Clean Up City of St. Augustine, Florida: 2018 Q3 Earnings Presentation of D.R. Horton (DHI), which wants to destroy Fish Island

D.R. HORTON (NYSE: DHI) is a housing construction monopolist, which wants to destroy Fish Island.

On July 3, 2018, DHI's expert lied about the presence of bald eagles and a nest it falsely claimed was "abandoned."

I filed an SEC securities fraud complaint about this false testimony.

DHI's perjury will be explored at the August 7, 2018 PZB meeting on its meretricious Planned Unit Development (PUD).

On July 3, 2018, the day before Independence Day, ROGERS TOWERS partner ELLEN AVERY-SMITH, on behalf of Texas billionaire DONALD R. HORTON and St. Augustine landowner PIERRE THOMPSON, presented false testimony that bald eagle nest number SJ019 on Fish Island is "abandoned."

The bald eagle is our national symbol, no longer endangered but still a threatened species, legally protected by two federal criminal laws, the Bald and Golden Eagle Protection Act and Migratory Bird Treaty Act.

In fact, during the 2017-2018 season, the "abandoned" bald eagle nest was shown to be an active bald eagle nest, with a nesting pair and babies.

Unrebutted testimony from our Matanzas Riverkeeper, Jen Lemberk, St. Johns County Audubon Society President Amy Koch, Audubon Eagle Watch expert Rhonda Lovett and eco-tour guide Adam Morley ALL verified the presence of eagles, with time-stepped photos (17MAR2018 13:15; 13:17; 13:19) admitted into evidence by PZB:

Here is DHI's revealing FY 2018 third quarter earnings presentation -- it made a whopping twelve cents a share!

Investor Presentation

Q3 FY 2018

D.R. HORTON, INC.

By closings volume for calendar years 2002 to 2017 2

FORWARD-LOOKING STATEMENTS

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 industry and changes in economic, real estate and other conditions; constriction of the credit 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; home warranty and construction defect claims; the effects of a health and safety incident; the effects of negative publicity; supply shortages and other risks of acquiring land, building materials and skilled labor; the impact of an inflationary, deflationary or higher interest rate environment; 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 operations; the effects of governmental regulations on our financial services operations; our significant debt and our ability to 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 and our most recent quarterly report on Form 10‐Q, both of which are filed with the Securities and Exchange Commission.

D.R. HORTON, INC.

TRADED ON NYSE AS DHI

50,348

$15.7 billion

$1.9 billion

Annual homes closed

Annual consolidated revenues

Annual pre‐tax income

19.1%

$8.6 billion

$22.80

Homebuilding return on inventory*

Stockholders’ equity

Book value per common share

As of or for the twelve‐month period ended June 30, 2018
*See slide 12 for definition of homebuilding return on inventory

BROAD NATIONAL FOOTPRINT 80 MARKETS | 26 STATES

BROAD NATIONAL FOOTPRINT

80 MARKETS | 26 STATES

EAST

MIDWEST

SOUTHEAST

SOUTH CENTRAL

SOUTHWEST

WEST

Delaware, Maryland, New Jersey, North and South Carolina, Pennsylvania, Virginia

Colorado Illinois Minnesota

Alabama, Florida, Georgia, Mississippi, Tennessee

Louisiana Oklahoma Texas

Arizona New Mexico

California, Hawaii, Nevada, Oregon, Utah, Washington

12%

29%

27%

25%

24%

HB Revenue

Inventory

5% 5%

6% 5%

24%

25%

As of or for the twelve‐month period ended June 30, 2018
Savannah, Georgia is included in the East Region; Atlanta and Augusta, Georgia are included in the Southeast Region

13%

DIVERSE PRODUCT OFFERINGS AND PRICE POINTS

Represents homes closed for the twelve months ended 6/30/18

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

27%

$200k

16%

$500k $0

$300k
$250k

30%

20%

FAMILY OF BRANDS

FIRST TIME / MOVE UP

ENTRY LEVEL

LUXURY

ACTIVE ADULT

80 markets | 26 states ASP $322k

60 markets | 21 states ASP $243k

34 markets | 14 states ASP $629k

27 markets | 15 states ASP $263k

Based on Q3 FY 2018 results

3%3%

3%2%

7% 2%

37% Homes Sold

37%

Homes Closed

29%

Home Sales Revenue

57%

58%

62%

MANAGEMENT TENURE AND EXPERIENCE

Executive team and region presidents

25 years

Division presidents

14 years

City managers

over 10 years

Average employee tenure

MARKET SHARE DOMINANCE

18% 16% 14% 12% 10%

50
40
30
20
10 14

8% 6% 4% 2% 0%

32 27

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

Top 5 Markets

Top 50 Markets

DFWDHI Market Share Next Ranking Competitor Market Share

Top 5

Top 10

Operate In

Houston

Atlanta

Phoenix

Austin

Source: Builder magazine ‐ 2018 Local Leaders issue, rankings based on homes closed in calendar 2017

HOMEBUILDING OPERATIONAL FOCUS

• Maximize returns by managing inventories, sales pace and pricing in each community

• Generate consistent positive annual cash flow from operations

• Maintain inventories of land, lots and homes that support double‐digit annual growth in both revenues and profits

• Underwriting expectations for each community:• Minimum 20% annual pre‐tax return on inventory (ROI)• Initial cash investment returned within 24 months or less

• Increase optioned land and lots by expanding relationships with land developers• Grow Forestar’s land development platform

• Control SG&A while ensuring infrastructure supports growth

EMPHASIS ON RETURN ON INVENTORY (ROI)

20%

15%

16.3%

16.6%

10%

12.8%

FY 2015

FY 2016

TTM 6/30/17

FY 2017

TTM 6/30/18

Steady improvement in Homebuilding ROI

15.4%

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.

19.1%

BALANCED APPROACH

$ in billions

$18

$16.1 – $16.3 $5$4

$12

$14.1

$2.7 $2.2

Expect to generate positive cash flow from operations for the fourth consecutive year while growing revenues and replenishing land investments

$0
FY 2015

FY 2016

FY 2017

FY 2018e

FY 2015

FY 2016

FY 2017

FY 2018e

Consolidated Revenues

Land Investment ‐ Homebuilding

$12.2 $10.8

$3 $2 $1 $0

$3.5

~$4.0

FY 2018 CAPITAL AND CASH FLOW PRIORITIES

• •

Balanced, disciplined, flexible and opportunistic

• •

Acquired 75% of Forestar for $558 million in October 2017

•

Consistent dividends to shareholders

Increased quarterly dividend by 25% in Q1 FY 2018
Approximately $190 million annually

•

Share repurchases to partially offset dilution

Repurchased 1.6 million shares during the nine months ended 6/30/18 for $75 million
Board authorization of $400 million through September 2019

Invest in homebuilding opportunities, including acquisitions, to increase returns and consolidate market share

Reduce or maintain debt levels and leverage• Refinanced $400 million of senior notes in Q1 FY 2018

CONSOLIDATED PRE-TAX PROFIT MARGIN

Rev $ $18

Expect consolidated pre‐tax profit margin to improve 130 to 150 basis points in FY 2018

PTI % 15%

$16
$14
$12
$10

12.7% ‐ 12.9%

$8 $6 $4 $2 $0

$10.8

10.4%

FY 2015Consolidated pre‐tax profit margin shown as a % of consolidated revenues

FY 2017 PTI %

FY 2018e

$ in billions

11.1%

11.4%

$16.1 – $16.3

$12.2

FY 2016

Consol. Rev $

$14.1

10%

FORESTAR GROUP (“FOR”)

• FOR, a majority‐owned subsidiary of DHI (as of 10/5/17), is a publicly‐traded land development company, with operations in 20 markets and 11 states as of June 30, 2018

• The strategic relationship between DHI and FOR will significantly grow FOR into a large, national residential land development company, selling lots to DHI and other homebuilders

Advances DHI strategy of increasing access to optioned land and lots to enhance efficiency and returns
Over the next 3 to 5 years, DHI intends to reduce its ownership position and increase FOR’s public float
Effective 1/30/18, FOR’s fiscal year‐end aligns with DHI’s September 30 fiscal year
Annual lot delivery and revenue expectations*

• Fiscal 2018: 1,200 lot deliveries and $90M of revenue• Fiscal 2019: 4,000 lot deliveries and $300M to $350M of revenue• Fiscal 2020: 10,000 lot deliveries and $700M to $800M of revenue

Over the next three years, expect FOR’s stabilized pre‐tax profit margin to be 10% to 12%
Forestar is targeting a net debt to capital ratio of 40% or less

*Expectations are for Forestar’s standalone operations

FORESTAR GROWTH TIMELINE

Expect FOR to invest $400M in land acquisition and development and have a bank credit facility in place in FY18

Expect FOR to access the public markets for additional growth capital in FY19

FOR owns and controls 18,800 lots as of 6/30/18, with 11,100 under contract with or subject to right of first offer to DHI

Oct. 5, 2017

Sept. 30, 2018

Sept. 30, 2019

Sept. 30, 2020

DHI acquisition date of 75% of o/s shares of FOR

DHI & FOR fiscal year‐end

Feb. 2018

June 30, 2018

FOR strategic asset sale

DHI & FOR quarter‐end

Expect FOR to deliver 1,200 lots and generate $90M of revenues in fiscal 2018

Expect FOR to deliver 4,000 lots and generate $300M to $350M of revenues in FY19

Expect FOR to deliver 10,000 lots and generate $700M to $800M of revenues in FY20

DHI does not expect FOR to have a material impact on its fiscal 2018 results

Lot counts and dollar amounts are approximate
Expectations outlined are for Forestar’s standalone operations

FY18 & FY19 EXPECTATIONS*

Q4 Fiscal 2018

• Backlog conversion rate in the range of 90% to 93%• Home sales gross margin consistent with the third quarter of fiscal 2018• Homebuilding SG&A expense around 8%• Income tax rate of approximately 26%

Fiscal 2018

• Consolidated revenues of $16.1 billion to $16.3 billion• Consolidated pre‐tax profit margin in the range of 12.7% to 12.9%• Cash flow from operations excluding Forestar of greater than $800 million

Preliminary Fiscal 2019

• Consolidated revenue increase of 10% to 15%• Consolidated pre‐tax profit margin of approximately 13%• Income tax rate of approximately 25%• Outstanding share count consistent with fiscal 2018

*Based on market conditions as noted on the Company’s Q3 FY18 conference call on 7/26/18

FY19 & FY20 OUTLOOK*

• Increase consolidated revenues and pre‐tax profits at a double‐digit annual pace

• Maintain homebuilding pre‐tax return on inventory around 20%

• Increase optioned lots to 60% of total homebuilding land and lot position

• Increase cash flow from operations excluding Forestar to over $1.25 billion annually by 2020

• Reduce homebuilding leverage and maintain or reduce homebuilding debt

• Increase dividends

• Repurchase shares to offset dilution and keep outstanding share count flat in fiscal 2019 and 2020

*Based on market conditions as noted on the Company’s conference call on 7/26/18

THIRD QUARTER DATA

Q3 FY 2018 HIGHLIGHTS

• Net income attributable to D.R. Horton increased 57% to $453.8 million or $1.18 per diluted share

• Consolidated pre‐tax income increased 39% to $616.2 million

• Consolidated pre‐tax profit margin improved 210 basis points to 13.9%

• Net homes sold, homes closed and homes in backlog increased by 12%, 13% and 9%, respectively

• 14,650 net homes sold and 14,114 homes closed

• Homes in inventory increased 8% to 29,800 homes

• Lots owned and controlled up 10% YOY to 277,700; 56% optioned, up from 52% in Q2 FY18 and 50% Q3 FY17

• Repurchased 608,537 shares during the quarter for $27.0 millionComparisons to prior year quarter

SALES, CLOSINGS AND BACKLOG

# of Homes

15,000 12,500 10,000

7,500 5,000 2,500

Net Sales Orders, Homes Closed and Homes in Backlog increased 12%, 13% and 9%, respectively, in Q3 FY 2018 compared to Q3 FY 2017

Sales

Closings3Q FY 2017

Backlog

3Q FY 2016

3Q FY 2018

INCOME STATEMENT

Homes closed

14,114

12,497

37,183

32,586

45,751

Homebuilding Revenues:

Home sales
Land/lot sales and other

4,265.5 59.1 4,324.6

3,662.3 22.2 3,684.5

11,122.1 109.2 11,231.3

9,618.1 56.9 9,675.0

13,653.2 88.3 13,741.5

Gross profit:
Home sales
Land/lot sales and other
Inventory and land option charges

932.7 13.7 (8.9) 937.5 349.1 (1.3) 589.7 26.5 616.2 162.5 453.7 (0.1) 453.8

725.4 3.4 (5.4) 723.4 309.5 (1.3) 415.2 29.3 444.5 155.5 289.0 0.0 289.0

2,360.4 20.5 (42.8) 2,338.1 976.6 (18.0) 1,379.5 72.8 1,452.3 458.9 993.4 (0.7) 994.1

1,904.3 11.7 (19.9) 1,896.1 872.4 (7.8) 1,031.5 85.0 1,116.5 391.4 725.1 0.0 725.1

2,725.4 13.5 (40.2) 2,698.7 1,220.4 (11.0) 1,489.3 112.8 1,602.1 563.7 1,038.4 0.0 1,038.4

SG&A

Interest and other (income)
Homebuilding pre‐tax income
Financial services, Forestar and other pre‐tax income Pre‐tax income
Income tax expense
Net income
Net loss attributable to noncontrolling interests
Net income attributable to D.R. Horton, Inc.

$ $

Diluted earnings per share

1.18

0.76

2.59

1.92

2.74

$ in millions except per share data

3 MONTHS ENDED

9 MONTHS ENDED

YEAR ENDED 9/30/2017

6/30/2018

6/30/2017

6/30/2018

6/30/2017

HOME SALES GROSS MARGIN

22% 20% 18% 16% 14% 12% 10%

20.8%

21.9%

8% 6% 4% 2% 0%

In a healthy market, home sales gross margin improved 210 basis points from the prior year quarter

19.8% 20.2%

19.8%

20.0%

FY15 FY16

Q3 FY17 FY17

Q2 FY18

Q3 FY18

Shown as a % of the Company’s homebuilding segment’s home sales revenues
Includes interest amortized to cost of sales
Refer to slide 3 of the Company’s Q3 FY18 Supplementary Data presentation for detailed components of home sales gross margin

HOMEBUILDING SG&A

SG&A as a percentage of homebuilding revenues improved 30 basis points to 8.1% in Q3 FY 2018

HB Rev $

SG&A % HB Rev $

SG&A %

$14,000 $12,000 $10,000

12% $14,00011% $12,000 $10,00010% $8,0009% $6,000 $4,0008% $2,000 7%$0

12% 11% 10% 9% 8% 7%

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

9.0%

8.7%

$ in millions
Shown as a % of homebuilding revenues

Fiscal YTD 6/30

Third Fiscal Quarter

2017
HB Rev $

2018 SG&A %

Q3 FY17 HB Rev $

Q3 FY18 SG&A %

8.4%

8.1%

CONSOLIDATED PRE-TAX INCOME

Consolidated pre‐tax profit margin improved 210 basis points to 13.9% in Q3 FY 2018

PTI $

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

12.6%

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

$800
$600
$400
$200

$800
$600
$400
$200

13.9%

$ in millions
Shown as a % of consolidated revenues

Fiscal YTD 6/30

Third Fiscal Quarter

11.2%

$1,452.3

$1,116.5

2017 2018

Q3 FY17

Q3 FY18

11.8%

$444.5

$616.2

BALANCE SHEET

Homebuilding
Cash and cash equivalents

6/30/2018

9/30/2017

6/30/2017

Inventories:
Construction in progress and finished homes Land inventories

5,194.8 4,715.5 9,910.3

4,606.0 4,631.1 9,237.1

4,905.6 4,648.4 9,554.0

Other assets
Deferred income taxes, net
Financial services, Forestar and other assets Total assets

879.7

793.1 365.0 807.1

729.9 383.7 837.8

Homebuilding Notes payable Other liabilities

2,447.1 1,649.4 727.0 8,597.3 172.6 8,769.9 13,593.4

2,451.6 1,508.7 476.7 7,747.1 0.5 7,747.6 12,184.6

2,453.1 1,560.2 527.1 7,436.2 0.5 7,436.7 11,977.1

Financial services, Forestar and other liabilities Stockholders’ equity
Noncontrolling interests
Total equity

Total liabilities and equity

Debt to total capital – homebuilding Common shares outstanding
Book value per common share

22.2% 376.99 22.80

24.0% 374.99 20.66

24.8% 374.22 19.87

In millions except per share metrics
Homebuilding cash and cash equivalents presented above includes $11.2 million, $9.3 million and $10.9 million of restricted cash for the periods ended 6/30/18, 9/30/17 and 6/30/17, respectively.

759.2

982.3

471.7

$ $

203.2 1,841.0 13,593.4

$ $

12,184.6

$ $

11,977.1