Hovnanian Enterprises Q2 Loss Widens - Quick Facts

(RTTNews) - Home builder Hovnanian Enterprises Inc. (HOV) reported that its net loss for the second quarter of fiscal 2015 widened to $19.6 million or $0.13 per share, from $7.9 million, or $0.05 per share, in the second quarter of the previous year.

The pre-tax loss, excluding land-related charges and loss on extinguishment of debt, in the second quarter of fiscal 2015 was $25.2 million compared with a loss of $5.6 million in the prior year's second quarter.

Consolidated deliveries were 1,223 homes in the second quarter of fiscal 2015, a 1.0% decrease compared with 1,235 homes in the second quarter of fiscal 2014. For the three months ended April 30, 2015, deliveries, including unconsolidated joint ventures, decreased 3.2% to 1,289 homes compared with 1,331 homes in the second quarter of the prior year.

Total revenues for the quarter were $468.9 million, an increase of 4.2% from $449.9 million last year.

Analysts polled by Thomson Reuters expected the company to report a loss of $0.05 per share and revenues of $533.75 million for the quarter.

"As we discussed on our first quarter conference call, we expected our second quarter gross margin to be adversely affected by incentives and concessions on started unsold homes. However, the impact was greater than we anticipated and we are disappointed with our second quarter results," said Ara Hovnanian, Chairman of the Board, President and Chief Executive Officer.

Based on the higher gross margin in its April 30th backlog the company said it is confident that its gross margin for the third and fourth quarters of fiscal 2015 will show sequential increases.

While the company still feels good about its ability to grow the top line during fiscal 2015 and still expects to generate a solid profit during the fourth quarter, it does not expect it to be sufficient to offset earlier quarterly losses.

"We control enough land today to further grow our community count and remain focused on improving the operating results of some of our weaker divisions. As a result, assuming no changes in current market conditions, we expect fiscal 2016 to be a breakout year for deliveries and revenues, which should lead to a substantial increase in profitability as compared to recent years," concluded Mr. Hovnanian.