DR Horton FY 1Q17 Earnings Call Notes

David Auld – President and CEO

Seeing strong trends

“We were very pleased with the quarter. And we saw very strong improvement in our absorptions, community-by-community. Throughout the quarter, we continue to see a good response to our positioning. We were much better positioned coming into this first quarter this year than we had been, and we were able to execute against that. The market therefore is a very solid market. I wouldn’t say we saw significant deviations within the quarter month-to-month. It was a pretty consistent result for us. In January, the Cowboy lost. So, in this part of the world, the selling season is kind of starting now. So, we’re excited about the silver-lining on that cloud for us. But we continue to see good sales trends in January, very early into spring. And we’ll certainly keep you updated as things progress, and we get back with you in April on that one.”

2013 wasn’t too bad despite the interest rate increase

“Well, 2013, I don’t know that it was necessarily the rate increase as the rapidity of the rate increase it kind of shocked the market. And you saw, I would say, a deceleration in traffic, less consumer confidence deal from our sales agents. We fought through it. I think we ended with a pretty good 2013. But it did have a significant impact. Right now, the over-optimism that seems to be up there in the market, just traveled through Florida, and I’ll tell you, Florida feels like it is going to market as I’ve seen the long time.”

Bill Wheat

Stick and brick costs moderate, but lot costs increasing

” On a year-over-year basis, our costs, our stick and brick cost which were put, were up only 2%, which is certainly a more moderate than we saw a couple of years ago. And so we’ve been able to keep our revenue growth per square foot exceeding our cost per square foot on the stick and brick basis, which is certainly helping us going forward. We’re seeing lot cost start to increase, lot costs were up 9% on a per square foot basis this quarter. So it’s a very — we’re seeing very good results from our efforts to control our stick and brick, which is helping to keep our margins stable.”