D.R. Horton(DHI) - 2024 Q3 - Quarterly Report

Financial Performance - Homebuilding revenues increased 6% to $9.2 billion compared to$8.7 billion, with homes closed increasing 5% to 24,155 homes[146] - Consolidated revenues increased 7% to $26.8 billion in the nine months ended June 30, 2024, compared to$25.0 billion in the prior year period[137] - Net income was $3.5 billion in the nine months ended June 30, 2024, compared to$3.3 billion in the prior year period, with diluted earnings per share increasing to $10.43 from$9.39[137] - Home sales gross margin improved to 24.0% compared to 23.3%[146] - Consolidated net income attributable to D.R. Horton increased 7% to $3.5 billion compared to$3.2 billion[162] - Diluted net income per common share increased 11% to $10.43 compared to$9.39[162] - Pre-tax income for the three and nine months ended June 30, 2024, was $1.8 billion and$4.6 billion, respectively, compared to $1.8 billion and$4.3 billion in the prior year periods[229] Home Sales and Orders - Net sales orders increased 1% to 23,001 homes, with the value of net sales orders remaining essentially flat at $8.7 billion[146] - Homes closed increased 10$378,200[158] - Net sales orders increased 14% to 67,526 homes, with a value increase of 15% to $25.6 billion[158] - The sales order backlog decreased by 12$6.55 billion as of June 30, 2024[172] - The cancellation rate for sales orders was 18% for both the three and nine months ended June 30, 2024, consistent with the prior year[171] Inventory and Land Management - Homebuilding inventories totaled $20.5 billion, up from$18.2 billion at September 30, 2023[148] - Approximately 26,200 homes in inventory were unsold as of June 30, 2024, compared to 27,000 unsold homes as of September 30, 2023[208] - The company plans to actively manage its inventory of owned land and lots and homes under construction relative to demand in each market[201] - Total land/lots owned and controlled as of June 30, 2024, was 630,200, with 150,900 lots owned and 479,300 lots controlled through purchase contracts[207] Regional Performance - Homebuilding revenues for the Northwest region increased by 10% in Q2 2024 and by 9% for the nine months, with pre-tax income of $121.2 million and$300.0 million respectively[193] - The Southwest region saw homebuilding revenues increase by 16% in Q2 2024 and by 28% for the nine months, with pre-tax income of $209.4 million and$515.3 million respectively[194] - The South Central region experienced a 7% decrease in homebuilding revenues in Q2 2024, with pre-tax income of $368.7 million[196] - The East region reported a 17$314.9 million[198] Financial Services - Financial services revenues increased 6% to $242.3 million compared to$228.5 million[153] - DHI Mortgage originated 18,807 first-lien loans for D.R. Horton homebuyers in the three months ended June 30, 2024, an increase of 11% from 17,011 in the same period of 2023[218] - The percentage of D.R. Horton homes financed by DHI Mortgage rose to 78% in the three months ended June 30, 2024, up from 74% in the prior year[218] - Total loan origination volume increased by 10% and 15% for the three and nine months ended June 30, 2024, respectively, with mortgage operation revenues rising by 6% to $189.3 million and 15$512.4 million[224] Expenses and Margins - Selling, General and Administrative (SG&A) expenses increased by 12% to $656.5 million in Q2 2024 and by 13$1.9 billion for the nine months, with SG&A as a percentage of homebuilding revenues at 7.1% and 7.5% respectively[186] - Gross profit from home sales increased to $2.2 billion in Q2 2024, up from$2.0 billion in Q2 2023, with a gross profit margin of 24.0%, an increase of 70 basis points[180] - For the nine months ended June 30, 2024, gross profit from home sales rose to $5.8 billion, compared to$5.2 billion in the prior year, with a gross profit margin of 23.4%, an increase of 50 basis points[181] Debt and Cash Management - At June 30, 2024, the company had outstanding notes payable totaling $5.7 billion, with a debt to total capital ratio of 18.8$2.2 billion at June 30, 2024[237] - In the nine months ended June 30, 2024, net cash provided by operating activities was $228.2 million, a significant decrease from$2.3 billion in the prior year period[257] - Cash used to increase residential land and lots was $2.0 billion in the current year period, compared to$915.0 million in the prior year period[257] Compliance and Legal Matters - The Company is involved in lawsuits and contingencies but believes that liabilities will not materially affect its consolidated financial position or cash flows[288] - The Company received Notices of Violation from the EPA and other agencies related to stormwater compliance, which have been resolved through a Consent Decree issued on April 8, 2024[289] - The total cost of the penalty and the supplemental environmental project related to the Consent Decree is not expected to exceed $1 million[289]