D.R. Horton, Inc.

Fourth-quarter consolidated pretax income was $1 billion on revenues of $9.4 billion, with a pretax profit margin of 10.8%. Net income was $742 million, or $2.67 per diluted share. Full-year consolidated pretax income was $3.9 billion on revenues of $33 billion, with an 11.8% pretax margin; full-year net income was $2.9 billion, or $10.11 per diluted share. Q4 home sales revenue was $8.4 billion on 22.9 thousand homes closed, with an average closing price of $366 thousand, flat year over year. Q4 home sales gross margin was 19.5%, down 120 basis points sequentially, while Q4 net sales orders declined 7% year over year to 18.6 thousand homes and order value declined 9% to $6.6 billion. For fiscal 2027, management expects consolidated revenue of approximately $30 billion to $32 billion, homebuilding closings of 79 thousand to 84 thousand, a tax rate of 25.5%, operating cash flow of approximately $3.5 billion, about $3 billion of share repurchases, and around $500 million of dividends. For the first fiscal quarter, guidance is revenue of $5.9 billion to $6.4 billion, home closings of 15.5 thousand to 16.5 thousand, home sales gross margin of 18% to 18.5%, consolidated pretax margin of 7% to 8%, and a tax rate of approximately 25.5%.

Paul Romanowski said the quarter reflected a tougher demand backdrop driven by sharply higher mortgage rates, affordability pressure, and cautious consumer sentiment. He emphasized that the company is responding community by community with pricing and incentives, has reduced starts to better align inventory with demand, and remains focused on affordable price points, first-time buyers, and disciplined capital allocation. His tone was cautious on near-term demand but confident that Horton is positioned to gain share and improve returns when conditions stabilize.

Bill Wheat highlighted the company’s balance sheet and cash returns: $7.2 billion of consolidated liquidity at September 30, including $2.1 billion of cash and $5.1 billion of available capacity, with consolidated debt of $6.1 billion and leverage of 20.8%. He said fiscal 2026 operating cash flow was $3.5 billion, share repurchases totaled $3.6 billion for the year, and dividends were $513 million, while book value per share increased 4% to $85.14. He also noted no other senior note maturities in fiscal 2027 and said the company expects to keep buybacks meaningful, continue targeting leverage around 20%, and raise the quarterly dividend to $0.50 per share.

Analysts pressed management on the sharp drop in Q1 gross margin guidance, the assumption behind rate buy-downs, and whether the outlook implies a tougher spring selling season. Management said the 18% to 18.5% margin guide reflects current market conditions, elevated incentives, and no expectation for near-term rate relief, though they still believe long-term margins can be higher. On costs, they pointed to recent lumber and labor inflation affecting stick-and-brick costs, while saying lower cycle times and smaller rental asset levels should help support fiscal 2027 cash flow. They also said weaker demand was more pronounced in larger, more competitive markets, while smaller secondary markets have held up better.