D.r. Horton, Inc. · NYSE:DHI
D.r. Horton — Q2 2021 Earnings Presentation
29 slides from D.r. Horton's earnings presentation, April 2021
Slide 1: Investor Presentation Q2 2021
Investor Presentation Q2 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 of an inflationary, deflationary or higher interest rate environment; home Private Securities Litigation Reform Act of 1995. Although D.R. Horton believes warranty and construction defect claims;
Slide 4: D.R. Horton, Inc.
D.R. HORTON, INC. Traded on NYSE as DHI $24.2 billion $4.1 billion 31.2% & 27.1% Consolidated revenues Consolidated pre‐tax income ROI (HB) & ROE, respectively* $13.0 billion $35.96 16.8% Stockholders’ equity Book value per common share Homebuilding leverage* As of or for the twelve‐month period end
Slide 5: DHI Growth, Consolidation and Market Share
DHI GROWTH, CONSOLIDATION AND MARKET SHARE 1,400 76,330 Homes Closed during TTM ended 3/31/2021 10% 2020 Closings: 71,168 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 2001 200
Slide 6: 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 7: 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 7
Slide 8: 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 9: 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 10: Geographic Diversification
GEOGRAPHIC DIVERSIFICATION 7% 9% 91 Markets 29 States 26% 12% East Inventory Delaware, Maryland, New Jersey, North and South Carolina, Pennsylvania, Virginia 19% 27% Midwest Colorado, Illinois, Indiana, Iowa, Minnesota, Ohio South Central Louisiana, Oklahoma, Texas Southeast South Central West East
Slide 11: Diverse Product Offerings and Price Points
DIVERSE PRODUCT OFFERINGS AND PRICE POINTS Homes for entry‐level, move‐up, active adult and luxury buyers 63% of homes closed <$300k 5% 28% 30% 32% 5% $0 - $200k $200k - $250k $250k - $300k $300k - $500k >$500k Represents price points of homes closed for the twelve months ended 3/31/21 11
Slide 12: 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% $320k 91 29 30% 31% 27% $260k 63 20 3% 3% 3% $305k 24 11 1% 1% 2% $532k 19 7 As of or for the twelve months ended March 31, 2021 12
Slide 13: Forestar ("FOR")
FORESTAR (“FOR”) • DHI owns 64% of FOR, a publicly traded residential lot manufacturer with operations in 54 markets and 22 states • Supports DHI’s strategy of increasing land and lots controlled through purchase contracts • FOR delivered 7,155 lots and generated $594.2 million of revenue during the
Slide 14: Emphasis on Return on Inventory (ROI)
EMPHASIS ON RETURN ON INVENTORY (ROI) Homebuilding ROI target of >20% 30% 31.2% 25% 24.6% 20% 20.2% 20.2% 18.1% 15% 10% 5% 0% FY 2018 FY 2019 TTM 3/31/20 FY 2020 TTM 3/31/21 Homebuilding ROI is calculated as homebuilding pre‐tax income for the year divided by average homebuilding inventory. Average
Slide 15: Return on Equity (ROE)
RETURN ON EQUITY (ROE) ROE has improved to greater than 20%, while leverage has decreased to below 20% ROE HB leverage 30% 30% 25% 27.1% 25% 20% 22.1% 20% 19.1% 15% 17.6% 17.2% 15% 10% 10% 5% 5% 0% 0% FY 2018 FY 2019 TTM 3/31/20 FY 2020 TTM 3/31/21 ROE Leverage ROE is calculated as net income divide
Slide 16: Book Value per Share
BOOK VALUE PER SHARE Consistent annual double‐digit percentage growth in book value per share $35.00 $35.96 $30.00 $32.53 $28.77 $25.00 $27.20 $23.88 $20.00 $15.00 $10.00 $5.00 $0.00 9/30/2018 9/30/2019 3/31/2020 9/30/2020 3/31/2021 16
Slide 17: 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 H
Slide 18: Expectations
EXPECTATIONS • Q3 FY 2021 • Consolidated revenues in a range of $7.0 billion to $7.2 billion • Homes closed between 21,500 homes and 22,000 homes • Home sales gross margin of 24.6% to 25.0% • Homebuilding SG&A of approximately 7.5% of homebuilding revenues • Financial services pre‐tax profit margin
Slide 19: Second Quarter Data
Second Quarter Data
Slide 20: Q2 FY 2021 Highlights
Q2 FY 2021 HIGHLIGHTS • Net income per diluted share increased 95% to $2.53 • Net income attributable to D.R. Horton increased 93% to $929.5 million • Consolidated revenues increased 43% to $6.4 billion • Consolidated pre‐tax income increased 90% to $1.2 billion • Consolidated pre‐tax profit margin
Slide 21: Sales and Closings
SALES AND CLOSINGS Net Sales Orders and Homes Closed increased 35% and 36%, respectively, in Q2 FY 2021 compared to Q2 FY 2020 # of Homes 25,000 20,000 15,000 10,000 5,000 0 Sales Closings 2QFY19 2Q FY20 2Q FY21 21
Slide 22: Income Statement
INCOME STATEMENT $ in millions except per share data 22
Slide 23: Home Sales Gross Margin
HOME SALES GROSS MARGIN 24% 24.1% 24.6% 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 1Q21 2Q21 Shown as a % of the Company’s homebuilding segment’s home sales revenues Includes interest amortized to cost of sales Ref
Slide 24: Homebuilding SG&A
HOMEBUILDING SG&A SG&A as a percentage of homebuilding revenues improved 70 basis points to 7.6% in Q2 FY 2021 HB Rev $ Fiscal YTD 3/31 SG&A % HB Rev $ Second Fiscal Quarter 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% $4,000 8.7% $
Slide 25: Consolidated Pre-Tax Income
CONSOLIDATED PRE-TAX INCOME Consolidated pre‐tax profit margin improved 450 basis points to 18.3% in Q2 FY 2021 Fiscal YTD 3/31 Second Fiscal Quarter PTI $ PTI $ $3,000 $1,600 $1,400 $2,500 17.9% 18.3% $1,200 $2,000 $2,214.2 $1,179.9 $1,000 $1,500 $800 13.4% 13.8% $600 $1,000 $621.3 $1,144.5 $400 $5
Slide 26: Balance Sheet
BALANCE SHEET $ in millions except per share metrics Homebuilding cash and cash equivalents presented above includes $14.0 million, $9.5 million and $7.8 million of restricted cash for the periods ended 3/31/21, 9/30/20 and 3/31/20, respectively. 26
Slide 27: Homes in Inventory
HOMES IN INVENTORY Well‐positioned to respond to increased new home demand 50,000 46,100 45,000 40,000 38,000 35,000 33,400 30,000 27,900 27,700 25,000 20,000 15,000 10,000 5,000 0 9/30/18 9/30/19 3/31/20 9/30/20 3/31/21 Sold Specs Homes in inventory excluding model homes 27
Slide 28: Homebuilding Land and Lot Position
HOMEBUILDING LAND AND LOT POSITION Total lot position increased 48% from a year ago 25% owned / 75% controlled at 3/31/21 550,000 486,700 500,000 450,000 400,000 376,900 350,000 329,300 307,300 288,500 365,200 300,000 250,000 264,300 185,900 210,600 164,200 200,000 150,000 100,000 50,000 124,300 121
Slide 29: Homebuilding Public Debt Maturities by Year
HOMEBUILDING PUBLIC DEBT MATURITIES BY YEAR No senior note maturities in next 12 months $800 $700 $700 $600 $500 $500 $500 $500 5.750% $400 $350 $300 $200 4.375% 4.750% 2.500% 2.600% 1.400% $100 $0 FY 22 FY 23 FY 24 FY 25 FY 26 FY 27 FY 28 $ in millions 29