D.R. Horton reported solid earnings results for Q2 2024, with EPS of $3.52 increasing 29% year-over-year. Consolidated revenues grew 14% to $9.1 billion. The company delivered 22,548 homes, up from 19,664 in the prior year. Gross margin was 23.2%, up 30 basis points sequentially.
While inflation and mortgage rates remain elevated, net sales orders increased 14% year-over-year to 26,456 homes as demand remains strong, especially at affordable price points. The cancellation rate declined to 15%. D.R. Horton has 45,000 homes in inventory and has seen construction cycle times normalize, positioning it well to continue gaining market share.
For Q3 2024 guidance, D.R. Horton expects:
- Consolidated revenues of $9.5-9.7 billion
- 23,500-24,000 homes closed
- Gross margin of 23-23.5%
- SG&A around 7% of revenues
For full year fiscal 2024, the company increased guidance and now expects:
- Consolidated revenues of $36.7-37.7 billion
- 89,000-91,000 homes closed
- Around $3 billion cash flow from homebuilding operations
- Share repurchases of approximately $1.6 billion
Despite affordability challenges, homebuyer demand has been good, especially for affordable homes where supply remains limited. Favorable demographics continue supporting housing demand. However, the economic environment remains uncertain with risks from elevated inflation and interest rates. D.R. Horton remains focused on an efficient, flexible operating model to drive strong cash flows and returns while consolidating market share.
The overall sentiment on the call was positive, with management expressing confidence in their solid results, strong competitive positioning, and ability to navigate the challenging macro environment by focusing on affordable products, cost controls and financial discipline. However, they acknowledged risks and uncertainties remain elevated.
Notable quotes: “Although inflation and mortgage interest rates remain elevated, our net sales orders increased 46% for the first quarter and 14% from the prior year quarter as the supply of both new and existing homes at affordable price points is still limited, and the demographics supporting housing demand remained favorable.” - Paul Romanowski, CEO
”We will maintain our disciplined approach to investing capital to enhance the long-term value of the company, which includes returning capital to our shareholders through both dividends and share repurchases on a consistent basis.” - Paul Romanowski, CEO
”Going forward, as Jessica has said a couple of times already, going forward, it’s going to be subject to the rate what happens in the market with rates and in the last week, we’ve seen another period of volatility.” - Bill Wheat, CFO