Homebuilder Hovnanian Enterprises (NYSE: HOV) reported its fourth quarter and fiscal-year 2017 results before the market opened this morning. Revenues and net income both fell for the quarter and full-year, though less than analysts expected, resulting in a mid-day gain of 6.7% on the company’s stock.
Total revenues for the quarter decreased 10.4% to $721.7 million from $805.1 million in the year-ago quarter. Total fiscal-year revenues decreased 10.9% to $2.45 billion, compared to $2.75 billion for the prior year. Net income during the quarter was $11.8 million, or $0.08 per share, compared to net income of $22.3 million, or $0.14 per share, in the fourth quarter of 2016. Fiscal-year 2017 net loss was $332.2 million, or $2.25 per common share, compared to a net loss of $2.8 million, or $0.02 per common share, in 2016. The 2017 results included a $294 million increase in deferred tax asset valuation allowance and a $34.9 million loss on debt extinguishment.
“We focused on enhancing our operating results throughout fiscal 2017 and this is reflected in improvements in our gross margin percentage and our contracts per community, both of which increased during the fourth quarter and the full year,” stated Ara K. Hovnanian, Chairman, President and CEO. “We ended fiscal 2017 with $464 million of cash, which is $219 million in excess of the high end of our target range and the highest level at a quarter’s end since July 31, 2010. As we move forward, we remain focused on controlling more lots, further operational improvements and returning to consistent profitability. Given our renewed efforts to expand our land position, we believe we should be well positioned for growing our deliveries, revenues and profitability in 2019 and beyond.”
“Although we are taking steps to increase our future community count, our 2017 deliveries and revenues were impacted by a decrease in our community count, which resulted from the decisions we made in fiscal 2016 to exit four underperforming markets, convert a number of wholly owned communities to joint ventures and temporarily reduce land spend, in order to pay off $320 million of maturing debt,” concluded Mr. Hovnanian.
Skyline Advisors is a division of Ideation Ventures, Inc. Services involving securities are offered through M&A Securities Group, Inc. (“MAS," 4151 N Mulberry Drive, Suite 252, Kansas City, MO 64116). Services involving real estate brokerage are offered through Berkshire Hathaway HomeServices Ambassador Real Estate ("BHHS"). Skyline, MAS, and BHHS are separate entities.
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