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 **[0000882184-24-000057_dhi-20240930.htm:2]** **[0000882184-24-000057_dhi-20240930.htm:92]**. The company also operates in rental operations, residential lot development, and financial services, contributing to its diverse portfolio **[0001193125-24-183858_d842683ds3asr.htm:6]** **[0000882184-24-000057_dhi-20240930.htm:2]**. 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 **[0000882184-24-000039_dhi-20240630.htm:8]** **[0000882184-24-000057_dhi-20240930.htm:2]**.

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.

b7475697901b2e05224cb52a75da942be80198ee67cae99beed50cb46431f194

**Number of Homes Closed**

**Lots Sold to D.R. Horton**

**Tract Acres Sold to D.R. Horton**

**Residential Single-Family Lots in Inventory and Under Contract**

**First-Lien Loans Originated/Brokered**

**Percentage of Homes Financed by DHI Mortgage**

**Loans Sold to Third Parties**

**Net Sales Orders**

**Sales Order Backlog**

0da96186816eebec213061c66137553e997311be7b47e1ad8e156770d0d1493b

| Metric / Quarter | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
|------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Number of Homes Closed** | 17,340 **[0000882184-23-000011_a12312022exhibit991.htm:1]** | 19,664 **[0000882184-23-000080_a3312023exhibit991.htm:1]** | 22,985 **[0000882184-23-000089_a6302023exhibit991.htm:1]** | 22,928 **[0000882184-23-000110_a9302023exhibit991.htm:0]** | 19,340 **[0000882184-24-000009_a12312023exhibit991.htm:2]** | 22,548 **[DHI_3380005_2]** | 24,155 **[0000882184-24-000034_a6302024exhibit991.htm:1]** | 23,647 **[0000882184-24-000051_a9302024exhibit991.htm:3]** |
| **Lots Sold to D.R. Horton** | 2,094 **[0000882184-23-000015_dhi-20221231.htm:39]** | 2,666 **[0000882184-23-000084_dhi-20230331.htm:45]** | 3,187 **[0000882184-23-000093_dhi-20230630.htm:45]** | N/A | 2,834 **[0000882184-24-000014_dhi-20231231.htm:39]** | 3,105 **[0000882184-24-000027_dhi-20240331.htm:46]** | 2,903 **[0000882184-24-000039_dhi-20240630.htm:46]** | N/A |
| **Total Lots Sold** | 2,263 **[0000882184-23-000011_a12312022exhibit991.htm:3]** | 2,979 **[0000882184-23-000080_a3312023exhibit991.htm:3]** | 3,812 **[0000882184-23-000089_a6302023exhibit991.htm:3]** | 4,986 **[0000882184-23-000110_a9302023exhibit991.htm:4]** | 3,150 **[0000882184-24-000009_a12312023exhibit991.htm:2]** | 3,289 **[0000882184-24-000022_a3312024exhibit991.htm:4]** | 3,255 **[0000882184-24-000039_dhi-20240630.htm:46]** | 5,374 **[0000882184-24-000051_a9302024exhibit991.htm:4]** |
| **Tract Acres Sold to D.R. Horton** | N/A | 379 **[0000882184-23-000084_dhi-20230331.htm:45]** | 45 **[0000882184-23-000093_dhi-20230630.htm:45]** | 820 **[0000882184-23-000115_dhi-20230930.htm:56]** | N/A | 0 **[0000882184-24-000027_dhi-20240331.htm:46]** | 32 **[0000882184-24-000039_dhi-20240630.htm:46]** | N/A |
| **Residential Single-Family Lots in Inventory and Under Contract** | 82,300 **[0000882184-23-000015_dhi-20221231.htm:39]** | 76,400 **[0000882184-23-000084_dhi-20230331.htm:45]** | 73,000 **[0000882184-23-000093_dhi-20230630.htm:45]** | 79,200 **[0000882184-23-000115_dhi-20230930.htm:56]** | 82,400 **[0000882184-24-000014_dhi-20231231.htm:39]** | 96,100 **[0000882184-24-000027_dhi-20240331.htm:46]** | 102,100 **[0000882184-24-000039_dhi-20240630.htm:46]** | 95,100 **[0000882184-24-000057_dhi-20240930.htm:57]** |
| **First-Lien Loans Originated/Brokered** | 13,296 **[0000882184-23-000015_dhi-20221231.htm:40]** | 14,865 **[0000882184-23-000084_dhi-20230331.htm:47]** | 17,011 **[0000882184-23-000093_dhi-20230630.htm:46]** | N/A | 15,117 **[0000882184-24-000014_dhi-20231231.htm:40]** | 18,066 **[0000882184-24-000027_dhi-20240331.htm:47]** | 18,807 **[0000882184-24-000039_dhi-20240630.htm:47]** | N/A |
| **Percentage of Homes Financed by DHI Mortgage** | 77% **[0000882184-23-000015_dhi-20221231.htm:40]** | 76% **[0000882184-23-000084_dhi-20230331.htm:47]** | 74% **[0000882184-23-000093_dhi-20230630.htm:46]** | 76% **[DHI_3364680_9]** | 78% **[0000882184-24-000014_dhi-20231231.htm:40]** | 80% **[0000882184-24-000027_dhi-20240331.htm:47]** | 78% **[0000882184-24-000039_dhi-20240630.htm:47]** | N/A |
| **Loans Sold to Third Parties** | 15,167 **[0000882184-23-000015_dhi-20221231.htm:40]** | 13,984 **[0000882184-23-000084_dhi-20230331.htm:47]** | 16,091 **[0000882184-23-000093_dhi-20230630.htm:46]** | N/A | 16,927 **[0000882184-24-000014_dhi-20231231.htm:40]** | 16,029 **[0000882184-24-000027_dhi-20240331.htm:47]** | 19,203 **[0000882184-24-000039_dhi-20240630.htm:47]** | N/A |
| **Net Sales Orders** | 13,382 **[0000882184-23-000011_a12312022exhibit991.htm:1]** | 23,142 **[0000882184-23-000080_a3312023exhibit991.htm:1]** | 22,879 **[DHI_3254973_2]** | 18,939 **[DHI_3364680_3]** | 18,069 **[DHI_3370586_2]** | 26,456 **[DHI_3380005_3]** | 23,001 **[0000882184-24-000034_a6302024exhibit991.htm:1]** | 19,035 **[0000882184-24-000051_a9302024exhibit991.htm:3]** |
| **Sales Order Backlog** | 15,759 **[0000882184-23-000011_a12312022exhibit991.htm:1]** | 19,237 **[0000882184-23-000080_a3312023exhibit991.htm:1]** | 19,186 **[0000882184-23-000089_a6302023exhibit991.htm:1]** | 15,197 **[0000882184-23-000115_dhi-20230930.htm:12]** | 13,965 **[0000882184-24-000009_a12312023exhibit991.htm:2]** | 17,873 **[0000882184-24-000022_a3312024exhibit991.htm:3]** | 16,792 **[0000882184-24-000034_a6302024exhibit991.htm:3]** | 12,180 **[0000882184-24-000057_dhi-20240930.htm:11]** |

55d16dc7cda944e4229b38b7b2141f0ae82b61dc39ac645cec2547bca2e7698b

| Geographical Segment | Q1 2023    | Q2 2023    | Q3 2023    | Q4 2023 | Q1 2024    | Q2 2024 | Q3 2024    | Q4 2024    |
|----------------------|-------------|-------------|-------------|---------|-------------|---------|-------------|-------------|
| Northwest            | **$520.4M** | **$691.1M** | **$661.1M** | N/A     | **$577.9M** | N/A     | **$725.0M** | **$2,761.7M** |
| Southwest            | **$803.0M** | **$920.9M** | **$1,134.3M** | N/A   | **$1,051.4M** | N/A   | **$1,313.7M** | **$4,914.7M** |
| South Central        | **$1,642.1M** | **$1,805.8M** | **$2,175.0M** | N/A | **$1,669.2M** | N/A | **$2,013.0M** | **$7,652.1M** |
| Southeast            | **$1,996.3M** | **$2,106.1M** | **$2,384.5M** | N/A | **$1,999.6M** | N/A | **$2,417.2M** | **$8,876.8M** |
| East                 | **$1,143.9M** | **$1,206.9M** | **$1,464.4M** | N/A | **$1,268.3M** | N/A | **$1,709.6M** | **$6,073.1M** |
| North                | **$638.3M** | **$738.8M** | **$914.3M** | N/A   | **$730.3M** | N/A   | **$1,063.0M** | **$3,683.4M** |

e3b3ecbb28a30f7da7e183ea75a15a0e1e87e9538cbaaaf0aa4067266d03b8e9

1. Given that your cancellation rate increased to 18% in the quarter, up from 15% sequentially ( **[DHI_3393426_4]** ), 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 ( **[DHI_3393426_9]** ), 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 ( **[DHI_3393426_11]** ), 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 ( **[DHI_3393426_35]** ), 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 ( **[DHI_3393426_18]** ), what strategies are you implementing to mitigate these delays, and what proportion of your current communities are meeting this target?

91d9623e547c90bab64f7eb330f35e538f92877a029823327c58405be2932c80

Homebuilding

- Home Sales

- Land/Lot Sales and Other

Rental

- Rental Property Sales

Forestar

Financial Services

Other

Eliminations and Other

Total Revenue

4f34d7df78178b6457886dffbecd503876bdc6605390ed5356c40f7c1e8dff8c

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: FY 2025
- **Guidance**:
  - **Consolidated Revenues**: Expected to be between **$10 billion and $10.4 billion**  **[DHI_3393426_13]** .
  - **Homes Closed**: Anticipated to be in the range of **24,000 to 24,500 homes**  **[DHI_3393426_13]** .
  - **Home Sales Gross Margin**: Expected to be around **24%**  **[DHI_3393426_13]** .
  - **Homebuilding SG&A as a Percentage of Revenues**: Approximately **7%**  **[DHI_3393426_13]** .
  - **Financial Services Pretax Profit Margin**: Around **35%**  **[DHI_3393426_13]** .
  - **Quarterly Income Tax Rate**: Expected to be approximately **24% to 24.3%**  **[DHI_3393426_13]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: Q4 2024 and FY 2024
- **Guidance for Q4 2024**:
  - **Consolidated Revenues**: Expected to be between **$10 billion to $10.4 billion**  **[DHI_3393426_13]** .
  - **Homes Closed**: Anticipated to be in the range of **24,000 to 24,500 homes**  **[DHI_3393426_13]** .
  - **Home Sales Gross Margin**: Expected to be around **24%**  **[DHI_3393426_13]** .
  - **Homebuilding SG&A as a Percentage of Revenues**: Approximately **7%**  **[DHI_3393426_13]** .
  - **Financial Services Pretax Profit Margin**: Around **35%**  **[DHI_3393426_13]** .
  - **Quarterly Income Tax Rate**: Approximately **24% to 24.3%**  **[DHI_3393426_13]** .
- **Guidance for FY 2024**:
  - **Consolidated Revenues**: Expected to be between **$36.8 million to $37.2 million**  **[DHI_3393426_13]** .
  - **Homes Closed**: Anticipated to be in the range of **90,000 to 90,500 homes**  **[DHI_3393426_13]** .
  - **Cash Flow from Homebuilding Operations**: Expected to generate approximately **$3 billion**  **[DHI_3393426_13]** .
  - **Stock Repurchase**: Plan to repurchase approximately **$1.8 billion** of common stock  **[DHI_3393426_13]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: Q3 2024 and FY 2024
- **Guidance for Q3 2024**:
  - **Consolidated Revenues**: Expected to be between **$9.5 billion to $9.7 billion**  **[DHI_3380005_12]** .
  - **Homes Closed**: Anticipated to be in the range of **23,500 to 24,000 homes**  **[DHI_3380005_12]** .
  - **Home Sales Gross Margin**: Expected to be approximately **23% to 23.5%**  **[DHI_3380005_12]** .
  - **Homebuilding SG&A as a Percentage of Revenues**: Expected to be approximately **7%**  **[DHI_3380005_12]** .
  - **Financial Services Pretax Profit Margin**: Anticipated to be around **30% to 35%**  **[DHI_3380005_12]** .
  - **Quarterly Income Tax Rate**: Expected to be approximately **24%**  **[DHI_3380005_12]** .
- **Guidance for FY 2024**:
  - **Consolidated Revenues**: Expected to be approximately **$36.7 billion to $37.7 billion**  **[DHI_3380005_12]** .
  - **Homes Closed**: Anticipated to be in the range of **89,000 to 91,000 homes**  **[DHI_3380005_12]** .
  - **Cash Flow from Homebuilding Operations**: Expected to generate approximately **$3 billion**  **[DHI_3380005_12]** .
  - **Common Stock Purchase**: Plan to purchase approximately **$1.6 billion** of common stock  **[DHI_3380005_12]** .
  - **Annual Dividend Payments**: Around **$400 million**  **[DHI_3380005_12]** .
  - **Income Tax Rate**: Expected to be in the range of **23.5% to 24%**  **[DHI_3380005_12]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: Q2 2024 and FY 2024
- **Guidance for Q2 2024**:
  - **Consolidated Revenues**: Expected to be between **$8.1 billion and $8.3 billion**  **[DHI_3370586_10]** .
  - **Homes Closed**: Expected to be in the range of **20,000 to 20,500 homes**  **[DHI_3370586_10]** .
  - **Home Sales Gross Margin**: Expected to be approximately **22.6% to 23.1%**  **[DHI_3370586_10]** .
  - **Homebuilding SG&A as a Percentage of Revenues**: Expected to be in the range of **7.5% to 7.7%**  **[DHI_3370586_10]** .
  - **Financial Services Pretax Profit Margin**: Anticipated to be around **30% to 35%**  **[DHI_3370586_10]** .
  - **Quarterly Income Tax Rate**: Expected to be approximately **23.5% to 24%**  **[DHI_3370586_10]** .
- **Guidance for FY 2024**:
  - **Consolidated Revenues**: Expected to be approximately **$36 billion to $37.3 billion**  **[DHI_3370586_10]** .
  - **Homes Closed**: Expected to be in the range of **87,000 to 90,000 homes**  **[DHI_3370586_10]** .
  - **Cash Flow from Homebuilding Operations**: Expected to generate approximately **$3 billion**  **[DHI_3370586_10]** .
  - **Share Repurchase**: Plan to repurchase approximately **$1.5 billion** of common stock  **[DHI_3370586_10]** .
  - **Annual Dividend Payments**: Expected to be around **$400 million**  **[DHI_3370586_10]** .
  - **Income Tax Rate for Fiscal 2024**: Expected to be approximately **24%**  **[DHI_3370586_10]** .

e3af196c230e3e3a7f8b15d47fba173d1767c652cbd090c1b3531c51c57d8014

Cash and Cash Equivalents (USD, millions)

Inventory (USD, millions)

Property, Plant, and Equipment (USD, millions)

Goodwill (USD, millions)

Accounts Payable (USD, millions)

Accrued Expenses (USD, millions)

Shareholders' Equity (USD, millions)

Retained Earnings (USD, millions)

Common Stock (USD, millions)

Additional Paid-in Capital (USD, millions)

b6e701bfdbf1481d3c4fb1019e3e1deda04baf4b2c0005f0a139ac8adc31eeb1

a82f7e96de6abb63406adecce3f9116130095bc4d604a8ecff90c4004103fae0

Adjustments for Non-Cash Items (USD, millions)

Stock-Based Compensation (USD, millions)

Changes in Working Capital (USD, millions)

Capital Expenditures (CapEx) (USD, millions)

Proceeds from / Repayments of Debt (USD, millions)

Share Repurchases (USD, millions)

Dividend Payments (USD, millions)

Net Change in Cash (USD, millions)

91336255f81aa85740db759c35a12c6b616c2f475beecdf27146ce1764d1b180

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

Northwest

Southwest

South Central

Southeast

East

North

Midwest

West

2ea32e612ca890bf07361e3a09c1b6f00e34467d4c27481eec653d568ac77cc9

| Name                | Position                                      | Start Date        | Short Bio                                                                                                                                                                                                                                                                                                                                                     |
|---------------------|-----------------------------------------------|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Donald R. Horton    | Chairman & Strategic Advisor                  | October 1, 2023   | Donald 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  **[0001193125-23-296787_d492945ddef14a.htm:58]** **[0001193125-23-296787_d492945ddef14a.htm:37]** **[0001193125-23-296787_d492945ddef14a.htm:107]** . |
| David V. Auld       | Executive Vice Chair                          | October 2023      | David 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  **[0001193125-23-296787_d492945ddef14a.htm:11]** **[0001193125-23-296787_d492945ddef14a.htm:37]** .                        |
| Paul J. Romanowski  | President & Chief Executive Officer           | October 2023      | Paul 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  **[0001193125-23-296787_d492945ddef14a.htm:12]** **[0001193125-23-296787_d492945ddef14a.htm:34]** .                                                  |
| Michael J. Murray   | Executive Vice President & Chief Operating Officer | 2014              | Michael 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  **[0001193125-23-296787_d492945ddef14a.htm:35]** **[0001193125-23-296787_d492945ddef14a.htm:58]** .                                                                                     |
| Bill W. Wheat       | Executive Vice President & Chief Financial Officer | 2003              | Bill 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**  **[0001193125-23-296787_d492945ddef14a.htm:35]** .                                                                                           |
| Barbara R. Smith    | Independent Director                          | August 26, 2024   | Barbara 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  **[0000882184-24-000043_exhibit991bodappointments.htm:1]** **[0000882184-24-000043_dhi-20240823.htm:1]** .                                                                                                                   |
| M. Chad Crow        | Independent Director                          | August 26, 2024   | M. 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  **[0000882184-24-000043_exhibit991bodappointments.htm:1]** **[0000882184-24-000043_dhi-20240823.htm:1]** .                                                                                                 |
| Elaine D. Crowley   | Independent Director                          | August 26, 2024   | Elaine 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  **[0000882184-24-000043_exhibit991bodappointments.htm:1]** .                                                                                                                        |

f5d7215992122d6098d3334bc83afc9ce2788e19333db0c9f26248b157804a4f

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | July 18, 2024  **[0000882184-24-000057_dhi-20240930.htm:61]** **[0000882184-24-000057_dhi-20240930.htm:109]** **[0000882184-24-000057_dhi-20240930.htm:43]**  |
| End Date/Duration        | No expiration date  **[0000882184-24-000057_dhi-20240930.htm:61]** **[0000882184-24-000057_dhi-20240930.htm:109]** **[0000882184-24-000057_dhi-20240930.htm:43]**  |
| Total additional amount  | **$4.0 billion**  **[0000882184-24-000057_dhi-20240930.htm:61]** **[0000882184-24-000057_dhi-20240930.htm:109]** **[0000882184-24-000057_dhi-20240930.htm:43]**  |
| Remaining authorization amount | **$3.6 billion** as of September 30, 2024  **[0000882184-24-000057_dhi-20240930.htm:61]** **[0000882184-24-000057_dhi-20240930.htm:109]** **[0000882184-24-000057_dhi-20240930.htm:43]**  |
| Details                  | Part of capital allocation strategy to return capital to shareholders. Plans to repurchase approximately **$1.5 billion** of common stock in fiscal 2024.  **[DHI_3364680_34]** **[DHI_3364680_11]**  |

5488d509faf893f058ef12b7f72274a524246df3de38c64839ba6cd63ba0c521

1. **Gross Margin Impact**  
   **Q:** Why is Q2 gross margin expected to be flat despite one-time Q1 hedging charge?  
   **A:** Despite the **$65 million** hedging charge in Q1 impacting gross margin by **100 basis points**  **[DHI_3370586_12]** **[DHI_3370586_13]** **[DHI_3370586_19]** , management expects Q2 margins to remain flat because earlier sales with higher incentives are closing in Q2.  **[DHI_3370586_17]**  While rates have fallen, the benefit is offset by lower margins from these prior sales.  **[DHI_3370586_17]** **[DHI_3370586_22]** 

2. **Capital Allocation Plans**  
   **Q:** How is D.R. Horton allocating its capital amidst sufficient cash position?  
   **A:** The company plans to increase share repurchases by **25% to $1.5 billion** this year.  **[DHI_3370586_14]**  They will also pay **$400 million** in dividends.  **[DHI_3370586_14]**  While open to small acquisitions, they do not anticipate significant large acquisitions.  **[DHI_3370586_16]**  Additionally, they will invest in land and rental inventory to support growth.  **[DHI_3370586_14]** 

3. **SG&A Expense Outlook**  
   **Q:** What caused higher SG&A expenses and what's the outlook?  
   **A:** SG&A rose due to a **14% increase** in average selling communities and **$13 million** in stock-based compensation timing.  **[DHI_3370586_15]** **[DHI_3370586_21]**  Management expects higher SG&A as a percentage of revenue for a couple of quarters but anticipates returning to historical levels as revenues grow.  **[DHI_3370586_15]** **[DHI_3370586_21]** 

4. **Gross Margin Sensitivity**  
   **Q:** How sensitive are margins to future rate changes and hedging positions?  
   **A:** Significant rate volatility can affect hedging positions, as seen with the **$65 million** charge in Q1.  **[DHI_3370586_19]**  Management strives to manage this exposure but notes that sudden rate changes can impact margins.  **[DHI_3370586_19]**  Margins may improve later in Q2 as lower-cost rate buy-downs from recent sales take effect.  **[DHI_3370586_22]** **[DHI_3370586_23]** 

5. **Constraints on Closings Guidance**  
   **Q:** Are there constraints to achieving increased closings guidance?  
   **A:** Management is confident in achieving approximately **89,000 closings**, above prior peaks.  **[DHI_3370586_25]**  Improved cycle times to around **4 months**  **[DHI_3370586_25]** **[DHI_3370586_37]** , strong finished lot positions, and supportive trade partnerships mitigate constraints. However, they acknowledge that finished lots remain an industry constraint.  **[DHI_3370586_25]** 

6. **Land Investment and Lot Supply**  
   **Q:** Can land investment be reduced further, and how is lot supply managed?  
   **A:** The company maintains roughly a one-year supply of owned land to support production.  **[DHI_3370586_14]**  They aim to control more land and acquire finished lots from others but need sufficient land on the balance sheet to maintain production velocity.  **[DHI_3370586_14]** 

7. **Materials Cost Outlook**  
   **Q:** What is the outlook for materials costs and potential inflation?  
   **A:** Management observes relative flatness in costs and expects similar trends next quarter.  **[DHI_3370586_20]**  However, increased starts by peers could pressure labor and materials, potentially leading to cost increases.  **[DHI_3370586_20]** 

8. **Acquisition Strategy**  
   **Q:** Is D.R. Horton considering large acquisitions?  
   **A:** While they continue to consider acquisitions, they are more interested in smaller, tuck-in builders to enhance market share.  **[DHI_3370586_16]**  They do not foresee significant large acquisitions imminent.  **[DHI_3370586_16]** 

9. **Sales Incentives and Market Approach**  
   **Q:** Has the company reduced incentives as rates dropped recently?  
   **A:** They have maintained consistency in incentives and have not made significant changes yet.  **[DHI_3370586_24]**  Incentives are managed locally, and they will respond to market conditions as needed.  **[DHI_3370586_24]** 

10. **SG&A Impact from Community Expansion**  
    **Q:** Is higher SG&A due to community count expansion and new markets?  
    **A:** Yes, the **14% increase** in average selling communities contributed to higher SG&A.  **[DHI_3370586_15]** **[DHI_3370586_21]**  As they expand into new markets, they expect to achieve leverage over time, reducing SG&A as a percentage of revenue.  **[DHI_3370586_15]** **[DHI_3370586_21]** 

11. **Lot Costs Trend**  
    **Q:** How did lot costs trend, and what's expected ahead?  
    **A:** Lot costs increased by low double digits year-over-year, mainly due to geographic mix, but adjusted to high single digits after stripping out geography.  **[DHI_3370586_18]**  Sequentially, lot costs were up **1.5%**.  **[DHI_3370586_18]**  This trend should moderate after cycling a full year.  **[DHI_3370586_18]** 

12. **Build Cycles Improvement**  
    **Q:** How much can build cycles improve, and what's driving it?  
    **A:** Build cycles improved to just over **4 months**, down from **7 months** a year ago.  **[DHI_3370586_25]** **[DHI_3370586_37]**  Further improvements may be modest, but reduced cycle times enhance flexibility and support their closings target.  **[DHI_3370586_25]** **[DHI_3370586_37]** 

13. **Affordability and Buyer Trends**  
    **Q:** Are buyers responding to measures other than rate buy-downs?  
    **A:** Buyers are opting for smaller homes to manage payments, with average square footage down about **3%** year-over-year.  **[DHI_3370586_40]**  Product selection and focus on affordability remain key strategies.  **[DHI_3370586_40]** 

14. **Market Conditions and Sales Trends**  
    **Q:** What are the current market conditions and sales trends?  
    **A:** Early signs in January are encouraging, with good traffic and conversions.  **[DHI_3370586_26]** **[DHI_3370586_38]**  Management is cautiously optimistic about the spring selling season.  **[DHI_3370586_26]** **[DHI_3370586_38]** 

24f78eca3c0be4452afa46bdd6802ef81633467a226cad208aac896e7bbca3c9

**Quarterly guidance for Q2 2025:**
- **Consolidated Revenues**: $7.7 billion to $8.2 billion  **[DHI_3412867_11]**  (no prior guidance)  
- **Homes Closed**: 20,000 to 20,500 homes  **[DHI_3412867_11]**  (no prior guidance)  
- **Home Sales Gross Margin**: 21.5% to 22%  **[DHI_3412867_11]**  (no prior guidance)  
- **Consolidated Pretax Profit Margin**: 13.7% to 14.2%  **[DHI_3412867_11]**  (no prior guidance)  

**Annual guidance for FY 2025:**
- **Consolidated Revenues**: $36 billion to $37.5 billion  **[DHI_3412867_11]**  (raised from $10 billion to $10.4 billion  **[DHI_3393426_13]** )  
- **Homes Closed**: 90,000 to 92,000 homes  **[DHI_3412867_11]**  (raised from 24,000 to 24,500 homes  **[DHI_3393426_13]** )  
- **Income Tax Rate**: 24%  **[DHI_3412867_11]**  (no prior guidance)  
- **Share Repurchases**: $2.6 billion to $2.8 billion  **[DHI_3412867_11]**  (no prior guidance)  
- **Dividend Payments**: $500 million  **[DHI_3412867_11]**  (no prior guidance)

f1fe57115836d479a63df3a6d41d89b1f6e2cfcf701ff770c66cbedf5bce02b0

| Name                  | Start Date  | End Date   | Reason for Change                                      |
|-----------------------|-------------|------------|-------------------------------------------------------|
| Ernst & Young LLP (EY)| 2018  **[0000882184-19-000147_a2019930-10k.htm:70]**     | Present    | Current auditor.                                      |
| PricewaterhouseCoopers LLP (PwC) | N/A         | December 7, 2018  **[0000882184-18-000145_a8-kchangeofauditordec2018.htm:1]**  | The change was the result of a competitive request for proposal process undertaken by the Audit Committee.  **[0000882184-18-000145_a8-kchangeofauditordec2018.htm:1] [0000882184-18-000145_a8-kchangeofauditordec2018.htm:0]**  |

22e367bca50b3071c461504e677bc0fd6e658625a2edebdab1826c9a84dc7d48

- Total Revenue: $7.613B (-1% YoY)  **[0000882184-25-000014_dhi-20241231.htm:11]** **[0000882184-24-000014_dhi-20231231.htm:9]**   
- Homebuilding: $7.167B (-2% YoY)  **[0000882184-25-000014_dhi-20241231.htm:11]** **[0000882184-24-000014_dhi-20231231.htm:9]**   
- Rental: $217.8M (+12% YoY)  **[0000882184-25-000014_dhi-20241231.htm:11]** **[0000882184-24-000014_dhi-20231231.htm:9]**   
- Forestar: $250.4M (**-18%** YoY)  **[0000882184-25-000014_dhi-20241231.htm:11]** **[0000882184-24-000014_dhi-20231231.htm:9]**   
- Financial Services: $182.3M (-5% YoY)  **[0000882184-25-000014_dhi-20241231.htm:11]** **[0000882184-24-000014_dhi-20231231.htm:9]**   
- Northwest Region: $533.2M (-8% YoY)  **[0000882184-25-000014_dhi-20241231.htm:12]** **[0000882184-24-000014_dhi-20231231.htm:10]**   
- Southwest Region: $1,140.1M (+8% YoY)  **[0000882184-25-000014_dhi-20241231.htm:12]** **[0000882184-24-000014_dhi-20231231.htm:10]**   
- South Central: $1,486.9M (**-11%** YoY)  **[0000882184-25-000014_dhi-20241231.htm:12]** **[0000882184-24-000014_dhi-20231231.htm:10]**   
- Southeast: $1,749.8M (**-13%** YoY)  **[0000882184-25-000014_dhi-20241231.htm:12]** **[0000882184-24-000014_dhi-20231231.htm:10]**   
- North Region: $942.7M (**+29%** YoY)  **[0000882184-25-000014_dhi-20241231.htm:12]** **[0000882184-24-000014_dhi-20231231.htm:10]**   
- Net Income: $851.9M (**-11%** YoY)  **[0000882184-25-000009_a12312024exhibit991.htm:7]** **[0000882184-24-000014_dhi-20231231.htm:3]** **[0000882184-24-000014_dhi-20231231.htm:5]**   
- EPS (Diluted): $2.61 (-7% YoY)  **[0000882184-25-000009_a12312024exhibit991.htm:7]** **[0000882184-24-000014_dhi-20231231.htm:3]**   

3be8252899204ba9f1d66d48613a4a55711caa59f6a71ed4475179fd085b5404

d9555c3b4841e0ec18dfa2ebc5a697786a1e8cb97f1ccf7f2c79e99d4f8e7d3d

ab04ddda90dfee1d9ff08a5fb493101576cfd4307c05c5d5c9c14cb6c4cd6d7d

c4addfc8e14b08144d2cc7249f2bcf1abca1d1e8d4394143a3efe006da2336a0

- **D.R. Horton is facing increasing lot costs**, which **are expected to continue to climb**, posing a significant **headwind** to profitability. The company stated, "We have continued to see **increase in our lot cost**... we do expect that to be a **headwind** for us... we just haven't seen much relief in that... we **expect to see a continued climb**."  **[DHI_3393426_31]**
- **Starts are down year-over-year**, and the company acknowledges the need to increase starts to meet its growth goals, indicating potential challenges in maintaining growth momentum. As mentioned, "we are seeing efficiencies in our operation, which is why you've seen a **little lower starts pace than maybe might have been expected**... we're going to have to see some **improvement in the overall... start space to keep pace with our growth goals**."  **[DHI_3393426_37]**
- **Regional and community banks have pulled back from lending to lot developers**, requiring D.R. Horton to help developers find alternative capital sources, which could present financing challenges if credit conditions tighten further. The company noted that "a lot of the **regional and community banks have pulled back** from that sort of lending, but there's been other capital sources willing to step up when the developer is working for somebody like D.R. Horton that we've been able to keep those folks in business producing lots for us."  **[DHI_3393426_32]**

2dc365cc4e2499d88e53da06e26594f8529a161b538ba2be2486a62d3ec1edf0

1. **Cash Flow and Capital Returns**  
   **Q:** Will consolidated cash flow increase next year, boosting buybacks and dividends?  
   **A:** Yes, management expects **consolidated cash flow** to improve in fiscal 2025 due to efficiencies in homebuilding operations and stabilization of rental inventory levels.  **[DHI_3393426_19]**  This should lead to higher **share repurchases and dividends** proportionate to the increased cash flow.  **[DHI_3393426_19]** 

2. **Gross Margins and Cost Pressures**  
   **Q:** Will gross margins remain flat amid cost pressures?  
   **A:** Management anticipates fourth-quarter gross margins to be **relatively flat** despite higher lot costs.  **[DHI_3393426_21]**  Any pullback in interest rates is beneficial, potentially reducing incentive costs, but overall affordability issues persist.  **[DHI_3393426_21]** 

3. **Interest Rates Impact on Demand**  
   **Q:** How are fluctuating interest rates affecting demand and incentives?  
   **A:** Rate volatility caused **choppy demand** during the quarter.  **[DHI_3393426_17]**  Buyers seek interest rate certainty, favoring homes closer to completion.  **[DHI_3393426_17]**  The company offers **permanent rate buydowns**, with **77%** of buyers using this option through their mortgage company, up from the prior quarter.  **[DHI_3393426_28]** 

4. **Lot Costs Trends**  
   **Q:** What is the outlook on lot cost inflation?  
   **A:** Lot costs continue to rise, up about **2.5%** sequentially and **low double-digit percentage** year-over-year.  **[DHI_3393426_32]**  Management does not expect significant moderation in lot cost increases and sees it as a **headwind**.  **[DHI_3393426_32]** 

5. **Inventory Levels and Cycle Times**  
   **Q:** How are inventory levels and cycle times affecting operations?  
   **A:** Improved cycle times have led to faster completion of homes, increasing finished spec inventory.  **[DHI_3393426_23]**  However, management is comfortable with inventory levels, focusing on turning houses quickly without a buildup of aged inventory.  **[DHI_3393426_20]** 

6. **Forestar Strategy**  
   **Q:** What are the plans for Forestar's future?  
   **A:** Forestar is an important part of the company's strategy, operating in about **60 markets**.  **[DHI_3393426_34]**  As Forestar matures, management may consider its capitalization but currently focuses on supporting its growth and efficiency.  **[DHI_3393426_34]** 

7. **Rental Business Outlook**  
   **Q:** What is the expectation for the rental platform in Q4?  
   **A:** The rental business is included in the consolidated revenue guidance, but timing uncertainties cause lumpiness in numbers.  **[DHI_3393426_40]**  No specific guidance on Q4 rental revenues was provided.  **[DHI_3393426_40]** 

8. **Community Count Growth**  
   **Q:** Will community count growth continue to drive market share gains?  
   **A:** Management anticipates community count growth to **moderate** but still contribute to market share gains.  **[DHI_3393426_31]**  They hope to maintain **mid- to high single-digit** growth in community count to support consolidation efforts.  **[DHI_3393426_31]** 

9. **Consumer Credit Quality**  
   **Q:** Are there changes in consumer ability to qualify for homes?  
   **A:** Cancellation rates remain around **18%**, at the low end of historical norms.  **[DHI_3393426_26]**  Buyers now need higher incomes (averaging around **$100,000**) to qualify due to interest rates, but credit metrics remain stable.  **[DHI_3393426_26]** 

10. **M&A Environment**  
    **Q:** What is the current outlook on mergers and acquisitions?  
    **A:** The company prefers **small tuck-in acquisitions** to expand into new geographies and is selective about deals, with a good flow of opportunities.  **[DHI_3393426_37]** 

da608af719a66e3d3c73b318686c8c73a6efbe5caf32b21d56e985af4129b30b

- D.R. Horton is facing **affordability challenges** among buyers, leading them to purchase **smaller homes**, resulting in a **3% year-over-year decrease in average square footage** sold, which could impact revenues and margins.  **[DHI_3370586_40]**
- **Lot costs increased high single digits year-over-year**, and this trend is expected to continue, putting pressure on profit margins moving forward.  **[DHI_3370586_18]**
- The demand environment for institutional buyers of build-to-rent homes has become **"much choppier"** due to changes in capital markets, potentially impacting D.R. Horton's ability to monetize land positions quickly through this strategy.  **[DHI_3370586_31]**

f8c13cc90002d75706a9ce10616fb30d38107e45a66cc266e40b926ffd1734bf

- **Increased existing home inventory and higher insurance costs in Florida, an important market for DHI, could pose challenges.**  **[DHI_3380005_14]**
- **Lot cost inflation is expected to continue with moderate increases, impacting margins.**  **[DHI_3380005_30]**
- **Rental revenues are expected to remain flat despite more units completed, and margins are not meeting company objectives due to cap rates and interest rates.**  **[DHI_3380005_34]**

104255f4f8965c69ec39e91f347e08fc2459914b69c8fdca96398a4b3073b8aa

| Year | Amount Due (in millions) | Debt Type         | Interest Rate (%) | % of Total Debt                                                                 |
|----------|------------------------------|------------------------|-----------------------|------------------------------------------------------------------------------------|
| 2025     | $786.9 **[0000882184-25-000014_dhi-20241231.htm:45]**               | Mortgage Repurchase    | 6.0 **[0000882184-25-000014_dhi-20241231.htm:58]**           | 15.4% = (786.9 / 5,100) * 100 **[0000882184-25-000014_dhi-20241231.htm:45]** **[0000882184-25-000014_dhi-20241231.htm:52]**                                     |
| 2025     | $500.0 **[0000882184-25-000014_dhi-20241231.htm:45]**               | Homebuilding Senior    | 2.6 **[0000882184-25-000014_dhi-20241231.htm:45]**           | 9.8% = (500.0 / 5,100) * 100 **[0000882184-25-000014_dhi-20241231.htm:45]** **[0000882184-25-000014_dhi-20241231.htm:52]**                                      |
| 2026     | $154.1 **[0000882184-25-000014_dhi-20241231.htm:58]**               | Fixed Rate Debt        | 4.5 **[0000882184-25-000014_dhi-20241231.htm:58]**           | 3.0% = (154.1 / 5,100) * 100 **[0000882184-25-000014_dhi-20241231.htm:58]** **[0000882184-25-000014_dhi-20241231.htm:52]**                                      |
| 2027     | $910.3 **[0000882184-25-000014_dhi-20241231.htm:58]**               | Fixed Rate Debt        | 3.4 **[0000882184-25-000014_dhi-20241231.htm:58]**           | 17.8% = (910.3 / 5,100) * 100 **[0000882184-25-000014_dhi-20241231.htm:58]** **[0000882184-25-000014_dhi-20241231.htm:52]**                                     |
| 2028     | $600.4 **[0000882184-25-000014_dhi-20241231.htm:58]**               | Fixed Rate Debt        | 1.5 **[0000882184-25-000014_dhi-20241231.htm:58]**           | 11.8% = (600.4 / 5,100) * 100 **[0000882184-25-000014_dhi-20241231.htm:58]** **[0000882184-25-000014_dhi-20241231.htm:52]**                                     |
| 2029     | $800.0 **[0000882184-25-000014_dhi-20241231.htm:58]**               | Fixed Rate Debt        | 3.0 **[0000882184-25-000014_dhi-20241231.htm:58]**           | 15.7% = (800.0 / 5,100) * 100 **[0000882184-25-000014_dhi-20241231.htm:58]** **[0000882184-25-000014_dhi-20241231.htm:52]**                                     |
| 2029     | $1,050.0 **[0000882184-25-000014_dhi-20241231.htm:58]**             | Variable Rate Debt     | 6.2 **[0000882184-25-000014_dhi-20241231.htm:58]**           | 20.6% = (1,050.0 / 5,100) * 100 **[0000882184-25-000014_dhi-20241231.htm:58]** **[0000882184-25-000014_dhi-20241231.htm:52]**                                   |
| 2030     | $17.5 **[0000882184-25-000014_dhi-20241231.htm:58]**                | Fixed Rate Debt        | 6.0 **[0000882184-25-000014_dhi-20241231.htm:58]**           | 0.3% = (17.5 / 5,100) * 100 **[0000882184-25-000014_dhi-20241231.htm:58]** **[0000882184-25-000014_dhi-20241231.htm:52]**                                       |
| Thereafter | $700.0 **[0000882184-25-000014_dhi-20241231.htm:58]**             | Fixed Rate Debt        | 5.3 **[0000882184-25-000014_dhi-20241231.htm:58]**           | 13.7% = (700.0 / 5,100) * 100 **[0000882184-25-000014_dhi-20241231.htm:58]** **[0000882184-25-000014_dhi-20241231.htm:52]**                                     |
| Thereafter | $100.0 **[0000882184-25-000014_dhi-20241231.htm:58]**             | Variable Rate Debt     | 5.9 **[0000882184-25-000014_dhi-20241231.htm:58]**           | 2.0% = (100.0 / 5,100) * 100 **[0000882184-25-000014_dhi-20241231.htm:58]** **[0000882184-25-000014_dhi-20241231.htm:52]**                                      |

e1d3ad4d71d75f25ca1da700365a4355fc4ac2d67e617462555aa55a376d3940

- **Strong focus on affordable housing targeting first-time buyers**: D.R. Horton reports that **55% to 56%** of their deliveries have been to **first-time homebuyers**, and **70%** of deliveries were priced at **$400,000 or less**, emphasizing their commitment to affordability.  **[DHI_3370586_26]**
- **Encouraging early trends for the spring selling season**: The company is **very encouraged by the early trends in January** and is **excited for what the spring is going to hold**, indicating strong demand ahead.  **[DHI_3370586_26]**
- **Improved construction cycle times enhancing efficiency**: Construction cycle times have improved back to the historical average of approximately **4 months from start to complete**, boosting efficiency and inventory turnover.  **[DHI_3370586_4]**

624877a0f869ec3ca042e31a2dd0fd990afe4c52fcd3c5f46a7ee8c21daf5f75

- **Management anticipates challenging market conditions with continued uncertainty regarding mortgage rates, capital markets, and general economic conditions that may significantly impact their business.**  **[DHI_3364680_11]**
- **D.R. Horton expects homebuilding gross margins to decline in the first quarter of fiscal 2024 due to increased incentives necessary to address affordability amid volatile mortgage rates.**  **[DHI_3364680_4]**
- **Increased investments in multifamily rental projects in fiscal 2024 may offset cash flow from homebuilding operations and potentially limit free cash flow available to shareholders.**  **[DHI_3364680_40]**

194522f8ad01a9f40fecb2d911298732909d58a33528a0c4866f042919db01f3

- D.R. Horton **maintained solid margins** and achieved their sales pace to hit their guidance for the year by relying on local operators to make pricing decisions based on market conditions, resulting in a **strong financial position** despite not pushing incentives aggressively.  **[DHI_3393426_39]**
- The company has **improved construction cycle times below historical norms** due to healed supply chains, strengthened labor availability, and increased efficiency in the construction process, enhancing operational effectiveness.  **[DHI_3393426_35]**
- D.R. Horton has strong relationships with **seasoned land development companies**, helping them find alternative capital sources, leading to **64% of closings** coming from lots developed by others, which is a key part of their business strategy to efficiently secure lot supply and support future growth.  **[DHI_3393426_32]**

7b846e4171e292e344a4d1373facf091d7b9bb67426fd93b7776ca7d435858bc

1. **Gross Margin Decline**  
   **Q:** Why is gross margin expected to decline?  
   **A:** Gross margins are expected to decline to **22.5%** in Q1, mainly due to higher incentives and increased costs of rate buydowns as mortgage rates rise and become more volatile.  **[DHI_3404335_19]**  The margin in September was lower than in August, and this trend is expected to continue.  **[DHI_3404335_19]** 

2. **2025 Delivery Outlook**  
   **Q:** How are delivery numbers expected to change in 2025?  
   **A:** The company guides for **90,000 to 92,000** deliveries in 2025, supported by improved cycle times and the ability to ramp up starts in the spring.  **[DHI_3404335_16]**  They feel confident in turning their housing inventory **1.5x** in fiscal 2025.  **[DHI_3404335_16]** 

3. **Buyer Hesitation Due to Market Conditions**  
   **Q:** Why are buyers sitting on the sidelines?  
   **A:** Buyers are less motivated due to rate volatility, affordability challenges, and election-related uncertainty.  **[DHI_3404335_15]**  The combination of higher mortgage rates and market noise has led people to pause their purchasing decisions.  **[DHI_3404335_15]** 

4. **Addressing Affordability Challenges**  
   **Q:** How is the company addressing affordability issues?  
   **A:** The company is focusing on building smaller, more affordable homes, adjusting product selection, and improving efficiencies with trade partners to reduce costs and offer homes that buyers can afford.  **[DHI_3404335_29]** 

5. **Rising Incentive Costs**  
   **Q:** Are increased incentives impacting margins?  
   **A:** Yes, higher incentives are necessary to maintain affordability for buyers amid rising rates, which is increasing costs and putting pressure on margins.  **[DHI_3404335_28]**  The cost of rate buydowns has increased due to higher mortgage rates.  **[DHI_3404335_28]** 

6. **Land and Material Cost Trends**  
   **Q:** How are land and material costs trending?  
   **A:** Lot costs increased by a high single-digit percentage this quarter and are expected to continue rising at a mid-single-digit rate.  **[DHI_3404335_35]**  Stick and brick costs were down **1%** sequentially and **2.5%** year-over-year, with expectations of relatively flat costs moving forward.  **[DHI_3404335_31]** 

7. **Unsold Inventory Levels**  
   **Q:** Are there concerns about rising unsold inventories?  
   **A:** The rise in completed unsold inventory is not a concern and has no geographic concentration.  **[DHI_3404335_23]**  It is due to improved cycle times and sales slightly below expectations, and they expect this inventory to trend down over the next few quarters.  **[DHI_3404335_23]** 

8. **Market Share Growth Strategy**  
   **Q:** Will the company focus on market share growth in 2025?  
   **A:** The company is well-positioned with lot inventory and is prepared to respond to market conditions.  **[DHI_3404335_26]**  Operators have higher goals, and they feel confident in their ability to lean into the market if it strengthens, though the guidance reflects current expectations.  **[DHI_3404335_26]** 

9. **Cancellation Rates Stable**  
   **Q:** Has the cancellation rate increased significantly?  
   **A:** The cancellation rate ticked up slightly but remains in line with the prior year, and is within a comfortable range for management.  **[DHI_3404335_30]** 

10. **Shift to Smaller Homes**  
    **Q:** Is the company building smaller homes to improve affordability?  
    **A:** Yes, average home size decreased by **1%** sequentially and year-over-year, as the company leans towards smaller plans to address affordability and position for the spring market.  **[DHI_3404335_17]** 

76694cd0026f9c1c6dbd3feae991b8793281c8cde50c1e223775a7cae2ad59a7

- **Lot cost inflation is expected to remain moderate, with low single-digit percentage increases in the current pipeline**, indicating a controlled cost environment.  **[DHI_3380005_30]**
- **Increased investor interest in the company's single-family rental and multifamily assets**, with more interested parties in the assets they have for sale today, suggesting potential growth in the rental business.  **[DHI_3380005_32]**
- **The company is ready to monetize completed rental projects and expects no significant shifts in rental revenues**, selling whole communities at a time, which may lead to higher revenues when closings occur.  **[DHI_3380005_34]**

32d50ca046e7432c1067405f11d7a75f160a8540183a826a00842ac224f46f39

1. **Cash Flow Guidance**  
   **Q:** What is the cash flow outlook considering rental investments?  
   **A:** Bill Wheat explained that while guiding to around **$3 billion** of homebuilding cash flow this year, consolidated cash flow will be offset by investments in the rental business, expecting around **$800 million to $1 billion** for the full year on a consolidated basis.  **[DHI_3380005_18]**  The gap should narrow in future years as rental platform growth moderates, with the asset base at **$3.1 billion** today expected to grow slightly.  **[DHI_3380005_18]** 

2. **Gross Margin Outlook**  
   **Q:** Will higher rates and incentives impact future margins?  
   **A:** Jessica Hansen stated that with over **50%** of homes sold and closed intra-quarter, real-time market conditions are reflected quickly in gross margins.  **[DHI_3380005_23]**  While costs outside of incentives have flattened, incentives remain a wildcard dependent on market conditions.  **[DHI_3380005_23]**  The impact of higher mortgage rates on buydowns is already reflected in Q2 and Q3 results.  **[DHI_3380005_24]** 

3. **Demand Trends**  
   **Q:** How are recent demand trends amid rate volatility?  
   **A:** Bill Wheat noted that despite rate volatility causing intermittent buyer adjustments in February and March, sales pace has stabilized over the past six weeks, aligning with plans and enabling an increase in annual guidance.  **[DHI_3380005_22]**  Future demand will depend on rate movements, with the company adjusting accordingly.  **[DHI_3380005_22]** 

4. **Land and Lot Cost Inflation**  
   **Q:** What is the outlook for land and lot cost inflation?  
   **A:** Bill Wheat expects moderate increases in land costs, with low single-digit percentage increases anticipated.  **[DHI_3380005_31]**  While land prices have settled recently, the long-term trend remains upward due to a shortage of lot availability in the industry.  **[DHI_3380005_41]** 

5. **Community Count Growth**  
   **Q:** What is the outlook for community count growth?  
   **A:** Jessica Hansen mentioned that community count has been up double-digit percentages year-over-year for several quarters, with growth expected to moderate in the coming quarters.  **[DHI_3380005_19]**  The company continues to focus on driving growth through community count rather than increased absorption per community.  **[DHI_3380005_19]** 

6. **Interest Rate Buydowns**  
   **Q:** Are costlier buydowns affecting margins?  
   **A:** Paul Romanowski explained that mortgage rate buydowns are adjusted in line with market rates, aiming to offer rates about **1 to 1.5 points** below market.  **[DHI_3380005_16]**  The impact of higher rates on buydown costs is already reflected, and incentives may increase if rates rise significantly.  **[DHI_3380005_24]** 

7. **Rental Business Margins**  
   **Q:** What are the expectations for rental business margins?  
   **A:** Michael Murray indicated that rental margins will largely depend on interest rates and capital markets, expecting them to remain consistent with current levels but acknowledging potential volatility due to the size and timing of transactions.  **[DHI_3380005_44]** 

8. **Buyer Credit Quality**  
   **Q:** Any signs of stress in buyer credit metrics?  
   **A:** Paul Romanowski reported no significant signs of stress, with the average FICO score last quarter at **725**.  **[DHI_3380005_21]**  Fluctuations in rates have not meaningfully impacted backlog or buyers' ability to qualify.  **[DHI_3380005_21]** 

9. **Resale Market Competition**  
   **Q:** Is increased resale inventory affecting sales?  
   **A:** Michael Murray stated that resale inventory remains limited, especially at affordable price points, and has not significantly impacted sales pace.  **[DHI_3380005_29]**  The company's interest rate incentives offer an affordability advantage over existing homes.  **[DHI_3380005_29]** 

10. **Cycle Time Improvements**  
    **Q:** Can cycle times be reduced further?  
    **A:** Paul Romanowski acknowledged that while cycle times are back to historical norms, the company continues to focus on efficiency and sees potential for further improvement, though significant reductions are not expected in the near term.  **[DHI_3380005_27]** 

11. **SG&A Expenses**  
    **Q:** What are the expectations for SG&A expenses?  
    **A:** Bill Wheat explained that SG&A is expected to remain low, around **7%** for the third quarter, as the company invests in growth by hiring personnel and realigning divisions, with quick payback anticipated.  **[DHI_3380005_38]** 

12. **Investor Appetite for Rentals**  
    **Q:** Are investors' interest in rentals changing?  
    **A:** Paul Romanowski noted a slight uptick in investor interest for single-family rentals and multifamily, though caution remains due to current rates and cap rates.  **[DHI_3380005_33]** 

268fc0316f166ecd970501cb672c6652394267ab02156bf4dc135d65068099d5

- **Significant Increase in Net Sales Orders**: D.R. Horton reported a **39% increase in net sales orders** in the fourth quarter compared to the prior year quarter, indicating strong demand for their homes.  **[DHI_3364680_3]**
- **Improved Gross Profit Margins**: The company achieved a **gross profit margin on home sales revenues of 25.1%**, which is **up 180 basis points sequentially** from the June quarter, reflecting improving profitability.  **[DHI_3364680_4]**
- **Strong Financial Position and Cash Flow**: D.R. Horton maintains a **strong balance sheet with low leverage and significant liquidity**, expecting to generate **$3 billion of cash flow from homebuilding operations** in fiscal 2024, providing flexibility to capitalize on market opportunities.  **[DHI_3364680_10]** **[DHI_3364680_40]**

424cd863f7e94e7f6005a01a101a38fcd5da9ec28212fde132884027d74f8211

DR Horton Inc (DHI)

Financials