D.R. Horton Inc., a national homebuilder, reported a 4 percent rise in quarterly orders as stabilizing mortgage rates and signs of an economic recovery spur housing demand, according to Reuters. Shares rose 5 percent in premarket trading after the company also reported an 86 percent jump in profit for the winter quarter, seasonally the slowest selling period for U.S. homebuilders.
A low supply of finished homes allowed builders to raise selling prices. D.R. Horton said its average sales price rose 10 percent to $275,600.
D.R. Horton reported that net income for its first fiscal quarter ended Dec. 31, 2013, increased 86 percent to $123.2 million, or $0.36 per diluted share, from $66.3 million, or $0.20 per diluted share in the same quarter of fiscal 2013. Homebuilding revenue for the first quarter of fiscal 2014 increased 33 percent to $1.6 billion from $1.2 billion in the same quarter of 2013. Homes closed in the quarter increased 19 percent to 6,188, compared to 5,182 homes in the year ago quarter.
Net sales orders for the first quarter ended Dec. 31, 2013, increased 4 percent to 5,454 homes from 5,259 homes in the year-ago quarter, and the value of net sales orders increased 14 percent to $1.5 billion from $1.3 billion. The company’s cancellation rate (cancelled sales orders divided by gross sales orders) for the first quarter of fiscal 2014 was 23 percent. The company’s sales order backlog of homes under contract at Dec. 31, 2013, increased 5 percent to 7,684 homes from 7,317 homes at Dec. 31, 2012. The value of the backlog increased 20 percent to $2.1 billion at Dec. 31, 2013, from $1.8 billion a year ago.
The company ended the quarter with $801.1 million of homebuilding unrestricted cash and net homebuilding debt to total capital of 37.1 percent. Net homebuilding debt to total capital consists of homebuilding notes payable net of cash divided by total equity plus homebuilding notes payable net of cash.
The company has declared a quarterly cash dividend of $0.0375 per common share. The dividend is payable on Feb. 18, 2014, to stockholders of record on Feb. 7, 2014.
“Our fiscal 2014 is off to a great start. First quarter pre-tax income increased 76 percent to $189.7 million and our pre-tax income margin improved 290 basis points to 11.4 percent, said Donald Horton, chairman of the board. “The dollar value of our homes sold, closed and in backlog all increased by double-digit percentages. Our average sales price increased 10 percent to $275,600, reflecting pricing power across most of our markets and increased demand from move-up buyers.
“Housing market conditions continue to improve across most of our operating markets, and our weekly sales pace has accelerated in January,” Horton continued. “We are well-positioned to capture demand in the spring selling season with a solid balance sheet, an increased community count, a robust finished lot supply and a strong inventory of homes available for sale.”