Hovnanian’s Third-Quarter Loss Narrows as Homebuilder Reduces Writedowns
The net loss was $50.9 million, or 47 cents a share, for the period ended July 31, compared with a loss of $72.9 million, or 92 cents, a year earlier, the Red Bank-based company said today in a statement. The average estimate of 10 analysts in a Bloomberg survey was for a loss of 51 cents a share.
Hovnanian, the worst-performing homebuilder stock in the past 12 months, has been buying land at distressed prices in an effort to boost margins. Tighter credit and a jobless rate above 9 percent are discouraging home purchases. Sales of new houses fell 0.7 percent in July to a 298,000 annual pace, the lowest level in five months, the Commerce Department said Aug. 23.
“Recently ‘less bad’ just hasn’t been good enough for investors,” Megan McGrath, an analyst with MKM Partners LLC, in Stamford, Connecticut, said in an e-mail before the report. “There is a concern that earnings may deteriorate from here.”
Hovnanian’s revenue declined to $285.6 million from $380.6 million a year earlier. Net orders increased 33 percent to 1,297 homes from a year earlier.
The results included $11.4 million in land-related impairments, down from $49 million a year earlier.
“We see very few indicators that any recovery in the housing market has begun,” Chairman Ara Hovnanian said in the statement. “As such, we are taking appropriate steps to run our business based on current market conditions, with a focus on maintaining adequate liquidity.”
The company spent about $105 million in the third quarter to buy 1,200 lots and develop land, resulting in cash flow of negative $76.2 million for the period.
Hovnanian’s loss was the company’s 19th out of the past 20 quarters. Its one profit, in the three months that ended in January 2010, was the result of a federal tax break.
Hovnanian reported earnings after the close of regular U.S. trading. The shares rose 16 cents to $1.65 as of 4:15 p.m. in New York Stock Exchange composite trading. They have dropped 57 percent in the last 12 months for the biggest loss in the 13- member Bloomberg homebuilder index, which is down 26 percent for the period.
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