D.R. Horton, Inc. · NYSE:DHI
D.R. Horton — Q1 FY2019 Earnings Presentation
30 slides from D.R. Horton's earnings presentation, 2019
Slide 1: Investor Presentation Q1 2019
I N V E S T O R P R E S E N T A T I O N Q1 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 52,569 $16.3 billion $2.0 billion Annual homes closed Annual consolidated revenues Annual pre‐tax income 19.3% $9.1 billion $24.45 Homebuilding return on inventory* Stockholders’ equity Book value per common share As of or for the twelve‐month period ended De
Slide 5: Geographic Diversification: 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% 5% 6% 8% 29% 27% 12% 12% 24% 24% 24% 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 67% of homes closed <$300k 6% 13% $0 $500k 27% $200k $300k 32% $250k 22% Represents homes closed for the twelve months ended 12/31/18 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 61 markets | 21 states 34 markets | 14 states 29 markets | 16 states ASP $315k ASP $241k ASP $635k ASP $280k 3% 3% 3% 3% 6% 3% 35% Homes Homes Home Sales 36% 29% Sold Closed Revenue 58% 62% 59% Base
Slide 8: Management Tenure and Experience
MANAGEMENT TENURE AND EXPERIENCE Executive Team & Region Presidents 25 years Division Presidents 14 years City Managers over 10 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 41 12% 30 32 10% 27 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 • Generate strong profits and cash flow from operations • Maintain sufficient inventories of land, lots and homes to support annual growth in revenues and profi
Slide 11: Emphasis on Return on Inventory (ROI)
EMPHASIS ON RETURN ON INVENTORY (ROI) Homebuilding ROI increased 230 basis points compared to the prior twelve month period 20% 20.2% 19.3% 16.6% 17.0% 15% 15.4% 10% 5% 0% FY 2016 FY 2017 TTM 12/31/17 FY 2018 TTM 12/31/18 Homebuilding ROI is calculated as homebuilding pre‐tax income for the year div
Slide 12: Return on Equity (ROE)
RETURN ON EQUITY (ROE) ROE Increasing ROE while reducing homebuilding leverage HB leverage 20% 40% 18.2% 17.6% 15% 30% 14.4% 13.7% 14.1% 10% 20% 5% 10% 0% 0% FY 2016 FY 2017 TTM 12/31/17 FY 2018 TTM 12/31/18 ROE Leverage ROE is calculated as net income divided by average shareholders’ equity. Averag
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 $24.45 $23.88 $20.00 $20.66 $20.98 $18.21 $15.00 $10.00 $5.00 $0.00 9/30/2016 9/30/2017 12/31/2017 9/30/2018 12/31/2018 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 $321
Slide 15: Recent Acquisitions
RECENT ACQUISITIONS D.R. Horton acquired the homebuilding operations of 3 private builders in Q1 FY19 for approximately $321 million • Acquired in November 2018 • Market entrance into Indiana and Ohio • Top 5 homebuilder in Indianapolis and Columbus, which are both top 50 U.S. housing markets • Also
Slide 16: Forestar Group (FOR)
F O R E S TA R G R O U P ( “ 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 35 markets and 16 states as of December 31, 2018 • The strategic relationship between DHI and FOR will grow FOR into a large,
Slide 17: Forestar Timeline
F O R E S TA R T I M E L I N E Own and control 20,100 lots at Expect to invest Expect to own a 3 During the TTM ended 9/30/18: 9/30/18, with 13,600 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 18: Company Outlook
C O M PA N Y O U T L O O K * • Sales prices for new and existing homes have increased across most markets over the past several years, which coupled with rising interest rates has impacted affordability and resulted in some moderation of demand for homes, particularly at higher price points • Contin
Slide 19: FY Expectations
F Y 2 0 1 9 E X P E C TAT I O N S * • Full year fiscal 2019 results will be significantly impacted by the spring selling season, so the Company is not providing full year revenue or margin guidance • Q2 FY 2019 • Consolidated revenues in a range of $3.9 billion to $4.1 billion • Homes closed in a ra
Slide 20: First Quarter Data
FIRST QUARTER DATA DRHORTON = 35 America's Buitder
Slide 21: Q1 FY 2019 Highlights
Q1 FY 2019 HIGHLIGHTS • Net income attributable to D.R. Horton increased 52% to $287.2 million or $0.76 per diluted share • Net homes sold, homes closed and homes in backlog increased by 3%, 7% and 10%, respectively • 11,042 net homes sold and 11,500 homes closed • Completed acquisitions of 3 privat
Slide 22: Sales, Closings and Backlog
SALES, CLOSINGS AND BACKLOG Net Sales Orders, Homes Closed and Homes in Backlog increased 3%, 7% and 10%, respectively, in Q1 FY 2019 compared to Q1 FY 2018 # of Homes 15,000 12,500 10,000 7,500 5,000 2,500 0 Sales Closings Backlog 1Q FY 2017 1Q FY 2018 1Q FY 2019 22
Slide 23: Income Statement
I N C O M E S TAT E M E N T 3 MONTHS ENDED FISCAL YEAR ENDED 12/31/2018 12/31/2017 9/30/2018 9/30/2017 Homes closed 11,500 10,788 51,857 45,751 Homebuilding Revenues: Home sales $ 3,410.6 $ 3,184.5 $ 15,502.0 $ 13,653.2 Land/lot sales 6.7 36.4 121.8 88.3 3,417.3 3,220.9 15,623.8 13,741.5 Gross profi
Slide 24: Home Sales Gross Margin
HOME SALES GROSS MARGIN 22% 20% 20.8% 21.3% 20.2% 20.0% 20.0% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% FY 2016 FY 2017 Q1 FY18 FY 2018 Q1 FY19 Shown as a % of the Company’s homebuilding segment’s home sales revenues Includes interest amortized to cost of sales 24 Refer to slide 3 of the Company’s Q1 FY19
Slide 25: Homebuilding SG&A
HOMEBUILDING SG&A SG&A as a percentage of homebuilding revenues of 9.5% in Q1 FY 2019 Fiscal Year First 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 8.9% $4,000 $4,000 8.6% 8% 8% $2,00
Slide 26: 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 10.7% in Q1 FY 2019 Fiscal Year First Fiscal Quarter PTI $ PTI $ $2,200 12.8% $1,600 $2,000 $1,400 $1,800 11.4% $2,060.0 $1,600 $1,200 $1,400 $1,602.1 $1,000 $1,200 $800 $1,000 $800 $600 $600 11.7% 10.7% $400 $400 $
Slide 27: Balance Sheet
BALANCE SHEET 12/31/2018 9/30/2018 12/31/2017 Homebuilding Cash and cash equivalents $ 546.2 $ 1,120.4 $ 566.3 Inventories: Construction in progress and finished homes 5,840.4 5,084.4 4,907.8 Land inventories 5,057.8 4,790.7 4,767.9 10,898.2 9,875.1 9,675.7 Other assets 1,066.7 960.8 829.6 Deferred
Slide 28: Homes in Inventory
HOMES IN INVENTORY Well‐positioned for the 2019 spring selling season 35,000 33,700 30,000 29,700 27,800 26,200 25,000 23,100 20,000 15,000 10,000 5,000 0 9/30/16 9/30/17 12/31/17 9/30/18 12/31/18 Models Sold Specs 28
Slide 29: Homebuilding Land and Lot Position
HOMEBUILDING LAND AND LOT POSITION Optioned lot position increased 36% from a year ago 42% owned / 58% optioned at 12/31/18 350,000 309,400 300,000 288,500 259,400 249,000 250,000 204,500 180,900* 200,000 164,200 124,000 133,500 91,600 150,000 100,000 112,900 125,000 125,900 124,300 128,500 50,000 0
Slide 30: 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 5.750% $500* $500 $500 $400 $400 $350 $300 $200 $100 3.750% 4.000% 2.550% 4.375% 4.750% $0 FY 19 FY 20 FY 21 FY 22 FY 23 $ in millions 30 *Expect to repay from liquidity and cash flow at maturity in March