Homebuilder Hovnanian Enterprises, Inc. (HOV) said Wednesday after the markets closed that its third quarter loss narrowed from last year, helped by higher homebuilding gross margin and fewer land-related charges.
The Red Bank, New Jersey-based company reported a net loss for the third quarter of $72.9 million or $0.92 per share, compared to a net loss of $168.9 million or $2.16 per share for the year-ago quarter.
On average, 12 analysts polled by Thomson Reuters expected the company to report a loss of $0.52 per share for the third quarter.
Homebuilding gross margin, before interest expense included in cost of sales, increased to 17.1% in the third quarter from 9.1% in the prior year quarter.
Pre-tax land-related charges for the third quarter were $49.0 million, compared with $101.1 million in the third quarter of last year. More than 75% of the land-related charges in the latest quarter were related to four communities in California and one community in New Jersey.
Total revenues for the third quarter fell 1.7% to $380.60 million from $387.11 million in the same quarter last year. Eleven analysts had a consensus revenue estimate of $385.96 million for the third quarter.
Homebuilding revenue for the quarter declined to $371.8 million from $378.2 million a year ago.
The company delivered 1,316 homes during the third quarter, down slightly from 1,322 homes delivered in the year-ago quarter.
Net contracts for the third quarter decreased 37% year-over-year to 902 homes, while contract cancellation rate for the quarter was unchanged from last year 23%.
"We anticipated that our third quarter net contracts would decline as some sales were pulled forward into the second quarter due to the expiration of the $8,000 federal homebuyers' tax credit," said Ara Hovnanian, Chairman, President and Chief Executive Officer. "Concurrent with the expiration of the tax credit, we saw consumer confidence take a step backward, as the lack of job creation, volatile stock market prices, the oil spill in the Gulf of Mexico and general concerns about the health of the economy moved to the forefront. These factors combined to produce slower than expected sales throughout our third quarter."
The homebuilder ended the third quarter with a contract backlog of 1,375 homes with a sales value of $419.5 million, a decrease of 30% and 32%, respectively, from a year earlier.
Hovnanian shares, which have traded in a range of $3.20 to $8.05 over the past year, closed Wednesday's regular trading session at $3.68, up 26 cents or 7.60%, but lost 9 cents or 2.45% in after hours trading.
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