D.R. Horton, the largest U.S. home builder, on Thursday reported its first quarterly loss as a public company after taking more than $1 billion of charges, chiefly related to the lower value of land and other assets.
For its fiscal third quarter, ended June 30, D.R. Horton posted a loss of $823.8 million, or $2.62 per share, versus a profit of $292.8 million, or 93 cents per share, in the year-earlier quarter.
The results included charges totaling nearly $1.28 billion, including $835.8 million for inventory impairments and another charge of $425.6 million for other impairments.
The charges come to about 12% of the company's book value, Bank of America analyst Daniel Oppenheim said in a research note.
"While we think the market was prepared for a significant charge, we suspect that these charges of $1.28 billion are larger than most everyone expected for the quarter," he wrote.
Home-building revenue fell 31%, to $2.5 billion in the year-earlier quarter, as the number of homes sold fell 28% to 9,643.
Earlier this month, the company said net sales orders in the quarter fell 40% to 8,559 homes. The dollar value of the orders dropped 47% to $2.0 billion.
"We believe that market conditions will continue to be challenging, and our quarter-end impairment evaluations incorporated our more cautious outlook for the industry," Chairman Donald Horton said in a statement.
The company's traditional customers are first- or second-time home buyers. It builds homes in 27 states with sales prices starting at about $90,000 and going all the way up to $900,000.
The U.S. housing market's downward spiral continues to thrash new home builders as several expect the decline to continue well into next year. Recently, the National Association of Home Builders said U.S. home builder sentiment during July fell to its lowest level in 16 years.
Many leading U.S. home builders have said that they don't expect their business to improve until the glut of existing homes on the market is drastically reduced.
Wednesday, the National Association of Realtors said that the pace of U.S. existing single-family home sales fell 3.5% from the prior month and that inventory of single-family homes for sale rose to its highest level since June 1992.
In premarket activity, D.R. Horton shares traded at $17.00 -- down from their Wednesday close of $17.48. Year to date, D.R. Horton shares are off 34%, equal to the Dow Jones U.S. Home Construction Index, a yardstick that measures the sector's performance.