26 slides from D.r. Horton's earnings presentation, May 26, 2016
Slide 1: Q1 FY2016
D-RHORTON & JS nerica’s Q1 FY2016
Slide 2: D-R-HORTON #=
D-R-HORTON #= JS nerica’s ‘
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 $10.9 billion in annual revenues2 36,736 in annual homes closed2 $1.1 billion in annual pre-tax income2 $11.2 billion of total assets3 $6.1 billion of stockholders’ equity3 Book value per share of $16.393 1B
Slide 5: Geographic Diversification
Geographic Diversification HB Revenue1 East West 13% 79 Markets | 27 States 24% Midwest 6% Southwest 3% South Central 26% Southeast 28% East Inventory2 10% Midwest 6% West 29% Region States Covered East Delaware, Georgia, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Virginia M
Slide 6: Broad Range of Product Offerings
Broad Range of Product Offerings Homes for entry-level, move-up and luxury buyers 7% $500k+ 27% $0 to $200k 24% $300k to $500k $200k to $250k to $250k $300k 24% 18% Represents homes closed for the trailing twelve months ended 12/31/15 Q1 FY2016 6
Slide 7: Substantial Growth in Brands
Substantial Growth in Brands New Brand Growth - TTM Overall Brand Mix – Q1 Homes Closed 10,000 4% 22% 7,500 1,163 5,000 6,623 74% 2,500 580 1,960 0 TTM 12/31/14 TTM 12/31/15 Represents homes closed Q1 FY2016 7
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
Slide 9: Management Tenure & Experience
Management Tenure & Experience Average employee tenure: Region Presidents – over 20 years Division Presidents – 15 years City Managers – over 10 years Q1 FY2016 9
Slide 10: FY 2016 Expectations
FY 2016 Expectations* Fiscal Year: Consolidated pre-tax margin in the range of 10.5% to 11.0% Consolidated revenues of $12.0 billion to $12.5 billion Closings between 39,500 and 41,500 homes Home sales gross margin in the high 19s to 20% Homebuilding SG&A expense in the range of 9.2% to 9.
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 $373 million maturities remaining in fiscal 2016 – most likely
Slide 12: First Quarter Data
First Quarter Data Q1 FY2016 12
Slide 13: Q1 FY 2016 Highlights
Q1 FY 2016 Highlights The value of net homes sold, homes closed and homes in backlog increased by 12%, 4% and 16%, respectively 8,064 net homes sold and 8,061 homes closed 10,665 homes in backlog at 12/31/15 Consolidated pre-tax income increased 9% to $241.3 million Consolidated pre-tax in
Slide 14: D.R. Horton
D.R. Horton The Heart of our Business In the first quarter, accounted for: 71% of homes sold 79 Markets | 27 States 74% of homes closed 77% of home sales revenue Q1 Average Closing Price: $302,000 Reported metrics for D.R. Horton include our Crown Communities and Pacific Ridge Homes operat
Slide 15: Emerald Homes
Emerald Homes Higher-end move-up and luxury buyer Introduced in 2013 In the first quarter, accounted for: 44 Markets | 17 States 4% of homes sold 4% of homes closed 8% of home sales revenue Q1 Average Closing Price: $592,000 Q1 FY2016 15
Slide 16: Express Homes
Express Homes Targeted at the true entry-level buyer Introduced in Spring 2014 In the first quarter, accounted for: 48 Markets | 15 States 25% of homes sold 22% of homes closed 15% of home sales revenue Q1 Average Closing Price: $199,000 Reported metrics for Express include our Regent Ho
Slide 17: Sales, Closings & Backlog – Q1 FY16
Sales, Closings & Backlog – Q1 FY16 Net Sales Orders, Homes Closed and Homes in Backlog increased 9%, 1% and 15%, respectively, in Q1 of FY2016 compared to Q1 of FY2015 12,000 10,000 8,000 6,000 4,000 2,000 0 Sales Closings Backlog 1Q FY14 1Q FY15 1Q FY16 Q1 FY2016 17
Slide 18: Income Statement
Income Statement 3 Months Ended Fiscal Year Ended 12/31/2015 12/31/2014 9/30/2015 9/30/2014 Homes closed 8,061 7,973 36,648 28,670 Revenues: Home sales $ 2,340.9 $ 2,240.7 $ 10,469.4 $ 7,804.7 Land/lot sales & other 20.2 12.3 89.6 53.8 2,361.1 2,253.0 10,559.0 7,858.5 Gross Profit: Home sales 466.6
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% 19.9% 19.9% 19.9% 19.8% 19.7% 17.7% 15% 10% 5% 0% FY12 FY13 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Shown as a % of home sales revenues Includes interest amortized to cost of sales Q1 F
Slide 20: Homebuilding SG&A
Homebuilding SG&A SG&A as a percentage of homebuilding revenues improved 30 basis points in Q1 FY2016 Fiscal Year 2015 First Fiscal Quarter 2016 SG&A $ SG&A $ $1,200 $1,200 9.6% $1,000 $1,000 10.6% $800 $800 $600 $600 $834.2 $1,013.6 $400 $400 10.6% 10.3% $200 $200 $238.0 $243.3 $0 $0 2014 2015 Q1 F
Slide 21: Consolidated Pre-tax Income
Consolidated Pre-tax Income Consolidated pre-tax income margin in Q1 FY2016 improved 40 basis points to 10.0% Fiscal Year 2015 First Fiscal Quarter 2016 PTI $ PTI $ $1,200 10.4% $1,200 $1,000 $1,000 10.1% $800 $800 $600 $1,123.4 $600 $400 $814.2 $400 10.0% 9.6% $200 $200 $220.7 $241.3 $0 $0 2014 201
Slide 22: Balance Sheet
Balance Sheet 12/31/15 9/30/15 12/31/14 HB cash and cash equivalents $ 1,245.7 $ 1,355.9 $ 517.7 Restricted cash 9.7 9.7 9.6 Inventories 8,088.2 7,807.0 7,989.3 Deferred income taxes, net 542.2 558.1 552.7 Other assets 1,293.7 1,420.3 1,269.4 Total $ 11,179.5 $ 11,151.0 $ 10,338.7 Notes payable - HB
Slide 23: Homes in Inventory
Homes in Inventory 25,000 21,300 21,500 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 12/31/14 9/30/15 12/31/15 Models Sold Specs Q1 FY2016 23
Slide 24: Robust Lot Position
Robust Lot Position Increased optioned lot position by 10% from 9/30/15 to 12/31/15 200,000 183,500 184,700 180,900 177,700 175,000 173,900 152,700 150,000 55,500 61,100 58,100 54,300 58,900 60,200 125,000 100,000 75,000 94,600 126,600 124,600 124,500 118,400 116,600 50,000 25,000 0 9/30/12 9/30/13
Slide 25: Inactive Land Held for Development
Inactive Land Held for Development “Mothballed” lot count down 24% from 12/31/14 $700 45000 $628.3 40000 $600 39,400 Balance 35000 $500 Lots Held $450.2 30000 $400 25000 $332.8 $304.3 $300 20000 21,700 $202.3 15000 $200 14,000 $185.4 13,900 11,100 10000 10,500 $100 5000 $0 0 9/30/12 9/30/13 9/30/14
Slide 26: Public Debt Maturities by Year
Public Debt Maturities by Year As of January 25, 2016 $800 $700 $700 $600 $500 $500 $500 5.750% $400 $400 $373 $350 $350 $300 $200 $100 6.500% 4.750% 3.625% 3.750% 4.000% 4.375% 4.750% $0 FY 16 FY 17 FY 18 FY 19 FY 20 FY 22 FY 23 $ in millions Pro forma balance of public notes outstanding subsequent