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CME Group (NasdaqGS:CME) Q4 2025 Earnings call February 04, 2026 08:30 AM ET Company ParticipantsAdam Minick - Head of Investor RelationsAshish Sabadra - Managing DirectorBenjamin Budish - DirectorBrian Bedell - DirectorCraig Siegenthaler - Managing DirectorDan Fannon - Managing DirectorDerek Sammann - Global Head of Commodities, Options, and International MarketsJulie Winkler - Chief Commercial OfficerLynne Fitzpatrick - CFOMichael Cyprys - Managing DirectorSunil Cutinho - President of CME ClearingTerry Du ...

NewStreet Research analyst Pierre Ferragu has hailed Tesla Inc.'s (NASDAQ:TSLA) Robotaxi efforts compared to the likes of Alphabet Inc.-backed (NASDAQ:GOOGL) (NASDAQ:GOOG) Waymo. Tesla ‘Seven Times More Capital Efficient' Than Rivals, Says Pierre Ferragu In an interview with influencer Farzad Mesbahi on Saturday, Ferragu shared his thoughts on the company's Robotaxi efforts. "Tesla is seven times more capital efficient than competitors," Ferragu said, adding that Waymo still faced issues related to costs ...

Financial Data and Key Metrics Changes - Revenues for the first quarter increased by 9% to $273 million compared to $250.4 million in the prior year quarter [4][5] - Net income was $15.4 million or $0.30 per diluted share, down from $16.5 million or $0.32 per diluted share in the prior year quarter [5] - Book value per share increased by 10% from a year ago to $35.10 [4][13] - Pre-tax income decreased to $20.8 million from $21.9 million in the prior year quarter, with a pre-tax profit margin of 7.6% compared to 8.7% [5][6] - Gross profit margin for the quarter was 20.1%, down from 22% in the same quarter last year [6] Business Line Data and Key Metrics Changes - The company sold 1,944 lots in the quarter with an average sales price of $121,000, influenced by a mix of lot deliveries from higher price point communities [4][5] - SG&A expense was $36.5 million, representing 13.4% of revenues, compared to $36 million or 14.4% in the prior year quarter [7] Market Data and Key Metrics Changes - Demand for new homes is impacted by affordability constraints and cautious consumer sentiment, although mortgage rate buy-down incentives are helping to spur demand [8] - The company’s total lot position was 101,000 lots, with 65% owned and 35% controlled through purchase contracts [10] Company Strategy and Development Direction - The company aims to consolidate market share in the fragmented lot development industry while maintaining financial strength and operational expertise [5][12] - The focus remains on developing lots for entry-level and first-time buyers, which is the largest segment of the new home market [8][25] - The company plans to invest approximately $1.4 billion in land acquisition and development in fiscal 2026, subject to market conditions [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that home affordability constraints and cautious consumer sentiment will continue to be near-term headwinds for new home demand [15][16] - The company maintains its fiscal 2026 revenue guidance of $1.6 billion to $1.7 billion and lot delivery guidance of 14,000 to 15,000 lots [15] - The company is confident in the long-term demand for finished lots and its ability to gain market share [16] Other Important Information - The company ended the quarter with approximately $820 million of liquidity, including an unrestricted cash balance of $212 million [13] - The capital structure provides operational flexibility and positions the company to take advantage of attractive opportunities [14] Q&A Session Summary Question: Can you discuss the gross margins and expectations for the next few quarters? - Management indicated that the biggest impact on margin was due to the mix of projects delivering lots, and they expect gross margins to remain in the historical range of 21%-23% [18] Question: What are you seeing from your customers regarding pricing and takedown schedules? - Management noted a shift from large bulk takedowns to more structured quarterly takedowns, with no significant changes in pricing observed [21] Question: Is SG&A spend expected to remain stable? - Management confirmed that headcount is down slightly and expects SG&A to remain stable for the remainder of the year [22] Question: How does your inventory break out between entry-level and move-up homes? - Management stated that the strategy remains focused on entry-level homes, which is the largest market segment [25] Question: Are you looking to rebalance exposure in Texas and Florida? - Management is being selective in development activities in Texas and Florida due to higher resale inventory but believes in the long-term fundamentals of these markets [27] Question: How does pulling back on phased developments impact your cost structure? - Management indicated that there is no significant impact on cost structure, and pulling back helps reduce cycle times and development costs [28]

Financial Data and Key Metrics Changes - Revenues for Q1 2026 were $273 million, a 9% increase from $250.4 million in the prior year quarter [4][5] - Net income was $15.4 million or $0.30 per diluted share, compared to $16.5 million or $0.32 per diluted share in the prior year quarter [5] - Book value per share increased 10% from a year ago to $35.10 [4][15] - Pre-tax income was $20.8 million, down from $21.9 million in the prior year quarter, with a pre-tax profit margin of 7.6% compared to 8.7% [5][6] - Gross profit margin for the quarter was 20.1%, down from 22% in the same quarter last year [6] Business Line Data and Key Metrics Changes - The company sold 1,944 lots in the quarter with an average sales price of $121,000, influenced by a mix of higher price point lots [5][6] - SG&A expense was $36.5 million, or 13.4% of revenues, compared to $36 million or 14.4% in the prior year quarter [8] Market Data and Key Metrics Changes - Demand for new homes is impacted by affordability constraints and cautious consumer sentiment, although mortgage rate buy-down incentives are helping to spur demand [9][10] - The company’s total lot position was 101,000 lots, with 65% owned and 35% controlled through purchase contracts [11] Company Strategy and Development Direction - The company remains focused on turning inventory, maximizing returns, and consolidating market share in the lot development industry [5] - The strategic goal is to maintain a three- to four-year supply of land and lots while managing development phases to match market demand [11][14] - The company plans to invest approximately $1.4 billion in land acquisition and development in fiscal 2026, subject to market conditions [14] Management's Comments on Operating Environment and Future Outlook - Management expects home affordability constraints and cautious consumer sentiment to continue as near-term headwinds for new home demand [17] - The company maintains its fiscal 2026 revenue guidance of $1.6 billion to $1.7 billion and lot delivery guidance of 14,000 to 15,000 lots [17][18] - The company is confident in long-term demand for finished lots and its ability to gain market share in the lot development industry [18] Other Important Information - The company ended the quarter with $820 million of liquidity, including $212 million in unrestricted cash [15] - Total debt was $793 million, with a net debt to capital ratio of 24.6% [15] Q&A Session Summary Question: Can you discuss the gross margins and what they might look like over the next few quarters? - Management indicated that the biggest impact on margin was due to the mix of projects delivering lots, and they expect gross margins to remain in the historical range of 21%-23% [20][21] Question: What are you seeing from your customers regarding price pushback? - Management noted a shift from large bulk takedowns to more structured quarterly takedowns, with little change in pricing overall [22][23] Question: Is SG&A spend expected to remain stable? - Management confirmed that headcount is down slightly and expects SG&A to remain stable for the remainder of the year [24] Question: How is the inventory of developed lots breaking out between entry-level and move-up homes? - Management stated that the higher average sales prices were planned and that they remain focused on entry-level and first-time homebuyer markets [27][28] Question: Are you looking to rebalance exposure in Texas and Florida? - Management is being selective in development activities in Texas and Florida due to higher resale inventory but believes in the long-term fundamentals of these markets [29] Question: How does pulling back on phased developments impact your cost structure? - Management indicated that there is no significant impact on cost structure and that they continue to work with trade partners to reduce costs and cycle times [30]

Core Insights - D.R. Horton reported a revenue of $6.5 billion from home sales in the quarter, a decrease from $7.1 billion a year earlier, with 17,818 homes closed compared to 19,059 homes previously [1] - The company emphasized that demand is constrained by affordability, and it is adjusting its strategy by balancing pace, price, and incentives to drive sales while maintaining returns [2] - The average closing price of homes was $365,500, remaining flat sequentially but down 3% year over year [1] Financial Performance - D.R. Horton generated a consolidated pre-tax income of $798 million on $6.9 billion in revenue, resulting in a pre-tax profit margin of 11.6%. Net income was $595 million, with earnings per diluted share at $2.03, down from $2.61 in the prior-year quarter [3][4] - The company reported a gross margin of 20.4% for home sales, an increase of 40 basis points sequentially, attributed to a recovery of prior-period warranty costs [8] - Home sales revenue per square foot remained flat, while "stick-and-brick" costs decreased by 1% and lot costs increased by 2% [9] Sales and Orders - Net sales orders increased by 3% year over year to 18,300 homes, with an order value unchanged at $6.7 billion. The cancellation rate was 18%, consistent with the prior year [7] - The average price of net sales orders was $364,000, flat sequentially and down 2% year over year [7] Inventory and Land Strategy - D.R. Horton ended the quarter with 30,400 homes in inventory, including 20,000 unsold homes. The company started 18,500 homes in the December quarter, a 27% increase sequentially [14] - The lot position consisted of approximately 590,500 lots, with 25% owned and 75% controlled through purchase contracts. The company prefers to build on lots developed by others to enhance capital efficiency [15] Capital Returns and Financial Health - The company returned significant capital to shareholders, repurchasing 4.4 million shares for $670 million in the quarter and $4.4 billion over the past 12 months [5][19] - At quarter end, stockholders' equity was $24 billion, with a book value per share of $82.60, up 5% year over year. The company reported $6.6 billion in consolidated liquidity [20] Guidance - For the second quarter, D.R. Horton expects consolidated revenue of $7.3 billion to $7.8 billion and homebuilding closings of 19,700 to 20,200 homes. The company guided a home sales gross margin of 19% to 19.5% [22] - For fiscal 2026, the company reiterated expectations for consolidated revenue of approximately $33.5 billion to $35.0 billion and homebuilding closings of 86,000 to 88,000 homes [22]

Financial Data and Key Metrics Changes - The company reported consolidated pre-tax income of $798 million on revenues of $6.9 billion, with a pre-tax profit margin of 11.6% [5] - Earnings per diluted share were $2.03, down from $2.61 in the prior year quarter [9] - Net income for the quarter was $595 million, with home sales revenues of $6.5 billion from 17,818 homes closed, compared to $7.1 billion from 19,059 homes closed in the prior year quarter [9][10] - The gross profit margin on home sales revenues was 20.4%, up 40 basis points sequentially [11] Business Line Data and Key Metrics Changes - Net sales orders increased by 3% year-over-year to 18,300 homes, while order value remained unchanged at $6.7 billion [10] - The average price of net sales orders was $364,000, flat sequentially and down 2% from the prior year quarter [10] - The company started 18,500 homes in the December quarter, up 27% sequentially [14] Market Data and Key Metrics Changes - 64% of the mortgage company's closings were to first-time home buyers [8] - The average closing price for the quarter was $365,500, which is approximately $135,000 lower than the average sales price of new homes in the U.S. [9] Company Strategy and Development Direction - The company is focused on capital efficiency to generate strong operating cash flows and deliver returns to shareholders, having returned $4.4 billion through repurchases and dividends over the past 12 months [7] - The strategy includes tailoring product offerings and sales incentives based on demand in each market to maximize returns [8] - The company aims to maintain a balanced approach to growth, focusing on community count and market share while managing margins [90] Management's Comments on Operating Environment and Future Outlook - Management noted that new home demand is impacted by affordability constraints and cautious consumer sentiment, but they are responding with discipline [5] - The company expects consolidated revenues for the second quarter to be in the range of $7.3 billion to $7.8 billion, with homes closed expected to be between 19,700 and 20,200 [21] - Management expressed confidence in their positioning for the spring selling season, noting that lower mortgage rates have spurred some activity [40][94] Other Important Information - The company generated $3.6 billion of cash from operations over the past 12 months and has a strong balance sheet with low leverage [7][19] - The company’s capital allocation strategy is disciplined, with plans for $2.5 billion in common stock repurchases and around $500 million in dividend payments for the year [18][21] Q&A Session Summary Question: Inquiry about SG&A expenses - Management stated that SG&A expenses were slightly down year-over-year in absolute dollars, but the ratio increased due to lower closings [25] Question: Community count growth expectations - Management expects community count growth to continue but may drift down to mid-single to high-single digit range [31] Question: Impact of lower mortgage rates on demand - Management noted that lower rates have historically spurred activity in sales offices, but it is too early to determine the full impact [50] Question: Warranty costs and their impact on gross margins - Management indicated that warranty recovery was unexpected but beneficial, and they expect warranty costs to normalize going forward [56] Question: Land market conditions - Management observed that while there hasn't been significant capitulation in the raw land market, there have been rational conversations with land developers [46] Question: Balance between volume and margin - Management emphasized a balanced approach, focusing on maximizing returns while responding to market conditions [90]

Financial Data and Key Metrics Changes - The company reported consolidated pre-tax income of $798 million on revenues of $6.9 billion, with a pre-tax profit margin of 11.6% [5] - Earnings per diluted share were $2.03, down from $2.61 in the prior year quarter [9] - Net income for the quarter was $595 million, with home sales revenues of $6.5 billion from 17,818 homes closed, compared to $7.1 billion from 19,059 homes closed in the prior year quarter [9][10] - The gross profit margin on home sales revenues was 20.4%, up 40 basis points sequentially [11] Business Line Data and Key Metrics Changes - Net sales orders increased by 3% year-over-year to 18,300 homes, while order value remained unchanged at $6.7 billion [10] - The average price of net sales orders was $364,000, flat sequentially and down 2% from the prior year quarter [10] - The company started 18,500 homes in the December quarter, up 27% sequentially [14] Market Data and Key Metrics Changes - 64% of mortgage company closings were to first-time home buyers, indicating a focus on affordable housing [8] - The average closing price for the quarter was $365,500, which is approximately $135,000 lower than the average sales price of new homes in the U.S. [9] Company Strategy and Development Direction - The company is focused on capital efficiency to generate strong operating cash flows and deliver returns to shareholders, having returned $4.4 billion through repurchases and dividends over the past 12 months [7] - The strategy includes tailoring product offerings and sales incentives based on market demand to maximize returns [8] - The company aims to maintain a balanced approach to growth, focusing on community count and market share while managing costs [22] Management's Comments on Operating Environment and Future Outlook - Management noted that new home demand is impacted by affordability constraints and cautious consumer sentiment, but they are responding with discipline [5] - The company expects consolidated revenues for the second quarter to be in the range of $7.3-$7.8 billion and homes closed to be between 19,700-20,200 [21] - Management expressed confidence in their ability to adapt to market conditions and enhance long-term value [22] Other Important Information - The company generated $3.6 billion in cash from operations over the past 12 months and has a strong balance sheet with low leverage [7][19] - The company’s capital allocation strategy is disciplined, with a focus on maintaining leverage around 20% over the long term [19] Q&A Session Summary Question: Inquiry about SG&A expenses - Management stated that SG&A expenses were slightly down year-over-year in absolute dollars, but the ratio increased due to lower closings [25] Question: Community count growth expectations - Management expects community count growth to continue but may drift down to mid-single to high-single digit range [31] Question: Impact of incentives on gross margins - Management confirmed that incentives increased throughout the quarter, impacting gross margins for the second quarter [82] Question: Demand trends with lower mortgage rates - Management noted a pickup in demand as rates hover around 6%, but it is too early to determine the trajectory for the spring selling season [50] Question: Land market conditions - Management indicated that while there is no significant capitulation in the raw land market, there have been rational conversations with land development partners [47]

Financial Data and Key Metrics Changes - D.R. Horton reported consolidated pre-tax income of $798 million on revenues of $6.9 billion, with a pre-tax profit margin of 11.6% for Q1 2026 [4] - Earnings per diluted share decreased to $2.03 from $2.61 in the prior year quarter, with net income of $595 million [7] - Home sales revenues were $6.5 billion from 17,818 homes closed, down from $7.1 billion from 19,059 homes closed in the prior year quarter [7][8] - The average closing price for homes was $365,500, flat sequentially but down 3% year over year [8] Business Line Data and Key Metrics Changes - Net sales orders increased by 3% year over year to 18,300 homes, while order value remained unchanged at $6.7 billion [10] - The gross profit margin on home sales revenues was 20.4%, up 40 basis points sequentially, primarily due to a recovery of prior-period warranty costs [11] - Home building SG&A expenses decreased by 1% year over year, but as a percentage of revenues, it increased to 9.7% from 8.9% in the prior year quarter [12] Market Data and Key Metrics Changes - 64% of mortgage company closings were to first-time home buyers, indicating a focus on affordable housing [6] - The average number of active selling communities increased by 2% sequentially and 12% year over year [10] - The company ended the quarter with 30,400 homes in inventory, of which 20,000 were unsold [14] Company Strategy and Development Direction - D.R. Horton is focused on capital efficiency to generate strong operating cash flows and deliver returns to shareholders, with $3.6 billion generated from operations over the past 12 months [5] - The company aims to tailor product offerings and sales incentives based on demand in each market to maximize returns [6] - The strategy includes managing investments in lots, land, and development based on current market conditions, with a focus on relationships with land developers [15] Management's Comments on Operating Environment and Future Outlook - Management noted that new home demand is impacted by affordability constraints and cautious consumer sentiment, but they are responding with discipline [4] - The company expects consolidated revenues for Q2 2026 to be in the range of $7.3-$7.8 billion and homes closed to be between 19,700-20,200 [24] - For the full year, the company anticipates consolidated revenues of approximately $33.5-$35 billion and homes closed to be in the range of 86,000-88,000 [25] Other Important Information - D.R. Horton repurchased 4.4 million shares for $670 million and paid cash dividends of $0.45 per share, totaling $132 million [21] - The company has a strong balance sheet with $6.6 billion of consolidated liquidity and plans to maintain leverage around 20% over the long term [22] Q&A Session Summary Question: Inquiry about SG&A expenses - Management stated that SG&A was in line with expectations and attributed the increase to lower closings, but they expect it to stabilize over the year [28][29] Question: Capital allocation and cash flow expectations - Management confirmed that cash flow expectations remain reasonable, with a target of over $3 billion for the year [32] Question: Community count growth and future expectations - Management expects community count growth to continue but may drift down to mid-single to high-single digit range [35] Question: Warranty costs impact on gross margin - Management indicated that warranty recovery was unexpected but beneficial, and they expect warranty costs to normalize going forward [59][61] Question: Demand trends and inventory levels - Management noted that demand remains strong despite low job growth, and inventory levels are more balanced compared to the previous year [97][91]

Group 1 - Jefferies has lowered the price target on Chord Energy (CHRD) to $99 from $101 while maintaining a Hold rating on the shares [1] - The firm anticipates an improvement in the company's capital efficiency due to a softening service environment [1] - This improvement is expected to drive capital expenditures (capex) to exceed consensus estimates in 2026 [1]