Hovnanian Reports Double-Digit Decline in Deliveries and Contracts

| About: Hovnanian Enterprises, (HOV)

Hovnanian released preliminary fourth-quarter operating data before the bell Tuesday. The upscale U.S. homebuilder said it delivered 3,969 homes during its Q4 ended Oct. 31, a y/y decline of 19%, while net contracts decreased 10% to 2,781 homes. Cancellations increased to 40%, compared to 35% in Q3 and last Q4. In a statement, Hovnanian cited "the tightening of mortgage underwriting standards, which has lead to some customers cancelling their contracts due to an inability to obtain mortgage loans" for the increase in cancellations. Backlog fell 30% to 5,938 homes. Hovnanian also said Q4 total debt was reduced by $390M, as management remains focused on "improving its balance sheet and on generating cash flow." All of the data exclude unconsolidated joint ventures. Hovnanian is still completing a review of its Q4 results and plans to officially report on December 18, after the close of the NYSE. Shares of Hovnanian lost 2.2% to $10.11 on Monday and untraded in early pre-market activity.

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