Delaware | 1-14122 | 75-2386963 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibit |
99.1 |
D.R. Horton, Inc. | ||||
Date: | January 31, 2018 | By: | /S/ BILL W. WHEAT | |
Bill W. Wheat | ||||
Executive Vice President and | ||||
Chief Financial Officer |
• | Consolidated pre-tax income increased 23% to $391.2 million |
• | Consolidated pre-tax profit margin improved 70 basis points to 11.7% |
• | Net income attributable to D.R. Horton was $189.3 million or $0.49 per diluted share; includes a non-cash tax-related charge of $108.7 million |
• | Net sales orders increased 17% in value to $3.2 billion and 16% in homes to 10,753 |
• | Homes closed increased 14% in value to $3.2 billion and 15% in homes to 10,788 |
• | Increasing fiscal 2018 guidance for consolidated pre-tax profit margin to a range of 11.8% to 12.0% |
• | Increasing fiscal 2018 guidance for cash flow from operations to at least $700 million excluding Forestar |
• | Consolidated pre-tax profit margin of 11.8% to 12.0% compared to prior guidance of 11.5% to 11.7% |
• | Home sales gross margin in the range of 20% to 21%, with potential quarterly fluctuations that may be outside of this range |
• | Financial services operating margin of approximately 30% |
• | As previously announced on January 9, 2018, an income tax rate of approximately 26%, excluding the first quarter charge to reduce net deferred tax assets by $108.7 million |
• | Cash flow from operations of at least $700 million excluding Forestar, an increase of $200 million from initial guidance primarily due to recent tax legislation |
• | Consolidated revenues between $15.5 billion and $16.3 billion |
• | Homes closed between 50,500 and 52,500 homes |
• | Homebuilding SG&A expense of around 8.7% of homebuilding revenues |
• | Outstanding share count increase of less than 1% |
December 31, 2017 | September 30, 2017 | ||||||
(In millions) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 920.3 | $ | 1,007.8 | |||
Restricted cash | 53.7 | 16.5 | |||||
Inventories: | |||||||
Construction in progress and finished homes | 4,907.8 | 4,606.0 | |||||
Residential land and lots — developed, under development, held for development and held for sale | 5,132.4 | 4,631.1 | |||||
10,040.2 | 9,237.1 | ||||||
Investment in unconsolidated entities | 86.1 | — | |||||
Mortgage loans held for sale | 538.2 | 587.3 | |||||
Deferred income taxes, net of valuation allowance of $21.7 million and $11.2 million at December 31, 2017 and September 30, 2017, respectively | 239.1 | 365.0 | |||||
Property and equipment, net | 357.7 | 325.0 | |||||
Other assets | 622.0 | 565.9 | |||||
Goodwill | 100.0 | 80.0 | |||||
Total assets | $ | 12,957.3 | $ | 12,184.6 | |||
LIABILITIES | |||||||
Accounts payable | $ | 575.7 | $ | 580.4 | |||
Accrued expenses and other liabilities | 1,068.1 | 985.0 | |||||
Notes payable | 3,258.1 | 2,871.6 | |||||
Total liabilities | 4,901.9 | 4,437.0 | |||||
EQUITY | |||||||
Common stock, $.01 par value, 1,000,000,000 shares authorized, 385,244,037 shares issued and 375,693,966 shares outstanding at December 31, 2017 and 384,036,150 shares issued and 374,986,079 shares outstanding at September 30, 2017 | 3.9 | 3.8 | |||||
Additional paid-in capital | 3,010.2 | 2,992.2 | |||||
Retained earnings | 5,088.2 | 4,946.0 | |||||
Treasury stock, 9,550,071 shares and 9,050,071 shares at December 31, 2017 and September 30, 2017, respectively, at cost | (220.3 | ) | (194.9 | ) | |||
Stockholders’ equity | 7,882.0 | 7,747.1 | |||||
Noncontrolling interests | 173.4 | 0.5 | |||||
Total equity | 8,055.4 | 7,747.6 | |||||
Total liabilities and equity | $ | 12,957.3 | $ | 12,184.6 |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
(In millions, except per share data) | |||||||
Revenues | $ | 3,332.7 | $ | 2,904.2 | |||
Cost of sales | 2,580.1 | 2,267.9 | |||||
Selling, general and administrative expense | 384.2 | 325.9 | |||||
Equity in earnings of unconsolidated entities | (2.3 | ) | — | ||||
Other (income) expense | (20.5 | ) | (7.7 | ) | |||
Income before income taxes | 391.2 | 318.1 | |||||
Income tax expense | 202.4 | 111.2 | |||||
Net income | 188.8 | 206.9 | |||||
Net loss attributable to noncontrolling interests | (0.5 | ) | — | ||||
Net income attributable to D.R. Horton, Inc. | $ | 189.3 | $ | 206.9 | |||
Basic: | |||||||
Net income per share | $ | 0.50 | $ | 0.55 | |||
Weighted average number of common shares | 375.8 | 373.3 | |||||
Diluted: | |||||||
Net income per share | $ | 0.49 | $ | 0.55 | |||
Adjusted weighted average number of common shares | 383.8 | 377.4 | |||||
Other Consolidated Financial Data: | |||||||
Interest charged to cost of sales | $ | 28.6 | $ | 34.7 | |||
Depreciation and amortization | $ | 16.2 | $ | 14.4 | |||
Interest incurred | $ | 31.0 | $ | 33.5 |
Three Months Ended December 31, | |||||||
2017 | 2016 | ||||||
(In millions) | |||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | 188.8 | $ | 206.9 | |||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||
Depreciation and amortization | 16.2 | 14.4 | |||||
Amortization of discounts and fees | 1.2 | 1.3 | |||||
Stock based compensation expense | 13.6 | 9.3 | |||||
Equity in earnings of unconsolidated entities | (2.3 | ) | — | ||||
Distributions of earnings of unconsolidated entities | 0.2 | — | |||||
Excess income tax benefit from employee stock awards | — | (0.5 | ) | ||||
Deferred income taxes | 126.3 | 8.3 | |||||
Inventory and land option charges | 3.7 | 2.3 | |||||
Gain on sale of rental properties | (13.4 | ) | — | ||||
Changes in operating assets and liabilities: | |||||||
Increase in construction in progress and finished homes | (302.3 | ) | (246.3 | ) | |||
Increase in residential land and lots – developed, under development, held for development and held for sale | (185.2 | ) | (152.6 | ) | |||
Decrease (increase) in other assets | 4.3 | (4.9 | ) | ||||
Decrease in mortgage loans held for sale | 49.1 | 105.7 | |||||
Increase in accounts payable, accrued expenses and other liabilities | 24.8 | 27.9 | |||||
Net cash used in operating activities | (75.0 | ) | (28.2 | ) | |||
INVESTING ACTIVITIES | |||||||
Expenditures for property and equipment | (44.4 | ) | (22.2 | ) | |||
Proceeds from sale of rental properties | 24.8 | — | |||||
Increase in restricted cash | (37.2 | ) | (6.0 | ) | |||
Investment in unconsolidated entities | (0.1 | ) | — | ||||
Return of investment in unconsolidated entities | 15.0 | — | |||||
Net principal decrease of other mortgage loans and real estate owned | 0.1 | 1.0 | |||||
Payments related to acquisition of a business, net of cash acquired | (156.4 | ) | (4.1 | ) | |||
Net cash used in investing activities | (198.2 | ) | (31.3 | ) | |||
FINANCING ACTIVITIES | |||||||
Proceeds from notes payable | 1,113.9 | — | |||||
Repayment of notes payable | (825.8 | ) | (0.3 | ) | |||
Advances (payments) on mortgage repurchase facility, net | (32.6 | ) | (54.0 | ) | |||
Proceeds from stock associated with certain employee benefit plans | 14.6 | 2.8 | |||||
Excess income tax benefit from employee stock awards | — | 0.5 | |||||
Cash paid for shares withheld for taxes | (10.3 | ) | (5.1 | ) | |||
Cash dividends paid | (47.0 | ) | (37.3 | ) | |||
Repurchases of common stock | (25.4 | ) | — | ||||
Distributions to noncontrolling interests, net | (1.7 | ) | — | ||||
Net cash provided by (used in) financing activities | 185.7 | (93.4 | ) | ||||
DECREASE IN CASH AND CASH EQUIVALENTS | (87.5 | ) | (152.9 | ) | |||
Cash and cash equivalents at beginning of period | 1,007.8 | 1,303.2 | |||||
Cash and cash equivalents at end of period | $ | 920.3 | $ | 1,150.3 |
December 31, 2017 | ||||||||||||||||||||||||
Homebuilding | Forestar (1) | Financial Services | Other (2) | Other Adjustments (3) | Consolidated | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 558.0 | $ | 321.8 | $ | 24.5 | $ | 16.0 | $ | — | $ | 920.3 | ||||||||||||
Restricted cash | 8.3 | 40.0 | 5.4 | — | — | 53.7 | ||||||||||||||||||
Inventories: | ||||||||||||||||||||||||
Construction in progress and finished homes | 4,907.8 | — | — | — | — | 4,907.8 | ||||||||||||||||||
Residential land and lots — developed, under development, held for development and held for sale | 4,767.9 | 315.0 | — | — | 49.5 | 5,132.4 | ||||||||||||||||||
9,675.7 | 315.0 | — | — | 49.5 | 10,040.2 | |||||||||||||||||||
Investment in unconsolidated entities | — | 65.1 | — | — | 21.0 | 86.1 | ||||||||||||||||||
Mortgage loans held for sale | — | — | 538.2 | — | — | 538.2 | ||||||||||||||||||
Deferred income taxes | 236.3 | 2.5 | — | — | 0.3 | 239.1 | ||||||||||||||||||
Property and equipment, net | 204.3 | 2.0 | 3.1 | 148.3 | — | 357.7 | ||||||||||||||||||
Other assets | 545.3 | 18.4 | 34.1 | 3.8 | 20.4 | 622.0 | ||||||||||||||||||
Goodwill | 80.0 | — | — | — | 20.0 | 100.0 | ||||||||||||||||||
$ | 11,307.9 | $ | 764.8 | $ | 605.3 | $ | 168.1 | $ | 111.2 | $ | 12,957.3 | |||||||||||||
Liabilities | ||||||||||||||||||||||||
Accounts payable | $ | 567.0 | $ | 2.4 | $ | 1.6 | $ | 4.7 | $ | — | $ | 575.7 | ||||||||||||
Accrued expenses and other liabilities | 997.2 | 45.5 | 30.9 | 18.3 | (23.8 | ) | 1,068.1 | |||||||||||||||||
Notes payable | 2,749.6 | 108.4 | 387.5 | — | 12.6 | 3,258.1 | ||||||||||||||||||
$ | 4,313.8 | $ | 156.3 | $ | 420.0 | $ | 23.0 | $ | (11.2 | ) | $ | 4,901.9 |
September 30, 2017 | ||||||||||||||||
Homebuilding | Financial Services | Other (2) | Consolidated | |||||||||||||
(In millions) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 973.0 | $ | 24.1 | $ | 10.7 | $ | 1,007.8 | ||||||||
Restricted cash | 9.3 | 7.2 | — | 16.5 | ||||||||||||
Inventories: | ||||||||||||||||
Construction in progress and finished homes | 4,606.0 | — | — | 4,606.0 | ||||||||||||
Residential land and lots — developed, under development, held for development and held for sale | 4,631.1 | — | — | 4,631.1 | ||||||||||||
9,237.1 | — | — | 9,237.1 | |||||||||||||
Mortgage loans held for sale | — | 587.3 | — | 587.3 | ||||||||||||
Deferred income taxes | 365.0 | — | — | 365.0 | ||||||||||||
Property and equipment, net | 194.4 | 3.0 | 127.6 | 325.0 | ||||||||||||
Other assets | 518.7 | 42.2 | 5.0 | 565.9 | ||||||||||||
Goodwill | 80.0 | — | — | 80.0 | ||||||||||||
$ | 11,377.5 | $ | 663.8 | $ | 143.3 | $ | 12,184.6 | |||||||||
Liabilities | ||||||||||||||||
Accounts payable | $ | 575.6 | $ | 1.5 | $ | 3.3 | $ | 580.4 | ||||||||
Accrued expenses and other liabilities | 933.1 | 35.6 | 16.3 | 985.0 | ||||||||||||
Notes payable | 2,451.6 | 420.0 | — | 2,871.6 | ||||||||||||
$ | 3,960.3 | $ | 457.1 | $ | 19.6 | $ | 4,437.0 |
(1) | Results are presented on Forestar’s historical cost basis. |
(2) | Amounts represent the aggregate balances of certain subsidiaries that are immaterial for separate reporting. |
(3) | Amounts represent purchase accounting adjustments related to the Forestar acquisition and the reclassification of Forestar’s interest expense to inventory. |
Three Months Ended December 31, 2017 | ||||||||||||||||||||||||
Homebuilding | Forestar (1) | Financial Services | Other (2) | Other Adjustments (3) | Consolidated | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Home sales | $ | 3,184.5 | $ | — | $ | — | $ | — | $ | — | $ | 3,184.5 | ||||||||||||
Land/lot sales and other | 36.4 | 30.8 | — | — | — | 67.2 | ||||||||||||||||||
Financial services | — | — | 81.0 | — | — | 81.0 | ||||||||||||||||||
3,220.9 | 30.8 | 81.0 | — | — | 3,332.7 | |||||||||||||||||||
Cost of sales: | ||||||||||||||||||||||||
Home sales | 2,521.5 | — | — | — | — | 2,521.5 | ||||||||||||||||||
Land/lot sales | 31.2 | 19.3 | — | — | 4.4 | 54.9 | ||||||||||||||||||
Inventory and land option charges | 3.7 | — | — | — | — | 3.7 | ||||||||||||||||||
2,556.4 | 19.3 | — | — | 4.4 | 2,580.1 | |||||||||||||||||||
Selling, general and administrative expense | 304.8 | 13.6 | 61.7 | 4.0 | 0.1 | 384.2 | ||||||||||||||||||
Equity in earnings of unconsolidated entities | — | (7.6 | ) | — | — | 5.3 | (2.3 | ) | ||||||||||||||||
Interest expense | — | 2.1 | — | — | (2.1 | ) | — | |||||||||||||||||
Other (income) expense | (14.1 | ) | (0.6 | ) | (2.9 | ) | (2.9 | ) | — | (20.5 | ) | |||||||||||||
Income before income taxes | $ | 373.8 | $ | 4.0 | $ | 22.2 | $ | (1.1 | ) | $ | (7.7 | ) | $ | 391.2 | ||||||||||
Summary Cash Flow Information: | ||||||||||||||||||||||||
Cash (used in) provided by operating activities | $ | (101.6 | ) | $ | (36.2 | ) | $ | 67.9 | $ | 3.0 | $ | (8.1 | ) | $ | (75.0 | ) |
Three Months Ended December 31, 2016 | ||||||||||||||||
Homebuilding | Financial Services | Other (2) | Consolidated | |||||||||||||
(In millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
Home sales | $ | 2,797.7 | $ | — | $ | — | $ | 2,797.7 | ||||||||
Land/lot sales and other | 28.4 | — | — | 28.4 | ||||||||||||
Financial services | — | 78.1 | — | 78.1 | ||||||||||||
2,826.1 | 78.1 | — | 2,904.2 | |||||||||||||
Cost of sales: | ||||||||||||||||
Home sales | 2,244.8 | — | — | 2,244.8 | ||||||||||||
Land/lot sales | 20.8 | — | — | 20.8 | ||||||||||||
Inventory and land option charges | 2.3 | — | — | 2.3 | ||||||||||||
2,267.9 | — | — | 2,267.9 | |||||||||||||
Selling, general and administrative expense | 268.4 | 54.8 | 2.7 | 325.9 | ||||||||||||
Other (income) expense | (4.1 | ) | (3.2 | ) | (0.4 | ) | (7.7 | ) | ||||||||
Income before income taxes | $ | 293.9 | $ | 26.5 | $ | (2.3 | ) | $ | 318.1 | |||||||
Summary Cash Flow Information: | ||||||||||||||||
Cash (used in) provided by operating activities | $ | (98.3 | ) | $ | 59.9 | $ | 10.2 | $ | (28.2 | ) |
(1) | Results are presented from the date of acquisition and on Forestar’s historical cost basis. |
(2) | Amounts represent the aggregate balances of certain subsidiaries that are immaterial for separate reporting. |
(3) | Amounts represent purchase accounting adjustments related to the Forestar acquisition and the reclassification of Forestar’s interest expense to inventory. |
NET SALES ORDERS | ||||||||||||
Three Months Ended December 31, | ||||||||||||
2017 | 2016 | |||||||||||
Homes | Value | Homes | Value | |||||||||
East | 1,430 | $ | 398.5 | 1,146 | $ | 331.0 | ||||||
Midwest | 377 | 144.9 | 363 | 143.2 | ||||||||
Southeast | 3,632 | 976.3 | 3,148 | 825.1 | ||||||||
South Central | 3,026 | 760.8 | 2,838 | 711.1 | ||||||||
Southwest | 701 | 165.1 | 458 | 106.7 | ||||||||
West | 1,587 | 777.0 | 1,288 | 646.8 | ||||||||
10,753 | $ | 3,222.6 | 9,241 | $ | 2,763.9 |
HOMES CLOSED | ||||||||||||
Three Months Ended December 31, | ||||||||||||
2017 | 2016 | |||||||||||
Homes | Value | Homes | Value | |||||||||
East | 1,388 | $ | 393.0 | 1,053 | $ | 305.8 | ||||||
Midwest | 408 | 161.4 | 399 | 149.6 | ||||||||
Southeast | 3,744 | 988.6 | 3,337 | 882.5 | ||||||||
South Central | 3,178 | 808.4 | 2,903 | 738.6 | ||||||||
Southwest | 692 | 155.9 | 455 | 104.7 | ||||||||
West | 1,378 | 677.2 | 1,257 | 616.5 | ||||||||
10,788 | $ | 3,184.5 | 9,404 | $ | 2,797.7 |
SALES ORDER BACKLOG | ||||||||||||
As of December 31, | ||||||||||||
2017 | 2016 | |||||||||||
Homes | Value | Homes | Value | |||||||||
East | 1,586 | $ | 458.3 | 1,394 | $ | 408.2 | ||||||
Midwest | 388 | 156.0 | 434 | 177.6 | ||||||||
Southeast | 3,945 | 1,092.6 | 3,864 | 1,064.3 | ||||||||
South Central | 3,804 | 970.6 | 3,775 | 990.6 | ||||||||
Southwest | 852 | 201.9 | 658 | 152.7 | ||||||||
West | 1,719 | 884.7 | 1,187 | 610.8 | ||||||||
12,294 | $ | 3,764.1 | 11,312 | $ | 3,404.2 |