D.R. Horton reported a surge in profits for its fiscal first quarter, as housing markets improved nationwide and home prices began to rise, the company said Tuesday.
Investors reacted enthusiastically, pushing up shares of the Fort Worth-based home builder (ticker: DHI) by $2.06 a share, or nearly 10 percent, to $23.
Income for the three months ended Dec. 31 was $123.2 million, or 36 cents a share, up 86 percent from the same period a year ago, when income was $66.3 million. Revenue from home building was $1.6 billion, up 33 percent.
Donald Tomnitz, Horton’s president and chief executive, said during a conference call with Wall Street analysts that it marked Horton’s best first quarter since 2006 and sets a “firm foundation” for the year. The company has seen accelerated sales in January, typically a slower home-selling season, he said.
“We are better prepared for this spring than any other spring season,” Tomnitz said. “We continue to feel like there’s momentum building.”
Consumers are feeling more confident about buying a house, Tomnitz said. Couple with low inventories of new and existing homes, the company can hold its pricing firm going forward. “We’re able to raise prices faster than our costs are going increasing,” he said.
Some of the company’s gains have come from its nearly year-old Emerald brand of homes, a higher-priced luxury product targeted to move-up buyers, Tomnitz said. At its recent annual shareholders meeting, Chairman Donald R. Horton said he anticipates the Emerald line will grow to as much as 25 percent of the company’s revenues.
In the quarter, Horton said its sales orders rose 4 percent to 5,454 homes, closings rose 19 percent to 6,188 homes, and its sales order backlog rose 5 percent to 7,684 homes. The average sales price increased 10 percent to $275,600.
The company will pay shareholders a 37.5 cents-a-share dividend Feb. 18.
“Housing market conditions continue to improve across most of our operating markets, and our weekly sales pace has accelerated in January,” Horton said in a statement. “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.”