Hovnanian Swings To 1Q Loss After Year-Earlier Tax Gains

   DOW JONES NEWSWIRES 
 

Hovnanian Enterprises Inc. (HOV) swung to a fiscal first-quarter loss that was worse than analysts had expected after a year-earlier quarter that included $291.3 million of tax benefits.

"While we were encouraged by the typical seasonal increase in both traffic and net contracts during January, it is still too early to tell how this spring selling season will compare to last spring's net contracts when the federal home-buyer tax credit was still available," said President and Chief Executive Ara K. Hovnanian.

Hovnanian's contracts have plunged recently because of the expiration of the government's first-time homebuyer tax credit, which ended last spring after a rush of buyers flocked to secure it. The company has said a lackluster job market and high foreclosure activity are "clearly having a [damping] effect on the housing market."

For the quarter ended Jan. 31, Hovnanian reported a loss of $64.1 million, or 82 cents a share, from a profit of $236.2 million, or $2.97 a share, a year earlier. The most-recent quarter included a $1.1 million federal tax benefit and $13.5 million of land-related charges, while the year-earlier quarter included the $291.3 million federal tax benefit and $5 million of land-related charges.

Revenue dropped 21% to $252.6 million.

Analysts polled by Thomson Reuters had most recently forecast a loss of 61 cents on $245 million in revenue.

Homebuilding gross margin, excluding interest, rose to 16.9% from 16%.

Net contracts excluding unconsolidated joint ventures fell 13% to 792 homes. The cancellation rate was 22% from a year-earlier 21%. And the company's contract backlog as of the end of the quarter was 25% lower than a year earlier.

Shares closed at $3.89 and were inactive after hours. As of the close, the stock had fallen 1.8% the past year.

-By Nathan Becker, Dow Jones Newswires; 212-416-2855; [e-mail]