Hovnanian Reports Narrower Loss as Housing Sales Increase
The net loss for the three months ended Oct. 31 was $84.4 million, or 59 cents a share, compared with $98.3 million, or 90 cents, a year earlier, the Red Bank, New Jersey-based company said today in a statement. The results included $87 million in costs tied to the repurchase of debt.
Hovnanian, the largest homebuilder in New Jersey, is benefiting from rising demand for new U.S. homes with borrowing costs at record lows and prices rising. The company’s orders jumped 23 percent in the quarter and also increased last month.
The fourth-quarter results “were encouraging and consistent with the continually improving housing market,” Vincent Foley and Cedric Morris, analysts with Barclays Plc, wrote in a note to clients. “We believe the company is in the best fundamental shape since before the housing downturn.”
The shares slipped 5.3 percent to $5.20 at the close of New York trading. Hovnanian has gained 259 percent this year, compared with a 94 percent advance for the 13-company Bloomberg Industries homebuilding index.
“There could be some profit-taking here,” Megan McGrath, an analyst at MKM Partners LLC in Stamford, Connecticut, said in an e-mail. “While 4Q results were solid, I think that investors may be disappointed with the company’s limited commentary around fiscal 2013.”
The number of communities dropped 12 percent in the fourth quarter from a year earlier and “the lower number of active selling communities may dampen our sales and deliveries early in the new fiscal year,” Chief Executive Officer Ara K. Hovnanian said during a call with analysts today. “We are very optimistic about our opportunities for stronger growth in the latter half of the year.”
In the fourth quarter, revenue climbed 43 percent to $487 million.
Net contracts jumped to 1,443 homes from 1,175 a year earlier, and increased 19 percent in November, the company said. The contract backlog, an indication of future sales, rose 29 percent in the fourth quarter to 2,145.
Hovnanian had a pretax profit, excluding the charge on the debt costs, for the first time since 2006, the company said.
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