Builder D.R. Horton reports rise in profit

Jennifer Shubinski

Friday, Nov. 14, 2003 | 11:09 a.m.

The Las Vegas market remains one of the strongest divisions for home builder D.R. Horton Inc., which reported a profit Thursday for its fiscal fourth quarter and year.

Arlington, Texas-based D.R. Horton reported a profit of $230.7 million, or $1.46 per share, for the quarter ended Sept. 30, up from $136.4 million, or 92 cents, in the year-ago quarter.

Consolidated revenue for the Arlington, Texas-based company grew 32 percent to $2.9 billion from $2.2 billion. Consolidated revenue includes D.R. Horton's home building and financial divisions.

For the 2003 fiscal year, D.R. Horton reported a profit of $626 million, or $4.10 per share, up from $404.7 million, or $2.87 per share.

Consolidated revenue for the year increased 30 percent to $8.7 billion from $6.7 billion for fiscal 2002.

The company's backlog of homes under contract as of Sept. 30 was 15,488 homes, with a value of $3.7 billion. That compares with 12,697 homes valued at $2.8 billion at fiscal year-end fiscal 2002.

Locally, D.R. Horton closed on 1,666 homes during its fiscal year 2003 and as of Sept. 30 had a backlog of 345 homes, Jim Frasure, division president for the company, said.

The company said that strong home sales in all of its markets fueled its year-over-year improvement.

In Las Vegas, D.R. Horton is one of the largest home builders. In 2002, it was among the five largest builders in the area, closing escrow on 1,307 homes, Home Builders Research Inc. has reported.

Frasure expects the home builder, which sells both attached and detached homes, to sell about 2,300 homes during fiscal year 2004.

"I think the demand will increase, but the big issue here is the supply," he said. "If there is limited supply, then values go up and everybody has seen that."

The increase in the price of land, which Frasure said can exceed $300,000 an acre for entitled parcels, is why the home builder has turned to attached housing. An entitled parcel is land that is already zoned and is near utility hookups, Frasure said.

D.R. Horton sells tri-plexes, which contains three homes per building, starting at $110,000 in some of its communities. That compares to its starting price of $185,000 for a single-family home to more than $900,000 for a semi-custom single-family home. Frasure said the builders' attached product has grown to 37 percent of its closings.

The company will have a duplex product coming out in the next few months in three areas if the valley: in the north, soutwest and south, Frasure said. Frasure said they will not put the duplexes in Henderson because of a shortage of suitable land.

High land prices also have the potential to hurt the local division of D.R. Horton, which competes with the company's 41 other divisions for money from the corporate office to fund land acquisitions and projects.

"We must remain the shining star and do well so (corporate) will invest in us," Frasure said. "On a local level that means a good real estate market and doing a good job at managing our own business."

But Frasure said the Las Vegas division's biggest challenge -- and biggest competitor in Las Vegas -- is the resale home market.

He said the demand is so great for new homes, and the wait so long, that many people turn to the existing home market rather than wait.

"If we don't get homes to the market in a timely fashion, they go to resale," Frasure said.

Currently, D.R. Horton has four communities actively selling homes. In four other communities, homes are sold out, leaving D.R. Horton to sell off its model homes.

Frasure said 11 new Las Vegas-area communities are expected to open by the end of the year.