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D.R. Horton (DHI) David V. Auld on Q2 2016 Results - Earnings Call Transcript

D.R. Horton, Inc. (NYSE:DHI)

Q2 2016 Earnings Call

April 21, 2016 10:00 am ET


Jessica Hansen - Vice President of Investor Relations

David V. Auld - President & Chief Executive Officer

Michael J. Murray - Chief Operating Officer & Executive Vice President

Bill W. Wheat - Chief Financial Officer & Executive Vice President


Paul Przybylski - Evercore ISI

Kenneth R. Zener - KeyBanc Capital Markets, Inc.

Alan Ratner - Zelman & Associates

Eric Bosshard - Cleveland Research Co. LLC

Nishu Sood - Deutsche Bank Securities, Inc.

Stephen S. Kim - Barclays Capital, Inc.

Robert Wetenhall - RBC Capital Markets LLC

Michael Jason Rehaut - JPMorgan Securities LLC

Jack Micenko - Susquehanna Financial Group LLLP

Susan M. Maklari - UBS Securities LLC

Will Randow - Citigroup Global Markets, Inc. (Broker)

John Lovallo - Merrill Lynch, Pierce, Fenner & Smith, Inc.

Michael G. Dahl - Credit Suisse Securities (NYSE:USA) LLC (Broker)

Jade Rahmani - Keefe, Bruyette & Woods, Inc.

Jay McCanless - Sterne Agee


Greetings, and welcome to the Second Quarter 2016 Earnings Conference Call of D.R. Horton, America's Builder, the largest builder in the United States. At this time, all participants are in a listen-only mode. A 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, Jessica Hansen, Vice President of Investor Relations for D.R. Horton. Please go ahead.

Jessica Hansen - Vice President of Investor Relations

Thank you, Kevin, and good morning. Welcome to our call to discuss our results for the second quarter of fiscal 2016. Before we get started, today's call may include comments that 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 can lead to material changes in performance is contained in D.R. Horton's Annual Report on Form 10-K and on most recent quarterly report on Form 10-Q, both of which are filed with the Securities and Exchange Commission.

For your convenience, this morning's earnings release can be found on our website at, and we plan to file our 10-Q next week. After the conclusion of the call, we will post updated supplementary historical data to our Investor Relations site on the Presentations section under News & Events for your reference. The supplementary information includes historical data on our homebuilding return on inventory, gross margins, changes in active selling communities, product mix and our mortgage operations.

Now, I will turn the call over to David Auld, our President and CEO.

David V. Auld - President & Chief Executive Officer

Thank you, Jessica, and good morning. In addition to Jessica, I'm pleased to be joined on this call by Mike Murray, our Executive Vice President and Chief Operating Officer; and Bill Wheat, our Executive Vice President and Chief Financial Officer.

The spring selling season at D.R. Horton is in full swing and our team delivered a set – a strong second quarter. Our consolidated pre-tax income increased to $301 million on $2.8 billion of revenue, and our pre-tax profit margin improved 130 basis points to 10.9%. Our homes sold increased 10% compared to the second quarter of 2015, driven by improving absorptions. These results continue to reflect the consistent solid performance of our core D.R. Horton communities and our Emerald Homes and Express Homes brands. We are striving to be the leading builder in each of our markets and to continue to expand our industry-leading market share.