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D.R. Horton (DHI) Q4 Earnings call transcript Oct 29, 2024

Daily EarningsWednesday, Oct 30, 2024 3:14 pm ET

1min read

In the recent earnings call for D.R. Horton, America's largest homebuilder, executives provided insights into the company's performance and outlook for the future. Here are the key takeaways from the call.

Financial Highlights

D.R. Horton reported consolidated pretax income of $1.7 billion on revenues of $10 billion for the fourth quarter of 2024. For the year, the company achieved earnings per diluted share of $14.34, with a pretax profit margin of 17.1%. The company's homebuilding return on equity was 19.9%, and return on assets was 13.9%, ranking in the top 25% of all S&P 500 companies for the past 3-, 5- and 10-year periods.

Market Conditions and Strategies

Despite affordability challenges and competitive market conditions, D.R. Horton's net sales orders increased slightly from the prior year. The company is focusing on affordability and using incentives such as mortgage rate buy-downs to address the issue. The company expects its homebuilding volume and profit margins in 2025 to largely depend on the strength of the spring selling season.

Operational Efficiency and Incentives

D.R. Horton has been investing in lot development and acquisition to maintain a strong position in the market. The company's rental operations generated $100 million of pretax income in the fourth quarter, and the rental inventory is expected to remain around the current level for the next several quarters. The company has been investing in new markets, and while this has led to an increase in employee and community count, it is expected to moderate in the coming year.

Challenges and Opportunities

The call highlighted the challenges faced by the industry, including affordability and market volatility. The company is adapting to these challenges by focusing on affordability, improving cycle times, and leveraging its strategic relationships with land developers. Despite these challenges, D.R. Horton remains optimistic about its future, with a focus on enhancing capital efficiency and returning more capital to shareholders.

Looking Ahead

D.R. Horton is well-positioned for 2025, with a focus on affordable product offerings, improved cycle times, and adequate finished lots available on its pipeline. The company is confident in its ability to navigate the market conditions and continue to aggregate market share. As the company moves into fiscal 2025, it will be interesting to see how it adapts to the changing market dynamics and capitalizes on the opportunities that lie ahead.

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