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

Mike Murray: Our build time of that at five-and-a-half months has come down about a month, and we probably have another month, month-and-a-half to go to get back to where we have been historically when we’re operating at a more efficient level. And then, there’s probably another 45 days to 60 days after that, what we call, construction completion until we hit the home closing date. So on average, we’re looking to get to a 2 or a little better than 2 times turn of inventory units implies that six to slightly less than six months start to closing cycle time.

Rafe Jadrosich: Thank you. That’s helpful. So there’s still more opportunity. And then, just on the rental profit outlook for the fourth quarter, the guidance is units will be up quite a bit, but you’re thinking about rental profits being down. Should we think about gross margins there being lower than kind of core homebuilding longer term? Is there any dynamic that’s driving that margin kind of cadence short-term, or is this something we should be thinking about it longer-term?

Bill Wheat: Yeah, it’s really a short-term thing, as Mike mentioned earlier, part of it is the mix of the projects that we see coming through and the time in which those homes were constructed was the time when we were seeing higher construction costs as well. So, we really see that as a Q4 event and as we look longer-term from a gross margin perspective and really pre-tax margin perspective, we would expect the rental to still be higher than our homebuilding margins overall. Maybe a little bit of anomaly here in Q4, but not a long-term phenomenon.

Rafe Jadrosich: Great. Very helpful. Thanks.

Operator: Thank you. That’s all the questions we have time for today. I would now like to hand the call back to David Auld for closing remarks.

David Auld: Thank you, Paul. We appreciate everyone’s time on the call today and look forward to speaking with you again to share our fourth quarter results in November. And finally, congratulations to the entire D.R. Horton family on producing a solid third quarter. Continue to compete, win every day. Thank you.

Operator: Thank you. This does conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.