D R Horton — Income Statement, Cash Flows & Balance Sheet
Is D.R. Horton profitable?
Revenue fell and margins compressed in fiscal 2025, but D.R. Horton remained solidly profitable.
| Metric | FY2024 | FY2025 | Change |
|---|---|---|---|
| Revenue | $36,801M | $34,250M | -7% |
| Cost of sales | $27,266M | $26,134M | -4% |
| Gross margin | 25.9% | 23.7% | -2.2 pp |
| SG&A expense | $3,600M | $3,692M | +3% |
| Net income (GAAP) | $4,806M | $3,621M | -25% |
| Diluted EPS | $14.34 | $11.57 | -19% |
Revenue declined as home sales volume and pricing softened, while costs fell more slowly, squeezing margins. SG&A also crept higher partly due to a jump in advertising spend, adding further pressure. Despite all of this, D.R. Horton still earned well over $3.5 billion attributable to shareholders — a meaningful profit for any company.
A large construction defect reserve and increased inventory charges are worth keeping an eye on.
| Item | FY2024 | FY2025 | Change |
|---|---|---|---|
| Inventory & land option charges | $79M | $158M | +100% |
| Legal claims expense | $164M | $240M | +46% |
| Legal claims reserve (balance sheet) | $950M | $1,144M | +20% |
These are recurring costs in homebuilding, but both accelerated noticeably this year. The legal reserve — almost entirely construction defect claims — now tops $1.1 billion and involves significant management estimation, which auditors flagged as a critical audit matter.
Where does D.R. Horton's revenue come from?
Homebuilding is the engine, generating 92% of revenue, though every segment saw profitability decline.
| Segment | FY2024 Pre-tax Income | FY2025 Pre-tax Income | Change |
|---|---|---|---|
| Homebuilding | $5,455M | $4,135M | -24% |
| Rental | $229M | $170M | -26% |
| Forestar (lot development) | $270M | $219M | -19% |
| Financial Services | $311M | $279M | -10% |
The Southeast and South Central regions, historically D.R. Horton's biggest earners, saw the sharpest drops in home sales revenue, reflecting affordability pressure in previously hot markets. The North region bucked the trend, growing home sales from $3.7B to $4.2B, making it the standout performer this year.
Does D.R. Horton generate cash?
Operating cash flow improved significantly, though a massive buyback program consumed most of it.
| Cash Flow Item | FY2024 | FY2025 | Change |
|---|---|---|---|
| Operating cash flow | $2,190M | $3,421M | +56% |
| Capital expenditures | $(165M) | $(137M) | -17% |
| Free cash flow (GAAP op. CF minus capex) | $2,025M | $3,284M | +62% |
| Share repurchases | $(1,788M) | $(4,282M) | +139% |
| Dividends paid | $(395M) | $(495M) | +25% |
| Net change in cash | +$644M | $(1,511M) | — |
Operating cash generation bounced back strongly as finished home inventory wound down and land spending was disciplined. However, D.R. Horton chose to return capital aggressively — buying back over 30 million shares at a cost of $4.3 billion — which is why the cash balance fell by roughly $1.5 billion on net.
How strong is D.R. Horton's balance sheet?
Debt is modest relative to the asset base, and liquidity headroom remains substantial.
| Metric | FY2024 | FY2025 | Change |
|---|---|---|---|
| Total debt | $5,918M | $5,966M | +1% |
| Total equity | $25,824M | $24,742M | -4% |
| Debt-to-equity ratio | 0.23x | 0.24x | — |
| Cash & equivalents | $4,516M | $2,985M | -34% |
| Homebuilding revolving credit (available) | ~$2B+ | $2,073M | — |
Leverage remains low, and with over $2 billion in available revolving credit on top of nearly $3 billion in cash, D.R. Horton has ample financial flexibility. The cash decline is almost entirely explained by the buyback program — a deliberate capital allocation choice rather than a sign of financial strain. Shareholders' equity dipped as treasury stock swelled to over $10 billion from years of sustained repurchases.