Hovnanian Focuses on Land Buying

Hovnanian Enterprises will return to profitability when it gets more lower-priced land for building new homes in its portfolio, which is more likely to happen next year than this one, CEO Ara Hovnanian told investors during the company's second fiscal quarter conference call Thursday, June 3. This year, according to the CEO, 90% of the company's communities are comprised of older, more expensive legacy land. Next year, though, with 40% of Hovnanian's communities primed with lower-cost land, turning a profit will be much easier, he said. In the meantime, while the sales pace per community is stable, Hovnanian's community numbers dwindled, falling 17% year-over-year, and contributing to another quarterly loss of $28.6 million, $0.36 a share. Still, the company still beat the market's estimated loss of $0.64 a share. For comparison, in 2009's second quarter, Hovnanian lost $118.6 million, or $1.50 a share. Home deliveries fell to 1,118 homes for the quarter, down 19% from the same quarter a year ago. Sales contracts also fell to 1,314 homes, down 17% on an annual basis.

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