D.R. Horton, Inc., Arlington, Texas (NYSE:DHI) on Tuesday reported net income for its third fiscal quarter ended June 30, 2019 was $474.8 million, or $1.26 per diluted share, compared to $453.8 million, or $1.18 per diluted share, in the same quarter of fiscal 2018. The gain beat analyst expectation of a profit of $1.06 per share.
Home building revenue for the third quarter of fiscal 2019 increased 10% to $4.8 billion from $4.3 billion in the same quarter of fiscal 2018. Homes closed in the quarter increased 13% to 15,971 homes compared to 14,114 homes closed in the same quarter of fiscal 2018.
Net sales orders for the third quarter ended June 30, 2019 increased 6% to 15,588 homes and 8% in value to $4.7 billion compared to 14,650 homes and $4.4 billion in the same quarter of the prior year. The company’s cancellation rate (cancelled sales orders divided by gross sales orders) for the third quarter of fiscal 2019 was 20% compared to 21% in the prior year quarter. Net sales orders for the first nine months of fiscal 2019 increased 5% to 43,435 homes and 4% in value to $12.9 billion compared to 41,231 homes and $12.3 billion in the same period of fiscal 2018.
The company had 29,200 homes in inventory at June 30, 2019, and its home building land and lot portfolio totaled 303,000 lots, of which 39% were owned and 61% were controlled through land purchase contracts.
The company ended the third quarter with $577.9 million of home building unrestricted cash and a home building debt to total capital ratio of 18.5%.
Fiscal 2019 Third Quarter Highlights - comparisons to the prior year quarter
- Net income per diluted share increased 7% to $1.26
- Net income attributable to D.R. Horton increased 5% to $474.8 million
- Consolidated revenues increased 11% to $4.9 billion
- Consolidated pre-tax income increased 2% to $626.7 million, with a pre-tax margin of 12.8%
- Homes closed increased 13% to 15,971 homes and 11% in value to $4.7 billion
- Net sales orders increased 6% to 15,588 homes and 8% in value to $4.7 billion
Donald R. Horton, chairman of the board, said, “The D.R. Horton team delivered strong results in our third quarter. Our consolidated revenues increased 11% to $4.9 billion, and our pre-tax profit margin was 12.8%. The spring selling season was solid, and our home building gross margin improved sequentially.
“Our continued strategic focus is to consolidate market share while growing our revenues and profits, generating strong annual cash flows and returns and maintaining a flexible financial position. Our balance sheet strength, liquidity and earnings growth are increasing our strategic and financial flexibility, and we plan to maintain our disciplined, opportunistic position to enhance the long-term value of our company.
During the third quarter of fiscal 2019, the company paid cash dividends of $56.0 million. Subsequent to quarter-end, the company declared a quarterly cash dividend of $0.15 per common share that is payable on August 26, 2019 to stockholders of record on August 12, 2019.
The company repurchased 3.7 million shares of common stock for $159.3 million during the third quarter of fiscal 2019, for a total of 9.8 million shares of common stock for $375.5 million during the nine months ended June 30, 2019. There was no balance remaining on the Company’s stock repurchase authorization at June 30, 2019. Subsequent to quarter-end, the company’s Board of Directors authorized the repurchase of up to $1.0 billion of common stock effective July 30, 2019. The new authorization has no expiration date.
Forestar Group Inc. (NYSE:FOR)(“Forestar”), a majority-owned subsidiary of D.R. Horton, sold 1,158 lots and generated $88.2 million of revenue compared to 297 lots and $23.6 million of revenue in the prior year period. For the nine months ended June 30, 2019, Forestar sold 2,224 lots and generated $192.0 million of revenue compared to 856 lots and $77.0 million of revenue from the acquisition date through June 30, 2018.
DHI Communities, a wholly-owned D.R. Horton subsidiary, sold its second multi-family rental project for $60.0 million and recorded a gain on the sale of $22.6 million which is included in the consolidated statements of operations for both the three and nine months ended June 30, 2019. At June 30, 2019 and September 30, 2018, the consolidated balance sheets included $167.2 million and $173.2 million, respectively, of assets related to DHI Communities.
