D.R. Horton, Inc. (NYSE:DHI):
Fiscal 2017 Second Quarter Highlights - comparisons to the
prior year quarter
- Net income increased 17% to $229.2
million or $0.60 per diluted share
- Consolidated pre-tax income increased
18% to $353.9 million
- Consolidated pre-tax profit margin was
10.9%
- Net sales orders increased 17% in value
to $4.2 billion and 14% in homes to 13,991
- Homes closed increased 18% in value to
$3.2 billion and 15% in homes to 10,685
- Increasing fiscal 2017 guidance for
consolidated revenues to a range of $13.6 billion to $14.0 billion
and for homes closed between 44,500 and 46,000
- Reaffirming fiscal 2017 guidance for
consolidated pre-tax profit margin in a range of 11.2% to
11.5%
D.R. Horton, Inc. (NYSE:DHI), America’s Builder, today reported
that net income for its second fiscal quarter ended March 31,
2017 increased 17% to $229.2 million, or $0.60 per diluted share,
from $195.1 million, or $0.52 per diluted share, in the same
quarter of fiscal 2016. Homebuilding revenue for the second quarter
of fiscal 2017 increased 17% to $3.2 billion from $2.7 billion in
the same quarter of fiscal 2016. Homes closed in the quarter
increased 15% to 10,685 homes compared to 9,262 homes in the prior
year quarter.
For the six months ended March 31, 2017, net income
increased 24% to $436.1 million, or $1.15 per diluted share, from
$352.8 million, or $0.94 per diluted share, in the same period of
fiscal 2016. Homebuilding revenue for the six months ended
March 31, 2017 increased 18% to $6.0 billion from $5.1 billion
in the first six months of fiscal 2016. Homes closed in the
six-month period increased 16% to 20,089 homes compared to 17,323
homes in the same period of fiscal 2016.
Net sales orders for the second quarter ended March 31,
2017 increased 14% to 13,991 homes and 17% in value to $4.2 billion
compared to 12,292 homes and $3.6 billion in the prior year
quarter. The Company’s cancellation rate (cancelled sales orders
divided by gross sales orders) for the second quarter of fiscal
2017 was 20% compared to 19% in the same quarter of fiscal 2016.
Net sales orders for the first six months of fiscal 2017 increased
14% to 23,232 homes from 20,356 homes in the first six months of
fiscal 2016, and the value of net sales orders increased 17% to
$7.0 billion from $5.9 billion.
The Company’s sales order backlog of homes under contract at
March 31, 2017 increased 7% to 14,618 homes and 9% in value to
$4.4 billion compared to 13,695 homes and $4.1 billion at
March 31, 2016.
The Company ended the quarter with $947.9 million of
homebuilding unrestricted cash and homebuilding debt to total
capital of 28.0%. Homebuilding debt to total capital consists of
homebuilding notes payable divided by total equity plus
homebuilding notes payable.
Donald R. Horton, Chairman of the Board, said, “The D.R. Horton
team produced strong results in our second quarter, as our
consolidated pre-tax income increased 18% to $353.9 million on $3.3
billion of revenues. The spring selling season is going well, as
the value of our net sales orders increased by 52% sequentially
from the December quarter and 17% from the March quarter last year.
These results reflect the strength of our experienced operational
teams, diverse product offerings through our family of brands and
good market conditions across our broad national footprint.
"Our balance sheet strength, liquidity and continued earnings
and cash flow generation are increasing our flexibility, and we
plan to maintain our disciplined, opportunistic position to improve
the long-term value of our company. We also remain focused on
growing our revenues and pre-tax profits at a double-digit annual
pace, while continuing to generate positive annual operating cash
flows and improved returns. With 27,100 homes in inventory at the
end of March and a robust supply of lots, we are well-positioned
for the remainder of the spring and the second half of fiscal
2017.”
The Company is updating its fiscal 2017 guidance as follows:
- Increasing the range of consolidated
revenues to $13.6 billion to $14.0 billion from $13.4 billion to
$13.8 billion
- Increasing the range of homes closed to
44,500 to 46,000 homes from 43,500 to 45,500 homes
- Homebuilding SG&A expense of 8.8%
to 9.1% of homebuilding revenues compared to prior guidance of
approximately 9.0%
- Increasing financial services pre-tax
profit margin to approximately 35% from approximately 30%
- An income tax rate of approximately
35.5% compared to prior guidance of approximately 35.0%
The Company reaffirms its previously issued fiscal 2017 guidance
for other metrics including:
- Consolidated pre-tax profit margin of
11.2% to 11.5%
- Home sales gross margin of around
20%
- Diluted share count of approximately
380 million shares
- Cash flow from operations in the range
of $300 million to $500 million
The Company has declared a quarterly cash dividend of $0.10 per
common share. The dividend is payable on May 19, 2017 to
stockholders of record on May 5, 2017.
The Company will host a conference call today (Thursday, April
20th) at 10:00 a.m. Eastern Time. The dial-in number is
877-407-8033, and the call will also be webcast from the Company’s
website at investor.drhorton.com.
D.R. Horton, Inc., America’s Builder, has been the largest
homebuilder by volume in the United States for fifteen consecutive
years. Founded in 1978 in Fort Worth, Texas, D.R. Horton has
operations in 78 markets in 26 states across the United States and
closed 43,075 homes in the twelve-month period ended March 31,
2017. The Company is engaged in the construction and sale of
high-quality homes through its diverse brand portfolio that
includes D.R. Horton, Emerald Homes, Express Homes and Freedom
Homes with sales prices ranging from $100,000 to over $1,000,000.
D.R. Horton also provides mortgage financing and title services for
homebuyers through its mortgage and title subsidiaries.
Portions of this document may constitute “forward-looking
statements” as defined by the Private Securities Litigation Reform
Act of 1995. Although D.R. Horton believes any such statements are
based on reasonable assumptions, there is no assurance that actual
outcomes will not be materially different. All forward-looking
statements are based upon information available to D.R. Horton on
the date this release was issued. D.R. Horton does not undertake
any obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. Forward-looking statements in this release include
that our balance sheet strength, liquidity and continued earnings
and cash flow generation are increasing our flexibility, and we
plan to maintain our disciplined, opportunistic position to improve
the long-term value of our company; that we remain focused on
growing our revenues and pre-tax profits at a double-digit annual
pace, while continuing to generate positive annual operating cash
flows and improved returns and that with 27,100 homes in inventory
at the end of March and a robust supply of lots, we are
well-positioned for the remainder of the spring and the second half
of fiscal 2017. The forward-looking statements also include that
the Company is updating its fiscal 2017 guidance as follows:
increasing the range of consolidated revenues to $13.6 billion to
$14.0 billion from $13.4 billion to $13.8 billion; increasing the
range of homes closed to 44,500 to 46,000 homes from 43,500 to
45,500 homes; homebuilding SG&A expense of 8.8% to 9.1% of
homebuilding revenues compared to prior guidance of approximately
9.0%; increasing financial services pre-tax profit margin to
approximately 35% from approximately 30%; and an income tax rate of
approximately 35.5% compared to prior guidance of approximately
35.0%; and that the Company reaffirms its previously issued fiscal
2017 guidance for other metrics including: consolidated pre-tax
profit margin of 11.2% to 11.5%; home sales gross margin of around
20%; diluted share count of approximately 380 million shares; and
cash flow from operations in the range of $300 million to $500
million.
Factors that may cause the actual results to be materially
different from the future results expressed by the forward-looking
statements include, but are not limited to: the cyclical nature of
the homebuilding industry and changes in economic, real estate and
other conditions; constriction of the credit markets, which could
limit our ability to access capital and increase our costs of
capital; reductions in the availability of mortgage financing
provided by government agencies, changes in government financing
programs, a decrease in our ability to sell mortgage loans on
attractive terms or an increase in mortgage interest rates; the
risks associated with our land and lot inventory; home warranty and
construction defect claims; the effects of a health and safety
incident; the effects of negative publicity; supply shortages and
other risks of acquiring land, building materials and skilled
labor; the impact of an inflationary, deflationary or higher
interest rate environment; reductions in the availability of
performance bonds; increases in the costs of owning a home; the
effects of governmental regulations and environmental matters on
our homebuilding operations; the effects of governmental
regulations on our financial services operations; our significant
debt and our ability to comply with related debt covenants,
restrictions and limitations; competitive conditions within the
homebuilding and financial services industries; our ability to
effect our growth strategies, acquisitions or investments
successfully; the effects of the loss of key personnel; and
information technology failures and data security breaches.
Additional information about issues that could lead to material
changes in performance is contained in D.R. Horton’s annual report
on Form 10-K and our most recent quarterly report on Form 10-Q,
both of which are filed with the Securities and Exchange
Commission.
D.R. HORTON, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, 2017 September 30, 2016
(In millions) ASSETS Homebuilding: Cash and
cash equivalents
$ 947.9 $ 1,271.8 Restricted cash
11.1 9.5 Inventories: Construction in progress and finished
homes
4,642.6 4,034.7 Residential land and lots — developed
and under development
4,242.2 4,135.2 Land held for
development
128.4 137.8 Land held for sale
24.9 33.2
9,038.1 8,340.9
Deferred income taxes, net of valuation allowance of $10.3 million
at March 31, 2017 and September 30, 2016
451.6 476.3
Property and equipment, net
167.6 139.5 Other assets
463.4 456.2 Goodwill
80.0 80.0
11,159.7 10,774.2
Financial Services and Other: Cash and cash equivalents
45.3 31.4 Mortgage loans held for sale
577.8 654.0
Property and equipment, net
80.5 55.9 Other assets
57.8 43.4
761.4
784.7 Total assets
$ 11,921.1 $
11,558.9
LIABILITIES Homebuilding: Accounts
payable
$ 530.3 $ 537.0 Accrued expenses and other
liabilities
897.7 917.1 Notes payable
2,803.4
2,798.3
4,231.4
4,252.4
Financial Services and Other: Accounts
payable and other liabilities
50.6 40.5 Mortgage repurchase
facility
419.0 473.0
469.6 513.5 Total liabilities
4,701.0 4,765.9
EQUITY
Common stock, $.01 par value,
1,000,000,000 shares authorized, 382,731,504 shares issued and
375,531,433 shares outstanding at March 31, 2017 and 380,123,258
shares issued and 372,923,187 shares outstanding at September 30,
2016
3.8 3.8 Additional paid-in capital
2,931.5 2,865.8
Retained earnings
4,418.6 4,057.2
Treasury stock, 7,200,071 shares at March
31, 2017 and September 30, 2016, at cost
(134.3 ) (134.3 ) Stockholders’ equity
7,219.6 6,792.5 Noncontrolling interests
0.5
0.5 Total equity
7,220.1
6,793.0 Total liabilities and equity
$
11,921.1 $ 11,558.9
D.R. HORTON, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED) Three Months Ended March
31, Six Months Ended March 31, 2017
2016 2017 2016 (In
millions, except per share data) Homebuilding: Revenues:
Home sales
$ 3,158.1 $ 2,686.0
$
5,955.8 $ 5,026.9 Land/lot sales and other
6.3
15.0
34.7 35.2
3,164.4 2,701.0
5,990.5 5,062.1 Cost of sales: Home
sales
2,532.1 2,151.3
4,776.9 4,025.6 Land/lot sales
and other
5.6 12.0
26.4 27.9 Inventory and land
option charges
12.2 6.0
14.5 7.9
2,549.9
2,169.3
4,817.8 4,061.4
Gross profit: Home sales
626.0 534.7
1,178.9
1,001.3 Land/lot sales and other
0.7 3.0
8.3 7.3
Inventory and land option charges
(12.2 )
(6.0 )
(14.5 ) (7.9 )
614.5 531.7
1,172.7 1,000.7 Selling, general and
administrative expense
294.5 257.4
562.9 499.1 Other
(income) expense
(2.4 ) (7.6 )
(6.5 ) (9.3 ) Homebuilding pre-tax income
322.4 281.9
616.3
510.9
Financial Services and Other:
Revenues
86.9 66.9
165.0 122.2 General and
administrative expense
60.7 51.8
118.1 99.6 Interest
and other (income) expense
(5.3 ) (3.5
)
(8.9 ) (8.3 ) Financial services and
other pre-tax income
31.5 18.6
55.8 30.9 Income before income
taxes
353.9 300.5
672.1 541.8 Income tax expense
124.7 105.4
236.0
189.0 Net income
$ 229.2
$ 195.1
$ 436.1 $ 352.8
Basic: Net income per share
$ 0.61 $
0.53
$ 1.17 $ 0.95 Weighted
average number of common shares
374.4
370.2
373.8 369.7
Diluted: Net income per share
$ 0.60 $
0.52
$ 1.15 $ 0.94 Adjusted
weighted average number of common shares
378.9
373.7
378.1 373.6
Other Consolidated Financial Data: Interest charged to cost
of sales
$ 37.3 $ 40.9
$
72.0
$
76.1 Depreciation and amortization
$ 12.9
$ 14.0
$ 27.3
$
27.6 Interest incurred
$ 33.5 $ 40.4
$ 67.0 $ 82.6
D.R. HORTON, INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED) Six Months Ended
March 31, 2017 2016 (In
millions) OPERATING ACTIVITIES Net income
$
436.1 $ 352.8 Adjustments to reconcile net income to net
cash (used in) provided by operating activities: Depreciation and
amortization
27.3 27.6 Amortization of discounts and fees
2.6 2.8 Stock based compensation expense
26.1 24.3
Excess income tax benefit from employee stock awards
(8.7
) (3.9 ) Deferred income taxes
24.1 29.6 Inventory
and land option charges
14.5 7.9 Gain on sale of debt
securities collateralized by residential real estate
— (4.5
) Changes in operating assets and liabilities: Increase in
construction in progress and finished homes
(603.5 )
(652.8 )
(Increase) decrease in residential land
and lots – developed, under development, held for development and
held for sale
(96.3 ) 235.9 (Increase) decrease in other assets
(29.9 ) 36.6 Decrease in mortgage loans held for sale
75.5 14.9 Decrease in accounts payable, accrued expenses and
other liabilities
(8.6 ) (44.3 ) Net
cash (used in) provided by operating activities
(140.8 ) 26.9
INVESTING
ACTIVITIES Purchases of property and equipment
(57.5
) (40.4 ) Increase in restricted cash
(8.9 )
(1.7 )
Net principal decrease (increase) of other
mortgage loans and real estate owned
1.0 (0.4 )
(Purchases of) proceeds from debt
securities collateralized by residential real estate
(3.9 ) 35.8 Payments related to acquisition of a
business
(4.1 ) — Net cash used
in investing activities
(73.4 ) (6.7 )
FINANCING ACTIVITIES Proceeds from notes payable
—
17.6 Repayment of notes payable
(54.5 ) (170.6 )
Proceeds from stock associated with certain employee benefit plans
24.7 28.4 Excess income tax benefit from employee stock
awards
8.7 3.9 Cash dividends paid
(74.7
) (59.2 ) Net cash used in financing activities
(95.8 ) (179.9 )
DECREASE IN CASH
AND CASH EQUIVALENTS (310.0 ) (159.7 ) Cash and
cash equivalents at beginning of period
1,303.2
1,383.8 Cash and cash equivalents at end of
period
$ 993.2 $ 1,224.1
D.R. HORTON, INC. ($’s in millions) NET
SALES ORDERS Three Months Ended March 31,
Six Months Ended March 31, 2017
2016 2017 2016
Homes Value Homes
Value Homes Value Homes
Value East
1,791 $ 513.1
1,446 $ 411.3
2,937 $ 844.1 2,423 $ 682.1
Midwest
643 249.2 600 223.6
1,006 392.4
845 317.5 Southeast
4,470 1,167.1 4,027 1,039.0
7,618 1,992.2 6,733 1,745.4 South Central
4,329 1,071.5 3,973 959.3
7,167 1,782.6
6,501 1,576.2 Southwest
745 172.8 482 110.2
1,203 279.5 817 187.5 West
2,013
1,015.5 1,764 832.2
3,301
1,662.3 3,037 1,435.0
13,991 $
4,189.2 12,292 $ 3,575.6
23,232 $
6,953.1 20,356 $ 5,943.7
HOMES CLOSED
Three Months Ended March 31, Six Months Ended March
31, 2017 2016 2017 2016
Homes Value Homes Value Homes
Value Homes Value East
1,309 $
372.6 1,135 $ 308.6
2,362 $ 678.4 2,188
$ 603.0 Midwest
430 168.0 419 162.1
829
317.6 731 285.4 Southeast
3,695 968.7 3,124
810.3
7,032 1,851.2 5,815 1,520.9 South Central
3,254 815.0 2,864 691.8
6,157 1,553.6
5,342 1,296.8 Southwest
532 126.7 348 79.9
987
231.4 670 153.8 West
1,465 707.1 1,372
633.3
2,722 1,323.6 2,577
1,167.0
10,685 $ 3,158.1 9,262 $ 2,686.0
20,089 $ 5,955.8 17,323 $ 5,026.9
SALES ORDER BACKLOG As of March 31,
2017 2016 Homes Value Homes
Value East
1,876 $ 548.7 1,665 $ 492.1
Midwest
647 258.8 526 198.5 Southeast
4,639
1,262.7 4,429 1,202.5 South Central
4,850
1,247.1 4,815 1,230.6 Southwest
871 198.8 718
157.8 West
1,735 919.2 1,542 782.1
14,618 $ 4,435.3 13,695 $ 4,063.6
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170420005428/en/
D.R. Horton, Inc.Jessica Hansen, 817-390-8200Vice President of
Investor RelationsInvestorRelations@drhorton.com
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