D.R. Horton (DHI) Q3 2024 earnings summary

Executive summary

• Q3 FY24 net income rose 1% year-over-year to $1.4 billion, with EPS up 5% to $4.10 per diluted share and consolidated revenues up 2% to $10 billion; homes closed grew 5% to 24,155 units, with home sales revenues at $9.2 billion and an average closing price of $382,200.

• For the nine months ended June 30, 2024, consolidated revenues rose 7% to $26.8 billion, net income increased 7% to $3.5 billion, and diluted EPS was up 11% to $10.43.

• D.R. Horton remains the largest U.S. homebuilder, operating in 121 markets across 33 states, with a strong balance sheet and book value per share of $75.32.

• Homebuyer demand remained solid despite affordability challenges, with 42,600 homes in inventory and average selling price of $380,000.

• Net sales orders increased 1% year-over-year to just over 23,000 homes in Q3, and 14% to 67,526 homes for the nine months, with order value flat at $8.7 billion in Q3 and up 15% to $25.6 billion for the nine months.

Financial highlights

• Q3 FY24 consolidated pre-tax income was $1.8 billion, with an 18.1% pre-tax profit margin; home sales gross margin was 23.2%–24%, and homebuilding SG&A was 7.1% of revenues.

• Rental operations generated $64 million pre-tax income on $414 million revenues in Q3; for the trailing twelve months, rental segment revenues were $980.2 million with pre-tax income of $128.8 million.

• Financial services earned $91 million pre-tax income on $242 million revenues in Q3, with a 37.7% pre-tax margin; 78%–79% of buyers used in-house mortgage, with average FICO of 725.

• Book value per share was $75.32, up 18% year-over-year; consolidated leverage was 18.8%.

• Net cash provided by operations for nine months was $228.2 million; cash and liquidity at June 30, 2024, totaled $5.8 billion ($3 billion cash, $2.8 billion credit capacity).

Outlook and guidance

• Q4 FY24 guidance: consolidated revenues of $10–$10.4 billion, 24,000–24,500 homes closed, home sales gross margin around 24%, and SG&A at ~7% of revenues.

• Full-year 2024 guidance: consolidated revenues of $36.8–$37.2 billion, 90,000–90,500 homes closed, ~$3 billion homebuilding cash flow, $1.8 billion in share repurchases, and $400 million in dividends.

• Management expects continued solid demand for new homes despite elevated mortgage rates and inflation, supported by limited supply and favorable demographics.

• The company will continue to use incentives and pricing adjustments to adapt to market conditions and manage inventory and home pricing based on demand.

• Focus remains on capital efficiency, strong cash flows, and maintaining a robust balance sheet to navigate changing economic conditions.