39.4 F
Fort Worth
Wednesday, October 28, 2020
Real Estate D.R. Horton falls most in five years after earnings decline

D.R. Horton falls most in five years after earnings decline

Other News

Exxon’s oil slick

Exxon Mobil is slashing its capital spending budget for 2020 by 30% due to weak demand caused by the COVID-19 pandemic and a market...

Folk music’s Mark Twain: 7 Essential tracks from John Prine,

NEW YORK (AP) — Some people, the songs just come out of them. For nearly half a century, they tumbled out of John Prine...

Tarrant County records another COVID-19 death

Tarrant County Public Health (TCPH) on Wednesday, April 8 reported that a resident of Euless has died as the result of the COVID-19 virus....

Tradition stymied: A year unlike any since WWII for Augusta

The Masters is so intertwined with Augusta, they added an extra day to spring break.You see, the first full week of April isn't just...
Robert Francis
Robert is a Fort Worth native and longtime editor of the Fort Worth Business Press. He is a former president of the local Society of Professional Journalists and was a freelancer for a variety of newspapers, weeklies and magazines, including American Way, BrandWeek and InformatonWeek. A graduate of TCU, Robert has held a variety of writing and editing positions at publications such as the Grand Prairie Daily News and InfoWorld. He is also a musician and playwright.

John Gittelsohn (c) 2014, Bloomberg News.

D.R. Horton Inc., the largest U.S. homebuilder by revenue, fell the most in almost five years after saying it’s increasing incentives to boost orders, reducing profitability as the broader new-home market stumbles.

Net income for the three months through June 30 fell to $113.1 million, or 32 cents a share, from $146 million, or 42 cents, a year earlier, the Fort Worth, Texas-based company said Thursday in a statement. The average estimate of 10 analysts was 49 cents a share, according to data compiled by Bloomberg.

D.R. Horton “is changing its operating strategy to target a certain pace of unit sales per community,” Jay McCanless, an analyst with Sterne Agee & Leach Inc., said in a note to investors. “We see the downsides of this strategy as a higher likelihood of impairments, increased use of incentives and less predictability in quarterly results.”

U.S. sales of newly built houses dropped 8.1 percent in June to a 406,000 annualized pace, the fewest since March and less than economists estimated, Commerce Department figures showed Thursday. May new home sales were revised downward to 442,000, 12.3 percent less than estimated. Home construction starts last month fell to an annual pace of 893,000, down 9.3 percent from May, led by a decline in Southern states, where D.R. Horton has been expanding.

D.R. Horton plunged almost 12 percent to $21.94 Thursday, the biggest decline since November 2009. The drop was the steepest in the 11-company Standard & Poor’s Supercomposite Homebuilding Index, which fell 4.9 percent.

“The biggest impediment to the housing industry continues to be job growth,” Chief Executive Officer Donald Tomnitz said on a conference call today. “Part-time workers are not looking for a house. They’re looking for a full-time job.”

D.R. Horton’s home-sales gross margin in its fiscal third quarter was 20.7 percent, down from 21.4 percent a year earlier as the company increased incentives 90 basis points, or 0.9 percentage points. Margins will remain close to 20 percent as the company tries to push volume, Tomnitz said.

“Our number one focus is generating a 20 percent return on investment community by community,” he said. “That requires us balancing our pace, our pricing, our incentives and our margin against volume to maximize, really, the return. And so, yes, we’ll give some incentive to achieve a 25 percent sales increase.”

Net orders rose to 8,551 homes worth $2.4 billion, a 25 percent increase in volume and 32 percent jump in value. The company’s contract backlog, an indication of future sales, climbed 15 percent to 11,365 homes.

Homebuilding revenue rose to $2.1 billion in the quarter from $1.6 billion a year earlier. The number of completed home sales climbed 19 percent to 7,676.

PulteGroup Inc., the third-largest U.S. homebuilder by revenue, said today that second-quarter net income declined to 11 cents a share from 14 cents a year earlier. The results included 14 cents a share in charges resulting from insurance reserves and office-relocation costs. PulteGroup shares fell 3 percent to $19.24.

D.R. Horton also incurred $54.7 million in pretax charges in the quarter, related mainly to active communities in the Midwest region in Chicago, according to the statement. The charges reduced earnings by about 15 cents a share, Jack Micenko, an analyst with Susquehanna International Group, wrote in a note to clients Thursday.

In May, D.R. Horton acquired Crown Communities Inc., a closely held builder operating in Georgia, South Carolina and eastern Alabama, for $210 million. Last October, it paid $34.5 million for Regent Homes Inc., which builds in Charlotte, Greensboro and Winston-Salem, North Carolina.

Latest News

Camp Bow Wow acquires building in Fort Worth

Acting on a lender's behalf, Bradford Commercial Real Estate Services has sold a 10,000-square foot retail building in east Fort Worth to...

S&P CoreLogic Case-Shiller: US home prices up 5.2% in August

By PAUL WISEMAN AP Economics WriterWASHINGTON (AP) — U.S. home prices posted a robust gain in August — another sign that the...

Arlington home prices increase in 3Q

The median price for Arlington homes increased 7% year-over-year to $247,500 for the third quarter of 2020. Arlington home...

JLL names new lead for South Central Region PDS

JLL announced Brad Carbo as the new South Central Region Project and Development Services (PDS) lead on Oct. 27. In his new...

Fort Brewery to relocate to former historic site

Fort Brewery & Pizza announced Oct. 27 the brewery and restaurant will relocate to a 25,000 square-foot facility located at 2737 Tillar...