D.R. Horton raises revenue, home sales forecasts after strong Q2

Dive Brief:

D.R. Horton’s second-quarter 2017 profits came in ahead of analyst expectations, according to Business Insider, as a strong spring selling season continues. The Fort Worth, TX–based builder also increased its revenue forecast for 2017 to between $13.6 billion and $14.0 billion, up from previous estimates of between $13.4 billion and $13.8 billion.
In a statement, D.R. Horton reported that net income for the second quarter of 2017 rose 17% to $229.2 million from a year ago, while revenue grew 17% to $3.2 billion for the period. Net sales orders rose 14% to 13,991 homes from the second quarter of 2016, while closings were up 15% to 10,685 homes for the period.
The company revised its forecast of homes sold from between 43,500 and 45,500 to between 44,500 and 46,000.

Dive Insight:

With a portfolio of homes in 26 states and 78 markets in the U.S., D.R. Horton emerged from the recession maintaining its status as the country’s largest homebuilder by volume, according to records kept by Builder magazine.

Looking forward, the company is targeting double-digit annual growth in revenues and pre-tax profits while maintaining positive operating cash flows and returns, the company’s president and CEO, David Auld, said in a call with analysts on Thursday. The company had 27,100 homes in inventory at the end of March as well as 227,000 owned and controlled lots.

The news follows a strong first quarter, with the company beating Wall Street estimates for four of the last five quarters. In March, investment research firm Zacks noted that the company has been working to reduce expenses while strategically managing pricing, incentives and its pace of sales. Like the rest of the industry, the company is managing recovery headwinds like land costs, labor constraints and higher mortgage rates.

Among the company’s moves over the past year was the $90 million acquisition of Wilson Parker Homes, a deal that aimed to boost business in the Southeast and Southwest. The purchase also added 490 lots to the company’s portfolio at a time when lot scarcity is a continuing concern for many builders.

The company continues to address the lack of inventory for first-time buyers through its entry-level Express Homes brand, which made up 28% of its 2016 unit volume. Last July, the builder launched Freedom Homes, a brand focused on the growing active-adult segment and that is initially targeting Florida, Texas and Arizona.

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