D.R. Horton saw a 38 percent increase in home-building revenues for its fiscal second quarter, driving up profits by 13 percent as the demand for new homes drove sales orders up 30 percent, the company said Wednesday.
In an upbeat earnings report, the Fort Worth-based company reported net income of $147.9 million, or 40 cents a share, for the three months ending March 31. Home-building revenue for the three months ending March 31 was $2.8 billion, up from $1.7 billion in the same quarter in fiscal 2014.
President and CEO David Auld called the current housing market “healthy and relatively stable.”
“It’s a great market for us,” Auld said. “We’ve got the land. We’ve got the operating platform. We’ve got the people out there. We like the way it is right now.”
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Still, Wall Street turned sour on the company’s stock after executives reported that the fastest-growing percentage of sales are in its lower-priced Express Homes brand, introduced a year ago and targeted at first-time buyers. Those homes carry lower profit margin.
Horton shares (ticker: DHI) closed down $1.53 at $27.03 a share.
Between January and March, D.R. Horton took orders for 11,135 homes, up from 8,569 a year ago. Closings increased 33 percent to 8,243 homes, compared with 6,194 in the quarter in 2014, the company said.
Sales tripled in Horton’s Express Homes brand, which is now offered in 44 markets in 13 states. Express Homes sales represented 18 percent of t all its home sales, 13 percent of homes closed and 8 percent of company revenue, the company said.
Auld said D.R. Horton is not seeing much competition from builders targeting the entry-level buyer. About 60 percent of those buying Express Homes are first-time buyers; the rest are conservative consumers looking for value, he said.
“We’re opening markets as fast as we can,” Auld said. “There is no lack of customers. People want a great value with a great location. We’re very happy with the investment.”
Express Homes’ average selling price in the quarter was $179,000, higher than anticipated a year ago.
The company said it expects to grow the Express Homes brand to be 20 percent of revenues. It also expects its luxury Emerald Homes brand to reach 20 percent of sales. Sales of its Emerald Homes doubled in the fiscal second quarter and accounted for 15 percent of sales revenues, the company said.
“The spring selling season at D.R. Horton is off to a strong start,” Chairman Donald R. Horton said in a statement. “Our increasingly diverse product offerings are enabling us to expand our industry-leading market share.”
Sandra Baker, 817-390-7727