D.R. Horton, Inc. · NYSE:DHI
D.R. Horton — Q4 FY2015 Earnings Presentation
27 slides from D.R. Horton's earnings presentation, November 2015
Slide 1: Q4 FY2015
D-R-HORTON & J mericas Q4 FY2015
Slide 2: D.R. Horton logo
D-R-HORTON #= JS nerica’s ‘
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, Inc.
D.R. Horton, Inc. Traded on NYSE as DHI #1 builder for 14 consecutive years1 $10.8 billion in annual revenues2 36,648 in annual homes closed $11.2 billion of total assets3 $5.9 billion of stockholders’ equity3 1By closings volume for fiscal years 2002 to 2015 2Twelve months ended Septemb
Slide 5: Geographic Diversification
Geographic Diversification HB Revenue 79 Markets | 27 States (TTM Ended 9/30/15) East 13% West 25% Midwest 6% Southwest 3% South Central Southeast 26% 27% Inventory East 11% (as of 9/30/15) Midwest 6% Region States Covered West East Delaware, Georgia, Maryland, New Jersey, North Carolina, 29% Pennsy
Slide 6: Broad Range of Product Offerings
Broad Range of Product Offerings Homes for entry-level, move-up and luxury buyers 5% 7% Under $150k $500k+ 7% $400k to 23% $500k $151k to $200k $300k to $400k 17% $200k to $250k to $250k $300k 18% 23% Represents homes closed in fiscal 2015 Q4 FY2015 6
Slide 7: Substantial Growth of Brands
Substantial Growth of Brands 5,648 homes closed in 1,059 homes closed in FY2015, which more than FY2015, which more than tripled from FY2014 doubled from FY2014 Homes sales revenue Homes sales revenue increased by $827 million increased by $344 million to $1 billion to $595 million Q4 FY2015
Slide 8: Operational Focus
Operational Focus Current land ownership level is sufficient to support double-digit annual growth in both revenues and profits Consistently optimize balance of sales absorptions and gross margins to maximize returns in each community Manage land and home inventory levels efficiently to genera
Slide 9: Management Tenure & Experience
Management Tenure & Experience Average employee tenure: Region Presidents – over 20 years Division Presidents – 15 years City Managers – over 10 years Q4 FY2015 9
Slide 10: FY 2015 Highlights
FY 2015 Highlights The value of net homes sold, homes closed and homes in backlog increased by 29%, 34% and 10%, respectively 37,380 net homes sold and 36,648 homes closed 10,662 homes in backlog at 9/30/15 Consolidated pre-tax income increased 38% to $1.1 billion Consolidated pre-tax inco
Slide 11: FY 2016 Expectations
FY 2016 Expectations* Fiscal Year: Consolidated pre-tax margin in the range of 10.5% to 11.0% Consolidated revenues of $12.0 to $12.5 billion Closings between 39,500 and 41,500 Home sales gross margin in the high 19s to 20% Homebuilding SG&A expense in the range of 9.2% to 9.4% of homebuil
Slide 12: Cash Flow Priorities
Cash Flow Priorities Increased dividend by 28% compared to most recent dividend paid to $0.08 per share Approximately $120 million annual cost at current rate Invest in homebuilding business where opportunities to generate acceptable returns exist, including business acquisitions Pay off deb
Slide 13: Fourth Quarter Data
Fourth Quarter Data Q4 FY2015 13
Slide 14: D.R. Horton: The Heart of our Business
D.R. Horton The Heart of our Business In the fourth quarter, accounted for: 75% of homes sold 79 Markets | 27 States 76% of homes closed 81% of home sales revenue Q4 Average Closing Price: $305,000 Reported metrics for D.R. Horton include our Crown Communities and Pacific Ridge Homes opera
Slide 15: Emerald Homes
Emerald Homes Higher-end move-up and luxury buyer Introduced in 2013 In the fourth quarter, accounted for: 46 Markets | 18 States 3% of homes sold 3% of homes closed 6% of home sales revenue Q4 Average Closing Price: $545,000 Q4 FY2015 15
Slide 16: Express Homes
Express Homes Targeted at the true entry-level buyer Introduced in Spring 2014 In the fourth quarter, accounted for: 48 Markets | 15 States 22% of homes sold 21% of homes closed 14% of home sales revenue Q4 Average Closing Price: $191,000 Reported metrics for Express include our Regent H
Slide 17: Q4 FY 2015 Highlights
Q4 FY 2015 Highlights The value of net homes sold, homes closed and homes in backlog increased by 22%, 27% and 10%, respectively 8,477 net homes sold and 10,576 homes closed 10,662 homes in backlog at 9/30/15 Consolidated pre-tax income increased 35% to $338.8 million Consolidated pre-tax
Slide 18: Sales, Closings & Backlog – Q4 FY15
Sales, Closings & Backlog – Q4 FY15 Net Sales Orders, Homes Closed and Homes in Backlog increased 19%, 23% and 8%, respectively, in Q4 of FY2015 compared to Q4 of FY2014 12,000 10,000 8,000 6,000 4,000 2,000 0 Sales Closings Backlog 4Q FY13 4Q FY14 4Q FY15 Q4 FY2015 18
Slide 19: Income Statement
Income Statement 3 Months Ended Fiscal Year Ended 9/30/2015 9/30/2014 9/30/2015 9/30/2014 Homes closed 10,576 8,612 36,648 28,670 Revenues: Home sales $ 3,052.1 $ 2,403.6 $ 10,469.4 $ 7,804.7 Land/lot sales & other 39.0 19.7 89.6 53.8 3,091.1 2,423.3 10,559.0 7,858.5 Gross Profit: Home sales 607.3 4
Slide 20: Home Sales Gross Margin
Home Sales Gross Margin Homes sales gross margin of around 20% in a stable housing market 25% 20% 22.3% 22.5% 20.7% 20.5% 20.8% 19.8% 19.7% 19.9% 19.9% 15% 17.7% 10% 5% 0% FY12 FY13 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY14 FY14 FY14 FY14 FY15 FY15 FY15 FY15 Shown as a % of home sales revenues Includes interest
Slide 21: Homebuilding SG&A
Homebuilding SG&A Long-term annual SG&A goal = 10% of homebuilding revenues Improved 100 basis points year-over-year in Q4 and FY2015 Fiscal Year Fourth Fiscal Quarter SG&A $ SG&A $ $1,200 $1,200 9.6% $1,000 $1,000 10.6% $800 $800 $600 $600 $834.2 $1,013.6 8.9% $400 $400 9.9% $200 $200 $241.0 $275.4
Slide 22: Consolidated Pre-tax Income
Consolidated Pre-tax Income Consolidated pre-tax income margin in Q4 2015 was 10.7% Fiscal Year Fourth Fiscal Quarter PTI $ PTI $ $1,200 10.4% $1,200 $1,000 $1,000 10.1% $800 $800 $600 $1,123.4 $600 $814.2 10.1% 10.7% $400 $400 $338.8 $200 $200 $250.8 $0 $0 2014 2015 Q4 FY14 Q4 FY15 $ in millions Sh
Slide 23: Balance Sheet
Balance Sheet 9/30/15 9/30/14 HB cash and cash equivalents $ 1,355.9 $ 632.5 Restricted cash 9.7 10.0 Inventories 7,807.0 7,700.5 Deferred income taxes, net 558.1 565.0 Other assets 1,420.3 1,277.4 Total $ 11,151.0 $ 10,185.4 Notes payable - HB $ 3,333.6 $ 3,306.5 Other liabilities 1,922.0 1,759.2 E
Slide 24: Homes in Inventory
Homes in Inventory 22,000 21,300 21,300 21,200 20,600 19,800 20,000 18,000 17,000 16,000 14,000 13,000 12,000 10,000 8,000 6,000 4,000 2,000 0 9/30/12 9/30/13 9/30/14 12/31/14 3/31/15 6/30/15 9/30/15 Models Sold Specs Q4 FY2015 24
Slide 25: Robust Lot Position
Robust Lot Position 67,000 of our total lots are finished at 9/30/15 200,000 180,900 183,500 184,700 180,000 177,200 173,600 173,900 160,000 152,700 54,300 58,900 60,200 55,500 53,500 55,500 140,000 120,000 58,100 100,000 80,000 60,000 126,600 124,600 124,500 121,700 120,100 118,400 94,600 40,000 20
Slide 26: Inactive Land Held for Development
Inactive Land Held for Development “Mothballed” lot count down 21% from a year ago $700 45000 $628.3 40000 $600 39,400 Balance 35000 $500 $450.2 Lots Held 30000 $400 25000 $332.8 $300 20000 21,700 $235.4 $202.3 15000 $200 14,000 12,800 11,100 10000 $100 5000 $0 0 9/30/12 9/30/13 9/30/14 6/30/15 9/30
Slide 27: Public Debt Maturities by Year
Public Debt Maturities by Year $800 $700 $700 $600 $543 $500 $500 $500 $400 5.750% $400 $350 $350 6.500% $300 $200 $100 5.625% 4.750% 3.625% 3.750% 4.000% 4.375% 4.750% $0 FY 16 FY 17 FY 18 FY 19 FY 20 FY 22 FY 23 $ in millions Balance of public notes outstanding at 9/30/15 of $3.3 billion Q4 FY2015