D.R. Horton, Inc, Ft. Worth (NYSE:DHI) on Thursday reported a net loss for its first fiscal quarter ended December 31, 2010 of $20.4 million, or -$0.06 per diluted share. The results included $8.4 million in charges for impairments and write-offs.
Anaylsts were expecting a loss of 3 cents a share. The loss compares with a profit of $192 million, or 56 cents a share, in the prior year first fiscal quarter, which included an income tax benefit of $149.2 million.
Home building revenue dropped 30.3% from last year's first fiscal quarter to $767.0 million as closings tumbled 34.2% to 3,637. The company did not report an average closing price.
New orders fell 16.7% to 3,363 homes and new order dollars dropped 16.9% to$705.6 million. The cancellation rate was 28%, down from 31% in the prior quarter. Backlog at Dec. 31 was 3,854 homes with an aggregate value of$795.4 million, down from 4,136 homes worth $884.0 million a year earlier.
The company did not report lot or community count nor did it provide an accounting of the number of spec homes it continues to carry. Horton also did not break out data on margins. Michael Rehaut, home building analyst at J.P. Morgan, pointed out in a research note that core operating margins came in at zero versus his estimate of 2.5%. SG&A was down 7.4% to $118.9 million.
At quarter's end, the company had home building cash and marketable securities of $1.5 billion. During the first quarter, Horton said reduced the number of homes in inventory by 400, contributing to the net cash provided by operating activities of $49.5 million. It also repurchased a total of $62.5 million of outstanding senior notes for $63.8 million plus accrued interest. At the close of the quarter, Horton listed $2.029 billion in debt on its balance sheet, down from $2.085 at the close of the previous quarter and the 2010 fiscal year.
The Company has declared a quarterly cash dividend of $0.0375 per share. The dividend is payable on February 18, 2011 to stockholders of record on February 10, 2011.
Donald R. Horton, chairman, said, "We still face challenges, such as rising foreclosures, significant existing home inventory, high unemployment, tight mortgage lending standards and weak consumer confidence. We are well positioned for the spring selling season, with homes available to meet the seasonal increase in demand, a broad geographic footprint and price points focused on the first-time homebuyer. While our year-over-year comparisons for net sales orders are very difficult for the next two quarters, we do expect to see an increase from the sales levels we achieved in the December quarter."
He added, "Our strong balance sheet and liquidity support our long-term strategy of providing affordable homes and increasing our number of active selling communities while controlling our costs. This strategy has proven successful through the downturn as our national market share of new home sales has increased significantly over the last three years."
In his research note, Rehaut, who maintained a neutral rating on shares of Horton, wrote, "While we are modestly disappointed with the lower than expected margins, at the same time, we believe the better than expected orders, down only 17% against a 45% year-ago comp and above our -35%E, is a modest positive, and view these factors as roughly offsetting each other. Additionally, DHI generated $50 million of operating cash flow, driven by a reduction of homes in inventory by 400, which we also view as a positive, as it points to less spec in the market."