10-QPeriod: Q2 FY2025

HORTON D R INC /DE/ Quarterly Report for Q2 Ended Mar 31, 2025

Filed April 23, 2025For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) reported a challenging third quarter for fiscal year 2025, with consolidated revenues declining 15% year-over-year to $7.7 billion. This decline was primarily driven by a 15% decrease in homebuilding revenues, reflecting a 15% reduction in homes closed and a slight decrease in the average selling price. Higher interest rates and affordability constraints continued to impact new home demand, leading to increased sales incentives and a lower home sales gross margin of 21.8%. Despite the top-line pressure, the company demonstrated strong cost management and capital allocation. Net income attributable to D.R. Horton decreased by 31% to $810.4 million, resulting in diluted earnings per share of $2.58. The company maintained a robust balance sheet with stockholders' equity of $24.3 billion and a debt-to-total capital ratio of 21.1%, indicating continued financial flexibility. DHI also continued its commitment to shareholder returns through substantial share repurchases, totaling $1.3 billion in the quarter, and consistent dividend payments.

Financial Highlights

38 data points
Beta

Revenue

$7.73B

24.6% Gross Margin

Net Income

$819.10M

10.6% Net Margin

EPS (Diluted)

$2.58

Total Assets

$35.69B

Cash & Equivalents

$2.52B

Free Cash Flow

-$470.50M

Financial Statements
Beta
Revenue$7.73B
Cost of Revenue$5.83B
Gross Profit$1.90B
SG&A Expenses$898.70M
Net Income$819.10M
EPS (Basic)$2.59
EPS (Diluted)$2.58
Shares Outstanding (Basic)312.50M
Shares Outstanding (Diluted)314.00M

Key Highlights

  • 1Consolidated revenues decreased 15% to $7.7 billion, primarily due to a 15% decline in homebuilding revenues.
  • 2Home sales gross margin narrowed to 21.8% from 23.2% year-over-year, attributed to increased sales incentives to address affordability challenges.
  • 3Net income attributable to D.R. Horton decreased 31% to $810.4 million, with diluted EPS falling to $2.58 from $3.52.
  • 4The company repurchased approximately 9.7 million shares of common stock for $1.3 billion during the quarter, highlighting a commitment to shareholder returns.
  • 5Total inventory increased to $20.9 billion from $20.0 billion at the prior fiscal year-end, reflecting strategic land and lot acquisitions.
  • 6The company maintained a strong liquidity position with $1.9 billion in homebuilding cash and cash equivalents and $2.02 billion in available capacity under its homebuilding revolving credit facility.
  • 7Sales order backlog decreased by 21% in homes and 22% in value, signaling a weaker demand environment for future sales.

Frequently Asked Questions

The primary reason for the decline in D.R. Horton's revenue this quarter is a decrease in the number of homes closed, which fell by 15% year-over-year. This is largely attributed to ongoing affordability constraints and declining consumer confidence, which have slowed new home demand. Consequently, the company has increased sales incentives, impacting average selling prices and overall revenue.

D.R. Horton is focusing on cost management and strategic pricing. While the home sales gross margin decreased to 21.8% due to increased sales incentives, the company is actively managing its home pricing, sales incentives, and inventory levels to optimize returns. The company's disciplined approach to inventory management and operational efficiency is crucial in navigating current market conditions.

D.R. Horton maintains a strong liquidity position with $1.9 billion in homebuilding cash and cash equivalents and a significant $2.02 billion in available capacity under its homebuilding revolving credit facility as of March 31, 2025. The company's debt-to-total capital ratio was 21.1%, which is within its target range, demonstrating effective debt management and financial flexibility.

The company anticipates continued softness in new home demand due to persistent affordability issues and consumer confidence concerns. D.R. Horton expects to maintain elevated incentive levels and may further increase them depending on market conditions and changes in mortgage interest rates. The company plans to adapt its product offerings, pricing, and inventory based on local market dynamics.