Q1 FY2015
Q1 FY2015
Forward-Looking StatementsThis presentation may include “forward-looking statements” as defined by the Private Securities Litigation Reform Actof 1995. Although D.R. Horton believes any such statements are based on reasonable assumptions, there is noassurance that actual outcomes will not be materially different. Factors that may cause the actual results to bematerially different from the future results expressed by the forward-looking statements include, but are not limited to:potential deterioration in homebuilding industry conditions or general economic conditions; the cyclical nature of thehomebuilding industry and changes in economic, real estate and other conditions; constriction of the credit markets,which could limit our ability to access capital and increase our costs of capital; reductions in the availability of mortgagefinancing and the liquidity provided by government-sponsored enterprises, the effects of government programs, adecrease in our ability to sell mortgage loans on attractive terms or an increase in mortgage interest rates; the risksassociated with our land and lot inventory; home warranty and construction defect claims; supply shortages and otherrisks of acquiring land, building materials and skilled labor; reductions in the availability of performance bonds;increases in the costs of owning a home; the impact of an inflationary, deflationary or higher interest rate environment;the effects of governmental regulations and environmental matters on our homebuilding operations; the effects ofgovernmental regulation on our financial services operations; our substantial debt and our ability to comply withrelated debt covenants, restrictions and limitations; competitive conditions within the homebuilding and financialservices industries; our ability to effect our growth strategies or acquisitions successfully; our ability to realize the fullamount of our deferred income tax assets; the effects of the loss of key personnel; the effects of negative publicity; andinformation technology failures and data security breaches. Additional information about issues that could lead tomaterial changes in performance is contained in D.R. Horton’s annual report on Form 10-K and our most recentquarterly report on Form 10-Q, both of which are filed with the Securities and Exchange Commission.
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Q1 FY2015
D.R. Horton, Inc.
Traded on NYSE as DHI
#1 builder for 13 consecutive years1
$8.7 billion in annual revenues2
30,455 in annual homes closed2
$10.3 billion of total assets3
$5.3 billion of stockholders’ equity3
1 Based on public builders reported closings as of January 26, 20152 Twelve months ended December 31, 20143 As of December 31, 2014
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Q1 FY2015
Geographic Diversification
79 Markets | 27 States
Region States Covered
East Delaware, Georgia, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Virginia
Midwest Colorado, Illinois, Indiana, Minnesota
Southeast Alabama, Florida, Georgia, Mississippi, Tennessee
South Central Louisiana, Oklahoma, Texas
Southwest Arizona, New Mexico
West California, Hawaii, Nevada, Oregon, Utah, Washington
South Central
25%
Southwest3%
West25%
HB Revenue(TTM Ended 12/31/14)
Midwest7%
South Central
24%Southeast26%
Inventory (as of 12/31/14)
East13%
Midwest6%
Southeast28%
West28%
Southwest4%
East11%
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Q1 FY2015
Broad Range of Product Offerings
Homes for entry-level, move-up and luxury buyers
53% of closings < $250,000 in Q1 FY15, down from 58% in Q1 FY14
Revenues from homes > $500,000 increased to 17% of home sales revenues in Q1 FY15 compared to 14% in Q1 FY14
Under $150k
$200k to $250k
$250k to $300k
$300k to $400k
$400k to $500k
$500k+
$151k to $200k
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Q1 FY2015
D.R. Horton
The Heart of our Business
79 markets and 27 states
In the first quarter, accounted for:
84% of homes sold
87% of homes closed
88% of home sales revenue
Q1 Average Closing Price: $283,000
Reported metrics for D.R. Horton include our Breland Homes and Crown Communities operations
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Q1 FY2015
Emerald Homes
Higher-end move-up and luxury buyer
Introduced in 2013
35 markets and 15 states
In the first quarter, accounted for:
3% of homes sold
3% of homes closed
6% of home sales revenue
Q1 Average Closing Price: $660,000
Higher margin, slower absorption
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Q1 FY2015
Express Homes
Targeted at the true entry-level buyer
$151k to $200k
Introduced in Spring 2014
38 markets and 11 states
In the first quarter, accounted for:
13% of homes sold
10% of homes closed
6% of home sales revenue
Q1 Average Closing Price: $169,000
Higher absorption, lower margin
Reported metrics for Express include our Regent Homes operations
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Q1 FY2015
Operational Focus
Current land ownership level is sufficient to support double-digit revenue growth
Underwriting criteria for land and lot purchases and operational expectations for each community: Minimum 20% annual net return on inventory investment
(ROI) for all three brands Net ROI% = Pre-tax Income divided by Average Inventory
Consistently optimize balance of sales absorptions and gross margins to maximize returns in each community
Manage land and home inventory levels efficiently
Improve cash flow generation
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Q1 FY2015
Q1 FY 2015 Highlights
The value of net homes sold, homes closed and homes in backlog increased by 40%, 37% and 29%, respectively
7,370 net homes sold and 7,973 homes closed 9,285 homes in backlog at 12/31/14 Consolidated pre-tax income increased 16% to $220.7
million Consolidated pre-tax income margin was 9.6% Net income increased 16% to $142.5 million
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Q1 FY2015
Sales, Closings & Backlog – Q1 FY15
Net Sales Orders, Homes Closed and Homes in Backlog increased 35%, 29% and 21%, respectively, in Q1 of FY15 compared to Q1 of FY14
01,0002,0003,0004,0005,0006,0007,0008,0009,000
10,000
Sales Closings Backlog
1Q FY13 1Q FY14 1Q FY15
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Q1 FY2015
Income Statement
12/31/2014 12/31/2013 9/30/2014 9/30/2013
Homes closed 7,973 6,188 28,670 24,155
Revenues:Home sales 2,240.7$ 1,630.8$ 7,804.7$ 6,024.8$ Land/lot sales & other 12.3 4.8 53.8 61.1
2,253.0 1,635.6 7,858.5 6,085.9 Gross Profit:
Home sales 442.6 364.1 1,665.6 1,253.3 Land/lot sales & other 2.0 0.5 9.5 10.2 Inventory & land option charges (6.0) (2.6) (85.2) (31.1)
438.6 362.0 1,589.9 1,232.4 SG&A 238.0 183.4 834.2 649.9 Interest and other (income) (5.5) (3.3) (13.1) (9.8) Homebuilding pre-tax income 206.1 181.9 768.8 592.3 Financial Services pre-tax income 14.6 7.8 45.4 65.5 Pre-tax income 220.7 189.7 814.2 657.8 Income tax expense 78.2 66.5 280.7 195.1 Net income 142.5$ 123.2$ 533.5$ 462.7$
$ in millions
3 Months Ended Fiscal Year Ended
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Q1 FY2015
Home Sales Gross Margin
Shown as a % of home sales revenuesIncludes interest amortized to cost of sales
0%
5%
10%
15%
20%
25%
FY11 FY12 1QFY13
2QFY13
3QFY13
4QFY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
16.1%17.7%
18.8%
20.4%
21.4% 21.9% 22.3% 22.5% 20.7% 20.5% 19.8%
Homes sales gross margin of around 20% in a stable housing market
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Q1 FY2015
Homebuilding SG&A
Long-term annual SG&A goal = 10% of homebuilding revenuesImproved 60 basis points year-over-year in Q1 FY2015
Fiscal Year 2014 First Fiscal Quarter 2015
$0
$200
$400
$600
$800
$1,000
2013 2014
$649.9$834.2
10.7%
10.6%
$0
$50
$100
$150
$200
$250
Q1 FY14 Q1 FY15
$183.4
$238.0
10.6%
SG&A $ SG&A $
11.2%
Shown as a % of homebuilding revenues$ in millions
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Q1 FY2015
Homebuilding Pre-tax Income
Homebuilding pre-tax income margin in Q1 2015 was 9.1%
Fiscal Year 2014 First Fiscal Quarter 2015
$0
$200
$400
$600
$800
2013 2014
$592.3$768.8
9.7%
9.8%
PTI $
$160
$170
$180
$190
$200
$210
Q1 FY14 Q1 FY15
$181.9
$206.111.1%
9.1%
PTI $
Shown as a % of homebuilding revenues$ in millions
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Q1 FY2015
Balance Sheet
12/31/14 9/30/14 12/31/13
HB cash and cash equivalents 517.7$ 632.5$ 801.1$ Restricted cash 9.6 10.0 81.1 Inventories 7,989.3 7,700.5 6,496.1 Deferred income taxes, net 552.7 565.0 578.5 Other assets 1,269.4 1,294.5 970.4 Total 10,338.7$ 10,202.5$ 8,927.2$
Notes payable - HB 3,403.1$ 3,323.6$ 3,276.1$ Other liabilities 1,671.8 1,759.2 1,451.2 Equity 5,263.8 5,119.7 4,199.9 Total 10,338.7$ 10,202.5$ 8,927.2$
Homebuilding LeverageGross 39.3% 39.4% 43.8%Net of cash 35.4% 34.5% 37.1%
Book Value/Share $14.40 $14.03 $12.97
$ in millions
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Q1 FY2015
Homes in Inventory
Growing housing inventory to meet increasing sales pace
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
9/30/11 9/30/12 9/30/13 12/31/13 9/30/14 12/31/14
Models Sold Specs
10,500
13,000
17,000 16,800
20,600 21,300
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Q1 FY2015
Robust Lot Position
71,000 of our total lots are finished at 12/31/14
85,800 94,600
126,600 125,800 124,600 124,500
26,900
58,100
54,300 49,000 58,900 60,200
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
9/30/11 9/30/12 9/30/13 12/31/13 9/30/14 12/31/14
Optioned Owned
112,700
152,700
180,900174,800
183,500 184,700
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Q1 FY2015
Inactive Land Held for Development
“Mothballed” lot count down 36% from 9/30/13
$699.2
$628.3
$450.2
$332.8$304.3
43,100
39,400
21,700
14,000 13,900
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
$0
$100
$200
$300
$400
$500
$600
$700
$800
9/30/11 9/30/12 9/30/13 9/30/14 12/31/14Balance Lots Held
Land held for development is shown as separate line item on face of balance sheet$ in millions
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Q1 FY2015
Public Debt Maturities by Year
Pro-forma balance of public notes o/s of $3.3b (for Feb issuance of $500m 4.0% notes due 2020 and payment of $158m notes at maturity).$ in millions
$0
$100
$200
$300
$400
$500
$600
$700
$800
FY 16 FY 17 FY 18 FY 19 FY 20 FY 22 FY 23
4.750%
$350
$500
$400$350
$543$500
$350$400
5.625%
6.500%
4.750% 3.625% 3.750% 4.375%
$700
5.750%
As of February 17, 2015
4.000%
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Q1 FY2015
FY 2015 Expectations*Fiscal Year:
Closings between 34,500 and 37,500 and consolidated revenues between $9.5 billion and $10.5 billion
Home sales gross margin of 19.5% to 20.5% with potential quarterly fluctuations outside of this range
Homebuilding SG&A expense of 10.0% to 10.3% of homebuilding revenues for full year
Financial Services operating margin of 25% to 30% 2015 income tax rate between 35% and 36% Diluted share count of approximately 370 million shares
Second Quarter: Backlog conversion rate of between 81% and 85% Home sales gross margin in the range of 19.5% to 20.0% Homebuilding SG&A expense in the range of 10.6% to 10.8% of homebuilding
revenues
*Based on the relatively stable market conditions noted on the Company’s conference call on 1/26/15.
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Slide Number 1Slide Number 2Forward-Looking StatementsD.R. Horton, Inc.Geographic DiversificationBroad Range of Product OfferingsD.R. HortonEmerald HomesExpress HomesOperational FocusQ1 FY 2015 HighlightsSales, Closings & Backlog – Q1 FY15Income StatementHome Sales Gross MarginHomebuilding SG&AHomebuilding Pre-tax IncomeBalance SheetHomes in InventoryRobust Lot PositionInactive Land Held for DevelopmentPublic Debt Maturities by YearFY 2015 Expectations*