raymond james 37th annual institutional investors...

Raymond James 37th Annual Institutional Investors Conference

March 8, 2016

2Raymond James 37th Annual Institutional Investors Conference

This presentation may include “forward-looking statements” as defined by the Private Securities LitigationReform Act of 1995. Although D.R. Horton believes any such statements are based on reasonableassumptions, there is no assurance that actual outcomes will not be materially different. Factors that maycause the actual results to be materially different from the future results expressed by the forward-lookingstatements include, but are not limited to: the cyclical nature of the homebuilding industry and changes ineconomic, real estate and other conditions; constriction of the credit markets, which could limit our abilityto access capital and increase our costs of capital; reductions in the availability of mortgage financing andthe liquidity provided by government-sponsored enterprises, the effects of government programs, adecrease in our ability to sell mortgage loans on attractive terms or an increase in mortgage interest rates;the risks associated with our land and lot inventory; home warranty and construction defect claims; supplyshortages and other risks of acquiring land, building materials and skilled labor; reductions in theavailability of performance bonds; increases in the costs of owning a home; the impact of an inflationary,deflationary or higher interest rate environment; the effects of governmental regulations and environmentalmatters on our homebuilding operations; the effects of governmental regulations on our financial servicesoperations; our substantial debt and our ability to comply with related debt covenants, restrictions andlimitations; competitive conditions within the homebuilding and financial services industries; our ability toeffect our growth strategies or acquisitions successfully; the effects of the loss of key personnel; the effectsof negative publicity; and information technology failures and data security breaches. Additionalinformation about issues that could lead to material changes in performance is contained in D.R. Horton’sannual report on Form 10-K and our most recent quarterly report on Form 10-Q, both of which are filedwith the Securities and Exchange Commission.

Forward-Looking Statements


Traded on NYSE as DHI

#1 builder for 14 consecutive years1

$10.9 billion in annual revenues2

36,736 in annual homes closed2

$1.1 billion in annual pre-tax income2

$11.2 billion of total assets3

$6.1 billion of stockholders’ equity3

Book value per share of $16.393

1By closings volume for fiscal years 2002 to 20152Twelve months ended December 31, 20153As of December 31, 2015

D.R. Horton, Inc.


Geographic DiversificationHB Revenue1

Region States Covered

East Delaware, Georgia, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Virginia

Midwest Colorado, Illinois, Indiana, Minnesota

Southeast Alabama, Florida, Georgia, Mississippi, Tennessee

South Central Louisiana, Oklahoma, Texas

Southwest Arizona, New Mexico

West California, Hawaii, Nevada, Oregon, Utah, Washington

Inventory2

South Central

26%

Southwest3%

West24%

East13%

Midwest6%

Southeast28%

Midwest6%

South Central

26%

Southeast25%

East10%

West29%

Southwest4%

79 Markets | 27 States

1Twelve months ended December 31, 20152As of December 31, 2015


$200k to $250k

$250k to $300k

$300k to $500k

27%

24% 18%

24%

Broad Range of Product Offerings

Homes for entry-level, move-up and luxury buyers

$0 to $200k

$500k+

Represents homes closed for the trailing twelve months ended 12/31/15

7%


74%

22%

4%

Substantial Growth in Brands

New Brand Growth - TTM

1,960

6,623

580

1,163

0

2,500

5,000

7,500

10,000

TTM 12/31/14 TTM 12/31/15

Overall Brand Mix – Q1

Represents homes closed

Homes Closed


Current land ownership level is sufficient to support double-digit annual growth in both revenues and profits

Consistently optimize balance of sales absorptions and gross margins to maximize returns in each community

Manage land and home inventory levels efficiently to generate consistent positive cash flow from operations

Underwriting criteria for land and lot purchases and operational expectations for each community: Minimum 20% annual net return on inventory investment

(ROI) for all brands Net ROI% = Pre-tax Income divided by Average Inventory

Initial cash investment returned within 24 months or less

Operational Focus


Average employee tenure: Region Presidents – over 20 years Division Presidents – 15 years City Managers – over 10 years

Management Tenure & Experience


The value of net homes sold, homes closed and homes in backlog increased by 12%, 4% and 16%, respectively

8,064 net homes sold and 8,061 homes closed

10,665 homes in backlog at 12/31/15

Consolidated pre-tax income increased 9% to $241.3 million

Consolidated pre-tax income margin improved 40 basis points to 10%

Net income increased 11% to $157.7 million

Cash flow used in operations improved $127.5 million to $1.5 million

Q1 FY 2016 Highlights


Home Sales Gross Margin

Homes sales gross margin of around 20% in a stable housing market

0%

5%

10%

15%

20%

25%

FY12 FY13 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16

17.7%

20.8% 21.3%19.8% 19.7% 19.9% 19.9% 19.9%

Shown as a % of home sales revenuesIncludes interest amortized to cost of sales


Homebuilding SG&A

Fiscal Year 2015

$0

$200

$400

$600

$800

$1,000

$1,200

2014 2015

$834.2 $1,013.6

10.6%9.6%

$0

$200

$400

$600

$800

$1,000

$1,200

Q1 FY15 Q1 FY16

$238.0 $243.3

10.3%

SG&A $SG&A $

10.6%

Shown as a % of homebuilding revenues$ in millions

First Fiscal Quarter 2016

SG&A as a percentage of homebuilding revenues improved 30 basis points in Q1 FY2016


Consolidated Pre-tax Income

Consolidated pre-tax income margin in Q1 FY2016 improved 40 basis points to 10.0%

Fiscal Year 2015 First Fiscal Quarter 2016

Shown as a % of consolidated revenues$ in millions

PTI $ PTI $

$0

$200

$400

$600

$800

$1,000

$1,200

2014 2015

$814.2

$1,123.4

10.1%

10.4%

$0

$200

$400

$600

$800

$1,000

$1,200

Q1 FY15 Q1 FY16

$220.7 $241.3

9.6% 10.0%


Balance Sheet

$ in millions

12/31/15 9/30/15 12/31/14

HB cash and cash equivalents 1,245.7$ 1,355.9$ 517.7$ Restricted cash 9.7 9.7 9.6 Inventories 8,088.2 7,807.0 7,989.3 Deferred income taxes, net 542.2 558.1 552.7 Other assets 1,293.7 1,420.3 1,269.4 Total 11,179.5$ 11,151.0$ 10,338.7$

Notes payable - HB 3,337.2$ 3,333.6$ 3,403.1$ Other liabilities 1,781.8 1,922.0 1,671.8 Equity 6,060.5 5,895.4 5,263.8 Total 11,179.5$ 11,151.0$ 10,338.7$

Homebuilding Leverage Gross 35.5% 36.1% 39.2% Net of cash 25.7% 25.1% 35.3%

Book Value/Share $16.39 $15.99 $14.40


Homes in Inventory

0

5,000

10,000

15,000

20,000

25,000

9/30/12 9/30/13 9/30/14 12/31/14 9/30/15 12/31/15

Models Sold Specs

17,000

13,000

21,30019,800

20,60021,500


Robust Lot Position

94,600 126,600 124,600 124,500 118,400 116,600

58,100 54,300 58,900 60,200 55,500 61,100

0

25,000

50,000

75,000

100,000

125,000

150,000

175,000

200,000

9/30/12 9/30/13 9/30/14 12/31/14 9/30/15 12/31/15

Optioned Owned

152,700

180,900 183,500 184,700173,900 177,700

Increased optioned lot position by 10% from 9/30/15 to 12/31/15


Fiscal Year: Consolidated pre-tax margin in the range of 10.5% to 11.0% Consolidated revenues of $12.0 billion to $12.5 billion Closings between 39,500 homes and 41,500 homes Home sales gross margin in the high 19s to 20% Homebuilding SG&A expense in the range of 9.2% to 9.4% of homebuilding revenues Financial Services operating margin between 30% and 33% Income tax rate between 35% and 36% Diluted share count of approximately 375 million shares Cash flow from operations in the range of $300 million to $500 million

Second Quarter: Backlog conversion rate in the range of 82% to 85% Home sales gross margin in the high 19s to 20%, consistent with first quarter Homebuilding SG&A expense in the range of 10.3% to 10.6% of homebuilding revenues

FY 2016 Expectations*

*Based on housing market conditions as noted on the Company’s conference call on 1/25/16


Invest in homebuilding business where opportunities to generate acceptable returns exist, including business acquisitions

Pay off debt at maturity Paid $170 million of senior notes at maturity in January

2016

$373 million maturities remaining in fiscal 2016 – most likely pay off some portion, while refinancing the rest

Be opportunistic, while remaining disciplined

Cash Flow Priorities

Raymond James 37th Annual Institutional Investors Conference

March 8, 2016

raymond james 37th annual institutional investors...

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