D.R. Horton(US:DHI)2025-11-19 19:30Financial Performance - Consolidated revenues decreased by 7% to $34.3 billion in fiscal 2025 compared to $36.8 billion in fiscal 2024[166] - Pre-tax income fell by 25% to $4.7 billion, with a pre-tax operating margin of 13.8% compared to 17.1% in the previous year[175] - Net sales orders decreased by 4% to 83,423 homes, with the value of net sales orders declining by 6% to $30.8 billion[175] - Home sales revenue fell to $31.4 billion (84,863 homes closed) in fiscal 2025, down from $33.9 billion (89,690 homes closed) in fiscal 2024, primarily due to a 5% decrease in closings volume and a 2% decrease in average selling price[190] - Pre-tax income decreased to $4.7 billion in fiscal 2025 from $6.3 billion in fiscal 2024, with contributions from homebuilding, rental, financial services, and Forestar businesses[246] Home Sales and Orders - Homes closed decreased by 5% to 84,863, with an average closing price of $370,400, down 2% from the prior year[175] - Home sales gross margin decreased to 21.5% from 23.5% due to increased sales incentives[168] - The average selling price of homes closed in fiscal 2025 was $370,400, a 2% decrease from $378,000 in fiscal 2024[190] - The cancellation rate for sales orders remained stable at 18% for fiscal 2025, consistent with the previous year[182] - Sales order backlog as of September 30, 2025, was 10,785 homes valued at $4.12 billion, representing an 11% decrease in homes and a 14% decrease in value compared to 2024[187] Regional Performance - Homebuilding revenues decreased by 3% in the Northwest region for fiscal 2025, generating pre-tax income of $395.7 million compared to $420.8 million in fiscal 2024[207] - Homebuilding revenues in the Southwest region decreased by 6% in fiscal 2025, with pre-tax income dropping to $517.1 million from $703.5 million in fiscal 2024[208] - The South Central region experienced a 10% decrease in homebuilding revenues, resulting in pre-tax income of $964.6 million, down from $1.3 billion in fiscal 2024[209] - Southeast region homebuilding revenues fell by 21% in fiscal 2025, with pre-tax income decreasing to $839.9 million from $1.4 billion in fiscal 2024[210] - The East region saw a slight increase of 1% in homebuilding revenues, generating pre-tax income of $834.0 million compared to $1.1 billion in fiscal 2024[212] - The North region reported a 15% increase in homebuilding revenues, with pre-tax income rising to $583.6 million from $498.4 million in fiscal 2024[213] Financial Services - Financial services revenues decreased by 5% to $841.2 million, with pre-tax income at $278.7 million compared to $311.2 million[179] - Total revenues from financial services decreased by 5% to $841.2 million in fiscal 2025 from $882.5 million in fiscal 2024[236] - Financial services pre-tax income decreased to $278.7 million in fiscal 2025 from $311.2 million in fiscal 2024, a decline of approximately 10%[236] - Other income from financial services operations fell by 12% to $88.9 million in fiscal 2025, down from $101.1 million in the prior year, primarily due to reduced interest income on loan origination volume[243] Inventory and Assets - Total homebuilding inventories as of September 30, 2025, amounted to $20.3 billion, compared to $20.0 billion in 2024[216] - Approximately 19,600 homes were unsold in inventory as of September 30, 2025, compared to 25,700 unsold homes in 2024[221] - The total remaining purchase price of lots controlled through land and lot purchase contracts was $26.0 billion as of September 30, 2025, up from $25.2 billion in 2024[219] - Forestar's inventory totaled $2.6 billion at September 30, 2025, an increase from $2.3 billion in 2024[232] Cash Flow and Financing - Cash provided by operating activities increased to $3.4 billion from $2.2 billion in fiscal 2024[167] - Net cash provided by operating activities was $3.4 billion, an increase from $2.2 billion in fiscal 2024, primarily driven by net income[285] - Net cash used in financing activities in fiscal 2025 was $4.8 billion, including $4.3 billion for share repurchases and $1.0 billion for repayment of homebuilding senior notes[289] - The company repurchased 30.7 million shares at a total cost of $4.3 billion during fiscal 2025, with $3.3 billion remaining under the stock repurchase authorization[263] Debt and Interest - Interest incurred increased 104% to $103.1 million in fiscal 2025 from $50.5 million in fiscal 2024, driven by a rise in the weighted average interest rate and a 33% increase in average debt[203] - The company had outstanding notes payable totaling $6.0 billion as of September 30, 2025, with $1.6 billion due within 12 months[252] - Forestar's ratio of debt to total capital increased to 31.2% at September 30, 2025, compared to 30.7% in the previous year[269] Tax and Legal Matters - The effective tax rate remained stable at 23.6% in fiscal 2025 compared to 23.5% in fiscal 2024, with income tax expenses of $1.1 billion and $1.5 billion, respectively[247] - The new law terminating the energy efficient home tax credit is expected to reduce tax benefits starting in fiscal 2026, with benefits of $39.5 million in fiscal 2025 compared to $70.4 million in 2024[249] - The company reported reserves for approximately 875 pending construction defect claims, with costs totaling $57.2 million for resolved claims during fiscal 2025[319] - The company has established reserves for legal claims, with approximately 98% related to construction defect matters as of September 30, 2025[318] Market Conditions and Future Outlook - The company plans to maintain elevated sales incentives to support demand based on market conditions and mortgage interest rates[168] - The company plans to maintain elevated incentive levels in fiscal 2026, depending on market conditions and mortgage interest rates[195] - The company is exposed to risks from adverse developments in capital markets, which could limit access to capital and impact liquidity[302] - The company is currently evaluating the impact of new accounting standards on its consolidated financial statements, effective in fiscal 2026 and 2028[323][324]