D R Horton : Q3 FY 2020 Investor Presentation

I N V E S T O R P R E S E N T A T I O N

Q 3 2 0 2 0

2

F O R W A R D - L O O K I N G S T A T E M E N T S

This presentation may include "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. Factors that may cause the actual results to be materially different from the future results expressed by the forward‐looking statements include, but are not limited to: the effects of public health issues such as a major epidemic or pandemic, including the impact of C-19 on the economy and our businesses; the cyclical nature of the homebuilding and lot development industries and changes in economic, real estate and other conditions; constriction of the credit and public capital markets, which could limit our ability to access capital and increase our costs of capital; reductions in the availability of mortgage financing provided by government agencies, changes in government financing programs, a decrease in our ability to sell mortgage loans on attractive terms or an increase in mortgage interest rates; the risks associated with our land and lot inventory; our ability to effect our growth strategies, acquisitions or investments successfully; the impact of an inflationary, deflationary or higher interest rate environment; home warranty and construction defect claims; the effects of health and safety incidents; the effects of negative publicity; supply shortages and other risks of acquiring land, building materials and skilled labor; reductions in the availability of performance bonds; increases in the costs of owning a home; the effects of governmental regulations and environmental matters on our homebuilding and land development operations; the effects of governmental regulations on our financial services operations; our ability to manage and service our debt and comply with related debt covenants, restrictions and limitations; competitive conditions within the homebuilding, lot development and financial services industries; the effects of the loss of key personnel; and information technology failures and data security breaches. Additional information about issues that could lead to material changes in performance is contained in D.R. Horton's annual report on Form 10‐K and subsequent quarterly reports on Form 10-Q, all of which are or will be filed with the Securities and Exchange Commission.

3

C O V I D - 1 9 ( " C - 1 9 " )

• During the latter part of March 2020, the impacts of the C-19 pandemic and the related widespread reductions in economic activity across the U.S. began to negatively affect the Company's business; however, residential construction and financial services are designated as essential businesses as part of critical infrastructure in almost all municipalities across the U.S. where the Company operates, and D.R. Horton implemented operational protocols to comply with social distancing and other health and safety standards
• During April 2020 when restrictive stay-at-home orders were in place for many markets, the Company experienced increases in sales cancellations and decreases in sales orders, and net sales orders for April were 1% lower than the same month in the prior year; however, as economic activity began to resume and restrictive orders began to be lifted, the Company's weekly sales pace during May and June increased significantly and cancellation rates returned to normal levels
• In both May and June, the Company's net sales orders increased by more than 50% compared to the prior year periods; however, even with the resurgence of demand in May and June, the Company remains cautious as to the impact C-19 may have on its operations and on the overall economy in the future as there is significant uncertainty regarding the extent to which and how long C-19 and its related effects will impact the U.S. economy and level of employment, capital markets, secondary mortgage markets, consumer confidence, demand for the Company's homes and availability of mortgage loans to homebuyers.
• The extent to which this impacts the Company's operational and financial performance will depend on future developments, including the duration and spread of C-19 and the impact on D.R. Horton's customers, trade partners and employees, all of which are highly uncertain and cannot be predicted.
• The Company believes its strong balance sheet and liquidity position provides it with the flexibility to operate effectively through these changing economic conditions, and the Company plans to continue to generate strong cash flows from its homebuilding operations and manage its land acquisition and development investments, product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on its inventory investments in each of its communities based on local housing market conditions

4

D . R . H O R T O N , I N C .	T R A D E D O N N Y S E A S D H I

$18.9 billion	$2.6 billion	21.6% & 19.9%
Consolidated revenues	Consolidated pre-tax income	ROI (HB) & ROE, respectively*

$11.0 billion	$30.38	18.4%
Stockholders' equity	Book value per common share	Homebuilding leverage*

As of or for the twelve-month period ended June 30, 2020

*See slides 15 and 16 for definitions of ROI [Return on Inventory (Homebuilding)], ROE (Return on Equity) and homebuilding leverage

5

D H I G R O W T H , C O N S O L I D A T I O N A N D M A R K E T S H A R E

1,400	61,164 Homes Closed during TTM ended 6/30/2020
1,200
1,000
800	2006 Closings:
53,410
	2011 Closings:
	17,176
600
400
200
	1992 Closings:
	1,231
0

10%

2019 Closings:

58,434 9%

8%

7%

6%

5%

4%

3%

2%

1%

0%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Total New U.S. Single-Family Houses Sold ('000s) DHI Homes Closed as a Percentage of U.S. Single-Family New Home Sales

Source: Company filings, Census

Note: Periods represent full calendar year

6

M A R K E T S H A R E D O M I N A N C E

D.R. Horton Share and Rankings in Largest U.S. Housing Markets

Top 5 Markets

Top 50 Markets

18%

16%

14%

12%

10%

8%

6%

4%

2%

50
40	44
40
	36
30

20

10 11

0%						0
DFW	Houston	Atlanta Phoenix Austin	#1	Top 5	Top 10	Operate In
DHI Market Share			Next Ranking Competitor Market Share

Source: Builder magazine ‐ 2020 Local Leaders issue, rankings based on homes closed in calendar 2019

7

M A N A G E M E N T T E N U R E A N D E X P E R I E N C E

Executive Team &

Region Presidents

~27 years

Division Presidents

~15 years

City Managers

>10 years

Average employee tenure

8

C A P I T A L A N D C A S H F L O W P R I O R I T I E S

• Balanced, disciplined, flexible and opportunistic; focused on enhancing long-term value
• Strong balance sheet, ample liquidity and low leverage provide significant financial flexibility to effectively operate through changing economic conditions
• Invest in homebuilding business
• Invest in DHI Communities, our multi-family rental company
• Maintain conservative homebuilding leverage
• • In early May, issued $500 million of 2.6% senior notes due 2025
  • $400 million of senior note maturities in next twelve months
• Dividends to shareholders
• Repurchases of common stock
• • Plan to cautiously manage level of share repurchases in the near-term to maintain financial flexibility until there is better visibility to future market conditions and the company's expected operating results

9

H O M E B U I L D I N G O P E R A T I O N A L F O C U S

• Maximize returns by managing inventories, sales pace and pricing in each community, while maintaining affordability for homebuyers
• Consolidate market share while generating strong profits and operating cash flow
• Maintain sufficient inventories of land, lots and homes to support growth plans
• • Underwriting expectations for each community:
  • • Minimum 20% annual pre tax return on inventory (ROI)
    • Initial cash investment returned within 24 months or less
• Expanding relationships with land developers to increase lots controlled
• • Continue to grow Forestar's lot manufacturing platform
• Control SG&A while ensuring infrastructure supports the business

10

G E O G R A P H I C D I V E R S I F I C A T I O N	8 8 M A R K E T S | 2 9 S T A T E S

EAST	MIDWEST
Delaware, Maryland,
New Jersey, North	Colorado, Illinois,
and South Carolina,	Indiana, Iowa,
Pennsylvania,	Minnesota, Ohio
Virginia

SOUTH CENTRAL	SOUTHEAST
Louisiana	Alabama, Florida,
Oklahoma	Georgia, Mississippi,
Texas	Tennessee

SOUTHWEST	WEST
California, Hawaii,
Arizona
Nevada, Oregon,
New Mexico
Utah, Washington

Inventory

Homebuilding

Revenue

9% 6%

26%

12%

20% 27%

7%	5%
13%	30%
20%	25%

As of or for the twelve-month period ended June 30, 2020

Savannah, Georgia is included in the East Region; Atlanta and Augusta, Georgia are included in the Southeast

11

D I V E R S E P R O D U C T O F F E R I N G S A N D P R I C E P O I N T S

Homes for entry-level,move-up, active adult and luxury buyers

66% of homes closed <$300k

$0 - $200k $200k - $250k $250k - $300k $300k - $500k >$500k

7%

32%

27%

29%

5%

Represents homes closed & price points for the twelve months ended 6/30/20

12

F A M I L Y O F B R A N D S

Homes	Homes	Home	Average	# of	# of
Sold	Closed	Sales	Selling	Markets	States
		Revenue	Price
63%	62%	65%	$315k	88	29

32%

33%

28% $251k

60

19

3%

3%

3% $290k 28

14

2%

2%

4% $551k 24

13

As of or for the twelve months ended June 30, 2020

13

F O R E S T A R ( " F O R " )

• FOR is a publicly traded residential lot manufacturer with operations in 51 markets and 22 states
• Supporting DHI's strategy of increasing land and lots controlled through purchase contracts
• Delivered 6,396 lots and generated $584.3 million of revenue FYTD
• FOR has raised capital to fund its growth
• • In fiscal 2019, issued $350 million of senior unsecured notes due 2024 and $100.7 million of common stock
  • In February 2020, issued $300 million of senior unsecured notes due 2028
• FOR expects to opportunistically raise additional growth capital in the public debt and equity markets
• Liquidity of $704 million: $356 million of unrestricted cash and $348 million available capacity on revolving credit facility
• Net debt to capitalization of 25.2%; next senior note maturity in fiscal 2024
• DHI's long-term goal is to deconsolidate FOR from DHI's financial statements
• • DHI's ownership of FOR is 65% as compared to 75% one year ago

As of 6/30/2020 unless otherwise noted

14

E M P H A S I S O N R E T U R N O N I N V E N T O R Y ( R O I )

Homebuilding ROI target of >20%

20%		21.6%
20.2%
	18.1%	18.1%
15%	16.6%

10%

5%

0%

FY 2017

FY 2018

TTM 6/30/19

FY 2019

TTM 6/30/20

Homebuilding ROI is calculated as homebuilding pre‐tax income for the year divided by average homebuilding inventory. Average homebuilding inventory in the ROI calculation is the sum of ending homebuilding inventory balances for the trailing five quarters divided by five.

15

R E T U R N O N E Q U I T Y ( R O E )

ROE 20%

15%

10%

5%

0%

ROE has improved to the high-teens while leverage has decreased

HB leverage

40%

19.9%

17.6%

17.3%

17.2%

30%

14.4%

20%

10%

0%

FY 2017

FY 2018

TTM 6/30/19

FY 2019

TTM 6/30/20

ROE Leverage

ROE is calculated as net income divided by average stockholders' equity. Average stockholders' equity in the ROE calculation is the sum of ending stockholders' equity balances for the trailing five quarters divided by five.

Leverage is calculated as homebuilding (HB) notes payable divided by stockholders' equity plus homebuilding notes payable.

16

B O O K V A L U E P E R S H A R E

Consistent annual double-digit percentage growth in book value per share

$30.00		$30.38
$25.00	$26.08	$27.20
	$23.88

$20.00 $20.66

$15.00

$10.00

$5.00

$0.00

9/30/2017

9/30/2018

6/30/2019

9/30/2019

6/30/2020

17

C A S H F L O W A T W O R K

Utilization of $4 billion of cash generated by homebuilding operations

1,800

1,600

$1,438

5 Year Cumulative Capital

1,400

1,200

1,000

$1,002

Cash Flow from	$4.0B
Homebuilding Operations
Acquisitions	$1.0B

800$581

	$600	$304
600

400

200

0

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

Acquisitions Debt Paydown Dividends Share Repurchases HB Cash Flow from Ops

Homebuilding Senior	$1.4B
Notes Paydown
Shareholder Return	$1.4B
through Dividends and
Share Repurchases

18

E X P E C T A T I O N S *

• In April 2020, due to the uncertainty in the U.S. economy and the Company's business operations resulting from C-19, the Company withdrew its previously issued guidance for fiscal 2020
• • Based on today's market conditions, the Company is now providing its expectations for Q4 FY 2020:
  • • Consolidated revenues in a range of $5.5 billion to $5.8 billion
    • Homes closed between 18,000 homes and 19,000 homes
    • Homes sales gross margin similar to Q3 FY 2020 in the mid-21% range
    • Homebuilding SG&A of 8.0% to 8.2% of homebuilding revenues
    • Financial services pre-tax profit margin of approximately 40%
    • Income tax rate of approximately 23%
• The Company expects to provide annual guidance for fiscal 2021 when it has sufficient visibility into market conditions

*Based on current market conditions as noted on the Company's Q3 FY20 conference call on 7/28/20

19

T H I R D Q U A R T E R D A T A

20

Q 3 F Y 2 0 2 0 H I G H L I G H T S

• Net income per diluted share increased 37% to $1.72
• Net income attributable to D.R. Horton increased 33% to $630.7 million
• Consolidated revenues increased 10% to $5.4 billion
• Consolidated pre-tax income increased 25% to $782.4 million
• Consolidated pre-tax profit margin improved 170 basis points to 14.5%
• Net homes sold and homes closed increased by 38% and 10%, respectively
• 21,519 net homes sold and 17,642 homes closed

Comparisons to prior year quarter

21

S A L E S A N D C L O S I N G S

Net Sales Orders and Homes Closed increased 38% and 10%,

respectively, in Q3 FY 2020 compared to Q3 FY 2019

# of Homes

20,000

17,500

15,000

12,500

10,000

7,500

5,000

2,500

0

Sales			Closings
3Q FY18	3Q FY19		3Q FY20

22

I N C O M E S T A T E M E N T

		3 MONTHS ENDED			9 MONTHS ENDED		YEAR ENDED
		6/30/2020			6/30/2019			6/30/2020			6/30/2019			9/30/2019
Homes closed		17,642			15,971			45,140			40,951			56,975
Homebuilding
Revenues:
Home sales	$	5,207.6	$	4,734.6	$	13,434.2	$	12,125.8	$	16,925.0
Land/lot sales		14.5			27.5			49.7			49.2			91.9
		5,222.1			4,762.1			13,483.9			12,175.0			17,016.9
Gross profit:
Home sales		1,125.3			961.6			2,865.0			2,409.3			3,417.9
Land/lot sales and other		4.3			4.3			14.8			11.6			16.8
Inventory and land option charges		(4.9)			(19.2)			(17.3)			(41.0)			(53.2)
		1,124.7			946.7			2,862.5			2,379.9			3,381.5
SG&A		415.1			387.4			1,135.3			1,071.4			1,482.3
Interest and other (income)		(0.2)			(2.5)			(9.7)			(8.1)			(11.5)
Homebuilding pre-tax income		709.8			561.8			1,736.9			1,316.6			1,910.7
Financial services, Forestar and other pre-tax income		72.6			64.9			190.0			148.6			214.6
Pre-tax income		782.4			626.7			1,926.9			1,465.2			2,125.3
Income tax expense		149.5			153.1			377.6			350.5			506.7
Net income		632.9			473.6			1,549.3			1,114.7			1,618.6
Net income (loss) attributable to noncontrolling interests		2.2			(1.2)			4.6			1.5			0.1
Net income attributable to D.R. Horton, Inc.	$	630.7	$	474.8	$	1,544.7	$	1,113.2	$	1,618.5
Net income per diluted share	$	1.72	$	1.26	$	4.17	$	2.94	$	4.29

$ in millions except per share data

23

H O M E S A L E S G R O S S M A R G I N

22%

20%	20.0%	21.3%		20.3%	21.0%	20.2%	21.0%	21.3%	21.6%
18%	20.0%	19.3%
16%
14%
12%
10%
8%
6%
4%
2%
0%
FY 2017	FY 2018 1Q19	2Q19	3Q19	4Q19	FY 2019 1Q20	2Q20	3Q20

Shown as a % of the Company's homebuilding segment's home sales revenues Includes interest amortized to cost of sales

Refer to slide 4 of the Company's Q3 FY20 Supplementary Data presentation for detailed components of home sales gross margin

24

H O M E B U I L D I N G S G & A

SG&A as a percentage of homebuilding revenues improved 40 basis points

to 8.4% for fiscal YTD 2020

			Fiscal YTD 6/30
HB Rev $					SG&A %
$14,000					12%
$12,000					11%
$10,000
$8,000					10%
$6,000					9%
$4,000	8.8%	8.4%
$2,000				8%
$0						7%
2019	2020
			HB Rev $	SG&A %

$ in millions

Shown as a % of homebuilding revenues

			Third Fiscal Quarter
HB Rev $		SG&A %
$14,000				12%
$12,000				11%
$10,000
$8,000				10%
$6,000				9%
$4,000
$2,000				8%
			7.9%
8.1%
$0					7%
			Q3 FY19	Q3 FY20
			HB Rev $	SG&A %

25

C O N S O L I D A T E D P R E - T A X I N C O M E

Consolidated pre-tax profit margin improved 220 basis points to 13.9% for fiscal YTD 2020

Fiscal YTD 6/30	Third Fiscal Quarter

PTI $ $2,250 $2,000 $1,750 $1,500

11.7%

13.9%

$1,926.9

PTI $

$1,600 $1,400 $1,200 $1,000

$1,250 $1,000 $750 $500 $250 $0

$1,465.2

20192020

$800		14.5%
12.8%	$782.4
$600
$626.7
$400
$200
$0
Q3 FY19	Q3 FY20

$ in millions

Shown as a % of consolidated revenues

26

B A L A N C E S H E E T

Homebuilding		6/30/2020			9/30/2019			6/30/2019
	Cash and cash equivalents	$	1,905.8	$	1,051.0	$	587.7
	Construction in progress and finished homes		5,886.0			5,249.0			5,723.5
	Land inventories		5,030.8			5,036.6			4,954.9
				10,916.8			10,285.6			10,678.4
	Other assets		1,359.0			1,232.9			1,192.7
Deferred income taxes, net		158.6			163.1			173.9
Financial services, Forestar and other assets			3,633.7			2,874.0			2,591.3
Total assets		$	17,973.9	$	15,606.6	$	15,224.0
Homebuilding
	Notes payable	$	2,490.3	$	2,047.6	$	2,191.3
	Other liabilities		2,143.8			1,751.1			1,796.4
Financial services, Forestar and other liabilities		2,012.7			1,512.8			1,421.6
Stockholders' equity		11,048.0			10,020.9			9,642.4
Noncontrolling interests			279.1			274.2			172.3
Total equity			11,327.1			10,295.1			9,814.7
Total liabilities and equity	$	17,973.9	$	15,606.6	$	15,224.0
Debt to total capital - consolidated		28.0%			25.3%			26.4%
Debt to total capital - homebuilding			18.4%			17.0%			18.5%
Common shares outstanding			363.63			368.43			369.75
Book value per common share		$	30.38	$	27.20	$	26.08

$ in millions except per share metrics

Homebuilding cash and cash equivalents presented above includes $9.0 million, $8.0 million, and $9.8 million of restricted cash for the periods ended 6/30/20, 9/30/19, and 6/30/19 respectively.

27

H O M E S I N I N V E N T O R Y

Well-positioned to respond to increased new home demand

35,000			32,800
30,000	27,900	29,200	27,700
25,000	24,600

20,000

15,000

10,000

5,000

0

9/30/17	9/30/18			6/30/19	9/30/19	6/30/20
			Sold			Specs

Homes in inventory excluding model homes

28

H O M E B U I L D I N G L A N D A N D L O T P O S I T I O N

400,000

Controlled lot position increased 19% from a year ago

34% owned / 66% controlled at 6/30/20

350,000

300,000

250,000

288,500

249,000

335,500

303,000307,300

200,000

150,000

100,000

50,000

0

164,200*	184,500*	185,900*	220,300*

124,000

125,000

124,300

118,500

121,400

115,200

9/30/17	9/30/18	6/30/19	9/30/19	6/30/20
	Owned	Controlled

*Includes lots owned or controlled by FOR that DHI has under contract or the right of first offer to purchase of 29,600, 23,400, 24,100 and 13,600 at 6/30/20, 9/30/19, 6/30/19 and 9/30/18, respectively

29

H O M E B U I L D I N G P U B L I C D E B T M A T U R I T I E S B Y Y E A R

$400 million of senior note maturities in next 12 months

$800

$700		$700
$600
$500		5.750%	$500	$500
$400
$400	$350
$300
$200	4.375%	4.750%		2.600%
2.550%	2.500%

$100 $0

FY 21

FY 22

FY 23

FY 24

FY 25

FY 26

$ in millions

30