D.R. Horton Inc.'s (DHI) fiscal fourth-quarter loss narrowed
sharply amid huge year-earlier write-downs as results were weaker
than expected.
But while orders at the No. 2 home builder in the U.S. jumped
26% on a unit basis, Chairman Donald R. Horton said, "Market
conditions in the homebuilding industry are still challenging" amid
still-rising foreclosures and unemployment, high inventory levels
and weak consumer confidence.
He added the company has continued to cut its land holdings and
number of homes built without buyers. D.R. Horton has had one of
the sector's highest counts of so-called speculative homes, giving
it a storehouse of units to sell to buyers who want to move quickly
or don't want to wait for construction, according to Moody's
Investors Service senior credit officer Joe Snider.
D.R. Horton posted narrower year-over-year losses every quarter
this fiscal year as the housing market inched toward recovery.
However, data on the market has been mixed lately, with the
Commerce Department most recently saying new-home starts tumbled in
October, erasing several months of gains.
Earlier this month, both Beazer Homes USA Inc. (BZH) and luxury
builder Toll Brothers Inc. (TOL) said orders rose in their fiscal
fourth quarters, with Toll particularly posting strong
improvements.
For the quarter ended Sept. 30, D.R. Horton posted a loss of
$231.9 million, or 73 cents a share, compared with a year-earlier
loss of $799.9 million, or $2.53 a share. The results included
inventory and land-option write-downs of $192.6 million and $1.07
billion, respectively.
Revenue slumped 42% to $1.08 billion as closings dropped 31% to
4,810.
Analysts surveyed by Thomson Reuters predicted a 30-cent loss on
$1.11 billion in revenue.
Home-sales gross margin rose to 12.5% from 10.9%.
Net sales orders climbed 21% on a dollar basis to $1.03 billion
as 5,008 homes were ordered and the cancellation rate slumped to
27% from 47%. At Sept. 30, the company's sales backlog of homes
under contract was 5,628 valued at $1.1 billion, up 6.2% on a unit
basis but down 5.4% on valuation.
The company, long the nation's largest residential builder by
volume, recently fell to the No. 2 slot following the merger of
Pulte Homes Inc. (PHM) and Centex Corp. (CTX).
Shares in D.R. Horton closed Thursday at $12.25 and weren't
active premarket. The stock is up 73% this year.
-By Joan E. Solsman and Kevin Kingsbury, Dow Jones Newswires;
212-416-2354; joan.solsman@dowjones.com