D.R. Horton Inc. (DHI) posted a fiscal second-quarter profit on a $59.2 million tax benefit, though revenue was weaker than expected and closings and backlog declined.
Horton has struggled along with its peers after the expiration of a federal homebuyer credit last year sent new home sales down to crisis-era levels. Horton sells to many first-time buyers, who haven't been out in full force lately, especially with bargain-priced foreclosures still sapping the market.
Horton last year beat rival PulteGroup Inc. (PHM) for the nation's top builder spot by number of completed annual sales. Last year, Horton closed on 18,983 homes compared with Pulte's 17,095.
"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," Chairman Donald R. Horton said. "However, housing affordability remains near record highs, interest rates are favorable and new home inventory is still very low."
For the period ended March 31, D.R. Horton reported a profit of $27.8 million, or 9 cents a share, up from a prior-year profit of $11.4 million, or 4 cents a share. The latest quarter included a $59.2 million tax benefit and $14.3 million in charges from inventory impairments and land option cost write-offs. Revenue dropped 18% to $733.1 million.
Analysts polled by Thomson Reuters had most recently forecast 5-cent per-share loss on $761 million in revenue.
Home-sales gross margin dropped to 16.2% from 18%.
The cancellation rate was 25%, up from 21% a year earlier but down from 28% in the first quarter. Closings decreased 18% and backlog dropped 16%.
Shares closed at $12.10 Thursday and were inactive premarket. The stock is down 15% over the past 12 months.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; Andrew.FitzGerald@dowjones.com