Hovnanian Enterprises, Inc. (NYSE:HOV), a leading national
homebuilder, reported results for its fiscal first quarter ended
January 31, 2017.
RESULTS FOR THE THREE MONTH PERIOD ENDED
JANUARY 31, 2017:
- Total revenues were $552.0 million in the first quarter of
fiscal 2017, a decrease of 4.1% compared with $575.6 million in the
first quarter of fiscal 2016.
- Total SG&A was $60.1 million, or 10.9% of total revenues,
for the first quarter ended January 31, 2017 compared with $63.8
million, and 11.1% of total revenues, in last year’s first
quarter.
- Interest incurred (some of which was expensed and some of which
was capitalized) decreased by 7.8% to $38.7 million for the first
quarter of fiscal 2017 compared with $42.0 million in the same
quarter one year ago.
- Total interest expense as a percentage of total revenues was
7.4% during the first quarter of fiscal 2017 compared with 6.6% for
the first quarter of fiscal 2016.
- Homebuilding gross margin percentage, before interest expense
and land charges included in cost of sales, was 17.2% for the first
quarter of fiscal 2017 compared with 16.6% in the prior year’s
first quarter.
- Income before income taxes for the quarter ended January 31,
2017 was $0.3 million compared with a loss before income taxes of
$13.2 million during the first quarter of 2016.
- Loss before income taxes, excluding land-related charges and
gain on extinguishment of debt, for the three months ended January
31, 2017 was $4.1 million compared with a $1.5 million loss before
income taxes, excluding land-related charges and gain on
extinguishment of debt, for the same quarter last year.
- Net loss was $0.1 million, or $0.00 per common share, in the
first quarter of fiscal 2017, compared with a net loss of $16.2
million, or $0.11 per common share, during the same quarter a year
ago.
- During the first quarter of fiscal 2017, Adjusted EBITDA
increased 1.7% to $39.5 million compared with $38.8 million during
the first quarter of fiscal 2016.
- Adjusted EBITDA to interest incurred was 1.02x for the first
quarter ended January 31, 2017 compared with 0.92x in the first
quarter of the prior year.
- Net contracts per active selling community, including
unconsolidated joint ventures, increased 5.7% to 7.4 net contracts
per active selling community for the quarter ended January 31, 2017
compared with 7.0 net contracts, including unconsolidated joint
ventures, per active selling community in last year’s first
quarter. Consolidated net contracts per active selling community
increased 5.6% to 7.5 net contracts per active selling community
for the first quarter of fiscal 2017 compared with 7.1 net
contracts per active selling community in the first quarter of
fiscal 2016.
- As of the end of the first quarter of fiscal 2017, active
selling communities, including unconsolidated joint ventures,
decreased 22.4% to 177 communities compared with 228 communities at
January 31, 2016. Consolidated active selling communities decreased
27.6% to 157 communities as of January 31, 2017 from 217
communities at the end of the prior year’s first
quarter.
- The dollar value of net contracts, including unconsolidated
joint ventures, in the first quarter of fiscal 2017 decreased 15.0%
to $567.9 million compared with $668.5 million in the prior year’s
first quarter. The dollar value of consolidated net contracts
decreased 22.4% to $487.6 million for the three months ended
January 31, 2017 compared with $628.6 million for the first quarter
of fiscal 2016.
- For the first quarter ended January 31, 2017, the number of net
contracts, including unconsolidated joint ventures, decreased 17.6%
to 1,312 homes from 1,592 homes for the same quarter last year. The
number of consolidated net contracts, during the first quarter of
fiscal 2017, decreased 23.4% to 1,173 homes compared with 1,531
homes during the first quarter of 2016.
- As of January 31, 2017, the dollar value of contract backlog,
including unconsolidated joint ventures, was $1.19 billion, a
decrease of 17.1% compared with $1.44 billion as of January 31,
2016. The dollar value of consolidated contract backlog, as of
January 31, 2017, decreased 20.8% to $1.02 billion compared with
$1.29 billion as of January 31, 2016.
- As of January 31, 2017, the number of homes in contract
backlog, including unconsolidated joint ventures, decreased 20.8%
to 2,563 homes compared with 3,238 homes as of January 31, 2016.
The number of homes in consolidated contract backlog, as of January
31, 2017, decreased 24.6% to 2,272 homes compared with 3,014 homes
as of the end of the first quarter of fiscal 2016.
- For the quarter ended January 31, 2017, deliveries, including
unconsolidated joint ventures, decreased 4.6% to 1,398 homes
compared with 1,466 homes during the first quarter of fiscal 2016.
Consolidated deliveries were 1,290 homes for the first quarter of
fiscal 2017, a 9.3% decrease compared with 1,422 homes during the
same quarter a year ago.
- The contract cancellation rate, including unconsolidated joint
ventures, for the three months ended January 31, 2017 was 20%,
compared with 21% in the first quarter of the prior
year.
- The valuation allowance was $628.1 million as of January 31,
2017. The valuation allowance is a non-cash reserve against the tax
assets for GAAP purposes. For tax purposes, the tax deductions
associated with the tax assets may be carried forward for 20 years
from the date the deductions were incurred.
- For February 2017, net contracts per active selling community,
including unconsolidated joint ventures, increased to 3.1 net
contracts per active selling community compared to 2.7 net
contracts per active selling community for the same month one year
ago. During February 2017, the number of net contracts, including
unconsolidated joint ventures, decreased 6.8% to 562 homes from 603
homes in February 2016 and the dollar value of net contracts,
including unconsolidated joint ventures, decreased 10.4% to $235.3
million in February 2017 compared with $262.7 million for February
2016.
LIQUIDITY AND INVENTORY AS OF JANUARY 31,
2017:
- Total liquidity at the end of the first quarter of fiscal 2017
was $204.5 million.
- During the first quarter of fiscal 2017, land and land
development spending was $190.4 million compared with $116.6
million in the first quarter of fiscal 2016.
- As of January 31, 2017, owned lots increased 2.5% sequentially
to 17,548 from 17,116 lots at October 31, 2016. The total land
position, including unconsolidated joint ventures, was 31,178 lots,
consisting of 13,630 lots under option and 17,548 owned lots, as of
January 31, 2017, compared with a total of 38,070 lots as of
January 31, 2016.
- In the first quarter of fiscal 2017, approximately 2,700 lots,
including unconsolidated joint ventures, a sequential increase of
28.6%, were put under option or acquired in 42
communities.
- During the first quarter of 2017, $38.7 million of face value
of debt was repurchased in the open market for approximately $30.8
million of cash, resulting in a $7.8 million gain on extinguishment
of debt.
COMMENTS FROM MANAGEMENT:
“Given the liquidity constraints we faced last
year, we are pleased with our results for the first quarter of
fiscal 2017. From October 15, 2015 through May 15, 2016, we paid
off $320 million of maturing debt, which limited our ability to
invest in land during fiscal 2016. As we began fiscal 2017, we were
in a much improved liquidity position with a beginning cash balance
of $340 million. We used $31 million to retire $39 million face
value of debt maturing in 2017 and 2019. Furthermore, we spent $190
million on land and land development in the first quarter of fiscal
2017, which was more than we had spent in any quarter last year. As
a result, after reporting decreases in owned lots last year, during
the first quarter the number of owned lots increased sequentially,”
stated Ara K. Hovnanian, Chairman of the Board, President and Chief
Executive Officer.
“While the high yield debt market continues to be challenging
for us, we have strong relationships and continue to develop new
relationships with alternative capital sources, including land
banking, project specific nonrecourse debt, joint ventures and
model sale leaseback financings. Our land acquisition teams remain
very busy identifying new land parcels so that we can once again
grow our community count, which, assuming no changes in market
conditions, should ultimately result in higher levels of deliveries
and profitability in the future,” concluded Mr. Hovnanian.
WEBCAST INFORMATION:
Hovnanian Enterprises will webcast its fiscal
2017 first quarter financial results conference call at 11:00 a.m.
E.T. on Wednesday, March 8, 2017. The webcast can be accessed live
through the “Investor Relations” section of Hovnanian Enterprises’
website at http://www.khov.com. For those who are not available to
listen to the live webcast, an archive of the broadcast will be
available under the “Past Events” section of the Investor Relations
page on the Hovnanian website at http://www.khov.com. The archive
will be available for 12 months.
ABOUT HOVNANIAN ENTERPRISES®, INC.:
Hovnanian Enterprises, Inc., founded in 1959 by
Kevork S. Hovnanian, is headquartered in Red Bank, New Jersey. The
Company is one of the nation’s largest homebuilders with operations
in Arizona, California, Delaware, Florida, Georgia, Illinois,
Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas,
Virginia, Washington, D.C. and West Virginia. The Company’s homes
are marketed and sold under the trade names K. Hovnanian® Homes,
Brighton Homes® and Parkwood Builders. As the developer of K.
Hovnanian’s® Four Seasons communities, the Company is also one of
the nation’s largest builders of active lifestyle communities.
Additional information on Hovnanian Enterprises,
Inc., including a summary investment profile and the Company’s 2016
annual report, can be accessed through the “Investor Relations”
section of the Hovnanian Enterprises’ website at
http://www.khov.com. To be added to Hovnanian's investor e-mail
list, please send an e-mail to IR@khov.com or sign up at
http://www.khov.com.
NON-GAAP FINANCIAL MEASURES:
Consolidated earnings before interest
expense and income taxes (“EBIT”) and before depreciation and
amortization (“EBITDA”) and before inventory impairment loss and
land option write-offs and gain on extinguishment of debt
(“Adjusted EBITDA”) are not U.S. generally accepted accounting
principles (GAAP) financial measures. The most directly comparable
GAAP financial measure is net loss. The reconciliation for
historical periods of EBIT, EBITDA and Adjusted EBITDA to net loss
is presented in a table attached to this earnings
release.
Loss Before Income Taxes Excluding
Land-Related Charges and Gain on Extinguishment of Debt
is a non-GAAP financial measure. The most directly
comparable GAAP financial measure is Income (Loss) Before Income
Taxes. The reconciliation for historical periods of Loss Before
Income Taxes Excluding Land-Related Charges and Gain on
Extinguishment of Debt to Income (Loss)
Before Income Taxes is presented in a table attached to
this earnings release.
Total liquidity is comprised of $195.8
million of cash and cash equivalents, $1.7 million of restricted
cash required to collateralize letters of credit and $7.0 million
of availability under the unsecured revolving credit facility as of
January 31, 2017.
FORWARD-LOOKING STATEMENTS
All statements in this press release
that are not historical facts should be considered as
“Forward-Looking Statements” within the meaning of the “Safe
Harbor” provisions of the Private Securities Litigation Reform Act
of 1995. Such statements involve known and unknown risks,
uncertainties and other factors that may cause actual results,
performance or achievements of the Company to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such
forward-looking statements include but are not limited to
statements related to the Company’s goals and expectations with
respect to its financial results for future financial periods.
Although we believe that our plans, intentions and expectations
reflected in, or suggested by, such forward-looking statements are
reasonable, we can give no assurance that such plans, intentions or
expectations will be achieved. By their nature, forward-looking
statements: (i) speak only as of the date they are made, (ii) are
not guarantees of future performance or results and (iii) are
subject to risks, uncertainties and assumptions that are difficult
to predict or quantify. Therefore, actual results could differ
materially and adversely from those forward-looking statements as a
result of a variety of factors. Such risks, uncertainties and other
factors include, but are not limited to, (1) changes in general and
local economic, industry and business conditions and impacts of the
sustained homebuilding downturn; (2) adverse weather and other
environmental conditions and natural disasters; (3) levels of
indebtedness and restrictions on the Company’s operations and
activities imposed by the agreements governing the Company’s
outstanding indebtedness; (4) the Company's sources of liquidity;
(5) changes in credit ratings; (6) changes in market conditions and
seasonality of the Company’s business; (7) the availability and
cost of suitable land and improved lots; (8) shortages in, and
price fluctuations of, raw materials and labor; (9) regional and
local economic factors, including dependency on certain sectors of
the economy, and employment levels affecting home prices and sales
activity in the markets where the Company builds homes; (10)
fluctuations in interest rates and the availability of mortgage
financing; (11) changes in tax laws affecting the after-tax costs
of owning a home; (12) operations through joint ventures with third
parties; (13) government regulation, including regulations
concerning development of land, the home building, sales and
customer financing processes, tax laws and the environment; (14)
product liability litigation, warranty claims and claims made by
mortgage investors; (15) levels of competition; (16) availability
and terms of financing to the Company; (17) successful
identification and integration of acquisitions; (18) significant
influence of the Company’s controlling stockholders; (19)
availability of net operating loss carryforwards; (20) utility
shortages and outages or rate fluctuations; (21) geopolitical
risks, terrorist acts and other acts of war; (22) increases in
cancellations of agreements of sale; (23) loss of key management
personnel or failure to attract qualified personnel; (24)
information technology failures and data security breaches; (25)
legal claims brought against us and not resolved in our favor; and
(26) certain risks, uncertainties and other factors described in
detail in the Company’s Annual Report on Form 10-K for the fiscal
year ended October 31, 2016 and subsequent filings with the
Securities and Exchange Commission. Except as otherwise required by
applicable securities laws, we undertake no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events, changed circumstances or
any other reason.
(Financial Tables Follow)
|
|
|
|
|
|
|
|
Hovnanian Enterprises, Inc. |
|
|
|
January 31, 2017 |
|
|
|
Statements
of Consolidated Operations |
|
|
|
(Dollars in
Thousands, Except Per Share Data) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
January 31, |
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
(Unaudited) |
Total
Revenues |
$ |
552,009 |
|
|
$ |
575,605 |
|
Costs and
Expenses (a) |
|
557,666 |
|
|
|
587,319 |
|
Gain on
Extinguishment of Debt |
|
7,646 |
|
|
|
- |
|
Loss from
Unconsolidated Joint Ventures |
|
(1,666 |
) |
|
|
(1,480 |
) |
Income
(Loss) Before Income Taxes |
|
323 |
|
|
|
(13,194 |
) |
Income Tax
Provision |
|
466 |
|
|
|
2,979 |
|
Net
Loss |
|
$ |
(143 |
) |
|
$ |
(16,173 |
) |
|
|
|
|
|
|
|
Per Share
Data: |
|
|
|
Basic: |
|
|
|
|
|
Loss Per Common Share |
$ |
0.00 |
|
|
$ |
(0.11 |
) |
Weighted Average Number of |
|
|
|
Common Shares Outstanding (b) |
|
147,535 |
|
|
|
147,139 |
|
Assuming
Dilution: |
|
|
|
Loss Per Common Share |
$ |
0.00 |
|
|
$ |
(0.11 |
) |
Weighted Average Number of |
|
|
|
Common Shares Outstanding (b) |
|
147,535 |
|
|
|
147,139 |
|
|
|
|
|
|
|
|
(a)
Includes inventory impairment loss and land option write-offs. |
(b)
For periods with a net loss, basic shares are used in accordance
with GAAP rules. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hovnanian Enterprises, Inc. |
|
|
|
January 31, 2017 |
|
|
|
Reconciliation of Loss Before Income Taxes Excluding Land-Related
Charges and Gain on Extinguishment of Debt to Income (Loss) Before
Income Taxes |
(Dollars in
Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
January 31, |
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
(Unaudited) |
Income
(Loss) Before Income Taxes |
$ |
323 |
|
|
$ |
(13,194 |
) |
Inventory
Impairment Loss and Land Option Write-Offs |
|
3,184 |
|
|
|
11,681 |
|
Gain on
Extinguishment of Debt |
|
(7,646 |
) |
|
|
- |
|
Loss Before
Income Taxes Excluding Land-Related Charges and Gain on
Extinguishment of Debt (a) |
$ |
(4,139 |
) |
|
$ |
(1,513 |
) |
|
|
|
|
|
|
|
(a) Loss
Before Income Taxes Excluding Land-Related Charges and Gain on
Extinguishment of Debt is a non-GAAP Financial measure. The most
directly comparable GAAP financial measure is Income (Loss) Before
Income Taxes. |
|
|
|
|
|
Hovnanian
Enterprises, Inc. |
|
|
|
|
January 31,
2017 |
|
|
|
|
Gross Margin |
|
|
|
|
(Dollars in
Thousands) |
|
|
|
|
|
|
Homebuilding Gross Margin |
|
|
Three Months Ended |
|
|
January 31, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
(Unaudited) |
Sale of Homes |
|
$ |
531,415 |
|
|
$ |
556,775 |
|
Cost of Sales,
Excluding Interest and Land Charges (a) |
|
|
439,917 |
|
|
|
464,146 |
|
Homebuilding Gross
Margin, Excluding Interest and Land Charges |
|
|
91,498 |
|
|
|
92,629 |
|
Homebuilding Cost of
Sales Interest |
|
|
16,574 |
|
|
|
16,843 |
|
Homebuilding Gross
Margin, Including Interest and Excluding Land Charges |
|
$ |
74,924 |
|
|
$ |
75,786 |
|
|
|
|
|
|
Gross Margin
Percentage, Excluding Interest and Land Charges |
|
|
17.2 |
% |
|
|
16.6 |
% |
Gross Margin
Percentage, Including Interest and Excluding Land Charges |
|
|
14.1 |
% |
|
|
13.6 |
% |
|
|
|
|
|
|
|
Land Sales Gross Margin |
|
|
Three Months Ended |
|
|
January 31, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
(Unaudited) |
Land and Lot Sales |
|
$ |
7,001 |
|
|
$ |
- |
|
Cost of Sales,
Excluding Interest and Land Charges (a) |
|
|
5,110 |
|
|
|
- |
|
Land and Lot Sales
Gross Margin, Excluding Interest and Land Charges |
|
|
1,891 |
|
|
|
- |
|
Land and Lot Sales
Interest |
|
|
1,748 |
|
|
|
- |
|
Land and Lot Sales
Gross Margin, Including Interest and Excluding Land Charges |
|
$ |
143 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
(a) Does
not include cost associated with walking away from land options or
inventory impairment losses which are recorded as Inventory
impairment loss and land option write-offs in the Condensed
Consolidated Statements of Operations. |
|
|
|
|
Hovnanian
Enterprises, Inc. |
|
|
|
January 31,
2017 |
|
|
|
Reconciliation of
Adjusted EBITDA to Net Loss |
|
|
|
(Dollars in
Thousands) |
|
|
|
|
Three Months Ended |
|
January 31, |
|
|
2017 |
|
|
|
2016 |
|
|
(Unaudited) |
Net Loss |
$ |
(143 |
) |
|
$ |
(16,173 |
) |
Income Tax
Provision |
|
466 |
|
|
|
2,979 |
|
Interest Expense |
|
40,949 |
|
|
|
38,068 |
|
EBIT (a) |
|
41,272 |
|
|
|
24,874 |
|
Depreciation |
|
1,012 |
|
|
|
865 |
|
Amortization of Debt
Costs |
|
1,632 |
|
|
|
1,383 |
|
EBITDA (b) |
|
43,916 |
|
|
|
27,122 |
|
Inventory Impairment
Loss and Land Option Write-offs |
|
3,184 |
|
|
|
11,681 |
|
Gain on Extinguishment
of Debt |
|
(7,646 |
) |
|
|
- |
|
Adjusted EBITDA
(c) |
$ |
39,454 |
|
|
$ |
38,803 |
|
|
|
|
|
Interest Incurred |
$ |
38,699 |
|
|
$ |
41,959 |
|
|
|
|
|
Adjusted EBITDA to
Interest Incurred |
|
1.02 |
|
|
|
0.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
EBIT is a non-GAAP financial measure. The most directly comparable
GAAP financial measure is net loss. EBIT represents earnings before
interest expense and income taxes. |
(b)
EBITDA is a non-GAAP financial measure. The most directly
comparable GAAP financial measure is net loss. EBITDA represents
earnings before interest expense, income taxes, depreciation and
amortization. |
(c)
Adjusted EBITDA is a non-GAAP financial measure. The most directly
comparable GAAP financial measure is net loss. Adjusted EBITDA
represents earnings before interest expense, income taxes,
depreciation, amortization, inventory impairment loss and land
option write-offs and gain on extinguishment of debt. |
|
|
|
|
|
|
|
|
|
|
|
|
Hovnanian
Enterprises, Inc. |
|
|
|
January 31,
2017 |
|
|
|
Interest Incurred,
Expensed and Capitalized |
|
|
|
(Dollars in
Thousands) |
|
|
|
|
Three Months Ended |
|
January 31, |
|
|
2017 |
|
|
|
2016 |
|
|
(Unaudited) |
Interest Capitalized at
Beginning of Period |
$ |
96,688 |
|
|
$ |
123,898 |
|
Plus Interest
Incurred |
|
38,699 |
|
|
|
41,959 |
|
Less Interest Expensed
(a) |
|
40,949 |
|
|
|
38,068 |
|
Less Interest
Contributed to Unconsolidated Joint Venture (a) |
|
- |
|
|
|
10,676 |
|
Interest Capitalized at
End of Period (b) |
$ |
94,438 |
|
|
$ |
117,113 |
|
|
|
|
|
(a)
Represents capitalized interest which was included as part of the
assets transferred to the joint venture the Company entered into in
November 2015. There was no impact to the Condensed Consolidated
Statement of Operations as a result of this transaction. |
(b)
Capitalized interest amounts are shown gross before allocating any
portion of impairments to capitalized interest. |
|
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In Thousands) |
|
|
January 31,2017 |
|
|
October 31,2016 |
|
|
|
(Unaudited) |
|
|
(1) |
|
ASSETS |
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
195,830 |
|
|
$ |
339,773 |
|
Restricted cash and cash equivalents |
|
|
1,786 |
|
|
|
3,914 |
|
Inventories: |
|
|
|
|
|
Sold and
unsold homes and lots under development |
|
|
945,153 |
|
|
|
899,082 |
|
Land and
land options held for future development or sale |
|
|
176,701 |
|
|
|
175,301 |
|
Consolidated inventory not owned |
|
|
171,572 |
|
|
|
208,701 |
|
Total
inventories |
|
|
1,293,426 |
|
|
|
1,283,084 |
|
Investments in and advances to unconsolidated joint ventures |
|
|
111,351 |
|
|
|
100,502 |
|
Receivables, deposits and notes, net |
|
|
45,982 |
|
|
|
49,726 |
|
Property,
plant and equipment, net |
|
|
49,998 |
|
|
|
50,332 |
|
Prepaid
expenses and other assets |
|
|
50,352 |
|
|
|
46,762 |
|
Total
homebuilding |
|
|
1,748,725 |
|
|
|
1,874,093 |
|
|
|
|
|
|
|
Financial services |
|
|
113,249 |
|
|
|
197,230 |
|
|
|
|
|
|
|
Income taxes receivable
– including net deferred tax benefits |
|
|
283,322 |
|
|
|
283,633 |
|
Total assets |
|
$ |
2,145,296 |
|
|
$ |
2,354,956 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
Nonrecourse mortgages secured by inventory, net of debt issuance
costs |
|
$ |
73,528 |
|
|
$ |
82,115 |
|
Accounts
payable and other liabilities |
|
|
319,661 |
|
|
|
369,228 |
|
Customers’ deposits |
|
|
35,953 |
|
|
|
37,429 |
|
Nonrecourse mortgages secured by operating properties |
|
|
13,997 |
|
|
|
14,312 |
|
Liabilities from inventory not owned, net of debt issuance
costs |
|
|
124,394 |
|
|
|
150,179 |
|
Revolving
credit facility |
|
|
52,000 |
|
|
|
52,000 |
|
Notes
payable and term loan, net of discount and debt issuance costs |
|
|
1,567,673 |
|
|
|
1,605,758 |
|
Total
homebuilding |
|
|
2,187,206 |
|
|
|
2,311,021 |
|
|
|
|
|
|
|
Financial services |
|
|
86,370 |
|
|
|
172,445 |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
2,273,576 |
|
|
|
2,483,466 |
|
|
|
|
|
|
|
|
|
Stockholders’ equity
deficit: |
|
|
|
|
|
Preferred
stock, $0.01 par value - authorized 100,000 shares; issued and
outstanding 5,600 shares with a liquidation preference of $140,000
at January 31, 2017 and at October 31, 2016 |
|
|
135,299 |
|
|
|
135,299 |
|
Common
stock, Class A, $0.01 par value – authorized 400,000,000 shares;
issued 143,870,764 shares at January 31, 2017 and 143,806,775
shares at October 31, 2016 |
|
|
1,439 |
|
|
|
1,438 |
|
Common
stock, Class B, $0.01 par value (convertible to Class A at time of
sale) – authorized 60,000,000 shares; issued 15,942,809 shares at
January 31, 2017 and 15,942,809 shares at October 31, 2016 |
|
|
159 |
|
|
|
159 |
|
Paid in
capital – common stock |
|
|
706,509 |
|
|
|
706,137 |
|
Accumulated deficit |
|
|
(856,326 |
) |
|
|
(856,183 |
) |
Treasury
stock – at cost - 11,760,763 shares of Class A common stock and
691,748 shares of Class B common stock at January 31, 2017 and
October 31, 2016 |
|
|
(115,360 |
) |
|
|
(115,360 |
) |
Total
stockholders’ equity deficit |
|
|
(128,280 |
) |
|
|
(128,510 |
) |
Total liabilities and
equity |
|
$ |
2,145,296 |
|
|
$ |
2,354,956 |
|
|
|
|
|
|
|
|
|
|
(1) Derived from the
audited balance sheet as of October 31, 2016. |
|
|
|
|
|
|
|
|
|
|
|
|
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(In Thousands Except Share and
Per Share Data)(Unaudited) |
|
|
|
|
|
Three Months Ended January 31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
Revenues: |
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
Sale of
homes |
|
$ |
531,415 |
|
|
$ |
556,775 |
|
Land
sales and other revenues |
|
|
7,745 |
|
|
|
604 |
|
Total
homebuilding |
|
|
539,160 |
|
|
|
557,379 |
|
Financial
services |
|
|
12,849 |
|
|
|
18,226 |
|
Total
revenues |
|
|
552,009 |
|
|
|
575,605 |
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
Cost of
sales, excluding interest |
|
|
445,027 |
|
|
|
464,146 |
|
Cost of
sales interest |
|
|
18,322 |
|
|
|
16,843 |
|
Inventory
impairment loss and land option write-offs |
|
|
3,184 |
|
|
|
11,681 |
|
Total
cost of sales |
|
|
466,533 |
|
|
|
492,670 |
|
Selling,
general and administrative |
|
|
44,408 |
|
|
|
47,504 |
|
Total
homebuilding expenses |
|
|
510,941 |
|
|
|
540,174 |
|
|
|
|
|
|
|
|
Financial
services |
|
|
6,855 |
|
|
|
8,215 |
|
Corporate
general and administrative |
|
|
15,656 |
|
|
|
16,321 |
|
Other
interest |
|
|
22,627 |
|
|
|
21,225 |
|
Other
operations |
|
|
1,587 |
|
|
|
1,384 |
|
Total
expenses |
|
|
557,666 |
|
|
|
587,319 |
|
Gain on extinguishment
of debt |
|
|
7,646 |
|
|
|
- |
|
Loss from
unconsolidated joint ventures |
|
|
(1,666 |
) |
|
|
(1,480 |
) |
Income (loss) before
income taxes |
|
|
323 |
|
|
|
(13,194 |
) |
State and federal
income tax (benefit) provision: |
|
|
|
|
|
|
State |
|
|
(18 |
) |
|
|
4,319 |
|
Federal |
|
|
484 |
|
|
|
(1,340 |
) |
Total
income taxes |
|
|
466 |
|
|
|
2,979 |
|
Net loss |
|
$ |
(143 |
) |
|
$ |
(16,173 |
) |
|
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
Loss per
common share |
|
$ |
0.00 |
|
|
$ |
(0.11 |
) |
Weighted-average number of common shares outstanding |
|
|
147,535 |
|
|
|
147,139 |
|
Assuming dilution: |
|
|
|
|
|
|
Loss per
common share |
|
$ |
0.00 |
|
|
$ |
(0.11 |
) |
Weighted-average number of common shares outstanding |
|
|
147,535 |
|
|
|
147,139 |
|
|
HOVNANIAN ENTERPRISES, INC. |
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE) |
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT
VENTURES) |
(UNAUDITED) |
|
Communities Under Development |
|
|
Three Months - January 31, 2017 |
|
|
Net Contracts(1) |
Deliveries |
Contract |
|
|
Three Months Ended |
Three Months Ended |
Backlog |
|
|
Jan 31, |
Jan 31, |
Jan 31, |
|
|
|
2017 |
|
2016 |
% Change |
|
2017 |
|
2016 |
% Change |
|
2017 |
|
2016 |
% Change |
Northeast |
|
|
|
|
|
|
|
|
|
|
(NJ, PA) |
Home |
|
83 |
|
92 |
(9.8 |
)% |
|
104 |
|
151 |
(31.1 |
)% |
|
183 |
|
234 |
(21.8 |
)% |
|
Dollars |
$ |
38,045 |
$ |
39,784 |
(4.4 |
)% |
$ |
52,907 |
$ |
72,438 |
(27.0 |
)% |
$ |
84,649 |
$ |
114,350 |
(26.0 |
)% |
|
Avg.
Price |
$ |
458,369 |
$ |
432,432 |
6.0 |
% |
$ |
508,726 |
$ |
479,721 |
6.0 |
% |
$ |
462,563 |
$ |
488,673 |
(5.3 |
)% |
Mid-Atlantic |
|
|
|
|
|
|
|
|
|
|
(DE, MD, VA, WV) |
Home |
|
190 |
|
260 |
(26.9 |
)% |
|
204 |
|
206 |
(1.0 |
)% |
|
416 |
|
507 |
(17.9 |
)% |
|
Dollars |
$ |
102,246 |
$ |
130,316 |
(21.5 |
)% |
$ |
100,159 |
$ |
93,552 |
7.1 |
% |
$ |
251,062 |
$ |
275,863 |
(9.0 |
)% |
|
Avg.
Price |
$ |
538,138 |
$ |
501,215 |
7.4 |
% |
$ |
490,975 |
$ |
454,136 |
8.1 |
% |
$ |
603,516 |
$ |
544,108 |
10.9 |
% |
Midwest(2) |
|
|
|
|
|
|
|
|
|
|
(IL, MN, OH) |
Home |
|
145 |
|
207 |
(30.0 |
)% |
|
150 |
|
274 |
(45.3 |
)% |
|
369 |
|
577 |
(36.0 |
)% |
|
Dollars |
$ |
45,566 |
$ |
67,569 |
(32.6 |
)% |
$ |
43,651 |
$ |
91,840 |
(52.5 |
)% |
$ |
106,443 |
$ |
170,020 |
(37.4 |
)% |
|
Avg.
Price |
$ |
314,250 |
$ |
326,420 |
(3.7 |
)% |
$ |
291,007 |
$ |
335,181 |
(13.2 |
)% |
$ |
288,462 |
$ |
294,662 |
(2.1 |
)% |
Southeast(3) |
|
|
|
|
|
|
|
|
|
|
(FL, GA, NC, SC) |
Home |
|
108 |
|
213 |
(49.3 |
)% |
|
138 |
|
116 |
19.0 |
% |
|
302 |
|
376 |
(19.7 |
)% |
|
Dollars |
$ |
46,451 |
$ |
90,259 |
(48.5 |
)% |
$ |
56,386 |
$ |
39,194 |
43.9 |
% |
$ |
135,236 |
$ |
157,001 |
(13.9 |
)% |
|
Avg.
Price |
$ |
430,104 |
$ |
423,754 |
1.5 |
% |
$ |
408,594 |
$ |
337,884 |
20.9 |
% |
$ |
447,801 |
$ |
417,556 |
7.2 |
% |
Southwest |
|
|
|
|
|
|
|
|
|
|
(AZ, TX) |
Home |
|
485 |
|
560 |
(13.4 |
)% |
|
531 |
|
550 |
(3.5 |
)% |
|
717 |
|
1,043 |
(31.3 |
)% |
|
Dollars |
$ |
170,884 |
$ |
208,642 |
(18.1 |
)% |
$ |
183,260 |
$ |
204,189 |
(10.2 |
)% |
$ |
273,268 |
$ |
427,164 |
(36.0 |
)% |
|
Avg.
Price |
$ |
352,338 |
$ |
372,575 |
(5.4 |
)% |
$ |
345,123 |
$ |
371,253 |
(7.0 |
)% |
$ |
381,126 |
$ |
409,553 |
(6.9 |
)% |
West |
|
|
|
|
|
|
|
|
|
|
(CA) |
Home |
|
162 |
|
199 |
(18.6 |
)% |
|
163 |
|
125 |
30.4 |
% |
|
285 |
|
277 |
2.9 |
% |
|
Dollars |
$ |
84,423 |
$ |
92,073 |
(8.3 |
)% |
$ |
95,052 |
$ |
55,562 |
71.1 |
% |
$ |
169,512 |
$ |
143,396 |
18.2 |
% |
|
Avg.
Price |
$ |
521,130 |
$ |
462,676 |
12.6 |
% |
$ |
583,140 |
$ |
444,494 |
31.2 |
% |
$ |
594,780 |
$ |
517,677 |
14.9 |
% |
Consolidated Total |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
1,173 |
|
1,531 |
(23.4 |
)% |
|
1,290 |
|
1,422 |
(9.3 |
)% |
|
2,272 |
|
3,014 |
(24.6 |
)% |
|
Dollars |
$ |
487,615 |
$ |
628,643 |
(22.4 |
)% |
$ |
531,415 |
$ |
556,775 |
(4.6 |
)% |
$ |
1,020,170 |
$ |
1,287,794 |
(20.8 |
)% |
|
Avg.
Price |
$ |
415,699 |
$ |
410,610 |
1.2 |
% |
$ |
411,949 |
$ |
391,543 |
5.2 |
% |
$ |
449,018 |
$ |
427,271 |
5.1 |
% |
Unconsolidated Joint Ventures |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
139 |
|
61 |
127.9 |
% |
|
108 |
|
44 |
145.5 |
% |
|
291 |
|
224 |
29.9 |
% |
|
Dollars |
$ |
80,300 |
$ |
39,821 |
101.7 |
% |
$ |
64,641 |
$ |
20,187 |
220.2 |
% |
$ |
173,222 |
$ |
151,716 |
14.2 |
% |
|
Avg.
Price |
$ |
577,697 |
$ |
652,803 |
(11.5 |
)% |
$ |
598,531 |
$ |
458,795 |
30.5 |
% |
$ |
595,264 |
$ |
677,304 |
(12.1 |
)% |
Grand Total |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
1,312 |
|
1,592 |
(17.6 |
)% |
|
1,398 |
|
1,466 |
(4.6 |
)% |
|
2,563 |
|
3,238 |
(20.8 |
)% |
|
Dollars |
$ |
567,915 |
$ |
668,464 |
(15.0 |
)% |
$ |
596,056 |
$ |
576,962 |
3.3 |
% |
$ |
1,193,392 |
$ |
1,439,510 |
(17.1 |
)% |
|
Avg.
Price |
$ |
432,862 |
$ |
419,889 |
3.1 |
% |
$ |
426,363 |
$ |
393,562 |
8.3 |
% |
$ |
465,623 |
$ |
444,568 |
4.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
DELIVERIES INCLUDE EXTRAS |
Notes: |
(1) Net
contracts are defined as new contracts signed during the period for
the purchase of homes, less cancellations of prior contracts.(2)
The Midwest net contracts include 45 homes and $18.5 million for
the three months ended January 31, 2016 from Minneapolis, MN.(3)
The Southeast net contracts include 46 homes and $21.7 million for
the three months ended January 31, 2016 from Raleigh, NC. |
|
HOVNANIAN ENTERPRISES, INC. |
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE) |
(SEGMENT DATA INCLUDES UNCONSOLIDATED JOINT
VENTURES) |
(UNAUDITED) |
|
Communities Under Development |
|
|
Three Months - January 31, 2017 |
|
|
Net Contracts(1) |
Deliveries |
Contract |
|
|
Three Months Ended |
Three Months Ended |
Backlog |
|
|
Jan 31, |
Jan 31, |
Jan 31, |
|
|
|
2017 |
|
2016 |
% Change |
|
2017 |
|
2016 |
% Change |
|
2017 |
|
2016 |
% Change |
Northeast |
|
|
|
|
|
|
|
|
|
|
(includes unconsolidated joint ventures) |
Home |
|
108 |
|
87 |
24.1 |
% |
|
110 |
|
159 |
(30.8 |
)% |
|
229 |
|
269 |
(14.9 |
)% |
(NJ, PA) |
Dollars |
$ |
50,120 |
$ |
35,494 |
41.2 |
% |
$ |
54,647 |
$ |
74,694 |
(26.8 |
)% |
$ |
105,247 |
$ |
129,276 |
(18.6 |
)% |
|
Avg.
Price |
$ |
464,072 |
$ |
407,974 |
13.8 |
% |
$ |
496,795 |
$ |
469,773 |
5.8 |
% |
$ |
459,594 |
$ |
480,580 |
(4.4 |
)% |
Mid-Atlantic |
|
|
|
|
|
|
|
|
|
|
(includes unconsolidated joint ventures) |
Home |
|
207 |
|
273 |
(24.2 |
)% |
|
214 |
|
216 |
(0.9 |
)% |
|
463 |
|
524 |
(11.6 |
)% |
(DE, MD, VA, WV) |
Dollars |
$ |
111,674 |
$ |
136,738 |
(18.3 |
)% |
$ |
105,348 |
$ |
99,219 |
6.2 |
% |
$ |
285,390 |
$ |
284,425 |
0.3 |
% |
|
Avg.
Price |
$ |
539,487 |
$ |
500,874 |
7.7 |
% |
$ |
492,277 |
$ |
459,347 |
7.2 |
% |
$ |
616,392 |
$ |
542,796 |
13.6 |
% |
Midwest(2) |
|
|
|
|
|
|
|
|
|
|
(includes unconsolidated joint ventures) |
Home |
|
155 |
|
207 |
(25.1 |
)% |
|
157 |
|
274 |
(42.7 |
)% |
|
384 |
|
577 |
(33.4 |
)% |
(IL, MN, OH) |
Dollars |
$ |
52,792 |
$ |
67,569 |
(21.9 |
)% |
$ |
49,267 |
$ |
91,840 |
(46.4 |
)% |
$ |
117,641 |
$ |
170,020 |
(30.8 |
)% |
|
Avg.
Price |
$ |
340,597 |
$ |
326,420 |
4.3 |
% |
$ |
313,803 |
$ |
335,181 |
(6.4 |
)% |
$ |
306,358 |
$ |
294,662 |
4.0 |
% |
Southeast(3) |
|
|
|
|
|
|
|
|
|
|
(includes unconsolidated joint ventures) |
Home |
|
143 |
|
220 |
(35.0 |
)% |
|
162 |
|
117 |
38.5 |
% |
|
401 |
|
391 |
2.6 |
% |
(FL, GA, NC, SC) |
Dollars |
$ |
63,330 |
$ |
95,086 |
(33.4 |
)% |
$ |
66,226 |
$ |
39,580 |
67.3 |
% |
$ |
185,998 |
$ |
166,366 |
11.8 |
% |
|
Avg.
Price |
$ |
442,870 |
$ |
432,210 |
2.5 |
% |
$ |
408,801 |
$ |
338,287 |
20.8 |
% |
$ |
463,835 |
$ |
425,490 |
9.0 |
% |
Southwest |
|
|
|
|
|
|
|
|
|
|
(includes unconsolidated joint ventures) |
Home |
|
497 |
|
560 |
(11.3 |
)% |
|
531 |
|
550 |
(3.5 |
)% |
|
736 |
|
1,043 |
(29.4 |
)% |
(AZ, TX) |
Dollars |
$ |
179,550 |
$ |
208,642 |
(13.9 |
)% |
$ |
183,260 |
$ |
204,189 |
(10.2 |
)% |
$ |
286,411 |
$ |
427,164 |
(33.0 |
)% |
|
Avg.
Price |
$ |
361,268 |
$ |
372,575 |
(3.0 |
)% |
$ |
345,123 |
$ |
371,253 |
(7.0 |
)% |
$ |
389,145 |
$ |
409,553 |
(5.0 |
)% |
West |
|
|
|
|
|
|
|
|
|
|
(includes unconsolidated joint ventures) |
Home |
|
202 |
|
245 |
(17.6 |
)% |
|
224 |
|
150 |
49.3 |
% |
|
350 |
|
434 |
(19.4 |
)% |
(CA) |
Dollars |
$ |
110,449 |
$ |
124,935 |
(11.6 |
)% |
$ |
137,308 |
$ |
67,440 |
103.6 |
% |
$ |
212,705 |
$ |
262,259 |
(18.9 |
)% |
|
Avg.
Price |
$ |
546,776 |
$ |
509,937 |
7.2 |
% |
$ |
612,981 |
$ |
449,597 |
36.3 |
% |
$ |
607,729 |
$ |
604,284 |
0.6 |
% |
Grand Total |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
1,312 |
|
1,592 |
(17.6 |
)% |
|
1,398 |
|
1,466 |
(4.6 |
)% |
|
2,563 |
|
3,238 |
(20.8 |
)% |
|
Dollars |
$ |
567,915 |
$ |
668,464 |
(15.0 |
)% |
$ |
596,056 |
$ |
576,962 |
3.3 |
% |
$ |
1,193,392 |
$ |
1,439,510 |
(17.1 |
)% |
|
Avg.
Price |
$ |
432,862 |
$ |
419,889 |
3.1 |
% |
$ |
426,363 |
$ |
393,562 |
8.3 |
% |
$ |
465,623 |
$ |
444,568 |
4.7 |
% |
Consolidated Total |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
1,173 |
|
1,531 |
(23.4 |
)% |
|
1,290 |
|
1,422 |
(9.3 |
)% |
|
2,272 |
|
3,014 |
(24.6 |
)% |
|
Dollars |
$ |
487,615 |
$ |
628,643 |
(22.4 |
)% |
$ |
531,415 |
$ |
556,775 |
(4.6 |
)% |
$ |
1,020,170 |
$ |
1,287,794 |
(20.8 |
)% |
|
Avg.
Price |
$ |
415,699 |
$ |
410,610 |
1.2 |
% |
$ |
411,949 |
$ |
391,543 |
5.2 |
% |
$ |
449,018 |
$ |
427,271 |
5.1 |
% |
Unconsolidated Joint Ventures |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
139 |
|
61 |
127.9 |
% |
|
108 |
|
44 |
145.5 |
% |
|
291 |
|
224 |
29.9 |
% |
|
Dollars |
$ |
80,300 |
$ |
39,821 |
101.7 |
% |
$ |
64,641 |
$ |
20,187 |
220.2 |
% |
$ |
173,222 |
$ |
151,716 |
14.2 |
% |
|
Avg.
Price |
$ |
577,697 |
$ |
652,803 |
(11.5 |
)% |
$ |
598,531 |
$ |
458,795 |
30.5 |
% |
$ |
595,264 |
$ |
677,304 |
(12.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
DELIVERIES INCLUDE EXTRAS |
Notes: |
(1) Net
contracts are defined as new contracts signed during the period for
the purchase of homes, less cancellations of prior contracts.(2)
The Midwest net contracts include 45 homes and $18.5 million for
the three months ended January 31, 2016 from Minneapolis, MN.(3)
The Southeast net contracts include 46 homes and $21.7 million for
the three months ended January 31, 2016 from Raleigh, NC. |
|
Contact:
J. Larry Sorsby
Executive Vice President & CFO
732-747-7800
Jeffrey T. O’Keefe
Vice President, Investor Relations
732-747-7800
Hovnanian Enterprises (NYSE:HOV)
Historical Stock Chart
From Mar 2024 to Apr 2024
Hovnanian Enterprises (NYSE:HOV)
Historical Stock Chart
From Apr 2023 to Apr 2024