D.r. Horton, Inc. · NYSE:DHI
D.r. Horton — Q3 2020 Earnings Presentation
30 slides from D.r. Horton's earnings presentation, 2020
Slide 1: Investor Presentation Q3 2020
I N I VN EV SE ST TO ORR PP RR E E SS EE NNT TA A T IT O I NO N Q 3 Q23 0 22 00 2 0
Slide 2: America's #1 Homebuilder Since 2002
AMERICA’S #1 HOMEBUILDER SINCE 2002 ORTON | 0.8. norton. express - EMERALD - FREEDOM
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
Slide 4: COVID-19 ("C-19")
COVID-19 (“C-19”) • During the latter part of March 2020, the impacts of the C-19 pandemic and the related widespread reductions in economic activity across the U.S. began to negatively affect the Company’s business; however, residential construction and financial services are designated as essentia
Slide 5: D.R. Horton, Inc. Traded on NYSE as DHI
D.R. HORTON, INC. TRADED ON NYSE AS DHI $18.9 billion $2.6 billion 21.6% & 19.9% Consolidated revenues Consolidated pre-tax income ROI (HB) & ROE, respectively* $11.0 billion $30.38 18.4% Stockholders’ equity Book value per common share Homebuilding leverage* As of or for the twelve-month period end
Slide 6: DHI Growth, Consolidation and Market Share
DHI GROWTH, CONSOLIDATION AND MARKET SHARE 1,400 61,164 Homes Closed during TTM ended 6/30/2020 10% 2019 Closings: 58,434 9% 1,200 8% 1,000 7% 2006 Closings: 6% 800 53,410 2011 Closings: 17,176 5% 600 4% 400 3% 2% 200 1992 Closings: 1% 1,231 0 0% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 200
Slide 7: 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 8: 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 8
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, ample liquidity and low leverage provide significant financial flexibility to effectively operate through changing economic conditions • Invest in homebu
Slide 10: 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 11: Geographic Diversification
GEOGRAPHIC DIVERSIFICATION 88 MARKETS | 29 STATES 6% 9% 26% EAST 12% Delaware, Maryland, MIDWEST Colorado, Illinois, New Jersey, North and South Carolina, Indiana, Iowa, Inventory 20% Minnesota, Ohio 27% Pennsylvania, Virginia SOUTH CENTRAL SOUTHEAST Louisiana Alabama, Florida, Oklahoma Georgia, Mis
Slide 12: Diverse Product Offerings and Price Points
DIVERSE PRODUCT OFFERINGS AND PRICE POINTS Homes for entry-level, move-up, active adult and luxury buyers 66% of homes closed <$300k $0 - $200k $200k - $250k $250k - $300k $300k - $500k >$500k 7% 32% 27% 29% 5% Represents homes closed & price points for the twelve months ended 6/30/20 12
Slide 13: Family of Brands
FAMILY OF BRANDS Homes Homes Home Average # of # of Sold Closed Sales Selling Markets States Revenue Price 63% 62% 65% $315k 88 29 32% 33% 28% $251k 60 19 3% 3% 3% $290k 28 14 2% 2% 4% $551k 24 13 As of or for the twelve months ended June 30, 2020 13
Slide 14: Forestar ("FOR")
FORESTAR (“FOR”) • FOR is a publicly traded residential lot manufacturer with operations in 51 markets and 22 states • Supporting DHI’s strategy of increasing land and lots controlled through purchase contracts • Delivered 6,396 lots and generated $584.3 million of revenue FYTD • FOR has raised capi
Slide 15: Emphasis on Return on Inventory (ROI)
EMPHASIS ON RETURN ON INVENTORY (ROI) Homebuilding ROI target of >20% 20% 21.6% 20.2% 18.1% 18.1% 15% 16.6% 10% 5% 0% FY 2017 FY 2018 TTM 6/30/19 FY 2019 TTM 6/30/20 Homebuilding ROI is calculated as homebuilding pre‐tax income for the year divided by average homebuilding inventory. Average homebuil
Slide 16: Return on Equity (ROE)
RETURN ON EQUITY (ROE) ROE ROE has improved to the high-teens while leverage has decreased HB leverage 20% 40% 19.9% 17.6% 17.3% 17.2% 15% 30% 14.4% 10% 20% 5% 10% 0% 0% FY 2017 FY 2018 TTM 6/30/19 FY 2019 TTM 6/30/20 ROE Leverage ROE is calculated as net income divided by average stockholders’ equi
Slide 17: Book Value Per Share
BOOK VALUE PER SHARE Consistent annual double-digit percentage growth in book value per share $30.00 $30.38 $25.00 $27.20 $26.08 $23.88 $20.00 $20.66 $15.00 $10.00 $5.00 $0.00 9/30/2017 9/30/2018 6/30/2019 9/30/2019 6/30/2020 17
Slide 18: Cash Flow at Work
CASH FLOW AT WORK Utilization of $4 billion of cash generated by homebuilding operations 1,800 1,600 $1,438 5 Year Cumulative Capital 1,400 Cash Flow from $4.0B Homebuilding Operations 1,200 $1,002 1,000 Acquisitions $1.0B 800 $581 $600 Homebuilding Senior $1.4B 600 $304 Notes Paydown 400 Shareholde
Slide 19: Expectations
EXPECTATIONS* • In April 2020, due to the uncertainty in the U.S. economy and the Company’s business operations resulting from C-19, the Company withdrew its previously issued guidance for fiscal 2020 • Based on today’s market conditions, the Company is now providing its expectations for Q4 FY 2020:
Slide 20: Third Quarter Data
THIRD QUARTER DATA D.R. HORTON - EXPRESS - EMERALD - FREEDOM
Slide 21: Q3 FY 2020 Highlights
Q3 FY 2020 HIGHLIGHTS • Net income per diluted share increased 37% to $1.72 • Net income attributable to D.R. Horton increased 33% to $630.7 million • Consolidated revenues increased 10% to $5.4 billion • Consolidated pre-tax income increased 25% to $782.4 million • Consolidated pre-tax profit margi
Slide 22: Sales and Closings
SALES AND CLOSINGS Net Sales Orders and Homes Closed increased 38% and 10%, respectively, in Q3 FY 2020 compared to Q3 FY 2019 # of Homes 20,000 17,500 15,000 12,500 10,000 7,500 5,000 2,500 0 Sales Closings 3Q FY18 3Q FY19 3Q FY20 22
Slide 23: Income Statement
INCOME STATEMENT 3 MONTHS ENDED 9 MONTHS ENDED YEAR ENDED 6/30/2020 6/30/2019 6/30/2020 6/30/2019 9/30/2019 Homes closed 17,642 15,971 45,140 40,951 56,975 Homebuilding Revenues: Home sales $ 5,207.6 $ 4,734.6 $ 13,434.2 $ 12,125.8 $ 16,925.0 Land/lot sales 14.5 27.5 49.7 49.2 91.9 5,222.1 4,762.1 1
Slide 24: Home Sales Gross Margin
HOME SALES GROSS MARGIN 22% 20% 21.3% 21.3% 21.6% 21.0% 21.0% 20.0% 20.0% 20.3% 20.2% 18% 19.3% 16% 14% 12% 10% 8% 6% 4% 2% 0% FY 2017 FY 2018 1Q19 2Q19 3Q19 4Q19 FY 2019 1Q20 2Q20 3Q20 Shown as a % of the Company’s homebuilding segment’s home sales revenues Includes interest amortized to cost of sa
Slide 25: Homebuilding SG&A
HOMEBUILDING SG&A SG&A as a percentage of homebuilding revenues improved 40 basis points to 8.4% for fiscal YTD 2020 Fiscal YTD 6/30 Third Fiscal Quarter HB Rev $ SG&A % HB Rev $ 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
Slide 26: Consolidated Pre-Tax Income
CONSOLIDATED PRE-TAX INCOME Consolidated pre-tax profit margin improved 220 basis points to 13.9% for fiscal YTD 2020 Third Fiscal Quarter Fiscal YTD 6/30 PTI $ PTI $ $2,250 $1,600 $2,000 13.9% $1,400 $1,750 $1,926.9 $1,200 11.7% $1,500 $1,000 $1,250 $1,465.2 14.5% $800 $1,000 12.8% $600 $782.4 $750
Slide 27: Balance Sheet
BALANCE SHEET 6/30/2020 9/30/2019 6/30/2019 Homebuilding Cash and cash equivalents $ 1,905.8 $ 1,051.0 $ 587.7 Construction in progress and finished homes 5,886.0 5,249.0 5,723.5 Land inventories 5,030.8 5,036.6 4,954.9 10,916.8 10,285.6 10,678.4 Other assets 1,359.0 1,232.9 1,192.7 Deferred income
Slide 28: Homes in Inventory
HOMES IN INVENTORY Well-positioned to respond to increased new home demand 35,000 32,800 30,000 29,200 27,900 27,700 25,000 24,600 20,000 15,000 10,000 5,000 0 9/30/17 9/30/18 6/30/19 9/30/19 6/30/20 Sold Specs Homes in inventory excluding model homes 28
Slide 29: Homebuilding Land and Lot Position
HOMEBUILDING LAND AND LOT POSITION Controlled lot position increased 19% from a year ago 400,000 34% owned / 66% controlled at 6/30/20 350,000 335,500 303,000 307,300 300,000 288,500 249,000 250,000 220,300* 164,200* 184,500* 185,900* 200,000 124,000 150,000 100,000 125,000 124,300 118,500 121,400 1
Slide 30: Homebuilding Public Debt Maturities by Year
HOMEBUILDING PUBLIC DEBT MATURITIES BY YEAR $400 million of senior note maturities in next 12 months $800 $700 $700 $600 $500 $500 $500 5.750% $400 $400 $350 $300 $200 2.550% 4.375% 4.750% 2.500% 2.600% $100 $0 FY 21 FY 22 FY 23 FY 24 FY 25 FY 26 $ in millions 30