D.R. Horton, Inc., Dallas (NYSE:DHI) on Friday morning reported a profit of$27.8 million, or $0.09 per diluted share, for its second fiscal quarter ended March 31, 2011. The gain was driven by a tax benefit of $59.2 million, partially offset by impairments and land charges of $14.3 million and compares with a profit of $11.4 million for the prior year quarter.

Analysts surveyed by First Call/Thomson Financial were expecting a loss of five cents a share, minus the tax benefit and write-downs. Shares of Horton were up a bit more than 2% in mornign trading Friday after taking off in the pre-market shortly after the earnings release.

Home building revenue for the quarter was down 18.2% from last year's quarter to $733.1 million as closings dropped 17.5% to 3,516 homes.

New orders dropped 30.2% to 4,943 homes with an aggregate value of $1.0 billion, down from $1.3 billion in last year's quarter. The cancellation rate was 25%, up from 21% in last year's quarter but down from 28% in the company's first fiscal quarter.

Backlog on March 31, 2011 was 5,281 homes with a value of $1.1 billion, down from 6,314 homes worth $1.3 billion on March 31, 2010.

The company did not report average prices, land position or community count.

Gross margins minus write-downs fell to 16.2% from 18% in the prior year quarter but rose from 15.6% in the previous quarter. SG&A fell to $123.2 million from $129.0 million in last year's quarter for a ratio of 16.8%, up from 15.6% in the previous quarter and 14.4% a year earlier.

Horton ended the quarter with $1.4 billion in cash, restricted cash and marketable securities, down from $1.6 billion at Sept.30, 2010, the period for which the company provided data. Debt totaled $1.959 billion, down from$2.085 billion, also as of the company-selected reporting date of Sept. 30.During the quarter, repurchased $64.7 million principal amount of its outstanding senior notes for $67.2 million, and after the quarter close, it repaid at maturity the remaining $70.1 million principal amount of its 6% senior notes. As previously announced, Horton redeemed the remaining $112.3 million principal amount of its 5.375% senior notes due 2012, which will result in a loss on early retirement of debt of $6.3 million in its third fiscal quarter.

"Market conditions in the homebuilding industry are still challenging, with high foreclosures, significant existing home inventory, high unemployment, tight mortgage lending standards and weak consumer confidence," said Donald R. Horton, chairman. ""Our sequential increases in net sales orders and backlog of 47% and 37%, respectively, reflect traditional seasonal demand.We increased our homes in inventory by 1,400 during the quarter to support the increased demand for new homes in the spring selling season."

In a note to investors, Michael Rehaut, home-building analyst at J.P.Morgan, wrote, "We view DHI's results as a relative neutral event amid a builder earnings season thus far that has produced results roughly in-line with our estimates, pointing to a still challenging but 'okay' Spring selling season that has demonstrated normal positive seasonal trends, as well as pricing and incentives that have remained largely steady thus far."