Hovnanian reaffirms positive cash flow expectations for fourth quarter

By Jennifer Lanning Drey

Portland, Ore., Nov. 2 - Hovnanian Enterprises, Inc. chief executive officer Ara K. Hovnanian said he remains comfortable with the company's projection of fourth-quarter cash flow between $175 million and $250 million following the close of the quarter.

Hovnanian made the comments Friday during a presentation at the Imperial Capital Equity Conference in New York.

"We've been turning the boat, finally, in terms of cash flow as we've been saying we would, and our plan is to continue that positive trend with positive cash flow in '08 as well," Hovnanian said.

The company recorded negative cash flow for the first three quarters of 2007.

As the company begins generating positive cash flow, Hovnanian will continue to focus on reducing debt, he said.

For the most part, however, Hovnanian's Friday presentation centered on what he called the "not all bad news" related to the homebuilding industry. Factors the CEO highlighted included good macroeconomic trends, low interest rates and a product that won't go obsolete.

"I think our industry is here to stay," Hovnanian said. "I think pricing in our whole industry and certainly with our company presents some great values."

Additionally, Hovnanian said the company has gained marketshare during every past housing downturn and he believes the trend is will continue in the current environment.

"The large builders are absolutely taking marketshare from the general housing market," he said.

Hovnanian had $933 million of availability on its revolving credit facility and was in compliance with its bank facility covenants at the end of the third quarter, Hovnanian said.

Hovnanian Enterprises is a Red Bank, N.J.-based homebuilder.

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