- Revenue: $10 billion for the fourth quarter; $36.8 billion for the fiscal year.
- Pre-Tax Income: $1.7 billion for the fourth quarter; $6.3 billion for the fiscal year.
- Pre-Tax Profit Margin: 17.1% for both the fourth quarter and fiscal year.
- Earnings Per Diluted Share: $3.92 for the fourth quarter; $14.34 for the fiscal year.
- Net Income: $1.3 billion for the fourth quarter; $4.8 billion for the fiscal year.
- Home Sales Revenue: $8.9 billion for the fourth quarter.
- Gross Profit Margin on Home Sales: 23.6% for the fourth quarter.
- Cash Flow from Operations: $2.2 billion for the fiscal year.
- Share Repurchases: 12.5 million shares for $1.8 billion during the fiscal year.
- Dividends Paid: $395 million during the fiscal year.
- Return on Equity: 19.9% for the fiscal year.
- Return on Assets: 13.9% for the fiscal year.
- Net Sales Orders: 19,035 homes for the fourth quarter.
- Average Sales Price of Net Sales Orders: $375,400 for the fourth quarter.
- Cancellation Rate: 21% for the fourth quarter.
- SG&A Expenses: 7.6% of revenues for the fourth quarter.
- Homes in Inventory: 37,400 at year-end.
- Rental Operations Revenue: $705 million for the fourth quarter; $1.7 billion for the fiscal year.
- Financial Services Revenue: $222 million for the fourth quarter; $883 million for the fiscal year.
- Financial Services Pre-Tax Profit Margin: 34.2% for the fourth quarter; 35.3% for the fiscal year.
- Liquidity: $7.6 billion at year-end.
- Debt: $5.9 billion at year-end.
- Book Value Per Share: $78.12, up 15% from the prior year.
Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- D.R. Horton Inc (DHI, Financial) reported solid financial results with a consolidated pre-tax income of $1.7 billion and revenues of $10 billion for the fourth quarter.
- Earnings per diluted share for the year increased by 4% to $14.34, indicating strong profitability.
- The company returned all of its generated cash flow to shareholders through repurchases and dividends, with share distributions increasing by approximately $700 million or 44% from the prior year.
- D.R. Horton Inc (DHI) has a strong balance sheet with low leverage and substantial liquidity, providing significant financial flexibility.
- The company has improved its construction cycle times, positioning it to turn housing inventory faster in 2025.
Negative Points
- Net income for the fourth quarter decreased by 15% to $1.3 billion, indicating a decline in profitability compared to the prior year.
- The average closing price for homes in the fourth quarter was $377,600, down 1% both sequentially and from the prior year quarter.
- The cancellation rate for the quarter increased to 21%, up from 18% sequentially, indicating potential buyer hesitancy.
- Gross profit margin on home sales revenues in the fourth quarter was 23.6%, down 40 basis points sequentially due to higher incentive costs.
- The company anticipates further increases in incentive levels on homes closed over the next few months, which could impact profit margins.
Q & A Highlights
Q: Can you provide more details on your revenue guidance, particularly regarding rental revenue and average selling price (ASP)?
A: Bill W Wheat, CFO: Our consolidated revenue guidance assumes relatively flat rental revenues year over year, with a heavier weighting in the back half of the year. ASP is expected to remain relatively flat, subject to market conditions and incentive levels.
Q: How are current market conditions affecting buyer behavior, and what are you seeing in terms of interest and traffic?
A: Paul J Romanowski, CEO: Buyers are less motivated due to affordability challenges and market noise, including rate volatility and election news. Traffic is consistent but below expectations. We don't see this as a structural demand issue but rather a temporary pause.
Q: With your delivery guidance for 2025, are you expecting a ramp in starts or improved cycle times?
A: Michael J Murray, COO: We expect both improved cycle times and the ability to increase starts as the market unfolds. Our lot position and improved cycle times position us well to turn our housing inventory faster in 2025.
Q: What is your strategy regarding building smaller floor plans, and how does it impact affordability?
A: Jessica Hansen, SVP: We've reduced home sizes by about 1% sequentially and year over year, with attached products like townhomes making up a larger percentage of closings. Smaller plans help us deliver affordable price points and monthly payments.
Q: How are you managing incentives and gross margins given the current market conditions?
A: Bill W Wheat, CFO: Higher incentives are expected to continue into Q1 due to rate volatility and increased costs of interest rate buydowns. Over 80% of buyers using our mortgage company had rate buydowns, reflecting the cost rather than an increase in the percentage of buyers utilizing them.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
