On March 8, Hovnanian Enterprise (NYSE:HOV) released first-quarter earnings for the period ended Jan. 31.

  • Revenues decreased by 8.8% to $1.2 billion, as a result of declines in the number of homes delivered and net contracts.
  • Contract backlog fell by almost 35% to 7,800 homes.
  • As previously announced, the company took significant charges related to its operations in the Fort Myers-Cape Coral area of Southwest Florida.
  • Motley Fool CAPS players are still bearish on homebuilders. They've given Hovnanian, Lennar (NYSE:LEM) and Pulte (NYSE:PHM) lowly one-star ratings.

(Figures in millions, except per-share data.)

Income Statement Highlights

Q1 2007

Q1 2006

Change

Sales

$1,165.8

$1,278.0

(8.8%)

Net Profit

($57.3)

$81.4

N/A

EPS

($0.91)

$1.25

N/A

Diluted Shares

62.9

65.4

(3.8%)



Get back to basics with the income statement.

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

14.0%

25.3%

(11.3)

Operating Margin

(5.7%)

10.6%

(16.3)

Net Margin

(4.9%)

6.4%

(11.3)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$9.3

$56.9

(83.6%)

Accounts Rec.

$86.4

$84.3

2.5%

Inventory

$4,133.7

$3,886.4

6.4%



Liabilities

Q1 2007

Q1 2006

Change

Accounts Payable

$429.8

$488.8

(12.1%)

Long-Term Debt

$2,303.1

$1,738.7

32.5%



The balance sheet reflects the company's health.

Cash Flow Highlights

When it comes to cash flow data, it seems no one's home at Hovnavian. For shame!

Free cash flow is a Fool's best friend.

Related Foolishness:

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