cut its full-year earnings guidance late Monday, blaming slowing sales, higher cancellations, production delays and higher construction costs for its new homes.
The homebuilder said it now expects 2006 EPS to be in the range of $7.20 to $7.40, down from its previous guidance of $8.05 to $8.40. Analysts had forecast earnings of $7.87 a share for the year ending Oct. 31. The company posted earnings of $7.16 a share for 2005.
The company also lowered its fiscal second-quarter EPS estimate to $1.40 to $1.50 from an earlier forecast of $1.55 to $1.80. The company also said it expects to report a 20% decline in its new-order contracts when it reports its second-quarter earnings in late May.
"Our anticipated results for our second quarter and the remainder of fiscal 2006 reflect smaller year-over-year increases in earnings than we had anticipated, primarily due to continuing production delays in several markets that have postponed deliveries, a slower recent sales pace, higher cancellation rates, more pronounced use of concessions and incentives, and material price increases," Ara Hovnanian, the company's president and CEO, said in a statement.
"We believe the higher cancellation rates, in addition to an increase in resale listings and increased use of sales incentives in certain markets, are temporary aberrations as certain markets work through the increased level of resale homes for sale. However, we remain encouraged that supported by job creation and household formation the long-term fundamentals of housing remain solid," Hovnanian said.
The company's shares recently dropped $1.58, or 4%, to $37.20 in after-hours trading.