D.R. Horton, Inc. (NYSE:DHI):
Fiscal 2017 Fourth Quarter Highlights - comparisons to the
prior year quarter
- Net income increased 10% to $313.2
million or $0.82 per diluted share
- Consolidated pre-tax income increased
12% to $485.5 million
- Consolidated pre-tax profit margin
improved 10 basis points to 11.7%
- Homes closed increased 7% to 13,165
homes and 11% in value to $4.0 billion
- Net sales orders increased 18% to
10,333 homes and 19% in value to $3.1 billion
Fiscal 2017 Highlights - comparisons to the prior
year
- Net income increased 17% to $1.0
billion or $2.74 per diluted share
- Consolidated pre-tax income increased
18% to $1.6 billion
- Consolidated pre-tax profit margin
improved 30 basis points to 11.4%
- Homes closed increased 14% to 45,751
homes and 16% in value to $13.7 billion
- Net sales orders increased 14% to
46,605 homes and 16% in value to $13.9 billion
- Homes in inventory increased 13% to
26,200 homes
- Book value per common share increased
13% to $20.66
- Homebuilding return on inventory
improved 120 basis points to 16.6%
- Net cash provided by operations was
$435.1 million
D.R. Horton, Inc. (NYSE:DHI), America’s Builder, today reported
that net income for the fourth fiscal quarter increased 10% to
$313.2 million, or $0.82 per diluted share, compared to $283.6
million, or $0.75 per diluted share, in the same quarter of fiscal
2016. Homebuilding revenue for the fourth quarter of fiscal 2017
increased 11% to $4.1 billion from $3.7 billion in the same quarter
of 2016. Homes closed in the quarter increased 7% to 13,165 homes,
compared to 12,247 homes in the same quarter of fiscal 2016.
For the fiscal year ended September 30, 2017, the Company's
net income increased 17% to $1.0 billion, or $2.74 per diluted
share, compared to $886.3 million, or $2.36 per diluted share, in
fiscal 2016. Homebuilding revenue for the fiscal year ended
September 30, 2017 increased 16% to $13.7 billion from $11.9
billion in fiscal 2016. Homes closed in fiscal 2017 increased 14%
to 45,751 homes, compared to 40,309 homes in fiscal 2016.
Net sales orders for the fourth quarter ended September 30,
2017 increased 18% to 10,333 homes from 8,744 homes in the year-ago
quarter, and the value of net sales orders increased 19% to $3.1
billion from $2.6 billion. The Company’s cancellation rate
(cancelled sales orders divided by gross sales orders) for the
fourth quarter of fiscal 2017 was 25%. Net sales orders for the
fiscal year ended September 30, 2017 increased 14% to 46,605
homes from 40,814 homes in fiscal 2016, and the value of net sales
orders increased 16% to $13.9 billion from $12.0 billion. The
Company's cancellation rate for fiscal 2017 was 22%. The Company's
sales order backlog of homes under contract at September 30,
2017 increased 7% to 12,329 homes and 8% in value to $3.7 billion
compared to 11,475 homes and $3.4 billion at September 30,
2016.
Homes in inventory at September 30, 2017 increased 13% to
26,200 homes compared to 23,100 homes at September 30, 2016.
The Company's land and lot portfolio at September 30, 2017
consisted of 249,000 lots, of which 50% were owned and 50% were
controlled through option contracts, compared to 205,000 lots at
September 30, 2016, of which 55% were owned and 45% were
controlled through option contracts.
The Company's homebuilding return on inventory (ROI) improved
120 basis points to 16.6% in fiscal 2017 from 15.4% in fiscal 2016.
Homebuilding ROI is calculated as homebuilding pre-tax income for
the year divided by average inventory. Average inventory in the ROI
calculation is the sum of ending inventory balances for the
trailing five quarters divided by five.
Net cash provided by operations for fiscal 2017 was $435.1
million, and the Company ended the year with $973.0 million of
homebuilding unrestricted cash and homebuilding debt to total
capital of 24.0%. Homebuilding debt to capital consists of
homebuilding notes payable divided by total equity plus
homebuilding notes payable.
Donald R. Horton, Chairman of the Board, said, “With 45,751
homes closed in fiscal 2017, D.R. Horton completed its 16th year in
a row as the largest homebuilder by volume in the United States. We
generated positive cash flows from operations for a third
consecutive year while growing both our revenues and pre-tax
profits at a double-digit pace. Our consolidated pre-tax income
increased 18% to $1.6 billion on revenues of $14.1 billion, and our
consolidated pre-tax profit margin improved 30 basis points to
11.4%. Our homebuilding return on inventory improved 120 basis
points from a year ago to 16.6%. Cash flow provided by operations
was $435.1 million in fiscal 2017, totaling $1.8 billion for the
past three fiscal years.
"These results reflect the strength of our experienced
operational teams, industry-leading market share, broad geographic
footprint and diverse product offerings across our D.R. Horton,
Emerald Homes, Express Homes and Freedom Homes brands. We remain
focused on growing our revenues and pre-tax profits at a
double-digit annual pace, while continuing to generate positive
annual cash flows and improved returns. With 26,200 homes in
inventory at the end of the year, 249,000 lots owned and
controlled, and positive sales trends in October, we are excited
and well-positioned for continued strong performance in 2018 as we
celebrate our 40th anniversary year."
Dividend
The Company has declared a quarterly cash dividend of $0.125 per
common share, an increase of 25% compared to its most recent
dividend paid. The dividend is payable on December 15, 2017 to
stockholders of record on December 1, 2017.
Guidance
D.R. Horton updates its previously issued fiscal 2018 guidance
and provides additional guidance for fiscal 2018 including:
- Consolidated pre-tax profit margin of
11.5% to 11.7%
- Consolidated revenues of $15.5 billion
to $16.3 billion
- Homes closed between 50,500 homes and
52,500 homes
- Home sales gross margin around 20%,
with potential quarterly fluctuations that may range from 19% to
21%
- Homebuilding SG&A expense as a
percentage of homebuilding revenues around 8.7%
- Financial services pre-tax profit
margin of 30% to 32%
- Income tax rate of approximately
35.2%
- Diluted share count increase of less
than 1%
- Cash flow from operations (excluding
impact of Forestar) of at least $500 million
The Company's guidance for fiscal 2018 excludes any impact from
the Forestar acquisition and operations, which is not expected to
have a material impact on D.R. Horton's earnings in fiscal
2018.
Forestar Acquisition
On October 5, 2017, the Company acquired 75% of the
outstanding shares of Forestar Group Inc. (Forestar) for $558.3
million in cash, pursuant to the terms of the June 2017 merger
agreement. Forestar is and will continue to be a publicly-traded
residential and real estate development company with operations
currently in 14 markets and 10 states, where it owns, directly or
through joint ventures, interests in 44 residential and mixed-use
projects.
D.R. Horton's alignment with Forestar advances the Company’s
strategy of increasing its access to high-quality optioned land and
lot positions to enhance operational efficiency and returns. Both
companies are identifying land development opportunities to expand
Forestar’s platform, and D.R. Horton plans to acquire a large
portion of Forestar's finished lots in accordance with the master
supply agreement between the two companies. As the controlling
shareholder of Forestar, the Company will have significant
influence in guiding the strategic direction and driving the
operational execution necessary to increase the future value
potential of Forestar.
The Company will provide an update on the integration progress
with Forestar on its conference call today, along with an outline
and timeline for future public reporting of Forestar's financial
results and guidance.
Conference Call and Webcast Details
The Company will host a conference call today (Thursday,
November 9th) 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 sixteen 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 45,751 homes during its fiscal year ended September 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 we remain focused on growing our revenues and pre-tax profits
at a double-digit annual pace, while continuing to generate
positive annual cash flows and improved returns; with 26,200 homes
in inventory at the end of the year, 249,000 lots owned and
controlled, and positive sales trends in October, we are excited
and well-positioned for continued strong performance in 2018 as we
celebrate our 40th anniversary year; and all guidance set forth
under the guidance header. The forward-looking statements also
include that Forestar is and will continue to be a publicly-traded
residential and real estate development company; D.R. Horton's
alignment with Forestar advances the Company's strategy of
increasing its access to high-quality optioned land and lot
positions to enhance operational efficiency and returns; both
companies are identifying land development opportunities to expand
Forestar’s platform, and D.R. Horton plans to acquire a large
portion of Forestar's finished lots in accordance with the master
supply agreement between the two companies; and as the controlling
shareholder of Forestar, the Company will have significant
influence in guiding the strategic direction and driving the
operational execution necessary to increase the future value
potential of Forestar.
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; our ability to
effect our growth strategies, acquisitions or investments
successfully; 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; 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) September 30,
2017 2016 (In millions)
ASSETS Homebuilding: Cash and cash equivalents
$ 973.0 $ 1,271.8 Restricted cash
9.3 9.5
Inventories: Construction in progress and finished homes
4,606.0 4,034.7 Residential land and lots — developed and
under development
4,519.7 4,135.2 Land held for development
101.0 137.8 Land held for sale
10.4
33.2
9,237.1 8,340.9
Deferred income taxes, net of valuation
allowance of $11.2 million and $10.3 million at September 30, 2017
and 2016, respectively
365.0 476.3 Property and equipment, net
194.4 139.5
Other assets
518.7 456.2 Goodwill
80.0
80.0
11,377.5 10,774.2
Financial Services and Other: Cash and cash
equivalents
34.8 31.4 Mortgage loans held for sale
587.3 654.0 Property and equipment, net
130.6 55.9
Other assets
54.4 43.4
807.1 784.7 Total assets
$
12,184.6 $ 11,558.9
LIABILITIES
Homebuilding: Accounts payable
$ 575.6 $ 537.0
Accrued expenses and other liabilities
933.1 917.1 Notes
payable
2,451.6 2,798.3
3,960.3 4,252.4
Financial Services
and Other: Accounts payable and other liabilities
56.7
40.5 Mortgage repurchase facility
420.0
473.0
476.7 513.5 Total
liabilities
4,437.0 4,765.9
EQUITY
Common stock, $.01 par value,
1,000,000,000 shares authorized, 384,036,150 shares issued and
374,986,079 shares outstanding at September 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
2,992.2 2,865.8
Retained earnings
4,946.0 4,057.2
Treasury stock, 9,050,071 shares and
7,200,071 shares at September 30, 2017 and 2016, respectively, at
cost
(194.9 ) (134.3 ) Stockholders’ equity
7,747.1 6,792.5 Noncontrolling interests
0.5
0.5 Total equity
7,747.6
6,793.0 Total liabilities and equity
$
12,184.6 $ 11,558.9
D.R. HORTON, INC. CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED) Three
Months EndedSeptember 30, Fiscal Year
EndedSeptember 30, 2017 2016
2017 2016 (In millions, except per
share data) Homebuilding: Revenues: Home sales
$
4,035.1 $ 3,637.5
$ 13,653.2 $ 11,783.1
Land/lot sales and other
31.4 13.5
88.3 78.7
4,066.5 3,651.0
13,741.5
11,861.8 Cost of sales: Home sales
3,214.0 2,890.9
10,927.8 9,403.0 Land/lot sales and
other
29.6 12.1
74.8 68.2 Inventory and land option
charges
20.4 15.4
40.2 31.4
3,264.0
2,918.4
11,042.8 9,502.6
Gross profit: Home sales
821.1 746.6
2,725.4
2,380.1 Land/lot sales and other
1.8 1.4
13.5 10.5
Inventory and land option charges
(20.4 )
(15.4 )
(40.2 ) (31.4 )
802.5 732.6
2,698.7 2,359.2 Selling, general and
administrative expense
348.0 321.9
1,220.4 1,100.3
Goodwill impairment
— 7.2
— 7.2 Other (income)
expense
(3.3 ) (1.5 )
(11.0 ) (12.7 ) Homebuilding pre-tax income
457.8 405.0
1,489.3 1,264.4
Financial Services
and Other: Revenues
92.6 90.3
349.5 295.6 General
and administrative expense
68.1 63.0
251.2 220.0
Interest and other (income) expense
(3.2 )
(0.7 )
(14.5 ) (13.5 ) Financial
services and other pre-tax income
27.7
28.0
112.8 89.1 Income
before income taxes
485.5 433.0
1,602.1 1,353.5
Income tax expense
172.3 149.4
563.7 467.2 Net income
$
313.2 $ 283.6
$ 1,038.4 $
886.3
Basic: Net income per share
$
0.84 $ 0.76
$ 2.77 $ 2.39
Weighted average number of common shares
374.7
372.8
374.3 371.0
Diluted: Net income per share
$ 0.82
$ 0.75
$ 2.74 $ 2.36
Adjusted weighted average number of common shares
380.0 377.3
378.9
375.1
Other Consolidated Financial Data:
Interest charged to cost of sales
$ 41.9 $
49.7
$ 152.6 $ 169.1
Depreciation and amortization
$ 14.3 $ 19.6
$ 54.7 $ 61.0 Interest incurred
$ 29.9 $ 34.3
$ 129.3
$ 152.3
D.R. HORTON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Fiscal Year EndedSeptember 30, 2017
2016 (In millions) OPERATING
ACTIVITIES Net income
$ 1,038.4 $ 886.3
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
54.7
61.0 Amortization of discounts and fees
5.0 5.4 Stock-based
compensation expense
59.2 49.0 Excess income tax benefit
from employee stock awards
(14.3 ) (10.0 ) Deferred
income taxes
110.8 75.3 Inventory and land option charges
40.2 31.4 Gain on sale of debt securities collateralized by
residential real estate
— (4.5 ) Goodwill impairment
— 7.2 Changes in operating assets and liabilities: Increase
in construction in progress and finished homes
(584.4
) (496.2 )
Increase in residential land and lots –
developed, under development, held for development and held for
sale
(362.3 ) (10.3 ) Increase in other assets
(63.7 ) (16.3 ) Decrease (increase) in mortgage loans
held for sale
67.6 (12.4 ) Increase in accounts payable,
accrued expenses and other liabilities
83.9
52.1 Net cash provided by operating activities
435.1 618.0
INVESTING ACTIVITIES
Expenditures for property and equipment
(157.3 )
(86.1 ) (Increase) decrease in restricted cash
(7.0 )
0.2 Net principal decrease of other mortgage loans and real estate
owned
6.2 19.7 (Purchases of) proceeds from debt securities
collateralized by residential real estate
(8.8 ) 35.8
Payments related to acquisition of a business
(4.1
) (82.2 ) Net cash used in investing activities
(171.0 ) (112.6 )
FINANCING
ACTIVITIES Proceeds from notes payable
835.0 — Repayment
of notes payable
(1,245.3 ) (549.7 ) Proceeds from
stock associated with certain employee benefit plans
46.7
72.4 Excess income tax benefit from employee stock awards
14.3 10.0 Cash dividends paid
(149.6 ) (118.7
) Repurchases of common stock
(60.6 ) —
Net cash used in financing activities
(559.5
) (586.0 )
DECREASE IN CASH AND CASH
EQUIVALENTS (295.4 ) (80.6 ) Cash and cash
equivalents at beginning of year
1,303.2
1,383.8 Cash and cash equivalents at end of year
$ 1,007.8 $ 1,303.2
D.R. HORTON, INC. ($’s in millions) NET
SALES ORDERS Three Months
Ended September 30, Fiscal Year Ended September 30,
2017 2016 2017
2016 Homes Value Homes
Value Homes Value Homes
Value East
1,460 $ 411.0 1,160 $ 324.3
6,039 $ 1,708.9 4,944 $ 1,388.5 Midwest
378 152.3 394 151.4
1,841 722.6 1,766
669.2 Southeast
3,556 925.7 2,953 778.5
15,575
4,068.9 13,616 3,547.3 South Central
2,516
630.1 2,344 581.8
13,374 3,339.1 12,433
3,045.4 Southwest
674 154.3 409 95.1
2,693
620.5 1,761 409.0 West
1,749 842.7
1,484 690.1
7,083 3,481.2 6,294
2,940.8
10,333 $ 3,116.1 8,744 $ 2,621.2
46,605 $ 13,941.2 40,814 $ 12,000.2
HOMES CLOSED Three Months Ended September
30, Fiscal Year Ended September 30, 2017
2016 2017 2016 Homes Value
Homes Value Homes Value Homes
Value East
1,710 $ 478.7 1,558 $ 446.7
5,796 $ 1,639.1 5,126 $ 1,431.0 Midwest
552 214.5 499 186.4
1,892 734.1 1,708
651.7 Southeast
4,209 1,098.4 3,993 1,025.9
15,571 4,085.7 13,303 3,459.3 South Central
3,497 880.6 3,552 871.2
13,258 3,339.1
12,249 2,978.5 Southwest
861 194.5 619 141.4
2,505 578.5 1,703 388.1 West
2,336
1,168.4 2,026 965.9
6,729
3,276.7 6,220 2,874.5
13,165 $
4,035.1 12,247 $ 3,637.5
45,751 $
13,653.2 40,309 $ 11,783.1
SALES ORDER
BACKLOG As of September 30, 2017
2016 Homes Value Homes Value
East
1,544 $ 452.8 1,301 $ 383.0 Midwest
419 172.5 470 184.0 Southeast
4,057
1,104.9 4,053 1,121.7 South Central
3,956
1,018.1 3,840 1,018.1 Southwest
843 192.7 655
150.7 West
1,510 785.0 1,156 580.5
12,329 $ 3,726.0 11,475 $ 3,438.0
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version on businesswire.com: http://www.businesswire.com/news/home/20171109005321/en/
D.R. Horton, Inc.Jessica Hansen, 817-390-8200Vice President of
Investor RelationsInvestorRelations@drhorton.com
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