D.R. Horton, Inc.

Good morning and welcome to the first quarter 2025 earnings conference call for Dior 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the call over to Jessica Hansen, Senior Vice President of Communications for Dior Horton.

Thank you, Paul, and good morning. Welcome to our call to discuss our financial results for the first quarter of fiscal 2025. Before we get started, today's call includes 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 DR Horton does not undertake any obligation to publicly update or revise any forward-looking statements. Additional information about factors that could lead to material changes in performance is contained in DR Horton's annual report on Form 10-K, which is filed with the Securities and Exchange Commission. This morning's earnings release can be found on our website at investor.drhorton.com, and we plan to file our 10-Q in the next few days. After this call, we will post updated investor and supplementary data presentations to our investor relations sites on the presentation section under news and events for your reference. Please note that we have added and updated several slides in our investor presentation to highlight our returns-focused strategy and performance. Now I will turn the call over to Paul Romanowski, our president and CEO.

Thank you, Jessica, and good morning. I'm pleased to also be joined on this call by Mike Murray, our executive vice president and chief operating officer, and Bill Weed, our executive vice president and chief financial officer. For the first quarter, the D.R. Horton team delivered solid results, highlighted by earnings of $2.61 per diluted share. Our consolidated pre-tax income was $1.1 billion on $7.6 billion of revenues, with a pre-tax profit margin of 14.6%. We remain focused on enhancing capital efficiency to produce sustainable returns and cash flow. Our home building pre-tax return on inventory for the trailing 12 months and to December 31st was 26.7%. Our return on equity was 19.1%, and return on assets was 13.4%. Our return on assets ranks in the top 15% of all S&P 500 companies for the past 3, 5, and 10-year periods. During the three months ended December 31st, we generated consolidated operating cash flow of $647 million and returned $1.2 billion to shareholders through share repurchases and dividends. Over the past 12 months, we returned essentially all of the cash we generated to shareholders through repurchases and dividends. Overall, the demographics supporting housing demand remained favorable. And although both new and existing home inventories have increased from historically low levels, the supply of homes at affordable price points is generally still limited. To help spur demand and address affordability, we are continuing to use incentives such as mortgage rate buy-downs, and we have continued to start and sell more of our smaller floor plans. Our local teams have been successful meeting the market, with net sales orders this quarter decreasing only slightly from the prior year. We typically experience our seasonally slowest sales demand in the first quarter, and our tenured local operators seek to find the right balance of sales pace, pricing, incentives, and inventory levels to position each community for optimal returns as we enter the spring. With 53% of our first quarter closings also sold in the same quarter, our sales, incentive levels, and gross margin are generally representative of current market conditions. With our focus on affordable product offerings, homes and inventory, continued improvement in our construction cycle times, and finished lots available in our pipeline, we are well positioned for the remainder of fiscal 2025.