D.R. Horton Swings
To a First-Quarter Loss
Homebuilder D.R. Horton Inc. swung to a fiscal first-quarter loss amid a further $245.5 million in inventory and land charges, and the company expects the "challenging" environment to continue.
The largest U.S. residential builder by volume reported a net loss of $128.8 million, or 41 cents a share, for the quarter ended Dec. 31, compared with year-earlier net income of $109.7 million, or 35 cents a share. Prior-year results included 15 cents in land and inventory charges. Revenue fell 39% to $1.71 billion. The mean estimates of analysts were for a loss of 25 cents a share on revenue of $1.62 billion.
"Market conditions remained challenging in our December quarter as inventory levels of both new and existing homes remained high while pricing remained very competitive," said Chairman Donald Horton. "Lending standards continue to be more restrictive than during the previous year, and buyers continued to approach the home buying decision cautiously. We expect the housing environment to remain challenging."
Homes closed fell 36% to 6,549, while Horton's sales backlog of homes dropped just over half to 8,138. The company's cancellation rate was 44%, as net orders slid 52% to 4,245.
Horton said it brought in $550 million in cash from operations, primarily driven by a $476 million inventory selloff. The company reiterated hopes to generate $1 billion in cash flow from operations this fiscal year.
Builders continue to suffer from falling home prices due in part to a glut of inventory. Chief Executive Donald Tomnitz intimated three months ago that house prices are bottoming out, saying if the market wasn't at bottom it soon would be.
Horton indicated in November it would spend $1 billion on fiscal 2008 land-acquisition and land-development, down from $2.5 billion in 2007 and $5.2 billion in 2006.
Horton has gotten some breathing room from its own creditors as it has convinced them to relax its debt covenants, thus lowering the financial thresholds it must meet to satisfy lenders that Horton is in good health.
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