DR Horton (DHI) reported earnings on Tue 24 Jan 2017 (b/o)

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DR Horton beats by $0.07, beats on revs; reaffirms FY17 guidance  :

• Reports Q1 (Dec) earnings of $0.55 per share, $0.07 better than the Capital IQ Consensus of $0.48; revenues rose 20.2% year/year to $2.9 bln vs the $2.69 bln Capital IQ Consensus. Homebuilding revenue for the first quarter of fiscal 2017 increased 20% to $2.8 billion from $2.4 billion in the same quarter of fiscal 2016. Homes closed in the quarter increased 17% to 9,404 homes compared to 8,061 homes in the prior year quarter. Pre-tax profit margin for the first quarter of fiscal 2017 improved 100 basis points to 11.0% from 10.0% in the same quarter of fiscal 2016. The improvement in pre-tax profit margin was driven primarily by a 70 basis point decrease in homebuilding SG&A expense as a percentage of revenues. Home sales gross margin in the first quarter of fiscal 2017 was 19.8%, compared to 19.9% in the prior year quarter and 20.5% in the fourth quarter of fiscal 2016. Gross margin decreased from the fourth quarter primarily due to higher warranty and litigation costs as a percentage of homebuilding revenues.
• In the current housing market, the Company continues to expect its average home sales gross margin to be around 20%, with quarterly fluctuations that may range from 19% to 21% due to product and geographic mix and the relative impact of warranty, litigation and interest costs. Homebuilding SG&A expense as a percentage of revenues in the first quarter of fiscal 2017 was 9.5% compared to 10.2% in the prior year quarter.
• Co reaffirms guidance for FY17, sees FY17 revs of $13.4-13.8 bln vs. $13.5 bln Capital IQ Consensus Estimate. D.R. Horton reaffirms its previously issued fiscal 2017 guidance including a consolidated pre-tax profit margin of 11.2% to 11.5%, consolidated revenues of $13.4 billion to $13.8 billion, homes closed between 43,500 homes and 45,500 homes and cash flow from operations in the range of $300 million to $500 million. The Company's fiscal 2017 results will be significantly impacted by the strength of the spring selling season, and the Company will update its expectations as necessary each quarter. The Company's sales order backlog of homes under contract at December 31, 2016 increased 6% to 11,312 homes and 7% in value to $3.4 billion compared to 10,665 homes and $3.2 billion at December 31, 2015.