Financial Data and Key Metrics Changes - D.R. Horton reported consolidated pre-tax income of $1.2 billion on revenues of $9.7 billion for Q4 2025, with a pre-tax profit margin of 12.4% [7] - For the full year, consolidated pre-tax income was $4.7 billion, with a pre-tax profit margin of 13.8% [7] - Net income for Q4 was $905.3 million, or $3.04 per diluted share, on consolidated revenues of $9.7 billion [9] - The average closing sales price for Q4 was $365,600, down 1% sequentially and down 3% year over year [9] - The company generated $3.4 billion of cash from operations in fiscal 2025, representing 10% of total revenues [8][20] Business Line Data and Key Metrics Changes - Home sales revenues for Q4 were $8.5 billion on 23,368 homes closed [9] - Net sales orders in Q4 increased 5% year over year to 20,078 homes, with order value increasing 3% to $7.3 billion [10] - The average price of net sales orders in Q4 was $364,900, flat sequentially and down 3% from the prior year [10] - Rental operations generated $81 million of pre-tax income on $805 million of revenues in Q4 [16] Market Data and Key Metrics Changes - The average number of active selling communities was up 1% sequentially and up 13% from the prior year [10] - The company’s home building lot position at year-end consisted of approximately 592,000 lots, with 25% owned and 75% controlled through purchase contracts [15] - In the Southeast region, particularly Florida, some markets like Jacksonville and Southwest Florida faced excess inventory issues [75] Company Strategy and Development Direction - D.R. Horton remains focused on capital efficiency to generate strong operating cash flows and deliver compelling returns to shareholders [8] - The company plans to tailor product offerings and sales incentives based on demand in each market to maximize returns [8] - The company expects to generate consolidated revenues of approximately $33.5 to $35 billion for fiscal 2026, with homes closed in the range of 86,000 to 88,000 [21] Management's Comments on Operating Environment and Future Outlook - Management noted that new home demand remains impacted by affordability constraints and cautious consumer sentiment [6] - The company anticipates that incentive levels will remain elevated in fiscal 2026, depending on demand strength during the spring selling season [12] - Management expressed a positive outlook for the housing market over the medium to long term, despite current volatility and uncertainty in the economy [23] Other Important Information - The company repurchased 30.7 million shares for $4.3 billion in fiscal 2025, reducing the outstanding share count by 9% [20] - D.R. Horton’s book value per share increased by 5% year over year to $82.15 [20] - The company’s consolidated leverage at fiscal year-end was 19.8%, with plans to maintain leverage around 20% over the long term [20] Q&A Session Summary Question: How to think about the walk from the 20% gross margin in Q4 to the 20 to 20.5% in Q1? - Management indicated that the unusual impact from litigation in Q4 is not expected to persist into Q1, and the baseline would be a more normal impact from warranty and litigation going forward [27] Question: How quickly can the company ramp up starts to meet demand? - Management acknowledged that starts were intentionally lower to align inventory and expressed confidence in their ability to respond to market demand as it increases [28] Question: What is the outlook for rental operations and its impact on consolidated operating margin? - Management expects rental operations to be softer in Q1, impacting consolidated operating margin due to lower closings volume on the homebuilding side [32] Question: Can you provide insight into the Southeast market performance? - Management noted that while some areas in Florida are struggling with inventory balance, overall demand remains choppy across various markets [65] Question: What are the expectations for lot costs and stick and brick costs? - Management indicated that lot costs are expected to remain sticky, but they anticipate opportunities to renegotiate stick and brick costs down as the year progresses [56]