D.R. Horton results miss estimates
D.R. Horton Inc
Horton said its loss narrowed to $231.9 million, or 73 cents a share, in the fourth quarter ended September 30 from $799.9 million, or $2.53 per share, a year earlier.
Analysts on average were expecting a loss of 30 cents a share, according to Thomson Reuters I/B/E/S.
The latest results included charges of $192.6 million for losses on land values and write-offs of costs from land the company decided not to acquire.
Revenue fell 42 percent to $1 billion. Analysts' average estimate was for $1.1 billion.
Our industry continues to face many challenges, such as high levels of existing inventory and foreclosures, low consumer confidence and tight credit, said Chief Executive Don Tomnitz during a conference call with analysts. These headwinds continue to impact our business.
The shares fell because of the earnings miss and slightly disappointing margins, said FTN Securities analyst Joel Locker and Morningstar analyst Eric Landry.
Revenue was light, too, so cash was much worse than expected, Locker added.
The company ended the quarter with $1.9 billion in cash.
Wall Street's expectations proved overly optimistic mainly because analysts underestimated the quarter's impairment charges on land that continues to lose value, Locker said.
On the brighter side, orders rose to 5,008 homes from 3,977 last year, and the number of homes under contract increased to 5,628, from 5,297.
Horton needs to find and build on cheaper land while home prices continue to stabilize, in order to return to profitability, Landry said.
They're out looking for land they can make a margin on, he said. The land they hold on their balance sheet right now won't work at current prices. They have to wait on that.
Throughout the worst housing slump in decades, builders have been forced to impair the value of the land, much of it bought at peak prices during the boom years of 2002-2006.
D.R. Horton's shares were down 14.2 percent to $10.51 in early afternoon trading on the New York Stock Exchange compared with a 4.8 percent decline for the sector, as measured by the Dow Jones U.S. Home Construction Index <.DJUSHB>.
Other builders' shares were also lower on the day as KB Home lost 4.8 percent at $9.35, and Toll Brothers
(Reporting by Helen Chernikoff; additional reporting by Divya Sharma in Bangalore; editing by John Wallace and Tim Dobbyn)
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