D.R. Horton, Inc. · NYSE:DHI
D.R. Horton — Q2 2020 Earnings Presentation
30 slides from D.R. Horton's earnings presentation, 2020
Slide 1: Investor Presentation Q2 2020
I N V E S T O R P R E S E N T A T I O N Q2 2020
Slide 2: America's #1 Homebuilder Since 2002
AMERICA’S #1 HOMEBUILDER SINCE 2002 ORTON | 0.8. norton. express - EMERALD - FREEDOM
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: COVID-19 Pandemic ("C-19")
COVID-19 PANDEMIC (“C-19”) • Economic fundamentals remained solid in the housing market throughout most of Q2 FY20; however, during the latter part of March and into April, the impacts of C-19 and the related widespread reductions in economic activity began to negatively affect the Company’s busines
Slide 5: D.R. Horton, Inc. Traded on NYSE as DHI
D.R. HORTON, INC. TRADED ON NYSE AS DHI $18.5 billion $2.4 billion 20.2% & 19.1% Consolidated revenues Consolidated pre-tax income ROI (HB) & ROE, respectively* $10.5 billion $28.77 19.2% Stockholders’ equity Book value per common share Homebuilding leverage* As of or for the twelve-month period end
Slide 6: DHI Growth, Consolidation and Market Share
DHI GROWTH, CONSOLIDATION AND MARKET SHARE 1,400 59,493 Homes Closed during TTM ended 3/31/2020 10% 2019 Closings: 58,434 9% 1,200 8% 1,000 7% 2006 Closings: 6% 800 53,410 2011 Closings: 17,176 5% 600 4% 400 3% 2% 200 1992 Closings: 1% 1,231 0 0% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 200
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 43 14% 38 12% 30 10% 31 8% 20 6% 4% 10 13 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: Sales and Closings – Q2 and Month of March
SALES AND CLOSINGS – Q2 AND MONTH OF MARCH Net Sales Orders and Homes Closed increased 20% and 8%, respectively, in Q2 FY 2020 compared to Q2 FY 2019 # of Homes # of Homes 10,000 20,000 17,500 7,500 15,000 12,500 10,000 5,000 7,500 5,000 2,500 2,500 0 0 Sales Closings Sales Closings 2Q FY 2019 2Q FY
Slide 9: 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 9
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 withstand difficult economic conditions • Invest in homebuilding business •
Slide 11: Homebuilding Operational Focus
HOMEBUILDING OPERATIONAL FOCUS • The Company’s strategy remains consistent, while making operational adjustments and limiting capital investments as a result of C-19 • Maximize returns by managing inventories, sales pace and pricing in each community • Consolidate market share while generating stron
Slide 12: Geographic Diversification
GEOGRAPHIC DIVERSIFICATION 89 MARKETS | 29 STATES 6% 8% 28% EAST 12% Delaware, Maryland, MIDWEST Inventory New Jersey, North Colorado, Illinois, and South Carolina, Indiana, Iowa, 20% Pennsylvania, Minnesota, Ohio 26% Virginia SOUTH CENTRAL SOUTHEAST Louisiana Alabama, Florida, Oklahoma Georgia, Mis
Slide 13: Diverse Product Offerings and Price Points
DIVERSE PRODUCT OFFERINGS AND PRICE POINTS Homes for entry-level, move-up, active adult and luxury buyers 67% of homes closed <$300k $0 - $200k $200k - $250k $250k - $300k $300k - $500k >$500k 8% 33% 26% 28% 5% Represents homes closed & price points for the twelve months ended 3/31/20 13
Slide 14: Family of Brands
FAMILY OF BRANDS Homes Homes Home Average # of # of Sold Closed Sales Selling Markets States Revenue Price 62% 61% 65% $317k 89 29 33% 34% 28% $248k 59 19 3% 3% 3% $287k 27 13 2% 2% 4% $563k 25 14 As of or for the twelve months ended March 31, 2020 14
Slide 15: Forestar ("FOR")
FORESTAR (“FOR”) • FOR is a publicly traded residential lot manufacturer with operations in 50 markets and 21 states • Supporting DHI’s strategy of increasing land and lots controlled through purchase contracts • Delivered 4,373 lots and generated $406.4 million of revenue FYTD • FOR has raised capi
Slide 16: Emphasis on Return on Inventory (ROI)
EMPHASIS ON RETURN ON INVENTORY (ROI) Homebuilding ROI target of 20% 20% 20.2% 20.2% 18.6% 18.1% 15% 16.6% 10% 5% 0% FY 2017 FY 2018 TTM 3/31/19 FY 2019 TTM 3/31/20 Homebuilding ROI is calculated as homebuilding pre‐tax income for the year divided by average homebuilding inventory. Average homebuild
Slide 17: Return on Equity (ROE)
RETURN ON EQUITY (ROE) ROE ROE has improved to the high-teens while leverage has decreased HB leverage 20% 40% 19.1% 17.6% 17.6% 17.2% 15% 30% 14.4% 10% 20% 5% 10% 0% 0% FY 2017 FY 2018 TTM 3/31/19 FY 2019 TTM 3/31/20 ROE Leverage ROE is calculated as net income divided by average stockholders’ equi
Slide 18: Book Value Per Share
BOOK VALUE PER SHARE Consistent annual double-digit percentage growth in book value per share $30.00 $28.77 $27.20 $25.00 $25.09 $23.88 $20.00 $20.66 $15.00 $10.00 $5.00 $0.00 9/30/2017 9/30/2018 3/31/2019 9/30/2019 3/31/2020 18
Slide 19: Cash Flow at Work
CASH FLOW AT WORK Utilization of $4 billion of cash generated by homebuilding operations 1,800 1,600 $1,438 5 Year Cumulative Capital 1,400 Cash Flow from $4.0B Homebuilding Operations 1,200 $1,002 1,000 Acquisitions $1.0B 800 $581 $600 Homebuilding Senior $1.4B 600 $304 Notes Paydown 400 Shareholde
Slide 20: Outlook
OUTLOOK* • Due to the uncertainty in the U.S. economy and the Company’s business operations resulting from C-19, the Company has withdrawn its previously issued guidance for fiscal 2020 • The Company expects to provide new annual guidance when it has clearer visibility into the business • The extent
Slide 21: Second Quarter Data
SECOND QUARTER DATA D.R. HORTON - EXPRESS - EMERALD - FREEDOM
Slide 22: Q2 FY 2020 Highlights
Q2 FY 2020 HIGHLIGHTS • Net income per diluted share increased 40% to $1.30 • Net income attributable to D.R. Horton increased 37% to $482.7 million • Consolidated revenues increased 9% to $4.5 billion • Consolidated pre-tax income increased 34% to $621.3 million • Consolidated pre-tax profit margin
Slide 23: Income Statement
INCOME STATEMENT 3 MONTHS ENDED 6 MONTHS ENDED YEAR ENDED 3/31/2020 3/31/2019 3/31/2020 3/31/2019 9/30/2019 Homes closed 14,539 13,480 27,498 24,980 56,975 Homebuilding Revenues: Home sales $ 4,363.3 $ 3,980.5 $ 8,226.6 $ 7,391.2 $ 16,925.0 Land/lot sales 15.5 14.9 35.2 21.7 91.9 4,378.8 3,995.4 8,2
Slide 24: Home Sales Gross Margin
HOME SALES GROSS MARGIN 22% 20% 21.3% 21.0% 21.0% 21.3% 20.0% 20.0% 20.3% 20.2% 18% 19.3% 16% 14% 12% 10% 8% 6% 4% 2% 0% FY 2017 FY 2018 1Q19 2Q19 3Q19 4Q19 FY 2019 1Q20 2Q20 Shown as a % of the Company’s homebuilding segment’s home sales revenues Includes interest amortized to cost of sales Refer t
Slide 25: Homebuilding SG&A
HOMEBUILDING SG&A SG&A as a percentage of homebuilding revenues improved 70 basis points to 8.3% in Q2 FY 2020 Fiscal YTD 3/31 Second Fiscal Quarter HB Rev $ SG&A % HB Rev $ SG&A % $14,000 12% $14,000 12% $12,000 $12,000 11% 11% $10,000 $10,000 $8,000 10% $8,000 10% $6,000 9% $6,000 9% 9.2% $4,000 8
Slide 26: Consolidated Pre-Tax Income
CONSOLIDATED PRE-TAX INCOME Consolidated pre-tax profit margin improved 260 basis points to 13.8% in Q2 FY 2020 Second Fiscal Quarter Fiscal YTD 3/31 PTI $ PTI $ $2,250 $1,600 $2,000 $1,400 $1,750 $1,200 $1,500 $1,000 $1,250 13.4% 11.0% $800 $1,000 $1,144.5 13.8% $600 11.2% $750 $838.5 $621.3 $500 $
Slide 27: Balance Sheet
BALANCE SHEET 3/31/2020 9/30/2019 3/31/2019 Homebuilding Cash and cash equivalents $ 1,020.4 $ 1,051.0 $ 566.7 Construction in progress and finished homes 6,003.8 5,249.0 6,086.1 Land inventories 5,084.6 5,036.6 4,990.7 11,088.4 10,285.6 11,076.8 Other assets 1,353.0 1,232.9 1,087.3 Deferred income
Slide 28: Homes in Inventory
HOMES IN INVENTORY Well-positioned to deliver homes both during and after the pandemic 35,000 33,400 32,100 30,000 27,900 27,700 25,000 24,600 20,000 15,000 10,000 5,000 0 9/30/17 9/30/18 3/31/19 9/30/19 3/31/20 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 8% from a year ago 350,000 36% owned / 64% controlled at 3/31/20 329,300 316,400 307,300 300,000 288,500 249,000 250,000 195,500* 210,600* 164,200* 185,900* 200,000 124,000 150,000 100,000 125,000 124,300 120,900 121,400 118,700 50
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 5.750% $400 $400 $350 $300 $200 2.550% 4.375% 4.750% 2.500% $100 $0 FY 21 FY 22 FY 23 FY 24 FY 25 $ in millions 30