New home sales
Despite a drop in builder confidence, D.R. Horton’s fourth quarter (2009) earnings call reveals a steady optimism within the company. Although the year ended with its first quarterly operating profit since the first quarter of 2008, the company is bracing for the end of the $8,000 first time buyer tax credit in April.
“The third quarter will probably be our strongest quarter for profits this year,” said Donald J. Tomnitz, Horton CEO. “We expect our September quarter will be the most challenging as a tax credit support for home sales will have expired. As we move past the selling season, we will be able to get a better read on demand and we will adjust our business accordingly.”
While the National Association of Home Builders puts out a media blitz claiming shortages, Horton takes a realistic look at how they’ll survive in light of historic foreclosure rates and unemployment threatening to hold back economic recovery.
“Now we have to go to quarter-by-quarter-by-quarter,” Tomnitz said. “Our goal is to make money, a profit each one of the four quarters — for the fiscal year. So let’s go and do it again. You’re only as good as your last deal.”
How will you pull yourself up by the bootstraps in these historically challenging times?