D.r. Horton, Inc. · NYSE:DHI
D.r. Horton — Q3 2021 Earnings Presentation
29 slides from D.r. Horton's earnings presentation, July 2021
Slide 1: Investor Presentation Q3 2021
Investor Presentation Q3 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 $26.1 billion $4.7 billion 29.5% & 34.9% Consolidated revenues Consolidated pre‐tax income ROE & ROI (HB), respectively* $13.8 billion $38.54 16.0% 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 80,276 Homes Closed during TTM ended 6/30/2021 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% 41 12% 35 30 10% 8% 20 6% 4% 15 10 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: Diverse Product Offerings and Price Points
DIVERSE PRODUCT OFFERINGS AND PRICE POINTS Homes for entry‐level, move‐up, active adult and luxury buyers 59% of homes closed <$300k 4% 25% 30% 36% 5% $0 - $200k $201k - $250k $251k - $300k $301k - $500k >$500k Represents price points of homes closed for the twelve months ended 6/30/21 8
Slide 9: Return on Equity (ROE)
RETURN ON EQUITY (ROE) ROE has improved to almost 30% while leverage has decreased to below 20% ROE HB leverage 30% 30% 29.5% 25% 25% 20% 22.1% 20% 19.9% 15% 17.6% 17.2% 15% 10% 10% 5% 5% 0% 0% FY 2018 FY 2019 TTM 6/30/20 FY 2020 TTM 6/30/21 ROE Leverage ROE is calculated as net income divided by av
Slide 10: Emphasis on Return on Inventory (ROI)
EMPHASIS ON RETURN ON INVENTORY (ROI) Homebuilding ROI target ‐ Minimum of 20% 35% 34.9% 30% 25% 24.6% 20% 21.6% 20.2% 18.1% 15% 10% 5% 0% FY 2018 FY 2019 TTM 6/30/20 FY 2020 TTM 6/30/21 Homebuilding ROI is calculated as homebuilding pre‐tax income for the year divided by average homebuilding invent
Slide 11: Book Value per Share
BOOK VALUE PER SHARE Consistent annual double‐digit percentage growth in book value per share $40.00 $38.54 $35.00 $30.00 $32.53 $30.38 $25.00 $27.20 $23.88 $20.00 $15.00 $10.00 $5.00 $0.00 9/30/2018 9/30/2019 6/30/2020 9/30/2020 6/30/2021 11
Slide 12: 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 13: 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 14: Homebuilding Operational Focus
HOMEBUILDING OPERATIONAL FOCUS • Maximize returns by managing inventories, sales pace and pricing in each community, while providing value to homebuyers • Consolidate market share while generating strong profits and operating cash flow • Maintain sufficient inventories of land, lots and homes to sup
Slide 15: Expectations
EXPECTATIONS Q4 FY 2021 • Consolidated revenues in a range of $7.9 billion to $8.4 billion • Homes closed between 23,000 homes and 24,500 homes • Home sales gross margin of 26.0% to 26.3% • Homebuilding SG&A of approximately 7.0% of homebuilding revenues • Financial services pre‐tax profit margin in
Slide 16: Geographic Diversification
GEOGRAPHIC DIVERSIFICATION 8% 4% 96 Markets 30 States 31% 14% East Homebuilding Delaware, Maryland, New Jersey, North and South Carolina, Revenue 18% Pennsylvania, Virginia 25% Midwest Colorado, Illinois, Indiana, Iowa, Kentucky, Minnesota, Ohio South Central Southeast South Central West East Midwes
Slide 17: Family of Brands
FAMILY OF BRANDS Homes Sales Average Selling Number of Number of Homes Sold Homes Closed Revenue Markets Price States 66% 65% 69% $328k 96 30 30% 31% 26% $268k 66 21 3% 3% 3% $313k 24 11 1% 1% 2% $531k 17 6 As of or for the twelve months ended June 30, 2021 17
Slide 18: Forestar (FOR)
FORESTAR (“FOR”) • DHI owns 64% of FOR, a publicly traded residential lot manufacturer with operations in 55 markets and 22 states • Supports DHI’s strategy of increasing land and lots controlled through purchase contracts • FOR delivered 11,013 lots and generated $907.1 million of revenue during th
Slide 19: Third Quarter Data
Third Quarter Data
Slide 20: Q3 FY 2021 Highlights
Q3 FY 2021 HIGHLIGHTS • Net income per diluted share increased 78% to $3.06 • Net income attributable to D.R. Horton increased 77% to $1.1 billion • Consolidated revenues increased 35% to $7.3 billion • Consolidated pre‐tax income increased 81% to $1.4 billion • Consolidated pre‐tax profit margin im
Slide 21: Sales and Closings
SALES AND CLOSINGS The value of Net Sales Orders and Homes Closed increased 2% and 35%, respectively, in Q3 FY 2021 compared to Q3 FY 2020 Slowed home sales pace in Q3 FY21 to more closely align to current production levels Net Sales Orders Closings # of Homes Value $7,040.1 $7,500 $6,337.3 $6,448.9
Slide 22: Income Statement
INCOME STATEMENT $ in millions except per share data 22
Slide 23: Home Sales Gross Margin
HOME SALES GROSS MARGIN 26% 24% 25.9% 24.1% 24.6% 22% 22.7% 20% 21.3% 21.3% 21.6% 21.8% 21.0% 18% 20.2% 16% 14% 12% 10% 8% 6% 4% 2% 0% FY 2018 FY 2019 1Q20 2Q20 3Q20 4Q20 FY 2020 1Q21 2Q21 3Q21 Shown as a % of the Company’s homebuilding segment’s home sales revenues Includes interest amortized to co
Slide 24: Homebuilding SG&A
HOMEBUILDING SG&A SG&A as a percentage of homebuilding revenues improved 80 basis points to 7.1% in Q3 FY 2021 HB Rev $ Fiscal YTD 6/30 SG&A % HB Rev $ Third Fiscal Quarter SG&A % $20,000 12% $14,000 12% $18,000 11% $12,000 11% $16,000 $14,000 $10,000 10% 10% $12,000 $8,000 $10,000 9% 9% $8,000 $6,0
Slide 25: Consolidated Pre-Tax Income
CONSOLIDATED PRE-TAX INCOME Consolidated pre‐tax profit margin improved 490 basis points to 19.4% in Q3 FY 2021 Fiscal YTD 6/30 Third Fiscal Quarter PTI $ PTI $ $4,000 18.5% $1,600 19.4% $3,500 $1,400 $3,629.8 $1,415.6 $3,000 $1,200 $2,500 $1,000 $2,000 13.9% 14.5% $800 $1,926.9 $782.4 $1,500 $600 $
Slide 26: Balance Sheet
BALANCE SHEET $ in millions except per share metrics Homebuilding cash and cash equivalents presented above includes $11.5 million, $9.5 million and $9.0 million of restricted cash for the periods ended 6/30/21, 9/30/20 and 6/30/20, respectively. 26
Slide 27: Homes in Inventory
HOMES IN INVENTORY Increased housing inventory in response to strength in demand 50,000 47,300 45,000 40,000 38,000 35,000 32,800 30,000 27,900 27,700 25,000 20,000 15,000 10,000 5,000 0 9/30/18 9/30/19 6/30/20 9/30/20 6/30/21 Sold Specs Homes in inventory excluding model homes 27
Slide 28: Homebuilding Land and Lot Position
HOMEBUILDING LAND AND LOT POSITION Controlled portion of land and lot pipeline increased 78% from a year ago 24% owned / 76% controlled at 6/30/21 550,000 517,100 500,000 450,000 400,000 376,900 335,500 350,000 307,300 288,500 393,200 300,000 250,000 264,300 185,900 220,300 164,200 200,000 150,000 1
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