D.r. Horton, Inc. · NYSE:DHI
D.r. Horton — 2016 Zelman Housing Summit
29 slides from D.r. Horton's conference presentation, Sep 22, 2016
Slide 1: 2016 Zelman Housing Summit
2016 Zelman Housing Summit September 22, 2016
Slide 2: D.R. Horton logo
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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: D.R. Horton, Inc.
D.R. Horton, Inc. Traded on NYSE as DHI #1 builder for 14 consecutive years1 $11.6 billion in annual revenues2 38,638 in annual homes closed2 $1.3 billion in annual pre-tax income2 $11.3 billion of total assets3 $6.5 billion of stockholders’ equity3 Book value per share of $17.503 1B
Slide 5: Geographic Diversification
Geographic Diversification HB Revenue1 East West 12% 78 Markets | 26 States 24% Midwest 6% Southwest 3% South Central 26% Southeast 29% East Inventory2 11% Midwest 5% West 29% Region States Covered East Delaware, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Virginia Midwest Co
Slide 6: Broad Range of Product Offerings
Broad Range of Product Offerings Homes for entry-level, move-up and luxury buyers 7% $500k+ 26% < $200k 25% $300k to $500k $200k to $250k to $250k $300k 24% 18% Represents homes closed for the trailing twelve months ended 6/30/16 Zelman Housing Summit I September 2016 6
Slide 7: Substantial Growth in New Brands
Substantial Growth in New Brands New Brand Growth - TTM Overall Brand Mix – Q3 Homes Closed 12,000 4% 10,000 1,401 28% 8,000 6,000 68% 911 9,106 4,000 2,000 4,027 0 TTM 6/30/15 TTM 6/30/16 Represents homes closed Zelman Housing Summit I September 2016 7
Slide 8: Newest Brand - Freedom Homes
Newest Brand - Freedom Homes Targeted at the active adult buyer Introduced in July 2016 Carefree affordable living for active Coming Soon! adults Low-maintenance lifestyle Age-restricted and age-targeted communities Available in at least 8 markets by end of FY16 and approximately 1/3 of ou
Slide 9: 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
Slide 10: 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 Zelman Housing Summit I September 2016 10
Slide 11: D.R. Horton Market Share Rankings
D.R. Horton Market Share Rankings Top 50 U.S. Housing Markets # Markets 50 45 40 41 35 35 36 30 30 29 25 20 23 15 10 13 5 7 0 #1 Top 5 Top 10 Operations In 2009 2015 Source: Builder magazine - 2016 Local Leaders issue Market share rankings based on homes closed Zelman Housing Summit I September 2016
Slide 12: Q4 FY16 & FY17 Expectations
Q4 FY16 & FY17 Expectations* Q4 Fiscal 2016: Backlog conversion rate in the range of 81% to 84% Home sales gross margin around 20%, consistent with first three quarters of year Homebuilding SG&A expense in the range of 8.4% to 8.7% of homebuilding revenues Financial Services pre-tax profit m
Slide 13: Cash Flow Priorities
Cash Flow Priorities Invest in homebuilding business where opportunities to generate acceptable returns exist Business acquisitions to further consolidate market share Pay off debt at maturity Paid $170 million and $373 million of senior notes at maturity in January and April 2016, respectiv
Slide 14: Wilson Parker Acquisition
Wilson Parker Acquisition Acquired the homebuilding operations of Wilson Parker Homes (WPH) in September 2016 for approximately $90 million in cash WPH operates in Atlanta and Augusta, GA; Raleigh, NC; Columbia, SC and Phoenix, AZ Assets include approximately 490 lots, 390 homes in inventory a
Slide 15: Third Quarter Data
Third Quarter Data Zelman Housing Summit I September 2016 15
Slide 16: Q3 FY 2016 Highlights
Q3 FY 2016 Highlights The value of net homes sold, homes closed and homes in backlog increased by 14%, 9% and 17%, respectively 11,714 net homes sold and 10,739 homes closed 14,670 homes in backlog at 6/30/16 Consolidated pre-tax income increased 13% to $378.6 million Consolidated pre-tax
Slide 17: D.R. Horton
D.R. Horton The heart of our business In the third quarter, accounted for: 68% of homes sold 78 Markets | 26 States 68% of homes closed 72% of home sales revenue Q3 Average Closing Price: $306,000 Reported metrics for D.R. Horton include our Crown Communities and Pacific Ridge Homes operat
Slide 18: Emerald Homes
Emerald Homes Higher-end move-up and luxury buyer Introduced in 2013 In the third quarter, accounted for: 46 Markets | 18 States 4% of homes sold 4% of homes closed 8% of home sales revenue Q3 Average Closing Price: $635,000 Zelman Housing Summit I September 2016 18
Slide 19: Express Homes
Express Homes Targeted at the true entry-level buyer Introduced in Spring 2014 In the third quarter, accounted for: 51 Markets | 17 States 28% of homes sold 28% of homes closed 20% of home sales revenue Q3 Average Closing Price: $205,000 Reported metrics for Express include our Regent Ho
Slide 20: Sales, Closings & Backlog – Q3 FY16
Sales, Closings & Backlog – Q3 FY16 Net Sales Orders, Homes Closed and Homes in Backlog increased 13%, 9% and 15%, respectively, in Q3 of FY2016 compared to Q3 of FY2015 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Sales Closings Backlog 3Q FY14 3Q FY15 3Q FY16 Zelman Housing Summit I Septe
Slide 21: Income Statement
Income Statement Fiscal 3 Months Ended 9 Months Ended Year Ended 6/30/2016 6/30/2015 6/30/2016 6/30/2015 9/30/2015 Homes closed 10,739 9,856 28,062 26,072 36,648 Revenues: Home sales $ 3,118.7 $ 2,857.9 $ 8,145.6 $ 7,417.4 $ 10,469.4 Land/lot sales & other 30.1 18.5 65.2 50.6 89.6 3,148.8 2,876.4 8,
Slide 22: Home Sales Gross Margin
Home Sales Gross Margin Home sales gross margin of around 20% in a stable housing market 25% 20% 21.3% 20.8% 19.8% 19.9% 19.9% 20.3% 17.7% 15% 10% 5% 0% FY12 FY13 FY14 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Shown as a % of home sales revenues Includes interest amortized to cost of sales Zelman Housing Summit
Slide 23: Homebuilding SG&A
Homebuilding SG&A SG&A as a percentage of homebuilding revenues improved 10 basis points in Q3 FY2016 Fiscal YTD 6/30 Third Fiscal Quarter SG&A $ SG&A $ $1,200 $1,200 $1,000 $1,000 $800 9.9% 9.5% $800 $600 $600 $782.0 $400 $738.2 $400 9.0% 8.9% $200 $200 $257.8 $280.4 $0 $0 2015 2016 Q3 FY15 Q3 FY16
Slide 24: Consolidated Pre-tax Income
Consolidated Pre-tax Income Consolidated pre-tax profit margin improved 40 basis points to 11.7% in Q3 FY2016 Fiscal YTD 6/30 Third Fiscal Quarter PTI $ PTI $ $1,200 $1,200 $1,000 $1,000 10.9% $800 10.3% $800 $600 $600 $920.4 11.7% $784.6 $400 11.3% $400 $200 $333.8 $378.6 $200 $0 $0 2015 2016 Q3 FY
Slide 25: Balance Sheet
Balance Sheet 6/30/16 9/30/15 6/30/15 HB cash and cash equivalents $ 862.9 $ 1,355.9 $ 766.7 Restricted cash 11.8 9.7 11.7 Inventories 8,504.2 7,807.0 8,111.2 Deferred income taxes, net 505.1 558.1 544.3 Other assets 1,449.2 1,420.3 1,411.3 Total $ 11,333.2 $ 11,151.0 $ 10,845.2 Notes payable - HB $
Slide 26: Homes in Inventory
Homes in Inventory 30,000 25,300 25,000 20,600 21,200 20,000 19,800 17,000 15,000 13,000 10,000 5,000 0 9/30/12 9/30/13 9/30/14 6/30/15 9/30/15 6/30/16 Models Sold Specs Zelman Housing Summit I September 2016 26
Slide 27: Land and Lot Position
Land and Lot Position Supports double-digit growth in both revenues and pre-tax profits 225,000 202,000 200,000 180,900 183,500 175,000 173,600 173,900 152,700 58,900 89,900 150,000 54,300 53,500 55,500 125,000 58,100 100,000 75,000 94,600 126,600 124,600 120,100 118,400 112,100 50,000 25,000 0 9/30
Slide 28: Inactive Land Held for Development
Inactive Land Held for Development “Mothballed” lot count down 35% 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 $235.4 15000 $202.3 $200 14,000 12,800 $155.5 11,100 10000 $100 9,100 5000 $0 0 9/30/12 9/30/13 9/30/14 6/
Slide 29: Public Debt Maturities by Year
Public Debt Maturities by Year $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 Zelman Housing Summit I September 2016 29