Financial Data and Key Metrics Changes - The company reported consolidated pre-tax income of $798 million on revenues of $6.9 billion, with a pre-tax profit margin of 11.6% [5] - Earnings per diluted share were $2.03, down from $2.61 in the prior year quarter [9] - Net income for the quarter was $595 million, with home sales revenues of $6.5 billion from 17,818 homes closed, compared to $7.1 billion from 19,059 homes closed in the prior year quarter [9][10] - The gross profit margin on home sales revenues was 20.4%, up 40 basis points sequentially [11] Business Line Data and Key Metrics Changes - Net sales orders increased by 3% year-over-year to 18,300 homes, while order value remained unchanged at $6.7 billion [10] - The average price of net sales orders was $364,000, flat sequentially and down 2% from the prior year quarter [10] - The company started 18,500 homes in the December quarter, up 27% sequentially [14] Market Data and Key Metrics Changes - 64% of the mortgage company's closings were to first-time home buyers [8] - The average closing price for the quarter was $365,500, which is approximately $135,000 lower than the average sales price of new homes in the U.S. [9] Company Strategy and Development Direction - The company is focused on capital efficiency to generate strong operating cash flows and deliver returns to shareholders, having returned $4.4 billion through repurchases and dividends over the past 12 months [7] - The strategy includes tailoring product offerings and sales incentives based on demand in each market to maximize returns [8] - The company aims to maintain a balanced approach to growth, focusing on community count and market share while managing margins [90] Management's Comments on Operating Environment and Future Outlook - Management noted that new home demand is impacted by affordability constraints and cautious consumer sentiment, but they are responding with discipline [5] - The company expects consolidated revenues for the second quarter to be in the range of $7.3 billion to $7.8 billion, with homes closed expected to be between 19,700 and 20,200 [21] - Management expressed confidence in their positioning for the spring selling season, noting that lower mortgage rates have spurred some activity [40][94] Other Important Information - The company generated $3.6 billion of cash from operations over the past 12 months and has a strong balance sheet with low leverage [7][19] - The company’s capital allocation strategy is disciplined, with plans for $2.5 billion in common stock repurchases and around $500 million in dividend payments for the year [18][21] Q&A Session Summary Question: Inquiry about SG&A expenses - Management stated that SG&A expenses were slightly down year-over-year in absolute dollars, but the ratio increased due to lower closings [25] Question: Community count growth expectations - Management expects community count growth to continue but may drift down to mid-single to high-single digit range [31] Question: Impact of lower mortgage rates on demand - Management noted that lower rates have historically spurred activity in sales offices, but it is too early to determine the full impact [50] Question: Warranty costs and their impact on gross margins - Management indicated that warranty recovery was unexpected but beneficial, and they expect warranty costs to normalize going forward [56] Question: Land market conditions - Management observed that while there hasn't been significant capitulation in the raw land market, there have been rational conversations with land developers [46] Question: Balance between volume and margin - Management emphasized a balanced approach, focusing on maximizing returns while responding to market conditions [90]

Financial Data and Key Metrics Changes - The company reported consolidated pre-tax income of $798 million on revenues of $6.9 billion, with a pre-tax profit margin of 11.6% [5] - Earnings per diluted share were $2.03, down from $2.61 in the prior year quarter [9] - Net income for the quarter was $595 million, with home sales revenues of $6.5 billion from 17,818 homes closed, compared to $7.1 billion from 19,059 homes closed in the prior year quarter [9][10] - The gross profit margin on home sales revenues was 20.4%, up 40 basis points sequentially [11] Business Line Data and Key Metrics Changes - Net sales orders increased by 3% year-over-year to 18,300 homes, while order value remained unchanged at $6.7 billion [10] - The average price of net sales orders was $364,000, flat sequentially and down 2% from the prior year quarter [10] - The company started 18,500 homes in the December quarter, up 27% sequentially [14] Market Data and Key Metrics Changes - 64% of mortgage company closings were to first-time home buyers, indicating a focus on affordable housing [8] - The average closing price for the quarter was $365,500, which is approximately $135,000 lower than the average sales price of new homes in the U.S. [9] Company Strategy and Development Direction - The company is focused on capital efficiency to generate strong operating cash flows and deliver returns to shareholders, having returned $4.4 billion through repurchases and dividends over the past 12 months [7] - The strategy includes tailoring product offerings and sales incentives based on market demand to maximize returns [8] - The company aims to maintain a balanced approach to growth, focusing on community count and market share while managing costs [22] Management's Comments on Operating Environment and Future Outlook - Management noted that new home demand is impacted by affordability constraints and cautious consumer sentiment, but they are responding with discipline [5] - The company expects consolidated revenues for the second quarter to be in the range of $7.3-$7.8 billion and homes closed to be between 19,700-20,200 [21] - Management expressed confidence in their ability to adapt to market conditions and enhance long-term value [22] Other Important Information - The company generated $3.6 billion in cash from operations over the past 12 months and has a strong balance sheet with low leverage [7][19] - The company’s capital allocation strategy is disciplined, with a focus on maintaining leverage around 20% over the long term [19] Q&A Session Summary Question: Inquiry about SG&A expenses - Management stated that SG&A expenses were slightly down year-over-year in absolute dollars, but the ratio increased due to lower closings [25] Question: Community count growth expectations - Management expects community count growth to continue but may drift down to mid-single to high-single digit range [31] Question: Impact of incentives on gross margins - Management confirmed that incentives increased throughout the quarter, impacting gross margins for the second quarter [82] Question: Demand trends with lower mortgage rates - Management noted a pickup in demand as rates hover around 6%, but it is too early to determine the trajectory for the spring selling season [50] Question: Land market conditions - Management indicated that while there is no significant capitulation in the raw land market, there have been rational conversations with land development partners [47]

Financial Data and Key Metrics Changes - D.R. Horton reported consolidated pre-tax income of $798 million on revenues of $6.9 billion, with a pre-tax profit margin of 11.6% for Q1 2026 [4] - Earnings per diluted share decreased to $2.03 from $2.61 in the prior year quarter, with net income of $595 million [7] - Home sales revenues were $6.5 billion from 17,818 homes closed, down from $7.1 billion from 19,059 homes closed in the prior year quarter [7][8] - The average closing price for homes was $365,500, flat sequentially but down 3% year over year [8] Business Line Data and Key Metrics Changes - Net sales orders increased by 3% year over year to 18,300 homes, while order value remained unchanged at $6.7 billion [10] - The gross profit margin on home sales revenues was 20.4%, up 40 basis points sequentially, primarily due to a recovery of prior-period warranty costs [11] - Home building SG&A expenses decreased by 1% year over year, but as a percentage of revenues, it increased to 9.7% from 8.9% in the prior year quarter [12] Market Data and Key Metrics Changes - 64% of mortgage company closings were to first-time home buyers, indicating a focus on affordable housing [6] - The average number of active selling communities increased by 2% sequentially and 12% year over year [10] - The company ended the quarter with 30,400 homes in inventory, of which 20,000 were unsold [14] Company Strategy and Development Direction - D.R. Horton is focused on capital efficiency to generate strong operating cash flows and deliver returns to shareholders, with $3.6 billion generated from operations over the past 12 months [5] - The company aims to tailor product offerings and sales incentives based on demand in each market to maximize returns [6] - The strategy includes managing investments in lots, land, and development based on current market conditions, with a focus on relationships with land developers [15] Management's Comments on Operating Environment and Future Outlook - Management noted that new home demand is impacted by affordability constraints and cautious consumer sentiment, but they are responding with discipline [4] - The company expects consolidated revenues for Q2 2026 to be in the range of $7.3-$7.8 billion and homes closed to be between 19,700-20,200 [24] - For the full year, the company anticipates consolidated revenues of approximately $33.5-$35 billion and homes closed to be in the range of 86,000-88,000 [25] Other Important Information - D.R. Horton repurchased 4.4 million shares for $670 million and paid cash dividends of $0.45 per share, totaling $132 million [21] - The company has a strong balance sheet with $6.6 billion of consolidated liquidity and plans to maintain leverage around 20% over the long term [22] Q&A Session Summary Question: Inquiry about SG&A expenses - Management stated that SG&A was in line with expectations and attributed the increase to lower closings, but they expect it to stabilize over the year [28][29] Question: Capital allocation and cash flow expectations - Management confirmed that cash flow expectations remain reasonable, with a target of over $3 billion for the year [32] Question: Community count growth and future expectations - Management expects community count growth to continue but may drift down to mid-single to high-single digit range [35] Question: Warranty costs impact on gross margin - Management indicated that warranty recovery was unexpected but beneficial, and they expect warranty costs to normalize going forward [59][61] Question: Demand trends and inventory levels - Management noted that demand remains strong despite low job growth, and inventory levels are more balanced compared to the previous year [97][91]

Core Viewpoint - Horton Homes reported strong first-quarter earnings, exceeding analyst expectations due to buyer incentives and Federal Reserve interest rate cuts [1] Financial Performance - Revenue for the first quarter was $6.9 billion, surpassing analyst expectations of $6.603 billion [1] - Earnings per share were $2.03, higher than the anticipated $1.93 [1] Sales Performance - Net sales orders increased by 3%, reaching 18,300 units during the period [1]

Financial Performance & Expectations - D.R. Horton's Q1 FY26 net income was $594.8 million, resulting in earnings per diluted share of $2.03[88] - The company's consolidated pre-tax income for Q1 FY26 was $798.1 million, with a pre-tax profit margin of 11.6%[88] - D.R. Horton anticipates FY 2026 consolidated revenues to be in the range of $33.5 billion to $35.0 billion and expects to close between 86,000 and 88,000 homes[18] - The company expects to repurchase approximately $2.5 billion of common stock and pay out ~$500 million in dividends in fiscal year 2026[18,58] Market Position & Operations - D.R. Horton closed 17,818 homes in Q1 FY26, generating home sales revenues of $6.5 billion[88,89] - 63% of D.R. Horton's homebuyers are first-time homebuyers[8] - D.R. Horton's average sales price is $368.3K[8,28] - D.R. Horton's financial services segment had an 81% mortgage capture rate of D.R. Horton homebuyers[15,84] Land and Lot Strategy - D.R. Horton had 445,000 controlled lots (75%) and 145,500 owned lots (25%) as of December 31, 2025[78] - Forestar, in which D.R. Horton owns 62%, sold 14,240 lots and generated $1.7 billion of revenue in FY25[84,110]

Earnings Season Overview - The fourth quarter earnings season is gaining momentum, with major banks having reported results and upcoming reports from Charles Schwab and regional banks like Fifth Third [1] - Attention is expected to shift towards Netflix and Intel, which are headlining the earnings calendar [1] Earnings Growth Expectations - As of January 16, 7% of S&P 500 companies have reported fourth quarter results, with analysts estimating an 8.2% increase in earnings per share for the quarter, marking the 10th consecutive quarter of annual earnings growth for the index [2] - Analysts had initially expected an 8.3% jump in earnings per share, a decrease from the third quarter's 13.6% growth rate, but have since raised expectations, particularly for tech companies [3] Market Themes and Influences - The earnings season will test the improved stock market breadth observed at the start of 2026, with ongoing themes from 2025 such as artificial intelligence, tariff and economic policies from the Trump administration, and a K-shaped consumer economy continuing to influence market dynamics [4] Upcoming Earnings Reports - This week's earnings releases will include reports from United Airlines, 3M Company, D.R. Horton, Johnson & Johnson, GE Aerospace, Procter & Gamble, Abbott Laboratories, and Capital One, in addition to Netflix and Intel [5]

D.R. Horton recorded a lower first-quarter profit as affordability concerns continued to put off home buyers, hurting sales and forcing the company to offer big incentives. ...

Group 1 - 3M Co. is expected to report quarterly earnings of $1.80 per share on revenue of $6.01 billion, with shares slipping 0.2% to $167.45 in after-hours trading [1] - D.R. Horton Inc. is projected to post quarterly earnings of $1.93 per share on revenue of $6.60 billion, with shares falling 0.2% to $155.67 in after-hours trading [1] - BOK Financial Corp. reported better-than-expected earnings of $2.89 per share, exceeding the analyst consensus estimate of $2.18 per share, with quarterly sales of $589.563 million surpassing the estimate of $550.100 million; shares gained 0.4% to close at $128.21 [1] - United Airlines Holdings Inc. is projected to report quarterly earnings of $2.94 per share on revenue of $15.40 billion, with shares slipping 0.1% to $113.45 in after-hours trading [1] - Netflix Inc. is expected to post quarterly earnings of 55 cents per share on revenue of $11.97 billion, with shares rising 0.5% to $88.44 in after-hours trading [1]

Core Viewpoint - The focus of investors has shifted from D.R. Horton's quarterly performance to forward-looking issues such as changes in demand following a decline in mortgage rates and the potential impact of housing policy adjustments under the Trump administration [1] Group 1: Financial Performance Expectations - Analysts expect D.R. Horton's Q1 earnings per share to be $1.93, with revenue around $6.6 billion, a significant decline from $2.61 per share and $7.6 billion in the same period last year [1] - The company's gross margin is projected to drop from 22.7% in the previous year to 20.1% this quarter, indicating pressure on profitability due to the housing affordability crisis [2] Group 2: Demand and Market Signals - Early signs of improvement in housing demand are emerging, with an increase in mortgage applications reported by the Mortgage Bankers Association [3] - The interest from homebuyers has reportedly increased earlier than in previous years, coinciding with Trump's announcement to direct Fannie Mae and Freddie Mac to purchase mortgage-backed securities to lower rates [3] Group 3: Policy Uncertainty and Industry Impact - The Trump administration's housing policy changes introduce complexity to the industry outlook, with discussions around a "carrot and stick" approach that may reward or penalize builders based on compliance with government housing goals [4] - Analysts note that while lower mortgage rates could benefit builders by reducing repurchase costs, there is pressure to prioritize entry-level housing sales over profitability, which could negatively impact gross margins [4] Group 4: Future Guidance and Orders - Analysts forecast D.R. Horton's second-quarter profit margin to be 20.2%, with new orders expected to reach 24,240 units [5] - The company's management's guidance on orders and profit margins, along with interpretations of policy changes, will be critical for assessing the industry's direction [5]

Group 1 - The core viewpoint is that lower mortgage rates and potential housing policy changes may have a more significant impact on the housing market than the quarterly results of America's largest homebuilder [1] Group 2 - The upcoming report from the largest homebuilder is anticipated to reflect the influence of these external factors rather than just financial performance [1]