D.r. Horton, Inc. · NYSE:DHI
D.r. Horton — Q4 2020 Earnings Presentation
30 slides from D.r. Horton's earnings presentation, November 2020
Slide 1: Investor Presentation Q4 2020
Investor Presentation Q4 2020
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 the impact of an inflationary, deflationary or higher interest rate environment; Private Securities Litigation Reform Act of 1995. Although D.R. Horton believes home warranty and construction defe
Slide 4: D.R. Horton, Inc.
D.R. HORTON, INC. Traded on NYSE as DHI $20.3 billion $3.0 billion 24.6% & 22.1% Consolidated revenues Consolidated pre‐tax income ROI (HB) & ROE, respectively* $11.8 billion $32.53 17.5% Stockholders’ equity Book value per common share Homebuilding leverage* As of or for the fiscal year ended Septe
Slide 5: FY 2020 Highlights
FY 2020 HIGHLIGHTS • Net income attributable to D.R. Horton increased 47% to $2.4 billion or $6.41 per diluted share • Consolidated revenues increased 15% to $20.3 billion • Return on equity was 22.1% and homebuilding return on inventory was 24.6% • Consolidated pre‐tax income increased 40% to $3.0
Slide 6: DHI Growth, Consolidation and Market Share
DHI GROWTH, CONSOLIDATION AND MARKET SHARE 1,400 65,388 Homes Closed during fiscal year ended 9/30/2020 10% 2019 Closings: 58,434 9% 1,200 8% 1,000 7% 2006 Closings: 6% 800 53,410 2011 Closings: 5% 17,176 600 4% 400 3% 2% 1992 Closings: 200 1,231 1% 0 0% 1992 1993 1994 1995 1996 1997 1998 1999 2000
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% 40 12% 36 30 10% 8% 20 6% 4% 10 11 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 ~27 years Division Presidents ~15 years City Managers >10 years Average employee tenure 8
Slide 9: Homebuilding Operational Focus
HOMEBUILDING OPERATIONAL FOCUS • Maximize returns by managing inventories, sales pace and pricing in each community, while maintaining affordability for homebuyers • Consolidate market share while generating strong profits and operating cash flow • Maintain sufficient inventories of land, lots and h
Slide 10: Capital and Cash Flow Priorities
CAPITAL AND CASH FLOW PRIORITIES • Balanced, disciplined, flexible and opportunistic; focused on enhancing long‐term value • Strong balance sheet, ample liquidity and low leverage provide significant financial flexibility to effectively operate through changing economic conditions • Invest in homebu
Slide 11: Geographic Diversification
GEOGRAPHIC DIVERSIFICATION 9% 6% 88 Markets 29 States 27% 12% East Inventory Delaware, Maryland, New Jersey, North and South Carolina, 19% Pennsylvania, Virginia 27% Midwest Colorado, Illinois, Indiana, Iowa, Minnesota, Ohio South Central Louisiana, Oklahoma, Texas Southeast South Central West East
Slide 12: Diverse Product Offerings and Price Points
DIVERSE PRODUCT OFFERINGS AND PRICE POINTS Homes for entry‐level, move‐up, active adult and luxury buyers 66% of homes closed <$300k 7% 31% 28% 29% 5% $0 - $200k $200k - $250k $250k - $300k $300k - $500k >$500k Represents price points of homes closed for the fiscal year ended 9/30/20 12
Slide 13: Family of Brands
FAMILY OF BRANDS Homes Sales Average Selling Number of Number of Homes Sold Homes Closed Revenue Markets Price States 64% 63% 66% $316k 88 29 32% 32% 28% $254k 61 19 3% 3% 3% $295k 27 13 1% 2% 3% $539k 22 10 As of or for the fiscal year ended September 30, 2020 13
Slide 14: Forestar (FOR)
FORESTAR (“FOR”) • DHI owns 65% of FOR, a publicly traded residential lot manufacturer with operations in 49 markets and 21 states • Supports DHI’s strategy of increasing land and lots controlled through purchase contracts • FOR delivered 10,373 lots and generated $931.8 million of revenue in FY20 •
Slide 15: Emphasis on Return on Inventory (ROI)
EMPHASIS ON RETURN ON INVENTORY (ROI) Homebuilding ROI target of >20% 25% 24.6% 20% 20.2% 18.1% 15% 16.6% 10% 5% 0% FY 2017 FY 2018 FY 2019 FY 2020 Homebuilding ROI is calculated as homebuilding pre‐tax income for the year divided by average homebuilding inventory. Average homebuilding inventory in
Slide 16: Return on Equity (ROE)
RETURN ON EQUITY (ROE) ROE has improved to greater than 20%, while leverage has decreased to below 20% HB leverage ROE 20% 22.1% 40% 17.6% 17.2% 15% 30% 14.4% 10% 20% 5% 10% 0% 0% FY 2017 FY 2018 FY 2019 FY 2020 ROE Leverage ROE is calculated as net income divided by average stockholders’ equity. Av
Slide 17: Book Value Per Share
BOOK VALUE PER SHARE Consistent annual double‐digit percentage growth in book value per share $30.00 $32.53 $25.00 $27.20 $23.88 $20.00 $20.66 $15.00 $10.00 $5.00 $0.00 9/30/2017 9/30/2018 9/30/2019 9/30/2020 17
Slide 18: Cash Flow at Work
CASH FLOW AT WORK Utilization of greater than $5 billion of cash generated by homebuilding operations Investments CF from HB Operations $2,000 $2,000 $1,904 $1,800 $1,800 5 Year Cumulative Capital $1,600 $1,438 $1,600 Cash Flow from $5.2B $1,400 $1,400 Homebuilding Operations $1,200 $1,200 $1,002 Ho
Slide 19: Expectations
EXPECTATIONS* • Q1 FY 2021 • Consolidated revenues in a range of $5.4 billion to $5.6 billion • Homes closed between 17,500 homes and 18,000 homes • Homes sales gross margin around 23.0% • Homebuilding SG&A of approximately 8.9% of homebuilding revenues • Financial services pre‐tax profit margin of
Slide 20: Fourth Quarter Data
Fourth Quarter Data
Slide 21: Q4 FY 2020 Highlights
Q4 FY 2020 HIGHLIGHTS • Net income per diluted share increased 66% to $2.24 • Net income attributable to D.R. Horton increased 64% to $829 million • Consolidated revenues increased 27% to $6.4 billion • Consolidated pre‐tax income increased 60% to $1.1 billion • Consolidated pre‐tax profit margin im
Slide 22: Sales and Closings
SALES AND CLOSINGS Net Sales Orders and Homes Closed increased 81% and 26%, respectively, in Q4 FY 2020 compared to Q4 FY 2019 # of Homes 25,000 20,000 15,000 10,000 5,000 0 Sales Closings 4Q FY18 4Q FY19 4Q FY20 22
Slide 23: Income Statement
INCOME STATEMENT 3 MONTHS ENDED 12 MONTHS ENDED 9/30/2020 9/30/2019 9/30/2020 9/30/2019 Homes closed 20,248 16,024 65,388 56,975 Homebuilding Revenues: Home sales $ 6,126.6 $ 4,799.2 $ 19,560.8 $ 16,925.0 Land/lot sales 33.4 42.8 83.1 91.9 6,160.0 4,842.0 19,643.9 17,016.9 Gross profit: Home sales 1
Slide 24: Home Sales Gross Margin
HOME SALES GROSS MARGIN 22% 22.7% 20% 21.3% 21.3% 21.6% 21.8% 21.0% 20.2% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% FY 2018 FY 2019 1Q20 2Q20 3Q20 4Q20 FY 2020 Shown as a % of the Company’s homebuilding segment’s home sales revenues Includes interest amortized to cost of sales Refer to slide 4 of the Compa
Slide 25: Homebuilding SG&A
HOMEBUILDING SG&A SG&A as a percentage of homebuilding revenues improved 50 basis points to 8.2% for fiscal year 2020 HB Rev $ Fiscal Year SG&A % HB Rev $ Fourth Fiscal Quarter SG&A % $20,000 12% $14,000 12% $17,500 $12,000 11% 11% $15,000 $10,000 $12,500 10% 10% $8,000 $10,000 9% $6,000 9% $7,500 8
Slide 26: Consolidated Pre-Tax Income
CONSOLIDATED PRE-TAX INCOME Consolidated pre‐tax profit margin improved 260 basis points to 14.7% for fiscal year 2020 Fiscal Year Fourth Fiscal Quarter PTI $ PTI $ $3,000 14.7% $1,600 $2,983.0 $1,400 $2,500 12.1% $1,200 16.5% $2,000 $2,125.3 $1,000 $1,056.1 $1,500 $800 13.1% $600 $660.1 $1,000 $400
Slide 27: Balance Sheet
BALANCE SHEET 9/30/2020 9/30/2019 Homebuilding Cash and cash equivalents $ 2,560.6 $ 1,051.0 Inventories: Construction in progress and finished homes 6,037.5 5,249.0 Land inventories 4,977.5 5,036.6 11,015.0 10,285.6 Other assets 1,503.5 1,232.9 Deferred income taxes, net 144.9 163.1 Financial servi
Slide 28: Homes in Inventory
HOMES IN INVENTORY Well‐positioned to respond to increased new home demand 40,000 38,000 35,000 30,000 27,900 27,700 24,600 25,000 20,000 15,000 10,000 5,000 0 9/30/17 9/30/18 9/30/19 9/30/20 Sold Specs Homes in inventory excluding model homes 28
Slide 29: Homebuilding Land and Lot Position
HOMEBUILDING LAND AND LOT POSITION Controlled lot position increased 42% from a year ago 30% owned / 70% controlled at 9/30/20 400,000 376,900 350,000 307,300 300,000 288,500 249,000 250,000 264,300* 164,200* 185,900* 200,000 124,000 150,000 100,000 125,000 124,300 121,400 112,600 50,000 0 9/30/17 9
Slide 30: Homebuilding Public Debt Maturities by Year
HOMEBUILDING PUBLIC DEBT MATURITIES BY YEAR $400 million of senior note maturities in next 12 months $800 $700 $700 $600 $500 $500 $500 5.750% $400 $400 $350 $300 $200 2.550% 4.375% 4.750% 2.500% 2.600% $100 $0 FY 21 FY 22 FY 23 FY 24 FY 25 FY 26 $ in millions 30