Hovnanian Posts Loss of $117 Million; Hurt by Canceled New Home Orders
Hovnanian Enterprises, New Jersey's largest home builder, had a fiscal fourth-quarter loss of $117.9 million on cancellations of new home orders and write-offs on land options.
RED BANK -- Hovnanian Enterprises, New Jersey's largest home builder, had a fiscal fourth-quarter loss of $117.9 million on cancellations of new home orders and write-offs on land options. Shares fell as much as 5 percent in after-hours trading.
The net loss for the three months ended Oct. 31 was $1.88 a share, compared with a profit of $168.1 million, or $2.55, a year earlier, the Red Bank-based company said Monday. Revenue fell to $1.7 billion, from $1.8 billion a year earlier.
Hovnanian customers canceled more than a third of their contracts for new homes in the fourth quarter, an increase of 25 percent from the same period last year, the company said. The company walked away from $141 million in land deposits and pre-development costs in the fourth quarter and took impairment charges of $174 million.
"We did not anticipate the suddenness or magnitude of the fall in pricing that occurred this year in many of our communities," said Chief Executive Officer Ara Hovnanian. "Over the past two months, we have started to see a glimmer of hopeful indicators that the markets may be stabilizing, including modest declines in resale inventories."
Chief Financial Officer Larry Sorsby estimated first quarter 2007 earnings between 5 cents and 10 cents per share.
The company released its report after the close of regular U.S. trading. Shares fell 64 cents to $35.25 in New York Stock Exchange composite trading. After the close of official markets, they fell as low as $33.51. The stock has dropped 31 percent this year, compared with a 23 percent decline in the Standard & Poor's Supercomposite Homebuilding Index.
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