Red Bank, NJ, September 7 -- Hovnanian Enterprises reported net income of $86.7 million, or $1.33 per fully diluted share, on $1.1 billion in total revenue for the third quarter ended July 31, 2004. Last year's third quarter net income was $68.8 million, or $1.06 per fully diluted share, on total revenue of $848.8 million.
The dollar value of net contracts increased 34% in the third quarter to $1.3 billion, including unconsolidated joint ventures, from $967 million in the third quarter of 2003. Deliveries in the third quarter of fiscal 2004 were 3,765 homes, including homes from unconsolidated joint ventures, with an aggregate sales value of $1.1 billion.
This compares to 3,075 homes delivered with an aggregate sales value of $832.6 million in the third quarter of fiscal 2003. Contract backlog increased to 8,501 homes, including unconsolidated joint ventures, compared to 5,741 homes in last year's third quarter.
Consolidated earnings before interest expense, income taxes, depreciation and amortization ("EBITDA") for the third quarter of fiscal 2004 rose 32% to $178.8 million from $135.0 million in the third quarter of 2003. EBITDA covered the amount of interest incurred in the quarter by 8.3 times, compared to 7.6 times during the same period of fiscal 2003.
The company's homebuilding gross margin for the most recent three month period was 25.5%, equal to the 25.5% homebuilding gross margin reported in the prior year's third quarter despite the effects of increases in lumber, concrete and other material costs, and the impact of lower margins from two acquisitions that closed during the interim time period.
Total selling, general and administrative expense, including corporate expense, as a percentage of total revenues decreased to 9.0% in the third quarter of 2004, an 80 basis point decline from 9.8% in the third quarter of 2003. Shareholders' equity grew to $1.05 billion at July 31, 2004 from $970.2 million at the end of the second quarter of fiscal 2004.
For the nine months ended July 31, 2004, revenue reached $2.8 billion, up 28% compared to $2.2 billion for the year earlier period. Net income for the first nine months of fiscal 2004 increased to $214.9 million, or $3.30 per fully diluted share, compared to $166.1 million, or $2.53 per fully diluted share, in 2003. The dollar value of year-to-year net contracts during the nine-month period increased by 51% and the number of home deliveries rose by 28%, including the impact of unconsolidated joint ventures.
"We are extremely pleased to report record revenues, earnings, deliveries and backlog for the third quarter," said Ara K. Hovnanian, president and chief executive officer. "Our 26% growth in earnings and 34% increase in the dollar value of our quarterly net contracts demonstrate the healthy demand for our new homes and the underlying strength of our business. We continue to produce some of the highest returns in the industry and create exceptional value for our shareholders, achieving a 42% return on equity and 23% return on capital over the most recent twelve month period. Our robust financial performance is primarily due to continuing market share gains and our diversified product offerings, in addition to the underlying strength of housing demand driven by household formation," he said.
"Current market conditions remain solid, particularly in the heavily regulated markets along the East and West coast, where housing demand continues to exceed the available supply."
