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D.R. Horton Reports First-Quarter Profit as Homebuilding Revenue Increases
D.R. Horton Inc. (DHI), the largest U.S. homebuilder by volume, reported a first-quarter profit that beat analyst estimates after a year-earlier loss as revenue from home sales rose.
Net income was $27.7 million, or 9 cents a share, for the three months through Dec. 31, compared with a loss of $20.4 million, or 6 cents, a year earlier, the Fort Worth, Texas-based company said today in a statement. Analysts expected earnings of 5 cents, the average of 17 estimates in a Bloomberg survey.
The company reported a profit for the fourth consecutive quarter as it cut costs and boosted margins by selling more houses on discounted land acquired after prices fell in 2009. D.R. Horton managed to profit even as unemployment and mortgage delinquencies stifled the housing market. About 302,000 new homes were sold in the U.S. in 2011, the worst year in records dating to 1963, the Commerce Department reported yesterday.
“We believe new residential construction bottomed in 2011 and could see modest growth in 2012,” Adam Rudiger, an analyst with Wells Fargo & Co. in San Francisco, wrote in a note to investors today. He has an “outperform” rating on D.R. Horton “because of the company’s excellent cost control, ability to generate profits at depressed volume levels and focus on affordability,” he said.
The builder rose 1.9 percent to $14.39 at the close in New York. The shares have increased 12 percent in the past 12 months, compared with a 2.3 percent loss for the 11-member Standard & Poor’s 1500 Homebuilding Index. (S15HOME)
‘Cautiously Optimistic’
“Although macroeconomic and housing conditions remain soft, we are cautiously optimistic for the remainder of 2012,” Chief Executive Officer Donald Tomnitz said in a conference call today. “We’re just focusing on probably the next 12 months ahead when we say cautious because there are some elections coming, there are a lot of issues on the table, and we don’t know how those are going to impact the homebuilding business.”
D.R. Horton’s homebuilding revenue for the quarter was $885.6 million, up from $767 million a year earlier.
Net home orders rose to 3,794 from 3,363 a year earlier. The company’s backlog of houses under contract, another gauge of future revenue, rose to 4,530 from 3,854.
The company has 5,700 “spec” homes built or under construction on speculation that they will be available to meet demand in the first half of the year, with closings expected to increase in the second half, D.R. Horton Treasurer Stacey Dwyer said during the conference call.
East Grows Most
The strongest growth was in its eastern and southeastern areas of the country. In the east, the company had 509 net orders in the fourth quarter, up from 400 in the last three months of 2010. In the southeast, orders climbed to 921 from 769. Executives declined to say which markets they expect to be their strongest this year.
NVR Inc. (NVR), the fourth-largest U.S. homebuilder by revenue, said yesterday that net income decreased 45 percent while orders rose 22 percent in the fourth quarter from a year earlier. The company’s backlog climbed 26 percent.
Ryland Group Inc. (RYL), a builder based in Westlake Village, California, reported net income of $812,000 million for the three months through December, its first profitable quarter since 2009, as closings increased 16 percent and new home orders rose 24 percent from a year earlier, according to a statement released after markets closed yesterday.
To contact the reporter on this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net
To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net
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