D.R. Horton(US:DHI)2025-10-28 13:32Financial 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 [19] 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 gross profit margin on home sales revenues in Q4 was 20%, down 180 basis points sequentially [11] - 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] - Lot costs increased by 8% year-over-year on a per square foot basis [60] 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 strategic relationship with Forestar is vital for the company’s returns-focused business model, with Forestar reporting revenues of $671 million in Q4 [17] Management's Comments on Operating Environment and Future Outlook - Management anticipates that new home demand will continue to be impacted by affordability constraints and cautious consumer sentiment [21] - For fiscal 2026, the company expects consolidated revenues of approximately $33.5 billion to $35 billion and homes closed to be in the range of 86,000 to 88,000 [21] - 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 4.6 million shares for $689 million in Q4 and 30.7 million shares for $4.3 billion for the full year [19] - D.R. Horton’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] Q&A Session Summary Question: How to think about the transition from 20% gross margin in Q4 to 20%-20.5% in Q1? - Management indicated that the unusual impact from litigation costs is not expected to persist into Q1, and the baseline would reflect a more normal impact from warranty and litigation going forward [27] Question: Can you discuss the starts pace and how quickly it can ramp up? - Management acknowledged that starts were intentionally lower to align inventory and indicated confidence in ramping up starts to meet demand as needed [28] Question: What is the outlook for rental operations in Q1? - Management expects rental operations to be a bit softer in Q1, with a heavier delivery expected in the back half of the year [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 in the Southeast remains choppy [74] Question: What are the expectations for lot costs moving forward? - Management indicated that lot costs are expected to remain sticky, with an 8% year-over-year increase noted [60]