D.R. Horton, Inc.

Greetings and welcome to the third quarter 2019 earnings conference call for D.R. Horton, America's builder, the largest builder in the United States. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jessica Hansen, Vice President, Investor Relations for D.R. Horton. Please go ahead.

Thank you, Kevin, and good morning. Welcome to our call to discuss our results for the third quarter of fiscal 2019. 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.L. 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.L. Horton on the date of this conference call, and D.O. Horton does not undertake any obligation to publicly update or revise any forward-looking statements. Additional information about issues that could lead to material changes in performance is contained in D.O. Horton's annual report on Form 10-K and most recent quarterly report on Form 10-Q, both of which are filed with the Securities and Exchange Commission. This morning's earnings release can be found on our website at investor.dohorton.com, and we plan to file our 10-Q this week. After this call, we will post an investor presentation and supplementary data to our investor relations site on the presentation section under news and events for your reference. The supplementary data relates to our humbling return on inventory, home sales growth margin, changes in active selling communities, our product mix, and mortgage operations. Now I will turn the call over to David Auld, our president and CEO.

Thank you, Jessica, and good morning. In addition to Jessica, I am 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 Dale Horton team delivered a strong third quarter of 2019. Our consolidated revenues increased 11% to $4.9 billion. Pre-tax income was $627 million, and our pre-tax profit margin was 12.8%. The spring selling season was solid, and our home building gross margins improved sequentially. These results reflect the strength of our operational teams, our ability to leverage the DL Horton scale across our broad geographic footprint, and our product positioning to offer affordable homes across multiple brands. As we have discussed on our last few calls, affordability concerns caused some moderation of demand for homes in late fiscal 2018 and early fiscal 2019. And in response, we increased sales incentives to improve our sales pace. Interest rates on mortgage loans has since decreased, and we reduced the level of incentives offered as the spring progressed. We continue to see good demand and a limit to supply homes at affordable prices across our markets. At the same time, economic fundamentals and financing availability remain solid. We are pleased with our product positioning and our sales volumes of the June quarter and in July. which were in line with our expectations and normal seasonality. Our strategic focus is to continue consolidating market share while growing our revenues and profits, generating strong annual cash flows and returns, and maintaining a flexible financial position. With a conservative balance sheet that includes an ample supply of homes, lots, and land to support growth, we are well positioned for the remainder of 2019 and future years, right?