10-QPeriod: Q3 FY2023

HORTON D R INC /DE/ Quarterly Report for Q3 Ended Jun 30, 2023

Filed July 24, 2023For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported strong revenue growth and solid profitability in its fiscal third quarter of 2023, demonstrating resilience despite a challenging macroeconomic environment. The company saw a notable increase in home sales revenue and a significant surge in net sales orders, indicating robust demand for its housing products. While gross margins in the homebuilding segment experienced a decline due to increased costs and pricing adjustments, sequential improvement was observed, suggesting stabilization. The company's diversified business model, encompassing homebuilding, lot development (Forestar), financial services, and rental operations, contributed to overall performance. The rental segment, in particular, showed substantial revenue growth. DHI's strong balance sheet and ample liquidity position it well to navigate potential economic uncertainties and continue its strategic initiatives, including returning capital to shareholders. Overall, the report indicates a company that is effectively managing market dynamics, leveraging its scale and geographic diversity to maintain a competitive edge and deliver value to its shareholders, though margin pressures warrant attention.

Financial Highlights

38 data points
Beta

Revenue

$9.73B

26.6% Gross Margin

Net Income

$1.35B

13.9% Net Margin

EPS (Diluted)

$3.90

Total Assets

$32.32B

Cash & Equivalents

$3.41B

Free Cash Flow

$758.40M

Financial Statements
Beta
Revenue$9.73B
Cost of Revenue$7.14B
Gross Profit$2.58B
SG&A Expenses$852.10M
Net Income$1.35B
EPS (Basic)$3.93
EPS (Diluted)$3.90
Shares Outstanding (Basic)339.90M
Shares Outstanding (Diluted)342.30M

Key Highlights

  • 1Consolidated revenues increased 11% year-over-year to $9.7 billion for the third quarter of fiscal 2023.
  • 2Homebuilding revenues increased 5% to $8.7 billion, driven by an 8% increase in homes closed.
  • 3Net sales orders surged 37% in the third quarter, signaling strong underlying demand.
  • 4Home sales gross margin decreased to 23.3% from 30.1% in the prior year period, reflecting cost pressures and pricing adjustments, though margins improved sequentially.
  • 5The rental segment demonstrated significant growth, with revenues increasing substantially year-over-year.
  • 6The company maintained a strong balance sheet with a debt-to-total capital ratio of 22.0% at June 30, 2023.
  • 7D.R. Horton repurchased $342.9 million of common stock during the third quarter and continues to return capital to shareholders through dividends.

Frequently Asked Questions

The homebuilding segment experienced a 5% increase in revenue to $8.7 billion, with homes closed up 8% to 22,985. However, the home sales gross margin declined to 23.3% from 30.1% in the prior year, primarily due to increased home costs and pricing adjustments. Despite this, the company noted sequential improvement in margins during the quarter.

D.R. Horton views demand for new homes as solid, citing a 37% increase in net sales orders in the third quarter. While acknowledging elevated inflationary pressures and mortgage rates, the company notes that typical seasonal factors, coupled with pricing adjustments and incentives, have supported demand. They believe favorable demographics and limited supply of affordable housing will continue to support demand.

The company continues to control a substantial portion of its land and lot pipeline through purchase contracts, with 75% of lots owned and controlled being under contract as of June 30, 2023. They are actively managing their inventory of homes under construction and completed homes relative to demand in each market, adjusting pricing, incentives, and construction starts as needed.

D.R. Horton maintains a strong balance sheet with a debt-to-total capital ratio of 22.0% at June 30, 2023. The company has significant cash and cash equivalents, robust borrowing capacity through its revolving credit facilities, and access to capital markets, providing ample liquidity to fund operations, debt obligations, and capital returns to shareholders.