RED BANK, NJ-Homebuilder Hovnanian Enterprises yesterday released its Q3 results, and they revealed a year-over-year drop in profits of 36%. Company officials blamed the lackluster performance on higher costs, a slowdown in the pace of orders, an increase in cancellations and a general slowdown in the residential real estate market.
"Since the end of the summer of 2005, we've experienced a deteriorating environment for new home sales in a number of our more regulated markets," Ara K. Hovnanian, the company's president and CEO, told analysts yesterday.
By the numbers, Q3 earnings amounted to $74.4 million, or $1.15 per share, compared with $116.1 million, or $1.76 per share, a year earlier. On the plus side, Q3 revenues rose 18% to $1.55 billion from $1.31 billion. On the other hand, costs jumped by 26% to $1.42 billion from $1.13 billion.
Net contracts for Q3 2006, not including joint ventures, dropped by 19.2% to a total of 3,349. On the same basis, the dollar value of net contracts dropped by 23.5% to $1.1 billion from $1.4 billion. The overall results include a charge of $11.4 million in write-offs for walk-away costs and another $800,000 in land write-downs in Q3.
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