Hovnanian Enterprises (NYSE:HOV), Red Bank, N.J., after market close Tuesday reported a net loss of $450.5 million for its fiscal fourth quarter of 2008, ended Oct. 31. The loss included $319.9 million in impairments and write-downs and a non-cash charge to deferred tax assets under FAS 109 of$169.5 million.
The loss minus the extraordinary charges came in at around $1.74 per share; analysts were expecting a loss of $1.66.
For fiscal 2008, the company's net loss was $1.1 billion, or $16.04 per share, including impairments of $776.7 million, including land impairments of $596.0 million, write- offs of predevelopment costs and land deposits of$114.1 million, goodwill impairments of $32.7 million and intangible impairments of $2.7 million, as well as $31.2 million related to joint ventures. The FAS 109 current and deferred tax valuation allowance charge to earnings was $409.6 million for the full year.
During the quarter, revenues fell 48% from last year's fourth quarter to$721.4 million. Deliveries were down 42% to 2,294 homes, and net new contracts were down 56% to 1,225 homes. The company noted that last year's fourth quarter included approximately 1,500 net contracts signed during its "Deal of the Century" promotion. The cancellation rate for the quarter edged up to 42% from 40% at the same time last year.
Home deliveries through unconsolidated joint ventures were 185 homes, compared with 471 homes in the fourth quarter of fiscal 2007.
Contract backlog, as of October 31, 2008, excluding unconsolidated joint ventures, was 1,907 homes with a sales value of $646.2 million, a decrease of 68% compared to October 31, 2007. Started unsold homes and models declined 43% to 1,596.
The company said cash flow during the fourth quarter was $175.1 million, giving it $838.2 million in home building cash at October 31, with no balance on its revolving credit facility. Total land position, as of October 31, decreased by 24,881 lots compared to the same day the prior year, reflecting decreases of 5,241 owned lots and 19,640 optioned lots. Lots controlled under option contracts totaled 16,464 and owned lots totaled23,439 at the end of the quarter, giving the company a total land position of 39,903 lots, down 67% from peak on April 30, 2006.
The company ended the quarter and fiscal year with 284 active selling communities, excluding unconsolidated joint ventures, a decline 147, or 34%, from the prior year. Homebuilding gross margin, before interest expense included in cost of sales, was 6.7% in fiscal 2008 and 4.7% for the fourth quarter of 2008, compared to 15.1% and 10.9%, respectively, in the same periods last year.
Pretax income from Hovnanian's financial services unit declined 40% compared to the previous year to $16.7 million.
For all of fiscal 2008, deliveries through unconsolidated joint ventures were 704 homes, compared with 1,364 homes during fiscal 2007. During the fourth quarter of fiscal 2008, home deliveries through unconsolidated joint ventures were 185 homes, compared with 471 homes in the fourth quarter of fiscal 2007.
"Since mid-September, the housing market has deteriorated in lock-step with the widening financial crisis and declines in broader economic conditions," said Ara K. Hovnanian, president and CEO. "After three years of an unprecedented housing downturn and the deteriorating state of the U.S. economy, we along with other public and private homebuilders, the National Association of Homebuilders, the Business Roundtable and the National Association of Manufacturers, among others, are seeking a housing stimulus package from the Federal Government to assist buyers of both existing and new homes."
Hovnaninan shares, up nearly 30% in regular trading after the Fed announced its historic rate cut, were giving back 10% at $2.40 in after hours trading shortly before 6 p.m.