D.R. Horton, Inc. (NYSE:DHI):
Fiscal 2017 Third Quarter Highlights - comparisons to the
prior year quarter
- Net income increased 16% to $289.0
million or $0.76 per diluted share
- Consolidated pre-tax income increased
17% to $444.5 million
- Consolidated pre-tax profit margin
improved 10 basis points to 11.8%
- Net sales orders increased 13% in value
to $3.9 billion and 11% in homes to 13,040
- Homes closed increased 17% in value to
$3.7 billion and 16% in homes to 12,497
D.R. Horton, Inc. (NYSE:DHI), America’s Builder, today reported
that net income for its third fiscal quarter ended June 30,
2017 increased 16% to $289.0 million, or $0.76 per diluted share,
from $249.8 million, or $0.66 per diluted share, in the same
quarter of fiscal 2016. Homebuilding revenue for the third quarter
of fiscal 2017 increased 17% to $3.7 billion from $3.1 billion in
the same quarter of fiscal 2016. Homes closed in the quarter
increased 16% to 12,497 homes compared to 10,739 homes in the prior
year quarter.
For the nine months ended June 30, 2017, net income
increased 20% to $725.1 million, or $1.92 per diluted share, from
$602.6 million, or $1.61 per diluted share, in the same period of
fiscal 2016. Homebuilding revenue for the nine months ended
June 30, 2017 increased 18% to $9.7 billion from $8.2 billion
in the first nine months of fiscal 2016. Homes closed in the
nine-month period increased 16% to 32,586 homes compared to 28,062
homes in the same period of fiscal 2016.
Net sales orders for the third quarter ended June 30, 2017
increased 11% to 13,040 homes and 13% in value to $3.9 billion
compared to 11,714 homes and $3.4 billion in the same quarter of
fiscal 2016. The Company’s cancellation rate (cancelled sales
orders divided by gross sales orders) for the third quarter of
fiscal 2017 was 21%, unchanged from the prior year quarter. Net
sales orders for the first nine months of fiscal 2017 increased 13%
to 36,272 homes from 32,070 homes in the first nine months of
fiscal 2016, and the value of net sales orders increased 15% to
$10.8 billion from $9.4 billion.
The Company’s sales order backlog of homes under contract at
June 30, 2017 increased 3% to 15,161 homes and 6% in value to
$4.6 billion compared to 14,670 homes and $4.4 billion at
June 30, 2016. The Company’s homes in inventory at
June 30, 2017 increased 9% to 27,600 homes compared to 25,300
homes at June 30, 2016.
During the third quarter of fiscal 2017, the Company repurchased
1.85 million shares of its common stock for $60.6 million and
repaid at maturity $350 million principal amount of its senior
notes. The Company ended the quarter with $460.8 million of
homebuilding unrestricted cash and a homebuilding debt to total
capital ratio of 24.8%. 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 is producing strong results in fiscal 2017. In the third
quarter, our consolidated pre-tax income increased 17% to $444.5
million on $3.8 billion of revenues, and the value of our net sales
orders increased 13%. For the nine months ended June 30, 2017,
our consolidated pre-tax income, homebuilding revenues and homes
closed increased 21%, 18% and 16%, respectively, and our pre-tax
profit margin improved 30 basis points to 11.2%. These results
reflect the strength of our experienced operational teams, diverse
product offerings from our family of brands and solid market
conditions across our broad national footprint.
“Our balance sheet strength, liquidity and continued earnings
growth 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 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 27,600 homes in inventory at the
end of June and a robust supply of owned and controlled lots, we
are well-positioned for the fourth quarter and fiscal 2018.”
Dividends
The Company has declared a quarterly cash dividend of $0.10 per
common share. The dividend is payable on August 23, 2017 to
stockholders of record on August 9, 2017.
Share Repurchase Authorization
Subsequent to quarter-end, the Company’s Board of Directors
authorized the repurchase of up to $200 million of the Company’s
common stock effective through July 31, 2018, which replaced
the prior authorization.
Forestar Acquisition
On June 29, 2017, the Company entered into a definitive merger
agreement with Forestar Group Inc. (Forestar) (NYSE:FOR), a
publicly-traded residential real estate development company, to
acquire 75% of the currently outstanding shares of Forestar for
$17.75 per share in cash or approximately $560 million of total
cash consideration. The strategic relationship between D.R. Horton
and Forestar will significantly grow Forestar into a large,
national residential land development company, selling lots to D.R.
Horton and other homebuilders. Forestar will remain a public
company with access to the capital markets to support its future
growth. The proposed merger accelerates D.R. Horton’s strategy of
expanding its relationships with land developers and ultimately
increasing the optioned portion of its land and lot position to
enhance operational efficiency and returns. The transaction is
expected to close during the Company’s first quarter of fiscal
2018, subject to the approval of Forestar shareholders and other
customary closing conditions.
Conference Call and Webcast Details
The Company will host a conference call today (Wednesday, July
26th) at 8:30 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.
About D.R. Horton, Inc.
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 79 markets in 26 states across the United States and
closed 44,833 homes in the twelve-month period ended June 30,
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.
Forward-Looking Statements
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
growth 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 27,600 homes in
inventory at the end of June and a robust supply of owned and
controlled lots, we are well-positioned for the fourth quarter and
fiscal 2018. The forward-looking statements also include that the
strategic relationship between D.R. Horton and Forestar will
significantly grow Forestar into a large, national residential land
development company, selling lots to D.R. Horton and other
homebuilders; Forestar will remain a public company with access to
the capital markets to support its future growth; the proposed
Forestar merger accelerates D.R. Horton’s strategy of expanding its
relationships with land developers and ultimately increasing the
optioned portion of its land and lot position to enhance
operational efficiency and returns; and that the transaction is
expected to close during the Company’s first quarter of fiscal
2018, subject to the approval of Forestar shareholders and other
customary closing conditions.
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, including the proposed Forestar merger; 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 (SEC).
Additional Information
In connection with the proposed transaction with Forestar, it is
expected that Forestar will file a registration statement on Form
S-4 with the SEC that will include a proxy statement/prospectus to
be distributed to Forestar stockholders. FORESTAR SECURITY HOLDERS
ARE ADVISED TO READ THE REGISTRATION STATEMENT AND PROXY
STATEMENT/PROSPECTUS IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION. The registration statement,
proxy statement/prospectus and other relevant documents will be
available at no cost on the SEC’s website at www.sec.gov and
Forestar’s website at www.forestargroup.com. Copies may also be
obtained at no cost by contacting Forestar’s Chief Financial
Officer, Charles D. Jehl.
D.R. Horton and its directors and certain of its executive
officers may be deemed to be participants in any solicitation in
connection with the proposed transaction with Forestar. Information
regarding D.R. Horton’s directors and executive officers is
available in D.R. Horton’s proxy statement for the 2017 Annual
Meeting of Stockholders, filed with the SEC on December 9, 2016.
Other information regarding D.R. Horton participants in connection
with the proposed transaction and a description of their direct and
indirect interests, by security holdings or otherwise, will be
contained in the proxy statement/prospectus and other relevant
materials to be filed with the SEC. As of the date of this release,
the D.R. Horton participants do not have any ownership interest in
Forestar.
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
D.R. HORTON, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, 2017 September 30, 2016 (In
millions) ASSETS Homebuilding: Cash and cash
equivalents
$ 460.8 $ 1,271.8 Restricted cash
10.9 9.5 Inventories: Construction in progress and finished
homes
4,905.6 4,034.7 Residential land and lots — developed
and under development
4,529.2 4,135.2 Land held for
development
107.7 137.8 Land held for sale
11.5 33.2
9,554.0 8,340.9
Deferred income taxes, net of valuation
allowance of $10.4 million and $10.3 million at June 30, 2017 and
September 30, 2016, respectively
383.7 476.3 Property and equipment, net
179.6 139.5
Other assets
470.3 456.2 Goodwill
80.0
80.0
11,139.3 10,774.2
Financial Services and Other: Cash and cash
equivalents
51.6 31.4 Mortgage loans held for sale
627.4 654.0 Property and equipment, net
103.2 55.9
Other assets
55.6 43.4
837.8 784.7 Total assets
$
11,977.1 $ 11,558.9
LIABILITIES
Homebuilding: Accounts payable
$ 602.6 $ 537.0
Accrued expenses and other liabilities
957.6 917.1 Notes
payable
2,453.1 2,798.3
4,013.3 4,252.4
Financial Services
and Other: Accounts payable and other liabilities
53.7
40.5 Mortgage repurchase facility
473.4
473.0
527.1 513.5 Total
liabilities
4,540.4 4,765.9
EQUITY
Common stock, $.01 par value,
1,000,000,000 shares authorized, 383,273,918 shares issued and
374,223,847 shares outstanding at June 30, 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
2,957.2 2,865.8
Retained earnings
4,670.1 4,057.2
Treasury stock, 9,050,071 shares and
7,200,071 shares at June 30, 2017 and September 30, 2016,
respectively, at cost
(194.9 ) (134.3 ) Stockholders’ equity
7,436.2 6,792.5 Noncontrolling interests
0.5
0.5 Total equity
7,436.7
6,793.0 Total liabilities and equity
$
11,977.1 $ 11,558.9
D.R. HORTON, INC. CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED) Three Months
Ended June 30, Nine Months Ended June 30,
2017 2016 2017
2016 (In millions, except per share data)
Homebuilding: Revenues: Home sales
$ 3,662.3 $
3,118.7
$ 9,618.1 $ 8,145.6 Land/lot sales and other
22.2 30.1
56.9
65.2
3,684.5
3,148.8
9,675.0 8,210.8
Cost of sales: Home sales
2,936.9 2,486.5
7,713.8
6,512.1 Land/lot sales and other
18.8 28.4
45.2 56.2
Inventory and land option charges
5.4
8.1
19.9 16.0
2,961.1 2,523.0
7,778.9
6,584.3 Gross profit: Home sales
725.4
632.2
1,904.3 1,633.5 Land/lot sales and other
3.4
1.7
11.7 9.0 Inventory and land option charges
(5.4 ) (8.1 )
(19.9 )
(16.0 )
723.4 625.8
1,896.1 1,626.5 Selling,
general and administrative expense
309.5 279.3
872.4
778.4 Other (income) expense
(1.3 )
(1.9 )
(7.8 ) (11.2 ) Homebuilding
pre-tax income
415.2 348.4
1,031.5 859.3
Financial
Services and Other: Revenues
91.9 83.1
256.9
205.4 General and administrative expense
65.0 57.5
183.1 157.1 Interest and other (income) expense
(2.4 ) (4.6 )
(11.2 )
(12.8 ) Financial services and other pre-tax income
29.3 30.2
85.0
61.1 Income before income taxes
444.5 378.6
1,116.5 920.4 Income tax expense
155.5
128.8
391.4 317.8
Net income
$ 289.0 $ 249.8
$
725.1 $ 602.6
Basic: Net income per
share
$ 0.77 $ 0.67
$
1.94 $ 1.63 Weighted average number of common
shares
374.8 371.8
374.1 370.4
Diluted: Net income
per share
$ 0.76 $ 0.66
$
1.92 $ 1.61 Adjusted weighted average number
of common shares
379.4 375.9
378.5 374.4
Other
Consolidated Financial Data: Interest charged to cost of sales
$ 38.7 $ 43.3
$ 110.7
$ 119.4 Depreciation and amortization
$
13.1 $ 13.8
$ 40.4 $ 41.4
Interest incurred
$ 32.4 $ 35.4
$ 99.4 $ 118.0
D.R. HORTON, INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED) Nine Months Ended
June 30, 2017 2016 (In
millions) OPERATING ACTIVITIES Net income
$
725.1 $ 602.6 Adjustments to reconcile net income to net
cash (used in) provided by operating activities: Depreciation and
amortization
40.4 41.4 Amortization of discounts and fees
3.9 4.1 Stock based compensation expense
40.4 36.8
Excess income tax benefit from employee stock awards
(10.5
) (6.3 ) Deferred income taxes
92.0 46.7 Inventory
and land option charges
19.9 16.0 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
(870.9 )
(879.1 )
(Increase) decrease in residential land
and lots – developed, under development, held for development and
held for sale
(352.2 ) 151.3 Increase in other assets
(29.5
) (4.6 ) Decrease (increase) in mortgage loans held for sale
26.2 (3.5 ) Increase in accounts payable, accrued expenses
and other liabilities
124.4 87.7
Net cash (used in) provided by operating activities
(190.8 ) 88.6
INVESTING
ACTIVITIES Purchases of property and equipment
(103.5
) (65.2 ) Increase in restricted cash
(9.9 )
(2.1 ) Net principal decrease of other mortgage loans and real
estate owned
5.3 4.3
(Purchases of) proceeds from debt
securities collateralized by residential real estate
(8.8 ) 35.8 Payments related to acquisition of a
business
(4.1 ) — Net cash used
in investing activities
(121.0 ) (27.2
)
FINANCING ACTIVITIES Proceeds from notes payable
700.4 26.3 Repayment of notes payable
(1,051.4
) (543.9 ) Proceeds from stock associated with certain
employee benefit plans
34.3 61.8 Excess income tax benefit
from employee stock awards
10.5 6.3 Cash dividends paid
(112.2 ) (88.9 ) Repurchases of common stock
(60.6 ) — Net cash used in financing
activities
(479.0 ) (538.4 )
DECREASE IN CASH AND CASH EQUIVALENTS (790.8 )
(477.0 ) Cash and cash equivalents at beginning of period
1,303.2 1,383.8 Cash and cash
equivalents at end of period
$ 512.4 $ 906.8
D.R. HORTON, INC. ($’s in
millions) NET SALES ORDERS
Three Months Ended June 30, Nine Months Ended June
30, 2017 2016 2017
2016 Homes Value
Homes Value Homes
Value Homes Value East
1,642 $ 453.8 1,361 $ 382.1
4,579
$ 1,297.9 3,784 $ 1,064.2 Midwest
457
177.9 527 200.4
1,463 570.3 1,372 517.9
Southeast
4,401 1,151.0 3,930 1,023.4
12,019
3,143.2 10,663 2,768.8 South Central
3,691
926.4 3,588 887.3
10,858 2,709.0 10,089
2,463.5 Southwest
816 186.7 535 126.3
2,019
466.2 1,352 313.8 West
2,033 976.2
1,773 815.7
5,334 2,638.5 4,810
2,250.7
13,040 $ 3,872.0 11,714 $ 3,435.2
36,272 $ 10,825.1 32,070 $ 9,378.9
HOMES CLOSED Three Months Ended June
30, Nine Months Ended June 30, 2017 2016
2017 2016 Homes Value Homes
Value Homes Value Homes Value
East
1,724 $ 482.1 1,380 $ 381.2
4,086
$ 1,160.5 3,568 $ 984.3 Midwest
511
201.9 478 179.9
1,340 519.6 1,209 465.2
Southeast
4,330 1,136.1 3,495 912.5
11,362
2,987.3 9,310 2,433.4 South Central
3,604
904.9 3,355 810.5
9,761 2,458.5 8,697 2,107.3
Southwest
657 152.6 414 93.0
1,644
383.9 1,084 246.8 West
1,671 784.7
1,617 741.6
4,393 2,108.3 4,194
1,908.6
12,497 $ 3,662.3 10,739 $ 3,118.7
32,586 $ 9,618.1 28,062 $ 8,145.6
SALES ORDER BACKLOG As of June 30,
2017 2016 Homes Value Homes
Value East
1,794 $ 520.5 1,646 $ 492.9
Midwest
593 234.7 575 219.1 Southeast
4,710
1,277.6 4,864 1,313.3 South Central
4,937
1,268.6 5,048 1,307.5 Southwest
1,030 232.9
839 191.1 West
2,097 1,110.7 1,698
856.3
15,161 $ 4,645.0 14,670 $ 4,380.2
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170726005304/en/
D.R. Horton, Inc.Jessica Hansen, 817-390-8200Vice President of
Investor RelationsInvestorRelations@drhorton.com
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