Homebuilder Hovnanian Enterprises posts $236.2M profit in 1st-qtr on tax gain
Hovnanian Enterprises Inc. said Tuesday it posted a quarterly profit for the first time since 2006 as the homebuilder benefited from a hefty tax gain.
But aside from the $291.3 million gift from Uncle Sam, the builder’s results reflected ongoing weakness in the housing market. Hovnanian’s completed home sales for the three months ended in January fell 10 percent from the same period last year.
Hovnanian and other builders are hoping sales will pick up as the traditional homebuying spring season unfolds and an April 30 deadline for two housing tax credits nears.
Hovnanian shares added one penny to $3.97 on Tuesday. The stock added 12 cents, or 3 percent, to $4.09 in aftermarket trading, following the news.
Recent housing data, however, have been mixed and suggest the housing market’s recovery could stall.
Home prices edged up in December, the seventh straight monthly gain. But sales of newly built homes plunged 11 percent to a record low in January, the third consecutive monthly decline. And sales of previously occupied homes tumbled 7 percent — the sharpest drop since June.
Nevertheless, trouble in the real estate market has created opportunities. Hovnanian, which has operations in 18 states, has been acquiring thousands of home sites in recent months.
“We are pleased to see the market for new land deals begin to thaw out a bit and we continue to diligently pursue new land opportunities … ” said Ara Hovnanian, chairman, president and chief executive of the Red Bank, N.J.-based company.
The latest results bring to an end a string of 13 quarterly losses for Hovnanian. Several builders have managed to turn a profit in recent months because of a tax rule enacted last year that extends the time companies have to offset past losses.
Like other builders, Hovnanian saw orders improve last year as low interest rates and a housing tax credit coaxed reluctant buyers into the market.
But high unemployment and job insecurities are keeping some buyers on the fence.
First quarter completed sales, excluding joint ventures, totaled 1,091 homes, down 10 percent from the year-ago quarter. About 21 percent of buyers backed out of their deals, down from 31 percent in the first quarter last year.
The company earned $236.2 million, or $2.97 a share, in its fiscal first quarter. That compares with a loss of $178.4 million, or $2.29 a share, in the prior-year period.
Excluding the $291.3 million tax gain, Hovnanian lost about $55.1 million, or 69 cents a share.
Revenue dropped to $319.6 million from $373.8 million the year before.
Analysts polled by Thomson Reuters were expecting a loss of 45 cents a share on revenue of about $319 million.
Hovnanian Enterprises Inc.: http://www.khov.com