D.r. Horton, Inc. · NYSE:DHI
D.r. Horton — Q4 2021 Earnings Presentation
32 slides from D.r. Horton's earnings presentation, November 2021
Slide 1: Investor Presentation Q4 2021
Investor Presentation Q4 2021
Slide 2: Broad Geographic Footprint
Broad Geographic Footprint 2
Slide 3: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation may include “forward‐looking statements” as defined by the including the impact of COVID‐19 on the economy and our businesses; the effects of Private Securities Litigation Reform Act of 1995. Although D.R. Horton believes any weather conditions and natura
Slide 4: D.R. Horton, Inc.
D.R. HORTON, INC. Traded on NYSE as DHI $27.8 billion $5.4 billion 31.6% & 37.9% Consolidated revenues Consolidated pre‐tax income ROE & ROI (HB), respectively* $14.9 billion $41.81 17.8% Stockholders’ equity Book value per common share Homebuilding leverage* As of or for the fiscal year ended Septe
Slide 5: FY 2021 Highlights
FY 2021 HIGHLIGHTS • Net income attributable to D.R. Horton increased 76% to $4.2 billion or $11.41 per diluted share • Consolidated revenues increased 37% to $27.8 billion • Return on equity was 31.6% and homebuilding return on inventory was 37.9% • Consolidated pre‐tax income increased 80% to $5.4
Slide 6: DHI Growth, Consolidation and Market Share
DHI GROWTH, CONSOLIDATION AND MARKET SHARE 1,400 12% 81,965 Homes Closed during fiscal year ended 9/30/2021 2021 Closings: 1,200 81,965 10% 1,000 8% 800 2011 Closings: 2006 Closings: 17,176 6% 53,410 600 4% 400 2% 200 1992 Closings: 1,231 0 0% Total U.S. Single‐Family New Home Sales ('000s) Source:
Slide 7: 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 44 14% 41 12% 35 30 10% 8% 20 6% 4% 15 10 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 8: Management Tenure and Experience
MANAGEMENT TENURE AND EXPERIENCE Executive Team & Region Presidents 28 years Division Presidents ~15 years City Managers >10 years Average employee tenure 8
Slide 9: Diverse Product Offerings and Price Points
DIVERSE PRODUCT OFFERINGS AND PRICE POINTS Homes for entry‐level, move‐up, active adult and luxury buyers Over half of homes closed <$300k 23% 30% 31% 10% 6% $0 - $250k $251k - $300k $300k - $400k $401k - $500k >$500k Represents price points of homes closed for the fiscal year ended 9/30/21 9
Slide 10: Return on Equity (ROE)
RETURN ON EQUITY (ROE) ROE has improved to over 30% while maintaining leverage below 20% ROE HB leverage 35% 35% 30% 31.6% 30% 25% 25% 20% 22.1% 20% 15% 17.6% 17.2% 15% 10% 10% 5% 5% 0% 0% FY 2018 FY 2019 FY 2020 FY 2021 ROE Leverage ROE is calculated as net income divided by average stockholders’ e
Slide 11: Emphasis on Return on Inventory (ROI)
EMPHASIS ON RETURN ON INVENTORY (ROI) Homebuilding ROI target ‐ Minimum of 20% 40% 35% 37.9% 30% 25% 24.6% 20% 20.2% 15% 18.1% 10% 5% 0% FY 2018 FY 2019 FY 2020 FY 2021 Homebuilding ROI is calculated as homebuilding pre‐tax income for the year divided by average homebuilding inventory. Average homeb
Slide 12: Book Value Per Share
BOOK VALUE PER SHARE Consistent annual double‐digit percentage growth in book value per share $45.00 $40.00 $41.81 $35.00 $30.00 $32.53 $25.00 $27.20 $23.88 $20.00 $15.00 $10.00 $5.00 $0.00 9/30/2018 9/30/2019 9/30/2020 9/30/2021 12
Slide 13: Cash Flow at Work
CASH FLOW AT WORK Utilization of nearly $6 billion of cash generated by homebuilding operations Investments CF from HB Operations $2,000 $2,000 $1,889 $1,800 $1,800 5 Year Cumulative Capital* $1,453 $1,600 $1,600 Cash Flow from $5.9B $1,400 $1,240 $1,400 Homebuilding Operations $1,200 $1,200 $1,002
Slide 14: Capital and Cash Flow Priorities
CAPITAL AND CASH FLOW PRIORITIES • Balanced, disciplined, flexible and opportunistic; focused on enhancing long‐term value • Strong balance sheet, liquidity and low leverage provide significant financial flexibility • Invest in homebuilding business, including acquisitions • Grow our multi‐family an
Slide 15: Homebuilding Operational Focus
HOMEBUILDING OPERATIONAL FOCUS • Maximize returns by managing inventories, sales pace and pricing in each community, while providing value to homebuyers • Consolidate market share while generating strong profits and operating cash flow • Maintain sufficient inventories of land, lots and homes to sup
Slide 16: Forestar ("FOR")
FORESTAR (“FOR”) • DHI owns 63% of FOR, a publicly traded residential lot manufacturer with operations in 56 markets and 23 states • Supports DHI’s strategy of increasing land and lots controlled through purchase contracts • FOR delivered 15,915 lots and generated $1,325.8 million of revenue during
Slide 17: Rental Operations
RENTAL OPERATIONS • The Company’s rental operations develop, construct and lease multi‐family and single‐family residential properties and then sell the properties to real estate investors • The Company’s rental operations generated pre‐tax income of $74.3 million in Q4 and $86.5 million in FY21 • R
Slide 18: Expectations
EXPECTATIONS Q1 FY 2022 • Consolidated revenues in a range of $6.5 billion to $6.8 billion • Homes closed between 17,500 homes and 18,500 homes • Home sales gross margin in a range of 26.8% to 27.0% • Homebuilding SG&A of approximately 8% of homebuilding revenues • Financial services pre‐tax profit
Slide 19: Fourth Quarter Data
Fourth Quarter Data
Slide 20: Q4 FY 2021 Highlights
Q4 FY 2021 HIGHLIGHTS • Net income per diluted share increased 65% to $3.70 • Net income attributable to D.R. Horton increased 62% to $1.3 billion • Consolidated revenues increased 27% to $8.1 billion • Consolidated pre‐tax income increased 63% to $1.7 billion • Consolidated pre‐tax profit margin im
Slide 21: Sales and Closings
SALES AND CLOSINGS The value of Net Sales Orders and Homes Closed decreased 17% and increased 24%, respectively, in Q4 FY 2021 compared to Q4 FY 2020 Intentionally restricted home sales pace in Q4 FY21 to better align to current production levels Net Sales Orders Closings # of Homes Value $7,298.4 $
Slide 22: Income Statement
INCOME STATEMENT $ in millions except per share data 22
Slide 23: Home Sales Gross Margin
HOME SALES GROSS MARGIN 28% 26% 26.9% 24% 25.9% 25.5% 24.1% 24.6% 22% 20% 21.8% 18% 20.2% 16% 14% 12% 10% 8% 6% 4% 2% 0% FY 2019 FY 2020 1Q21 2Q21 3Q21 4Q21 FY 2021 Shown as a % of the Company’s homebuilding segment’s home sales revenues Includes interest amortized to cost of sales Refer to slide 4
Slide 24: Homebuilding SG&A
HOMEBUILDING SG&A SG&A as a percentage of homebuilding revenues improved 80 basis points to 7.3% for fiscal year 2021 HB Rev $ Fiscal Year SG&A % HB Rev $ Fourth Fiscal Quarter SG&A % $28,000 12% $14,000 12% $24,000 11% $12,000 11% $20,000 $10,000 10% 10% $16,000 $8,000 9% 9% $12,000 $6,000 8% 8% $8
Slide 25: Consolidated Pre-Tax Income
CONSOLIDATED PRE-TAX INCOME Consolidated pre‐tax profit margin improved 460 basis points to 19.3% for fiscal year 2021 Fiscal Year Fourth Fiscal Quarter PTI $ PTI $ $5,500 19.3% $1,800 21.3% $5,000 $5,356.3 $1,600 $1,726.6 $4,500 $1,400 $4,000 $3,500 $1,200 16.5% 14.7% $3,000 $1,000 $1,056.1 $2,500
Slide 26: Balance Sheet
BALANCE SHEET $ in millions except per share metrics Homebuilding cash and cash equivalents presented above includes $8.4 million and $9.4 million of restricted cash for the periods ended 9/30/21 and 9/30/20, respectively. 26
Slide 27: Homes in Inventory
HOMES IN INVENTORY Increased housing inventory in response to strength in demand 50,000 47,800 45,000 40,000 38,000 35,000 30,000 27,900 27,700 25,000 20,000 15,000 10,000 5,000 0 9/30/18 9/30/19 9/30/20 9/30/21 Sold Specs Homes in inventory excluding model homes 27
Slide 28: Homebuilding Land and Lot Position
HOMEBUILDING LAND AND LOT POSITION Controlled portion of land and lot pipeline increased 52% from a year ago 24% owned / 76% controlled at 9/30/21 550,000 530,300 500,000 450,000 400,000 376,900 350,000 307,300 402,500 288,500 300,000 250,000 264,300 164,200 185,900 200,000 150,000 100,000 50,000 12
Slide 29: Appendix
Appendix
Slide 30: Geographic Diversification
GEOGRAPHIC DIVERSIFICATION 9% 9% 98 Markets 31 States 27% Homebuilding 15% Northwest Colorado, Oregon, Utah and Washington Revenue 23% 17% Southwest Arizona, California, Hawaii, Nevada and New Mexico South Central Oklahoma and Texas Southeast South Central East Southwest Northwest North Southeast 10
Slide 31: Family of Brands
FAMILY OF BRANDS Homes Sales Average Selling Number of Number of Homes Sold Homes Closed Revenue Markets Price States 66% 65% 68% $339k 98 31 30% 31% 27% $282k 64 20 3% 3% 3% $322k 22 10 1% 1% 2% $556k 17 6 As of or for the fiscal year ended September 30, 2021 31
Slide 32: Homebuilding Public Debt Maturities by Year
HOMEBUILDING PUBLIC DEBT MATURITIES BY YEAR $350 million of senior note maturities in next 12 months $800 $700 $700 $600 $600 $500 $500 $500 $500 5.750% $400 $350 $300 $200 4.375% 4.750% 2.500% 2.600% 1.300% 1.400% $100 $0 FY 22 FY 23 FY 24 FY 25 FY 26 FY 27 FY 28 $ in millions 32