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D.R. Horton posts profit for Q1

D.R. Horton posted its first quarterly profit in three years Tuesday and predicted it would stay in the black at least through the first half of this year.
Homebuilders have seen orders improve in recent months due to low mortgage interest rates and tax credits for homebuyers. Many anticipate sales will surge in coming weeks as homebuyers race to beat the April 30 deadline to qualify for a tax credit.
The results, which beat expectations, buoyed investors. D.R. Horton’s stock climbed $1.30, or 11 percent, to $13.21.
D.R. Horton “is kind of our best pick on a block that’s still a little bit shaky,” said Robin Diedrich, an analyst with investment firm Edward Jones.
But the big question hovering over the industry, however, is whether sales will slow or fall off a cliff when the government support vanishes.
“We’re prepared to deal with whatever comes at us,” said Donald Tomnitz, the builder’s chief executive. “And if the tax credit expires and there’s not another one, then we’ll deal with that just as we’ve dealt with everything else.”
Tomnitz expects the company will sell fewer homes and see smaller profits in the second quarter. But he anticipates the third quarter will be its strongest for the year, as buyers race to beat the tax credit deadline.
Diedrich said the builder will likely post a loss in the fourth quarter, unless the economy turns around.
“The biggest issue as we head into the next fiscal year … will be unemployment,” Diedrich said. “In general, we are cautious on the home-selling market.”
But for now, the nation’s second-largest homebuilder is enjoying brisk business.
Horton said the number of new orders surged 45 percent and completed sales increased 36 percent in its first fiscal quarter compared with the first quarter of last year.
The company posted a profit of $192 million, or 56 cents a share, in the three months ended in December, thanks largely to a hefty tax gain. That compares with a loss of $62.6 million, or 20 cents a share, in the prior-year period.
Excluding the one-time tax benefit of $149.2 million, the company earned $42.8 million.
Revenue rose 23 percent to $1.1 billion from $900.3 million.

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