D.R. Horton, Inc., Arlington, Tex. (NYSE:DHI) reported net income for the fourth fiscal quarter ended Sept. 30 increased 10% to $313.2 million, or $0.82 per diluted share, compared to $283.6 million, or $0.75 per diluted share, in the same quarter of fiscal 2016. Wall Street was expecting a gain of $0.81.
Home building revenue for the s quarter of fiscal 2017 increased 11% to $4.1 billion from $3.7 billion in the same quarter of 2016. Homes closed in the quarter increased 7% to 13,165 homes, compared to 12,247 homes in the same quarter of fiscal 2016.
For the fiscal year ended September 30, 2017, the company’s net income increased 17% to $1.0 billion, or $2.74 per diluted share, compared to $886.3 million, or $2.36 per diluted share, in fiscal 2016. The annual gain matched Wall Street estimates. Home building revenue for the fiscal year increased 16% to $13.7 billion from $11.9 billion in fiscal 2016. Homes closed in fiscal 2017 increased 14% to 45,751 homes, compared to 40,309 homes in fiscal 2016.
Net sales orders for the fourth quarter ended September 30, 2017 increased 18% to 10,333 homes from 8,744 homes in the year-ago quarter, and the value of net sales orders increased 19% to $3.1 billion from $2.6 billion. The cancellation rate for the fourth quarter was 25%. The sales order backlog of homes under contract at September 30, 2017 increased 7% to 12,329 homes and 8% in value to $3.7 billion, compared to 11,475 homes and $3.4 billion at September 30, 2016.
Homes in inventory at September 30, 2017 increased 13% to 26,200 homes compared to 23,100 homes at September 30, 2016. The Company’s land and lot portfolio at September 30, 2017 consisted of 249,000 lots, of which 50% were owned and 50% were controlled through option contracts, compared to 205,000 lots at September 30, 2016, of which 55% were owned and 45% were controlled through option contracts.
The Company’s home building return on inventory (ROI) improved 120 basis points to 16.6% in fiscal 2017 from 15.4% in fiscal 2016. Home building ROI is calculated as home building pre-tax income for the year divided by average inventory. Average inventory in the ROI calculation is the sum of ending inventory balances for the trailing five quarters divided by five.
Net cash provided by operations for fiscal 2017 was $435.1 million, and the company ended the year with $973.0 million of home building unrestricted cash and home building debt to total capital of 24.0%.
Donald R. Horton, chairman, said, “With 45,751 homes closed in fiscal 2017, D.R. Horton completed its 16th year in a row as the largest home builder by volume in the United States. We generated positive cash flows from operations for a third consecutive year while growing both our revenues and pre-tax profits at a double-digit pace. These results reflect the strength of our experienced operational teams, industry-leading market share, broad geographic footprint and diverse product offerings across our D.R. Horton, Emerald Homes, Express Homes and Freedom Homes brands.”
On October 5, 2017, the Company acquired 75% of the outstanding shares of Forestar Group Inc. for $558.3 million in cash, pursuant to the terms of the June 2017 merger agreement. Forestar will continue as a publicly-traded residential and real estate development company with operations currently in 14 markets and 10 states, where it owns, directly or through joint ventures, interests in 44 residential and mixed-use projects.
In its earnings release, the company stated, “D.R. Horton’s alignment with Forestar advances the company’s strategy of increasing its access to high-quality optioned land and lot positions to enhance operational efficiency and returns. Both companies are identifying land development opportunities to expand Forestar’s platform, and D.R. Horton plans to acquire a large portion of Forestar’s finished lots in accordance with the master supply agreement between the two companies”
