DR Horton Inc DHI
Q3 2012 Earnings Call Transcript

Transcript Call Date 07/27/2012

Operator: Good morning, and welcome to the D.R. Horton, America's Builder, the largest builder in the United States, Third Quarter 2012 Earnings Release Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Donald Tomnitz, President and CEO. Thank you. You may begin.

Donald J. Tomnitz - VC, President and CEO: Thank you, and good morning. Joining me this morning are Bill Wheat, Executive Vice President and CFO; Stacey Dwyer, Executive Vice President and Treasurer; and Mike Murray, Vice President and Controller.

Before we get started, Stacey?

Stacey H. Dwyer - EVP and Treasurer: Some comments made on this call may constitute forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Although D.R. Horton believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. All forward-looking statements are based upon information available to D.R. Horton on the date of this conference call and D.R. Horton does not undertake any obligation to publicly update or revise any forward-looking statements.

Additional information about issues that could lead to material changes in performance is contained in D.R. Horton's Annual Report on Form 10-K and our most recent quarterly report on Form 10-Q, both of which are filed with the Securities and Exchange Commission.


Donald J. Tomnitz - VC, President and CEO: D.R. Horton posted its highest quarterly pretax income since the second quarter of fiscal 2007, the highest in the industry, earning $72 million this quarter and $144 million year-to-date. Our pre-tax operating profit margin for the third quarter was 6.3%, the highest since the fourth quarter of fiscal 2006. For the 10th consecutive year we are the largest builder in the United States based on homes closed.

Our new sales orders improved 25% from our third quarter last year and 3% sequentially from the March quarter. Our average sales price increased during the quarter, driving a 32% increase in the value of net sales orders compared to the year ago quarter. We've seen solid positive year-over-year sales comparisons continue into July. Our sales this quarter resulted in a 31% increase in our backlog units and a 40% increase in backlog value compared to the prior year, which puts us in a strong position for increased revenues and profitability in the fourth quarter of fiscal 2012.

In response to our sales growth, we're putting our liquidity to work by increasing our investments in homes under construction, finished lots, land and lot development. These investments are fueling our profitable growth, even though macroeconomic conditions remain soft and overall housing demand is at historically low levels. We are finding opportunities to take market share in existing markets while evaluating attractive new sub-markets. Our entry level business remains strong while we continue to expand our product offerings for move-up buyers. Bill?

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