D.R. Horton sees opportunities as banking difficulties weigh on smaller competitors

Homebuilding giant D.R. Horton Inc. expects to see opportunities for growth as regional banking volatility potentially places pressure on private or smaller competitors.

In an earnings call last week, executives didn’t exclude the possibility of M&A activity as capital constraints affect regional competitors.

“We do believe that capital constraints for the privates and smaller builders are going to be impactful,” said David Auld, president and CEO of D.R. Horton, in response to a question during the April 20 earnings call. “We see opportunities, we evaluate opportunities and based upon the positioning, people and market that they have, we will pursue them or not. Regardless, it’s going to help us aggregate markets, whether it’s through acquisition, picking up lots or just providing more inventory availability than can be done by a private or small regional. It’s an opportunity for us.”

Overall, the Arlington-based homebuilder posted a solid quarter. Homebuilding revenue for the second quarter of fiscal 2023 was $7.5 billion, consistent with the same quarter of fiscal 2022. Homes closed in the quarter decreased 1% to 19,664 compared with 19,828 homes closed in the same quarter of fiscal 2022.

Net income per common share attributable to D.R. Horton (NYSE: DHI) for its second fiscal quarter ending March 31 decreased 32% to $2.73 per diluted share compared with $4.03 per diluted share in the same quarter of fiscal 2022.

At the end of the quarter, the company had 43,600 homes in inventory, of which 24,800 were unsold. Of those unsold homes, 6,400 were completed. D.R. Horton’s homebuilding land and lot portfolio totaled 547,000 lots at the end of the quarter, of which 25% were owned and 75% were controlled through land and lot purchase contracts.

The firm saw stabilization over the last quarter, and executives expressed optimism for ongoing market conditions. The company released guidance for the full fiscal year, the highlights of which are listed below:

• Consolidated revenue in a range of $31.5 billion to $33.0 billion

• Between 77,000 and 80,000 homes

• Rental homes/units closed between 4,000 and 5,000

• Cash provided by both consolidated and homebuilding operations greater than fiscal 2022

• Share repurchases at a similar dollar amount as fiscal 2022

In 2021, D.R. Horton sold a little more than $1 billion in homes in the Austin area, more than any other volume builder.


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