D.R. Horton, Inc. (NYSE:DHI) on Tuesday morning reported a net loss for its first fiscal quarter ended December 31, 2008 of $62.6 million, or $0.20 per diluted share, down from the $128.8 million (-0.41 per diluted share) reported for last year's first quarter. The loss included impairments and write-write downs of $56.2 million, down sharply from $245.5 million in last year's first quarter.
Home building revenue for the quarter totaled $900.3 million, down 47% from$1.7 billion in the same quarter of fiscal 2008. Homes closed totaled 4,068 homes, down 37.9% from 6,549 homes in the year ago quarter.
Net sales orders for the quarter totaled 2,777 homes ($0.6 billion), down 34.6% from 4,245 homes ($0.9 billion) for the same quarter of fiscal 2008.The cancellation rate for the quarter was 38%.
Backlog of homes under contract at December 31, 2008 was 4,006 homes ($0.9 billion), compared to 8,138 homes ($2.0 billion), at December 31, 2007.SG&A was down sharply, from $213.1 million in last year's quarter to$127 million this year.
At the end of the quarter, Horton had $1.9 billion in cash on its balance sheet, including a federal income tax refund of $621.7 million it received in December. The company generated $817.6 million in cash flow during the quarter.
"Market conditions in the homebuilding industry continued to deteriorate during our first fiscal quarter, characterized by rising foreclosures, high inventory levels of both new and existing homes, increasing unemployment, tight credit for home buyers and eroding consumer confidence," said board chairman Donald R. Horton in a statement. "We continue to adjust our business to the current homebuilding environment by reducing our homes under construction and our owned lot position, controlling costs and repaying debt."
The company has declared a quarterly cash dividend of $0.0375 per share. The dividend is payable on February 26, 2009 to stockholders of record on February 16, 2009. Horton stock was up nearly 10% at $6.71 shortly after market open Tuesday.
Wall Street noted the better-than-expected performance but remains wary of the home building environment. David Goldberg at UBS put out a note stating, "The company further strengthened its liquidity this quarter, driven by a $622mn tax refund, in line with expectations. In turn, its 29% net debt-to-cap (adjusted for FAS 109), was down ~900bps sequentially and is well below the ~40% group average. Despite this, unit backlog -51% YOY and now represents just three months of closings based on our forward estimates."
Similarly, Michael Rehaut at J.P. Morgan wrote, "We believe impairment charges should increase markedly in 2Q based on the following three reasons: 1) We point to last quarter's $1.1 bil. in charges, or 18% of equity, well above its peers' 9% average, which in turn allowed for below-average charges this quarter, in our view; 2) 1Q's order decline of 35% was well below our -20%E, which we believe likely resulted in some unintended spec buildup; and 3) We point to an aggressive late January promotion in Las Vegas, which resulted in the sale of 150 homes, according to the Las Vegas Review-Journal.