DHI
#We don't have an exact break down of the investors.
Anecdotally, I'd tell you it's very low, what we're hearing about any investor sales.
A lot of it is, just people that are moving out of a rental situation into a home that they can afford.
We had real weather, in the fourth quarter, in a couple of our bigger markets, across the Carolinas, and really Dallas/Fort Worth.
But as <UNK> points out, we have weather every quarter.
So would our numbers have been better with typical weather.
Yes, they would have been.
But we're very happy with the numbers we posted, and think we're going to have a great year.
I think that the confidence is coming from being in touch with the operators out in the divisions, and what they sense, and what they feel is taking place in their markets.
And across the board, our people feel very good about what's happening out there.
The labor side, I would say, it's still stressed, but seems to be improving, and the trade bases are starting to add people.
I think a big part of the improvement we're seeing is the consistency of production in the community by community is allowing these trades to staff and maintain a workforce to hit those numbers.
And it's taken awhile to get there, but they are adding people.
I think our trade base is seeing ---+ is becoming more and more confident, as well.
And <UNK>, in terms of what we saw in price changes, our revenues per square foot outpaced our stick-and-brick per square foot on a year-over-year basis for the second time.
So we've gotten to where that's in check.
Sequentially, that was essentially net neutral.
So you saw our margin tick up by 10 basis points year-over-year, and stayed flat from Q4 to Q1.
We are continuing to experience higher land costs, but in about the same range year-over-year as we were last quarter, so flat gross margins.
We're actually getting price.
If we look at our price per square foot, which is the best way we can try to look at our business apples-to-apples, we did see a low single-digit increase.
I will tell you, <UNK>, I spent a week driving Dallas, and a week driving Fort Worth in January.
And when I got back, I told Horton I had to get out of the field because if I stayed in Dallas and Fort Worth, I would become way too aggressive buying land.
It is as good of market as I've seen.
And as to Houston, I think that there's a lot of conversation, a lot of uncertainty, a lot of volatility within the oil and gas business, which I think is making people more conservative about buying homes.
And I think there's still pent-up demand in Houston.
I think the pent-up demand is growing.
But it is just not the frenzy that we've seen in the past, or is really taking place in some of the other Texas markets.
Thank you, <UNK>.
It's pretty much across the board.
I mean, we're seeing construction labor force increase.
And I think, and our strive to create more efficiency in the process of building and selling homes, and trying to actually take some labor out of a per square foot cost for the home has paid off.
And our trades are making money, and we're seeing less pressure on the cost side, and I think providing more value for the customer.
So we feel like we are positioned to deliver our year.
Oh, I think there are ---+ probably, we're in 78 markets.
We probably will end up mid 60s, primarily because some markets just don't ---+ we've ---+ don't allow you market your product, and we aren't going to give up the Horton brand to sell Express.
We have a lot of opportunity still to increase our position within most of the markets, and are actively out there looking every day to do that.
Maybe half way.
We're in 48 markets in 15 states today.
But to echo <UNK>'s comments, we haven't fully saturated the markets that we're currently in with Express.
So there's more runway within those 48, plus expanding into the mid 60s.
I mean, we are allocating capital to the programs that are driving the best returns, and right now Express is driving the great returns.
You bet.
Houston has been relatively stable for us on a year-over-year basis.
And so, we didn't see a further slowdown in Houston, but we're also not seeing any meaningful pick up.
We continue to see our lower-priced Express homes, very steady demand, steady sales pace.
But as had been mentioned a couple times on the call, definitely softer at the higher end.
But we continue to see good steady demand for the entry level, and people moving out of apartments, where we're providing an attractive rent versus buy equation, and driving people into those sales offices each week.
So we continue to have a close eye on Houston.
We are not heavily reinvesting in Houston right now.
We are replenishing where it makes sense, and where we can continue to add those entry level product offerings.
<UNK>, just to add a little more color.
We have some, what I would call, A-plus project location positions in Houston, that are maybe at the price point that we're seeing less demand for.
And we are not going to accelerate or liquidate those positions.
So we will see lower absorptions in those communities.
And these are ---+ they're communities we can't go replace, and don't want to.
So it's ---+ we're going to protect the value in our core projects, take absorption at the $250,000 to $300,000 range.
And if you're looking at what I look at, almost zero margin deterioration on the projects that are at the price point that are turning right now.
And we don't need, nor do we want to force sales in the core project where we have been selling $350,000 to $450,000, and are just seeing where absorption's reduced.
So that's my color on Houston.
It's going to be a tremendous market for us for a long time.
We are very strong in the ---+ I mean, we dominate the $250,000 to $300,000 ---+ $200,000 to $300,000 price point in Houston.
And we're going to continue to dominate that.
And if you look at our ---+ the benefit ---+ one of the many benefits of being D.
R.
Horton is the broad geographic footprint.
When the upper end in Houston slows down, the entry level in Denver accelerates.
So I mean, it's ---+ we have a lot of levers to pull.
My consistent comment to the people inside the Company is, it's good to be us, because we can hit our plan, and without being forced to sell a project we don't want to sell at the pace that its been running at.
Well, we're pretty much running on our absorption targets.
So, I think we will as we continue to push out the Express brand, and follow up replacing the Horton positions, I think we will see some community count growth.
We don't have visibility into that today.
We do have visibility into what we know we can deliver so.
It's hard to know exactly where the contributions are, sitting here in January, not knowing what the spring is going to hold.
We're certainly seeing good early signs.
But clearly, the strength of the spring selling season will help determine our year.
It will determine where we land in our range, or whether we could perhaps exceed our range.
And so, it's ---+ sitting here in January feeling good, feel good about our position, our preparations for the spring.
And then, we'll go try to execute as best we can over the next few months.
And we'll know a whole lot more when we talk to you next quarter.
Hi, <UNK>.
We really haven't seen an appreciable impact, and a delay in closings.
Our teams have worked very hard to prepare for the changing rules, and worked with our captive mortgage company.
DHM Mortgage and Associates have done a yeoman's job preparing for this change, as well as working with our preferred lenders.
So we really didn't see a material impact on our closings for the quarter.
We'll continue to improve our processes, and try to become more efficient, and make it a good experience for the buyers.
I think the labor side has been minimized for us, because we set absorption targets per community and drive to that, so we have consistency within the communities.
And our trades are not out there looking for work one week, and then have twice what they can do the next.
We are still just running a low single-digit percentage increase on cost per square foot, stick-and-brick.
Yes, no doubt.
The ---+ to be prepared for the new regulations our mortgage company financial services operation had to make significant investments, primarily in personnel.
The effort to comply is a big one.
And in order to meet those regulations and provide that experience to the home buyers, they've had to increase costs there.
Typically though, season ---+ on a ---+ from a seasonal basis, we see our lower operating margins in our first and second quarters, in our lower volume quarters.
And then, we typically see higher than average operating margins in financial services in Q3 and Q4.
And so, the margin here this quarter, in the low 20%s certainly does not preclude achieving the 30% to 33% guidance for the year.
Certainly do appreciate it has been a serious storm.
It's impacted a lot of people.
But we feel ---+ it's fortunate, it's early in our quarter, and our operating teams will be able to take care of our existing homeowners in the communities, and deal with the homes that are in backlog, and the specs that out there today, and be ready for sales next weekend.
I'd also like to add, it's a beautiful day in Texas today, as they say.
The sun is shining on somebody somewhere every day.
We love Texas.
Good morning.
Well, I ---+ we have a hard enough time managing our people.
I don't want to get into trying to help them help themselves.
So I don't know.
All we do, is get up every day and operate, and pursue to be the best we can be.
And we're tough competition.
Maybe they just ---+ I don't know.
But entry level housing is something we've done for a very long time.
It's a core competency of our Business.
It ---+ and with our footprint, and with that competency among our operating teams across the country, it's something that we've got a lot of practice at.
So it's something we're focused on.
And like we said earlier, it's a good market, and there's a lot of demand there.
We do expect some more competition down the line, and I think that would be a natural next step in the cycle.
I will say, we were first movers, and we were aggressive first movers.
And I would believe that the other companies that are also good at driving value will be following us in it.
But we bought the lion's share of the finished lots.
And when we saw the success, we started investment, investing in development, developing lots.
So we just have a head start.
I'm sure they're coming.
Well, the area that we've watched the most closely, that we have less visibility too, are the closings with outside lenders.
Obviously, our internal mortgage company are captive closings, so we have more visibility to that process, and feel confident about that.
But with outside lenders, it's something we watch closely division by division, or they have relationships with outside lenders.
They are working with them to make sure that we have the visibility to hit things on time.
But I think that's where the greater risk is.
But I honestly think, month by month, as everyone in the process gets more used to it, I think it will get smoother.
And any disruptions that may have occurred thus far, I think will be alleviated over the coming months.
Thank you, Kevin.
We appreciate everyone's time today, and look forward to speaking with you again in April.
Again, special thanks to the D.
R.
Horton team.
You've ---+ outstanding first quarter, outstanding start to the year.
