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01/10 00:28
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects negative financial performance with declining revenues, EPS, and home sales. Despite optimistic guidance and strong shareholder returns, the Q&A revealed uncertainties regarding tariffs and inflation management, alongside increased SG&A expenses. The market's reaction is likely to be negative due to these factors, especially the financial declines, despite some positive aspects like cash flow focus and shareholder returns.
Earnings per diluted share $2.58, down from $3.52 year-over-year.
Consolidated pretax income $1,100,000,000, with a pretax profit margin of 13.8%.
Consolidated revenues $7,700,000,000, down from $8,500,000,000 year-over-year.
Home sales revenues $7,200,000,000, down from $8,500,000,000 year-over-year.
Homes closed 19,276 homes, down from 22,548 homes year-over-year.
Average closing price $372,500, down 1% year-over-year.
Net sales orders 22,437 homes, down 15% year-over-year.
Order value $8,400,000,000, down 17% year-over-year.
Cancellation rate 16%, down from 18% sequentially, up from 15% year-over-year.
Average number of active selling communities Up 5% sequentially and up 10% year-over-year.
Gross profit margin on home sales revenues 21.8%, down 90 basis points sequentially.
Homebuilding SG&A expenses Increased by 4% year-over-year, SG&A as a percentage of revenues was 8.9%, up 170 basis points year-over-year.
Homebuilding investments in lots, land, and development $2,000,000,000.
Rental operations pre-tax income $23,000,000 on $237,000,000 of revenues.
Financial Services pre-tax income $73,000,000 on $213,000,000 of revenues, with a pre-tax profit margin of 34.3%.
Consolidated cash provided by operations $211,000,000.
Consolidated liquidity $5,800,000,000, consisting of $2,500,000,000 of cash and $3,300,000,000 of available capacity on credit facilities.
Debt at the end of the quarter $6,500,000,000.
Stockholders’ equity $24,300,000,000, with book value per share of $78.82, up 9% year-over-year.
Cash dividends paid $0.40 per share totaling $126,000,000.
Shares repurchased 9,700,000 shares for $1,300,000,000.
Return on equity 17.4%.
Return on assets 12.2%.
Homebuilding cash provided by operations $876,000,000.
Homebuilding lot position Approximately 613,000 lots, with 25% owned and 75% controlled through purchase contracts.
Land and lot costs Up 3% sequentially and 10% year-over-year.
Market Expansion: D.R. Horton has expanded its market count by 6% to 126 markets across 36 states, with a 10% increase in community count.
Operational Efficiency: Construction cycle times improved, allowing for faster inventory turnover. The company closed 19,276 homes, with a gross margin of 21.8%.
Sales Incentives: Increased sales incentives to drive traffic and sales, with expectations for these to remain elevated.
Cash Flow: Generated $876 million in cash from homebuilding operations, with a focus on capital efficiency.
Strategic Shift: Shifted focus from sheer volume to returns-based business model, emphasizing consistent operating cash flows and shareholder returns.
Share Repurchase: Increased share repurchase authorization to $5 billion, reflecting a commitment to returning capital to shareholders.
Market Conditions: The spring selling season started slower than expected due to affordability constraints and declining consumer confidence, leading to a 15% decrease in net sales orders and homebuilding revenues.
Sales Incentives: Increased sales incentives are necessary to drive traffic and incremental sales, with expectations that incentive levels will remain elevated or increase further depending on market conditions and mortgage interest rates.
Cancellation Rates: The cancellation rate for the quarter was 16%, indicating some volatility in buyer commitment, although it remains at the low end of historical ranges.
Supply Chain Challenges: There is uncertainty regarding tariffs and their potential impact on costs, with ongoing discussions about how to manage any price increases from suppliers.
Land Costs: Land costs increased by 10% year-over-year and are expected to continue rising, with no significant relief anticipated in the near future.
Economic Factors: The company acknowledges significant current volatility and uncertainty in the economy, which may impact future performance and requires careful adjustment of operations and capital allocation.
Labor Costs: Labor costs are expected to remain relatively flat, with good availability of labor across markets, contributing to improved construction cycle times.
Inventory Management: The company is managing its inventory levels carefully, with a focus on reducing unsold homes and improving turnover rates.
Return on Inventory: Homebuilding pretax return on inventory for the twelve months ended March 31 was 24.3%.
Share Repurchase: The company plans to repurchase approximately $4,000,000,000 of common stock in fiscal 2025, which is more than double the amount purchased in fiscal 2024.
Dividend Payments: The company continues to expect annual dividend payments of around $500,000,000.
Community Count Expansion: The average number of active selling communities was up 5% sequentially and up 10% year over year.
Lot Position: The homebuilding lot position at March 31 consisted of approximately 613,000 lots, with 25% owned and 75% controlled through purchase contracts.
Q3 Revenue Guidance: Expected consolidated revenues in the range of $8,400,000,000 to $8,900,000,000.
Q3 Homes Closed Guidance: Homes closed by homebuilding operations expected to be in the range of 22,000 to 22,500 homes.
Q3 Gross Margin Guidance: Expected home sales gross margin for the third quarter to be in the range of 21% to 21.5%.
Full Year Revenue Guidance: Expected consolidated revenues of approximately $33,300,000,000 to $34,800,000,000.
Full Year Homes Closed Guidance: Homes closed by homebuilding operations expected to be in the range of 85,000 to 87,000 homes.
Income Tax Rate Guidance: Forecasted income tax rate for fiscal 2025 of approximately 24%.
Cash Dividends Paid: $0.40 per share totaling $126,000,000.
Declared Quarterly Dividend: The Board has declared a quarterly dividend at the same level to be paid in May.
Annual Dividend Payments: Expected annual dividend payments of around $500,000,000.
Share Repurchases in Q2: Repurchased 9,700,000 shares for $1,300,000,000.
Fiscal Year to Date Share Repurchases: $2,400,000,000, reducing outstanding share count by 7%.
New Share Repurchase Authorization: Board approved a new share repurchase authorization totaling $5,000,000,000.
Planned Share Repurchases for FY 2025: Approximately $4,000,000,000, more than double the amount purchased in FY 2024.
The earnings call summary presents a mixed outlook. While there are positive indicators like strong order growth in certain regions and a significant share repurchase plan, concerns exist over elevated sales incentives, sticky lot costs, and reduced gross margins. The Q&A reveals management's strategic flexibility and confidence but highlights uncertainties in market conditions and costs. The lack of specific guidance on gross margins and incentives adds to the neutral sentiment. Given the absence of market cap data, a neutral prediction is appropriate, balancing positive long-term housing market outlook against current economic volatility.
The earnings call presented a mixed outlook. While financial metrics like homebuilding return and share repurchase plans are positive, concerns include increased incentives affecting margins, and unclear responses on cost impacts. The Q&A highlighted uncertainties in geographic demand and costs. With stable rental revenues but declining margins, the sentiment is balanced. The absence of market cap data suggests a cautious approach, leading to a neutral prediction for stock movement.
The earnings call presents mixed signals. While there are positive aspects like strong shareholder returns and a significant share repurchase plan, financial metrics such as EPS and revenue have declined year-over-year. The guidance for revenue is optimistic but offset by increased SG&A expenses and a decline in gross profit margins. The Q&A session did not reveal any major new risks or positive catalysts. Given the lack of a strong positive or negative catalyst, the overall sentiment is neutral, suggesting a stock price movement within -2% to 2% over the next two weeks.
The earnings call reflects negative financial performance with declining revenues, EPS, and home sales. Despite optimistic guidance and strong shareholder returns, the Q&A revealed uncertainties regarding tariffs and inflation management, alongside increased SG&A expenses. The market's reaction is likely to be negative due to these factors, especially the financial declines, despite some positive aspects like cash flow focus and shareholder returns.
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