D.R. Horton, Inc.

Good morning, and welcome to the fourth 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 a listen-only mode. An interactive 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. I would now like to turn the conference over to your host. Jessica Hampton, Vice President of Investor Relations for D.R. Horton. Thank you. You may begin.

Thank you, Melissa, and good morning. Welcome to our call to discuss our fourth quarter and fiscal 2019 financial results. 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.O. 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 our subsequent quarterly reports on Form 10-Q, all of which are filed with the Securities and Exchange Commission. This morning's earnings release can be found on our website at investor.deerhorton.com, and we plan to file our 10-K next week. After this call, we will post updated investor and supplementary data presentations to our investor relations site on the presentation section under news and events for your reference. Now I will turn the call over to David Auld, our president and CEO.

Thank you, Jessica, and good morning. Good morning. In addition to Jessica, I am pleased to be joined on the call by Mike Murray, our Executive Vice President and Chief Operating Officer, and Bill Wheat, our Executive Vice President and Chief Financial Officer. Our D.R. Horton team finished the year strong. Free tax income for the fourth quarter increased 9% to $660 million on $5 billion of revenue, and our free tax operating margin was 13.1%. For the year, EPS increased 13% to $4.29 per diluted share. And consolidated pre-tax income increased to $2.1 billion on $17.6 billion of revenues. Our consolidated pre-tax margin for the year was 12.1%. We closed 56,975 homes this year, an increase of over 5,000 homes, or 10% from last year. Our home building return on inventory was 18.1%. and our return on equity was 17.2%. These results reflect the strength of our operational teams, our ability to leverage D.O. Horton's scale across our broad geographic footprint, and our product positioning to offer homes at affordable price points across multiple brands. Our home building cash flow from operations in 2019 was $1.4 billion. Over the past five years, we have generated approximately of cash flow from home building operations, while growing our home building revenues by more than $9 billion, or 117%, and our earnings per share by 186%. During these five years, in addition to organically growing the business, we have invested approximately $1 billion in acquisitions and returned over $1.4 billion to shareholders through dividends and share repurchases, while reducing home building debt by $1.3 billion. As a result, our return on equity increased by 540 basis points, while our home building debt to capital ratio decreased by less than half of its level five years ago. Our strategic focus is to continue consolidating market share while growing both our revenues and pre-tax profits, generating strong 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 and a good October sales pace, we are well positioned as we begin 2020. Mike?