D.R. Horton, Inc., America's Builder, Reports Fiscal 2009 Third Quarter Results and Declares Quarterly Dividend

August 04, 2009

FORT WORTH, Texas--(BUSINESS WIRE)--Aug. 4, 2009-- D.R. Horton, Inc. (NYSE:DHI), America’s Builder, today reported a net loss for its third fiscal quarter ended June 30, 2009 of $142.3 million, or $0.45 per diluted share. The quarterly results included $110.8 million in pre-tax charges to cost of sales for inventory impairments and write-offs of deposits and pre-acquisition costs related to land option contracts that the Company does not intend to pursue. The net loss for the same quarter of fiscal 2008 was $399.3 million, or $1.26 per diluted share. Homebuilding revenue for the third quarter of fiscal 2009 totaled $914.1 million, compared to $1.4 billion in the same quarter of fiscal 2008. Homes closed totaled 4,240 homes, compared to 6,167 homes in the year ago quarter.

For the nine months ended June 30, 2009, the Company reported a net loss of $313.4 million, or $0.99 per diluted share. The nine-month results included pre-tax charges to cost of sales of $215.2 million of inventory impairments and write-offs of deposits and pre-acquisition costs related to land option contracts that the Company does not intend to pursue. The net loss for the same period of fiscal 2008 was $1.8 billion, or $5.81 per diluted share. Homebuilding revenue for the nine months ended June 30, 2009 totaled $2.6 billion, compared to $4.8 billion for the same period of fiscal 2008. Homes closed in the nine-month period totaled 11,893 homes, compared to 19,435 homes closed in the same period of fiscal 2008.

The Company’s sales order backlog of homes under contract at June 30, 2009 was 5,430 homes ($1.1 billion), compared to 8,281 homes ($1.9 billion) at June 30, 2008. Net sales orders for the third quarter totaled 5,089 homes ($1.1 billion), compared to 5,501 homes ($1.2 billion) for the same quarter of fiscal 2008. The Company’s cancellation rate (cancelled sales orders divided by gross sales orders) for the third quarter of fiscal 2009 was 26%. Net sales orders for the first nine months of fiscal 2009 were 12,026 homes ($2.5 billion), compared to 17,274 homes ($3.8 billion) for the same period of fiscal 2008.

The Company’s homebuilding unrestricted cash balance at June 30, 2009 was $1.97 billion. Net cash provided by operating activities for the first nine months of fiscal 2009 was $1.1 billion, including $124.1 million provided during the three months ended June 30, 2009.

During the third quarter, the Company repurchased $87.8 million principal amount of its outstanding senior notes for a total purchase price of $84.0 million, plus accrued interest.

The Company has declared a quarterly cash dividend of $0.0375 per share. The dividend is payable on August 28, 2009 to stockholders of record on August 19, 2009.

Donald R. Horton, Chairman of the Board, said, “Our net sales orders in the June quarter reflected a 22% sequential increase from our March quarter which was stronger than our usual seasonal trend. However, market conditions in the homebuilding industry are still challenging, characterized by rising foreclosures, high inventory levels of available homes, increasing unemployment, tight credit for homebuyers and weak consumer confidence. We have continued to adjust our business to the current homebuilding environment by reducing our owned lot position and completed specs, controlling costs and strengthening our balance sheet.

“We have generated positive cash flow from operations in each of the past twelve quarters, and our unrestricted homebuilding cash balance was $1.97 billion at June 30, 2009. Our net homebuilding debt to total capitalization was 34.5% at the end of the quarter, and we will continue to focus on maintaining our strong liquidity position and balance sheet.”

The Company will host a conference call today (Tuesday, August 4) at 11:00 a.m. Eastern time. The dial-in number is 800-374-9096, and the call will also be webcast from www.drhorton.com on the “Investor Relations” page.

D.R. Horton, Inc., America’s Builder, is the largest homebuilder in the United States, delivering more than 26,000 homes in its fiscal year ended September 30, 2008. Founded in 1978 in Fort Worth, Texas, D.R. Horton has operations in 76 markets in 27 states in the East, Midwest, Southeast, South Central, Southwest and West regions of the United States. The Company is engaged in the construction and sale of high quality homes with sales prices ranging from $90,000 to over $900,000. D.R. Horton also provides mortgage financing and title services for homebuyers through its mortgage and title subsidiaries.

Portions of this document may constitute “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 materially different. All forward-looking statements are based upon information available to D.R. Horton on the date this release was issued. D.R. Horton does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements in this release include our continued focus on maintaining our strong liquidity position and balance sheet. Factors that may cause the actual results to be materially different from the future results expressed by the forward-looking statements include, but are not limited to: the continuing downturn in the homebuilding industry, including further deterioration in industry or broader economic conditions; the downturn in homebuilding and the disruptions in the credit markets, which could limit our ability to access capital and increase our costs of capital; the reduction in availability of mortgage financing and the increase in mortgage interest rates; the limited success of our strategies in responding to adverse conditions in the industry; changes in general economic, real estate, construction and other business conditions; changes in the costs of owning a home; the effects of governmental regulations and environmental matters on our homebuilding operations; the effects of governmental regulations on our financial services operations; our substantial debt and our ability to comply with related debt covenants, restrictions and limitations; competitive conditions within our industry; our ability to effect any future growth strategies successfully; our ability to realize our deferred income tax asset; our net operating loss carryforwards could be substantially limited if we experienced an ownership change as defined in the Internal Revenue Code; and the uncertainties inherent in home warranty and construction defect claims matters. Additional information about issues that could lead to material changes in performance is contained in D.R. Horton’s annual report on Form 10-K and most recent quarterly report on Form 10-Q, which are filed with the Securities and Exchange Commission.

WEBSITE ADDRESS: www.drhorton.com

 
D.R. HORTON, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
  June 30,   September 30,
2009 2008
ASSETS (In millions)
Homebuilding:
Cash and cash equivalents $ 1,966.3 $ 1,355.6
Inventories:
Construction in progress and finished homes 1,407.7 1,681.6
Residential land and lots - developed and under development 1,875.9 2,409.6
Land held for development 567.0 531.7
Land inventory not owned   22.7     60.3  
3,873.3 4,683.2
Income taxes receivable 124.9 676.2
Restricted cash 62.0 2.0
Deferred income taxes, net of valuation allowance of
$1,068.5 million and $961.3 million at June 30, 2009
and September 30, 2008, respectively 165.4 213.5
Property and equipment, net 62.5 65.9
Earnest money deposits and other assets 198.5 245.5
Goodwill   15.9     15.9  
  6,468.8     7,257.8  
Financial Services:
Cash and cash equivalents 36.0 31.7
Mortgage loans held for sale 222.7 352.1
Other assets   52.0     68.0  
  310.7     451.8  
$ 6,779.5   $ 7,709.6  
LIABILITIES
Homebuilding:
Accounts payable $ 170.6 $ 254.0
Accrued expenses and other liabilities 685.9 814.9
Notes payable   3,280.2     3,544.9  
  4,136.7     4,613.8  
Financial Services:
Accounts payable and other liabilities 46.8 27.5
Mortgage repurchase facility   77.4     203.5  
  124.2     231.0  
  4,260.9     4,844.8  
 
Minority interests   20.9     30.5  
STOCKHOLDERS' EQUITY
Common stock 3.2 3.2
Additional capital 1,728.7 1,716.3
Retained earnings 861.5 1,210.5
Treasury stock, at cost   (95.7 )   (95.7 )
  2,497.7     2,834.3  
$ 6,779.5   $ 7,709.6  
 
D.R. HORTON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
  Three months ended   Nine months ended
June 30, June 30,
2009   2008 2009   2008
(In millions, except per share data)
Homebuilding:
Revenues:
Home sales $ 896.6 $ 1,415.0 $ 2,553.1 $ 4,619.8
Land/lot sales   17.5     18.3     36.6     145.1  
 
  914.1     1,433.3     2,589.7     4,764.9  
Cost of sales:
Home sales 795.0 1,271.7 2,211.5 4,097.1
Land/lot sales 16.7 14.2 32.6 118.0
Inventory impairments and land option cost write-offs   110.8     330.4     215.2     1,410.0  
 
  922.5     1,616.3     2,459.3     5,625.1  
Gross profit (loss):
Home sales 101.6 143.3 341.6 522.7
Land/lot sales 0.8 4.1 4.0 27.1
Inventory impairments and land option cost write-offs   (110.8 )   (330.4 )   (215.2 )   (1,410.0 )
 
  (8.4 )   (183.0 )   130.4     (860.2 )
 
Selling, general and administrative expense 134.3 194.7 388.2 616.1
Interest expense 20.3 11.7 68.9 22.9
Loss (gain) on early retirement of debt 3.9 2.6 (4.4 ) 2.6
Other (income)   (2.2 )   (3.5 )   (8.7 )   (7.0 )
 
Operating (loss) from Homebuilding   (164.7 )   (388.5 )   (313.6 )   (1,494.8 )
 
Financial Services:
Revenues, net of recourse expense and reinsurance reserves 18.8 30.9 39.1 98.8
General and administrative expense 18.1 23.1 58.5 76.4
Interest expense 0.2 0.6 1.2 2.7
Interest and other (income)   (2.3 )   (2.2 )   (8.0 )   (8.5 )
 
Operating income (loss) from Financial Services   2.8     9.4     (12.6 )   28.2  
 
Loss before income taxes (161.9 ) (379.1 ) (326.2 ) (1,466.6 )
(Benefit from) provision for income taxes   (19.6 )   20.2     (12.8 )   367.2  
 
Net loss $ (142.3 ) $ (399.3 ) $ (313.4 ) $ (1,833.8 )
 
Basic & Diluted:
Net loss per common share $ (0.45 ) $ (1.26 ) $ (0.99 ) $ (5.81 )
Weighted average number of common shares   316.9     316.0     316.8     315.5  
 
 
Other Consolidated Financial Data:
 
Interest amortized to home and land/lot cost of sales $ 30.3   $ 44.9   $ 89.1   $ 178.1  
Depreciation and amortization $ 5.9   $ 13.0   $ 20.7   $ 42.1  
Interest incurred $ 43.1   $ 59.1   $ 151.0   $ 180.6  
 
D.R. HORTON, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
 
  Nine Months Ended
June 30, 2009
(In millions)
Operating Activities
Net loss $ (313.4 )
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 20.7
Amortization of debt discounts and fees 5.0
Stock option compensation expense 10.0
Income tax benefit from stock option exercises (0.3 )
Deferred income taxes 48.1
Gain on early retirement of debt (4.4 )
Inventory impairments and land option cost write-offs 215.2
Changes in operating assets and liabilities:
Decrease in construction in progress and finished homes 230.6
Decrease in residential land and lots — developed, under
development, and held for development 325.3
Decrease in earnest money deposits and other assets 49.2
Decrease in income taxes receivable 551.3
Decrease in mortgage loans held for sale 129.4
Decrease in accounts payable, accrued expenses and other liabilities   (164.7 )
Net cash provided by operating activities   1,102.0  
Investing Activities
Purchases of property and equipment (6.2 )
Increase in restricted cash   (60.0 )
Cash used in investing activities   (66.2 )
Financing Activities
Proceeds from notes payable 487.5
Repayment of notes payable (875.0 )
Proceeds from stock associated with certain employee benefit plans 2.0
Income tax benefit from stock option exercises 0.3
Cash dividends paid   (35.6 )
Net cash used in financing activities   (420.8 )
Increase in Cash and Cash Equivalents 615.0
Cash and cash equivalents at beginning of period   1,387.3  
Cash and cash equivalents at end of period   2,002.3  
 
D.R. HORTON, INC.
($'s in millions)
 
  NET SALES ORDERS
             
Three Months Ended June 30, Nine Months Ended June 30,
2009 2008 2009 2008
Homes Value Homes Value Homes Value Homes Value
 
East 482 $ 115.8 372 $ 95.4 1,024 $ 239.4 1,225 $ 315.8
Midwest 377 102.5 406 121.1 842 227.0 1,145 331.5
Southeast 786 145.4 841 172.3 2,087 379.0 2,586 508.4
South Central 1,845 317.6 1,904 344.5 4,319 747.6 5,896 1,048.2
Southwest 583 102.6 836 155.5 1,455 249.0 2,853 525.7
West 1,016   275.2 1,142   348.0 2,299   629.1 3,569   1,095.4
 
5,089 $ 1,059.1 5,501 $ 1,236.8 12,026 $ 2,471.1 17,274 $ 3,825.0
 
 
 
HOMES CLOSED
 
Three Months Ended June 30, Nine Months Ended June 30,
2009 2008 2009 2008
Homes Value Homes Value Homes Value Homes Value
 
East 351 $ 83.1 540 $ 134.7 1,012 $ 240.0 1,737 $ 445.8
Midwest 274 76.8 357 107.8 743 206.5 1,302 391.8
Southeast 718 136.6 890 186.2 2,059 393.6 2,775 600.5
South Central 1,529 269.3 1,894 344.5 4,231 745.0 5,857 1,051.9
Southwest 510 86.8 1,294 251.2 1,624 304.4 4,049 831.2
West 858   244.0 1,192   390.6 2,224   663.6 3,715   1,298.6
 
4,240 $ 896.6 6,167 $ 1,415.0 11,893 $ 2,553.1 19,435 $ 4,619.8
 
 
 
SALES ORDER BACKLOG
 
As of June 30,
2009 2008
Homes Value Homes Value
 
East 499 $ 117.6 682 $ 176.6
Midwest 427 112.0 443 131.8
Southeast 811 151.1 1,009 217.5
South Central 2,087 362.1 2,732 492.5
Southwest 643 115.2 1,943 380.0
West 963   267.5 1,472   501.2
 
5,430 $ 1,125.5 8,281 $ 1,899.6

Source: D.R. Horton, Inc.

D.R. Horton, Inc.
Stacey Dwyer, EVP, 817-390-8200

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding D.R. Horton's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.

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