Hovnanian reports narrower quarterly loss as home sales increase
Hovnanian Enterprises Inc., the largest home-builder in New Jersey, reported a narrower loss for its fiscal fourth quarter as sales increased in a recovering U.S. housing market.
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-based company said today in a statement. The results included $87 million in costs tied to the repurchase of debt.
Hovnanian, the best-performing home-builder stock this year, is benefiting from rising demand for new U.S. homes. Sales and orders increased even as Hurricane Sandy, which battered the East Coast on Oct. 29, pushed back the completion of some deals. Home deliveries are typically weighted toward the end of the quarter and fiscal year, according to the company.
"After the worst downturn that the home-building industry has ever seen, I do not think there is any question that the industry is finally in a period of modest recovery," chief executive officer Ara K. Hovnanian said in the statement.
Revenue in the quarter climbed 43 percent to $487 million.
Net contracts jumped 23 percent from a year earlier to 1,443 homes, the company said. The contract backlog, an indication of future sales, rose 29 percent to 2,145.
Hovnanian is lagging behind home-builders including Lennar Corp., Toll Brothers Inc. and D.R. Horton Inc. in returning to consistent profitability after the U.S. housing crash. Relatively high debt costs make it harder for Hovnanian to make money, according to Megan McGrath, an analyst at MKM Partners LLC in Stamford, Connecticut.
"They are slowly crawling their way out, but so far they haven't been able to be profitable consistently," McGrath said in a telephone interview Wednesday. "That said, the market is expecting them to be."
Hovnanian had a pretax profit, excluding the charge on the debt costs, for the first time since 2006, the company said.
Fourth-quarter results were released before the start of regular U.S. trading. Hovnanian has gained 279 percent this year through Wednesday, compared with a 96 percent advance for the 13-company Bloomberg Industries home-building index.