Home Builder Hovnanian Posts Disappointing Results

Home builder Hovnanian Enterprises Inc., which has struggled under a massive debt load, said earnings declined in the latest period even though revenue rose, hurt by climbing expenses.

The results missed Wall Street expectations, and shares fell 2.9% to $2.38 in morning trading in New York.

Hovnanian has faced maturing public debt from land purchases and acquisitions during the boom years. The company increased its use of land bank financing and joint ventures and exited four underperforming markets in 2016, which Chief Executive Ara Hovnanian said was a "challenging year" for the company.

But the company said it would start to actively seek out land investment opportunities, which should lead to higher levels of profitability in the future, Mr. Hovnanian said.

Over all, net income was $22.3 million, or 14 cents a share, compared with $25.5 million, or 17 cents a share, in the prior-year period. Analysts polled by Thomson Reuters expected 13 cents a share.

Revenue rose 16% to $805.1 million, as analysts expected $802.3 million.

Total home-building expenses rose to $719.9 million from $612.9 million in the prior-year period. U.S. home builders have faced growing concerns over rising land and labor costs and an tepid housing recovery.

Luxury home builder Toll Brothers Inc. earlier this week reported double-digit revenue growth in its fourth-quarter results and projected a strong performance going into 2017 despite softening in some markets.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

December 08, 2016 11:05 ET (16:05 GMT)

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