HOV profitable; up. $2.00 .Hovnanian Enterprises Reports Second Quarter Fiscal 2012 Results
Press Release: Hovnanian Enterprises, Inc. – 29 minutes ago
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RED BANK, N.J., June 6, 2012 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE:HOV - News), a leading national homebuilder, reported results for its second quarter and six months ended April 30, 2012.
RESULTS FOR THE THREE AND SIX MONTH PERIODS ENDED APRIL 30, 2012:
Total revenues were $341.7 million for the second quarter of fiscal 2012 compared with $255.1 million in the second quarter of the previous year. For the first six months of fiscal 2012, total revenues were $611.3 million compared with $507.7 million during the same period of the prior year.
Net income was $1.8 million during the second quarter, or $0.02 per common share, compared with an after-tax net loss of $72.7 million, or $0.69 per common share, during the second quarter of 2011. For the six months ended April 30, 2012, the after-tax net loss was $16.5 million, or $0.15 per common share, compared with an after-tax net loss of $136.8 million, or $1.49 per common share, during the same period a year ago.
Homebuilding gross margin percentage, before interest expense included in cost of sales, was 17.4% during the second quarter of 2012, compared to 14.8% in the same quarter of the prior year. For the six month period ended April 30, 2012, homebuilding gross margin percentage, before interest expense included in cost of sales, was 17.0% compared with 15.8% in the year earlier period.
Total SG&A was $47.4 million or 13.9% of total revenues for the three months ended April 30, 2012 compared to $51.8 million or 20.3% of total revenues during the same quarter a year ago. For the first half of fiscal 2012, total SG&A was $93.4 million or 15.3% of total revenues compared with $107.0 million or 21.1% of total revenues during the first half of 2011.
Net contracts for the quarter ended April 30, 2012, including unconsolidated joint ventures, increased 52% to 1,775 homes compared with 1,166 homes in the 2011 second quarter. For the first half of fiscal 2012, net contracts, including unconsolidated joint ventures, were 2,854, a 42% increase compared with 2,016 homes in the first six months of 2011.
Consolidated pre-tax land-related charges during the fiscal 2012 second quarter were $3.2 million, compared with $16.9 million in last year's second quarter. During the first six months of fiscal 2012, the consolidated pre-tax land-related charges were $6.5 million compared with $30.5 million in last year's first half.
Repurchased $75.4 million principal amount of unsecured senior notes for $53.5 million, including accrued interest, from the proceeds of a 25 million share Class A common stock offering at $2.00 per share and $6.2 million of cash during the second quarter of 2012, resulting in a $23.3 million gain on extinguishment of debt.
Exchanged approximately 3.1 million shares of Class A common stock for $12.2 million of unsecured senior and senior subordinated amortizing notes during the three months ended April 30, 2012, resulting in an additional $3.7 million gain on extinguishment of debt.
Excluding land-related charges, expenses associated with debt exchange offer and gain on extinguishment of debt, the pre-tax loss in the fiscal 2012 second quarter was $21.4 million compared with $55.1 million in the prior year's second quarter. During the six months ended April 30, 2012, the pre-tax loss, excluding land-related charges, expenses associated with debt exchange offer and gain on extinguishment of debt, was $55.7 million compared with $106.2 million in the first half of last year.
Contract backlog, as of April 30, 2012, including unconsolidated joint ventures, was 2,298 homes with a sales value of $762.8 million, which was an increase of 48% and 49%, respectively, compared to April 30, 2011.
The contract cancellation rate, including unconsolidated joint ventures, for the three months ended April 30, 2012 was 17%, compared with 20% in the second quarter of the prior year.
Deliveries, including unconsolidated joint ventures, were 1,207 homes in the second quarter of 2012, up 25% compared with 967 homes in the 2011 second quarter. During the first six months of fiscal 2012, deliveries, including unconsolidated joint ventures, were 2,219 homes compared with 1,859 homes in the same period of the prior year, an increase of 19%.
The valuation allowance was $906.8 million as of April 30, 2012. The valuation allowance is a non-cash reserve against the tax assets for GAAP purposes. For tax purposes, the tax deductions associated with the tax assets may be carried forward for 20 years from the date the deductions were incurred.
CASH AND INVENTORY AS OF APRIL 30, 2012:
After spending $44.2 million in the second quarter of fiscal 2012 on land and land development and $53.5 million to repurchase debt, homebuilding cash was $229.0 million, as of April 30, 2012, including $33.8 million of restricted cash required to collateralize letters of credit.
Cash flow in the second quarter of fiscal 2012 was positive $10.3 million, after spending $44.2 million of cash to purchase approximately 740 lots and to develop land across the Company's markets.
As of April 30, 2012, the land position, including unconsolidated joint ventures, was 28,809 lots, consisting of 9,372 lots under option and 19,437 owned lots.
COMMENTS FROM MANAGEMENT:
"We are encouraged by the positive operating trends we reported for the second quarter. We achieved a 34% year-over-year increase in total revenues, a 260 basis point year-over-year improvement in gross margin and reduced our total SG&A ratio by 640 basis points during the second quarter," commented Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. "We sold more homes per community in April 2012, excluding our September 2007 Deal of the Century sales promotion, than we have in any month since the spring selling season of 2006. The sales improvements we have experienced are fairly wide-based in terms of geography, price points and buyer profiles. As evidenced by our four consecutive quarters of year-over-year net contract growth for the first time since 2006, we are encouraged that the homebuilding industry may be entering the early stages of a recovery," concluded Mr. Hovnanian.
