D.r. Horton, Inc. · NYSE:DHI

D.r. Horton — Q2 2016 Earnings Presentation

26 slides from D.r. Horton's earnings presentation, May 2016

  1. Slide 1: D.R. Horton Q2 FY2016

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  2. Slide 2: D-RHORTON =

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  3. 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

  4. Slide 4: D.R. Horton, Inc.

    D.R. Horton, Inc.  Traded on NYSE as DHI  #1 builder for 14 consecutive years1  $11.3 billion in annual revenues2  37,755 in annual homes closed2  $1.2 billion in annual pre-tax income2  $11.3 billion of total assets3  $6.2 billion of stockholders’ equity3  Book value per share of $16.853 1B

  5. Slide 5: Geographic Diversification

    Geographic Diversification HB Revenue1 East West 12% 79 Markets | 26 States 24% Midwest 6% Southwest 3% South Central 26% Southeast 29% East Inventory2 10% Midwest 6% West 28% Region States Covered East Delaware, Georgia, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Virginia M

  6. Slide 6: Broad Range of Product Offerings

    Broad Range of Product Offerings Homes for entry-level, move-up and luxury buyers 7% $500k+ 27% < $200k 24% $300k to $500k $200k to $250k to $250k $300k 24% 18% Represents homes closed for the trailing twelve months ended 3/31/16 Q2 FY2016 6

  7. Slide 7: Substantial Growth in Brands

    Substantial Growth in Brands New Brand Growth - TTM Overall Brand Mix – Q2 Homes Closed 10,000 4% 1,326 23% 7,500 5,000 7,693 73% 714 2,500 2,840 0 TTM 3/31/15 TTM 3/31/16 Represents homes closed Q2 FY2016 7

  8. Slide 8: Operational Focus

    Operational Focus  Current land ownership level is sufficient to support double-digit annual growth in both revenues and profits  Consistently optimize balance of sales absorptions and gross margins to maximize returns in each community  Manage land and home inventory levels efficiently to genera

  9. Slide 9: Management Tenure & Experience

    Management Tenure & Experience Average employee tenure:  Executive Team and Region Presidents – over 20 years  Division Presidents – approximately 15 years  City Managers – over 10 years Q2 FY2016 9

  10. Slide 10: FY 2016 Expectations

    FY 2016 Expectations* Fiscal Year:  Consolidated pre-tax profit margin in the range of 10.7% to 11.2%  Consolidated revenues of $12.0 billion to $12.5 billion  Closings between 39,500 homes and 41,500 homes  Home sales gross margin in the high 19s to 20%  Homebuilding SG&A expense in the range

  11. Slide 11: Cash Flow Priorities

    Cash Flow Priorities  Invest in homebuilding business where opportunities to generate acceptable returns exist, including business acquisitions  Pay off debt at maturity  Paid $170 million of senior notes at maturity in January 2016  Paid $373 million of senior notes at maturity in April 2016 

  12. Slide 12: Second Quarter Data

    Second Quarter Data Q2 FY2016 12

  13. Slide 13: Q2 FY 2016 Highlights

    Q2 FY 2016 Highlights  The value of net homes sold, homes closed and homes in backlog increased by 13%, 16% and 14%, respectively  12,292 net homes sold and 9,262 homes closed  13,695 homes in backlog at 3/31/16  Consolidated pre-tax income increased 31% to $300.5 million  Consolidated pre-tax

  14. Slide 14: D.R. Horton: The Heart of our Business

    D.R. Horton The Heart of our Business  In the second quarter, accounted for:  70% of homes sold 79 Markets | 26 States  73% of homes closed  75% of home sales revenue  Q2 Average Closing Price: $299,000 Reported metrics for D.R. Horton include our Crown Communities and Pacific Ridge Homes opera

  15. Slide 15: Emerald Homes

    Emerald Homes Higher-end move-up and luxury buyer  Introduced in 2013  In the second quarter, accounted for: 44 Markets | 17 States  3% of homes sold  4% of homes closed  9% of home sales revenue  Q2 Average Closing Price: $631,000 Q2 FY2016 15

  16. Slide 16: Express Homes

    Express Homes Targeted at the true entry-level buyer  Introduced in Spring 2014  In the second quarter, accounted for: 51 Markets | 17 States  27% of homes sold  23% of homes closed  16% of home sales revenue  Q2 Average Closing Price: $202,000 Reported metrics for Express include our Regent H

  17. Slide 17: Sales, Closings & Backlog – Q2 FY16

    Sales, Closings & Backlog – Q2 FY16 Net Sales Orders, Homes Closed and Homes in Backlog increased 10%, 12% and 12%, respectively, in Q2 of FY2016 compared to Q2 of FY2015 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Sales Closings Backlog 2Q FY14 2Q FY15 2Q FY16 Q2 FY2016 17

  18. Slide 18: Income Statement

    Income Statement Fiscal 3 Months Ended 6 Months Ended Year Ended 3/31/2016 3/31/2015 3/31/2016 3/31/2015 9/30/2015 Homes closed 9,262 8,243 17,323 16,216 36,648 Revenues: Home sales $ 2,686.0 $ 2,318.8 $ 5,026.9 $ 4,559.4 $ 10,469.4 Land/lot sales & other 15.0 19.7 35.2 32.1 89.6 2,701.0 2,338.5 5,0

  19. Slide 19: Home Sales Gross Margin

    Home Sales Gross Margin Homes sales gross margin of around 20% in a stable housing market 25% 20% 21.3% 20.8% 19.8% 19.7% 19.9% 19.9% 19.9% 19.9% 17.7% 15% 10% 5% 0% FY12 FY13 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Q2 FY16 Shown as a % of home sales revenues Includes interest amortized to cost

  20. Slide 20: Homebuilding SG&A

    Homebuilding SG&A SG&A as a percentage of homebuilding revenues improved 80 basis points in Q2 FY2016 Fiscal YTD 3/31 Second Fiscal Quarter SG&A $ SG&A $ $1,200 $1,200 $1,000 $1,000 $800 $800 $600 10.5% 9.9% $600 $400 $501.6 $400 10.4% 9.6% $480.4 $200 $200 $242.4 $258.2 $0 $0 2015 2016 Q2 FY15 Q2 F

  21. Slide 21: Consolidated Pre-tax Income

    Consolidated Pre-tax Income Consolidated pre-tax profit margin improved 130 basis points to 10.9% in Q2 FY2016 Fiscal YTD 3/31 Second Fiscal Quarter PTI $ PTI $ $1,200 $1,200 $1,000 $1,000 $800 $800 $600 10.5% $600 9.6% $400 $400 10.9% $541.8 9.6% $450.8 $200 $200 $230.1 $300.5 $0 $0 2015 2016 Q2 FY

  22. Slide 22: Balance Sheet

    Balance Sheet 3/31/16 9/30/15 3/31/15 HB cash and cash equivalents $ 1,195.2 $ 1,355.9 $ 665.8 Restricted cash 11.4 9.7 10.4 Inventories 8,216.6 7,807.0 8,136.9 Deferred income taxes, net 526.6 558.1 547.7 Other assets 1,350.4 1,420.3 1,332.9 Total $ 11,300.2 $ 11,151.0 $ 10,693.7 Notes payable - HB

  23. Slide 23: Homes in Inventory

    Homes in Inventory 25,000 24,600 21,300 20,600 20,000 19,800 17,000 15,000 13,000 10,000 5,000 0 9/30/12 9/30/13 9/30/14 3/31/15 9/30/15 3/31/16 Models Sold Specs Q2 FY2016 23

  24. Slide 24: Land and Lot Position

    Land and Lot Position Supports double-digit growth in both revenues and pre-tax profits 200,000 183,500 188,500 180,900 177,200 175,000 173,900 152,700 150,000 58,900 55,500 55,500 76,600 58,100 54,300 125,000 100,000 75,000 94,600 126,600 124,600 121,700 118,400 111,900 50,000 25,000 0 9/30/12 9/30

  25. Slide 25: Inactive Land Held for Development

    Inactive Land Held for Development “Mothballed” lot count down 28% from 9/30/14 $700 45000 $628.3 40000 $600 39,400 Balance 35000 $500 Lots Held $450.2 30000 $400 25000 $332.8 $300 20000 21,700 $271.3 15000 $202.3 $194.3 $200 14,000 12,900 11,100 10000 10,100 $100 5000 $0 0 9/30/12 9/30/13 9/30/14 3

  26. Slide 26: Public Debt Maturities by Year

    Public Debt Maturities by Year As of April 21, 2016 $800 $700 $700 $600 $500 $500 $500 5.750% $400 $400 $350 $350 $300 $200 $100 4.750% 3.625% 3.750% 4.000% 4.375% 4.750% $0 FY 17 FY 18 FY 19 FY 20 FY 22 FY 23 $ in millions Pro forma balance of public notes outstanding subsequent to 4/15/2016 debt m

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