D.R. Horton, Inc. (NYSE:DHI), Fort Worth, Tx., on Thursday reported net income of $195.1 million, or 52 cents a share, for its fiscal second quarter, beating Wall Street expectations of 46 cents per share.
Home building revenue for the second quarter of fiscal 2016 increased 16% to $2.7 billion from $2.3 billion in the same quarter of fiscal 2015. Homes closed in the quarter increased 12% to 9,262 homes, compared to 8,243 homes in the prior year quarter.
- Net income increased 32% to $195.1 million, or $0.52 per diluted share.
- Pre-tax income increased 31% to $300.5 million.
- Pre-tax profit margin improved 130 basis points to 10.9%.
- Net sales orders increased 13% in value to $3.6 billion and 10% in homes to 12,292.
- Homes closed increased 16% in value to $2.7 billion and 12% in homes to 9,262.
- Sales order backlog increased 14% in value to $4.1 billion and 12% in homes to 13,695.
- Net cash provided by operations for the six months ended March 31, 2016 was $26.9 million, compared to net cash used in operations of $168.8 million.
- Increases fiscal 2016 guidance for consolidated pre-tax profit margin to a range of 10.7% to 11.2%.
- Reaffirms fiscal 2016 guidance for consolidated revenues of $12.0 billion to $12.5 billion.
For the six months ended March 31, 2016, net income increased 21% to $352.8 million, or $0.94 per diluted share, from $290.4 million, or $0.79 per diluted share, in the same period of fiscal 2015. Home building revenue for the six months ended March 31, 2016 increased 10% to $5.1 billion from $4.6 billion in the first six months of fiscal 2015. Homes closed in the six-month period increased 7% to 17,323, compared to 16,216 homes in the same period of fiscal 2015.
Net sales orders for the second quarter ended March 31, 2016 increased 10% to 12,292 homes and 13% in value to $3.6 billion, compared to 11,135 homes and $3.2 billion in the prior year quarter. The Company’s cancellation rate (cancelled sales orders divided by gross sales orders) for the second quarter of fiscal 2016 was 19%. Net sales orders for the first six months of fiscal 2016 increased 10% to 20,356 homes from 18,505 homes in the first six months of fiscal 2015, and the value of net sales orders increased 13% to $5.9 billion from $5.3 billion.
The Company’s sales order backlog of homes under contract at March 31, 2016 increased 12% to 13,695 homes and 14% in value to $4.1 billion, compared to 12,177 homes and $3.6 billion at March 31, 2015.
During the quarter, the Company repaid at maturity $170.2 million principal amount of its 5.625% senior notes and ended the quarter with $1.2 billion of home building unrestricted cash and home building debt to total capital of 33.6%. Subsequent to quarter end, the Company repaid at maturity $372.7 million principal amount of its 6.5% senior notes.
Donald R. Horton, Chairman of the Board, said, “The spring selling season is off to a great start at D.R. Horton. Our team delivered a strong second quarter, highlighted by $300.5 million of pre-tax income on $2.8 billion of revenues. Our pre-tax profit margin improved 130 basis points from the prior year quarter to 10.9%. The number and dollar value of our homes sold, closed and in backlog all increased by double-digit percentages. Our net sales orders in the March quarter increased 52% sequentially from the December quarter and 10% from the March quarter last year.
"Solid performance in our three core brands is enabling us to capitalize on market opportunities and expand our industry-leading market share. With a sales backlog of 13,695 homes at the end of March and a robust lot supply and inventory of homes available for sale, we are well-positioned for the second half of fiscal 2016. We remain focused on growing our revenues and pre-tax profits at a double-digit annual pace, while generating positive cash flows and improved returns.”
D.R. Horton is increasing its fiscal 2016 guidance for consolidated pre-tax profit margin to a range of 10.7% to 11.2% from its prior guidance of 10.5% to 11.0%. The Company is also updating its annual guidance for home building SG&A to 9.0% to 9.2% of home building revenues from its prior guidance of 9.2% to 9.4%.
D.R. Horton reaffirms its previously issued fiscal 2016 guidance for other metrics including:
• Consolidated revenues of $12.0 billion to $12.5billion.
• Homes closed between 39,500 homes and 41,500 homes.
• Home sales gross margin in the high 19s to 20%.
• Financial services pre-tax profit margin between 30% and 33%.
• Income tax rate of 35% to 36%.
• Diluted share count of approximately 375 million shares.
• Cash flow from operations of $300 million to $500 million.
The Company has declared a quarterly cash dividend of $0.08 per common share. The dividend is payable on May 27, 2016 to stockholders of record on May 13, 2016.