Four Key Points from D.R. Horton's FQ109 Conference Call

Key points from D.R. Horton, Inc.’s FQ109 conference call: (DHI)

Much like Ryland Group (RYL), Horton saw an upturn of sorts in January:

What we basically saw during the quarter is stable sales in each of the month, and what we have seen in January is that these will pick up in terms of absolute number of sales. The percentage decline that we experienced in the December quarter is pretty consistent with what we continue to see in January.

We are very proud of our sales in January so far, because it could have been a lot worse given where the economy is and the unemployment is, so we are very proud of our sales in January.

And speaking of competitors, Palm Harbor Homes (PHHM) reported speedier delivery times. Horton isn't buying it:

One of your competitors indicated that in the recent quarter that they had cut their build time by 31 days and their cost per unit by 33% over the last year. I am sure you have been doing some of the same step, but do you have any comparable figures like that?

A: At this stage of my life, I am so tired of the smoke and mirrors comments from our competitors. What we are focusing on is the results, and I think you see the results for us this quarter. So, yes we have decreased the construction cost, we have decreased our construction cycles, but to put a number to all that is a bunch of hokey-pokey.

Write offs:

Q: You only took $56 million of write-down and one of your competitors may take ten times as much and they will come back with that number that you’ve maybe been late on the write-offs?

A: We took the ones that we needed to, based on the performance this quarter and where we expect our pricing will be. Looking forward it’s all going to be a matter where the market goes in the spring and the summer, and where pricing goes in the spring and the summer as to what the future impairments will be and we are not in the business of predicting where impairments are going to be.

Banks started to come down in land prices, but not enough:

There are pockets across the country where banks are now coming to us. Clearly, because one reason we got the cash to put the vertical construction on the ground which not many builders do especially the private which have lost virtually all of their financing. So, as a result… the banks are coming to us and asking us to work through their lot position… We are looking at land deals from time to time, but the return on our land deals where we would have to cash out a land track are extraordinarily high and we would have to have return of our money within a very short period of time.

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Comments

[missudpat:]

The reason that D R Horton is ranked among the lowest in J D Power's customer satisfaction, construction quality and warranty is because of their excessively quick build times and low cost, corner cutting subs. iTs easy research on the web..'D R Horton & defects.'

Feb 05 09:02 PM