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DR Horton Inc DHI
Q2 2013 Earnings Call Transcript

Transcript Call Date 04/26/2013

Operator: Good morning, and welcome to the D.R. Horton, America's Builder, the largest builder in the United States Second 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, Donald Tomnitz, President and CEO for D.R. Horton. Thank you, Mr. Tomnitz, 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), 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, and our most recent quarterly report on Form 10-Q, both of which are filed with the Securities and Exchange Commission. Don?

Donald J. Tomnitz - VC, President and CEO: The spring selling season is in full swing, especially for D.R. Horton. Demand for homes have strengthened and the relative available housing supply has shrunk, which has created a favorable pricing environment. Our first-time buyer demand remains very strong and we continue to see improving demand from move-up buyers. We are well positioned to meet the increasing demand across our broad geographic footprint with our inventory of homes available for sale and with the land and lot position we've accumulated over the past three to four years.

Our team of operators across the country delivered an outstanding second quarter. They generated significant sales and revenue growth along with substantial improvements in profit margins and returns, which resulted in our pre-tax income more than tripling last year's levels.

Overall, the first half of fiscal year 2013 was nothing short of phenomenal, and we expect the second half to be even better. Bill?

Bill W. Wheat - EVP and CFO: In the second quarter, our consolidated pre-tax income increased 236% to $142.1 million from $42.3 million in the year ago quarter. Our pre-tax income as a percentage of consolidated revenue was 9.9%, an increase of 550 basis points from 4.4% 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 $127.4 million from $34.6 million and financial services pre-tax income increased to $14.7 million from $7.7 million.

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