FORT WORTH, Texas – D.R. Horton Inc. said Thursday that its profit fell 43 per cent from a year ago in its fiscal third quarter as the homebuilder closed on fewer homes and new home orders declined.
Still, the company’s earnings trumped Wall Street estimates and the builder’s management said the company is in position to be profitable for fiscal 2011.
The company’s shares rose 25 cents, or 2.2 per cent, to $11.85 in afternoon trading.
D.R. Horton, which operates in 26 states, said closings fell 33 per cent in the April to June quarter from a year earlier, while its new home orders slipped about 1 per cent. The sales results were roughly in line with analysts’ forecast for a 31 per cent drop in closings and no change in the level of orders, according to FactSet.
Management said home orders for the quarter were about level with the first three months of this year, reflecting a traditional seasonal demand pattern.
D.R. Horton and other builders saw sales pick up in the spring, traditionally the peak season for the industry. But sales of new homes remain at near-historic lows for the industry.
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Last year was the worst for new-home sales on records dating back a half century, and through the first six months of this year, sales are lagging behind last year’s totals.
High unemployment, larger down payment requirements and tougher lending standards are preventing many people from buying homes. And some potential buyers who can clear those hurdles are holding off, worried that home prices have yet to bottom out.
D.R. Horton said net income fell to $28.7 million, or 9 cents a share, in the three months ended June 30. That compares with a profit of $50.5 million, or 16 cents a share, a year earlier.
The latest results included $16.4 million in pretax charges and losses from paying debt off early.
Revenue dropped 30 per cent to $975.4 million from $1.4 billion.
Analysts polled by FactSet were expecting a profit of 5 cents a share on $985.4 million in revenue.
Home closings fell to 4,555 homes during the quarter. New home orders slipped to 4,874 homes.
D.R. Horton ended the quarter with a backlog of 5,600 homes under contract with a value of $1.2 billion, up from 4,430 homes at quarter’s end last year.
Also Thursday, the company’s board of directors declared a quarterly cash dividend of 0.0375 a share. The dividend will be paid on Aug. 24 to shareholders of record on Aug. 12.
D.R. Horton is based in Fort Worth, Texas, and was ranked the largest builder in the U.S. last year by Builder magazine.