D R Horton : Q1 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 1 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 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 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, which is filed with the Securities and Exchange Commission.

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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

58,434	$18.1 billion	$2.3 billion
Annual homes closed	Annual consolidated revenues	Annual pre‐tax income

18.7% & 18.2%	$10.2 billion	$27.92
ROI (HB) & ROE, respectively*	Stockholders' equity	Book value per common share

As of or for the twelve-month period ended December 31, 2019

*See slides 12 and 13 for definition of ROI [Return on Inventory (Homebuilding)] and ROE (Return on Equity)

4

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	9 0 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%

27%

12%

21% 25%

7% 5%

13%29%

21%

25%

As of or for the twelve-month period ended December 31, 2019

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

5

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

67% of homes closed <$300k

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

9%

33%

25%

28%

5%

Represents homes closed & price points for the twelve months ended 12/31/19

6

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
61%	61%	64%	$316k	90	29

34%

34%

28% $245k

58

19

3%

3%

3% $285k 27

13

2%

2%

5% $593k 26

14

As of or for the twelve months ended December 31, 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

25 years

Division Presidents

~15 years

City Managers

>10 years

Average employee tenure

8

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

	Total New U.S. Single-Family Houses Sold ('000s)
1,400	DHI Homes Closed as a Percentage of U.S. Single-Family New Home Sales
1,200
1,000
800
600
400
200
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

Source: Company filings, Census

Note: Periods represent full calendar year

10%

9%

8%

7%

6%

5%

4%

3%

2%

1%

0%

9

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

43

38

3031

20

10 13

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 ‐ 2019 Local Leaders issue, rankings based on homes closed in calendar 2018 and proforma for D.R. Horton's acquisition of Westport Homes, a top 5 builder in Indianapolis, IN and Columbus, OH, which closed in November 2018

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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
• 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
• Increase lots controlled by expanding relationships with developers
• • Continue to grow Forestar's lot manufacturing platform
• Control SG&A while ensuring infrastructure supports targeted growth

11

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 expected to remain strong in the 18% to 20% range

20%

20.2%

19.3%18.1%18.7%

15% 16.6%

10%

5%

0%

FY 2017

FY 2018

TTM 12/31/18

FY 2019

TTM 12/31/19

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.

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

ROE 20%

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

HB leverage

40%

17.6%	18.2%	18.2%
	17.2%
15%		30%
14.4%
10%		20%

5%

10%

0%						0%
	FY 2017	FY 2018	TTM 12/31/18	FY 2019	TTM 12/31/19

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 notes payable divided by stockholders' equity plus homebuilding notes payable.

13

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

$25.00

$27.20$27.92

$23.88$24.45

$20.00 $20.66

$15.00

$10.00

$5.00

$0.00

9/30/2017

9/30/2018

12/31/2018

9/30/2019

12/31/2019

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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
• Invest in homebuilding business, including acquisitions
• Invest in DHI Communities, our multi-family rental company
• Maintain conservative homebuilding leverage
• • $500 million senior note maturity in Q2 FY 2020
• Consistent dividends to shareholders
• • Increased cash dividend per share by 17% in Q1 FY 2020
  • Approximately $250 million annually
• Repurchases of common stock to reduce outstanding shares
• • Repurchased 3.0 million shares during Q1 2020 for $163.1 million
  • $732.6 million remaining share repurchase authorization with no expiration date

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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

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

• FOR, a majority-owned subsidiary of DHI, is a publicly traded residential lot manufacturer, with operations in 51 markets and 20 states as of December 31, 2019
• Advancing DHI's strategy of increasing land and lots controlled through purchase contracts
• FOR has begun raising capital to fund long-term growth
• • In fiscal 2019, FOR issued $350 million of senior unsecured notes and $100.7 million of common stock
• FOR expects to opportunistically raise additional growth capital in the public debt and equity markets
• DHI's long-term goal is to deconsolidate FOR from DHI's financial statements
• • DHI's ownership of FOR is 65% as of 12/31/19 compared to 75% one year ago
• Delivered 2,422 lots and generated $247.2M of revenue in Q1 2020
• Annual lot delivery and revenue expectations*
• • Fiscal 2020: 10,000 lot deliveries and $800M to $850M of revenue
  • Fiscal 2021: 12,000 lot deliveries and $900M to $1B of revenue

*Expectations are for Forestar's standalone operations

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F Y 2 0 2 0 E X P E C T A T I O N S *

• Q2 FY 2020
• • Consolidated revenues in a range of $4.25 billion to $4.4 billion
  • Homes closed in a range between 13,800 homes and 14,300 homes
  • Home sales gross margin of approximately 21%
  • Homebuilding SG&A of approximately 9% of homebuilding revenues
  • Income tax rate between 23% and 24%
• FY 2020
• • Consolidated revenues in a range of $18.5 billion to $19.1 billion
  • Homes closed in a range between 60,000 homes and 61,500 homes
  • Income tax rate between 23% and 24% for second, third and fourth fiscal quarters
  • Outstanding share count at end of fiscal 2020 down 2% from end of fiscal 2019
  • Generate homebuilding cash flow from operations in excess of $1 billion

*Based on current market conditions as noted on the Company's Q1 FY20 conference call on 1/27/20

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F I R S T Q U A R T E R D A T A

19

Q 1 F Y 2 0 2 0 H I G H L I G H T S

• Net income per diluted share increased 53% to $1.16
• Net income attributable to D.R. Horton increased 50% to $431.3 million
• Consolidated revenues increased 14% to $4.0 billion
• Consolidated pre-tax income increased 39% to $523.3 million
• Consolidated pre-tax profit margin improved 230 basis points to 13.0%
• Net homes sold and homes closed increased by 19% and 13%, respectively
• 13,126 net homes sold and 12,959 homes closed
• Repurchased 3.0 million shares of common stock for $163.1 million

Comparisons to prior year quarter

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

Net Sales Orders and Homes Closed increased 19% and 13%,

respectively, in Q1 FY 2020 compared to Q1 FY 2019

# of Homes

17,500

15,000

12,500

10,000

7,500

5,000

2,500

0

Sales		Closings
		1Q FY 2018	1Q FY 2019	1Q FY 2020

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

		3 MONTHS ENDED			FISCAL YEAR ENDED
	12/31/2019	12/31/2018			9/30/2019			9/30/2018
Homes closed		12,959			11,500			56,975			51,857
Homebuilding
Revenues:
Home sales	$	3,863.3	$	3,410.6	$	16,925.0	$	15,502.0
Land/lot sales		19.7			6.7			91.9			121.8
		3,883.0			3,417.3			17,016.9			15,623.8
Gross profit:
Home sales		811.7			681.4			3,417.9			3,306.5
Land/lot sales and other		6.4			1.6			16.8			22.7
Inventory and land option charges		(3.5)			(8.0)			(53.2)			(48.8)
		814.6			675.0			3,381.5			3,280.4
SG&A		358.4			324.7			1,482.3			1,346.2
Interest and other (income)		(5.4)			(4.0)			(11.5)			(23.0)
Homebuilding pre-tax income		461.6			354.3			1,910.7			1,957.2
Financial services, Forestar and other pre-tax income		61.7			21.4			214.6			102.8
Pre-tax income		523.3			375.7			2,125.3			2,060.0
Income tax expense		90.8			89.0			506.7			597.7
Net income		432.5			286.7			1,618.6			1,462.3
Net income (loss) attributable to noncontrolling interests		1.2			(0.5)			0.1			2.0
Net income attributable to D.R. Horton, Inc.	$	431.3	$	287.2	$	1,618.5	$	1,460.3
Net income per diluted share	$	1.16	$	0.76	$	4.29	$	3.81

$ in millions except per share data

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

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 Q1 FY20 Supplementary Data presentation for detailed components of home sales gross margin

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

SG&A as a percentage of homebuilding revenues improved 30 basis points to 9.2% in Q1 FY 2020

	Fiscal Year
HB Rev $	SG&A %
$18,000	12%
$16,000

HB Rev $ $14,000 $12,000

First Fiscal Quarter

SG&A % 12%

$14,000		11%
$12,000		10%
$10,000
$8,000		9%
$6,000
	8.7%
$4,000	8.6%
		8%
$2,000
$0			7%

$10,000 $8,000 $6,000 $4,000 $2,000

$0

9.5% 9.2%

11%

10%

9%

8%

7%

2018	2019
HB Rev $	SG&A %

$ in millions

Shown as a % of homebuilding revenues

Q1 FY19	Q1 FY20
HB Rev $	SG&A %

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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 230 basis points to 13.0% in Q1 FY 2020

Fiscal Year

First Fiscal Quarter

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

$750 $500 $250 $0

12.8%12.1%

$2,060.0 $2,125.3

20182019

PTI $ $1,600

$1,400 $1,200 $1,000 $800 $600 $400 $200 $0

13.0%

10.7%

$523.3

$375.7

Q1 FY19

Q1 FY20

$ in millions

Shown as a % of consolidated revenues

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

Homebuilding		12/31/2019			9/30/2019			12/31/2018
	Cash and cash equivalents	$	1,159.5	$	1,051.0	$	546.2
	Construction in progress and finished homes		5,603.3			5,249.0			5,840.4
	Land inventories		5,282.3			5,036.6			5,057.8
				10,885.6			10,285.6			10,898.2
	Other assets		1,291.5			1,232.9			1,066.7
Deferred income taxes, net		154.1			163.1			181.4
Financial services, Forestar and other assets			2,832.2			2,874.0			1,843.3
Total assets		$	16,322.9	$	15,606.6	$	14,535.8
Homebuilding
	Notes payable	$	2,470.0	$	2,047.6	$	2,748.7
	Other liabilities		1,865.3			1,751.1			1,791.2
Financial services, Forestar and other liabilities		1,484.7			1,512.8			697.7
Stockholders' equity		10,227.4			10,020.9			9,124.7
Noncontrolling interests			275.5			274.2			173.5
Total equity			10,502.9			10,295.1			9,298.2
Total liabilities and equity	$	16,322.9	$	15,606.6	$	14,535.8
Debt to total capital - consolidated			27.0%			25.3%			26.8%
Debt to total capital - homebuilding			19.5%			17.0%			23.2%
Common shares outstanding			366.27			368.43			373.24
Book value per common share		$	27.92	$	27.20	$	24.45

$ in millions except per share metrics

Homebuilding cash and cash equivalents presented above includes $6.6 million, $8.0 million, and $8.7 million of restricted cash for the periods ended 12/31/19, 9/30/19 and 12/31/18, respectively.

26

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

Well-positioned to achieve FY 2020 closings guidance

35,000

		31,800
30,000		30,200
27,900	27,700
25,000	24,600

20,000

15,000

10,000

5,000

0

9/30/17	9/30/18			12/31/18	9/30/19	12/31/19
			Sold			Specs

Homes in inventory excluding model homes

27

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

350,000

300,000

250,000

200,000

150,000

100,000

50,000

0

Controlled lot position increased 8% from a year ago

39% owned / 61% controlled at 12/31/19

309,400307,300319,000

288,500

249,000

164,200*	180,900*	185,900*	195,600*

124,000

125,000

124,300

128,500

121,400

123,400

9/30/17	9/30/18	12/31/18	9/30/19	12/31/19
	Owned	Controlled

*Includes lots owned or controlled by FOR that DHI has under contract or the right of first offer to purchase of 25,600, 23,400, 18,800 and 13,600 at 12/31/19, 9/30/19, 12/31/18 and 9/30/18, respectively

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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

$800

$700				$700
$600
$500*			5.750%		$500
$500
$400		$400
		$350
$300
$200			4.375%	4.750%
4.000%	2.550%		2.500%
$100
$0
FY 20	FY 21	FY 22	FY 23	FY 24	FY 25

$ in millions

*plan to repay at maturity utilizing cash on hand and revolving credit facility as necessary

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