D.R. Horton Inc.
) second-quarter fiscal 2014 results surpassed the Zacks
Consensus Estimate for both revenues and earnings due to improved
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Adjusted earnings of 38 cents per share in the second quarter of
fiscal 2014 beat the Zacks Consensus Estimate of 34 cents by
11.8%. Earnings grew 18.8% year over year driven by improved
homebuilding revenues and strong margin expansion.
Homebuilding revenues of $1.70 billion climbed 22.3% year over
year and surpassed the Zacks Consensus Estimate of $1.61 billion
Home sales increased 22.6% year over year to $1.68 billion due to
higher closings and pricing gains. Home sales revenues increased
in five out of the six regions. Home closings increased 9.8% to
6,194 homes in the reported quarter. The upside was driven by
growth in all the regions, except the Midwest, Southwest and the
West. Average sales price (ASP) rose 10% to $278,900, owing to
increased pricing in most of the markets.
Land sales contributed $16.6 million to revenues, lower than
$21.7 million in the prior-year quarter.
Net sales orders rose 9% in the second quarter to 8,569 homes
attributable to better housing market conditions across most
markets. Orders increased in the East, Southeast West, and South
Central regions but continued to decline in the Midwest and
Southwest. The value of net orders grew 20% to $2.4 billion. The
company also witnessed sequential improvement in orders.
D.R. Horton reported solid order growth in the second quarter of
fiscal 2014 whereas other homebuilders like
Meritage Homes Corp.
) witnessed a decline in orders in their recently reported first
The quarter-end sales order backlog rose 5% to 10,059 homes.
Backlog value grew 18% to $2.8 billion. Sales order backlog
represents homes under contract but not yet closed at the end of
a certain period. Backlog rose in West, East, and South Central
regions but declined in Southwest, Southeast and Midwest regions.
Margins Going Strong
Gross profit on home sales was $377.2 million, up around 35.3%
year over year. Gross margin on home sales expanded 210 basis
points (bps) year over year to 22.5% driven largely by improved
market conditions, which led to higher ASPs.
Selling, general and administrative expenses were $187.9 million,
up 21.1% from the prior-year quarter. Consolidated pre-tax income
was $201.9 million in the quarter, up 42% year over year.
Consolidated pre-tax margin stood at 11.6%, reflecting an
improvement of 170 bps year over year.
D.R. Horton's homebuilding cash, cash equivalents and marketable
securities totaled $930.8 million as of Mar 31, 2014, compared
with $801.1 million as of Dec 31, 2013.
D.R. Horton carries a Zacks Rank #3 (Hold).