• Earnings Per Share (EPS): $2.61 per diluted share, a decrease of 7% from the prior year quarter.
• Consolidated Revenue: $7.6 billion.
• Net Income: $845 million.
• Pretax Income: $1.1 billion with a pretax profit margin of 14.6%.
• Home Sales Revenue: $7.1 billion on 19,059 homes closed.
• Average Closing Price: $374,900, down 1% sequentially.
• Net Sales Orders: 17,837 homes, a decrease of 1% from the prior year.
• Order Value: $6.7 billion, a decrease of 2% from the prior year.
• Gross Profit Margin on Home Sales: 22.7%, down 90 basis points sequentially.
• SG&A Expenses: Increased by 6% from last year, representing 8.9% of revenues.
• Operating Cash Flow: $647 million generated in the quarter.
• Shareholder Returns: $1.2 billion returned through share repurchases and dividends.
• Rental Operations Revenue: $218 million with a pretax income of $12 million.
• Forestar Revenue: $250 million on 2,333 lots sold with pretax income of $22 million.
• Financial Services Pretax Income: $49 million on $182 million of revenues.
• Liquidity: $6.5 billion, including $3 billion in cash.
• Debt: $5.1 billion with a consolidated leverage of 17%.
• Stockholders' Equity: $24.9 billion with a book value per share of $78.53.

• Warning! GuruFocus has detected 3 Warning Sign with PEBO.

Release Date: January 21, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• D.R. Horton Inc (NYSE:DHI) reported solid earnings of $2.61 per diluted share for the first quarter.
• The company achieved a pretax profit margin of 14.6% on $7.6 billion in revenues.
• D.R. Horton Inc (NYSE:DHI) returned $1.2 billion to shareholders through share repurchases and dividends in the quarter.
• The company improved its construction cycle times, enhancing its ability to turn housing inventory faster.
• D.R. Horton Inc (NYSE:DHI) maintained a strong balance sheet with $6.5 billion in consolidated liquidity.

Negative Points

• Earnings per share decreased by 7% compared to the prior year quarter.
• Net sales orders for the first quarter decreased by 1% from the prior year.
• The company's gross profit margin on home sales revenue decreased by 90 basis points sequentially.
• Homebuilding SG&A expenses increased by 6% from the previous year.
• The average closing price for homes decreased by 1% sequentially.

Q & A Highlights

Q: Can you explain the gross margin outlook for the second quarter, which seems to be decreasing from 22.7% to 21.5% to 22%? Is this due to higher incentive levels or changes in land, labor, and materials? A: The expected decrease in gross margin is primarily due to higher incentive levels. We closed 53% of homes sold in the same quarter, which reflects current market conditions. Our margin on closings in December was slightly lower than in the prior months, leading to a projected slight step down in margin for the second quarter. - Paul Romanowski, President, CEO

Q: You exceeded delivery expectations by about 1,000 units but maintained the full-year guidance of 90,000 to 92,000 homes. Was there any pull-forward into the first quarter, or is this a conservative approach? A: The strong delivery performance reflects our improved build times and the ability to sell and close 53% of homes within the quarter. We had the inventory, and our teams executed well. We are positioned to continue delivering homes, with the necessary inventory to meet our targets. - Michael Murray, COO

Q: How are you approaching the start pace given the improving cycle times? Are you considering bringing back build-to-order (BTO) components, or will you continue to match starts with sales pace? A: Improved cycle times allow us to carry lower inventory levels and sell earlier in the process. We expect our starts to align more closely with our sales pace, replenishing inventory as needed throughout the year. - Paul Romanowski, President, CEO

Q: With the new administration, how are you preparing for potential changes in housing-related policies, such as tariffs or immigration? A: We are monitoring potential policy changes but remain focused on affordability for buyers. We aim to price our products competitively to meet homebuyers' needs, regardless of policy shifts. - Bill Wheat, CFO

Q: Can you provide insight into your cash flow from operations relative to share repurchases and dividends? A: Over the last 12 months, we have distributed nearly all cash flow from operations to shareholders through repurchases and dividends. We expect this trend to continue, with $2.6 billion to $2.8 billion in repurchases and $500 million in dividends as a proxy for our cash flow expectations. - Bill Wheat, CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.