Tags: Horton | Profit | Orders | Homes

DR Horton Profit Rises amid Strong Orders for New Homes

Tuesday, 11 November 2014 05:40 PM

D.R. Horton Inc., the largest U.S. homebuilder by revenue, reported a bigger profit and a 38 percent jump in orders for its fiscal fourth quarter.

Net income was $166.3 million, or 45 cents a share, for the three months ended Sept. 30, compared with $139.5 million, or 40 cents, a year earlier, the Fort Worth, Texas-based company said Tuesday in a statement.

Under Donald Tomnitz, who stepped down at the end of the quarter after 16 years as chief executive officer, and his successor, David Auld, D.R. Horton has increased buyer incentives to boost sales. Orders for the quarter rose to 7,135 homes with a value of $2 billion, compared with 5,160 houses valued at $1.4 billion a year earlier. The builder completed 8,612 sales, up 25 percent from the same period in 2013.

“We feel pretty good about kind of where we are in the market and what’s taking place out there,” Auld, 58, said during his first earnings call as CEO. “If we just execute and do what we can do on a day-to-day basis, we should have a great three-year to five-year run.”

While earnings missed the average analyst estimate of 48 cents a share, the company’s pricing, order growth and profitability exceeded expectations, said Jay McCanless, an analyst with Sterne, Agee & Leach Inc. in Nashville, Tennessee.

“It appears DHI’s strategy shift to higher unit volumes worked” in the quarter, McCanless wrote in a note Tuesday.

Homebuilding Revenue

The company’s homebuilding revenue in the quarter rose to $2.4 billion from $1.8 billion a year earlier.

For fiscal 2015, D.R. Horton said it expects to complete sales on 34,500 to 37,500 homes for $9.5 billion to $10.5 billion, up from this year’s 28,670 houses for $7.8 billion. The gross sales margin will be 19.5 percent to 20 percent in the first quarter of 2015, compared with 20.5 percent in the latest quarter, the company said in an investor presentation.

U.S. new houses sold at an annual rate of 467,000 in September, the fastest in six years. That’s still 29 percent below the U.S. average pace since 1963, according to Commerce Department data.

D.R. Horton shares rose 2.2 percent Tuesday to close at $23.95, the highest since July 23. The shares are up 7.3 percent this year, compared with a 2.7 percent increase for the 11-company Standard & Poor’s Supercomposite Homebuilding Index.

While serving as the company’s front man is a new experience, Auld said he doesn’t expect to deviate from the course set by his predecessor.

“I’ve always been a behind-the-curtain kind of guy, and being pushed out front is different for me,” he said on the call. “Three years to five years down the road, I think my goal is just to continue the excellence the company’s had.”

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D.R. Horton Inc., the largest U.S. homebuilder by revenue, reported a bigger profit and a 38 percent jump in orders for its fiscal fourth quarter.
Horton, Profit, Orders, Homes
Tuesday, 11 November 2014 05:40 PM
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