Forward-Looking Statements This presentation may include forward - - PowerPoint PPT Presentation

3 Q2 FY2016

This presentation may include “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. Factors that may cause the actual results to be materially different from the future results expressed by the forward-looking statements include, but are not limited to: the cyclical nature of the homebuilding industry and changes in economic, real estate and other conditions; constriction of the credit markets, which could limit our ability to access capital and increase our costs of capital; reductions in the availability of mortgage financing and the liquidity provided by government-sponsored enterprises, the effects of government programs, a decrease 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; supply shortages and other risks of acquiring land, building materials and skilled labor; reductions in the availability 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 environmental matters on our homebuilding operations; the effects of governmental regulations on our financial services

• perations; our substantial debt and our ability to comply with related debt covenants, restrictions and

limitations; competitive conditions within the homebuilding and financial services industries; our ability to effect our growth strategies or acquisitions successfully; the effects of the loss of key personnel; the effects

• f negative publicity; and information technology failures and data security breaches. Additional

information about issues that could lead to material changes in performance is contained in D.R. Horton’s annual report on Form 10-K and our most recent quarterly report on Form 10-Q, both of which are filed with the Securities and Exchange Commission.

Forward-Looking Statements

4 Q2 FY2016

• Traded on NYSE as DHI
• #1 builder for 14 consecutive years1
• $11.3 billion in annual revenues2
• 37,755 in annual homes closed2
• $1.2 billion in annual pre-tax income2
• $11.3 billion of total assets3
• $6.2 billion of stockholders’ equity3
• Book value per share of $16.853

1By closings volume for fiscal years 2002 to 2015 2Twelve months ended March 31, 2016 3As of March 31, 2016

D.R. Horton, Inc.

5 Q2 FY2016

Geographic Diversification

HB Revenue1

Region States Covered East Delaware, Georgia, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Virginia Midwest Colorado, Illinois, 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% Southwest 3% West 24% East 12% Midwest 6% Southeast 29% Midwest 6% South Central 27% Southeast 25% East 10% West 28% Southwest 4%

79 Markets | 26 States

1Twelve months ended March 31, 2016 2As of March 31, 2016

6 Q2 FY2016 $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

< $200k $500k+

Represents homes closed for the trailing twelve months ended 3/31/16

7%

7 Q2 FY2016

73% 23% 4%

Substantial Growth in Brands

New Brand Growth - TTM

2,840 7,693 714 1,326

2,500 5,000 7,500 10,000 TTM 3/31/15 TTM 3/31/16

Overall Brand Mix – Q2

Represents homes closed

Homes Closed

8 Q2 FY2016

• 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

9 Q2 FY2016

Average employee tenure:

• Executive Team and Region Presidents – over 20 years
• Division Presidents – approximately 15 years
• City Managers – over 10 years

Management Tenure & Experience

10 Q2 FY2016

Fiscal Year:

• Consolidated pre-tax profit margin in the range of 10.7% to 11.2%
• 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 9.0% to 9.2% of homebuilding revenues
• Financial Services pre-tax profit 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 to $500 million

Third Quarter:

• Backlog conversion rate in the range of 76% to 80%
• Home sales gross margin in the high 19s to 20%, consistent with the second quarter
• Homebuilding SG&A expense in the range of 8.9% to 9.1% of homebuilding revenues

FY 2016 Expectations*

*Based on updated guidance and housing market conditions as noted on the Company’s conference call on 4/21/16

11 Q2 FY2016

• 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

• Paid $373 million of senior notes at maturity in April 2016
• Be opportunistic, while remaining disciplined

Cash Flow Priorities

12 Q2 FY2016

Second Quarter Data

13 Q2 FY2016

• The value of net homes sold, homes closed and homes in

backlog increased by 13%, 16% and 14%, respectively

• 12,292 net homes sold and 9,262 homes closed
• 13,695 homes in backlog at 3/31/16
• Consolidated pre-tax income increased 31% to $300.5

million

• Consolidated pre-tax income margin improved 130 basis

points to 10.9%

• Net income increased 32% to $195.1 million
• Cash flow provided by operations for the six months ended

March 31, 2016 improved $195.7 million to $26.9 million

Q2 FY 2016 Highlights

14 Q2 FY2016

• In the second quarter, accounted for:
• 70% of homes sold
• 73% of homes closed
• 75% of home sales revenue
• Q2 Average Closing Price: $299,000

D.R. Horton

The Heart of our Business

Reported metrics for D.R. Horton include our Crown Communities and Pacific Ridge Homes operations

79 Markets | 26 States

15 Q2 FY2016

• Introduced in 2013
• In the second quarter, accounted for:
• 3% of homes sold
• 4% of homes closed
• 9% of home sales revenue
• Q2 Average Closing Price: $631,000

Emerald Homes

Higher-end move-up and luxury buyer

44 Markets | 17 States

16 Q2 FY2016

• Introduced in Spring 2014
• In the second quarter, accounted for:
• 27% of homes sold
• 23% of homes closed
• 16% of home sales revenue
• Q2 Average Closing Price: $202,000

Express Homes

Targeted at the true entry-level buyer

Reported metrics for Express include our Regent Homes operations

51 Markets | 17 States

17 Q2 FY2016

Sales, Closings & Backlog – Q2 FY16

Net Sales Orders, Homes Closed and Homes in Backlog increased 10%, 12% and 12%, respectively, in Q2 of FY2016 compared to Q2 of FY2015

2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Sales Closings Backlog 2Q FY14 2Q FY15 2Q FY16

18 Q2 FY2016

Income Statement

$ in millions

3/31/2016 3/31/2015 3/31/2016 3/31/2015 9/30/2015 Homes closed 9,262 8,243 17,323 16,216 36,648 Revenues: Home sales 2,686.0 $ 2,318.8 $ 5,026.9 $ 4,559.4 $ 10,469.4 $ Land/lot sales & other 15.0 19.7 35.2 32.1 89.6 2,701.0 2,338.5 5,062.1 4,591.5 10,559.0 Gross Profit: Home sales 534.7 456.9 1,001.3 899.5 2,075.8 Land/lot sales & other 3.0 2.1 7.3 4.1 7.8 Inventory & land option charges (6.0) (12.5) (7.9) (18.6) (60.3) 531.7 446.5 1,000.7 885.0 2,023.3 SG&A 258.2 242.4 501.6 480.4 1,013.6 Interest and other (income) (9.6) (4.5) (13.0) (10.1) (8.6) Homebuilding pre-tax income 283.1 208.6 512.1 414.7 1,018.3 Financial Services pre-tax income 17.4 21.5 29.7 36.1 105.1 Pre-tax income 300.5 230.1 541.8 450.8 1,123.4 Income tax expense 105.4 82.2 189.0 160.4 372.7 Net income 195.1 $ 147.9 $ 352.8 $ 290.4 $ 750.7 $ 6 Months Ended Year Ended 3 Months Ended Fiscal

19 Q2 FY2016

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 Q2 FY16

17.7% 20.8% 21.3% 19.8% 19.7% 19.9% 19.9% 19.9% 19.9%

Shown as a % of home sales revenues Includes interest amortized to cost of sales

20 Q2 FY2016

Homebuilding SG&A

$0 $200 $400 $600 $800 $1,000 $1,200 2015 2016

$480.4 $501.6

10.5% 9.9% $0 $200 $400 $600 $800 $1,000 $1,200 Q2 FY15 Q2 FY16

$242.4 $258.2

9.6% SG&A $ SG&A $ 10.4%

Shown as a % of homebuilding revenues $ in millions

Second Fiscal Quarter SG&A as a percentage of homebuilding revenues improved 80 basis points in Q2 FY2016 Fiscal YTD 3/31

21 Q2 FY2016

Consolidated Pre-tax Income

Consolidated pre-tax profit margin improved 130 basis points to 10.9% in Q2 FY2016 Fiscal YTD 3/31 Second Fiscal Quarter

Shown as a % of consolidated revenues $ in millions

PTI $ PTI $ $0 $200 $400 $600 $800 $1,000 $1,200 2015 2016

$450.8 $541.8

9.6% 10.5% $0 $200 $400 $600 $800 $1,000 $1,200 Q2 FY15 Q2 FY16

$230.1 $300.5

9.6% 10.9%

22 Q2 FY2016

Balance Sheet

$ in millions

3/31/16 9/30/15 3/31/15 HB cash and cash equivalents 1,195.2 $ 1,355.9 $ 665.8 $ Restricted cash 11.4 9.7 10.4 Inventories 8,216.6 7,807.0 8,136.9 Deferred income taxes, net 526.6 558.1 547.7 Other assets 1,350.4 1,420.3 1,332.9 Total 11,300.2 $ 11,151.0 $ 10,693.7 $ Notes payable - HB 3,167.3 $ 3,333.6 $ 3,528.6 $ Other liabilities 1,883.9 1,922.0 1,744.1 Equity 6,249.0 5,895.4 5,421.0 Total 11,300.2 $ 11,151.0 $ 10,693.7 $ Homebuilding debt to total capital 33.6% 36.1% 39.4% Book value/share $16.85 $15.99 $14.78

23 Q2 FY2016

Homes in Inventory

5,000 10,000 15,000 20,000 25,000 9/30/12 9/30/13 9/30/14 3/31/15 9/30/15 3/31/16

Models Sold Specs

17,000 13,000 21,300 19,800 20,600 24,600

24 Q2 FY2016

Land and Lot Position

94,600 126,600 124,600 121,700 118,400 111,900 58,100 54,300 58,900 55,500 55,500 76,600 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 3/31/15 9/30/15 3/31/16

Optioned Owned

152,700 180,900 183,500 177,200 173,900 188,500

Supports double-digit growth in both revenues and pre-tax profits

25 Q2 FY2016 $ in millions Land held for development is shown as separate line item on face of balance sheet

Inactive Land Held for Development

“Mothballed” lot count down 28% from 9/30/14

$628.3 $450.2 $332.8 $271.3 $202.3 $194.3 39,400 21,700 14,000 12,900 11,100 10,100

5000 10000 15000 20000 25000 30000 35000 40000 45000

$0 $100 $200 $300 $400 $500 $600 $700 9/30/12 9/30/13 9/30/14 3/31/15 9/30/15 3/31/16

Balance Lots Held

26 Q2 FY2016

Public Debt Maturities by Year

$0 $100 $200 $300 $400 $500 $600 $700 $800 FY 17 FY 18 FY 19 FY 20 FY 22 FY 23 4.750% $350 $500 $500 $400 4.750% 3.625% 3.750% 4.000% 4.375% 5.750% $700 $350

$ in millions Pro forma balance of public notes outstanding subsequent to 4/15/2016 debt maturity

As of April 21, 2016