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8-K - FORM 8-K - HORTON D R INC /DE/ | d83870e8vk.htm |
Exhibit 99.1
Jessica Hansen, Director of Investor Relations
301 Commerce Street, Ste. 500, Fort Worth, Texas 76102
817-390-8200
July 28, 2011
817-390-8200
July 28, 2011
D.R. HORTON, INC., AMERICAS BUILDER, REPORTS FISCAL 2011 THIRD QUARTER RESULTS AND DECLARES
QUARTERLY DIVIDEND
FORT WORTH, TEXAS D.R. Horton, Inc. (NYSE:DHI), Americas Builder, today reported net
income for its third fiscal quarter ended June 30, 2011 of $28.7 million, or $0.09 per diluted
share. The quarterly results included $9.9 million in pre-tax charges to cost of sales for
inventory impairments and land option cost write-offs and a $6.5 million loss on early retirement
of debt. Net income for the same quarter of fiscal 2010 was $50.5 million, or $0.16 per diluted
share. Homebuilding revenue for the third quarter of fiscal 2011 totaled $975.4 million, compared
to $1.4 billion in the same quarter of fiscal 2010. Homes closed in the quarter totaled 4,555
homes, compared to 6,805 homes in the same quarter of fiscal 2010.
For the nine months ended June 30, 2011, the Company reported net income of $36.0 million, or
$0.11 per diluted share, which included a tax benefit of $57.8 million. The nine-month results
also included $32.6 million in pre-tax charges to cost of sales for inventory impairments and land
option cost write-offs and a $10.7 million loss on early retirement of debt. Net income for the
same period of fiscal 2010 was $253.9 million, or $0.78 per diluted share, which included a tax
benefit of $152.7 million. Homebuilding revenue for the nine months ended June 30, 2011 totaled
$2.5 billion, compared to $3.4 billion in the same period of fiscal 2010. Homes closed in the
nine-month period totaled 11,708, compared to 16,594 homes in the same period of fiscal 2010.
Net sales orders for the third quarter ended June 30, 2011 totaled 4,874 homes ($1.1 billion),
compared to 4,921 homes ($1.0 billion) in the same quarter of fiscal 2010. The Companys
cancellation rate (cancelled sales orders divided by gross sales orders) for the third quarter of
fiscal 2011 was 27%. Net sales orders for the first nine months of fiscal 2011 totaled 13,180
homes ($2.8 billion), compared to 15,396 homes ($3.2 billion) in the same period of fiscal 2010.
The Companys sales order backlog of homes under contract at June 30, 2011 was 5,600 homes ($1.2
billion), compared to 4,430 homes ($1.0 billion) at June 30, 2010.
In the third quarter, the Company repaid at maturity the remaining $70.1 million principal
amount of its 6% senior notes and redeemed the remaining $112.3 million principal amount of its
5.375% senior notes due 2012. The Company also repurchased 3,544,838 shares of its common stock
during the quarter at a total cost of $38.6 million. The Company ended the quarter with $1.1
billion of homebuilding unrestricted cash and marketable securities and net homebuilding debt to
total capital of 19.9%. Net homebuilding debt to total capital consists of homebuilding notes
payable net of cash and marketable securities divided by total equity plus homebuilding notes
payable net of cash and marketable securities.
The Company has declared a quarterly cash dividend of $0.0375 per share. The dividend is
payable on August 24, 2011 to stockholders of record on August 12, 2011.
Donald R. Horton, Chairman of the Board, said, We are proud of the results our team achieved
this quarter. Sequentially, our homebuilding revenues grew $242 million, home sales gross margins
improved by 30 basis points and homebuilding SG&A decreased by approximately $10 million.
Additionally, our net sales orders in the June quarter were about flat with the March quarter,
reflecting a traditional seasonal demand pattern. Our results for the first nine months of the
fiscal year, combined with our backlog of 5,600 homes and our inventory of homes available for
sale, have positioned us to be profitable for the full fiscal year.
Market conditions in the homebuilding industry are still challenging, with high foreclosures,
significant existing home inventory, high unemployment, tight mortgage lending standards and weak
consumer confidence, which are all contributing to weak housing demand. However, housing
affordability remains near record highs, interest rates are favorable and new home inventory is
still very low. We continue to focus on providing new homes and communities for both first-time
and move-up buyers, controlling our construction costs, SG&A and inventory levels and maintaining
our strong balance sheet and liquidity.
The Company will host a conference call today (Thursday, July 28th) at 10:00 a.m. Eastern
time. The dial-in number is 877-407-8033, and the call will also be webcast from www.drhorton.com
on the Investors page.
D.R. Horton, Inc., Americas Builder, is the largest homebuilder in the United States, based
on its 15,989 homes closed in the twelve-month period ended June 30, 2011. Founded in 1978 in Fort
Worth, Texas, D.R. Horton has operations in 71 markets in 26 states in the East, Midwest,
Southeast, South Central, Southwest and West regions of the United States. The Company is engaged
in the construction and sale of high quality homes with sales prices ranging from $90,000 to over
$700,000. D.R. Horton also provides mortgage financing and title services for homebuyers through
its mortgage and title subsidiaries.
Portions of this document may constitute forward-looking statements as defined by the
Private Securities Litigation Reform Act of 1995. Although D.R. Horton believes any such
statements are based on reasonable assumptions, there is no assurance that actual outcomes will not
be materially different. All forward-looking statements are based upon information available to
D.R. Horton on the date this release was issued. D.R. Horton does not undertake any obligation to
publicly update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise. Forward-looking statements in this release include our expectation
that our results for the first nine months of the fiscal year, combined with our backlog of 5,600
homes and our inventory of homes available for sale, have positioned us to be profitable for the
full fiscal year. The forward-looking statements also include our continued focus on providing new
homes and communities for both first-time and move-up buyers, controlling our construction costs,
SG&A and inventory levels and maintaining our strong balance sheet and liquidity. Factors that may
cause the actual results to be materially different from the future results expressed by the
forward-looking statements include, but are not limited to: the continuing downturn in the
homebuilding industry, including further deterioration in industry or broader economic conditions;
the continuing constriction of the credit markets, which could limit our ability to access capital
and increase our costs of capital; the reduction in availability of mortgage financing, increases
in mortgage interest rates and the effects of government programs; the limited success of our
strategies in responding to adverse conditions in the industry; the impact of an inflationary or
deflationary environment; changes in general economic, real estate and other business conditions;
the risks associated with our inventory ownership position in changing market conditions; supply
risks for land, materials and labor; changes in the costs of owning a home; the effects of
governmental regulations and environmental matters on our homebuilding operations; the effects of
governmental regulation on our financial services operations; the uncertainties inherent in home
warranty and construction defect claims matters; our substantial debt and our ability to comply
with related debt covenants,
restrictions and limitations; competitive conditions within our industry; our ability to
effect any future growth strategies successfully; our ability to realize our deferred income tax
asset; and our ability to utilize our tax losses, which could be substantially limited if we
experienced an ownership change as defined in the Internal Revenue Code. Additional information
about issues that could lead to material changes in performance is contained in D.R. Hortons
annual report on Form 10-K, and our most recent quarterly report on Form 10-Q, both which are filed
with the Securities and Exchange Commission.
WEBSITE ADDRESS: www.drhorton.com
D.R. HORTON, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, | September 30, | |||||||
2011 | 2010 | |||||||
(In millions) | ||||||||
ASSETS |
||||||||
Homebuilding: |
||||||||
Cash and cash equivalents |
$ | 824.2 | $ | 1,282.6 | ||||
Marketable securities, available-for-sale |
297.1 | 297.7 | ||||||
Restricted cash |
50.4 | 53.7 | ||||||
Inventories: |
||||||||
Construction in progress and finished homes |
1,427.6 | 1,286.0 | ||||||
Residential land and lots developed and under development |
1,336.3 | 1,406.1 | ||||||
Land held for development |
736.9 | 749.3 | ||||||
Land inventory not owned |
| 7.6 | ||||||
3,500.8 | 3,449.0 | |||||||
Income taxes receivable |
14.0 | 16.0 | ||||||
Deferred
income taxes, net of valuation allowance of
$849.0 million and $902.6 million at June 30, 2011 and September 30, 2010, respectively |
| | ||||||
Property and equipment, net |
58.9 | 60.5 | ||||||
Other assets |
391.2 | 434.8 | ||||||
Goodwill |
15.9 | 15.9 | ||||||
5,152.5 | 5,610.2 | |||||||
Financial Services: |
||||||||
Cash and cash equivalents |
16.8 | 26.7 | ||||||
Mortgage loans held for sale |
286.2 | 253.8 | ||||||
Other assets |
49.3 | 47.9 | ||||||
352.3 | 328.4 | |||||||
$ | 5,504.8 | $ | 5,938.6 | |||||
LIABILITIES |
||||||||
Homebuilding: |
||||||||
Accounts payable |
$ | 181.7 | $ | 135.1 | ||||
Accrued expenses and other liabilities |
812.4 | 957.2 | ||||||
Notes payable |
1,764.1 | 2,085.3 | ||||||
2,758.2 | 3,177.6 | |||||||
Financial Services: |
||||||||
Accounts payable and other liabilities |
36.7 | 51.6 | ||||||
Mortgage repurchase facility |
116.3 | 86.5 | ||||||
153.0 | 138.1 | |||||||
2,911.2 | 3,315.7 | |||||||
EQUITY |
||||||||
Common stock |
3.2 | 3.2 | ||||||
Additional paid-in capital |
1,911.6 | 1,894.8 | ||||||
Retained earnings |
810.7 | 810.6 | ||||||
Treasury stock, at cost |
(134.3 | ) | (95.7 | ) | ||||
Accumulated other comprehensive income |
0.3 | 0.3 | ||||||
2,591.5 | 2,613.2 | |||||||
Noncontrolling interests |
2.1 | 9.7 | ||||||
2,593.6 | 2,622.9 | |||||||
$ | 5,504.8 | $ | 5,938.6 | |||||
D.R. HORTON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended | Nine months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In millions, except per share data) | ||||||||||||||||
Homebuilding: |
||||||||||||||||
Revenues: |
||||||||||||||||
Home sales |
$ | 974.5 | $ | 1,378.2 | $ | 2,468.6 | $ | 3,381.1 | ||||||||
Land/lot sales |
0.9 | 0.1 | 6.9 | 2.9 | ||||||||||||
975.4 | 1,378.3 | 2,475.5 | 3,384.0 | |||||||||||||
Cost of sales: |
||||||||||||||||
Home sales |
813.5 | 1,141.1 | 2,069.9 | 2,793.5 | ||||||||||||
Land/lot sales |
0.7 | 0.1 | 6.7 | 2.2 | ||||||||||||
Inventory impairments and land option cost write-offs |
9.9 | 30.3 | 32.6 | 33.9 | ||||||||||||
824.1 | 1,171.5 | 2,109.2 | 2,829.6 | |||||||||||||
Gross profit: |
||||||||||||||||
Home sales |
161.0 | 237.1 | 398.7 | 587.6 | ||||||||||||
Land/lot sales |
0.2 | | 0.2 | 0.7 | ||||||||||||
Inventory impairments and land option cost write-offs |
(9.9 | ) | (30.3 | ) | (32.6 | ) | (33.9 | ) | ||||||||
151.3 | 206.8 | 366.3 | 554.4 | |||||||||||||
Selling, general and administrative expense |
113.7 | 143.5 | 355.8 | 401.2 | ||||||||||||
Interest expense |
10.1 | 19.6 | 41.0 | 69.3 | ||||||||||||
Loss on early retirement of debt, net |
6.5 | 8.3 | 10.7 | 6.7 | ||||||||||||
Other (income) |
(1.2 | ) | (2.0 | ) | (6.8 | ) | (7.4 | ) | ||||||||
Operating income (loss) from Homebuilding |
22.2 | 37.4 | (34.4 | ) | 84.6 | |||||||||||
Financial Services: |
||||||||||||||||
Revenues, net of recourse and reinsurance expense |
23.8 | 27.8 | 63.0 | 67.7 | ||||||||||||
General and administrative expense |
19.3 | 21.2 | 56.4 | 57.2 | ||||||||||||
Interest expense |
0.3 | 0.7 | 0.7 | 1.4 | ||||||||||||
Interest and other (income) |
(2.5 | ) | (3.0 | ) | (6.7 | ) | (7.5 | ) | ||||||||
Operating income from Financial Services |
6.7 | 8.9 | 12.6 | 16.6 | ||||||||||||
Income (loss) before income taxes |
28.9 | 46.3 | (21.8 | ) | 101.2 | |||||||||||
Provision for (benefit from) income taxes |
0.2 | (4.2 | ) | (57.8 | ) | (152.7 | ) | |||||||||
Net income |
$ | 28.7 | $ | 50.5 | $ | 36.0 | $ | 253.9 | ||||||||
Basic: |
||||||||||||||||
Net income per share |
$ | 0.09 | $ | 0.16 | $ | 0.11 | $ | 0.80 | ||||||||
Weighted average number of common shares |
318.7 | 318.2 | 319.0 | 318.0 | ||||||||||||
Diluted: |
||||||||||||||||
Net income per share |
$ | 0.09 | $ | 0.16 | $ | 0.11 | $ | 0.78 | ||||||||
Numerator for diluted income per share after
assumed conversions |
$ | 28.7 | $ | 50.5 | $ | 36.0 | $ | 277.0 | ||||||||
Adjusted weighted average number of common shares |
319.0 | 319.1 | 319.3 | 356.9 | ||||||||||||
Other Consolidated Financial Data: |
||||||||||||||||
Interest amortized to home and land/lot cost of sales |
$ | 25.3 | $ | 38.3 | $ | 65.7 | $ | 95.6 | ||||||||
Depreciation |
$ | 5.0 | $ | 4.3 | $ | 14.9 | $ | 13.6 | ||||||||
Interest incurred |
$ | 31.7 | $ | 42.0 | $ | 101.3 | $ | 138.3 | ||||||||
D.R. HORTON, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Nine Months Ended | ||||
June 30, 2011 | ||||
(In millions) | ||||
Operating Activities |
||||
Net income |
$ | 36.0 | ||
Adjustments to reconcile net income to net cash used in
operating activities: |
||||
Depreciation |
14.9 | |||
Amortization of discounts and fees |
27.6 | |||
Stock based compensation expense |
9.9 | |||
Loss on early retirement of debt, net |
10.7 | |||
Gain on sale of marketable securities |
(0.1 | ) | ||
Inventory impairments and land option cost write-offs |
32.6 | |||
Changes in operating assets and liabilities: |
||||
Increase in construction in progress and finished homes |
(148.2 | ) | ||
Decrease in residential land and lots developed,
under development, and held for development |
34.7 | |||
Decrease in other assets |
39.3 | |||
Decrease in income taxes receivable |
2.0 | |||
Increase in mortgage loans held for sale |
(32.4 | ) | ||
Decrease in accounts payable, accrued expenses and other liabilities |
(102.3 | ) | ||
Net cash used in operating activities |
(75.3 | ) | ||
Investing Activities |
||||
Purchases of property and equipment |
(12.8 | ) | ||
Purchases of marketable securities |
(259.7 | ) | ||
Proceeds from the sale or maturity of marketable securities |
254.7 | |||
Decrease in restricted cash |
3.3 | |||
Net cash used in investing activities |
(14.5 | ) | ||
Financing Activities |
||||
Proceeds from notes payable |
29.8 | |||
Repayment of notes payable |
(336.5 | ) | ||
Proceeds from stock associated with certain employee benefit plans |
2.7 | |||
Cash dividends paid |
(35.9 | ) | ||
Purchase of treasury stock |
(38.6 | ) | ||
Net cash used in financing activities |
(378.5 | ) | ||
Decrease in Cash and Cash Equivalents |
(468.3 | ) | ||
Cash and cash equivalents at beginning of period |
1,309.3 | |||
Cash and cash equivalents at end of period |
$ | 841.0 | ||
D.R. HORTON, INC.
($s in millions)
NET SALES ORDERS
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||||||
Homes | Value | Homes | Value | Homes | Value | Homes | Value | |||||||||||||||||||||||||
East |
554 | $ | 133.0 | 512 | $ | 114.5 | 1,557 | $ | 356.4 | 1,582 | $ | 367.5 | ||||||||||||||||||||
Midwest |
303 | 83.0 | 250 | 71.5 | 758 | 202.2 | 821 | 233.4 | ||||||||||||||||||||||||
Southeast |
1,109 | 215.9 | 1,044 | 196.6 | 3,021 | 580.9 | 3,159 | 589.6 | ||||||||||||||||||||||||
South Central |
1,666 | 298.8 | 1,778 | 310.4 | 4,671 | 821.7 | 5,829 | 1,011.7 | ||||||||||||||||||||||||
Southwest |
328 | 61.7 | 402 | 69.9 | 932 | 173.5 | 1,387 | 242.7 | ||||||||||||||||||||||||
West |
914 | 275.0 | 935 | 262.8 | 2,241 | 665.3 | 2,618 | 748.6 | ||||||||||||||||||||||||
4,874 | $ | 1,067.4 | 4,921 | $ | 1,025.7 | 13,180 | $ | 2,800.0 | 15,396 | $ | 3,193.5 | |||||||||||||||||||||
HOMES CLOSED
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||||||
Homes | Value | Homes | Value | Homes | Value | Homes | Value | |||||||||||||||||||||||||
East |
508 | $ | 114.7 | 652 | $ | 150.6 | 1,375 | $ | 308.9 | 1,630 | $ | 381.7 | ||||||||||||||||||||
Midwest |
276 | 74.0 | 350 | 99.3 | 700 | 186.7 | 940 | 259.1 | ||||||||||||||||||||||||
Southeast |
996 | 194.2 | 1,337 | 247.8 | 2,457 | 479.8 | 3,148 | 573.6 | ||||||||||||||||||||||||
South Central |
1,662 | 294.5 | 2,704 | 462.8 | 4,288 | 751.5 | 6,512 | 1,111.4 | ||||||||||||||||||||||||
Southwest |
311 | 56.0 | 659 | 112.5 | 897 | 164.1 | 1,556 | 271.6 | ||||||||||||||||||||||||
West |
802 | 241.1 | 1,103 | 305.2 | 1,991 | 577.6 | 2,808 | 783.7 | ||||||||||||||||||||||||
4,555 | $ | 974.5 | 6,805 | $ | 1,378.2 | 11,708 | $ | 2,468.6 | 16,594 | $ | 3,381.1 | |||||||||||||||||||||
SALES ORDER BACKLOG
As of June 30, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Homes | Value | Homes | Value | |||||||||||||
East |
654 | $ | 150.9 | 511 | $ | 112.4 | ||||||||||
Midwest |
305 | 85.7 | 270 | 79.3 | ||||||||||||
Southeast |
1,376 | 263.6 | 980 | 195.0 | ||||||||||||
South Central |
2,074 | 367.5 | 1,679 | 302.8 | ||||||||||||
Southwest |
440 | 81.2 | 323 | 57.5 | ||||||||||||
West |
751 | 233.3 | 667 | 207.4 | ||||||||||||
5,600 | $ | 1,182.2 | 4,430 | $ | 954.4 | |||||||||||