RED BANK, N.J. (AP) — Hovnanian Enterprises Inc. said Wednesday that its fiscal first-quarter loss narrowed, helped by a jump in demand for new homes.
While the loss was smaller than Wall Street expected, the homebuilder's revenue fell short of predictions and Hovnanian shares fell 5 percent in morning trading.
Homebuilders struggled for much of last year as tough economic conditions sent demand for new homes tumbling, but sales have begun to rebound in recent months, giving builders a boost.
Hovnanian's contracts for new homes increased 25 percent and its cancellation rate dropped. But the growth slowed in February, the first month of the fiscal second quarter.
For the quarter ended Jan. 31, the Red Bank, N.J.-based company lost $11.3 million, or 8 cents per share, compared with a loss of $18.3 million, or 17 cents per share, in the same quarter a year ago.
The recent quarter's results included a $9.7 million federal tax benefit, while the year-ago period's included a net benefit of $20.1 million from gains on extinguishment of debt, which were partially offset by debt-related expenses.
Revenue jumped 33 percent to $358.2 million from $269.6 million, as the number of homes delivered increased 17 percent to 1,012.
Analysts, on average, expected a loss of 10 cents per share on $393.7 million in revenue, according to FactSet.
Hovnanian said its number of contracts for new homes increased to 1,344, while the total value of those contracts grew 42 percent to $463.2 million. The company's cancellation rate dropped to 17 percent from 21 percent.
But the growth slowed since the end of the first quarter. For the month of February, the company said its net contracts increased 18 percent to 622 homes, while the total value of those contracts increased 31 percent to $219.1 million.
Hovnanian said that assuming market conditions remain the same, home deliveries, revenue and profitability should all increase in fiscal 2013, with the largest improvements coming in the second half of the year. As a result, the company should return to profitability for the year.
Analysts expect a fiscal 2013 profit of 2 cents per share.
Hovnanian shares fell 28 cents, or 4.6 percent, to $5.82 in midday trading. They peaked for the past year at $7.43 in January, and fell as low as $1.52 last June.