D.R. Horton, Inc., America’s Builder, Reports Fiscal 2018 Third Quarter Earnings and Declares Quarterly Dividend of $0.125 Per Share

ARLINGTON, Texas--(BUSINESS WIRE)-- D.R. Horton, Inc. (NYSE:DHI):

Fiscal 2018 Third Quarter Highlights - comparisons to the prior year quarter

• Net income attributable to D.R. Horton increased 57% to $453.8 million or $1.18 per diluted share
• Consolidated pre-tax income increased 39% to $616.2 million
• Consolidated pre-tax profit margin improved 210 basis points to 13.9%
• Net sales orders increased 13% in value to $4.4 billion and 12% in homes to 14,650
• Homes closed increased 16% in value to $4.3 billion and 13% in homes to 14,114

Fiscal Year-to-Date Highlights - comparisons to the prior year period

• Consolidated pre-tax income increased 30% to $1.5 billion
• Consolidated pre-tax profit margin improved 140 basis points to 12.6%
• Increasing fiscal 2018 guidance for consolidated pre-tax profit margin to a range of 12.7% to 12.9%

D.R. Horton, Inc. (NYSE:DHI), America’s Builder, today reported that net income attributable to D.R. Horton for the third fiscal quarter increased 57% to $453.8 million, or $1.18 per diluted share, compared to $289.0 million, or $0.76 per diluted share, in the same quarter of fiscal 2017. Homebuilding revenue for the third quarter of fiscal 2018 increased 17% to $4.3 billion from $3.7 billion in the same quarter of fiscal 2017. Homes closed in the quarter increased 13% to 14,114 homes compared to 12,497 homes closed in the same quarter of fiscal 2017.

For the nine months ended June 30, 2018, net income attributable to D.R. Horton increased 37% to $994.1 million, or $2.59 per diluted share, compared to $725.1 million, or $1.92 per diluted share, in the same period of fiscal 2017. Homebuilding revenue for the first nine months of fiscal 2018 increased 16% to $11.2 billion from $9.7 billion in the same period of fiscal 2017. Homes closed in the first nine months of 2018 increased 14% to 37,183 homes compared to 32,586 homes closed in the same period of fiscal 2017.

The Company’s effective tax rates for the three and nine month periods ended June 30, 2018 reflect a tax benefit from the rate reduction from the December Tax Cuts and Jobs Act of 2017 (Tax Act), an excess tax benefit related to stock-based compensation and the February Bipartisan Budget Act of 2018, which retroactively reinstated the federal tax credit for energy-efficient homes. The nine month period ended June 30, 2018 included a one-time non-cash income tax charge of $108.7 million to re-measure the Company’s net deferred tax assets as a result of the Tax Act.

Net sales orders for the third quarter ended June 30, 2018 increased 12% to 14,650 homes and 13% in value to $4.4 billion compared to 13,040 homes and $3.9 billion in the same quarter of the prior year. The Company’s cancellation rate (cancelled sales orders divided by gross sales orders) for the third quarter of fiscal 2018 was 21%, consistent with the prior year quarter. Net sales orders for the first nine months of fiscal 2018 increased 14% to 41,231 homes and 14% in value to $12.3 billion compared to 36,272 homes and $10.8 billion in the same period of fiscal 2017.

The Company’s homes in inventory at June 30, 2018 increased 8% to 29,800 homes compared to 27,600 homes at June 30, 2017. The Company's homebuilding land and lot portfolio at June 30, 2018 increased 10% to 277,700 lots, of which 44% were owned and 56% were controlled through option contracts, compared to 252,100 lots at June 30, 2017, of which 50% were owned and 50% were controlled through option contracts.

The Company ended the third quarter with $748.0 million of homebuilding unrestricted cash and a homebuilding debt to total capital ratio of 22.2%. Homebuilding debt to total capital consists of homebuilding notes payable divided by stockholders’ equity plus homebuilding notes payable.

Donald R. Horton, Chairman of the Board, said, “The D.R. Horton team is producing strong results in fiscal 2018. Net income for the quarter increased 57% to $453.8 million on a 17% increase in consolidated revenues to $4.4 billion. Our pre-tax profit margin improved 210 basis points to 13.9%, and the value of our net sales orders increased 13%. For the nine months ended June 30, 2018, consolidated pre-tax income, homebuilding revenues and homes closed increased 30%, 16% and 14%, respectively. These results reflect the strength of our experienced operational teams, diverse product offerings from our family of brands and solid market conditions across our broad national footprint.

“Our balance sheet strength, liquidity and continued earnings growth are increasing our strategic and financial flexibility, and we plan to maintain our disciplined, opportunistic position to enhance the long-term value of our company. We continue to expect to grow our revenues and pre-tax profits at a double-digit annual pace, while generating increasing annual operating cash flows and returns. With 29,800 homes in inventory at the end of June and 277,700 lots owned and controlled, we are well-positioned for the fourth quarter and fiscal 2019.”

Dividends

During the third quarter of fiscal 2018, the Company paid cash dividends of $47.2 million. The Company has also declared a quarterly cash dividend of $0.125 per common share that is payable on August 22, 2018 to stockholders of record on August 8, 2018.

Share Repurchases

The Company repurchased 608,537 shares of common stock for $27.0 million during the third quarter of fiscal 2018. Subsequent to quarter-end, the Company’s Board of Directors authorized the repurchase of up to $400 million of the Company’s common stock effective through September 2019, which replaced the prior authorization.

Forestar Segment

Forestar Group Inc. (NYSE:FOR)(“Forestar”), a majority-owned subsidiary of D.R. Horton, is a publicly-traded residential and real estate development company, which currently operates in 20 markets and 11 states. Forestar’s results of operations for the three month period ended June 30, 2018 and from October 5, 2017 (acquisition date) through June 30, 2018 are fully consolidated in the Company’s financial statements with the 25% interest not owned by the Company reported as noncontrolling interests. These results are included in the Company’s segment information following the consolidated financials. On its conference call today, the Company will provide an update on Forestar’s operations and expectations regarding Forestar's future growth plans.

Guidance

Based on current market conditions and the Company’s results for the first nine months of fiscal 2018, D.R. Horton is increasing its fiscal 2018 guidance for consolidated pre-tax profit margin to a range of 12.7% to 12.9%. The Company will provide guidance for its fourth quarter of fiscal 2018 and preliminary guidance for fiscal 2019 on its conference call today.

Presentation

Consistent with the first half of fiscal 2018, the Company’s consolidated balance sheets and statements of operations present its homebuilding, Forestar land development, financial services and other operations on a combined basis. Prior year amounts have also been combined to reflect this presentation. See the segment information following the consolidated financials for detailed financial information for all of the Company’s reporting segments.

Conference Call and Webcast Details

The Company will host a conference call today (Thursday, July 26) at 8:30 a.m. Eastern Time. The dial-in number is 877-407-8033, and the call will also be webcast from the Company’s website at investor.drhorton.com.

About D.R. Horton, Inc.

D.R. Horton, Inc., America’s Builder, has been the largest homebuilder by volume in the United States for sixteen consecutive years. Founded in 1978 in Fort Worth, Texas, D.R. Horton has operations in 80 markets in 26 states across the United States and closed 50,348 homes in the twelve-month period ended June 30, 2018. The Company is engaged in the construction and sale of high-quality homes through its diverse brand portfolio that includes D.R. Horton, Emerald Homes, Express Homes and Freedom Homes with sales prices ranging from $100,000 to over $1,000,000. D.R. Horton also provides mortgage financing and title services for homebuyers through its mortgage and title subsidiaries.

Forward-Looking Statements

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 that our balance sheet strength, liquidity and continued earnings growth are increasing our strategic and financial flexibility; we plan to maintain our disciplined, opportunistic position to enhance the long-term value of our company; we continue to expect to grow our revenues and pre-tax profits at a double-digit annual pace, while generating increasing annual operating cash flows and returns; and with 29,800 homes in inventory at the end of June and 277,700 lots owned and controlled, we are well-positioned for the fourth quarter and fiscal 2019. The forward-looking statements also include all metrics in the Guidance section of this release and in the Forestar segment information.

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 cyclical nature of the homebuilding industry and changes in economic, real estate and other conditions; constriction of the credit markets, which could limit our ability to access capital and increase our costs of capital; reductions in the availability of mortgage financing provided by government agencies, changes in government financing programs, a decrease in our ability to sell mortgage loans on attractive terms or an increase in mortgage interest rates; the risks associated with our land and lot inventory; our ability to effect our growth strategies, acquisitions or investments successfully; home warranty and construction defect claims; the effects of a health and safety incident; the effects of negative publicity; supply shortages and other risks of acquiring land, building materials and skilled labor; the impact of an inflationary, deflationary or higher interest rate environment; reductions in the availability of performance bonds; increases 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 significant debt and our ability to comply with related debt covenants, restrictions and limitations; competitive conditions within the homebuilding and financial services industries; the effects of the loss of key personnel; and information technology failures and data security breaches. 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 our most recent quarterly report on Form 10-Q, both of which are filed with the Securities and Exchange Commission (SEC).

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D.R. Horton, Inc.
Jessica Hansen, 817-390-8200
Vice President of Investor Relations
[email protected]

Source: D.R. Horton, Inc.