D.R. Horton, Inc.

Good morning and welcome to the second quarter 2026 earnings conference call for Dior Horton, America's Builder. 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. 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 second quarter of fiscal 2026. Before we get started, today's call includes 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 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 and its most recent quarterly report on Form 10-Q, both of which are filed with the Securities and Exchange Commission. This morning's earnings release and our supplemental data presentation can be found on our website at investor.drhorton.com, and we plan to file our 10-Q later this week. After this call, we will also post our updated investor presentation to our investor relations site on the presentation section under news and events for your reference. Now, I will turn the call over to Paul Romanofsky, our president and CEO.

Thank you, Jessica, and good morning. I am pleased to also be joined on this call by Mike Murray, our chief operating officer, and Bill Wheat, our chief financial officer. The D.R. Horton team delivered solid second quarter results with consolidated pre-tax income of $867 million on $7.6 billion of revenues and a pre-tax profit margin of 11.5%. New home demand remains impacted by affordability constraints and cautious consumer sentiment. However, our tenured teams continue to respond to current market conditions with discipline. During the quarter, we delivered a consolidated pre-tax profit margin above the high end of our guidance range, generated revenues within our expected range, and increased net sales orders by 11% compared to the prior year quarter. At the same time, we reduced our unsold completed homes by 35% from a year ago, reflecting our focus on balancing sales pace, pricing, and incentives to drive incremental sales while maximizing returns. We continue to focus on capital efficiency to generate strong operating cash flows and deliver compelling returns to our shareholders. Over the past 12 months, we generated $3.7 billion of cash from operations and returned $4 billion to shareholders through repurchases and dividends. For the trailing 12 months ended March 31st, our home building pre-tax return on inventory was 17.6%. while our consolidated returns on equity and assets were 13.2% and 8.9%. Our return on assets ranks in the top 20% of all S&P 500 companies for the past three, five, and 10-year periods, demonstrating that our disciplined, returns-focused operating model delivers sustainable results and positions us well for continued value creation. Our sales incentives increased during the second quarter, and we expect incentives to remain elevated for the rest of the year, with a level dependent on demand, mortgage interest rates, and other market conditions. We work every day to leverage our industry-leading platform, unmatched scale, efficient operations, and experienced teams to bring home ownership opportunities at affordable price points to more Americans. 65% of our mortgage companies' closings this quarter were to first-time homebuyers. We will continue to tailor our product offerings, sales incentives, and inventory levels based on demand in each of our markets to maximize returns.