D.R. Horton, Inc. (DHI – Free Report) came up with yet another stellar performance in the final quarter of fiscal 2017. Although earnings came in line with the Zacks Consensus Estimate, revenues surpassed courtesy of a solid housing market scenario. The homebuilder’s order trends remained strong.
Despite some apprehensions arising out of the recent tropical storms, the Texas-based homebuilder’s sales marked the fifth straight surprise. To top it all, management announced a dividend hike, reflecting commitment toward its shareholders, and boosted it fiscal 2018 revenue and cash flow expectations on solid demand.
Earnings & Revenue Discussion
The company reported earnings of 82 cents per share, in line with the Zacks Consensus Estimate. Earnings also increased 9.3% year over year driven by higher home sales.
Total revenues (homebuilding and financial services) of $4.16 billion beat the Zacks Consensus Estimate of $4.04 billion and increased 11.2% year over year.
Home Closings and Orders
Homebuilding revenues of $4.07 billion increased 11.4% year over year. Home sales increased 10.9% year over year to $4.04 billion, aided by higher home deliveries. Land/lot sales and other revenues were $31.4 million, up from $13.5 million a year ago.
Home closings increased 7% to 13,165 homes, while in value it increased 11%. The company registered growth across all regions (baring South Central) comprising East, Midwest, Southeast, Southwest and West.
Net sales orders rose 18% to 10,333 homes on continued improvement. Orders increased across all operating regions except Midwest. The value of net orders grew 19% to $3.1 billion. The cancellation rate was 25%.
The quarter-end sales order backlog (under contract) rose 7% to 12,329 homes. Backlog value increased 8% to $3.7 billion.
Revenues at the financial services segment increased 2.5% to $92.6 million.
Margins
Gross profit on home sales came in at $821.1 million, increasing 10% year over year. However, gross margin on home sales contracted 10 basis points (bps) year over year to 20.3%.
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