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    DR Horton Inc (DHI)

    New Share Buyback Program

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    Business Description

    D.R. Horton, Inc. is the largest homebuilding company in the United States, primarily engaged in constructing and selling single-family detached homes, which form the core of its business activities . The company also operates in rental operations, residential lot development, and financial services, contributing to its diverse portfolio . D.R. Horton offers mortgage financing and title agency services through DHI Mortgage, and engages in other activities such as insurance-related operations and owning water rights, though these are considered immaterial for separate reporting .

    1. Homebuilding - Constructs and sells single-family detached homes, with a smaller portion of revenue from attached homes like townhomes, duplexes, and triplexes.
    2. Rental Operations - Involves single-family and multi-family rental operations, including constructing, leasing, and selling residential rental properties.
    3. Residential Lot Development - Owns 62% of Forestar Group Inc., focusing on developing residential lots and maintaining relationships with land developers.
    4. Financial Services - Provides mortgage financing and title agency services through DHI Mortgage, primarily generating revenue from originating and selling mortgages and collecting fees for title insurance and closing services.
    5. Other Activities - Engages in insurance-related operations, owning water rights, and non-residential real estate, though these are not significant enough for separate reporting.

    Key Metrics

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    Executive Team

    NamePositionStart DateShort Bio
    Donald R. HortonChairman & Strategic AdvisorOctober 1, 2023Donald R. Horton serves as the Chairman and Strategic Advisor at D.R. Horton, Inc. He transitioned to this role effective October 1, 2023, after serving as the Executive Chairman during fiscal 2023. As of September 30, 2023, he resigned as an executive officer of the company but continues to serve as Chairman and Strategic Advisor .
    David V. AuldExecutive Vice ChairOctober 2023David V. Auld began his career with D.R. Horton as a Division President from 1988 to 2005. He then served as Region President from 2005 to 2013, Executive Vice President and COO from 2013 to 2014, and President and CEO from 2014 to September 2023. He transitioned to Executive Vice Chair in October 2023 .
    Paul J. RomanowskiPresident & Chief Executive OfficerOctober 2023Paul J. Romanowski is the President and CEO of D.R. Horton, Inc., a position he has held since October 2023. He has been with the company since 1999, holding various leadership roles, including Executive Vice President and Co-Chief Operating Officer from October 2021 to September 2023 .
    Michael J. MurrayExecutive Vice President & Chief Operating Officer2014Michael J. Murray has been the Executive Vice President and COO since 2014. He served as Co-Chief Operating Officer in fiscal 2022 and 2023. He joined D.R. Horton in 2002 and has held various roles, including Senior Vice President of Business Development .
    Bill W. WheatExecutive Vice President & Chief Financial Officer2003Bill W. Wheat is the Executive Vice President and CFO of D.R. Horton, Inc., positions he has held since 2003. He joined the company in 1998 as an Accounting Manager and served as Senior Vice President and Controller from 2000 through 2003 .
    Barbara R. SmithIndependent DirectorAugust 26, 2024Barbara R. Smith was appointed as an independent director effective August 26, 2024. She has extensive experience in product, technology, and process innovation, having served as Chairman and CEO of Commercial Metals Company .
    M. Chad CrowIndependent DirectorAugust 26, 2024M. Chad Crow was appointed as an independent director effective August 26, 2024. He has over two decades of experience in the homebuilding industry and served as President and CEO of Builders FirstSource from 2017 until his retirement in 2021 .
    Elaine D. CrowleyIndependent DirectorAugust 26, 2024Elaine D. Crowley was appointed as an independent director effective August 26, 2024. She is an accomplished financial executive with deep expertise in accounting, finance, operational efficiency, and strategic leadership .

    Questions to Ask Management

    1. Given that your cancellation rate increased to 18% in the quarter, up from 15% sequentially ( ), and you expect elevated incentives to remain, how do you plan to manage margins and profitability while maintaining sales volume under these challenging market conditions?

    2. With your rental property inventory at $3.1 billion and plans to maintain this level for the next several quarters ( ), how do you assess the risks associated with the rental market, and what is your long-term strategy for your rental operations amidst potential market volatility?

    3. Considering that 56% of your mortgage company's volume consists of FHA and VA loans, and 57% of the closings are with first-time homebuyers ( ), how are you managing the credit risks associated with this borrower profile, particularly in the event of an economic downturn?

    4. Despite achieving cycle times below historical norms due to improvements in supply chain and labor conditions ( ), how sustainable is this efficiency, and what impact do you anticipate if interest rates decrease and demand increases, potentially putting pressure on resources?

    5. Given the extended time frames for entitlements and lot development affecting your ability to return cash within 24 months on land deals ( ), what strategies are you implementing to mitigate these delays, and what proportion of your current communities are meeting this target?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateJuly 18, 2024
    End Date/DurationNo expiration date
    Total additional amount$4.0 billion
    Remaining authorization amount$3.6 billion as of September 30, 2024
    DetailsPart of capital allocation strategy to return capital to shareholders. Plans to repurchase approximately $1.5 billion of common stock in fiscal 2024.

    Debt Maturity Schedule

    YearAmount Due (in millions)Debt TypeInterest Rate (%)% of Total Debt
    2025$786.9 Mortgage Repurchase6.0 15.4% = (786.9 / 5,100) * 100
    2025$500.0 Homebuilding Senior2.6 9.8% = (500.0 / 5,100) * 100
    2026$154.1 Fixed Rate Debt4.5 3.0% = (154.1 / 5,100) * 100
    2027$910.3 Fixed Rate Debt3.4 17.8% = (910.3 / 5,100) * 100
    2028$600.4 Fixed Rate Debt1.5 11.8% = (600.4 / 5,100) * 100
    2029$800.0 Fixed Rate Debt3.0 15.7% = (800.0 / 5,100) * 100
    2029$1,050.0 Variable Rate Debt6.2 20.6% = (1,050.0 / 5,100) * 100
    2030$17.5 Fixed Rate Debt6.0 0.3% = (17.5 / 5,100) * 100
    Thereafter$700.0 Fixed Rate Debt5.3 13.7% = (700.0 / 5,100) * 100
    Thereafter$100.0 Variable Rate Debt5.9 2.0% = (100.0 / 5,100) * 100

    Auditor

    NameStart DateEnd DateReason for Change
    Ernst & Young LLP (EY)2018 PresentCurrent auditor.
    PricewaterhouseCoopers LLP (PwC)N/ADecember 7, 2018 The change was the result of a competitive request for proposal process undertaken by the Audit Committee.

    Latest news

    Recent developments and announcements about DHI.

    Financial Reporting

      Earnings Report

      ·
      Jan 21, 2025, 7:54 PM

      D.R. Horton, Inc. (DHI) Fiscal 2025 First Quarter Earnings Results

      D.R. Horton, Inc. has released its earnings results for the first fiscal quarter ended December 31, 2024. Below are the key highlights:

      Financial Performance

      • Net Income: $844.9 million, a decrease of 11% compared to $947.4 million in the same quarter of fiscal 2024.
      • Diluted Earnings Per Share (EPS): $2.61, down 7% from $2.82 in the prior year quarter.
      • Consolidated Revenues: $7.6 billion, a slight decrease of 1% from $7.7 billion in the same quarter of fiscal 2024.
      • Pre-Tax Income: $1.1 billion, with a pre-tax profit margin of 14.6%.

      Operational Highlights

      • Homes Closed: 19,059 homes, a 1% decrease from 19,340 homes in the same quarter of fiscal 2024.
      • Net Sales Orders: 17,837 homes valued at $6.7 billion, a 1% decrease in volume and 2% decrease in value compared to the prior year quarter.
      • Sales Order Backlog: 11,003 homes valued at $4.3 billion, a 21% decrease in both volume and value compared to December 31, 2023.

      Segment Performance

      • Homebuilding Revenue: $7.2 billion, a 2% decrease from $7.3 billion in the prior year quarter.
      • Rental Operations: Generated $11.9 million in pre-tax income on $217.8 million in revenues, compared to $31.3 million in pre-tax income on $195.3 million in revenues in the prior year quarter.
      • Forestar (Lot Development): Sold 2,333 lots, generating $250.4 million in revenue, compared to 3,150 lots and $305.9 million in revenue in the prior year quarter.

      Liquidity and Capital Allocation

      • Cash and Liquidity: $3.0 billion in cash and $3.5 billion in available credit facilities, totaling $6.5 billion in liquidity.
      • Debt: Total debt of $5.1 billion, with a debt-to-total-capital ratio of 17.0%.
      • Share Repurchases: Repurchased 6.8 million shares for $1.1 billion during the quarter, with $2.5 billion remaining under the repurchase authorization.
      • Dividends: Paid $128.5 million in cash dividends during the quarter and declared a quarterly dividend of $0.40 per share, payable on February 14, 2025.

      Guidance for Fiscal 2025

      • Revenue: Expected to range between $36.0 billion and $37.5 billion.
      • Homes Closed: Projected between 90,000 and 92,000 homes.
      • Share Repurchases: Anticipated in the range of $2.6 billion to $2.8 billion.
      • Income Tax Rate: Approximately 24.0%.

      Market Conditions and Strategy

      • The company noted that while housing inventory levels have increased, the supply of affordable homes remains limited. D.R. Horton continues to focus on smaller floor plans and affordable product offerings to meet demand. Incentives such as mortgage rate buydowns have been used to address affordability challenges.

      Conference Call Details

      D.R. Horton will host a conference call on January 21, 2025, at 8:30 a.m. Eastern Time to discuss these results further.

      Source(s): , , , , ,

    Legal & Compliance

      Legal Proceedings

      ·
      Dec 23, 2024, 10:59 PM

      Summary of the Legal Matter Involving D.R. Horton, Inc.

      Key Parties Involved:

      • D.R. Horton, Inc.: The Borrower in the credit agreement.
      • Mizuho Bank, Ltd.: Acting as the Administrative Agent, Issuing Bank, and Lender.
      • Other Lenders: Include Bank of America, JPMorgan Chase Bank, TD Securities, U.S. Bank National Association, Wells Fargo Securities, and others .

      Nature of the Proceedings:

      • The document details Amendment No. 12 to the Credit Agreement originally dated September 7, 2012. This amendment was executed on December 18, 2024, and involves extending the termination date of the Series A Revolving Credit Commitments to December 18, 2029, modifying pricing, and increasing the Aggregate Revolving Credit Commitment to $2.23 billion .

      Potential Financial or Operational Consequences for the Company:

      • Financial Impact: The increase in the Aggregate Revolving Credit Commitment to $2.23 billion suggests enhanced liquidity for D.R. Horton, which could support its operational and strategic initiatives.
      • Operational Impact: The extension of the credit facility termination date provides D.R. Horton with a longer time frame to utilize the credit, potentially aiding in long-term planning and stability .

      This amendment reflects ongoing financial relationships and commitments between D.R. Horton and its lenders, which are crucial for its financial operations and strategic planning .

    Financial Actions

      New Share Buyback Program

      ·
      Dec 23, 2024, 10:59 PM

      D.R. Horton, Inc. has announced a new buyback program as of December 18, 2024. This program is part of their strategic financial management to enhance shareholder value .