DHI's Q2 Earnings & Revenues Miss, FY'25 View Down, Stock Tumbles

Core Viewpoint - D.R. Horton, Inc. reported disappointing second-quarter fiscal 2025 results, with earnings and total revenues falling short of expectations and declining year-over-year [1][5]. Financial Performance - Adjusted earnings per share were $2.58, missing the Zacks Consensus Estimate of $2.66 by 3%, and down from $3.52 in the same quarter last year [5]. - Total revenues amounted to $7.73 billion, a 15% decrease year-over-year, and also missed analysts' expectations of $8.09 billion by 4.4% [5]. - The consolidated pre-tax profit margin was 13.8%, down from 16.8% a year ago [6]. Segment Performance - Homebuilding revenues were $7.2 billion, a 15% decline from the prior-year quarter, with home sales at $7.18 billion, down 15.2% year-over-year [7]. - Net sales orders decreased by 15% year-over-year to 22,437 homes, with the value of net orders dropping 17% to $8.4 billion [8]. - Financial Services revenues fell by 5.6% to $212.9 million, while the Rental business generated $144.2 million, down from $301.3 million a year ago [9]. Market Conditions - The housing market remains soft due to declining consumer confidence and affordability concerns, leading to lower net sales orders and weak contributions from rental operations and financial services [2]. - The cancellation rate on gross sales orders was 16%, slightly up from 15% a year ago [8]. Balance Sheet and Liquidity - As of March 31, 2025, D.R. Horton had cash and equivalents totaling $2.52 billion, down from $4.54 billion at the end of fiscal 2024, with total liquidity at $5.8 billion [10][11]. - The company had a debt of $6.5 billion, with a debt-to-total capital ratio of 21.1% [11]. Share Repurchase and Guidance - D.R. Horton repurchased 16.5 million shares for $2.4 billion in the first half of fiscal 2025, with a remaining stock repurchase authorization of $1.2 billion [12]. - The updated fiscal 2025 guidance expects consolidated revenues between $33.3 billion and $34.8 billion, down from a previous range of $36 billion to $37.5 billion [13].