D.r. Horton, Inc. · NYSE:DHI
D.r. Horton — Q2 2019 Earnings Presentation
29 slides from D.r. Horton's earnings presentation, April 2019
Slide 1: Investor Presentation Q2 2019
I N V E S T O R P R E S E N T A T I O N Q2 2019
Slide 2: #1 by volume for calendar years 2002 to 2018
#1 by volume for calendar years 2002 to 2018
Slide 3: Forward-Looking Statements
F O R W A R D - L O O K I N G S TAT E M E N T S 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 outc
Slide 4: D.R. Horton, Inc. traded on NYSE as DHI
D.R. HORTON, INC . TRADED ON NYSE AS DHI 53,768 $16.6 billion $2.1 billion Annual homes closed Annual consolidated revenues Annual pre‐tax income 18.6% $9.4 billion $25.09 Homebuilding return on inventory* Stockholders’ equity Book value per common share As of or for the twelve‐month period ended Ma
Slide 5: Geographic Diversification Markets | 29 States
G E O G R A P H I C D I V E R S I F I C AT I O N 8 4 M A R K E T S | 2 9 S TAT E S HB Revenue Inventory 5% 6% 6% 8% 29% 26% 13% 12% 23% 23% 25% 24% EAST MIDWEST SOUTHEAST SOUTH CENTRAL SOUTHWEST WEST Delaware, Maryland, Colorado, Illinois, Alabama, Florida, Louisiana Arizona California, Hawaii, New
Slide 6: Diverse Product Offerings and Price Points
DIVERSE PRODUCT OFFERINGS AND PRICE POINTS Homes for entry‐level, move‐up, active adult and luxury buyers 68% of homes closed <$300k 6% 13% $0 $500k 26% $200k $300k 33% $250k 22% Represents homes closed for the twelve months ended 3/31/19 6
Slide 7: Family of Brands
FA M I LY O F B R A N D S FIRST TIME / MOVE UP ENTRY LEVEL LUXURY ACTIVE ADULT 84 markets | 29 states 60 markets | 20 states 34 markets | 14 states 29 markets | 15 states ASP $311k ASP $242k ASP $633k ASP $284k 2% 3% 3% 3% 6% 3% 35% Homes Homes Home Sales 35% 29% Sold Closed Revenue 59% 62% 60% Base
Slide 8: Management Tenure and Experience
MANAGEMENT TENURE AND EXPERIENCE Executive Team & Division Presidents City Managers Region Presidents ~15 years over 10 years 25 years Average employee tenure 8
Slide 9: 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% 14% 40 43 12% 30 34 10% 29 8% 20 6% 4% 10 14 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 10: Homebuilding Operational Focus
H O M E B U I L D I N G O P E R AT I O N A L F O C U S • Maximize returns by managing inventories, sales pace and pricing in each community • Consolidate market share while generating strong profits and operating cash flow • Maintain sufficient inventories of land, lots and homes to support growth p
Slide 11: Emphasis on Return on Inventory (ROI)
EMPHASIS ON RETURN ON INVENTORY (ROI) Homebuilding ROI increased 100 basis points compared to the year ago period 20% 20.2% 18.6% 17.6% 15% 16.6% 15.4% 10% 5% 0% FY 2016 FY 2017 TTM 3/31/18 FY 2018 TTM 3/31/19 Homebuilding ROI is calculated as homebuilding pre‐tax income for the year divided by aver
Slide 12: Return on Equity (ROE)
RETURN ON EQUITY (ROE) ROE increased 280 basis points while leverage decreased ROE compared to the year ago period HB leverage 20% 40% 17.6% 17.6% 15% 30% 14.8% 14.4% 14.1% 10% 20% 5% 10% 0% 0% FY 2016 FY 2017 TTM 3/31/18 FY 2018 TTM 3/31/19 ROE Leverage ROE is calculated as net income divided by av
Slide 13: Book Value per Share
B O O K VA LU E P E R S H A R E Consistent annual double‐digit percentage growth in book value per share $25.00 $25.09 $23.88 $20.00 $21.72 $20.66 $18.21 $15.00 $10.00 $5.00 $0.00 9/30/2016 9/30/2017 3/31/2018 9/30/2018 3/31/2019 13
Slide 14: Capital and Cash Flow Priorities
C A P I TA L A N D C A S H F L O W P R I O R I T I E S • Balanced, disciplined, flexible and opportunistic • Focused on enhancing long‐term value of DHI • Invest in homebuilding opportunities, including acquisitions, to increase returns and market share • Closed 3 acquisitions for approximately $326
Slide 15: Forestar (FOR)
F O R E S TA R ( “ F O R ” ) • FOR, a majority‐owned subsidiary of DHI (as of 10/5/17), is a publicly traded residential lot development company, with operations in 41 markets and 17 states as of March 31, 2019 • The strategic relationship between DHI and FOR will grow FOR into a large, national res
Slide 16: Forestar Timeline
F O R E S TA R T I M E L I N E Own and control 31,400 lots at Expect to invest Expect to own a 3 During the TTM ended 9/30/18: 3/31/19, with 21,700 under > $800M in land to 4‐year supply of • Invested $476M in land acquisition and development contract with or subject to acquisition and land and lots
Slide 17: Company Outlook
C O M PA N Y O U T L O O K * • Affordability concerns have caused some moderation of demand for homes since late 2018, particularly at higher price points • Continue to see good demand and a limited supply of homes at affordable prices across our markets this spring • Economic fundamentals and finan
Slide 18: Expectations
F Y 2 0 1 9 E X P E C TAT I O N S * • Q3 FY 2019 • Consolidated revenues between $4.4 billion and $4.6 billion • Homes closed in the range of 14,500 homes to 15,000 homes • Home sales gross margin in the range of 19.3% to 19.8% • Homebuilding SG&A percentage of 8.2% to 8.3% • FY 2019 • Consolidated
Slide 19: Second Quarter Data
SECOND QUARTER DATA DRHORTON i9 America's Buitder
Slide 20: Q2 FY 2019 Highlights
Q2 FY 2019 HIGHLIGHTS • Net income attributable to D.R. Horton of $351.3 million • Net income per diluted share of $0.93 • Consolidated pre‐tax income increased 4% to $462.8 million • Consolidated pre‐tax profit margin of 11.2% • Net homes sold and homes closed increased by 6% and 10%, respectively
Slide 21: Sales and Closings
SALES AND CLOSINGS Net Sales Orders and Homes Closed increased 6% and 10%, respectively, in Q2 FY 2019 compared to Q2 FY 2018 # of Homes 17,500 15,000 12,500 10,000 7,500 5,000 2,500 0 Sales Closings 2Q FY 2017 2Q FY 2018 2Q FY 2019 21
Slide 22: Income Statement
I N C O M E S TAT E M E N T 3 MONTHS ENDED 6 MONTHS ENDED YEAR ENDED 3/31/2019 3/31/2018 3/31/2019 3/31/2018 9/30/2018 Homes closed 13,480 12,281 24,980 23,069 51,857 Homebuilding Revenues: Home sales $ 3,980.5 $ 3,672.1 $ 7,391.2 $ 6,856.6 $ 15,502.0 Land/lot sales 14.9 13.6 21.7 50.0 121.8 3,995.4
Slide 23: Home Sales Gross Margin
HOME SALES GROSS MARGIN 22% 20% 20.8% 21.3% 20.2% 20.0% 18% 19.3% 16% 14% 12% 10% 8% 6% 4% 2% 0% FY 2016 FY 2017 Q2 FY18 FY 2018 Q2 FY19 Shown as a % of the Company’s homebuilding segment’s home sales revenues Includes interest amortized to cost of sales 23 Refer to slide 3 of the Company’s Q2 FY19
Slide 24: Homebuilding SG&A
HOMEBUILDING SG&A SG&A as a percentage of homebuilding revenues of 9.0% in Q2 FY 2019 Fiscal YTD 3/31 Second Fiscal Quarter HB Rev $ SG&A % HB Rev $ SG&A % $16,000 12% $14,000 12% $14,000 $12,000 11% 11% $12,000 $10,000 $10,000 10% 10% $8,000 $8,000 9% $6,000 9% $6,000 9.2% 9.1% $4,000 $4,000 9.0% 8
Slide 25: Consolidated Pre-Tax Income
C O N S O L I DAT E D P R E - TA X I N C O M E Consolidated pre‐tax profit margin of 11.2% in Q2 FY 2019 Fiscal YTD 3/31 Second Fiscal Quarter PTI $ PTI $ $1,600 $1,600 $1,400 $1,400 $1,200 $1,200 $1,000 11.7% 11.0% $1,000 $800 $800 $836.1 $838.5 $600 $600 11.2% 11.7% $400 $400 $444.8 $462.8 $200 $2
Slide 26: Balance Sheet
BALANCE SHEET 3/31/2019 9/30/2018 3/31/2018 Homebuilding Cash and cash equivalents $ 566.7 $ 1,120.4 $ 538.3 Inventories: Construction in progress and finished homes 6,086.1 5,084.4 5,119.6 Land inventories 4,990.7 4,790.7 4,720.0 11,076.8 9,875.1 9,839.6 Other assets 1,087.3 960.8 828.4 Deferred in
Slide 27: Homes in Inventory
HOMES IN INVENTORY Well‐positioned to achieve fiscal 2019 closings guidance 35,000 32,100 30,000 27,700 27,900 25,000 24,600 21,500 20,000 15,000 10,000 5,000 0 9/30/16 9/30/17 3/31/18 9/30/18 3/31/19 Sold Specs Homes in inventory excluding model homes 27
Slide 28: Homebuilding Land and Lot Position
HOMEBUILDING LAND AND LOT POSITION Controlled lot position increased 46% from a year ago 38% owned / 62% controlled at 3/31/19 350,000 316,400 300,000 288,500 257,700 249,000 250,000 204,500 195,500* 200,000 164,200 124,000 133,500 91,600 150,000 100,000 112,900 125,000 124,200 124,300 120,900 50,00
Slide 29: Homebuilding Public Debt Maturities by Year
H O M E B U I L D I N G P U B L I C D E B T M AT U R I T I E S B Y Y E A R $800 $700 $700 $600 $500 5.750% $500 $400 $400 $350 $300 $200 $100 4.000% 2.550% 2.550% 4.375% 4.750% $0 FY 20 FY 21 FY 22 FY 23 $ in millions 29