Hovnanian Enterprises, Red Bank, N.J. (NYSE:HOV) after market close Wednesday reported a net loss for its fiscal third quarter ended July 31 of $72.9 million (-$0.92 per common share). The loss compared with a loss of $168.9 million (-$2.16 per common share) for last year's fiscal third quarter.

Analysts were expecting a loss of 52 cents per share. The stock was unchanged at $3.68 after hours after closing up 7.6% on the day Wednesday.

The loss included land charges of $49.0 million compared with $101.1 million in the fiscal 2009 third quarter, with three quarters of that impairment related to four communities in California and one in New Jersey.

Revenue was essentially flat with last year's quarter, $380.6 million versus$387.1 million in 2009. Closings also were essentially flat: 1,316 versus 1,322. Closing revenue was up 0.3% to $368.1 million as the average price rose 0.7% to $279,694. Unconsolidated joint ventures added 80 closings worth$34.6 million with the average price up 2.2% to $288,457.

New orders dropped 37% from last year's quarter to 902 homes. The cancellation rate was flat with the comparable quarter at 23%. The average new-order price was up 2.4% to $274,525. Unconsolidated JVs added another 71 homes worth $35.7 million at an average price of $291,250, a 5.9% increase over the same quarter last year.

In his commentary on the results, Hovnanian chairman and CEO Ara K.Hovnanian said, "July sales were modestly better than June, and we saw August sales improve even more significantly compared to June. However, we still did not reach the sales pace we saw in July and August of the prior year. While far from a normal sales pace, we are hopeful that the stronger selling environment will continue into September and October."

Community count was 183, down from 198 at quarter's end last year but up from 178 at the end of the previous quarter on April 30. That was the first increase in active selling communities in 12 quarters.

Backlog, at quarter's end was 1,375 homes with a sales value of $419.5 million, a decrease of 30% and 32%, respectively, compared to July 31, 2009, excluding JVs.

Home building gross margin, before interest expense included in cost of sales, increased year-over-year for the sixth consecutive quarter to 17.1% during this quarter (11.4% including interest) from 9.1% in last year's quarter (3.5% including interest). SG&A was down to $42.2 million from$55.3 million in last year's quarter.

The company ended the quarter with $492.4 million in total cash, including$118 million in restricted cash. Cash flow was a negative $29.8 million owing in part to an expenditure of $19.3 million to repurchase debt and another $70.3 million that was used to purchase approximately 1,300 lots. At quarter's end, Hovnanian had 32,485 lots,14,793 lunder option and 17,692 owned. During the quarter, approximately 850 lots were purchased in 45 newly identified communities and approximately 4,700 lots were optioned in 62 newly identified communities.

Started unsold homes, excluding models, increased 6%, to 837 at July 31, 2010 compared with 793 at the end of the third quarter a year ago.

The company listed $1.65 billion in long-term debt on its balance sheet at quarter's end and showed a shareholders equity of negative $2087.5 million.

"We anticipated that our third quarter net contracts would decline as some sales were pulled forward into the second quarter due to the expiration of the $8,000 federal homebuyers' tax credit," said Hovnanian. "Concurrent with the expiration of the tax credit, we saw consumer confidence take a step backward, as the lack of job creation, volatile stock market prices, the oil spill in the Gulf of Mexico and general concerns about the health of the economy moved to the forefront. These factors combined to produce slower than expected sales throughout our third quarter."