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Homebuilder Hovnanian Enterprises posts smaller loss in fiscal 3Q as charges decline
LOS ANGELES (AP) ' Hovnanian Enterprises Inc. on Wednesday reported a smaller loss for its fiscal third quarter, as lower land-related charges helped to blunt a sharp drop in revenue for the homebuilder.
New home orders rose 33 percent against weak sales numbers in the May to July quarter last year, when demand for new homes plummeted industrywide following the end of special tax incentives for homebuyers. Home closings in the latest quarter slid 20 percent, reflecting a disappointing spring home-selling season this year.
"We see very few indicators that any recovery in the housing market has begun," said Ara K. Hovnanian, the builder's chairman, president and chief executive.
Coming off a lackluster spring, sales of new homes this year have failed to deliver on industry expectations for improvement following 2010, when sales sank to the lowest level on records going back to 1963.
U.S. sales of new homes declined in each month of the May to July quarter and some economists are already forecasting 2011 sales will be worse than last year's.
A sputtering U.S. economy, swooning stock market and worries of a broader global economic downturn are keeping many would-be homebuyers from moving forward with a home purchase. High unemployment, tougher lending standards and worries home prices have yet to bottom out also are preventing many people from buying homes.
Hovnanian's latest sales trends echo those of several other major homebuilders that reported results for the quarter ended in June. Many saw flat or improved new home orders for the quarter, but also weaker home closings.
Hovnanian has operations in 18 states and is the seventh-largest homebuilder in the U.S., based on homes delivered last year.
The builder, based in Red Bank, N.J., said it lost $50.9 million, or 47 cents a share, for the three months ended July 31. That compares with a loss of $72.9 million, or 92 cents a share, in the same period last year.
The results included $11.4 million in land-related charges, down from $49 million in the year-ago period.
Sales in the latest quarter tumbled to $285.6 million from $380.6 million.
Analysts polled by FactSet expected a loss of 51 cents a share on revenue of about $289.8 million.
For the May to July quarter, Hovnanian reported net contracts for new homes, including joint ventures, climbed to 1,297 homes. Home closings totaled 1,112 homes, down from 1,136 a year earlier.
The builder handily beat analysts' consensus forecast for a 24 percent increase in orders, but closings were 2 percent higher than Wall Street expected, according to FactSet.
The rate at which buyers walked away from contracts for new homes eased to 18 percent from 23 percent in the prior-year quarter.
As of July 31, Hovnanian's backlog, including joint ventures, stood at 1,736 homes, up 13 percent from a year earlier. The sales value of the backlog was $570.8 million, an increase of 14 percent.
Hovnanian spent about $105 million in land purchases and development during the quarter and ended the period with $334.2 million in cash.
That could add to concerns among some analysts that the builder might not have enough of a financial cushion should the housing market downturn drag on.
Its shares added 4 cents, or 2.4 percent, to $1.69 in aftermarket trading following the release of the earnings report. The stock gained 16 cents, or 10.7 percent, to $1.65 during the regular session.