Hovnanian Enterprises Inc., Red Bank, N.J. (NYSE:HOV) on Friday reported a net loss of $6.7 million, or $0.05 per common share, in the fiscal second quarter ended April 30, compared with a net loss of $8.5 million, or $0.06 per common share, during the same quarter a year ago. Wall Street was expecting a loss of four cents per share.
Shares of HOV were down 7.5% in heavier-than-average trading Friday morning on the news.
Total revenue declined 10.5% to $585.9 million in the quarter. Home building revenue for unconsolidated joint ventures increased 236.0% to $86.6 million in the second quarter of fiscal 2017, compared with $25.8 million in the second quarter of fiscal 2016.
Deliveries, including unconsolidated joint ventures, decreased 9.1% to 1,497 homes compared with 1,647 homes during the second quarter of fiscal 2016. Consolidated deliveries were 1,358 homes for the second quarter of fiscal 2017, a 15.0% decrease compared with 1,598 homes during the same quarter a year ago.
Net contracts, including unconsolidated joint ventures, decreased 6.1% to 1,748 homes from 1,862 homes for the same quarter last year. The number of consolidated net contracts, during the second quarter of fiscal 2017, decreased 12.3% to 1,590 homes compared with 1,812 homes during the second quarter of 2016.
Active selling communities, including unconsolidated joint ventures, decreased 18.3% to 170 communities compared with 208 communities at April 30, 2016. Consolidated active selling communities decreased 25.5% to 146 communities as of April 30, 2017 from 196 communities at the end of the prior year’s second quarter.
Consolidated net contracts per active selling community increased 18.5% to 10.9 net contracts per active selling community compared with 9.2 net contracts per active selling community in the second quarter of fiscal 2016. Net contracts per active selling community, including unconsolidated joint ventures, increased 14.4% to 10.3 net contracts per active selling community for the quarter ended April 30, 2017 compared with 9.0 net contracts, including unconsolidated joint ventures, per active selling community in last year’s second quarter.
The consolidated cancellation rate decreased to 18%, compared with 19% in the second quarter of the prior year. The cancellation rate including unconsolidated joint ventures decreased to 19%, compared with 20% in the second quarter of fiscal 2016.
The dollar value of contract backlog, including unconsolidated joint ventures, as of April 30, 2017, was $1.27 billion, a decrease of 19.7% compared with $1.58 billion as of April 30, 2016. The dollar value of consolidated contract backlog, as of April 30, 2017, decreased 23.6% to $1.09 billion compared with $1.43 billion as of April 30, 2016.
“We made progress during our second fiscal quarter toward our goal of returning to consistent profitability. We experienced a strong spring selling season reflected in an 18.5% increase in net contracts per active selling community during the quarter,” stated Ara K. Hovnanian, chairman, president and CEO. “As we discussed last quarter, the cumulative effect of our decision to exit four under-performing markets, temporarily reduce our overall land spend and pay off $320 million of maturing debt has led to decreases in our community count, net contracts, deliveries and revenues over the short term. Given these limitations, our second quarter results overall were in line with our expectations.”
