DR Horton Inc. (DHI)
Q4 2009 Earnings Call Transcript
November 20, 2009 10:00 a.m. ET
Executives
Donald J. Tomnitz - Vice Chairman, President and Chief Executive Officer
Stacey H. Dwyer - Executive Vice President, Treasurer
Bill W. Wheat - Executive Vice President and Chief Financial Officer
Analysts
Michael Rehaut - JPMorgan
Kenneth Zener - Macquarie Research Equities
Daniel Oppenheim - Credit Suisse
Nishu Sood - Deutsche Bank Securities
Joel Locker - FBN Securities
Susan - UBS Warburg LLC
Joshua Pollard - Goldman Sachs & Company Inc.
Josh Levin - Citigroup
Stephen East - Pali Research
Michael R. Widner - Stifel Nicolaus & Company, Inc.
Alex Barron - Agency Trading Group Inc.
Timothy Jones - Wasserman & Associates
Jay McCanless - FTN Equity Capital Markets
James Wilson - JMP Securities LLC
Stephen Kim - Stephen Kim. Alpine Woods Capital Investors, LLC
Presentation
Operator
Good morning. My name is Courtney, and I will be your conference operator today. At this time, I would like to welcome everyone to the DR Horton America’s Builder 2009 fiscal year end conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. If you would like to ask a question during this time simply press star then one on your telephone keypad. If you would like to withdraw your question, please press the pound key.
Thank you. Mr. Don Tomnitz, you may begin your conference.
Donald J. Tomnitz
Thank you. And good morning. Joining me this morning are Bill Wheat, Executive Vice President and CFO; and Stacey Dwyer, Executive Vice President and Treasurer. Before we get started, Stacey?
Stacey H. Dwyer
Some comments made on this call may constitute forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Although DR Horton believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. All forward-looking statements are based upon information available to DR Horton on the date of this conference call and DR Horton does not undertake any obligations to publicly update or revise any forward-looking statements.
Additional information about issues that could lead to material changes in performance is contained in DR Horton’s annual report on Form 10-K and the most recent Form 10-Q, both of which were filed with the Securities and Exchange Commission. Don?
Donald J. Tomnitz
Net sales orders for the fourth quarter were 5,008 homes, up 26% from the same quarter in the prior year. Fourth quarter sales were essentially flat with our June quarter, which is better than the usual seasonal trend.
Our average sales price on net sales orders in the quarter decreased approximately 4% from the year ago quarter and 1% sequentially to $205,100. Our cancellation rate was 27%, in line with our June quarter but improved from 47% in the year ago quarter.
Our net sales were relatively even in each month throughout the quarter, fourth quarter and in October. However, we have seen our sales in November slow both seasonally and in response to the original November 30th expiration date of the federal home buyer tax credit. We expect our net sales to show a positive year-over-year comparison in our first quarter of fiscal 2010.
As I am sure you are all aware, the federal home buyer tax credit has been extended. To qualify for the tax credit homes must be under contract by April 30, 2010 and close by June 30, 2010. The tax credit has also been expanded with higher income limitations and a new $6,500 tax credit for existing homeowners who have been in their homes for five years or more.
Our sales backlog increased 6% from the prior year and 4% sequentially to 5,628 homes or $1.1 billion. Our fourth quarter home sales revenues were $1.0 billion, compared to $1.5 billion in the year ago quarter. Our average closing price for the quarter decreased approximately 5% from the year ago quarter to $210,100. Stacey?
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