Hovnanian Enterprises, Red Bank, N.J. (NYSE:HOV) on Tuesday after market close reported a net loss of $132.1 million (-$1.68 per share) for its fiscal fourth quarter ended Oct. 31, compared with a net loss of $250.8 million (-$3.21 per share) in the fourth quarter of fiscal 2009. Analysts were expecting a loss of 65 cents per share.
The loss included impairments of $80.6 million, compared with $138.0 million in the fiscal 2009 fourth quarter. Shares of HOV were down 2.5% to $4.25 in after-market trading Tuesday.
Revenues were $353.0 million for the quarter compared with $437.4 million in the same quarter a year ago. Deliveries, excluding unconsolidated joint ventures, fell 16.6% to 1,204 homes from 1,444 homes in the prior year's fourth quarter. The average price for deliveries fell 1.8% to $282,040, no including joint ventures.
Deliveries through unconsolidated joint ventures were 83 homes, compared with 82 homes in the fiscal 2009 fourth quarter.
Net contracts for the quarter of fiscal 2010, excluding unconsolidated joint ventures, decreased 13% to 1,078 homes compared with last year's fourth quarter. The average price on new contracts fell 12.2% from the 2009 quarter to $261,530. The cancellation rate was 24%, flat with last year's quarter.
Backlog was 1,249 homes with a value of $370.8 million, down 30% and 34%, respectively, from October 31, 2009. The company reported 192 active selling communities at quarter's end, excluding unconsolidated joint ventures, up from 179 at October 31, 2009, the first increase in 11 quarters.
The company said 78% of the land charges were related to five communities, four of them in Hovnanian's home state of New Jersey. Of those, the company is dumping the remaining land in two. The fifth community, in Maryland, is being scrapped and the investment written off.
Gross margin percentage, before interest expense included in cost of sales, increased year-over-year for the seventh consecutive quarter to 16.9%, compared to 13.2% in last year's fourth quarter. SG&A was down to $50.7 million from $52.5 million in fourth quarter, 2009. Cash flow during the fourth quarter of fiscal 2010 was negative $35.6 million. The company spent $100 million cash to purchase approximately 1,200 lots and to develop land across the Company.
Hovnanian said it optioned approximately 3,300 lots in 37 newly identified communities during the fourth quarter. Lot count at quarter's end was 32,055, 14,379 under option and 17,676 owned. During the fourth quarter, approximately 960 of the lots purchased were within 73 newly identified communities (controlled subsequent to January 31, 2009).
The company ended the quarter with $451.4 million in cash, including restricted cash required to collateralize letters of credit. Notes payable decreased from $1.78 billion at the end of last year's quarter to $1.64 billion this year.
For the 2010 fiscal year, Hovnanian reported a net profit $2.6 million($0.03 per share) compared with a net loss of $716.7 million (-$9.16 pershare) in the prior year. The profit was achieved via a 2010 federal income tax benefit of $291.3 million. For the full year, the pre-tax loss excluding land related charges and gain from extinguishment of debt was $184.6 million compared with $379.1 million last year.
Total revenues were $1.4 billion compared with $1.6 billion in the prior year. Homebuilding gross margin percentage, before interest expense included in cost of sales, was 16.8% compared to 9.2% for fiscal 2009.
For fiscal 2010, net contracts, excluding unconsolidated joint ventures, decreased 20% to 4,206 compared with 5,227 net contracts in the prior year.Deliveries, excluding unconsolidated joint ventures, declined 12% to 4,729 compared with 5,362 home deliveries in the prior year. For fiscal 2010, 280 homes were delivered through unconsolidated joint ventures, compared with297 homes in the prior year.
In fiscal 2010, approximately 10,800 lots were purchased or optioned within169 communities identified during fiscal 2010.
"In spite of strong long-term demographics, the current housing market remains quite challenging," said Ara K. Hovnanian, chairman and CEO. "The combination of a lackluster job market and high foreclosure activity is clearly having a dampening effect on the housing market. The only silver lining is that we continue to find land acquisition opportunities which we believe will yield appropriate returns at today's home prices and sales paces."
He added, "Even without a general housing recovery, we are optimistic that as the percentage of deliveries from newly identified communities increases, our overall performance should continue to improve."