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D.R. Horton, Inc.
CEO : Mr. David V. Auld

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2023 Q1	2.9% YoY	-15.8%	-13.4%	2023-01-24

David Auld says,

Earnings and Financial Performance

• The company reported earnings of $2.76 per diluted share and consolidated pre-tax income of $1.3 billion in Q1 2023.
• The consolidated return on equity for the trailing 12 months was 31.5%.

Housing Demand and Market Conditions

• There has been a moderation in housing demand beginning in June 2022 due to affordability challenges caused by high mortgage rates, inflation, and economic uncertainty.
• The supply of both new and resale homes at affordable price points remains limited, and the demographics supporting housing demand remain favorable.

Sales Activity and Prospects

• The company closed over 17,000 homes and sold more than 13,000 homes in Q1 2023, despite being the seasonally slowest quarter of the year.
• Increased sales activity was seen in the first few weeks of January.
• Although higher mortgage rates and economic uncertainty may persist, the company remains well-positioned with affordable product offerings, flexible lot supply, and experienced operators to navigate the challenging market conditions.

Financial Flexibility and Strategies

• The company’s strong balance sheet, liquidity, and low leverage provide significant financial flexibility.
• The company will focus on turning its inventory, managing product offerings, incentives, home pricing, sales pace, and inventory levels to meet market conditions, optimize returns, and generate increased cash flow from its homebuilding operations.

Jessica Hansen says,

First Quarter and Fiscal Year 2023 Results

• Net income increased by 47% to $1 billion.
• Homes closed increased by 11% to 23,294.
• Homes sold increased by 16% to 26,890.
• Backlog increased by 8% to 27,130 homes.

Market Conditions and Guidance

• The demand for new homes remains strong, but supply chain challenges are impacting the industry.
• The company is confident in its ability to navigate these challenges and expects strong results for the remainder of fiscal year 2023.
• The company expects to close between 100,000 and 105,000 homes in fiscal year 2023, an increase from the previous guidance of 95,000 to 100,000 homes.

Land and New Community Acquisition

• The company acquired 16,500 lots in the first quarter, bringing the total owned or controlled lots to 387,200.
• The company continues to invest in new communities, with 94 added in the first quarter.

Financial Results and Capital Deployment

• The company repurchased $500 million in stock in the first quarter.
• The company has a strong balance sheet and intends to continue to invest in growth opportunities while also returning capital to shareholders.

COVID-19

• The company continues to prioritize the health and safety of its employees, customers, and trade partners.
• The impacts of COVID-19 on the industry are uncertain, but the company believes it is well-positioned to continue to navigate the ongoing challenges.

Q & A sessions,

Challenging Market Conditions

• The company expects challenging market conditions to persist with continued uncertainty regarding mortgage rates, the capital markets, and general economic conditions that may significantly impact their business.

Guidance for Q2 2023

• The company expects to generate consolidated revenues in the March quarter of $6.3 billion to $6.7 billion.
• Homes closed by the homebuilding operations are expected to be in the range of 16,000 to 17,000 homes.
• Home sales gross margin in the second quarter is expected to be approximately 20% to 21%.
• Homebuilding SG&A as a percentage of revenues in the second quarter is expected to be approximately 8% to 8.3%.
• Financial services pre-tax profit margin is expected to be around 20%.
• Income tax rate is expected to be approximately 23.5% to 24% in the second quarter.

Outlook for FY 2023

• The company’s goal is to generate consolidated revenues in fiscal 2023 or slightly higher than fiscal 2022.
• Full-year revenues are expected to decline year-over-year, given the environment and pricing actions taken.
• Income tax rate for the year is expected to be approximately 23.5% to 24%.
• Increased cash flow from the homebuilding operations and on a consolidated basis is expected in fiscal 2023 compared to fiscal 2022.

Share Repurchases and Debt Maturities

• The company plans to repurchase shares at a similar dollar amount as last year to reduce share count during this year.
• Expecting over $1 billion of share repurchases for fiscal 2023.
• $700 million of senior notes that matured during the remainder of fiscal 2023 will be repaid from cash.