3rd UPDATE: DR Horton 4Q Loss Narrows; Write-Downs A Surprise

While home-building giant D.R. Horton Inc. (DHI) sharply narrowed its fiscal fourth-quarter loss, it took hefty land-related charges and the results fell short of expectations.

That caused shares to tumble 10.12% to $11.01, and the entire sector felt its pain: The Dow Jones US Home Construction Index recently traded 4.32% lower.

While the No. 2 home builder in the U.S. saw its orders surge 26% on a unit basis, Chairman Donald R. Horton said of the continued headwinds hampering housing's recovery: "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 pare its land holdings and the 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. But such unsold inventory typically requires deep discounting to sell, eating into already battered profits.

Still, Fort Worth, Texas-based D.R. Horton posted narrower year-over-year losses every quarter this fiscal year as the housing market inched toward recovery. However, concerns are mounting because market data has been choppy lately, with the U.S. 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. Many builders, including D.R. Horton, have experienced a sales boost from a government tax credit for first-time buyers. While it was recently extended beyond November into next year, there's concern the offer took away deals that would have come in the future, and softness could result.

This has diluted excitement over the order boost.

D.R. Horton's "order volume was better than we had modeled, but we believe a substantial portion of the excess was pull-forward driven by the expected expiration of the first-time buyer tax credit," Michael R. Widner, an analyst with Stifel Nicolaus Equity Research wrote in a client note. "We anticipate some drop-off...as the negative [seasonal effects] kick in and the tax credit extension delivers diminishing returns."

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. This took some analysts by surprise, given that other builders' charges have declined as home-price declines abate.

"The higher-than-expected charges were likely driven in part by a more aggressive review of its inventory during its year-end process," J.P. Morgan analyst Michael Rehaut said.

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.

The results left Carl Reichardt, an analyst with Wells Fargo, unimpressed: The builder "missed effectively all core income statement metrics," he said.

On a bright note, 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%, showing fewer buyers abandoned deals.

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).

-By Dawn Wotapka, Dow Jones Newswires; 212-416-2193; dawn.wotapka@dowjones.com

(Joan E. Solsman and Kevin Kingsbury contributed to this article)

Beazer Homes USA (NYSE:BZH)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024