Hovnanian Enterprises Reports Fiscal 2019 Second Quarter Results

Date : 06/06/2019 @ 1:15PM
Source : GlobeNewswire Inc.
Stock : Hovnanian Enterprises Inc (HOV)
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Hovnanian Enterprises Reports Fiscal 2019 Second Quarter Results

Hovnanian Enterprises (NYSE:HOV)
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6 Months : From May 2019 to Nov 2019

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Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal second quarter and six-month period ended April 30, 2019.

“For the second quarter of fiscal 2019, we achieved an 11% year-over-year growth in consolidated community count and a 10% year-over-year increase in consolidated contracts,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. "Furthermore, for the month of May 2019, we had a 20% year-over-year increase in consolidated contracts."

“During the second quarter of fiscal 2019, driven entirely by increasing our lot option position, we also grew our consolidated land position by 17% year over year. Increasing our land position and community count should ultimately lead to rising revenues and substantially improved levels of profitability. We believe that controlling the majority of our consolidated lots through options – 60% at the end of the second quarter – gives us considerable flexibility, mitigates risk and is consistent with our strategy of achieving high inventory turns. We ended the quarter with our liquidity position above our stated goal and remain cautious and disciplined in our approach to underwriting new land purchases. We continue to invest in a housing market that appears to remain on solid economic and demographic footings. Assuming no adverse changes in current market conditions and excluding land related charges, gains or losses on extinguishment of debt and other non-recurring items, we expect the second half of the year to substantially outperform the first half, resulting in profitability for the full year,” concluded Mr. Hovnanian.

RESULTS FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED APRIL 30, 2019:

  • Total revenues decreased to $440.7 million in the second quarter of fiscal 2019, compared with $502.5 million in the second quarter of fiscal 2018. For the six months ended April 30, 2019, total revenues decreased to $821.3 million compared with $919.7 million in the same period during the prior fiscal year. 
  • Homebuilding revenues for unconsolidated joint ventures increased 29.7% to $125.7 million for the second quarter ended April 30, 2019, compared with $96.9 million in last year’s second quarter. During the first half of fiscal 2019, homebuilding revenues for unconsolidated joint ventures increased to $221.5 million compared with $155.5 million in the same period during the previous year. 
  • Homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 13.3% for the second quarter of fiscal 2019 compared with 13.8% during the prior year’s second quarter. For the six months ended April 30, 2019, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 14.0% compared with 14.3% last year. 
  • Homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 16.9% for the second quarter of fiscal 2019 compared with 17.7% in the same quarter one year ago. During the first half of fiscal 2019, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 17.3% compared with 17.8% in the same period of the previous fiscal year. 
  • For the second quarter of 2019, total SG&A decreased by $1.3 million, or 2.2%, year over year. Total SG&A was $60.3 million, or 13.7% of total revenues, in the second quarter of fiscal 2019 compared with $61.7 million, or 12.3% of total revenues, in the second quarter of fiscal 2018. For the six-month period ended April 30, 2019, total SG&A decreased by $3.3 million, or 2.7%, year over year. For the first six months of fiscal 2019, total SG&A was $120.7 million, or 14.7% of total revenues, compared with $124.1 million, or 13.5% of total revenues, in the same period of the prior fiscal year. 
  • Total interest expense was $36.6 million in the second quarter of fiscal 2019 compared with $45.5 million in the second quarter of fiscal 2018. Total interest expense was $69.1 million for the first half of fiscal 2019 compared with $86.9 million for the same period in fiscal 2018. 
  • Interest incurred (some of which was expensed and some of which was capitalized) was $41.4 million for the second quarter of fiscal 2019 compared with $40.0 million in the same quarter one year ago. For the six months ended April 30, 2019, interest incurred (some of which was expensed and some of which was capitalized) was $80.2 million compared with $81.2 million last year. 
  • Income from unconsolidated joint ventures was $7.3 million for the quarter ended April 30, 2019 compared with $1.3 million in the second quarter of the previous year. For the first half of fiscal 2019, income from unconsolidated joint ventures was $16.8 million compared with a loss of $3.8 million in the same period a year ago. 
  • Loss before income taxes for the quarter ended April 30, 2019 was $14.9 million compared with a loss of $9.6 million during the second quarter of fiscal 2018. For the first six months of fiscal 2019, the loss before income taxes was $32.0 million compared with a loss of $40.0 million during same period of fiscal 2018. 
  • Loss before income taxes, excluding land-related charges, joint venture write-downs and loss on extinguishment of debt, was $13.5 million during the second quarter of fiscal 2019 compared with a loss before these items of $5.5 million in the second quarter of fiscal 2018. For the six months ended April 30, 2019, loss before income taxes, excluding land-related charges, joint venture write-downs and loss on extinguishment of debt, was $29.9 million compared with a loss before these items of $34.9 million during the same period in fiscal 2018. 
  • Net loss was $15.3 million, or $2.56 per common share, in the second quarter of fiscal 2019 compared with a net loss of $9.8 million, or $1.65 per common share, during the same quarter a year ago. For the first six months of fiscal 2019, net loss was $32.7 million, or $5.49 per common share, compared with a net loss of $40.6 million, or $6.85 per common share, in the same period during fiscal 2018. 
  • Consolidated contracts per community decreased 0.9% to 10.5 contracts per community for the second quarter of fiscal 2019 compared with 10.6 contracts per community in the second quarter of fiscal 2018. Contracts per community, including unconsolidated joint ventures, decreased 3.6% to 10.8 contracts per community for the quarter ended April 30, 2019 compared with 11.2 contracts per community, including unconsolidated joint ventures, in last year’s second quarter. 
  • The consolidated community count was 147 as of April 30, 2019. This was an 11.4% year-over-year increase from 132 communities at the end of the prior year’s second quarter and a 7.3% sequential increase compared with 137 communities at January 31, 2019. As of the end of the second quarter of fiscal 2019, community count, including unconsolidated joint ventures, was 165 communities. This was a 7.8% increase, both sequentially and year over year, compared with 153 communities at both January 31, 2019 and April 30, 2018. 
  • The number of consolidated contracts increased 10.1% to 1,546 homes, during the second quarter of fiscal 2019, compared with 1,404 homes during the second quarter of fiscal 2018. The number of contracts, including unconsolidated joint ventures, for the second quarter ended April 30, 2019, increased 4.0% to 1,775 homes from 1,706 homes for the same quarter last year. 
  • The number of consolidated contracts increased 2.0% to 2,480 homes, during the six-month period ended April 30, 2019, compared with 2,431 homes in the same period of the previous fiscal year. During the first six months of fiscal 2019, the number of contracts, including unconsolidated joint ventures, was 2,843 homes, a decrease of 3.8% from 2,956 homes during the same period in fiscal 2018. 
  • For May 2019, consolidated contracts per community were 3.7 compared with 3.6 for the same month one year ago. During May 2019, the number of consolidated contracts increased 20.2% to 536 homes from 446 homes in May 2018.  
  • The dollar value of consolidated contract backlog, as of April 30, 2019, increased 5.5% to $949.9 million compared with $900.7 million as of April 30, 2018. The dollar value of contract backlog, including unconsolidated joint ventures, as of April 30, 2019, was $1.18 billion, a decrease of 11.9% compared with $1.34 billion as of April 30, 2018. 
  • Consolidated deliveries were 1,085 homes for the second quarter of fiscal 2019, a 10.7% decrease compared with 1,215 homes during the same quarter a year ago. For the quarter ended April 30, 2019, deliveries, including unconsolidated joint ventures, decreased 10.0% to 1,280 homes compared with 1,423 homes during the second quarter of fiscal 2018. 
  • Consolidated deliveries were 2,052 homes in the first half of fiscal 2019, an 8.4% decrease compared with 2,240 homes in the same period in fiscal 2018. For the six months ended April 30, 2019, deliveries, including unconsolidated joint ventures, decreased 6.4% to 2,399 homes compared with 2,564 homes in the same period of the prior fiscal year. 
  • The contract cancellation rate for both consolidated contracts and contracts including unconsolidated joint ventures were 19% for the three months ended April 30, 2019 compared with 17% for the same quarter in fiscal 2018.

LIQUIDITY AND INVENTORY AS OF APRIL 30, 2019:

  • Total liquidity at the end of the of the second quarter of fiscal 2019 was $266.0 million, which is above the upper end of our target range.  
  • In the second quarter of fiscal 2019, approximately 2,500 lots were put under option or acquired in 32 communities, including unconsolidated joint ventures. 
  • As of April 30, 2019, consolidated lots controlled increased by 17.1% to 31,087 year over year from 26,537 lots at April 30, 2018. The consolidated lots under option at the end of the second quarter of fiscal 2019 were 18,602 lots compared with 13,949 optioned lots at the end of last year’s second quarter. As of April 30, 2019, the Company owned 12,485 lots compared with 12,588 owned lots at the end of the second quarter of fiscal 2018.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2019 second quarter financial results conference call at 11:00 a.m. E.T. on Thursday, June 6, 2019. 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 Matawan, New Jersey and, through its subsidiaries, 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 and Brighton Homes®. Additionally, the Company’s subsidiaries, as developers of K. Hovnanian’s® Four Seasons communities, make the Company one of the nation’s largest builders of active lifestyle communities.

Additional information on Hovnanian Enterprises, Inc. 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 loss 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.

Homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, are non-GAAP financial measures. The most directly comparable GAAP financial measures are homebuilding gross margin and homebuilding gross margin percentage, respectively. The reconciliation for historical periods of homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, to homebuilding gross margin and homebuilding gross margin percentage, respectively, is presented in a table attached to this earnings release.

(Loss) before income taxes excluding land-related charges, joint venture write-downs and loss on extinguishment of debt is a non-GAAP financial measure. The most directly comparable GAAP financial measure is (loss) before income taxes. The reconciliation for historical periods of (loss) before income taxes excluding land-related charges, joint venture write-downs and loss on extinguishment of debt to (loss) before income taxes is presented in a table attached to this earnings release.

Total liquidity is comprised of $124.0 million of cash and cash equivalents, $17.0 million of restricted cash required to collateralize letters of credit and $125.0 million of availability under the senior secured revolving credit facility as of April 30, 2019.

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 a significant homebuilding downturn; (2) adverse weather and other environmental conditions and natural disasters; (3) high leverage and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (4) availability and terms of financing to the Company; (5) the Company’s sources of liquidity; (6) changes in credit ratings; (7) the seasonality of the Company’s business; (8) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (9) shortages in, and price fluctuations of, raw materials and labor; (10) reliance on, and the performance of, subcontractors; (11) 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; (12) fluctuations in interest rates and the availability of mortgage financing; (13) increases in cancellations of agreements of sale; (14) changes in tax laws affecting the after-tax costs of owning a home; (15) operations through unconsolidated joint ventures with third parties; (16) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (17) legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors; (18) levels of competition; (19) successful identification and integration of acquisitions; (20) significant influence of the Company’s controlling stockholders; (21) availability of net operating loss carryforwards; (22) utility shortages and outages or rate fluctuations; (23) changes in trade policies, including the imposition of tariffs and duties on homebuilding materials and products, and related trade disputes with and retaliatory measures taken by other countries; (24) geopolitical risks, terrorist acts and other acts of war; (25) loss of key management personnel or failure to attract qualified personnel; (26) information technology failures and data security breaches; (27) negative publicity; and (28) 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, 2018 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.
April 30, 2019
Statements of consolidated operations
(In thousands, except per share data)
    Three Months Ended Six Months Ended
    April 30, April 30,
     2019   2018   2019   2018 
                   
    (Unaudited)(Unaudited)
Total revenues$440,691  $502,544  $821,285  $919,710 
Costs and expenses (1) 462,855   512,025   870,117   954,486 
Loss on extinguishment of debt -   (1,440)  -   (1,440)
Income (loss) from unconsolidated joint ventures 7,252   1,343   16,814   (3,833)
(Loss) before income taxes (14,912)  (9,578)  (32,018)  (40,049)
Income tax provision 345   245   691   583 
Net (loss)$(15,257) $(9,823) $(32,709) $(40,632)
           
Per share data:       
Basic and assuming dilution:       
 Net (loss) per common share$(2.56) $(1.65) $(5.49) $(6.85)
 Weighted average number of       
  common shares outstanding (2) 5,962   5,937   5,960   5,929 
           
(1)  Includes inventory impairment loss and land option write-offs.
(2)  For periods with a net (loss), basic shares are used in accordance with GAAP rules.
           
           
Hovnanian Enterprises, Inc.
April 30, 2019
Reconciliation of (loss) before income taxes excluding land-related charges, joint venture write-downs and loss on extinguishment of debt to (loss) before income taxes
           
(In thousands)       
           
    Three Months Ended Six Months Ended
    April 30, April 30,
     2019   2018   2019   2018 
                   
    (Unaudited)(Unaudited)
(Loss) before income taxes$(14,912) $(9,578) $(32,018) $(40,049)
Inventory impairment loss and land option write-offs 1,462   2,673   2,166   3,087 
Unconsolidated joint venture write-downs -   -   -   660 
Loss on extinguishment of debt -   1,440   -   1,440 
(Loss) before income taxes excluding land-related charges, joint venture   write-downs and loss on extinguishment of debt (1)$(13,450) $(5,465) $(29,852) $(34,862)
           
(1)  (Loss) before income taxes excluding land-related charges, joint venture write-downs and loss on extinguishment of debt is a non-GAAP financial measure. The most directly comparable GAAP financial measure is (loss) before income taxes.

Hovnanian Enterprises, Inc.
April 30, 2019
Gross margin
(In thousands)
 Homebuilding GrossMargin Homebuilding GrossMargin
 Three Months Ended Six Months Ended
 April 30, April 30,
  2019   2018   2019   2018 
                
 (Unaudited) (Unaudited)
Sale of homes$427,552  $468,117  $789,687  $869,694 
Cost of sales, excluding interest expense and land charges (1) 355,477   385,302   653,047   714,829 
Homebuilding gross margin, before cost of sales interest expense and land   charges (2) 72,075   82,815   136,640   154,865 
Cost of sales interest expense, excluding land sales interest expense 13,898   15,309   24,140   27,601 
Homebuilding gross margin, after cost of sales interest expense, before land   charges (2) 58,177   67,506   112,500   127,264 
Land charges 1,462   2,673   2,166   3,087 
Homebuilding gross margin$56,715  $64,833  $110,334  $124,177 
                 
Gross margin percentage 13.3%  13.8%  14.0%  14.3%
Gross margin percentage, before cost of sales interest expense and land   charges (2) 16.9%  17.7%  17.3%  17.8%
Gross margin percentage, after cost of sales interest expense, before land   charges (2) 13.6%  14.4%  14.2%  14.6%
        
 Land Sales GrossMargin Land Sales GrossMargin
 Three Months Ended Six Months Ended
 April 30, April 30,
  2019   2018   2019   2018 
                
 (Unaudited) (Unaudited)
Land and lot sales $-  $20,505  $7,508  $20,505 
Cost of sales, excluding interest and land charges (1) -   7,710     7,357   7,710 
Land and lot sales gross margin, excluding interest and land charges -    12,795     151    12,795 
Land and lot sales interest -   4,055    -   4,055 
Land and lot sales gross margin, including interest and excluding land   charges $-  $8,740  $151  $8,740 
        
        
(1) 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.
(2) Homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, are non-GAAP financial measures. The most directly comparable GAAP financial measures are homebuilding gross margin and homebuilding gross margin percentage, respectively.

Hovnanian Enterprises, Inc.
April 30, 2019
Reconciliation of adjusted EBITDA to net (loss)
(In thousands)
 Three Months Ended Six Months Ended
 April 30, April 30,
  2019   2018   2019   2018 
                
 (Unaudited) (Unaudited)
Net (loss)$(15,257 $(9,823) $(32,709 $(40,632
Income tax provision 345   245   691   583 
Interest expense 36,561   45,452   69,076   86,875 
EBIT (1) 21,649   35,874   37,058   46,826 
Depreciation and amortization 959   719   1,938   1,509 
EBITDA (2) 22,608   36,593   38,996   48,335 
Inventory impairment loss and land option write-offs 1,462   2,673   2,166   3,087 
Loss on extinguishment of debt -   1,440   -   1,440 
Adjusted EBITDA (3)$24,070  $40,706  $41,162  $52,862 
        
Interest incurred$41,383  $40,014  $80,236  $81,179 
        
Adjusted EBITDA to interest incurred 0.58   1.02   0.51   0.65 
        
        
        
(1)  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.
(2)  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.
(3)  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 loss on extinguishment of debt.
        
        
Hovnanian Enterprises, Inc.
April 30, 2019
Interest incurred, expensed and capitalized
(In thousands)
 Three Months Ended Six Months Ended
 April 30, April 30,
  2019   2018   2019   2018 
                
 (Unaudited) (Unaudited)
Interest capitalized at beginning of period$74,455  $70,793  $68,117  $71,051 
Plus interest incurred 41,383   40,014   80,236   81,179 
Less interest expensed 36,561   45,452   69,076   86,875 
Interest capitalized at end of period (1)$79,277  $65,355  $79,277  $65,355 
        
(1) Capitalized interest amounts are shown gross before allocating any portion of impairments to capitalized interest.

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In Thousands)

 April 30,2019  October 31,2018
 (Unaudited)  (1) 
ASSETS    
Homebuilding:    
Cash and cash equivalents$123,998  $187,871 
Restricted cash and cash equivalents 17,223  12,808 
Inventories:    
Sold and unsold homes and lots under development 993,477  878,876 
Land and land options held for future development or sale 120,146  111,368 
Consolidated inventory not owned 154,435  87,921 
Total inventories 1,268,058  1,078,165 
Investments in and advances to unconsolidated joint ventures 135,562  123,694 
Receivables, deposits and notes, net 29,154  35,189 
Property, plant and equipment, net 20,307  20,285 
Prepaid expenses and other assets 41,058  39,150 
Total homebuilding 1,635,360  1,497,162 
     
Financial services 119,912  164,880 
Total assets$1,755,272  $1,662,042 
     
LIABILITIES AND EQUITY    
Homebuilding:    
Nonrecourse mortgages secured by inventory, net of debt issuance costs$190,655  $95,557 
Accounts payable and other liabilities 285,293  304,899 
Customers’ deposits 37,953  30,086 
Liabilities from inventory not owned, net of debt issuance costs 123,348  63,387 
Revolving and term loan credit facilities, net of debt issuance costs 201,459  201,389 
Notes payable (net of discount, premium and debt issuance costs) and accrued interest 1,298,899  1,273,446 
Total homebuilding 2,137,607  1,968,764 
     
Financial services 100,054  143,448 
Income taxes payable 2,090  3,334 
Total liabilities 2,239,751  2,115,546 
     
Equity:    
Hovnanian Enterprises, Inc. stockholders’ equity deficit:    
Preferred stock, $0.01 par value - authorized 100,000 shares; issued and outstanding 5,600shares with a liquidation preference of $140,000 at April 30, 2019 and at October 31, 2018 135,299  135,299 
Common stock, Class A, $0.01 par value – authorized 16,000,0000 shares; issued 5,786,826shares at April 30, 2019 and 5,783,858 shares at October 31, 2018 58  58 
Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) –authorized 2,400,000 shares; issued 650,457 shares at April 30, 2019 and 649,673 shares atOctober 31, 2018 6  6 
Paid in capital – common stock 711,517  710,349 
Accumulated deficit (1,216,565) (1,183,856)
Treasury stock – at cost – 470,430 shares of Class A common stock and 27,669 shares ofClass B common stock at April 30, 2019 and October 31, 2018 (115,360) (115,360)
Total Hovnanian Enterprises, Inc. stockholders’ equity deficit (485,045) (453,504)
Noncontrolling interest in consolidated joint ventures 566  - 
Total equity deficit (484,479) (453,504)
Total liabilities and equity$1,755,272  $1,662,042 

  (1)  Derived from the audited balance sheet as of October 31, 2018

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In Thousands Except Per Share Data)(Unaudited)

  Three Months Ended April 30,  Six Months Ended April 30, 
  2019  2018  2019  2018 
Revenues:                
Homebuilding:                
Sale of homes  $427,552   $468,117   $789,687   $869,694 
Land sales and other revenues  832   21,373   9,683   26,074 
Total homebuilding  428,384   489,490   799,370   895,768 
Financial services  12,307   13,054   21,915   23,942 
Total revenues  440,691   502,544   821,285   919,710 
                 
Expenses:                
Homebuilding:                
Cost of sales, excluding interest  355,477   393,012   660,404   722,539 
Cost of sales interest  13,898   19,364   24,140   31,656 
Inventory impairment loss and land option write-offs  1,462   2,673   2,166   3,087 
Total cost of sales  370,837   415,049   686,710   757,282 
Selling, general and administrative  44,179   45,544   86,915   88,775 
Total homebuilding expenses  415,016   460,593   773,625   846,057 
                 
Financial services  8,678   8,798   17,152   17,139 
Corporate general and administrative  16,169   16,144   33,833   35,279 
Other interest  22,663   26,088   44,936   55,219 
Other operations  329   402   571   792 
Total expenses  462,855   512,025   870,117   954,486 
Loss on extinguishment of debt  -   (1,440)  -   (1,440)
Income (loss) from unconsolidated joint ventures  7,252   1,343   16,814   (3,833)
Loss before income taxes  (14,912)  (9,578)  (32,018)  (40,049)
State and federal income tax provision:                
State  345   245   691   583 
Federal  -   -   -   - 
Total income taxes  345   245   691   583 
Net (loss)  $(15,257  $(9,823  $(32,709  $(40,632)
                 
Per share data:                
Basic and assuming dilution:                
Net (loss) per common share  $(2.56  $(1.65)  $(5.49)  $(6.85)
Weighted-average number of common shares outstanding  5,962   5,937   5,960   5,929 

             

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)
(UNAUDITED)
     Three Months - April 30, 2019   
  Contracts (1)DeliveriesContract
  Three Months EndedThree Months EndedBacklog
  April 30,April 30,April 30,
   2019 2018% Change 2019 2018% Change 2019 2018% Change
 Northeast          
 (NJ, PA)Home 104 26300.0% 23 47(51.1)% 162 8395.2%
 Dollars$62,580$15,278309.6%$13,040$23,513(44.5)%$102,481$48,715110.4%
 Avg. Price$601,731$587,6152.4%$566,957$500,27713.3%$632,599$586,9287.8%
 Mid-Atlantic           
 (DE, MD, VA, WV)Home 199 212(6.1)% 142 206(31.1)% 393 32421.3%
 Dollars$118,245$117,3990.7%$80,818$104,058(22.3)%$246,307$199,27923.6%
 Avg. Price$594,196$553,7667.3%$569,141$505,13912.7%$626,735$615,0591.9%
 Midwest          
 (IL, OH) Home 235 2206.8% 141 143(1.4)% 466 484(3.7)%
 Dollars$68,744$67,3082.1%$42,870$42,8160.1%$125,181$132,360(5.4)%
 Avg. Price$292,528$305,943(4.4)%$304,035$299,4151.5%$268,629$273,472(1.8)%
 Southeast          
 (FL, GA, SC) Home 155 1540.6% 123 158(22.2)% 270 276(2.2)%
 Dollars$64,772$62,7413.2%$49,346$60,974(19.1)%$120,140$115,9303.6%
 Avg. Price$417,884$407,4042.6%$401,187$385,9084.0%$444,963$420,0375.9%
 Southwest          
 (AZ, TX)Home 559 587(4.8)% 431 466(7.5)% 648 657(1.4)%
 Dollars$192,630$198,487(3.0)%$143,634$158,958(9.6)%$227,325$230,600(1.4)%
 Avg. Price$344,597$338,1371.9%$333,258$341,112(2.3)%$350,810$350,989(0.1)%
 West            
 (CA)Home 294 20543.4% 225 19515.4% 315 369(14.6)%
 Dollars$120,616$93,21329.4%$97,844$77,79825.8%$128,422$173,794(26.1)%
 Avg. Price$410,259$454,697(9.8)%$434,862$398,9629.0%$407,689$470,986(13.4)%
 Consolidated          
 TotalHome 1,546 1,40410.1% 1,085 1,215(10.7)% 2,254 2,1932.8%
 Dollars$627,587$554,42613.2%$427,552$468,117(8.7)%$949,856$900,6785.5%
 Avg. Price$405,942$394,8892.8%$394,057$385,2812.3%$421,409$410,7062.6%
 Unconsolidated          
 Joint Ventures (2)Home 229 302(24.2)% 195 208(6.3)% 382 636(39.9)%
 Dollars$131,282$178,973(26.6)%$124,776$96,29629.6% 228,730$436,715(47.6)%
 Avg. Price$573,284$592,630(3.3)%$639,877$462,96438.2%$598,770$686,659(12.8)%
 Grand          
 TotalHome 1,775 1,7064.0% 1,280 1,423(10.0)% 2,636 2,829(6.8)%
 Dollars$758,869$733,3993.5%$552,328$564,413(2.1)%$1,178,586$1,337,393(11.9)%
 Avg. Price$427,532$429,894(0.5)%$431,505$396,6368.8%$447,112$472,744(5.4)%
           
DELIVERIES INCLUDE EXTRAS
Notes:
(1) Contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.(2) Represents home deliveries, home revenues and average prices for our unconsolidated homebuilding joint ventures for the period. We provide this data as a supplement to our consolidated results as an indicator of the volume managed in our unconsolidated homebuilding joint ventures. Our proportionate share of the income or loss of unconsolidated homebuilding and land development joint ventures is reflected as a separate line item in our consolidated financial statements under “Income (loss) from unconsolidated joint ventures”.

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)
(UNAUDITED)
     Six Months - April 30, 2019   
  Contracts (1)DeliveriesContract
  Six Months EndedSix Months EndingBacklog
  April 30,April 30,April 30,
   2019 2018% Change 2019 2018% Change 2019 2018% Change
 Northeast          
 (NJ, PA)Home 156 72116.7% 45 87(48.3)% 162 8395.2%
 Dollars$97,530$40,641140.0%$25,545$43,705(41.6)%$102,481$48,715110.4%
 Avg. Price$625,192$564,45910.8%$567,667$502,35413.0%$632,599$586,9287.8%
 Mid-Atlantic           
 (DE, MD, VA, WV)Home 350 3373.9% 253 341(25.8)% 393 32421.3%
 Dollars$199,759$180,61210.6%$133,997$175,067(23.5)%$246,307$199,27923.6%
 Avg. Price$570,740$535,9396.5%$529,632$513,3933.2%$626,735$615,0591.9%
 Midwest          
 (IL, OH) Home 362 385(6.0)% 290 2832.5% 466 484(3.7)%
 Dollars$105,790$116,724(9.4)%$87,759$83,3335.3%$125,181$132,360(5.4)%
 Avg. Price$292,238$303,179(3.6)%$302,617$294,4632.8%$268,629$273,472(1.8)%
 Southeast          
 (FL, GA, SC) Home 250 281(11.0)% 231 290(20.3)% 270 276(2.2)%
 Dollars$105,232$113,196(7.0)%$93,229$117,648(20.8)%$120,140$115,9303.6%
 Avg. Price$420,928$402,8314.5%$403,589$405,682(0.5)%$444,963$420,0375.9%
 Southwest          
 (AZ, TX)Home 921 998(7.7)% 796 850(6.4)% 648 657(1.4)%
 Dollars$307,968$339,945(9.4)%$261,497$287,162(8.9)%$227,325$230,600(1.4)%
 Avg. Price$334,384$340,626(1.8)%$328,514$337,838(2.8)%$350,810$350,989(0.1)%
 West            
 (CA)Home 441 35823.2 437 38912.3% 315 369(14.6)%
 Dollars$177,634$162,6109.2$187,660$162,77915.3%$128,422$173,794(26.1)%
 Avg. Price$402,798$454,218(11.3)%$429,428$418,4542.6%$407,689$470,986(13.4)%
 Consolidated          
 TotalHome 2,480 2,4312.0% 2,052 2,240(8.4)% 2,254 2,1932.8%
 Dollars$993,913$953,7284.2%$789,687$869,694(9.2)%$949,856$900,6785.5%
 Avg. Price$400,771$392,3192.2%$384,838$388,256(0.9)%$421,409$410,7062.6%
 Unconsolidated          
 Joint Ventures (2)Home 363 525(30.9)% 347 3247.1% 382 636(39.9)%
 Dollars$216,851$316,194(31.4)%$219,803$154,39542.4%$228,730$436,715(47.6)%
 Avg. Price$597,386$602,276(0.8)%$633,438$476,52932.9%$598,770$686,659(12.8)%
 Grand          
 TotalHome 2,843 2,956(3.8)% 2,399 2,564(6.4)% 2,636 2,829(6.8)%
 Dollars$1,210,764$1,269,922(4.7)%$1,009,490$1,024,089(1.4)%$1,178,586$1,337,393(11.9)%
 Avg. Price$425,875$429,608(0.9)%$420,796$399,4115.4%$447,112$472,744(5.4)%
           
DELIVERIES INCLUDE EXTRAS          
Notes:          
(1) Contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.(2) Represents home deliveries, home revenues and average prices for our unconsolidated homebuilding joint ventures for the period. We provide this data as a supplement to our consolidated results as an indicator of the volume managed in our unconsolidated homebuilding joint ventures. Our proportionate share of the income or loss of unconsolidated homebuilding and land development joint ventures is reflected as a separate line item in our consolidated financial statements under “Income (loss) from unconsolidated joint ventures”.

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA UNCONSOLIDATED JOINT VENTURES ONLY)
(UNAUDITED)
     Three Months - April 30, 2019   
  Contracts (1)DeliveriesContract
  Three Months EndedThree Months EndedBacklog
  April 30,April 30,April 30,
   2019 2018% Change 2019 2018% Change 2019 2018% Change
 Northeast          
(unconsolidated joint ventures)Home 109 137(20.4)% 77 761.3% 145 302(52.0)%
 (NJ, PA)Dollars$64,691$82,865(21.9)%$59,840$29,891100.2%$95,645$239,418(60.1)%
 Avg. Price$593,495$604,854(1.9)%$777,143$393,29897.6%$659,621$792,774(16.8)%
 Mid-Atlantic          
(unconsolidated joint ventures)Home 4 25(84.0)% 14 5180.0% 17 52(67.3)%
 (DE, MD, VA, WV)Dollars$3,606$20,337(82.3)%$10,831$4,830124.2%$14,086$42,350(66.7)%
 Avg. Price$901,250$813,48010.8%$773,643$966,000(19.9)%$828,588$814,4221.7%
 Midwest          
(unconsolidated joint ventures)Home 2 15(86.7)% 4 14(71.4)% 5 31(83.9)%
 (IL, OH) Dollars$1,354$10,532(87.1)%$2,735$8,905(69.3)%$2,862$23,413(87.8)%
 Avg. Price$677,000$702,215(3.6)%$683,750$636,0717.5%$572,400$755,280(24.2)%
 Southeast          
(unconsolidated joint ventures)Home 58 3948.7% 49 482.1% 124 9530.5%
 (FL, GA, SC) Dollars$31,519$19,63560.5%$25,985$21,21722.5%$66,292$45,83444.6%
 Avg. Price$543,431$503,4567.9%$530,306$442,02020.0%$534,613$482,46510.8%
 Southwest          
(unconsolidated joint ventures)Home 36 44(18.2)% 32 2910.3% 68 106(35.8)%
 (AZ, TX)Dollars$22,859$26,990(15.3)%$18,622$16,35713.8%$41,535$63,429(34.5)%
 Avg. Price$635,000$613,4123.5%$581,938$564,0343.2%$610,809$598,3852.1%
 West          
(unconsolidated joint ventures)Home 20 42(52.4)% 19 36(47.2)% 23 50(54.0)%
 (CA)Dollars$7,253$18,614(61.0)%$6,763$15,096(55.2)%$8,310$22,271(62.7)%
 Avg. Price$362,650$443,190(18.2)%$355,947$419,333(15.1)%$361,304$445,418(18.9)%
 Unconsolidated Joint Ventures (2)          
 Home 229 302(24.2)% 195 208(6.3)% 382 636(39.9)%
 Dollars$131,282$178,973(26.6)%$124,776$96,29629.6%$228,730$436,715(47.6)%
 Avg. Price$573,284$592,630(3.3)%$639,877$462,96438.2%$598,770$686,659(12.8)%
           
DELIVERIES INCLUDE EXTRAS
Notes:
(1) Contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.(2) Represents home deliveries, home revenues and average prices for our unconsolidated homebuilding joint ventures for the period. We provide this data as a supplement to our consolidated results as an indicator of the volume managed in our unconsolidated homebuilding joint ventures. Our proportionate share of the income or loss of unconsolidated homebuilding and land development joint ventures is reflected as a separate line item in our consolidated financial statements under “Income (loss) from unconsolidated joint ventures”.

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA UNCONSOLIDATED JOINT VENTURES ONLY)
(UNAUDITED)
     Six Months - April 30, 2019   
  Contracts (1)DeliveriesContract
  Six Months EndedSix Months EndedBacklog
  April 30,April 30,April 30,
   2019 2018% Change 2019 2018% Change 2019 2018% Change
 Northeast          
(unconsolidated joint ventures)Home 159 191(16.8)% 133 10625.5% 145 302(52.0)%
 (NJ, PA)Dollars$103,544$127,529(18.8)%$102,265$44,791128.3%$95,645$239,418(60.1)%
 Avg. Price$651,220$677,689(3.9)%$768,910$422,55582.0%$659,621$792,774(16.8)%
 Mid-Atlantic          
(unconsolidated joint ventures)Home 17 50(66.0)% 24 9166.7% 17 52(67.3)%
 (DE, MD, VA, WV)Dollars$14,668$40,038(63.4)%$19,420$8,798120.7%$14,086$42,350(66.7)%
 Avg. Price$862,824$800,7607.8%$809,167$977,555(17.2)%$828,588$814,4221.7%
 Midwest          
(unconsolidated joint ventures)Home 7 24(70.8)% 11 20(45.0)% 5 31(83.9)%
 (IL, OH) Dollars$3,963$16,970(76.6)%$7,176$12,275(41.5)%$2,862$23,413(87.8)%
 Avg. Price$566,143$707,083(19.9)%$652,364$613,7506.3%$572,400$755,280(24.2)%
 Southeast          
(unconsolidated joint ventures)Home 83 97(14.4)% 81 801.3% 124 9530.5%
 (FL, GA, SC) Dollars$44,611$45,706(2.4)%$41,574$36,68213.3%$66,292$45,83444.6%
 Avg. Price$537,482$471,19114.1%$513,259$458,42411.9%$534,613$482,46510.8%
 Southwest          
(unconsolidated joint ventures)Home 62 93(33.3)% 61 4438.6% 68 106(35.8)%
 (AZ, TX)Dollars$37,383$55,347(32.5)%$36,314$25,17044.3%$41,535$63,429(34.5)%
 Avg. Price$602,952$595,1301.3%$595,311$572,0424.1%$610,809$598,3852.1%
 West          
(unconsolidated joint ventures)Home 35 70(50.0)% 37 65(43.1)% 23 50(54.0)%
 (CA)Dollars$12,682$30,604(58.6)%$13,054$26,679(51.1)%$8,310$22,271(62.7)%
 Avg. Price$362,343$437,200(17.1)%$352,811$410,446(14.0)%$361,304$445,418(18.9)%
 Unconsolidated Joint Ventures (2)          
 Home 363 525(30.9)% 347 3247.1% 382 636(39.9)%
 Dollars$216,851$316,194(31.4)%$219,803$154,39542.4%$228,730$436,715(47.6)%
 Avg. Price$597,386$602,276(0.8)%$633,438$476,52932.9%$598,770$686,659(12.8)%
           
DELIVERIES INCLUDE EXTRAS
Notes:
(1) Contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.(2) Represents home deliveries, home revenues and average prices for our unconsolidated homebuilding joint ventures for the period. We provide this data as a supplement to our consolidated results as an indicator of the volume managed in our unconsolidated homebuilding joint ventures. Our proportionate share of the income or loss of unconsolidated homebuilding and land development joint ventures is reflected as a separate line item in our consolidated financial statements under “Income (loss) from unconsolidated joint ventures”.

   
Contact:J. Larry SorsbyJeffrey T. O’Keefe
 Executive Vice President & CFOVice President, Investor Relations
 732-747-7800732-747-7800
   

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