D.R. Horton Inc ((DHI)) has held its Q3 earnings call. Read on for the main highlights of the call.
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D.R. Horton Inc’s latest earnings call revealed a mixed sentiment, with notable achievements in earnings and shareholder returns being tempered by challenges such as decreased home sales revenue and increased sales incentives. The company demonstrated a strategically adaptive approach to market conditions through proactive management of its community count and investments.
Solid Earnings for Third Quarter 2025
D.R. Horton reported robust earnings for the third quarter of 2025, with earnings per diluted share reaching $3.36. The company achieved a consolidated pre-tax income of $1.4 billion on revenues of $9.2 billion, resulting in a pre-tax profit margin of 14.7%. These figures underscore the company’s strong financial performance during the period.
Strong Cash Flow and Shareholder Returns
Over the past twelve months, D.R. Horton generated $2.9 billion in cash from operations and returned a substantial $4.6 billion to shareholders through repurchases and dividends. This highlights the company’s commitment to delivering value to its shareholders and maintaining a healthy cash flow.
Increased Community Count and Market Expansion
The company saw a 4% sequential and 12% year-over-year increase in the average number of active selling communities. Additionally, the market count rose by 4% to 126 markets across 36 states, indicating D.R. Horton’s strategic focus on market expansion and growth.
Successful Homebuilding and Rental Operations
D.R. Horton’s homebuilding operations closed 23,160 homes, while its rental operations generated $55 million of pre-tax income on $381 million of revenues from the sale of single-family and multifamily rental units. This success in both homebuilding and rental sectors showcases the company’s diversified operational capabilities.
Decrease in Home Sales Revenue and Average Closing Price
The third quarter saw a decline in home sales revenues to $8.6 billion from $9.2 billion in the previous year, with the average closing price dropping by 3% year-over-year to $369,600. This decrease reflects the challenges faced in maintaining sales revenue and pricing.
Increased Sales Incentives and Lower Gross Margin Expectations
To drive traffic and sales, D.R. Horton increased sales incentives, which is expected to lead to lower gross margins in the fourth quarter compared to the third quarter. This strategy indicates the company’s efforts to boost sales despite margin pressures.
Higher Homebuilding SG&A Expenses
SG&A expenses rose by 2%, with SG&A as a percentage of revenues increasing by 70 basis points from the prior year. This rise in expenses highlights the cost pressures faced by the company in its operations.
Inventory Impairments and Write-offs
D.R. Horton incurred $16 million in inventory impairments and wrote off $36 million in option deposits and due diligence costs related to land and lot purchase contracts. These write-offs reflect the company’s adjustments to its inventory and investment strategies.
Forward-Looking Guidance
Looking ahead, D.R. Horton expects fourth-quarter revenues to range between $9.1 billion to $9.6 billion, with a home sales gross margin of 21% to 21.5% and a consolidated pre-tax profit margin of 13.6% to 14.1%. The company plans to close between 23,500 to 24,000 homes and aims to repurchase $4.2 billion to $4.4 billion of common stock in fiscal 2025. Despite affordability constraints and cautious consumer sentiment, the company remains optimistic about its future performance.
In summary, D.R. Horton’s earnings call painted a picture of a company navigating a challenging market landscape with strategic adaptability. While facing decreased home sales revenue and increased sales incentives, the company reported strong earnings and shareholder returns, alongside a commitment to market expansion and operational success. The forward-looking guidance suggests a cautious yet optimistic outlook for the upcoming quarter.