D.R. Horton(US:DHI)2025-10-28 13:30Financial Data and Key Metrics Changes - In Q4 2025, consolidated pretax income was $1.2 billion on revenues of $9.7 billion, resulting in a pretax profit margin of 12.4% [7] - For the full year, consolidated pretax income was $4.7 billion with a pretax profit margin of 13.8% [7] - The average closing sales price for Q4 was $365,600, down 1% sequentially and 3% year over year [10] - The company generated $3.4 billion of cash from operations after making homebuilding investments totaling $8.5 billion [9] Business Line Data and Key Metrics Changes - Home sales revenues for Q4 were $8.5 billion on 23,368 homes closed [10] - Net sales orders in Q4 increased 5% year over year to 20,078 homes, with order value rising 3% to $7.3 billion [11] - The average price of net sales orders in Q4 was $364,900, flat sequentially and down 3% from the prior year [11] - Rental operations generated $81 million of pretax income on $805 million of revenues from single-family and multifamily rental homes [15] Market Data and Key Metrics Changes - The average number of active selling communities was up 1% sequentially and 13% from the prior year [11] - The company’s homebuilding lot position at year-end consisted of approximately 592,000 lots, with 25% owned and 75% controlled through purchase contracts [14] - In Texas, net sales orders were up 11% year over year, despite some markets experiencing weakness [72] Company Strategy and Development Direction - The company remains focused on capital efficiency to generate strong operating cash flows and deliver compelling returns to shareholders [8] - The strategy includes tailoring product offerings and sales incentives based on demand in each market to maximize returns [9] - The company plans to purchase approximately $2.5 billion of its common stock and pay around $500 million in dividends for fiscal 2026 [22] Management's Comments on Operating Environment and Future Outlook - Management expects new home demand to reflect ongoing affordability constraints and cautious consumer sentiment [21] - For fiscal 2026, the company anticipates consolidated revenues of approximately $33.5 billion to $35 billion and homes closed to be in the range of 86,000 to 88,000 [22] - The company has a positive outlook for the housing market over the medium to long term, despite current volatility [24] Other Important Information - The company’s fiscal year-end stockholders' equity was $24.2 billion, down 4% from a year ago, but book value per share was up 5% to $82.15 [20] - The company repurchased 30.7 million shares for $4.3 billion during the year, reducing the outstanding share count by 9% [19] Q&A Session Summary Question: What factors will influence the gross margin from Q4 to Q1? - Management indicated that the unusual impact from litigation costs is not expected to persist into Q1, and the baseline expectation for gross margin is around 20.6% [27][28] Question: How quickly can the company ramp up starts to meet demand? - Management stated that while starts were intentionally lower, they are positioned to respond to market demand and increase starts as necessary [30] Question: What is the outlook for rental operations in the upcoming quarters? - Management expects rental operations to be softer in the first quarter, with a heavier delivery expected in the back half of the year [34] Question: Can you provide insights on the Southeast market performance? - Management noted that certain markets in Florida, such as Jacksonville and Southwest Florida, are struggling with excess inventory, impacting overall performance in the Southeast [86]