Core Viewpoint - D.R. Horton reported mixed financial results for Q1 fiscal 2025, with earnings and revenues beating estimates but declining year-over-year, raising questions about future performance amid a challenging housing market [2][5][14]. Financial Performance - Adjusted earnings for Q1 were $2.61 per share, exceeding the Zacks Consensus Estimate of $2.40 by 8.8%, but down 7.4% from $2.82 a year ago [5]. - Total revenues reached $7.6 billion, a decrease of 1.5% year-over-year, yet above analysts' expectations of $7.13 billion [5]. - The consolidated pre-tax profit margin was 14.6%, down from 16.1% in the previous year [6]. Segment Performance - Homebuilding revenues were $7.17 billion, down 1.8% from the prior year, with home sales also declining by 1.8% to $7.15 billion [7]. - Home closings decreased by 1% to 19,059 homes, while net sales orders fell by 1% to 17,837 homes, with the value of net orders down 2% to $6.7 billion [7]. - The order backlog at the end of Q1 was 11,003 homes, down 21% year-over-year, with a backlog value of $4.3 billion [8]. Liquidity and Capital Management - D.R. Horton reported cash and cash equivalents of $3.07 billion as of December 31, 2024, down from $4.54 billion at the end of fiscal 2024, with total liquidity at $6.5 billion [10]. - The company had $5.1 billion in debt, resulting in a debt to total capital ratio of 17% [11]. - D.R. Horton repurchased 6.8 million shares for $1.1 billion in Q1, with $2.5 billion remaining in stock repurchase authorization [12]. Guidance and Market Outlook - For fiscal 2025, D.R. Horton expects consolidated revenues between $36 billion and $37.5 billion, with homes closed anticipated to be between 90,000 and 92,000 units [13]. - Recent estimates have trended downward, with a consensus estimate shift of -14.28%, leading to a Zacks Rank of 5 (Strong Sell) for the stock [14][16].

Core Insights - The United States is facing a significant issue with the lack of affordable housing, particularly in the single-family residence sector, despite an increase in apartment availability [1] Group 1: Housing Market Dynamics - There is a surplus of apartments entering the market, but the starts and completions for single-family homes have not kept pace [1]

Core Viewpoint - There is a significant disconnect between Wall Street homebuilder estimates and current stock valuations, suggesting that the sector is undervalued with potential for substantial earnings growth [1][2]. Earnings Growth Projections - D.R. Horton (DHI) is projected to grow earnings from $13.82 in 2025 to $20.24 in 2028, indicating a 46% growth [3]. - PulteGroup (PHM) and KB Home (KBH) are expected to grow earnings by 22% by 2027 [5]. - Toll Brothers (TOL) is projected to grow earnings by 32% by 2028 [7]. - Lennar (LEN) has the highest expected growth at 82% by 2028 [9]. Market Valuation - Homebuilders are trading at approximately 10X earnings, significantly lower than the S&P 500's 23X forward earnings [21]. - On an EV/EBITDA basis, homebuilders are valued at about 6X, indicating they are trading cheaply compared to historical norms [22]. Industry Dynamics - The U.S. housing market is believed to be undersupplied, with estimates suggesting a shortfall of 2 to 7 million units due to historical underbuilding from 2007 to 2020 [17][20]. - Current mortgage rates have created an affordability crisis, leading to lower demand than historical levels [15]. Business Model Strength - Homebuilders have improved their business models to be more capital light and operate with minimal debt, enhancing their resilience compared to the past [28][31]. - The sector has experienced strong free cash flow, which has been used to pay down debt and buy back shares, improving balance sheets significantly [31][49]. Margins and Market Share - D.R. Horton’s margins are currently around 18%, above historical averages [34]. - Publicly traded homebuilders have captured a larger market share, with homes sold being about double the volume during the housing bubble of 2005, despite overall industry output being lower [44]. Future Outlook - The consensus estimates suggest that 2024 and 2025 will be trough years for the industry, but growth is expected to resume thereafter [16]. - Even with a more moderated growth outlook, homebuilders present an attractive investment opportunity given their current pricing and growth potential [56].

Financial Performance - Consolidated revenues decreased 1% to $7.6 billion compared to $7.7 billion, with pre-tax income down 11% to $1.1 billion[108][116] - Net sales orders decreased 1% to 17,837 homes, with the value of net sales orders down 2% to $6.7 billion[116] - Homes closed decreased 1% to 19,059 homes, and average closing price slightly decreased to $374,900[116] - Home sales revenue for the quarter was $7.1 billion from 19,059 homes closed, a decrease from $7.3 billion from 19,340 homes closed in the prior year[136] - Net income for the three months ended December 31, 2024, was $774.4 million, while net income for the year ended September 30, 2024, was $4,148.9 million[246] Sales and Orders - Sales order backlog decreased 21% to 11,003 homes, with the value of the backlog also decreasing 21% to $4.3 billion[116] - Cancellations of sales orders totaled 3,929, with a cancellation rate of 18%, down from 19% in the previous year[127][128] - The average selling price of net sales orders was $373,000, a decrease of 1% compared to the prior year[129] Rental Operations - Rental revenues increased to $217.8 million compared to $195.3 million, but rental pre-tax income decreased to $11.9 million from $31.3 million[121] - Single-family rental operations closed 311 homes in Q4 2024, down 18% from 379 homes in Q4 2023[170] - Multi-family rental operations saw a 68% increase in homes closed, totaling 504 units in Q4 2024 compared to 300 units in Q4 2023[170] - The gross profit margin for rental operations decreased to 16.0% in Q4 2024 from 27.4% in Q4 2023[172] Financial Services - Financial services revenues decreased 5% to $182.3 million, with pre-tax income down to $48.6 million from $66.0 million[121] - Financial services pre-tax income decreased by 26% to $48.6 million in Q4 2024 from $66.0 million in Q4 2023[183] - Total revenues from financial services operations decreased by 5% to $182.3 million in Q4 2024 from $192.6 million in Q4 2023[188] Margins and Expenses - Homebuilding gross margin was 22.7%, slightly down from 22.9%[116] - SG&A expenses increased by 6% to $636.6 million in Q4 2024, representing 8.9% of homebuilding revenues compared to 8.3% in the prior year[146] - Interest incurred by homebuilding operations rose 57% to $17.9 million in Q4 2024, primarily due to higher average interest rates and increased debt[149] Inventory and Land - As of December 31, 2024, total inventory amounted to $20.65 billion, a slight increase from $20.03 billion on September 30, 2024[163][168] - The company controlled 639,800 lots as of December 31, 2024, with 154,400 lots owned and 485,400 lots under purchase contracts[164] - Approximately 25,700 homes in inventory were unsold as of December 31, 2024, with 10,400 of those completed[167] Debt and Equity - Stockholders' equity was $24.9 billion, down from $25.3 billion[116] - Debt to total capital ratio improved to 17.0% from 18.9%[116] - The company had outstanding notes payable totaling $5.1 billion, with $1.5 billion due within 12 months[199] Share Repurchase and Dividends - The company repurchased 6.8 million shares at a total cost of $1.1 billion during the three months ended December 31, 2024, with $2.5 billion remaining under the stock repurchase authorization[208] - The company declared a quarterly cash dividend of $0.40 per common share, payable on February 14, 2025[237] Legal and Compliance - The company is involved in a lawsuit filed by the Maryland Department of Environment regarding stormwater compliance issues, but does not expect a material loss from this matter[265] - A consent decree related to stormwater compliance issues from 2014 was resolved in April 2024, with costs not expected to exceed $1 million[264] Market Conditions and Outlook - The company anticipates that seasonal patterns will continue to impact home closings and revenue generation, particularly in the third and fourth quarters of the fiscal year[250] - The company expects incentive levels to remain elevated, assuming similar market conditions and no significant changes in mortgage interest rates[141]

Financial Performance - D R Horton reported fiscal 2025 Q1 EPS of $2 61, exceeding analysts' estimate of $2 35 [1] - Total revenue for Q1 2025 was $7 61 billion, surpassing the expected $7 01 billion [1] - Net income declined by 10 8% YoY to $844 9 million, while revenue decreased by 1 4% YoY [3][6] - Home sales revenue dropped 1 8% YoY to $7 15 billion, with homes closed down 1 5% to 19,059 units [3] - Homebuilding pre-tax income fell 8% to $1 billion, with margins tightening to 14 1% from 15% [7] - Rental operations pre-tax income decreased significantly from $31 3 million to $11 9 million, despite revenue growth from $195 3 million to $217 8 million [7] Business Overview - D R Horton is the largest US homebuilder, operating in 125 metropolitan markets across 36 states [4] - The company specializes in a wide range of residential properties, from affordable to luxury homes [4] - D R Horton has prioritized its affordable housing segment in recent years [4] - The company maintains operational flexibility through its majority stake in Forestar Group [5] - D R Horton benefits from economies of scale and vertical integration, particularly through DHI Mortgage [5] Strategic Initiatives - The company focuses on affordability through smaller home designs and price points [8] - Ownership in Forestar helps maintain cost control and meet housing demand [8] - D R Horton leverages its economies of scale, including capital access and procurement efficiencies [8] - The company plans share repurchases between $2 6 billion and $2 8 billion, signaling confidence in cash flow and shareholder value [9] Outlook - D R Horton maintains its fiscal 2025 revenue guidance of $36 billion to $37 5 billion [11] - The company aims to balance market adaptability with efficiency amid interest rate fluctuations [11] - Investors should monitor the 21% decline in sales order backlog, which may impact future revenue streams [12] - D R Horton's ability to manage competitive pressures and economic slowdowns will be critical in upcoming quarters [12]

Group 1: U.S. Stock Market Performance - U.S. stocks traded higher, with the Dow Jones index gaining over 450 points, up 1.07% to 43,951.84 [1] - NASDAQ rose 0.71% to 19,770.38, and S&P 500 increased by 0.85% to 6,047.41 [1] - Utilities shares surged by 1.6%, while energy shares fell by 0.6% [1] Group 2: Company Earnings Reports - D.R. Horton, Inc. reported first-quarter results with sales of $7.61 billion, a 1% year-over-year decline, but exceeding the consensus of $7.08 billion [2] - Earnings per share (EPS) for D.R. Horton was $2.61, beating the consensus estimate of $2.44 [2] Group 3: Commodity Market Updates - Oil prices decreased by 2.3% to $76.09, while gold fell by 0.1% to $2,748.20 [5] - Silver prices increased by 0.6% to $31.335, and copper prices dropped by 1.4% to $4.3070 [5] Group 4: Notable Stock Movements - Evolus Inc shares surged 32% to $13.92 following news of expected FDA approval for Evolysse gels [9] - Helius Medical Technologies Inc shares rose 41% to $1.06 after exceeding enrollment targets for a stroke study [9] - InMed Pharmaceuticals Inc shares increased by 36% to $6.75 due to positive preclinical study results for INM-901 [9] - Canoo Inc shares plummeted 66% to $0.46 after filing for Chapter 7 bankruptcy [9] - FTAI Aviation Ltd shares fell 30% to $78.35 due to potential delays in FY24 10-K filing [9] - New Oriental Education & Tech Group shares dropped 24% to $46.26 after reporting an EPS miss for the second quarter [9]

Core Viewpoint - D.R. Horton, Inc. reported first-quarter fiscal 2025 results with earnings and revenues exceeding expectations but showing a decline year-over-year, leading to a 6% increase in share price post-earnings release [1] Financial Performance - Adjusted earnings were $2.61 per share, beating the Zacks Consensus Estimate of $2.40 by 8.8%, but down 7.4% from $2.82 a year ago [4] - Total revenues reached $7.6 billion, a decrease of 1.5% year-over-year, yet above the analysts' expectation of $7.13 billion [4] - The consolidated pre-tax profit margin was 14.6%, down from 16.1% a year ago [5] Segment Performance - Homebuilding revenues were $7.17 billion, down 1.8% from the prior-year quarter, with home sales at $7.15 billion, also down 1.8% [6] - Net sales orders decreased by 1% year-over-year to 17,837 homes, with the value of net orders down 2% to $6.7 billion [7] - Financial Services revenues fell 5.3% to $182.3 million, while Forestar contributed $250.4 million, down from $305.9 million a year ago [8] Balance Sheet and Liquidity - Cash, cash equivalents, and restricted cash totaled $3.07 billion, down from $4.54 billion at the end of fiscal 2024, with total liquidity at $6.5 billion [9] - The company had 36,200 homes in inventory, with 25,700 unsold, and a debt of $5.1 billion, resulting in a debt to total capital ratio of 17% [10] Shareholder Returns - D.R. Horton repurchased 6.8 million shares for $1.1 billion in the fiscal first quarter, with a remaining stock repurchase authorization of $2.5 billion [11] Fiscal 2025 Guidance - The company expects consolidated revenues between $36 billion and $37.5 billion, with homes closed anticipated to be between 90,000 and 92,000 units [12]

Financial Performance - Net income per diluted share decreased 7% to $2.61 in Q1 fiscal 2025 compared to $2.82 in Q1 fiscal 2024[2] - Consolidated revenues decreased 1% to $7.6 billion in Q1 fiscal 2025 compared to $7.7 billion in Q1 fiscal 2024[2] - Net income attributable to D.R. Horton decreased 11% to $844.9 million in Q1 fiscal 2025 compared to $947.4 million in Q1 fiscal 2024[2] - Net income decreased by 10.9% from $955.7 million to $851.9 million[32] - Basic net income per common share decreased from $2.84 to $2.63, a decline of 7.4%[32] - Consolidated income before income taxes was $1,109.9 million in Q4 2024, down from $1,247.5 million in Q4 2023[39] Revenue and Sales - Homes closed decreased 1% to 19,059 in Q1 fiscal 2025 compared to 19,340 in Q1 fiscal 2024[9] - Net sales orders decreased 1% to 17,837 homes and 2% in value to $6.7 billion in Q1 fiscal 2025 compared to 18,069 homes and $6.8 billion in Q1 fiscal 2024[12] - Homebuilding segment revenue for Q4 2024 was $7,146.0 million, a slight decrease from $7,276.4 million in Q4 2023[39] - Total homes closed in Q4 2024 were 17,837 with a value of $6.6535 billion, compared to 18,069 homes and $6.7895 billion in Q4 2023[42] - Sales order backlog as of December 31, 2024, was 11,003 homes valued at $4.299 billion, down from 13,965 homes and $5.4428 billion in 2023[46] - Northwest region homes closed in Q4 2024 were 1,019 valued at $533.7 million, down from 1,179 homes and $595.8 million in Q4 2023[42] - North region homes closed in Q4 2024 were 2,076 valued at $898.3 million, up from 1,793 homes and $723.8 million in Q4 2023[42] Rental Operations - Rental operations generated $11.9 million of pre-tax income on revenues of $217.8 million in Q1 fiscal 2025 compared to $31.3 million of pre-tax income on revenues of $195.3 million in Q1 fiscal 2024[14] - Rental segment revenue increased to $217.8 million in Q4 2024, up from $195.3 million in Q4 2023[39] - Rental properties inventory increased to $2,988.9 million as of December 31, 2024, from $2,906.0 million as of September 30, 2024[36] Financial Services - Financial services revenues were $182.3 million in Q1 fiscal 2025 compared to $192.6 million in Q1 fiscal 2024[19] - Financial services revenue was $182.3 million in Q4 2024, compared to $192.6 million in Q4 2023[39] Share Repurchases and Cash Flow - The Company repurchased 6.8 million shares of common stock for $1.1 billion during Q1 fiscal 2025[21] - Consolidated cash flow provided by operations is expected to be greater than fiscal 2024[26] - Net cash provided by operating activities improved significantly from a negative $153.4 million to a positive $646.7 million[34] - Net cash used in financing activities increased by 469.5% from $362.8 million to $2,064.6 million[34] - Repurchases of common stock increased by 180.2% from $376.9 million to $1,055.7 million[34] - Cash provided by operating activities was $646.7 million in Q4 2024, compared to a cash used in operating activities of $153.4 million in Q4 2023[39] Inventory and Assets - Total cash, cash equivalents, and restricted cash decreased from $4,544.0 million to $3,069.0 million, a decline of 32.5%[30] - Total inventory increased by 4.7% from $24,903.2 million to $26,080.5 million[30] - Residential land and lots increased by 9.7% from $13,121.4 million to $14,390.2 million[30] - Mortgage loans held for sale decreased by 27.6% from $2,477.5 million to $1,794.4 million[30] - Total liabilities decreased by 6.9% from $10,279.9 million to $9,566.8 million[30] - Cash and cash equivalents decreased to $3,050.1 million as of December 31, 2024, from $4,516.4 million as of September 30, 2024[36] - Residential land and lots inventory increased to $14,390.2 million as of December 31, 2024, from $13,121.4 million as of September 30, 2024[36] - Mortgage loans held for sale decreased to $1,794.4 million as of December 31, 2024, from $2,477.5 million as of September 30, 2024[36] - Homes in inventory decreased to 36,200 as of December 31, 2024, from 37,400 as of September 30, 2024[52] - East region homes in inventory decreased to 7,300 as of December 31, 2024, from 7,500 as of September 30, 2024[52] Regional Performance - Southeast region sales order backlog as of December 31, 2024, was 2,486 homes valued at $898.2 million, down from 4,123 homes and $1.5885 billion in 2023[46] - South Central region lots controlled increased to 157,800 as of December 31, 2024, from 148,600 as of September 30, 2024[48] - Forestar-controlled lots increased to 43,800 as of December 31, 2024, from 37,700 as of September 30, 2024[50] Expenses - Selling, general and administrative expenses increased to $878.1 million in Q4 2024, up from $835.0 million in Q4 2023[39] Land and Lots - Forestar sold 2,333 lots and generated $250.4 million of revenue in Q1 fiscal 2025 compared to 3,150 lots and $305.9 million of revenue in Q1 fiscal 2024[18] - Total lots controlled as of December 31, 2024, were 639,800, with 24% owned and 76% under purchase contracts[48]

Financial Data and Key Metrics - The company is discussing its financial results for the first quarter of fiscal 2025 [3] - The call includes forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, indicating potential future financial performance [3] - The company believes these forward-looking statements are based on reasonable assumptions but acknowledges that actual outcomes may differ materially [3] Business Line Data and Key Metrics - No specific data on individual business lines or key metrics is provided in the content [1][2][3][4] Market Data and Key Metrics - No specific market data or key metrics are mentioned in the content [1][2][3][4] Company Strategy and Industry Competition - No specific details on company strategy or industry competition are provided in the content [1][2][3][4] Management Commentary on Operating Environment and Future Outlook - The company has made forward-looking statements regarding its future performance, but no specific commentary on the operating environment or future outlook is provided [3][4] Other Important Information - The call is being recorded, and participants are in listen-only mode until the Q&A session [2] - The company does not undertake any obligation to update or revise forward-looking statements after the call [4] Q&A Session Summary - No Q&A session details are provided in the content [1][2][3][4]

Core Insights - D.R. Horton reported a revenue of $7.61 billion for the quarter ended December 2024, reflecting a decrease of 1.5% year-over-year, while EPS was $2.61, down from $2.82 in the previous year [1] - The revenue exceeded the Zacks Consensus Estimate of $7.13 billion by 6.79%, and the EPS also surpassed the consensus estimate of $2.40 by 8.75% [1] Financial Performance Metrics - Homes Closed: 19,059, exceeding the average estimate of 17,963 by 14 analysts [4] - Net Sales Order - Homes Sold: 17,837, slightly below the average estimate of 18,485 by 14 analysts [4] - Sales Order Backlog - Homes in Backlog: 11,003, lower than the average estimate of 12,871 by 12 analysts [4] - Sales Order Backlog - Value: $4.30 billion, below the average estimate of $5.03 billion by 12 analysts [4] - Net Sales Order - Value: $6.65 billion, compared to the average estimate of $6.97 billion by 10 analysts [4] Revenue Breakdown - Revenues from Home Sales - Homebuilding: $7.15 billion, exceeding the average estimate of $6.79 billion based on 16 analysts, representing a year-over-year change of -1.8% [4] - Revenues from Financial Services: $182.30 million, slightly above the average estimate of $180.88 million by 16 analysts, showing a -5.4% change year-over-year [4] - Revenues from Rental: $217.80 million, surpassing the average estimate of $207.44 million by 15 analysts, with a year-over-year increase of +11.5% [4] - Revenues from Land/Lot Sales and Other - Homebuilding: $21.20 million, exceeding the average estimate of $19.09 million by 10 analysts, reflecting a year-over-year change of +4.4% [4] - Revenues from Forestar: $250.40 million, below the average estimate of $324.69 million based on six analysts, indicating a year-over-year decline of -18.1% [4] - Revenues from Eliminations and Other: -$204.70 million, better than the average estimate of -$268.32 million by four analysts, representing a year-over-year change of -22.6% [4] Stock Performance - D.R. Horton shares have returned +5.4% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]