D.R. Horton, Inc. · NYSE:DHI
D.R. Horton — Q1 FY2017 Earnings Presentation
27 slides from D.R. Horton's earnings presentation, January 2017
Slide 1: Q1 FY 2017
D-RHORTON Aner:
Slide 2: D-RHORTON #=
D-RHORTON #= yoy ; |
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 15 years in a row1 • Annual revenues of $12.6 billion2 • 41,652 in annual homes closed2 • Annual pre‐tax income of $1.4 billion2 • Total assets of $11.7 billion3 • Shareholders’ equity of $7.0 billion3 • Book value per share of $18.703 1By c
Slide 5: Broad National Footprint
Broad National Footprint East HB Revenue1 12% West 78 Markets | 26 States 24% Midwest 6% Southwest 3% South Central 25% Southeast 30% East Inventory2 11% Midwest 5% West Region States 28% East Delaware, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Virginia Midwest Colorado, Il
Slide 6: Diverse Product Offerings
Diverse Product Offerings Homes for entry‐level, move‐up, active adult and luxury buyers 7% $500k+ 25% < $200k 25% $300k to $500k $200k to $250k to $250k $300k 24% 19% Represents homes closed for the trailing twelve months ended 12/31/16 Q1 2017 6
Slide 7: Family of Brands
Family of Brands • The heart of our business • Introduced in 2014, targeted at the true entry‐level buyer • Offered across all 78 markets and 26 states we operate in • Currently in 53 markets and 17 states • 68% of homes closed and 71% of home sales • 28% of homes closed and 20% of home revenue sale
Slide 8: Management Tenure & Experience
Management Tenure & Experience Average employee tenure: • Executive Team and Region Presidents – over 20 years • Division Presidents and City Managers – over 13 years Q1 2017 8
Slide 9: D.R. Horton Market Share Rankings
D.R. Horton Market Share Rankings Top 50 U.S. Housing Markets # Markets 50 45 40 41 35 35 36 30 30 29 25 20 23 15 10 13 5 7 0 #1 Top 5 Top 10 Operations In 2009 2015 Source: Builder magazine ‐ 2016 Local Leaders issue Market share rankings based on homes closed in respective years Q1 2017 9
Slide 10: Operational Focus
Operational Focus • Land ownership level 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 generate consiste
Slide 11: Emphasis on Return on Inventory (ROI)
Emphasis on Return on Inventory (ROI) 20.0% Steady improvement in Homebuilding ROI 15.0% 15.9% 15.4% 10.0% 13.0% 12.8% 11.1% 5.0% 0.0% FY 2014 FY 2015 TTM 12/31/15 FY 2016 TTM 12/31/16 Homebuilding ROI is calculated as homebuilding pre‐tax income for the year divided by average inventory. Average in
Slide 12: Cash Flow from Operations
Cash Flow from Operations Expect to generate positive cash flow from operations for a third consecutive year while growing revenues and closings Homes Closed $800 50,000 45,000 40,000 $600 35,000 30,000 $500 $400 25,000 $700 $618 20,000 15,000 $200 $300 10,000 5,000 $0 0 FY 2015 FY 2016 FY 2017e $ i
Slide 13: Cash Flow Priorities
Cash Flow Priorities • Be opportunistic while remaining disciplined • Invest in homebuilding business where opportunities to generate acceptable returns exist • Business acquisitions to further consolidate market share • Pay off debt at maturity • Paid $543 million of senior notes at maturity during
Slide 14: Homebuilding SG&A
Homebuilding SG&A Expect SG&A as a percentage of homebuilding revenues to improve approximately 30 basis points in FY 2017 to around 9.0% HB Rev $ SG&A % $14 $13.4 ‐ $13.8 11.0% $12 $11.9 10.5% $10.6 $10 10.0% $7.9 $8 9.5% $6 9.0% $4 $2 8.5% $0 8.0% 2014 2015 2016 2017e $ in billions HB Rev $ SG&A %
Slide 15: FY 2017 Expectations
FY 2017 Expectations* Fiscal Year: • Consolidated pre‐tax profit margin of 11.2% to 11.5% • Consolidated revenues between $13.4 billion and $13.8 billion • Homes closed between 43,500 homes and 45,500 homes • Home sales gross margin around 20%, with potential quarterly fluctuations from 19% to 21% •
Slide 16: First Quarter Data
D-R-HORTON’ == JS nerica’s 4 First Quarter Data Qi 2017 16
Slide 17: Q1 FY 2017 Highlights
Q1 FY 2017 Highlights • Consolidated pre‐tax income increased 32% to $318.1 million • Consolidated pre‐tax income margin improved 100 basis points to 11.0% • Net income increased 31% to $206.9 million • The value of net homes sold, homes closed and homes in backlog increased by 17%, 20% and 7%, resp
Slide 18: Sales, Closings & Backlog – Q1 FY 2017
Sales, Closings & Backlog – Q1 FY 2017 Net Sales Orders, Homes Closed and Homes in Backlog increased 15%, 17% and 6%, respectively, in Q1 of FY 2017 compared to Q1 of FY 2016 # of Homes 12,000 10,000 8,000 6,000 4,000 2,000 0 Sales Closings Backlog 1Q FY15 1Q FY16 1Q FY17 Q1 2017 18
Slide 19: Income Statement
Income Statement 3 Months Ended Fiscal Year Ended 12/31/2016 12/31/2015 9/30/2016 9/30/2015 Homes closed 9,404 8,061 40,309 36,648 Revenues: Home sales $ 2,797.7 $ 2,340.9 $ 11,783.1 $ 10,469.4 Land/lot sales and other 28.4 20.2 78.7 89.6 2,826.1 2,361.1 11,861.8 10,559.0 Gross profit: Home sales 55
Slide 20: Home Sales Gross Margin
Home Sales Gross Margin Home sales gross margin of around 20% 22% 20% 18% 21.3% 19.8% 19.9% 19.9% 20.3% 20.5% 19.8% 16% 20.8% 14% 12% 10% 8% 6% 4% 2% 0% FY13 FY14 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Shown as a % of home sales revenues Includes interest amortized to cost of sales Q1 2017 20
Slide 21: Homebuilding SG&A
Homebuilding SG&A SG&A as a percentage of homebuilding revenues improved 70 basis points in Q1 FY 2017 Fiscal Year 2016 First Fiscal Quarter 2017 HB Rev $ SG&A % HB Rev $ SG&A % $12,000 12.0% $12,000 12.0% $10,000 $10,000 11.0% 11.0% $8,000 $8,000 10.2% $6,000 10.0% $6,000 10.0% 9.5% 9.5% 9.3% $4,00
Slide 22: Consolidated Pre-tax Income
Consolidated Pre‐tax Income Consolidated pre‐tax profit margin improved 100 basis points to 11.0% in Q1 FY 2017 Fiscal Year 2016 First Fiscal Quarter 2017 PTI $ PTI $ $1,400 11.1% $1,400 $1,200 10.4% $1,200 $1,354 $1,000 $1,123 $1,000 $800 $800 $600 $600 $400 $400 11.0% 10.0% $200 $200 $318 $241 $0
Slide 23: Balance Sheet
Balance Sheet 12/31/16 9/30/16 9/30/15 Cash and cash equivalents ‐ HB $ 1,115.5 $ 1,271.8 $ 1,354.8 Restricted cash 8.8 9.5 9.7 Inventories 8,742.4 8,340.9 7,807.0 Deferred income taxes, net 467.8 476.3 558.1 Other assets 1,377.6 1,460.4 1,421.4 Total assets $ 11,712.1 $ 11,558.9 $ 11,151.0 Notes pa
Slide 24: Homes in Inventory
Homes in Inventory Strong position for upcoming spring selling season # of Homes 30,000 25,000 24,500 23,100 21,500 20,600 19,800 20,000 17,000 15,000 10,000 5,000 0 9/30/13 9/30/14 9/30/15 12/31/15 9/30/16 12/31/16 Models Sold Specs Q1 2017 24
Slide 25: Land and Lot Position
Land and Lot Position Optioned lot position increased 70% from 9/30/15 # of Lots 225,000 212,600 204,500 200,000 180,900 183,500 173,900 177,700 175,000 54,300 58,900 55,500 61,100 91,600 94,300 150,000 125,000 100,000 75,000 126,600 124,600 118,400 116,600 112,900 118,300 50,000 25,000 0 9/30/13 9/
Slide 26: Inactive Land Held for Development
Inactive Land Held for Development “Mothballed” lot count down 55% from 9/30/14 $350 $332.8 16000 14000 $300 14,000 Balance Lots Held 12000 $250 $202.3 10000 $200 $185.4 8000 11,100 $137.8 $150 $137.2 10,500 6000 7,300 $100 6,300 4000 $50 2000 $0 0 9/30/14 9/30/15 12/31/15 9/30/16 12/31/16 $ in mill
Slide 27: Public Debt Maturities by Year
Public Debt Maturities by Year $350 million in maturities in FY 2017* $800 $700 $700 $600 $500 $500 $500 5.750% $400 $400 $350 $350 $300 $200 $100 4.750% 3.625% 3.750% 4.000% 4.375% 4.750% $0 FY 17 FY 18 FY 19 FY 20 FY 22 FY 23 *Expect to repay $350 million of senior notes due in May 2017 with exist