Investor Presentation - Q1 2022 - D.R. Horton Investor Relations
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Investor Presentation Q1 2022
2
FORWARD-LOOKING STATEMENTS
This presentation may include “forward‐looking statements” as defined by the COVID‐19 on the economy and our businesses; the effects of weather conditions
Private Securities Litigation Reform Act of 1995. Although D.R. Horton believes any and natural disasters on our business and financial results; home warranty and
such statements are based on reasonable assumptions, there is no assurance that construction defect claims; the effects of health and safety incidents; reductions in
actual outcomes will not be materially different. Factors that may cause the actual the availability of performance bonds; increases in the costs of owning a home; the
results to be materially different from the future results expressed by the effects of governmental regulations and environmental matters on our
forward‐looking statements include, but are not limited to: the cyclical nature of the homebuilding and land development operations; the effects of governmental
homebuilding, lot development and rental housing industries and changes in regulations on our financial services operations; competitive conditions within the
economic, real estate or other conditions; constriction of the credit and public industries in which we operate; our ability to manage and service our debt and
capital markets, which could limit our ability to access capital and increase our costs comply with related debt covenants, restrictions and limitations; the effects of
of capital; reductions in the availability of mortgage financing provided by negative publicity; the effects of the loss of key personnel; actions by activist
government agencies, changes in government financing programs, a decrease in our stockholders; and information technology failures, data security breaches and our
ability to sell mortgage loans on attractive terms or an increase in mortgage interest ability to satisfy privacy and data protection laws and regulations. Additional
rates; the risks associated with our land, lot and rental inventory; our ability to effect information about issues that could lead to material changes in performance is
our growth strategies, acquisitions or investments successfully; the impact of an contained in D.R. Horton’s annual report on Form 10‐K and most recent report on
inflationary, deflationary or higher interest rate environment; supply shortages and Form 10‐Q, both of which are or will be filed with the Securities and Exchange
other risks of acquiring land, building materials and skilled labor; the effects of Commission.
public health issues such as a major epidemic or pandemic, including the impact of
3
D.R. HORTON, INC.
Traded on NYSE as DHI
$28.9 billion $5.8 billion 32.4% & 38.5%
Consolidated revenues Consolidated pre‐tax income ROE & ROI (HB), respectively*
$15.7 billion $44.25 17.3%
Stockholders’ equity Book value per common share Homebuilding leverage*
As of or for the twelve‐month period ended December 31, 2021
*See slides 9 and 10 for definitions of ROE (Return on Equity), homebuilding leverage and ROI [Return on Inventory (Homebuilding)], respectively
4
DHI GROWTH, CONSOLIDATION AND MARKET SHARE
1,400 12%
81,622 Homes Closed during TTM ended 12/31/2021 2021 Closings:
81,622
1,200
10%
1,000
8%
800
2011 Closings:
2006 Closings: 17,176 6%
53,410
600
4%
400
2%
200 1992 Closings:
1,231
0 0%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Total U.S. Single‐Family New Home Sales ('000s)
Source: Company filings, Census DHI Homes Closed as a Percentage of U.S. Single‐Family New Home Sales
Note: Periods represent full calendar year
5
MARKET SHARE DOMINANCE
D.R. Horton Share and Rankings in Largest U.S. Housing Markets
Top 5 Markets Top 50 Markets
18% 50
16%
40 44
14% 41
12% 35
30
10%
8%
20
6%
4%
15
10
2%
0% 0
DFW Houston Atlanta Phoenix Austin #1 Top 5 Top 10 Operate In
DHI Market Share Next Ranking Competitor Market Share
Source: Builder magazine ‐ 2021 Local Leaders issue, rankings based on homes closed in calendar 2020
6
MANAGEMENT TENURE AND EXPERIENCE
Executive Team
28 years
Region Presidents & Vice
Presidents
20 years
Division Presidents
13 years
City Managers
>10 years
Average employee tenure
7
DIVERSE PRODUCT OFFERINGS AND PRICE POINTS
Homes for entry‐level, move‐up, active adult and luxury buyers
68% of homes closed $500k
Represents price points of homes closed for the twelve months ended 12/31/21
8
RETURN ON EQUITY (ROE)
ROE has improved to over 30% while maintaining homebuilding leverage below 20%
ROE HB leverage
35% 35%
30% 31.6% 32.4% 30%
25% 25%
24.4%
20% 22.1% 20%
15% 17.2% 15%
10% 10%
5% 5%
0% 0%
FY 2019 FY 2020 TTM 12/31/2020 FY 2021 TTM 12/31/2021
ROE Leverage
ROE is calculated as net income divided by average stockholders’ equity. Average stockholders’ equity in the ROE calculation is the sum of ending stockholders’ equity balances for the
trailing five quarters divided by five.
Leverage is calculated as homebuilding (HB) notes payable divided by stockholders’ equity plus homebuilding notes payable.
9
EMPHASIS ON RETURN ON INVENTORY (ROI)
Homebuilding ROI target ‐ Minimum of 20%
40%
37.9% 38.5%
35%
30%
25% 27.9%
24.6%
20%
15% 18.1%
10%
5%
0%
FY 2019 FY 2020 TTM 12/31/20 FY 2021 TTM 12/31/21
Homebuilding ROI is calculated as homebuilding pre‐tax income for the year divided by average homebuilding inventory. Average homebuilding inventory in the ROI calculation is the sum of ending
homebuilding inventory balances for the trailing five quarters divided by five.
10BOOK VALUE PER SHARE
Consistent annual double‐digit percentage growth in book value per share
$45.00
$44.25
$40.00 $41.81
$35.00
$34.33
$30.00 $32.53
$25.00 $27.20
$20.00
$15.00
$10.00
$5.00
$0.00
9/30/2019 9/30/2020 12/31/2020 9/30/2021 12/31/2021
11CASH FLOW AT WORK
Utilization of nearly $6 billion of cash generated by homebuilding operations
Investments CF from HB Operations
$2,000 $2,000
$1,889
$1,800 $1,800
5 Year Cumulative Capital*
$1,453
$1,600 $1,600
Cash Flow from $5.9B
$1,400 $1,240 $1,400 Homebuilding
Operations
$1,200 $1,200
$1,002 Shareholder Return $3.0B
$1,000 $1,000 through Dividends and
Share Repurchases
$800 $800
Homebuilding Debt $1.4B
$600 $600 Reduction & Liquidity
Increase
$400 $304 $400
Acquisitions $0.9B
$200 $200
$0 $0
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Other Investments, $0.6B
including Rental
Acquisitions Rental Businesses Debt Reduction & Liquidity Increase Businesses
Dividends Share Repurchases HB Cash Flow from Ops
$ in millions
*5 fiscal years ended 9/30/21 12CAPITAL AND CASH FLOW PRIORITIES
• Balanced, disciplined, flexible and opportunistic; focused on enhancing long‐term value
• Strong balance sheet, liquidity and low leverage provide significant financial flexibility
• Invest in homebuilding business, including acquisitions
• Grow our multi‐family and single‐family rental platforms
• Maintain conservative homebuilding leverage & liquidity
• $350 million of senior note maturities in next twelve months
• Dividends to shareholders ‐ approximately $320 million annually at current rate
• Repurchases of common stock
• Plan to reduce outstanding share count by 2% in fiscal 2022
• Repurchased 2.7 million shares during Q1 2022 for $278.2 million
• $268.0 million remaining share repurchase authorization
13HOMEBUILDING OPERATIONAL FOCUS
• Maximize returns by managing inventories, sales pace and pricing in each community, while
providing value to homebuyers
• Consolidate market share while generating strong profits and operating cash flow
• Maintain sufficient inventories of land, lots and homes to support growth plans
• Investment underwriting expectations for each new community:
• Minimum 20% annual pre‐tax return on inventory (ROI)
• Initial cash investment returned within 24 months or less
• Expand relationships with land developers and grow Forestar’s lot manufacturing platform to
increase lots controlled
• Control SG&A while ensuring infrastructure supports the business
14FORESTAR (“FOR”)
• DHI owns 63% of FOR, a publicly traded residential lot manufacturer with operations in 55 markets and 23 states
• Supports DHI’s strategy of increasing land and lots controlled through purchase contracts
• FOR delivered 4,516 lots and generated $408 million of revenue in Q1 2022
• FY22 Expectations*: 19,500 to 20,000 lots sold, approximately $1.7 billion of revenue and a pre‐tax profit margin between 13.5% and 14%
• Liquidity of $500 million: $160 million unrestricted cash; $340 million available on revolving credit facility
• Net debt to capitalization of 33.9%
• FOR has raised both debt and equity capital during FY19 ‐ FY22 to fund its growth and expects to opportunistically raise additional
growth capital in the public markets
• In April 2021, issued $400 million of 3.85% senior notes due 2026
• Issued 1.4 million shares of common stock for net proceeds of $33.4 million during fiscal 2021 and an additional 85,000 shares for
net proceeds of $1.7 million during Q1 2022 through its at‐the‐market equity offering program
• DHI’s long‐term goal is to deconsolidate FOR from DHI’s financial statements
*Expectations are for Forestar’s standalone operations as noted on their Q1 FY22 conference call on 1/27/22
15RENTAL OPERATIONS
• The Company’s rental operations develop, construct, lease and sell multi‐family and single‐family residential properties
• Generated revenues of $156.5 million and pre‐tax income of $70.1 million in Q1 FY22
• Sold one multi‐family property (350 total units) in Q1 FY22 for $76.2 million in revenue
• Sold two single‐family rental properties (225 total homes) in Q1 FY22 for a total of $80.3 million in revenue
• Rental property inventory at 12/31/21 totaled $1.2 billion compared to $385.6 million at 12/31/20
• Multi‐family: 16 projects under active construction and 1 substantially complete representing a total of 5,000
units
• Single‐family: 74 communities including 4,800 homes and finished lots, of which 1,100 homes are completed
• FY22 Expectations
• Generate more than $700 million in revenues from rental property sales
• Grow total inventory investment in rental platforms by more than $1 billion
16EXPECTATIONS
Q2 FY 2022
• Consolidated revenues in a range of $7.3 billion to $7.7 billion
• Homes closed between 19,000 homes and 20,000 homes
• Home sales gross margin of approximately 27.5%
• Homebuilding SG&A of approximately 7.5% of homebuilding revenues
• Financial services pre‐tax profit margin in a range of 30% to 35%
• Income tax rate of approximately 24%
FY 2022
• Consolidated revenues in a range of $34.5 billion to $35.5 billion
• Homes closed between 90,000 homes and 92,000 homes
• Income tax rate of approximately 24%
• Outstanding share count at the end of FY22 approximately 2% lower than at the end of FY21
Based on current market conditions as noted on the Company’s Q1 FY22 conference call on 2/2/22
17First Quarter Data
Q1 FY 2022 HIGHLIGHTS
• Net income per diluted share increased 48% to $3.17
• Net income attributable to D.R. Horton increased 44% to $1.1 billion
• Consolidated revenues increased 19% to $7.1 billion
• Consolidated pre‐tax income increased 45% to $1.5 billion
• Consolidated pre‐tax profit margin improved 380 basis points to 21.2%
• 21,522 net homes sold and 18,396 homes closed
• Repurchased 2.7 million shares for $278.2 million
Comparisons to the prior year quarter
19SALES AND CLOSINGS
The value of Net Sales Orders and Homes Closed increased 29% and 17%,
respectively, in Q1 FY22 compared to Q1 FY21
Net Sales Orders Closings
# of Homes Value
$8,256.4 $9,000
25,000 $7,500
$6,416.0 $6,656.4
$5,698.7
20,000 $6,000
$3,863.3
15,000 $3,949.8
$4,500
10,000 $3,000
5,000 $1,500
0 $0
1Q FY20 1Q FY21 1Q FY22 1Q FY20 1Q FY21 1Q FY22
$ in millions
20INCOME STATEMENT
$ in millions except per share data
21HOME SALES GROSS MARGIN
28%
26% 26.9% 27.4%
24% 25.9% 25.5%
24.1% 24.6%
22%
20% 21.8%
18% 20.2%
16%
14%
12%
10%
8%
6%
4%
2%
0%
FY 2019 FY 2020 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q22
Shown as a % of the Company’s homebuilding segment’s home sales revenues
Includes interest amortized to cost of sales
Refer to slide 4 of the Company’s Q1 FY22 Supplementary Data presentation for detailed components of home sales gross margin
22HOMEBUILDING SG&A
SG&A as a percentage of homebuilding revenues improved 40 basis
points to 7.5% in Q1 FY22
HB Rev $ Fiscal Year SG&A % HB Rev $ First Fiscal Quarter SG&A %
$28,000 12% $14,000 12%
$24,000 11% $12,000 11%
$20,000 $10,000
10% 10%
$16,000 $8,000
9% 9%
$12,000 $6,000
8% 8%
$8,000 8.1% $4,000
7% 7.9% 7.5% 7%
$4,000 7.3% $2,000
$0 6% $0 6%
2020 2021 Q1 FY21 Q1 FY22
$ in millions
HB Rev $ SG&A % HB Rev $ SG&A %
Shown as a % of homebuilding revenues
23CONSOLIDATED PRE-TAX INCOME
Consolidated pre‐tax profit margin improved 380 basis points to 21.2%
in Q1 FY22
Fiscal Year First Fiscal Quarter
PTI $ PTI $
$5,500 19.3% $1,800
$5,000 $5,356.3 $1,600 21.2%
$4,500
$1,400 $1,497.3
$4,000
$3,500 $1,200 17.4%
14.7%
$3,000 $1,000
$2,983.0 $1,034.3
$2,500 $800
$2,000
$600
$1,500
$1,000 $400
$500 $200
$0 $0
2020 2021 Q1 FY21 Q1 FY22
$ in millions
Shown as a % of consolidated revenues
24BALANCE SHEET
$ in millions except per share metrics
Homebuilding cash and cash equivalents presented above includes $12.4 million, $8.4 million and $10.7 million of restricted cash for the periods ended 12/31/21, 9/30/21 and
12/31/20, respectively.
25HOMES IN INVENTORY
Increased housing inventory to meet the current strong demand
60,000
55,000
54,800
50,000 47,800
45,000 42,100
40,000 38,000
35,000
30,000 27,700
25,000
20,000
15,000
10,000
5,000
0
9/30/19 9/30/20 12/31/20 9/30/21 12/31/21
Sold Specs
Homes in inventory excluding model homes
26HOMEBUILDING LAND AND LOT POSITION
Controlled portion of land and lot pipeline increased 32% from a year ago
24% owned / 76% controlled at 12/31/21
600,000
551,400
550,000 530,300
500,000
440,700
450,000
400,000 376,900
350,000 307,300 402,500 419,500
300,000 318,700
250,000 264,300
185,900
200,000
150,000
100,000
50,000 121,400 112,600 122,000 127,800 131,900
0
9/30/19 9/30/20 12/31/20 9/30/21 12/31/21
Owned Controlled
Controlled lots include lots owned by FOR that DHI has under contract or the right of first offer to purchase of 38,300, 39,200, 34,900, 30,400 and 23,400 at 12/31/21, 9/30/21,
12/31/20, 9/30/20 and 9/30/19, respectively
27Appendix
GEOGRAPHIC DIVERSIFICATION 9%
9%
102 Markets 32 States 27%
Homebuilding 15%
Northwest
Colorado, Oregon, Utah and Washington Revenue 23%
17%
Southwest
Arizona, California, Hawaii, Nevada and New Mexico
South Central
Oklahoma and Texas Southeast South Central East Southwest Northwest North
Southeast 10%
Alabama, Florida, Louisiana and Mississippi 10%
23%
East
Georgia, North Carolina, South Carolina and Tennessee
Inventory 18%
North 25%
Delaware, Illinois, Indiana, Iowa, Kentucky, Maryland,
Minnesota, Nebraska, New Jersey, Ohio, Pennsylvania, Virginia 14%
and West Virginia
As of or for the twelve‐month period ended December 31, 2021
29HOMEBUILDING PUBLIC DEBT MATURITIES BY YEAR
$350 million of senior note maturities in next 12 months
$800
$700
$700
$600
$600
$500 $500 $500
$500 5.750%
$400 $350
$300
$200
4.375% 4.750% 2.500% 2.600% 1.300% 1.400%
$100
$0
FY 22 FY 23 FY 24 FY 25 FY 26 FY 27 FY 28
$ in millions
30You can also read
