D.R. Horton's Q3 net income falls 43.2% year-over-year to US$28.7M amid challenging market conditions contributing to weak housing demand; revenue decreased to US$975.4M from US$1.4B

FORT WORTH, Texas , July 28, 2011 (press release) – D.R. Horton, Inc. (NYSE:DHI - News), America’s Builder, today reported net income for its third fiscal quarter ended June 30, 2011 of $28.7 million, or $0.09 per diluted share. The quarterly results included $9.9 million in pre-tax charges to cost of sales for inventory impairments and land option cost write-offs and a $6.5 million loss on early retirement of debt. Net income for the same quarter of fiscal 2010 was $50.5 million, or $0.16 per diluted share. Homebuilding revenue for the third quarter of fiscal 2011 totaled $975.4 million, compared to $1.4 billion in the same quarter of fiscal 2010. Homes closed in the quarter totaled 4,555 homes, compared to 6,805 homes in the same quarter of fiscal 2010.

For the nine months ended June 30, 2011, the Company reported net income of $36.0 million, or $0.11 per diluted share, which included a tax benefit of $57.8 million. The nine-month results also included $32.6 million in pre-tax charges to cost of sales for inventory impairments and land option cost write-offs and a $10.7 million loss on early retirement of debt. Net income for the same period of fiscal 2010 was $253.9 million, or $0.78 per diluted share, which included a tax benefit of $152.7 million. Homebuilding revenue for the nine months ended June 30, 2011 totaled $2.5 billion, compared to $3.4 billion in the same period of fiscal 2010. Homes closed in the nine-month period totaled 11,708, compared to 16,594 homes in the same period of fiscal 2010.

Net sales orders for the third quarter ended June 30, 2011 totaled 4,874 homes ($1.1 billion), compared to 4,921 homes ($1.0 billion) in the same quarter of fiscal 2010. The Company’s cancellation rate (cancelled sales orders divided by gross sales orders) for the third quarter of fiscal 2011 was 27%. Net sales orders for the first nine months of fiscal 2011 totaled 13,180 homes ($2.8 billion), compared to 15,396 homes ($3.2 billion) in the same period of fiscal 2010. The Company’s sales order backlog of homes under contract at June 30, 2011 was 5,600 homes ($1.2 billion), compared to 4,430 homes ($1.0 billion) at June 30, 2010.

In the third quarter, the Company repaid at maturity the remaining $70.1 million principal amount of its 6% senior notes and redeemed the remaining $112.3 million principal amount of its 5.375% senior notes due 2012. The Company also repurchased 3,544,838 shares of its common stock during the quarter at a total cost of $38.6 million. The Company ended the quarter with $1.1 billion of homebuilding unrestricted cash and marketable securities and net homebuilding debt to total capital of 19.9%. Net homebuilding debt to total capital consists of homebuilding notes payable net of cash and marketable securities divided by total equity plus homebuilding notes payable net of cash and marketable securities.

The Company has declared a quarterly cash dividend of $0.0375 per share. The dividend is payable on August 24, 2011 to stockholders of record on August 12, 2011.

Donald R. Horton, Chairman of the Board, said, “We are proud of the results our team achieved this quarter. Sequentially, our homebuilding revenues grew $242 million, home sales gross margins improved by 30 basis points and homebuilding SG&A decreased by approximately $10 million. Additionally, our net sales orders in the June quarter were about flat with the March quarter, reflecting a traditional seasonal demand pattern. Our results for the first nine months of the fiscal year, combined with our backlog of 5,600 homes and our inventory of homes available for sale, have positioned us to be profitable for the full fiscal year.

“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, which are all contributing to weak housing demand. However, housing affordability remains near record highs, interest rates are favorable and new home inventory is still very low. We continue to focus on providing new homes and communities for both first-time and move-up buyers, controlling our construction costs, SG&A and inventory levels and maintaining our strong balance sheet and liquidity.”

The Company will host a conference call today (Thursday, July 28th) at 10:00 a.m. Eastern time. The dial-in number is 877-407-8033, and the call will also be webcast from www.drhorton.com on the “Investors” page.

D.R. Horton, Inc., America’s Builder, is the largest homebuilder in the United States, based on its 15,989 homes closed in the twelve-month period ended June 30, 2011. Founded in 1978 in Fort Worth, Texas, D.R. Horton has operations in 71 markets in 26 states in the East, Midwest, Southeast, South Central, Southwest and West regions of the United States. The Company is engaged in the construction and sale of high quality homes with sales prices ranging from $90,000 to over $700,000. D.R. Horton also provides mortgage financing and title services for homebuyers through its mortgage and title subsidiaries.


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