Revenue$5.29B
Gross Profit$1.97B
SG&A Expenses$737.00M
Net Income$968.30M
EPS (Basic)$2.79
EPS (Diluted)$2.76
Shares Outstanding (Basic)344.20M
Shares Outstanding (Diluted)346.90M

Key Highlights

  • 1Consolidated revenues increased by 3% to $7.3 billion, primarily driven by the rental segment.
  • 2Net income attributable to D.R. Horton decreased by 16% to $958.7 million, with diluted EPS falling to $2.76.
  • 3Homebuilding segment faced headwinds, with net sales orders down 38% and sales order backlog down 46% due to rising interest rates.
  • 4Home sales gross margin decreased to 23.9% from 27.4% year-over-year, reflecting increased costs and higher incentives.
  • 5The company's financial services segment saw a 73% decrease in pre-tax income, largely due to lower gains on mortgage sales.
  • 6The rental segment showed strong growth with revenues increasing 108% year-over-year.
  • 7D.R. Horton maintained a strong liquidity position with $2.6 billion in cash, cash equivalents, and restricted cash.

Frequently Asked Questions

Consolidated revenues increased by 3% to $7.3 billion. The rental segment was a significant growth driver, with revenues nearly doubling year-over-year. Home sales revenue also saw a modest increase.

The company noted a moderation in housing demand starting in June 2022 due to rising mortgage rates and inflation. While higher interest rates and economic uncertainty may persist, DHI believes its affordable product offerings and strong market presence position it well. They plan to manage pricing, incentives, and inventory levels to adapt to market conditions. The sales order backlog and net sales orders have significantly decreased, indicating a challenging environment ahead.

D.R. Horton maintains a strong financial position with a debt-to-total capital ratio of 22.0% at December 31, 2022, and significant cash reserves totaling $2.6 billion. The company is focused on controlling debt levels and expects to maintain its homebuilding debt-to-total capital ratio below 20% throughout fiscal 2023. They also continue to return capital to shareholders through dividends and share repurchases.

The rental segment experienced substantial growth, with revenues increasing by 108% year-over-year to $327.5 million. Pre-tax income for the segment also saw a significant increase of 57% to $110.3 million, indicating strong performance in both multi-family and single-family rental operations.