Hovnanian Enterprises Inc.'s (HOV) fiscal third-quarter earnings
fell 76% as the home builder's improved revenue and margins were
overshadowed by a year-earlier period that included a combined
$42.7 million in tax benefits and debt-extinguishment gains.
The company, like other U.S. home builders, has mostly seen
more-solid results lately as the housing market recovers from the
worst downturn in generations.
"Our emphasis on raising home prices combined with concerns over
rising mortgage rates and weakened consumer confidence dampened our
home sales during July and August," Chief Executive Ara K.
Hovnanian said. "We believe we are in a period where consumers are
adjusting to current home prices and mortgage rates and remain
confident that the combination of pent-up housing demand and the
positive long-term demographic trends for housing will drive
increased demand for new homes going forward."
For the period ended July 31, Hovnanian reported a profit of
$8.5 million, or six cents a share, down from $34.7 million, or 25
cents a share, a year earlier. The year-earlier period included a
$36.5 million income tax benefit and $6.2 million in
debt-extinguishment gains.
Revenue jumped 24% to $478.4 million.
Analysts polled by Thomson Reuters recently expected per-share
earnings of seven cents and revenue of $505 million.
Adjusted home-building gross margin rose to 20.3% from
18.2%.
In the latest quarter, net contracts were up 1.8% to 1,568
homes, while the dollar value grew 7.9% to $546.9 million.
Deliveries rose 8.3% to 1,502 homes.
As of quarter's end, Hovanian's contract backlog was up 18% at
2,893 homes.
Shortly after the market opened, shares of Hovnanian rose two
cents to $5.06. Through Friday's close, the stock is down 28% this
year.
Write to Tess Stynes at tess.stynes@wsj.com
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