DOW JONES NEWSWIRES
Hovnanian Enterprises Inc.'s (HOV) fiscal third-quarter loss narrowed as the home builder saw fewer land-related write-downs in the most-recent quarter but its net contracts dropped 37% amid the expiration of government tax credits.
Shares declined 2.5% to $3.59 after hours. As of the close, the stock had fallen 27% in the past year.
"We anticipated that our third-quarter net contracts would decline as some sales were pulled forward into the second quarter" because of the tax credit, said Chairman and Chief Executive Ara K. Hovnanian. "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."
Although those factors combined for "slower-than-expected sales throughout our third quarter," Hovnanian did note that the company saw July and August sales improve from June levels.
The home builder has reported better results of late, with a sliding cancellation rate and sharply improving margins. But builders' results have been boosted by the government's first-time homebuyer tax credit, which propped up home sales by offering consumers up to $8,000. That program expired in April, though, with the closing deadline now extended until Sept. 30.
Sales of new homes in the U.S. dropped to a record low in July as demand from consumers dried up after the tax credit expired, the Commerce Department said last week.
For the quarter ended July 31, Hovnanian reported a loss of $72.9 million, or 92 cents a share, compared with a year-earlier loss of $168.9 million, or $2.16 a share. The results included land-related write-downs of $49 million and $101.1 million, respectively.
Revenue fell 1.7% to $380.6 million.
Analysts polled by Thomson Reuters had most recently forecast a loss of 52 cents on $386 million in revenue.
Home-building gross margin rose to 17.1% from 9.1%.
Net contracts excluding unconsolidated joint ventures dropped 37%. The builder's cancellation rate was 23%, unchanged from a year earlier. The company's contract backlog as of July 31 was 30% lower.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855; email@example.com