D.R. Horton Posts Rising Sales and Earnings in Fiscal Q4, New Orders Drop 2 Percent

Andrew Klips |

D.R. Horton, Inc. (DHI) matched analyst expectations with its fourth-quarter fiscal 2013 earnings report on Tuesday, showing rising profits and revenue on higher average sales prices compared to a year earlier, although the number of new orders declined.

For the quarter ended September 30, the largest homebuilder in the U.S. (based on number of homes built in the last fiscal year) reported revenue of $1.82 billion, up 40 percent from $1.3 billion in the year prior quarter.  Net profit rose to $139.5 million, or 40 cents per share, compared to $100.1 million, or 30 cents per share, in Q4 fiscal 2012last year.

Wall Street was expecting earnings of 40 cents per share on revenue of $1.82 billion.

The number of homes closed during the latest quarter increased by 23 percent to 6,866 from 5,575 last year.  The average price of those homes rose by 15 percent to $261,400 on higher demand from move-up buyers and pricing power across many markets.

New orders decreased by 2 percent to 5,160 homes from 5,276 homes in the year earlier quarter.  At the same time, net sales for those homes rose to $1.4 billion from $1.3 billion.

Homebuilders have been fending off slowing sales due to rising mortgage rates detracting some homebuyers with tighter budgets and higher sales prices.  Dwindling inventories of existing homes have aided in rising prices for houses in general.  In August, the last month reported by the Commerce Department, new home sales increased 7.9 percent compared to July to an annualized rate of 421,000. 

The existing home inventory is near 13-year lows, according to the National Association of Realtors.  The NAR is scheduled to release its report on existing home sales for October on November 20 and pending home sales for October on November 25, the first barometers as to how the housing market started the fourth quarter.

Total backlog of homes for D.R. at the end of the quarter was 8,205 valued at $2.21 billion, as compared to 7,240 valued at $1.67 billion at the same time in 2012, representing increases of 13.3 percent and 32.3 percent, respectively.

“Our fourth quarter provided a solid finish to a great year. In fiscal 2013, our homebuilding and financial services operating results improved significantly, with pre-tax income margin increasing 490 basis points to 10.5% from 5.6% last year,” said Donald R. Horton, chairman at Ft. Worth, Texas-based D.R. Horton, in a statement today.  He added, “We are well-positioned to continue to profitably grow our operations during the recovery with a strong balance sheet, good liquidity and sufficient inventories of homes and finished lots.”

For all of fiscal 2013, the company posted revenue of $6.1 billion, up by 44 percent from $4.2 billion in fiscal 2012.  Net income for the year was $462.7 million, or $1.33 per share, compared to $956 million, or $2.77 per share, last year.  Fiscal 2012 benefited from a non-cash tax benefit of $753.22 million related to deferred tax assets.  The company closed on 24,155 homes during the year, a 28-percent increase from fiscal 2012.

Shares of DHI have limped through 2013, closing Monday at $18.06, putting the stock down by about 8.5 percent so far this year.  Interestingly, though, shares have found a strong support level in this area, bouncing three times recently off of prices around $17.60.  Minutes after the opening bell on Tuesday, shares are up about 2 percent at $18.40 following the earnings report.

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Companies

Symbol Name Price Change % Volume
DHI D.R. Horton Inc. 27.90 0.39 1.42 3,701,359
BROD BRODER BROTHERS 144A n/a n/a n/a 0

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