D.r. Horton, Inc. · NYSE:DHI
D.r. Horton — Q1 FY2020 Earnings Presentation
29 slides from D.r. Horton's earnings presentation, January 2020
Slide 1: Investor Presentation Q1 2020
I N V E S T O R P R E S E N T A T I O N Q1 2020
Slide 2: America's #1 Homebuilder Since 2002
AMERICA’S #1 HOMEBUILDER SINCE 2002 ORTON | 0.8. norton. express - EMERALD - FREEDOM
Slide 3: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation may include “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 mate
Slide 4: D.R. Horton traded on NYSE as DHI
D.R. HORTON, INC. TRADED ON NYSE AS DHI 58,434 $18.1 billion $2.3 billion Annual homes closed Annual consolidated revenues Annual pre‐tax income 18.7% & 18.2% $10.2 billion $27.92 ROI (HB) & ROE, respectively* Stockholders’ equity Book value per common share As of or for the twelve-month period ende
Slide 5: Geographic Diversification
GEOGRAPHIC DIVERSIFICATION 90 MARKETS | 29 STATES 6% 9% 27% EAST 12% Delaware, Maryland, MIDWEST Colorado, Illinois, New Jersey, North and South Carolina, Indiana, Iowa, Inventory 21% Pennsylvania, Minnesota, Ohio 25% Virginia SOUTH CENTRAL SOUTHEAST Louisiana Alabama, Florida, Oklahoma Georgia, Mis
Slide 6: Diverse Product Offerings and Price Points
DIVERSE PRODUCT OFFERINGS AND PRICE POINTS Homes for entry-level, move-up, active adult and luxury buyers 67% of homes closed <$300k $0 - $200k $200k - $250k $250k - $300k $300k - $500k >$500k 9% 33% 25% 28% 5% Represents homes closed & price points for the twelve months ended 12/31/19 6
Slide 7: Family of Brands
FAMILY OF BRANDS Homes Homes Home Average # of # of Sold Closed Sales Selling Markets States Revenue Price 61% 61% 64% $316k 90 29 34% 34% 28% $245k 58 19 3% 3% 3% $285k 27 13 2% 2% 5% $593k 26 14 As of or for the twelve months ended December 31, 2019 7
Slide 8: Management Tenure and Experience
MANAGEMENT TENURE AND EXPERIENCE Executive Team & Region Presidents 25 years Division Presidents ~15 years City Managers >10 years Average employee tenure 8
Slide 9: DHI Growth, Consolidation and Market Share
DHI GROWTH, CONSOLIDATION AND MARKET SHARE Total New U.S. Single-Family Houses Sold ('000s) 1,400 10% DHI Homes Closed as a Percentage of U.S. Single-Family New Home Sales 9% 1,200 8% 1,000 7% 6% 800 5% 600 4% 400 3% 2% 200 1% 0 0% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 200
Slide 10: Market Share Dominance
MARKET SHARE DOMINANCE D.R. Horton Share and Rankings in Largest U.S. Housing Markets Top 5 Markets Top 50 Markets 18% 50 16% 40 43 14% 38 12% 30 10% 31 8% 20 6% 4% 10 13 2% 0% 0 DFW Houston Atlanta Phoenix Austin #1 Top 5 Top 10 Operate In DHI Market Share Next Ranking Competitor Market Share Sourc
Slide 11: Homebuilding Operational Focus
HOMEBUILDING OPERATIONAL FOCUS • Maximize returns by managing inventories, sales pace and pricing in each community • Consolidate market share while generating strong profits and operating cash flow • Maintain sufficient inventories of land, lots and homes to support growth plans • Underwriting expe
Slide 12: Emphasis on Return on Inventory (ROI)
EMPHASIS ON RETURN ON INVENTORY (ROI) Homebuilding ROI expected to remain strong in the 18% to 20% range 20% 20.2% 19.3% 18.7% 18.1% 15% 16.6% 10% 5% 0% FY 2017 FY 2018 TTM 12/31/18 FY 2019 TTM 12/31/19 Homebuilding ROI is calculated as homebuilding pre‐tax income for the year divided by average hom
Slide 13: Return on Equity (ROE)
RETURN ON EQUITY (ROE) ROE ROE has improved to the high-teens while leverage has decreased HB leverage 20% 40% 17.6% 18.2% 18.2% 17.2% 15% 30% 14.4% 10% 20% 5% 10% 0% 0% FY 2017 FY 2018 TTM 12/31/18 FY 2019 TTM 12/31/19 ROE Leverage ROE is calculated as net income divided by average stockholders’ eq
Slide 14: Book Value Per Share
BOOK VALUE PER SHARE Consistent annual double-digit percentage growth in book value per share $27.92 $27.20 $25.00 $23.88 $24.45 $20.00 $20.66 $15.00 $10.00 $5.00 $0.00 9/30/2017 9/30/2018 12/31/2018 9/30/2019 12/31/2019 14
Slide 15: Capital and Cash Flow Priorities
CAPITAL AND CASH FLOW PRIORITIES • Balanced, disciplined, flexible and opportunistic; focused on enhancing long-term value • Invest in homebuilding business, including acquisitions • Invest in DHI Communities, our multi-family rental company • Maintain conservative homebuilding leverage • $500 milli
Slide 16: Cash Flow at Work
CASH FLOW AT WORK Utilization of $4 billion of cash generated by homebuilding operations 1,800 1,600 $1,438 5 Year Cumulative Capital 1,400 Cash Flow from $4.0B Homebuilding Operations 1,200 $1,002 1,000 Acquisitions $1.0B 800 $581 $600 Homebuilding Senior $1.4B 600 $304 Notes Paydown 400 Shareholde
Slide 17: Forestar (FOR)
FORESTAR (“FOR”) • FOR, a majority-owned subsidiary of DHI, is a publicly traded residential lot manufacturer, with operations in 51 markets and 20 states as of December 31, 2019 • Advancing DHI’s strategy of increasing land and lots controlled through purchase contracts • FOR has begun raising capi
Slide 18: FY 2020 Expectations
FY 2020 EXPECTATIONS* • Q2 FY 2020 • Consolidated revenues in a range of $4.25 billion to $4.4 billion • Homes closed in a range between 13,800 homes and 14,300 homes • Home sales gross margin of approximately 21% • Homebuilding SG&A of approximately 9% of homebuilding revenues • Income tax rate bet
Slide 19: First Quarter Data
FIRST QUARTER DATA D.R. HORTON - EXPRESS - EMERALD - FREEDOM
Slide 20: Q1 FY 2020 Highlights
Q1 FY 2020 HIGHLIGHTS • Net income per diluted share increased 53% to $1.16 • Net income attributable to D.R. Horton increased 50% to $431.3 million • Consolidated revenues increased 14% to $4.0 billion • Consolidated pre-tax income increased 39% to $523.3 million • Consolidated pre-tax profit margi
Slide 21: Sales and Closings
SALES AND CLOSINGS Net Sales Orders and Homes Closed increased 19% and 13%, respectively, in Q1 FY 2020 compared to Q1 FY 2019 # of Homes 17,500 15,000 12,500 10,000 7,500 5,000 2,500 0 Sales Closings 1Q FY 2018 1Q FY 2019 1Q FY 2020 21
Slide 22: Income Statement
INCOME STATEMENT 3 MONTHS ENDED FISCAL YEAR ENDED 12/31/2019 12/31/2018 9/30/2019 9/30/2018 Homes closed 12,959 11,500 56,975 51,857 Homebuilding Revenues: Home sales $ 3,863.3 $ 3,410.6 $ 16,925.0 $ 15,502.0 Land/lot sales 19.7 6.7 91.9 121.8 3,883.0 3,417.3 17,016.9 15,623.8 Gross profit: Home sal
Slide 23: Home Sales Gross Margin
HOME SALES GROSS MARGIN 22% 20% 21.3% 21.0% 21.0% 20.0% 20.0% 20.3% 20.2% 18% 19.3% 16% 14% 12% 10% 8% 6% 4% 2% 0% FY 2017 FY 2018 1Q19 2Q19 3Q19 4Q19 FY 2019 1Q20 Shown as a % of the Company’s homebuilding segment’s home sales revenues Includes interest amortized to cost of sales Refer to slide 4 o
Slide 24: Homebuilding SG&A
HOMEBUILDING SG&A SG&A as a percentage of homebuilding revenues improved 30 basis points to 9.2% in Q1 FY 2020 Fiscal Year First Fiscal Quarter HB Rev $ SG&A % HB Rev $ SG&A % $18,000 12% $14,000 12% $16,000 $12,000 $14,000 11% 11% $10,000 $12,000 10% $8,000 10% $10,000 $8,000 $6,000 9% 9% $6,000 9.
Slide 25: Consolidated Pre-Tax Income
CONSOLIDATED PRE-TAX INCOME Consolidated pre-tax profit margin improved 230 basis points to 13.0% in Q1 FY 2020 Fiscal Year First Fiscal Quarter PTI $ PTI $ $2,250 12.8% 12.1% $1,600 $2,000 $1,400 $1,750 $2,060.0 $2,125.3 $1,200 $1,500 $1,000 $1,250 $800 $1,000 13.0% $600 $750 10.7% $500 $400 $523.3
Slide 26: Balance Sheet
BALANCE SHEET 12/31/2019 9/30/2019 12/31/2018 Homebuilding Cash and cash equivalents $ 1,159.5 $ 1,051.0 $ 546.2 Construction in progress and finished homes 5,603.3 5,249.0 5,840.4 Land inventories 5,282.3 5,036.6 5,057.8 10,885.6 10,285.6 10,898.2 Other assets 1,291.5 1,232.9 1,066.7 Deferred incom
Slide 27: Homes in Inventory
HOMES IN INVENTORY Well-positioned to achieve FY 2020 closings guidance 35,000 31,800 30,200 30,000 27,900 27,700 25,000 24,600 20,000 15,000 10,000 5,000 0 9/30/17 9/30/18 12/31/18 9/30/19 12/31/19 Sold Specs Homes in inventory excluding model homes 27
Slide 28: Homebuilding Land and Lot Position
HOMEBUILDING LAND AND LOT POSITION Controlled lot position increased 8% from a year ago 350,000 39% owned / 61% controlled at 12/31/19 319,000 309,400 307,300 300,000 288,500 249,000 250,000 180,900* 185,900* 195,600* 164,200* 200,000 124,000 150,000 100,000 125,000 124,300 128,500 121,400 123,400 5
Slide 29: Homebuilding Public Debt Maturities by Year
HOMEBUILDING PUBLIC DEBT MATURITIES BY YEAR $800 $700 $700 $600 $500* 5.750% $500 $500 $400 $400 $350 $300 $200 4.000% 2.550% 4.375% 4.750% 2.500% $100 $0 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25 $ in millions *plan to repay at maturity utilizing cash on hand and revolving credit facility as necessary 29