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DR Horton Inc DHI
Q1 2013 Earnings Call Transcript

Transcript Call Date 01/29/2013

Operator: Good morning and welcome to the D.R. Horton, America’s Builder, the largest builder in the United States First Quarter 2013 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 for D.R. Horton. Thank you, Sir. You may now 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), Senior Vice President.

As usual, 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, which is filed with the Securities and Exchange Commission.

Don?

Donald J. Tomnitz - VC, President and CEO: D.R. Horton is off to a great start in fiscal 2013. This quarter we saw a broad improvement in demand and most of our markets which has given us the ability to raise prices in more of our communities. Both the entry level and move-up segments of our business are strong. We're anticipating a good spring selling season and have added homes and communities to capture this increasing demand. We continue to find opportunities to expand our business in our existing markets as well as new sub-markets. We've put a significant amount of capital to work this quarter by increasing our investments in homes under construction, finished lots, land, and land development. D.R. Horton is in the best position it has ever been in its 35 year history. Bill?

Bill W. Wheat - EVP and CFO: In the first quarter our consolidated pretax income increased 270% to $107.9 million from $29.2 million in the year-ago quarter. As a percentage of consolidated revenue, our pre-tax income margin was 8.5%, an increase of 530 basis points from 3.2% in the prior year quarter, reflecting significant improvement in both our homebuilding and financial services operations.

Compared to the year-ago quarter, homebuilding pre-tax income increased to $90.2 million and $25 million and financial services pre-tax income increased to $17.7 million from $4.2 million. Our effective tax rate for the quarter was 38.5%, which resulted in income tax expense of $41.6 million in the current quarter, compared to $1.5 million in the prior year quarter.

Net income for the first quarter increased to $66.3 million, or $0.20 per diluted share compared to $27.7 million or $0.09 per diluted share in the year-ago quarter. Our diluted share count this quarter included 38.6 million shares related to our convertible senior notes. We expect these shares to be included in our diluted share count in most future quarters. Stacey?

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