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Hovnanian Enterprises Reports Fiscal 2013 First Quarter Results

RED BANK, N.J., March 6, 2013 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE:HOV), a leading national homebuilder, reported results for its first quarter ended January 31, 2013.

RESULTS FOR THREE MONTH PERIOD ENDED JANUARY 31, 2013:

  • Total revenues were $358.2 million for the fiscal 2013 first quarter up 32.9% compared with $269.6 million during the fiscal first quarter of 2012.  
  • Deliveries, including unconsolidated joint ventures, were 1,188 homes for the quarter ended January 31, 2013, up 17.4% compared with 1,012 homes in the 2012 first quarter.  
  • The dollar value of net contracts, including unconsolidated joint ventures, for the three months ended January 31, 2013 increased 42.1% to $463.2 million compared with $326.0 million in fiscal first quarter of the prior year.  The number of net contracts increased 24.6% to 1,344 homes in the first quarter of 2013 from 1,079 homes in the 2012 first quarter.  
  • Contract backlog, as of January 31, 2013, including unconsolidated joint ventures, was $812.1 million for 2,301 homes, which was an increase of 40.4% and 33.0%, respectively, compared to January 31, 2012.  
  • Homebuilding gross margin percentage, before interest expense included in cost of sales, increased to 17.0% for the first quarter of fiscal 2013, compared with 16.5% in the first quarter of the previous year.  
  • Total SG&A was $49.3 million, or 13.8% of total revenues, for the first quarter ended January 31, 2013 compared to $46.0 million, or 17.1% of total revenues, in last year's fiscal first quarter.  
  • Consolidated pre-tax land-related charges during the fiscal first quarter of 2013 were $0.7 million compared with $3.3 million in the same period of the prior year.  
  • Total interest expense as a percentage of total revenues declined 320 basis points to 9.6% during the first quarter of fiscal 2013 compared with 12.8% in the previous year's first quarter.  
  • Adjusted EBITDA increased to $16.5 million for the fiscal 2013 first quarter compared to $2.8 million during the same quarter a year ago.  
  • Excluding land-related charges, expenses associated with the debt exchange offer and gain on extinguishment of debt, the pre-tax loss for the three months ended January 31, 2013 was $20.1 million compared with a pre-tax loss of $34.3 million during the same quarter a year ago.  
  • Net loss was $11.3 million in the fiscal 2013 first quarter, or $0.08 per common share, including a $9.7 million federal tax benefit, compared with a net loss of $18.3 million, or $0.17 per common share, in the prior year's fiscal first quarter, which included a net benefit of $20.1 million from gains on extinguishment of debt less expenses associated with a debt exchange offer.  
  • The contract cancellation rate, including unconsolidated joint ventures, for the fiscal 2013 first quarter was 17%, compared with 21% during the first quarter of 2012.  
  • During February of 2013, the dollar value of net contracts and the number of net contracts, including unconsolidated joint ventures, increased 31.3% and 17.8%, respectively, to $219.1 million compared with $166.9 million and to 622 homes from 528 homes in February of 2012.  
  • The valuation allowance was $943.9 million as of January 31, 2013. The valuation allowance is a non-cash reserve against the tax assets for GAAP purposes. For tax purposes, the tax deductions associated with the tax assets may be carried forward for 20 years from the date the deductions were incurred.

LIQUIDITY AND INVENTORY AS OF JANUARY 31, 2013:

  • After spending $111.7 million during the first quarter of 2013 on land and land development, homebuilding cash was $261.6 million as of January 31, 2013, including $28.8 million of restricted cash required to collateralize letters of credit.  
  • As of January 31, 2013, the land position, including unconsolidated joint ventures, was 29,705 lots, consisting of 11,055 lots under option and 18,650 owned lots.

COMMENTS FROM MANAGEMENT:

"Provided there are no adverse changes in current market conditions, we anticipate our deliveries, revenues and gross margin will increase in fiscal 2013 compared with fiscal 2012 with the greatest improvement in these metrics expected to occur during the second half of the fiscal year," said Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. "In addition, we are optimistic that the recent increases in net contracts we have reported will continue and could lead to our best spring selling season in years. Given the size of our contract backlog, the average gross margin on homes currently in contract backlog and assuming that market conditions remain stable, we are pleased to project our return to profitability for fiscal 2013.  It has been a long and difficult cycle, but we finally see the benefits of the many steps we have taken to prepare ourselves for this inevitable market upturn."

Stock quotes in this article: HOV 

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