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D.R. Horton, Inc. (DHI - Free Report) reported solid fourth-quarter fiscal 2023 (ended Sep 30, 2023) results as earnings and revenues surpassed their respective Zacks Consensus Estimate.
Shares of the company grew 1.09% in the pre-market trading session on Nov 7.
On a year-over-year basis, the top line increased on the back of the supply of both new and existing homes as affordable price points remain limited and robust housing demand supported by favorable demographics.
Earnings, Revenue & Margin Discussion
DHI reported adjusted earnings of $4.45 per share for the fiscal fourth quarter, beating the Zacks Consensus Estimate of $3.98 by 11.8% but decreasing 4.7% from the year-ago figure of $4.67.
D.R. Horton, Inc. Price, Consensus and EPS Surprise
Total revenues (Homebuilding, Forestar, Rental and Financial Services) came in at $10.5 billion, up 9% year over year. The reported figure topped the consensus mark of $10.07 billion by 4.3%.
Consolidated pre-tax margin came in at 19.2% for the quarter.
Segment Details
Homebuilding revenues of $8.8 billion decreased from $9.39 billion in the prior-year quarter. Home sales were $8.78 billion, down from $9.37 billion reported a year ago. Home closings were down 1% from the prior-year quarter to 22,928 homes.
Net sales orders rose 39% year over year to 18,939 homes. The value of net orders also increased by 34% year over year to $7.3 billion. The cancellation rate (on gross sales orders) was 21%, improved from 32% a year ago.
The order backlog of homes at the end of fiscal 2023 was 15,197, down 23% year over year. The value of the backlog was down 26% from the prior year to $5.9 billion.
Financial Services revenues decreased 63.6% from the year-ago level to $219.5 million.
Forestar contributed $549.7 million to total quarterly revenues with 4,986 lots sold, reflecting a growth from $381.4 million in revenues generated a year ago on 3,914 lots sold.
The Rental business generated revenues of $1.39 billion for the quarter compared with $21.1 million a year ago.
Fiscal 2023 Highlights
Earnings came in at $13.82 per share, reflecting a 16% decline from a year ago. Total revenues were $35.5 billion, up 6% from fiscal 2022.
Deliveries were up to 82,917 from 82,744 units reported a year ago. Deliveries in value were down to $31.6 billion from $31.9 billion reported in prior year.
Net sales orders were up 3% year over year to 78,342 homes. The value of net orders declined 3% year over year to $29.5 billion.
Balance Sheet Details
D.R. Horton’s cash, cash equivalents and restricted cash totaled $3.9 billion as of Sep 30, 2023 compared with $2.57 billion at the end of fiscal 2022. It had $3.6 billion of available capacity on the revolving credit facility at the end of 2023. Total homebuilding liquidity was $7.5 billion.
At the end of September 2023, DHI had 42,000 homes in inventory, of which 27,000 were unsold. D.R. Horton’s homebuilding land and lot portfolio totaled 568,400 lots at the fiscal year’s end. Of these, 25% were owned and 75% were controlled through land and lot purchase contracts.
At the end of fiscal 2023, debt totaled $5.09 billion, with a debt to total capital of 18.3%. The trailing 12-month return on equity was 22.7%.
D.R. Horton repurchased 3.5 million shares of common stock for $423.1 million during the fiscal fourth quarter. For the year, DHI repurchased 11.1 million shares of common stock for $1.2 billion. In October, its board authorized $1.5 billion shares of common stock, replacing the previous authorization ($32.8 million remaining of $234.0 million at the time of authorization due to repurchases made subsequent to year-end).
Fiscal 2024 Views
DHI expects consolidated revenues to be in the range of $36-$37 billion. Homes closed are anticipated within 86,000-89,000 units. The income tax rate is expected in the range of 24-24.5%.
Fiscal 2024 cash flow from homebuilding operations is expected to be nearly $3 billion. Share repurchases are projected at approximately $1.5 billion.
Meritage Homes Corporation (MTH - Free Report) reported better-than-expected results for third-quarter 2023. Both earnings and total closing revenues surpassed the Zacks Consensus Estimate.
Although earnings declined from the year-ago quarter’s levels, revenues improved as the company continued to offer a full range of incentives to help buyers solve for a monthly payment. Despite the elevated interest rate environment, the ongoing shortage of existing home inventory for sale and a housing need for millennials and baby boomers boosted demand.
M.D.C. Holdings, Inc. reported mixed third-quarter 2023 results, wherein earnings topped the Zacks Consensus Estimate while revenues missed the same. Moreover, both metrics declined year over year.
MDC’s uptrend can be attributable to the current new home market, which continues to benefit from the lack of existing home supply. The company witnessed notable improvements in its net new orders, driven by a significant decline in cancellations and its use of financing incentives, which are aimed at reducing the negative impact of higher mortgage rates for its buyers. Given the ongoing market scenario, the company aims to increase its land acquisition efforts and improve its market share position.
PulteGroup Inc. (PHM - Free Report) reported mixed results in third-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates but revenues missed the same. Both metrics increased year over year. The company has been banking on a solid operating model, which strategically aligns the production of build-to-order and quick-move-in homes with applicable demand across consumer groups.
Backed by its disciplined and balanced business model, the company witnessed solid orders in the reported quarter and posted a 12-month return on equity of 30.1%.
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D.R. Horton (DHI) Q4 Earnings Beat Estimates, Shares Rise
D.R. Horton, Inc. (DHI - Free Report) reported solid fourth-quarter fiscal 2023 (ended Sep 30, 2023) results as earnings and revenues surpassed their respective Zacks Consensus Estimate.
Shares of the company grew 1.09% in the pre-market trading session on Nov 7.
On a year-over-year basis, the top line increased on the back of the supply of both new and existing homes as affordable price points remain limited and robust housing demand supported by favorable demographics.
Earnings, Revenue & Margin Discussion
DHI reported adjusted earnings of $4.45 per share for the fiscal fourth quarter, beating the Zacks Consensus Estimate of $3.98 by 11.8% but decreasing 4.7% from the year-ago figure of $4.67.
D.R. Horton, Inc. Price, Consensus and EPS Surprise
D.R. Horton, Inc. price-consensus-eps-surprise-chart | D.R. Horton, Inc. Quote
Total revenues (Homebuilding, Forestar, Rental and Financial Services) came in at $10.5 billion, up 9% year over year. The reported figure topped the consensus mark of $10.07 billion by 4.3%.
Consolidated pre-tax margin came in at 19.2% for the quarter.
Segment Details
Homebuilding revenues of $8.8 billion decreased from $9.39 billion in the prior-year quarter. Home sales were $8.78 billion, down from $9.37 billion reported a year ago. Home closings were down 1% from the prior-year quarter to 22,928 homes.
Net sales orders rose 39% year over year to 18,939 homes. The value of net orders also increased by 34% year over year to $7.3 billion. The cancellation rate (on gross sales orders) was 21%, improved from 32% a year ago.
The order backlog of homes at the end of fiscal 2023 was 15,197, down 23% year over year. The value of the backlog was down 26% from the prior year to $5.9 billion.
Financial Services revenues decreased 63.6% from the year-ago level to $219.5 million.
Forestar contributed $549.7 million to total quarterly revenues with 4,986 lots sold, reflecting a growth from $381.4 million in revenues generated a year ago on 3,914 lots sold.
The Rental business generated revenues of $1.39 billion for the quarter compared with $21.1 million a year ago.
Fiscal 2023 Highlights
Earnings came in at $13.82 per share, reflecting a 16% decline from a year ago. Total revenues were $35.5 billion, up 6% from fiscal 2022.
Deliveries were up to 82,917 from 82,744 units reported a year ago. Deliveries in value were down to $31.6 billion from $31.9 billion reported in prior year.
Net sales orders were up 3% year over year to 78,342 homes. The value of net orders declined 3% year over year to $29.5 billion.
Balance Sheet Details
D.R. Horton’s cash, cash equivalents and restricted cash totaled $3.9 billion as of Sep 30, 2023 compared with $2.57 billion at the end of fiscal 2022. It had $3.6 billion of available capacity on the revolving credit facility at the end of 2023. Total homebuilding liquidity was $7.5 billion.
At the end of September 2023, DHI had 42,000 homes in inventory, of which 27,000 were unsold. D.R. Horton’s homebuilding land and lot portfolio totaled 568,400 lots at the fiscal year’s end. Of these, 25% were owned and 75% were controlled through land and lot purchase contracts.
At the end of fiscal 2023, debt totaled $5.09 billion, with a debt to total capital of 18.3%. The trailing 12-month return on equity was 22.7%.
D.R. Horton repurchased 3.5 million shares of common stock for $423.1 million during the fiscal fourth quarter. For the year, DHI repurchased 11.1 million shares of common stock for $1.2 billion. In October, its board authorized $1.5 billion shares of common stock, replacing the previous authorization ($32.8 million remaining of $234.0 million at the time of authorization due to repurchases made subsequent to year-end).
Fiscal 2024 Views
DHI expects consolidated revenues to be in the range of $36-$37 billion. Homes closed are anticipated within 86,000-89,000 units. The income tax rate is expected in the range of 24-24.5%.
Fiscal 2024 cash flow from homebuilding operations is expected to be nearly $3 billion. Share repurchases are projected at approximately $1.5 billion.
Zacks Rank
Currently, D.R. Horton carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Releases
Meritage Homes Corporation (MTH - Free Report) reported better-than-expected results for third-quarter 2023. Both earnings and total closing revenues surpassed the Zacks Consensus Estimate.
Although earnings declined from the year-ago quarter’s levels, revenues improved as the company continued to offer a full range of incentives to help buyers solve for a monthly payment. Despite the elevated interest rate environment, the ongoing shortage of existing home inventory for sale and a housing need for millennials and baby boomers boosted demand.
M.D.C. Holdings, Inc. reported mixed third-quarter 2023 results, wherein earnings topped the Zacks Consensus Estimate while revenues missed the same. Moreover, both metrics declined year over year.
MDC’s uptrend can be attributable to the current new home market, which continues to benefit from the lack of existing home supply. The company witnessed notable improvements in its net new orders, driven by a significant decline in cancellations and its use of financing incentives, which are aimed at reducing the negative impact of higher mortgage rates for its buyers. Given the ongoing market scenario, the company aims to increase its land acquisition efforts and improve its market share position.
PulteGroup Inc. (PHM - Free Report) reported mixed results in third-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates but revenues missed the same. Both metrics increased year over year. The company has been banking on a solid operating model, which strategically aligns the production of build-to-order and quick-move-in homes with applicable demand across consumer groups.
Backed by its disciplined and balanced business model, the company witnessed solid orders in the reported quarter and posted a 12-month return on equity of 30.1%.