HOV Hovnanian Enterprises Inc

Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal third quarter and the nine-month period ended July 31, 2019.

RESULTS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED JULY 31, 2019:

• Total revenues increased 5.5% to $482.0 million in the third quarter of fiscal 2019, compared with $456.7 million in the third quarter of fiscal 2018. For the nine months ended July 31, 2019, total revenues decreased to $1.30 billion compared with $1.38 billion in the same period during the prior fiscal year. 
• Homebuilding revenues for unconsolidated joint ventures was $121.2 million for the third quarter ended July 31, 2019, compared with $194.5 million in last year’s third quarter. During the first nine months of fiscal 2019, homebuilding revenues for unconsolidated joint ventures was $342.7 million compared with $350.0 million in the same period during the previous year. 
• Homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 14.0% for the third quarter of fiscal 2019 compared with 15.4% during the prior year’s third quarter. For the nine months ended July 31, 2019, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 14.0% compared with 14.6% last year. 
• Homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 18.4% for both the third quarter of fiscal 2019 and the third quarter of fiscal 2018. During the first nine months of fiscal 2019, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 17.7% compared with 18.0% in the same period of the previous fiscal year. 
• Total SG&A was $58.5 million, or 12.1% of total revenues, in the third quarter of fiscal 2019 compared with $53.9 million, or 11.8% of total revenues, in the same quarter one year ago. For the first nine months of fiscal 2019, total SG&A was $179.3 million, or 13.8% of total revenues, compared with $178.0 million, or 12.9% of total revenues, in the same period of the prior fiscal year. 
• Total interest expense was $41.4 million in the third quarter of fiscal 2019 compared with $38.3 million in the third quarter of fiscal 2018. Total interest expense was $110.5 million for the first nine months of fiscal 2019 compared with $125.2 million for the same period in fiscal 2018. 
• Interest incurred (some of which was expensed and some of which was capitalized) was $42.1 million for the third quarter of fiscal 2019 compared with $40.4 million in the same quarter one year ago. For the nine months ended July 31, 2019, interest incurred (some of which was expensed and some of which was capitalized) was $122.3 million compared with $121.6 million last year. 
• Income from unconsolidated joint ventures was $3.7 million for the quarter ended July 31, 2019 compared with $10.7 million in the third quarter of the previous year. For the first nine months of fiscal 2019, income from unconsolidated joint ventures was $20.6 million compared with $6.9 million in the same period a year ago. 
• Loss before income taxes for the quarter ended July 31, 2019 was $7.1 million compared with income of $0.1 million during the third quarter of fiscal 2018. For the first nine months of fiscal 2019, the loss before income taxes was $39.1 million compared with a loss of $40.0 million during same period of fiscal 2018. 
• Net loss was $7.6 million, or $1.27 per common share, in the third quarter of fiscal 2019 compared with a net loss of $1.0 million, or $0.18 per common share, during the same quarter a year ago. For the first nine months of fiscal 2019, net loss was $40.3 million, or $6.76 per common share, compared with a net loss of $41.7 million, or $7.03 per common share, in the same period during fiscal 2018. 
• Consolidated contracts per community increased 10.0% to 11.0 contracts per community for the third quarter of fiscal 2019 compared with 10.0 contracts per community in the third quarter of fiscal 2018. Contracts per community, including domestic unconsolidated joint ventures(1), increased 3.9% to 10.6 contracts per community for the quarter ended July 31, 2019 compared with 10.2 contracts per community, including domestic unconsolidated joint ventures, in last year’s third quarter. 
• The consolidated community count was 138 as of July 31, 2019. This was a 12.2% year-over-year increase from 123 communities at the end of the prior year’s third quarter. As of the end of the third quarter of fiscal 2019, community count, including domestic unconsolidated joint ventures, was 159 communities. This was a 12.0% year-over-year increase compared with 142 communities at July 31, 2018. 
• The number of consolidated contracts increased 22.6% to 1,515 homes, during the third quarter of fiscal 2019, compared with 1,236 homes during the third quarter of fiscal 2018. The number of contracts, including domestic unconsolidated joint ventures, for the third quarter ended July 31, 2019, increased 16.6% to 1,690 homes from 1,449 homes for the same quarter last year. 
• The number of consolidated contracts increased 8.9% to 3,995 homes, during the nine-month period ended July 31, 2019, compared with 3,667 homes in the same period of the previous fiscal year. During the first nine months of fiscal 2019, the number of contracts, including domestic unconsolidated joint ventures, was 4,497 homes, an increase of 3.0% from 4,368 homes during the same period in fiscal 2018. 
• For August 2019, consolidated contracts per community were 3.2 compared with 2.6 for the same month one year ago. During August 2019, the number of consolidated contracts increased 37.8% to 445 homes from 323 homes in August 2018.  
• The dollar value of consolidated contract backlog, as of July 31, 2019, increased 11.4% to $1.05 billion compared with $946.5 million as of July 31, 2018. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of July 31, 2019, was $1.28 billion, a decrease of 2.4% compared with $1.31 billion as of July 31, 2018. 
• Consolidated deliveries were 1,185 homes for the third quarter of fiscal 2019, a 3.8% increase compared with 1,142 homes during the same quarter a year ago. For the quarter ended July 31, 2019, deliveries, including domestic unconsolidated joint ventures, decreased 3.5% to 1,377 homes compared with 1,427 homes during the third quarter of fiscal 2018. 
• Consolidated deliveries were 3,237 homes in the first nine months of fiscal 2019, a 4.3% decrease compared with 3,382 homes in the same period in fiscal 2018. For the nine months ended July 31, 2019, deliveries, including domestic unconsolidated joint ventures, decreased 4.3% to 3,772 homes compared with 3,940 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 both the three months ended July 31, 2019 and the same quarter in fiscal 2018.

(1)When we refer to “Domestic Unconsolidated Joint Ventures”, we are excluding results from our single community unconsolidated joint venture in the Kingdom of Saudi Arabia (KSA).

LIQUIDITY AND INVENTORY AS OF JULY 31, 2019:

• Total liquidity at the end of the of the third quarter of fiscal 2019 was $225.1 million. 
• In the third quarter of fiscal 2019, approximately 2,100 lots were put under option or acquired in 30 communities, including unconsolidated joint ventures. 
• As of July 31, 2019, consolidated lots controlled totaled 29,821; which, based on trailing twelve-month deliveries, equaled a 6.3 years supply.

COMMENTS FROM MANAGEMENT: “During the third quarter of fiscal 2019, we continued to make progress towards our growth objectives. We achieved year-over-year growth in total revenues, contracts, community count, contracts per community and contract backlog. Further, we saw a sequential increase in our gross margin, before cost of sales interest expense and land charges, to 18.4% in the third quarter of fiscal 2019 from 16.9% in the second quarter of fiscal 2019,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “The improvements we experienced in these metrics are a solid indicator that we are moving in the right direction.” “Given our pipeline of future community openings, we expect our community count to increase in the fourth quarter of fiscal 2019. We continue to believe that our strategy of using options to control a significant majority of our lots is a strong risk mitigator should housing demand fluctuate in the future. 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 to achieve pretax profitability for the full 2019 fiscal year,” concluded Mr. Hovnanian. WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2019 third quarter financial results conference call at 11:00 a.m. E.T. on Thursday, September 5, 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 name K. HovnanianÒ Homes. Additionally, the Company’s subsidiaries, as developers of K. Hovnanian’sÒ 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) income 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) income before income taxes. The reconciliation for historical periods of (loss) income before income taxes excluding land-related charges, joint venture write-downs and loss on extinguishment of debt to (loss) income before income taxes is presented in a table attached to this earnings release.

Total liquidity is comprised of $83.6 million of cash and cash equivalents, $16.5 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 July 31, 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.
July 31, 2019
Statements of consolidated operations
(In thousands, except per share data
				Three Months Ended								Nine Months Ended
				July 31,								July 31,
					2019				2018				2019				2018
				(Unaudited)								(Unaudited)
Total revenues				$482,041					$456,712				$1,303,326				$1,376,422
Costs and expenses (1)					492,847				463,100				1,362,964				1,417,586
Loss on extinguishment of debt					-				(4,266	)			-				(5,706	)
Income from unconsolidated joint ventures					3,742				10,732				20,556				6,899
(Loss) income before income taxes					(7,064	)			78				(39,082	)			(39,971	)
Income tax provision					537				1,104				1,228				1,687
Net (loss)				$(7,601		)		$(1,026		)		$(40,310		)		$(41,658		)
Per share data:
Basic and assuming dilution:
	Net (loss) per common share			$(1.27		)		$(0.18		)		$(6.76		)		$(7.03		)
	Weighted average number of
		common shares outstanding (2)			5,971				5,947				5,964				5,935
(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.
July 31, 2019
Reconciliation of (loss) before income taxes excluding land-related charges, joint venture write-downs and loss on extinguishment of debt to (loss) income before income taxes
(In thousands)
				Three Months Ended								Nine Months Ended
				July 31,								July 31,
					2019				2018				2019				2018
				(Unaudited)								(Unaudited)
(Loss) income before income taxes				$(7,064		)		$78				$(39,082		)		$(39,971		)
Inventory impairment loss and land option write-offs					1,435				96				3,601				3,183
Unconsolidated joint venture investment write-downs					854				-				854				660
Loss on extinguishment of debt					-				4,266				-				5,706
(Loss) income before income taxes excluding land-related charges, joint venture write-downs and loss on extinguishment of debt (1)				$(4,775		)		$4,440				$(34,627		)		$(30,422		)
(1) (Loss) income 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) income before income taxes.

Hovnanian Enterprises, Inc.
July 31, 2019
Gross margin
(In thousands)
		Homebuilding Gross Margin								Homebuilding Gross Margin									Homebuilding Gross Margin
		Three Months Ended								Nine Months Ended									Three Months Ended
		July 31,								July 31,									April 30, (3)
			2019				2018				2019				2018					2019
		(Unaudited)								(Unaudited)									(Unaudited)
Sale of homes		$467,849				$442,859				$1,257,536				$1,312,553					$427,552
Cost of sales, excluding interest expense and land charges (1)			381,906				361,303				1,034,953				1,076,132					355,477
Homebuilding gross margin, before cost of sales interest expense and land charges (2)			85,943				81,556				222,583				236,421					72,075
Cost of sales interest expense, excluding land sales interest expense			18,824				13,424				42,964				41,025					13,898
Homebuilding gross margin, after cost of sales interest expense, before land charges (2)			67,119				68,132				179,619				195,396					58,177
Land charges			1,435				96				3,601				3,183					1,462
Homebuilding gross margin		$65,684				$68,036				$176,018				$192,213					$56,715
Gross margin percentage			14.0	%			15.4	%			14.0	%			14.6		%			13.3	%
Gross margin percentage, before cost of sales interest expense and land charges (2)			18.4	%			18.4	%			17.7	%			18.0		%			16.9	%
Gross margin percentage, after cost of sales interest expense, before land charges (2)			14.3	%			15.4	%			14.3	%			14.9		%			13.6	%
		Land Sales Gross Margin								Land Sales Gross Margin
		Three Months Ended								Nine Months Ended
		July 31,								July 31,
			2019				2018				2019				2018
		(Unaudited)								(Unaudited)
Land and lot sales		$542					$-			$8,050				$20,505
Land and lot cost of sales, excluding interest and land charges (1)			33				-				7,390				7,710
Land and lot sales gross margin, excluding interest and land charges			509				-				660				12,795
Land and lot sales interest			205				-				205				4,055
Land and lot sales gross margin, including interest and excluding land charges		$304					$-			$455				$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.
(3) Second quarter gross margin reconciliation included because it is referenced in the “Comments from Management” section of the press release.

Hovnanian Enterprises, Inc.
July 31, 2019
Reconciliation of adjusted EBITDA to net (loss)
(In thousands)
	Three Months Ended								Nine Months Ended
	July 31,								July 31,
		2019				2018				2019				2018
	(Unaudited)								(Unaudited)
Net (loss)	$(7,601		)		$(1,026		)		$(40,310		)		$(41,658		)
Income tax provision		537				1,104				1,228				1,687
Interest expense		41,406				38,283				110,482				125,158
EBIT (1)		34,342				38,361				71,400				85,187
Depreciation and amortization		1,004				811				2,942				2,320
EBITDA (2)		35,346				39,172				74,342				87,507
Inventory impairment loss and land option write-offs		1,435				96				3,601				3,183
Loss on extinguishment of debt		-				4,266				-				5,706
Adjusted EBITDA (3)	$36,781				$43,534				$77,943				$96,396
Interest incurred	$42,104				$40,438				$122,340				$121,617
Adjusted EBITDA to interest incurred		0.87				1.08				0.64				0.79
(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.
July 31, 2019
Interest incurred, expensed and capitalized
(In thousands)
	Three Months Ended								Nine Months Ended
	July 31,								July 31,
		2019				2018				2019				2018
	(Unaudited)								(Unaudited)
Interest capitalized at beginning of period	$79,277				$65,355				$68,117				$71,051
Plus interest incurred		42,104				40,438				122,340				121,617
Less interest expensed		41,406				38,283				110,482				125,158
Less interest contributed to unconsolidated joint venture (1)		1,978				-				1,978				-
Interest capitalized at end of period (2)	$77,997				$67,510				$77,997				$67,510
(1) Represents capitalized interest which was included as part of the assets contributed to the joint venture the company entered into in June 2019. There was no impact to the Condensed Consolidated Statement of Operations as a result of this transaction.
(2) 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)
		July 31,2019				October 31,2018
		(Unaudited)					(1)
ASSETS
Homebuilding:
Cash and cash equivalents		$83,634				$187,871
Restricted cash and cash equivalents			16,919				12,808
Inventories:
Sold and unsold homes and lots under development			1,106,100				878,876
Land and land options held for future development or sale			69,176				111,368
Consolidated inventory not owned			179,642				87,921
Total inventories			1,354,918				1,078,165
Investments in and advances to unconsolidated joint ventures			134,111				123,694
Receivables, deposits and notes, net			32,536				35,189
Property, plant and equipment, net			20,488				20,285
Prepaid expenses and other assets			43,492				39,150
Total homebuilding			1,686,098				1,497,162
Financial services			109,164				164,880
Total assets		$1,795,262				$1,662,042
LIABILITIES AND EQUITY
Homebuilding:
Nonrecourse mortgages secured by inventory, net of debt issuance costs		$207,172				$95,557
Accounts payable and other liabilities			324,984				304,899
Customers’ deposits			40,358				30,086
Liabilities from inventory not owned, net of debt issuance costs			138,441				63,387
Revolving and term loan credit facilities, net of debt issuance costs			201,493				201,389
Notes payable (net of discount, premium and debt issuance costs) and accrued interest			1,284,624				1,273,446
Total homebuilding			2,197,072				1,968,764
Financial services			89,740				143,448
Income taxes payable			1,521				3,334
Total liabilities			2,288,333				2,115,546
Equity:Hovnanian Enterprises, Inc. 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 July 31, 2019 and at October 31, 2018			135,299				135,299
Common stock, Class A, $0.01 par value - authorized 16,000,000 shares; issued 5,792,858 shares at July 31, 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 650,449 shares at July 31, 2019 and 649,673 shares at October 31, 2018			6				6
Paid in capital - common stock			710,517				710,349
Accumulated deficit			(1,224,166	)			(1,183,856	)
Treasury stock - at cost – 470,430 shares of Class A common stock and 27,669 shares of Class B common stock at July 31, 2019 and October 31, 2018			(115,360	)			(115,360	)
Total Hovnanian Enterprises, Inc. stockholders’ equity deficit			(493,646	)			(453,504	)
Noncontrolling interest in consolidated joint ventures			575				-
Total equity deficit			(493,071	)			(453,504	)
Total liabilities and equity		$1,795,262				$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 July 31,								Nine Months Ended July 31,
			2019				2018				2019				2018
Revenues:
Homebuilding:
Sale of homes		$467,849				$442,859				$1,257,536				$1,312,553
Land sales and other revenues			1,428				844				11,111				26,918
Total homebuilding			469,277				443,703				1,268,647				1,339,471
Financial services			12,764				13,009				34,679				36,951
Total revenues			482,041				456,712				1,303,326				1,376,422
Expenses:
Homebuilding:
Cost of sales, excluding interest			381,939				361,303				1,042,343				1,083,842
Cost of sales interest			19,029				13,424				43,169				45,080
Inventory impairment loss and land option write-offs			1,435				96				3,601				3,183
Total cost of sales			402,403				374,823				1,089,113				1,132,105
Selling, general and administrative			43,559				37,544				130,474				126,319
Total homebuilding expenses			445,962				412,367				1,219,587				1,258,424
Financial services			8,927				8,986				26,079				26,125
Corporate general and administrative			14,959				16,393				48,792				51,672
Other interest			22,377				24,859				67,313				80,078
Other operations			622				495				1,193				1,287
Total expenses			492,847				463,100				1,362,964				1,417,586
Loss on extinguishment of debt			-				(4,266	)			-				(5,706	)
Income from unconsolidated joint ventures			3,742				10,732				20,556				6,899
(Loss) income before income taxes			(7,064	)			78				(39,082	)			(39,971	)
State and federal income tax provision:
State			537				1,104				1,228				1,687
Federal			-				-				-				-
Total income taxes			537				1,104				1,228				1,687
Net (loss)		$(7,601		)		$(1,026		)		$(40,310		)		$(41,658		)
Per share data:
Basic and assuming dilution:
Net (loss) per common share		$(1.27		)		$(0.18		)		$(6.76		)		$(7.03		)
Weighted-average number of common shares outstanding			5,971				5,947				5,964				5,935

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)
(UNAUDITED)
								Three Months - July 31, 2019
		Contracts (1)Three Months Ended						Deliveries						Contract
								Three Months Ended						Backlog
		July 31,						July 31,						July 31,
			2019		2018	% Change			2019		2018	% Change			2019		2018	% Change
Northeast
(NJ, PA)	Home		65		32	103.1	%		35		47	(25.5	)%		192		68	182.4	%
	Dollars	$37,560		$18,045		108.1	%	$20,694	$26,701		(22.5	)%	$119,347		$40,058		197.9	%
	Avg. Price	$577,846		$563,909		2.5	%	$591,257		$568,106		4.1	%	$621,599		$589,089		5.5	%
Mid-Atlantic (3)
(DE, MD, VA, WV)	Home		197		144	36.8	%		159		144	10.4	%		402		324	24.1	%
	Dollars	$99,807		$76,324		30.8	%	$86,811		$79,593		9.1	%	$242,958		$196,011		24.0	%
	Avg. Price	$506,635		$530,032		(4.4	)%	$545,981		$552,726		(1.2	)%	$604,373		$604,973		(0.1	)%
Midwest
(IL, OH)	Home		197		143	37.8	%		158		157	0.6	%		505		470	7.4	%
	Dollars	$58,794		$43,596		34.9	%	$47,261		$45,579		3.7	%	$136,713		$130,377		4.9	%
	Avg. Price	$298,442		$304,865		(2.1	)%	$299,120		$290,313		3.0	%	$270,719		$277,397		(2.4	)%
Southeast
(FL, GA, SC)	Home		147		175	(16.0	)%		121		121	0.0	%		296		330	(10.3	)%
	Dollars	$58,648		$71,381		(17.8	)%		50,217		47,472	5.8	%	$128,571		$139,840		(8.1	)%
	Avg. Price	$398,966		$407,894		(2.2	)%	$415,017		$392,330		5.8	%	$434,361		$423,757		2.5	%
Southwest
(AZ, TX)	Home		589		518	13.7	%		449		469	(4.3	)%		788		706	11.6	%
	Dollars	$202,553		$177,174		14.3	%	$152,615		$157,406		(3.0	)%	$277,263		$250,369		10.7	%
	Avg. Price	$343,893		$342,036		0.5	%	$339,900		$335,620		1.3	%	$351,857		$354,630		(0.8	)%
West
(CA)	Home		320		224	42.9	%		263		204	28.9	%		372		389	(4.4	)%
	Dollars	$131,483		$102,183		28.7	%	$110,251		$86,108		28.0	%	$149,654		$189,868		(21.2	)%
	Avg. Price	$410,884		$456,173		(9.9	)%	$419,205		$422,099		(0.7	)%	$402,296		$488,094		(17.6	)%
Consolidated Total (3)
	Home		1,515		1,236	22.6	%		1,185		1,142	3.8	%		2,555		2,287	11.7	%
	Dollars	$588,845		$488,703		20.5	%	$467,849		$442,859		5.6	%	$1,054,506		$946,523		11.4	%
	Avg. Price	$388,676		$395,392		(1.7	)%	$394,809		$387,793		1.8	%	$412,723		$413,871		(0.3	)%
Unconsolidated Joint Ventures (2) (4)
(excluding KSA JV)	Home		175		213	(17.8	)%		192		285	(32.6	)%		357		543	(34.3	)%
	Dollars	$107,579		$126,887		(15.2	)%	$119,704		$191,481		(37.5	)%	$226,778		$366,777		(38.2	)%
	Avg. Price	$614,737		$595,714		3.2	%	$623,458		$671,863		(7.2	)%	$635,232		$675,464		(6.0	)%
Grand Total
(excluding KSA JV)	Home		1,690		1,449	16.6	%		1,377		1,427	(3.5	)%		2,912		2,830	2.9	%
	Dollars	$696,424		$615,590		13.1	%	$587,553		$634,340		(7.4	)%	$1,281,284		$1,313,300		(2.4	)%
	Avg. Price	$412,085		$424,838		(3.0	)%	$426,691		$444,527		(4.0	)%	$440,001		$464,064		(5.2	)%
KSA JV Only
	Home		97		2	4,750.0	%		3		11	(72.7	)%		131		12	991.7	%
	Dollars	$15,346		$308		4,882.5	%	$719		$2,315		(68.9	)%	$20,800		$3,336		523.5	%
	Avg. Price	$158,205		$154,000		2.7	%	$239,667		$210,455		13.9	%	$158,777		$278,000		(42.9	)%
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”.(3) Contract backlog as of July 31, 2019 excludes 29 homes that were sold to one of our joint ventures at the time of the joint venture formation.(4) Contract backlog as of July 31, 2019 includes 29 homes that were sold to one of our joint ventures at the time of the joint venture formation.

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)
(UNAUDITED)
								Nine Months - July 31, 2019
		Contracts (1)						Deliveries						Contract
		Nine Months Ended						Nine Months Ended						Backlog
		July 31,						July 31,						July 31,
			2019		2018	% Change			2019		2018	% Change			2019		2018	% Change
Northeast
(NJ, PA)	Home		221		104	112.5	%		80		134	(40.3	)%		192		68	182.4	%
	Dollars	$135,090		$58,686		130.2	%	$46,239		$70,406		(34.3	)%	$119,347		$40,058		197.9	%
	Avg. Price	$611,267		$564,290		8.3	%	$577,988		$525,421		10.0	%	$621,599		$589,089		5.5	%
Mid-Atlantic (3)
(DE, MD, VA, WV)	Home		547		481	13.7	%		412		485	(15.1	)%		402		324	24.1	%
	Dollars	$299,566		$256,936		16.6	%	$220,808		$254,660		(13.3	)%	$242,958		$196,011		24.0	%
	Avg. Price	$547,653		$534,170		2.5	%	$535,942		$525,071		2.1	%	$604,373		$604,973		(0.1	)%
Midwest
(IL, OH)	Home		559		528	5.9	%		448		440	1.8	%		505		470	7.4	%
	Dollars	$164,584		$160,320		2.7	%	$135,020		$128,912		4.7	%	$136,713		$130,377		4.9	%
	Avg. Price	$294,426		$303,636		(3.0	)%	$301,384		$292,982		2.9	%	$270,719		$277,397		(2.4	)%
Southeast
(FL, GA, SC)	Home		397		456	(12.9	)%		352		411	(14.4	)%		296		330	(10.3	)%
	Dollars	$163,880		$184,577		(11.2	)%	$143,446		$165,120		(13.1	)%	$128,571		$139,840		(8.1	)%
	Avg. Price	$412,796		$404,774		2.0	%	$407,517		$401,751		1.4	%	$434,361		$423,757		2.5	%
Southwest
(AZ, TX)	Home		1,510		1,516	(0.4	)%		1,245		1,319	(5.6	)%		788		706	11.6	%
	Dollars	$510,521		$517,119		(1.3	)%	$414,112		$444,568		(6.9	)%	$277,263		$250,369		10.7	%
	Avg. Price	$338,093		$341,108		(0.9	)%	$332,620		$337,049		(1.3	)%	$351,857		$354,630		(0.8	)%
West
(CA)	Home		761		582	30.8	%		700		593	18.0	%		372		389	(4.4	)%
	Dollars	$309,117		$264,793		16.7	%	$297,911		$248,887		19.7	%	$149,654		$189,868		(21.2	)%
	Avg. Price	$406,198		$454,970		(10.7	)%	$425,587		$419,708		1.4	%	$402,296		$488,094		(17.6	)%
Consolidated Total (3)
	Home		3,995		3,667	8.9	%		3,237		3,382	(4.3	)%		2,555		2,287	11.7	%
	Dollars	$1,582,758		$1,442,431		9.7	%	$1,257,536		$1,312,553		(4.2	)%	$1,054,506		$946,523		11.4	%
	Avg. Price	$396,185		$393,354		0.7	%	$388,488		$388,100		0.1	%	$412,723		$413,871		(0.3	)%
Unconsolidated Joint Ventures (2) (4)
(excluding KSA JV)	Home		502		701	(28.4	)%		535		558	(4.1	)%		357		543	(34.3	)%
	Dollars	$318,350		$436,478		(27.1	)%	$338,599		$335,828		0.8	%	$226,778		$366,777		(38.2	)%
	Avg. Price	$634,163		$622,650		1.8	%	$632,895		$601,842		5.2	%	$635,232		$675,464		(6.0	)%
Grand Total
	Home		4,497		4,368	3.0	%		3,772		3,940	(4.3	)%		2,912		2,830	2.9	%
	Dollars	$1,901,108		$1,878,909		1.2	%	$1,596,135		$1,648,381		(3.2	)%	$1,281,284		$1,313,300		(2.4	)%
	Avg. Price	$422,750		$430,153		(1.7	)%	$423,153		$418,371		1.1	%	$440,001		$464,064		(5.2	)%
KSA JV Only
	Home		133		39	241.0	%		7		62	(88.7	)%		131		12	991.7	%
	Dollars	$21,426		$6,911		210.0	%	$1,627		$12,363		(86.8	)%	$20,800		$3,336		523.5	%
	Avg. Price	$161,101		$177,216		(9.1	)%	$232,383		$199,406		16.5	%	$158,777		$278,000		(42.9	)%
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”.(3) Contract backlog as of July 31, 2019 excludes 29 homes that were sold to one of our joint ventures at the time of the joint venture formation.(4) Contract backlog as of July 31, 2019 includes 29 homes that were sold to one of our joint ventures at the time of the joint venture formation.

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA UNCONSOLIDATED JOINT VENTURES ONLY)
(UNAUDITED)
								Three Months - July 31, 2019
		Contracts (1)						Deliveries						Contract
		Three Months Ended						Three Months Ended						Backlog
		July 31,						July 31,						July 31,
			2019		2018	% Change			2019		2018	% Change			2019		2018		% Change
Northeast
(unconsolidated joint ventures)	Home		65		63	3.2	%		62		129	(51.9	)%		111		215		(48.4	)%
(excluding KSA JV)	Dollars	$52,932		$48,757		8.6	%	$49,496		$107,574		(54.0	)%	$92,909		$175,257			(47.0	)%
(NJ, PA)	Avg. Price	$814,338		$773,921		5.2	%	$798,323		$833,907		(4.3	)%	$837,018		$815,149			2.7	%
Mid-Atlantic (3)
(unconsolidated joint ventures)	Home		9		12	(25.0	)%		19		17	11.8	%		36		47		(23.4	)%
(DE, MD, VA, WV)	Dollars	$4,490		$10,626		(57.7	)%	$13,847		$13,335		3.8	%	$21,075		$39,640			(46.8	)%
	Avg. Price	$498,889		$885,500		(43.7	)%	$728,789		$784,471		(7.1	)%	$585,417		$843,404			(30.6	)%
Midwest
(unconsolidated joint ventures)	Home		5		4	25.0	%		8		16	(50.0	)%		2		19		(89.5	)%
(IL, OH)	Dollars	$2,509		$2,121		18.3	%	$4,487		$10,978		(59.1	)%	$885		$14,556			(93.9	)%
	Avg. Price	$501,800		$530,000		(5.3	)%	$560,875		$686,063		(18.2	)%	$442,500		$766,105			(42.2	)%
Southeast
(unconsolidated joint ventures)	Home		39		66	(40.9	)%		46		38	21.1	%		117		123		(4.9	)%
(FL, GA, SC)	Dollars	$20,919		$31,702		(34.0	)%	$23,064		$15,619		47.7	%	$64,147		$61,917			3.6	%
	Avg. Price	$536,385		$480,333		11.7	%	$501,391		$411,029		22.0	%	$548,265		$503,394			8.9	%
Southwest
(unconsolidated joint ventures)	Home		24		38	(36.8	)%		37		45	(17.8	)%		55		99		(44.4	)%
(AZ, TX)	Dollars	$15,072		$22,656		(33.5	)%	$21,841		$25,236		(13.5	)%	$34,764		$60,849			(42.9	)%
	Avg. Price	$628,000		$596,211		5.3	%	$590,297		$560,802		5.3	%	$632,073		$614,637			2.8	%
West
(unconsolidated joint ventures)	Home		33		30	10.0	%		20		40	(50.0	)%		36		40		(10.0	)%
(CA)	Dollars	$11,657		$11,025		5.7	%	$6,969		$18,739		(62.8	)%	$12,998		$14,558			(10.7	)%
	Avg. Price	$353,242		$367,532		(3.9	)%	$348,450		$468,475		(25.6	)%	$361,056		$363,954			(0.8	)%
Unconsolidated Joint Ventures (2) (3)
(excluding KSA JV)	Home		175		213	(17.8	)%		192		285	(32.6	)%		357		543		(34.3	)%
	Dollars	$107,579		$126,887		(15.2	)%	$119,704		$191,481		(37.5	)%	$226,778		$366,777			(38.2	)%
	Avg. Price	$614,737		$595,714		3.2	%	$623,458		$671,863		(7.2	)%	$635,232		$675,464			(6.0	)%
KSA JV Only
	Home		97		2	4,750.0	%		3		11	(72.7	)%		131		12	991.7		%
	Dollars	$15,346		$308		4,882.5	%	$719		$2,315		(68.9	)%	$20,800		$3,336		523.5		%
	Avg. Price	$158,205		$154,000		2.7	%	$239,667		$210,455		13.9	%	$158,777		$278,000		(42.9		)%
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”.(3) Contract backlog as of July 31, 2019 includes 29 homes that were sold to one of our joint ventures at the time of the joint venture formation.

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA UNCONSOLIDATED JOINT VENTURES ONLY)
(UNAUDITED)
								Nine Months - July 31, 2019
		Contracts (1)						Deliveries						Contract
		Nine Months Ended						Nine Months Ended						Backlog
		July 31,						July 31,						July 31,
			2019		2018	% Change			2019		2018	% Change			2019				2018		% Change
Northeast
(unconsolidated joint ventures)	Home		188		217	(13.4	)%		191		184	3.8	%		111				215		(48.4	)%
(excluding KSA JV)	Dollars	$150,396		$169,683		(11.4	)%	$150,853		$142,317		6.0	%	$92,909				$175,257			(47.0	)%
(NJ, PA)	Avg. Price	$799,979		$781,949		2.3	%	$789,806		$773,462		2.1	%	$837,018				$815,149			2.7	%
Mid-Atlantic (3)
(unconsolidated joint ventures)	Home		26		62	(58.1	)%		43		26	65.4	%		36				47		(23.4	)%
(DE, MD, VA, WV)	Dollars	$19,158		$50,664		(62.2	)%	$33,267		$22,133		50.3	%	$21,075				$39,640			(46.8	)%
	Avg. Price	$736,846		$817,159		(9.8	)%	$773,651		$851,272		(9.1	)%	$585,417				$843,404			(30.6	)%
Midwest
(unconsolidated joint ventures)	Home		12		28	(57.1	)%		19		36	(47.2	)%		2				19		(89.5	)%
(IL, OH)	Dollars	$6,472		$19,091		(66.1	)%	$11,663		$23,253		(49.8	)%	$885				$14,556			(93.9	)%
	Avg. Price	$539,333		$681,820		(20.9	)%	$613,842		$645,916		(5.0	)%	$442,500				$766,105			(42.2	)%
Southeast
(unconsolidated joint ventures)	Home		122		163	(25.2	)%		127		118	7.6	%		117				123		(4.9	)%
(FL, GA, SC)	Dollars	$65,530		$77,408		(15.3	)%	$64,638		$52,301		23.6	%	$64,147				$61,917			3.6	%
	Avg. Price	$537,131		$474,895		13.1	%	$508,961		$443,229		14.8	%	$548,265				$503,394			8.9	%
Southwest
(unconsolidated joint ventures)	Home		86		131	(34.4	)%		98		89	10.1	%		55				99		(44.4	)%
(AZ, TX)	Dollars	$52,455		$78,003		(32.8	)%	$58,155		$50,406		15.4	%	$34,764				$60,849			(42.9	)%
	Avg. Price	$609,942		$595,445		2.4	%	$593,418		$566,359		4.8	%	$632,073				$614,637			2.8	%
West
(unconsolidated joint ventures)	Home		68		100	(32.0	)%		57		105	(45.7	)%		36				40		(10.0	)%
(CA)	Dollars	$24,339		$41,629		(41.5	)%	$20,023		$45,418		(55.9	)%	$12,998				$14,558			(10.7	)%
	Avg. Price	$357,926		$416,295		(14.0	)%	$351,281		$432,553		(18.8	)%	$361,056				$363,954			(0.8	)%
Unconsolidated Joint Ventures (2) (3)
(excluding KSA JV)	Home		502		701	(28.4	)%		535		558	(4.1	)%		357				543		(34.3	)%
	Dollars	$318,350		$436,478		(27.1	)%	$338,599		$335,828		0.8	%	$226,778				$366,777			(38.2	)%
	Avg. Price	$634,163		$622,650		1.8	%	$632,895		$601,842		5.2	%	$635,232				$675,464			(6.0	)%
KSA JV Only
	Home		133		39	241.0	%		7		62	(88.7	)%		131		12			991.7		%
	Dollars	$21,426		$6,911		210.0	%	$1,627		$12,363		(86.8	)%	$20,800		$3,336				523.5		%
	Avg. Price	$161,101		$177,216		(9.1	)%	$232,383		$199,406		16.5	%	$158,777		$278,000				(42.9		)%
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”.(3) Contract backlog as of July 31, 2019 includes 29 homes that were sold to one of our joint ventures at the time of the joint venture formation.

Contact:	J. Larry Sorsby	Jeffrey T. O’Keefe
	Executive Vice President & CFO	Vice President, Investor Relations
	732-747-7800	732-747-7800