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D.R. Horton Q4 earnings miss estimates despite return to profitability

Last updated: 08:57 11 Nov 2011 EST, First published: 09:57 11 Nov 2011 EST

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American homebuilder D.R. Horton (NYSE:DHI) said Friday it returned to profitability in its fourth quarter and full year fiscal 2011, but earnings still came in under estimates.

For the three months ended September 30, the company posted net income of $35.7 million, or $0.11 per share, up from a loss of $8.9 million, or $0.03 loss per share, a year ago.

Revenues rose to over $1.07 billion, up 16 percent from $925.7 million in the same period last year.

Analysts polled by Bloomberg had expected 14-cents per share, on $1.1 billion in sales.

As a result, shares of the company in New York fell 1.54 percent in premarket trading, to $11.48.

D.R. Horton chairman Donald R. Horton said: "Our strategy to open new communities for first-time and move-up buyers, improve gross margins, adjust our overhead and reduce interest expense led to our second consecutive year of profitability, despite continued challenging market conditions.

"In fiscal 2011, we reduced our homebuilding SG&A expense by $43 million and our homebuilding interest expensed directly and amortized to cost of sales by $67 million. Positive sales comparisons in our third and fourth quarters contributed to an 18% increase in our sales order backlog, positioning us for a stronger start to fiscal 2012.

"We will continue to control our construction costs, SG&A and inventory levels, while maintaining our strong balance sheet and liquidity, and we look forward to another year of profitability in fiscal 2012."

During the quarter, revenues from home sales increased 17 percent to $1.07 billion, largely on a 16 percent rise in completed homes, up to 4,987 units. Net orders hiked to 4,241 homes, up seven percent, representing a $927.6 million value. Sales backlog at the quarter's end also rose, increasing 18 percent to 4,854 homes, a $1.04 billion value.

For the full year fiscal 2011, the company posted net income of $71.8 million, or $0.23 per share, down 71 percent from $245.1 million, or $0.77 per share, last year. Horton said the drop is attributable to a $45.4 million pre-tax charge related to the cost of sales for inventory impairments and land option cost write-offs.

Revenues for the full year were $3.54 billion, down 18 percent from $4.31 billion a year ago.

Analysts anticipated 24-cents per share in full year earnings, on $3.6 billion in annual sales.

Also during the quarter, the company said it paid the remaining amount of its 7.875% senior notes at maturity, for a total of $106.1 million.

In other news, Horton said its board of directors approved a quarterly cash dividend of $0.0375 per share, payable on December 13.

As at 9:05 am EDT, Horton shares in New York fell three percent to $11.31.

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