UPDATE: Hovnanian Posts Better-Than-Expected FQ3 Profit

Hovnanian Enterprises

reported upbeat earnings for its fiscal third quarter. The Red Bank, New Jersey-based company posted quarterly net income of $17.1 million, or $0.11 per share, versus a year-ago net income of $8.5 million, or $0.06 per share. Its total revenue rose 15.2% to $551.0 million from $478.4 million. However, analysts were expecting earnings of $0.09 per share on revenue of $559.47 million. Hovnanian's deliveries, including unconsolidated joint ventures, rose 3.1% to 1,549 homes from 1,502 homes. As of July 31, 2014, consolidated active selling communities rose 5.4% to 196 communities, from 186 communities at July 31, 2013. The dollar value of consolidated net contracts surged 4.6% to $517.3 million from $494.6 million. However, the number of consolidated net contracts slipped 6.3% to 1,357 homes from 1,448 homes in the year-ago quarter. The number of net contracts, including unconsolidated joint ventures, fell 9.2% to 1,424 homes. As of July 31, 2014, the dollar value of consolidated contract backlog rose 14.3% to $1.03 billion from $897.2 million at July 31, 2013. Hovnanian's adjusted EBITDA surged to $53.8 million versus $48.6 million. The contract cancellation rate, including unconsolidated joint ventures, was 22%, versus 18% in the year-ago period. At the end of the fiscal third quarter, total liquidity was $231.7 million, versus $278.9 million at July 31, 2013. Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer said, "Assuming no change in current market conditions, we expect to be profitable for the full fiscal 2014 year. We believe the housing industry remains in the early stages of a recovery. We anticipate generating revenue growth from continued investments in new communities. This will allow us to leverage our SG&A and interest costs, which we expect will result in higher levels of profitability in future years," Hovnanian's shares gained 1.90% to $4.28 in pre-market trading.