Home builder D.R. Horton, Inc. (DHI) Tuesday reported a profit for the first quarter, as homebuilding revenue increased 23% from last year, and the company recorded a hefty tax benefit. The stock is up 6.63% in pre-market trading.
The company's first-quarter net income was $192 million or $0.56 per share, compared to a loss of $62.6 million or $0.20 per share in the previous year.
The latest results included $1.2 million in pre-tax charges to cost of sales for inventory impairments and write-offs of deposits and pre-acquisition costs, compared to $56.2 million in the same quarter of fiscal 2009.
On average, 18 analysts polled by Thomson Reuters expected the company to lose $0.14 per share in the quarter. Analysts' estimates typically exclude special items.
For the previous quarter, the company reported a loss of $231.9 million or $0.73 per share.
Revenues for the quarter increased to $1.109 billion from $900.3 million reported last year. Analysts were looking for quarterly revenues of $960.15 million.
In the first quarter, revenues from Home sales advanced to $1.108 billion from $885.8 million in the previous year. DR Horton's homebuilding revenue for the fourth quarter totaled $1.01 billion.
Land/lot sales generated $0.7 million in the just concluded quarter, compared to $14.5 million last year.
First-quarter gross profit increased to $188.3 million from $83.7 million in the previous year. Gross margin on home sales increased 160 basis points to 17.1%.
The company reported pre-tax income of $42.8 million for the quarter, compared to a pre-tax loss of $61.3 million in the same quarter of fiscal 2009.
Total cost of sales rose to $920.6 million from $816.6 million in the prior year.
The company, catering primarily to first-time buyers, recorded a benefit of $149.2 million in income taxes in the latest quarter, compared to a provision of $1.3 billion in income taxes last year.
Net sales orders increased 45% to 4,037 homes in the first quarter, and closings increased 36% to 5,529 homes. The company's cancellation rate was 26% in the first quarter. Sales backlog of homes under contract at December 31, 2009 was 4,136 homes, compared to 4,006 homes at December 31, 2008.
Further, the company declared a quarterly cash dividend of $0.0375 per share, payable on February 25 to stockholders of record on February 16.
In an effort to spur demand for homes, the government has facilitated a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence between January 1, 2009 and April 30, 2010. D.H. Horton said today it expects the extension of the tax credit to benefit its spring selling season.
According to Donald Horton, chairman of the company's Board, "Market conditions in the homebuilding industry are still challenging... However, new home inventory remains low, interest rates are favorable and housing affordability is near record highs. We will continue to focus on providing affordable homes for the first-time buyer, controlling our costs, contracting for new communities with attractively priced finished lots and maintaining our strong balance sheet."
Among peers, KB Home (KBH) last month reported a profit for the fourth quarter, compared to loss in the year-ago period, aided by a tax benefit.
The better-than-expected results at D.H. Horton is probably indicative of the beginning of a recovery in economic activity. Friday, a report from the Commerce Department showed that U.S. economic activity expanded for the second consecutive quarter in the final three months of 2009, growing at the fastest pace since the third quarter of 2003. Gross domestic product rose at an annual rate of 5.7% in the fourth quarter, compared to the 2.2% growth seen in the third quarter, higher than the economists' expectation of an 4.7% growth in GDP for the period.
However, another report showed that new home sales declined to a seasonally adjusted annual rate of 342,000 in December from an upwardly revised 370,000 rate in November. Economists had estimated new home sales of 366,000 for the latest month. Similarly, existing home sales fell 16.7% month-over-month to a seasonally adjusted annual rate of 5.45 million units in December compared to 6.54 million units in November. Economists had estimated a more modest decline to 5.90 million units.
DHI closed Monday's regular trade at $11.91, up from the previous close of $11.79, on 6.78 million shares. In pre-market trading, the stock is up $0.79 at $12.70.
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