HOV Hovnanian Enterprises Inc

Hovnanian Enterprises Inc. lowered its outlook for the year as results for its latest quarter fell short of Wall Street expectations.

Shares fell 8.6% to $1.81 in morning trading.

"We are fully aware that there is even more work to do in order to return the company to higher levels of sustainable profits," Chief Executive Ara Hovnanian said.

For the fiscal year ending in October, Hovnanian cut its pretax earnings estimate, excluding certain items, to $25 million to $35 million. The Red Bank, N.J., company previously had projected adjusted pretax profit of $25 million to $50 million. It reaffirmed its revenue guidance of between $2.7 billion and $2.9 billion.

The company said that since mid-October, it has paid off $320 million of debt, and after the quarter ended it issued $150 million of new debt to refinance debt maturing next year.

For the period ended July 31, Hovnanian reported a loss of $474,000, or zero cents on a per-share basis, compared with a year-earlier loss of $7.7 million, or 5 cents a share. Last year's period includes a $10 million income tax charge.

Still, revenue increased sharply, growing 33% to $716.9 million.

Analysts polled by Thomson Reuters expected per-share profit of 6 cents and revenue of $732.5 million.

Homebuilding gross margin, excluding certain items, fell to 16.9% from 17.8% a year prior.

Hovnanian delivered 10% more homes in the quarter, delivering 1,627 homes. The average price grew 9.9% to $412,477.

The number of contracts fell 7.3% to 1,537 homes, with their average price falling 1.7% to $412,019.

The quarterly cancellation rate was 22%, compared with 20% a year earlier.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

September 09, 2016 10:55 ET (14:55 GMT)

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