National homebuilder Hovnanian Enterprises Inc. (HOV:NYSE) today announced financial results for its first quarter ended January 31, 2021.
The company reported that for Q1/21 total revenues increased by 16.3% to $574.7 million, compared to $494.1 in Q1/20. The firm noted that homebuilding gross margin after cost of sales interest expense and land charges improved to 17.3% in Q1/21, versus 12.9% for Q1/20.
Hovnanian Enterprises stated that for Q1/21 net income was $19.0 million, or $2.75 per diluted common share, compared to a net loss of $9.1 million, or $1.49 per common share in Q1/20. During the same period the company reported that EBITDA increased 67.8% to $62.1 million, compared to $37.0 million in prior year's corresponding quarter.
The firm listed that in the most recent quarter, the number of consolidated contracts increased 34.5% to 1,778 homes, compared with 1,322 homes in last year's first quarter and the number of contracts, including domestic unconsolidated joint ventures increased 31.5% to 1,962 homes, up from 1,492 homes during the same quarter a year ago.
Hovnanian stated that during February 2021 it aggressively raised home prices to further increase margins and slow down its sales pace. In February 2021, the firm noted that consolidated contracts increased 8.6% to $283.0 million, compared to $260.7 million in February of last year, although it pointed out that the number of consolidated contracts had actually decreased to 613 homes compared to 647 homes in February 2020.
The company stated that the dollar value of consolidated contract backlog as of January 31, 2021, increased by 85.2% to $1.67 billion, compared with $899.6 million as of January 31, 2020.
The company noted that during Q1/21 it spent $178.6 million on land and land development, compared to $117.9 million in Q1/20.
The firm indicated that in Q1/21 it delivered 1,385 homes and contracted to buy 2,140 new lots, net of walk-aways. Hovnanian stated that it controlled a totaled 26,782 consolidated lots as of January 31, 2021, which based upon trailing 12-month deliveries, equates to a 4.6 years' supply.
The firm offered some forward guidance and indicated that for Q2/21 it expects that total revenues will be in the range of $700-750 million. The company added that over the same period it expects adjusted pretax income of $30-45 million and adjusted EBITDA in the range of $75-$90 million.
The company's Chairman, President and CEO Ara K. Hovnanian commented, "We are pleased with our fiscal 2021 first quarter results, as they exceeded the guidance we provided on our last conference call for gross margin percentage, total SG&A ratio, adjusted EBITDA and adjusted pretax income...Contracts per community this quarter increased 74%, clearly indicating that demand for our homes remains very strong. We plan to continue to increase home prices in order to stay ahead of rising costs, maximize our profits and to better align our sales pace with our production capacity."
"Our 85% increase in backlog dollars to $1.67 billion at the end of the first quarter sets us on solid footing to achieve dramatic year over year improvements in our fiscal 2021 financial performance," Hovnanian added.
Hovnanian's EVP and CFO J. Larry Sorsby remarked, "We remain committed to further strengthening our balance sheet. In July 2021, one year prior to maturity, we currently plan to pay off in full the $111 million of our 10.0% senior secured notes due July 2022. Additionally, we also presently intend to pay off the remaining balance of $70 million of our 10.5% senior secured notes due July 2024 in advance of their maturity."
Hovnanian Enterprises is based in Matawan, N.J., and is one of the largest homebuilders in the U.S. The company designs, markets and constructs homes in Arizona, California, Delaware, Florida, Georgia, Illinois, Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. and West Virginia through its subsidiary companies. The firm's homes are sold under the K. Hovnanian® Homes trade name. In addition, Hovnanian subsidiaries are engaged in developing and marketing K. Hovnanian's® Four Seasons active lifestyle communities.
Hovnanian Enterprises began the day with a market cap of around $363.6 million with approximately 6.152 million shares outstanding and a short interest of about 5.6%. HOV shares opened 3% higher today at $61.00 (+$1.89, +3.20%) over yesterday's $59.11 closing price and reached a new 52-week high price this morning of $82.48. The stock has traded today between $61.00 and $82.48 per share and closed for trading at $78.72 (+$19.61, +33.18%).
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