On May 31, Hovnanian Enterprises (NYSE:HOV) released second-quarter earnings for the period ended April 30.
- Revenues declined by 29%, and gross margins fell 9%.
- The company incurred $34.4 million of pretax charges related to land impairments and write-offs, which were a result of weak market conditions.
- Management has increased its focus on managing balance-sheet leverage and inventory levels and projects positive cash flow for the fourth quarter.
- Hovnanian carries a one-star Motley Fool CAPS rating (out of a potential five), like fellow homebuilders Toll Brothers (NYSE:TOL), Centex (NASDAQ:CTX), and DH Horton (NYSE:DHI).
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q2 2007 |
Q2 2006 |
Change | |
|---|---|---|---|
|
Sales |
$1,110.7 |
$1,574.1 |
(29.4%) |
|
Net Profit |
($30.7) |
$101.0 |
N/A |
|
EPS |
($0.49) |
$1.55 |
N/A |
|
Diluted Shares |
63.0 |
65.1 |
(3.2%) |
Get back to basics with the income statement.
Margin Checkup
|
Q2 2007 |
Q2 2006 |
Change* | |
|---|---|---|---|
|
Homebuilding Gross Margin |
13.6% |
22.4% |
(8.8) |
|
Operating Margin |
(3.7%) |
10.3% |
(14.1) |
|
Net Margin |
(2.8%) |
6.4% |
(9.2) |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q2 2007 |
Q2 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$39.6 |
$62.8 |
(36.9%) |
|
Accounts Rec. |
$82.9 |
$82.2 |
0.8% |
|
Inventory |
$4,237.5 |
$4,395.7 |
(3.6%) |
|
Liabilities |
Q2 2007 |
Q2 2006 |
Change |
|---|---|---|---|
|
Accounts Payable* |
$396.5 |
$509.2 |
(22.1%) |
|
Long-Term Debt |
$2,512.4 |
$2,099.6 |
19.7% |
The balance sheet reflects the company's health.
Cash Flow Highlights
Data not available.
Free cash flow is a Fool's best friend.
Related Foolishness:
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