Hovnanian Reports $236 Million Profit in its First Fiscal Quarter of 2010

New Jersey-based Homebuilder Hovnanian Enterprises reported after-tax net income of $236.2 million, compared with a net loss of $178.4 million in the first quarter of the previous year. As a result of tax legislation changes, the after-tax net income included a federal income tax benefit of $291.3 million.

Total revenues were $319.6 million for the first three months of fiscal 2010 compared with $373.8 million in the same quarter a year ago. The company delivered 1,091 homes for the quarter.

The company said net contracts per active selling community increased 31% to 5.1 net contracts per active selling community in the first quarter of fiscal 2010 from 3.9 in last year's first quarter. However, primarily due to a 27% decrease in active selling communities, the number of net contracts for the first quarter of fiscal 2010, excluding unconsolidated joint ventures, decreased 5% to 912 homes compared with the same quarter a year ago.

"The first quarter saw the typical seasonal home buying patterns that we would expect," commented Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. "Traffic and net contracts dropped off around the Thanksgiving holiday, and we began to see a pickup in traffic and net contracts during the last half of January and into February. In the first quarter, we continued to see a couple of positive year-over-year comparisons, including an increase in gross margins and an increase in net contracts per active selling community."

"We are pleased to see the market for new land deals begin to thaw out a bit and we continue to diligently pursue new land opportunities where we can make normalized returns based on today's home prices and sales absorption levels. Adhering to sound land underwriting assumptions will reduce risk and prove beneficial to our future financial performance," Mr. Hovnanian continued.

"It is encouraging that we have been able to continue to report improving margins and year-over-year increases in sales absorption rates. Although we remain cautiously optimistic, several headwinds such as persistently high unemployment levels, the expiration of the federal homebuyers tax credit and the threat of more foreclosures continue to hinder a sustainable recovery in the housing market," concluded Mr. Hovnanian.