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Hovnanian Enterprises, Inc.(NYSE:HOV) is scheduled to release financial report for the fourth quarter and fiscal year closed October 31, 2016 on December 8, 2016. In 3Q2016, the company posted a pre-tax profit. While it was small, it was certainly a step taken in the right direction. Ara Hovnanian, the CEO, had stated that their credit statistics have improved nicely in 3Q2016 as evidenced by EBITDA, the interest earned coverage surging to 1.4x. They will also discuss about their recent bond deal, which certainly enhances liquidity and enables them to increase land spend to surge community count.

The highlights

Hovnanian Enterprises recorded steady progress in numerous metrics. Total revenues surged to $717 million, which was a 33% jump versus same period, a year earlier. Gross margin was 16.9% in the reported period against 17.8% in last fiscal year’s third quarter. However, the gross margin did surge sequentially from 16.1% in 2Q2016.

The company continued to leverage its SG&A costs in the third quarter of year. Total SG&A ratio dropped 330 basis points to 9.3% in the reported period from 12.6% in 3Q2015. Hovnanian Enterprises recorded income of $3 million before income taxes and land linked expenses against a loss of $9 million last year.

Adjusted EBITDA surged nearly increased almost 75% in 3Q2016 to $56 million against $32 million in the same period, a year ago. The firm’s adjusted EBITDA to interest recorded increased to 1.4x versus 0.8x in the comparable period, a year ago. Adjusted EBITDA for the initial three quarters more than doubled this fiscal to $135 million.

Coming to gross margin, in 3Q2016 poor performance on that can be led to many factors, including higher concessions and incentives, and rising labor costs in attempt to disperse sales base and the influence of higher cost land the company acquired in 2013 and 2014 when the industry as well as the firm was witnessing higher home absorption rates at their construction and communities’ costs that were quite lower.

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