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D.R. Horton (DHI) Q4 Earnings Top, Margin Up, Shares Rise

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D.R. Horton, Inc. (DHI - Free Report) reported impressive results for fourth-quarter fiscal 2021. Both the top and bottom lines topped the Zacks Consensus Estimate and improved significantly on a year-over-year basis. Shares of the company gained 1.12% in the pre-market trading session on Nov 9.

Donald R. Horton, the chairman of the board, said, "Housing market conditions remain very robust, with homebuyer demand exceeding our current capacity to deliver homes across all of our markets.” He further added, “As we navigate the current supply chain challenges, we are focused on increasing our production capacity and infrastructure to support a higher level of home starts. After starting construction on 22,400 homes during the fourth quarter, our homes in inventory at September 30, 2021 increased 26% from a year ago to 47,800 homes. During October 2021, we started more than 8,000 homes, further supporting our strong positioning to produce double-digit volume growth in fiscal 2022.”

Earnings & Revenue Discussion

The company reported adjusted earnings of $3.70 per share for the quarter, surpassing the Zacks Consensus Estimate of $3.40 by 8.8% and increasing a whopping 65% from the year-ago period.

Total revenues (Homebuilding, Forestar, Rental and Financial Services) came in at $8.11 billion, up 26.7% year over year. Also, the reported figure surpassed the consensus mark of $7.89 billion.

D.R. Horton, Inc. Price, Consensus and EPS Surprise

D.R. Horton, Inc. Price, Consensus and EPS Surprise

D.R. Horton, Inc. price-consensus-eps-surprise-chart | D.R. Horton, Inc. Quote

Segment Details

Homebuilding revenues of $7.63 billion increased 23.9% from the prior-year quarter. The upside was led by higher home deliveries.

Home closings increased 8.3% from the prior-year quarter to 21,937 homes and 23.9% in value to $7.6 billion. It recorded growth across the regions served (baring Northwest and North), comprising Southwest, South Central, Southeast, and East.

Net sales orders, however, fell 33% year over year to 15,949 homes. Also, the value of net orders declined 17% year over year to $6 billion. Cancellation rate was 19%, unchanged from a year ago.

Order backlog of homes at quarter-end was 26,221 homes, down 2% year over year. Nonetheless, the value of the backlog was up 16% from the prior year to $9.5 billion.

Financial Services’ revenues increased 0.7% from the year-ago level to $222.5 million.

Forestar contributed $418.7 million to its total quarterly revenues, reflecting an improvement from $347.6 million a year ago.

The Rental business generated revenues of $212.9 million for the quarter.

Margins

The company’s consolidated pre-tax margin expanded 480 basis points (bps) to 21.3% for the quarter.

Fiscal 2021 Highlights

Earnings came in at $11.40 per share, reflecting a significant jump from $6.41 a year ago. Total revenues were $27.77 billion, up from $20.31 billion in fiscal 2020. Deliveries were up 25% in units and 35% in value. Pre-tax margin expanded 460 bps to 19.3%.

Balance Sheet Details

D.R. Horton’s cash, cash equivalents and restricted cash totaled $3.3 billion as of Sep 30, 2021 compared with $3.04 billion at fiscal 2020-end. At fiscal 2021-end, it had $3 billion of unrestricted homebuilding cash and $2 billion of available capacity on the revolving credit facility. Total homebuilding liquidity was $5 billion.

At fiscal 2021-end, it had 47,800 homes in inventory, of which 21,700 were unsold. D.R. Horton’s homebuilding land and lot portfolio totaled 530,300 lots at fiscal 2021-end. Of these, 24% were owned, and 76% were controlled through land and lot purchase contracts.

At September-end, homebuilding debt totaled $3.2 billion, with homebuilding debt to total capital of 17.8%. The trailing 12-month return on equity was 31.6%.

D.R. Horton repurchased 10.4 million shares of common stock for $874 million during fiscal 2021. The company’s remaining stock repurchase authorization as of Sep 30, 2021 was $546.2 million.

Fiscal 2022 Guidance

Total revenues are now expected in the range of $32.5-$33.5 billion. Homes closed are expected within 90,000-92,000 units.

Zacks Rank

Currently, D.R. Horton carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

PulteGroup Inc. (PHM - Free Report) — which currently holds a Zacks Rank #3 — reported third-quarter 2021 results, wherein earnings and revenues missed the Zacks Consensus Estimate, as major disruptions in the manufacture and supply of building products have been extending overall build cycles.

NVR, Inc. (NVR - Free Report) reported lower-than-expected earnings for third-quarter 2021. Nonetheless, the top and the bottom line improved impressively from the year-ago period on the back of solid demand. The stock currently has a Zacks Rank #3.

Meritage Homes Corporation (MTH - Free Report) reported third-quarter 2021 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate, defying the ongoing industry-wide supply-chain disruptions. Also, the top and the bottom line improved significantly on a year-over-year basis. Revenues and earnings topped the Zacks Consensus Estimate for the 12th straight quarter. The stock currently has a Zacks Rank #1.


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