D.R. Horton, Inc. (NYSE:DHI) Q3 2023 Earnings Call Transcript

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Paul Romanowski: And then, in terms of our forward investment level, we’re at a total of about $3.3 billion of inventory today. We’ve seen a significant growth ramp in that over the last two years. We do expect to continue to grow that platform and we will see our inventory levels continue to grow over the next couple of years, but we do expect that growth pace to moderate from what it’s been in the last two years.

Stephen Kim: Okay. Great. Thanks very much, guys.

Operator: Thank you. The next question is coming from Joe Ahlersmeyer from Deutsche Bank. Joe, your line is live.

Joe Ahlersmeyer: Thanks, and good quarter, guys.

David Auld: Thank you.

Joe Ahlersmeyer: I wanted to follow up on the community count. That’s up about 9% year-to-date, calendar year-to-date that is. And I’m just wondering is there anything in there that we should consider that’s more temporary in nature? I’m not going to straight-line that release or anything that sequential number, but should we expect that to go down into the back half, or are we going to sustain those levels? And then I have a follow-up.

Jessica Hansen: Sure, Joe. We’ve been really focused on our flag count. I mean, we clearly have the lot position to open new communities and to grow our community count, whereas the last couple of years, it’s not moved more than a low-single digit percentage. We do feel like we’re positioned to be closer to the mid-single digits going forward. So not necessarily 9% going forward, but around the mid-single digits quarter-to-quarter. There can be some choppiness just determining when we close out of communities and ultimately bring them online, but our lot position is there and our operators are focused on growing their flag count.

Joe Ahlersmeyer: Makes sense. And just thinking about the homes and inventory number, that was actually sequentially flattish the last couple quarters, even as you did grow those communities. So, is it right to think that maybe this is part of returning to higher levels of inventory unit turnover? Or should we expect that the total homes and inventory will sort of catch up on a lag as you continue to grow starts?

Paul Romanowski: We’re very focused on improving our inventory turn and as our construction cycle times have improved, that’s facilitating that. You look historically, we typically when we go into a year with our number of homes in inventory, we’ve been able to turn that 2 times in the following year. The last couple of years has been slower than that, and so we’re looking to get back to that more historic inventory turn level as we look to fiscal ’24.

David Auld: That is a — going back to the start question, that is a factor in our start pace is making sure that we have the capacity to continue to deliver these houses in a more — in a faster and more efficient way. It all flows together so that we can actually deliver more houses with fewer homes and inventory quarter-to-quarter, quarter-to-quarter.

Joe Ahlersmeyer: That’s great to hear. Thanks very much, and good luck.

Operator: Thank you. The next question is coming from John Lovallo from UBS. John, your line is live.

John Lovallo: Good morning, guys. Thank you for taking my questions. The first one is, it looks like the sequential improvement or the sequential cadence of orders from the second quarter to third quarter was better than normal seasonality by a bit. I mean, I think normal seasonality would suggest down about 5%. It looks like they were down about 1%. As we move into the fourth quarter, how should we sort of think about seasonality, which looks like it’s typically down, call it, 15% to 20% on a quarter-over-quarter basis? Is that a reasonable way to think about the fourth quarter, or are the dynamics getting a little bit better out there where you might be able to do a bit better than that?

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