D.r. Horton, Inc. · NYSE:DHI
D.r. Horton — Q3 FY2015 Earnings Presentation
24 slides from D.r. Horton's earnings presentation, July 2015
Slide 1: Q3 FY2015
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Slide 2: D.R. Horton America's Builder
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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 13 consecutive years1 $10.1 billion in annual revenues2 34,684 in annual homes closed2 $10.9 billion of total assets3 $5.6 billion of stockholders’ equity3 1 By closings volume for calendar years 2002 to 2014 2 Twelve months ended Ju
Slide 5: Geographic Diversification 79 Markets | 27 States
Geographic Diversification HB Revenue 79 Markets | 27 States (TTM Ended 6/30/15) East 13% West 25% Midwest 6% Southwest 3% South Central 26% Southeast 27% East Inventory 11% (as of 6/30/15) Midwest Region States Covered West 6% 29% East Delaware, Georgia, Maryland, New Jersey, North Carolina, Pennsy
Slide 6: Broad Range of Product Offerings
Broad Range of Product Offerings Homes for entry-level, move-up and luxury buyers Under $500k+ $150k $400k to $500k $151k to $200k $300k to $400k $200k to $250k to $250k $300k 49% of closings < $250,000 in Q3 FY15, down from 57% in Q3 FY14 Revenues from homes > $500,000 were 16% of home sales revenu
Slide 7: Competitive Advantage
Competitive Advantage Average employee tenure: Region Presidents – over 20 years Division Presidents – 15 years City Managers – over 10 years 10 Q3 FY2015 7
Slide 8: D.R. Horton The Heart of our Business
D.R. Horton The Heart of our Business 79 markets and 27 states In the third quarter, accounted for: 77% of homes sold 81% of homes closed 84% of home sales revenue Q3 Average Closing Price: $300,000 Reported metrics for D.R. Horton include our Crown Communities and Pacific Ridge Homes op
Slide 9: Emerald Homes
Emerald Homes Higher-end move-up and luxury buyer Introduced in 2013 46 markets and 18 states In the third quarter, accounted for: 4% of homes sold 3% of homes closed 6% of home sales revenue Q3 Average Closing Price: $524,000 Higher margin, slower absorption Q3 FY2015 9
Slide 10: Express Homes
Express Homes Targeted at the true entry-level buyer Introduced in Spring 2014 44 markets and 14 states In the third quarter, accounted for: 19% of homes sold 16% of homes closed 10% of home sales revenue Q3 Average Closing Price: $188,000 Higher absorption, lower margin Reported met
Slide 11: Operational Focus
Operational Focus Consistent positive cash flow from operations Current land ownership level is sufficient to support double-digit revenue and profit growth Consistently optimize balance of sales absorptions and gross margins to maximize returns in each community Manage land and home invento
Slide 12: Targeted Market Consolidations
Targeted Market Consolidations Completed four acquisitions since fiscal 2012 $151k to $200k Q3 FY2015 12
Slide 13: Q3 FY 2015 Highlights
Q3 FY 2015 Highlights The value of net homes sold, homes closed and homes in backlog increased by 25%, 37% and 15%, respectively 10,398 net homes sold and 9,856 homes closed 12,761 homes in backlog at 6/30/15 Consolidated pre-tax income increased 94% to $333.8 million Consolidated pre-tax
Slide 14: Sales, Closings & Backlog – Q3 FY15
Sales, Closings & Backlog – Q3 FY15 Net Sales Orders, Homes Closed and Homes in Backlog increased 22%, 28% and 12%, respectively, in Q3 of FY15 compared to Q3 of FY14 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Sales Closings Backlog 3Q FY13 3Q FY14 3Q FY15 Q3 FY2015 14
Slide 15: Income Statement
Income Statement 9 Months Ended Fiscal Year Ended 6/30/2015 6/30/2014 9/30/2014 9/30/2013 Homes closed 26,072 20,058 28,670 24,155 Revenues: Home sales $ 7,417.4 $ 5,401.1 $ 7,804.7 $ 6,024.8 Land/lot sales & other 50.6 34.0 53.8 61.1 7,468.0 5,435.1 7,858.5 6,085.9 Gross Profit: Home sales 1,468.6
Slide 16: Home Sales Gross Margin
Home Sales Gross Margin Homes sales gross margin of around 20% in a stable housing market 25% 20% 21.9% 22.3% 22.5% 20.7% 21.4% 20.5% 19.8% 19.7% 19.9% 20.4% 15% 18.8% 10% 17.7% 5% 0% FY12 1Q 2Q 3Q 4Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY13 FY13 FY13 FY13 FY14 FY14 FY14 FY14 FY15 FY15 FY15 Shown as a % of home sa
Slide 17: Homebuilding SG&A
Homebuilding SG&A Long-term annual SG&A goal = 10% of homebuilding revenues Improved 160 basis points year-over-year in Q3 FY2015 FYTD 6/30 Third Fiscal Quarter 2015 SG&A $ SG&A $ $800 9.9% $800 $600 10.9% $600 $400 $738.2 $400 9.0% $593.2 10.6% $200 $200 $257.8 $221.9 $0 $0 2014 2015 Q3 FY14 Q3 FY1
Slide 18: Homebuilding Pre-tax Income
Homebuilding Pre-tax Income Homebuilding pre-tax income margin in Q3 2015 was 10.5% FYTD 6/30 Third Fiscal Quarter 2015 PTI $ PTI $ $800 $800 9.6% $600 9.8% $600 $400 $716.8 $400 10.5% $532.2 7.5% $200 $200 $302.1 $158.6 $0 $0 2014 2015 Q3 FY14 Q3 FY15 Shown as a % of homebuilding revenues $ in mill
Slide 19: Balance Sheet
Balance Sheet 6/30/15 9/30/14 6/30/14 HB cash and cash equivalents $ 766.7 $ 632.5 $ 580.8 Restricted cash 11.7 10.0 20.1 Inventories 8,111.2 7,700.5 7,375.6 Deferred income taxes, net 544.3 565.0 582.6 Other assets 1,429.6 1,294.5 1,157.5 Total $ 10,863.5 $ 10,202.5 $ 9,716.6 Notes payable - HB $ 3
Slide 20: Homes in Inventory
Homes in Inventory Growing housing inventory to meet increasing sales pace 22,000 21,200 20,500 20,600 20,000 18,000 17,000 16,000 14,000 13,000 12,000 10,500 10,000 8,000 6,000 4,000 2,000 0 9/30/11 9/30/12 9/30/13 6/30/14 9/30/14 6/30/15 Models Sold Specs Q3 FY2015 20
Slide 21: Robust Lot Position
Robust Lot Position 65,000 of our total lots are finished at 6/30/15 200,000 180,900 183,500 180,000 178,500 173,600 160,000 152,700 54,300 53,600 58,900 53,500 140,000 120,000 112,700 58,100 100,000 26,900 80,000 60,000 126,600 124,900 124,600 120,100 85,800 94,600 40,000 20,000 0 9/30/11 9/30/12 9
Slide 22: Inactive Land Held for Development
Inactive Land Held for Development “Mothballed” lot count down 41% from 9/30/13 $750 $699.2 Carrying Value Lots Held $628.3 43,100 39,400 $500 $450.2 $332.8 21,700 $250 $235.4 14,000 12,800 $0 9/30/11 9/30/12 9/30/13 9/30/14 6/30/15 Land held for development is shown as separate line item on face of
Slide 23: Public Debt Maturities by Year
Public Debt Maturities by Year $800 $700 $700 $600 $543 $500 $500 $500 $400 $400 $350 5.750% $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 Balance of public notes outstanding at 6/30/15 of $3.3 billion $ in millions Q3 FY2015
Slide 24: Future Expectations*
Future Expectations* Q4 FY 2015: Backlog conversion rate in the range of 81 – 84% Home sales gross margin consistent with first three quarters of the year (high 19’s to 20%) Homebuilding SG&A expense in the range of 8.7% to 8.9% of homebuilding revenues Financial Services operating margin be