Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national
homebuilder, reported results for its fiscal first quarter ended
January 31, 2020.
RESULTS FOR THE THREE-MONTH PERIOD
ENDED JANUARY 31, 2020:
- Total revenues increased 29.8% to
$494.1 million in the first quarter of fiscal 2020, compared with
$380.6 million in the same period of the prior year.
- Homebuilding gross margin
percentage, after cost of sales interest expense and land charges,
was 12.9% for the three months ended January 31, 2020 compared with
14.8% during the same quarter a year ago.
- Homebuilding gross margin
percentage, before cost of sales interest expense and land charges,
was 17.3% during the fiscal 2020 first quarter compared with 17.8%
in last year’s first quarter.
- Total SG&A was $60.4 million,
or 12.2% of total revenues, in the fiscal 2020 first quarter
compared with $60.4 million, or 15.9% of total revenues, in the
previous year’s first quarter.
- Interest incurred (some of which
was expensed and some of which was capitalized) was $44.3 million
for the first quarter of fiscal 2020 compared with $38.9 million
during the first quarter of fiscal 2019.
- Income from unconsolidated joint
ventures was $1.5 million for the first quarter ended January 31,
2020 compared with $9.6 million in the fiscal 2019 first
quarter.
- Including a $9.5 million gain on
extinguishment of debt, loss before income taxes for the first
quarter of fiscal 2020 was $7.4 million compared with a loss of
$17.1 million in the first quarter of the prior year.
- Net loss was $9.1 million, or $1.49
per common share, for the three months ended January 31, 2020
compared with a net loss of $17.5 million, or $2.93 per common
share, in the first quarter of the previous year.
- Adjusted EBITDA increased to $30.4
million in the first quarter ended January 31, 2020 compared with
$17.1 million in the same quarter one year ago. EBITDA increased to
$37.0 million for the first quarter of fiscal 2020 compared with
$16.4 million in the same quarter of the prior year.
- Loss before income taxes excluding
land-related charges and gain on extinguishment of debt, was $14.1
million in the first quarter of fiscal 2020 compared with a loss
before these items of $16.4 million in the fiscal 2019 first
quarter.
- Consolidated contracts per
community increased 42.6% to 9.7 contracts per community for the
first quarter ended January 31, 2020 compared with 6.8 contracts
per community in last year’s first quarter. Contracts per
community, including domestic unconsolidated joint ventures(1),
increased 32.9% to 9.3 contracts per community during the first
quarter of fiscal 2020 compared with 7.0 contracts per community,
including domestic unconsolidated joint ventures, in the same
period of the prior year.
- The number of consolidated
contracts increased 41.5% to 1,322 homes, during the fiscal 2020
first quarter, compared with 934 homes in last year’s first
quarter. The number of contracts, including domestic unconsolidated
joint ventures, for the three months ended January 31, 2020,
increased 40.0% to 1,492 homes from 1,066 homes during the same
quarter a year ago.
- Due to stronger than expected
contracts, causing us to sell through communities faster than
anticipated, and after contributing four consolidated communities
to unconsolidated joint ventures, the consolidated community count
was 136 as of January 31, 2020, essentially unchanged compared with
137 communities at the end of the previous year’s first quarter. As
of the end of the first quarter of fiscal 2020, community count,
including domestic unconsolidated joint ventures, was 160
communities, up 5.3% compared with 152 communities at January 31,
2019.
- For February 2020, consolidated
contracts per community were 4.8 compared with 3.2 for the
same month one year ago. During February 2020, the number of
consolidated contracts increased 44.1% to 647 homes from 449
homes in February 2019.
- The dollar value of consolidated
contract backlog, as of January 31, 2020, increased 20.0% to $899.6
million compared with $749.8 million as of January 31, 2019. The
dollar value of contract backlog, including domestic unconsolidated
joint ventures, as of January 31, 2020, was $1.10 billion, an
increase of 13.7% compared with $971.2 million as of January 31,
2019.
- Consolidated deliveries were 1,236
homes in the fiscal 2020 first quarter a 27.8% increase compared
with 967 homes in the previous year’s first quarter. For the fiscal
2020 first quarter, deliveries, including domestic unconsolidated
joint ventures, increased 24.1% to 1,385 homes compared with 1,116
homes during the first quarter of fiscal 2019.
- The contract cancellation rate for
consolidated contracts was 19% for the first quarter ended January
31, 2020 compared with 24% in the fiscal 2019 first quarter. The
contract cancellation rate for contracts including domestic
unconsolidated joint ventures was 19% for the first quarter of
fiscal 2020 compared with 23% in the first quarter of the prior
year.
(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
JANUARY 31, 2020:
- Total liquidity at the end of the
of the first quarter of fiscal 2020 was $224.9 million.
- In the first quarter of fiscal
2020, 2,026 lots were put under option or acquired in 25
consolidated communities, which is 790 lots more than the 1,236
consolidated first quarter deliveries.
- As of January 31, 2020,
consolidated lots controlled totaled 27,701; which, based on
trailing twelve-month deliveries, equaled a 5.3 years’ supply.
COMMENTS FROM MANAGEMENT:
“Both the overall U.S. economy and the current
housing market continue to exhibit signs of strength. With more
than 40% growth in contracts and contracts per community during the
first quarter of fiscal 2020, we have seen the continuation of the
positive momentum that began in the spring selling season last
year,” stated Ara K. Hovnanian, Chairman of the Board, President
and Chief Executive Officer. “Furthermore, we are pleased that our
revenue gains have begun to catch up to the increases in contracts
that we have seen over the past six months and are also pleased
with the substantial growth we reported in EBITDA. The magnitude of
the improvement in our revenues gives us confidence that we are
making solid progress towards achieving our revenue growth goals,
which ultimately should lead to higher levels of
profitability.”
WEBCAST
INFORMATION:
Hovnanian Enterprises will webcast its fiscal
2020 first quarter financial results conference call at 11:00 a.m.
E.T. on Thursday, March 5, 2020. 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. Hovnanian® 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 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.
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 and gain 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 and gain on extinguishment of debt
to (loss) before income taxes is presented in a table attached to
this earnings release.
Total liquidity is comprised of $81.4
million of cash and cash equivalents, $18.5 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 January 31, 2020.
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 including due to changes
in trade policies, such as the imposition of tariffs and duties on
homebuilding materials and products, and related trade disputes
with and retaliatory measures taken by other countries; (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)
increases in cancellations of agreements of sale; (13) fluctuations
in interest rates and the availability of mortgage financing; (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 homebuilding, 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) geopolitical
risks, terrorist acts and other acts of war; (24) diseases,
pandemics or other severe public health events; (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, 2019 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, 2020 |
Statements of
consolidated operations |
(In thousands,
except per share data) |
|
|
|
Three Months Ended |
|
January 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Total revenues |
$494,056 |
|
|
$380,594 |
|
Costs and expenses (1) |
|
512,488 |
|
|
|
407,262 |
|
Gain on extinguishment of
debt |
|
9,456 |
|
|
|
- |
|
Income from unconsolidated
joint ventures |
|
1,540 |
|
|
|
9,562 |
|
(Loss) before income
taxes |
|
(7,436 |
) |
|
|
(17,106 |
) |
Income tax provision |
|
1,712 |
|
|
|
346 |
|
Net (loss) |
$(9,148 |
) |
|
$(17,452 |
) |
|
|
|
|
Per share data: |
|
|
|
Basic and assuming
dilution: |
|
|
|
Net (loss) per common share |
$(1.49 |
) |
|
$(2.93 |
) |
Weighted average number of |
|
|
|
common shares outstanding (2) |
|
6,161 |
|
|
|
5,958 |
|
|
|
|
|
(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. |
January
31, 2020 |
Reconciliation of
(loss) before income taxes excluding land-related charges and gain
on extinguishment of debt to (loss) before income taxes |
(In
thousands) |
|
Three Months Ended |
|
January 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
(Loss) before income
taxes |
$(7,436 |
) |
|
$(17,106 |
) |
Inventory impairment loss and
land option write-offs |
|
2,828 |
|
|
|
704 |
|
Gain on extinguishment of
debt |
|
(9,456 |
) |
|
|
- |
|
(Loss) before income taxes
excluding land-related charges and gain on extinguishment of debt
(1) |
$(14,064 |
) |
|
$(16,402 |
) |
|
|
|
|
(1) (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 (loss) before income
taxes. |
Hovnanian
Enterprises, Inc. |
January
31, 2020 |
Gross margin |
(In
thousands) |
|
|
Homebuilding Gross Margin |
|
Three Months Ended |
|
January 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Sale of homes |
$479,233 |
|
|
$362,135 |
|
Cost of sales, excluding
interest expense and land charges (1) |
|
396,318 |
|
|
|
297,570 |
|
Homebuilding gross margin,
before cost of sales interest expense and land charges (2) |
|
82,915 |
|
|
|
64,565 |
|
Cost of sales interest
expense, excluding land sales interest expense |
|
18,136 |
|
|
|
10,242 |
|
Homebuilding gross margin,
after cost of sales interest expense, before land charges (2) |
|
64,779 |
|
|
|
54,323 |
|
Land charges |
|
2,828 |
|
|
|
704 |
|
Homebuilding gross margin |
$61,951 |
|
|
$53,619 |
|
|
|
|
|
Gross margin percentage |
|
12.9% |
|
|
|
14.8% |
|
Gross margin percentage,
before cost of sales interest expense and land charges (2) |
|
17.3% |
|
|
|
17.8% |
|
Gross margin percentage, after
cost of sales interest expense, before land charges (2) |
|
13.5% |
|
|
|
15.0% |
|
|
|
|
|
|
|
|
Land Sales Gross Margin |
|
Three Months Ended |
|
January 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Land and lot sales |
$25 |
|
|
$7,508 |
|
Land and lot sales cost of
sales, excluding interest and land charges (1) |
|
37 |
|
|
|
7,357 |
|
Land and lot sales gross
margin, excluding interest and land charges |
|
(12 |
) |
|
|
151 |
|
Land and lot sales
interest |
|
- |
|
|
|
- |
|
Land and lot sales gross
margin, including interest and excluding land charges |
$(12 |
) |
|
$151 |
|
|
|
|
|
(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. |
January
31, 2020 |
Reconciliation of
adjusted EBITDA to net (loss) |
(In
thousands) |
|
Three Months Ended |
|
January 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Net (loss) |
$(9,148 |
) |
|
$(17,452 |
) |
Income tax provision |
|
1,712 |
|
|
|
346 |
|
Interest expense |
|
43,139 |
|
|
|
32,515 |
|
EBIT (1) |
|
35,703 |
|
|
|
15,409 |
|
Depreciation and
amortization |
|
1,279 |
|
|
|
979 |
|
EBITDA (2) |
|
36,982 |
|
|
|
16,388 |
|
Inventory impairment loss and
land option write-offs |
|
2,828 |
|
|
|
704 |
|
Gain on extinguishment of
debt |
|
(9,456 |
) |
|
|
- |
|
Adjusted EBITDA (3) |
$30,354 |
|
|
$17,092 |
|
|
|
|
|
Interest incurred |
$44,334 |
|
|
$38,853 |
|
|
|
|
|
Adjusted EBITDA to interest
incurred |
|
0.68 |
|
|
|
0.44 |
|
|
|
|
|
(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 and 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 and amortization, inventory impairment loss and land
option write-offs and gain on extinguishment of debt. |
|
|
|
|
|
|
|
|
Hovnanian
Enterprises, Inc. |
January
31, 2020 |
Interest incurred,
expensed and capitalized |
(In
thousands) |
|
|
Three Months Ended |
|
January 31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Interest capitalized at
beginning of period |
$71,264 |
|
|
$68,117 |
|
Plus interest incurred |
|
44,334 |
|
|
|
38,853 |
|
Less interest expensed |
|
43,139 |
|
|
|
32,515 |
|
Less interest contributed to
unconsolidated joint venture (1) |
|
4,580 |
|
|
|
- |
|
Interest capitalized at end of
period (2) |
$67,879 |
|
|
$74,455 |
|
|
|
|
|
(1) Represents
capitalized interest which was included as part of the assets
contributed to the joint venture the Company entered into in
December 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)
|
January 31, |
|
October 31, |
|
|
2020 |
|
|
|
2019 |
|
|
(Unaudited) |
|
|
(1) |
|
ASSETS |
|
|
|
|
Homebuilding: |
|
|
|
|
Cash and cash equivalents |
$81,396 |
|
|
$130,976 |
|
Restricted cash and cash equivalents |
|
19,878 |
|
|
|
20,905 |
|
Inventories: |
|
|
|
|
Sold and unsold homes and lots under development |
|
1,009,098 |
|
|
|
993,647 |
|
Land and land options held for future development or sale |
|
81,402 |
|
|
|
108,565 |
|
Consolidated inventory not owned |
|
205,215 |
|
|
|
190,273 |
|
Total inventories |
|
1,295,715 |
|
|
|
1,292,485 |
|
Investments in and advances to unconsolidated joint ventures |
|
135,331 |
|
|
|
127,038 |
|
Receivables, deposits and notes, net |
|
49,188 |
|
|
|
44,914 |
|
Property, plant and equipment, net |
|
19,654 |
|
|
|
20,127 |
|
Prepaid expenses and other assets |
|
71,284 |
|
|
|
45,704 |
|
Total homebuilding |
|
1,672,446 |
|
|
|
1,682,149 |
|
|
|
|
|
|
Financial services |
|
117,557 |
|
|
|
199,275 |
|
Total assets |
$1,790,003 |
|
|
$1,881,424 |
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Homebuilding: |
|
|
|
|
Nonrecourse mortgages secured by inventory, net of debt issuance
costs |
$205,805 |
|
|
$203,585 |
|
Accounts payable and other liabilities |
|
306,559 |
|
|
|
320,193 |
|
Customers’ deposits |
|
33,312 |
|
|
|
35,872 |
|
Liabilities from inventory not owned, net of debt issuance
costs |
|
152,235 |
|
|
|
141,033 |
|
Senior notes and credit facilities (net of discount, premium and
debt issuance costs) |
|
1,460,200 |
|
|
|
1,479,990 |
|
Accrued interest |
|
30,899 |
|
|
|
19,081 |
|
Total homebuilding |
|
2,189,010 |
|
|
|
2,199,754 |
|
|
|
|
|
|
Financial services |
|
96,057 |
|
|
|
169,145 |
|
Income taxes payable |
|
4,015 |
|
|
|
2,301 |
|
Total liabilities |
|
2,289,082 |
|
|
|
2,371,200 |
|
|
|
|
|
|
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 January 31, 2020 and October 31, 2019 |
|
135,299 |
|
|
|
135,299 |
|
Common stock, Class A, $0.01 par value – authorized 16,000,000
shares; issued 5,976,731 shares at January 31, 2020 and 5,973,727
shares at October 31, 2019 |
|
60 |
|
|
|
60 |
|
Common stock, Class B, $0.01 par value (convertible to Class A at
time of sale) – authorized 2,400,000 shares; issued 652,155 shares
at January 31, 2020 and 650,363 shares at October 31, 2019 |
|
7 |
|
|
|
7 |
|
Paid in capital – common stock |
|
715,336 |
|
|
|
715,504 |
|
Accumulated deficit |
|
(1,235,121 |
) |
|
|
(1,225,973 |
) |
Treasury stock – at cost – 470,430 shares of Class A common stock
and 27,669 shares of Class B common stock at January 31, 2020 and
October 31, 2019 |
|
(115,360 |
) |
|
|
(115,360 |
) |
Total Hovnanian Enterprises, Inc. stockholders' equity deficit |
|
(499,779 |
) |
|
|
(490,463 |
) |
Noncontrolling interest in
consolidated joint ventures |
|
700 |
|
|
|
687 |
|
Total equity deficit |
|
(499,079 |
) |
|
|
(489,776 |
) |
Total liabilities and
equity |
$1,790,003 |
|
|
$1,881,424 |
|
(1) Derived from the audited balance sheet as of October 31,
2019
HOVNANIAN ENTERPRISES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In
thousands except per share data)(Unaudited)
|
Three Months Ended January 31, |
|
|
2020 |
|
|
|
2019 |
|
Revenues: |
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
Sale of homes |
$479,233 |
|
|
$362,135 |
|
Land sales and other revenues |
|
809 |
|
|
|
8,851 |
|
Total homebuilding |
|
480,042 |
|
|
|
370,986 |
|
Financial services |
|
14,014 |
|
|
|
9,608 |
|
Total revenues |
|
494,056 |
|
|
|
380,594 |
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
Cost of sales, excluding interest |
|
396,355 |
|
|
|
304,927 |
|
Cost of sales interest |
|
18,136 |
|
|
|
10,242 |
|
Inventory impairment loss and land option write-offs |
|
2,828 |
|
|
|
704 |
|
Total cost of sales |
|
417,319 |
|
|
|
315,873 |
|
Selling, general and administrative |
|
40,674 |
|
|
|
42,736 |
|
Total homebuilding expenses |
|
457,993 |
|
|
|
358,609 |
|
|
|
|
|
|
|
Financial services |
|
9,554 |
|
|
|
8,474 |
|
Corporate general and administrative |
|
19,744 |
|
|
|
17,664 |
|
Other interest |
|
25,003 |
|
|
|
22,273 |
|
Other operations |
|
194 |
|
|
|
242 |
|
Total expenses |
|
512,488 |
|
|
|
407,262 |
|
Gain on extinguishment of
debt |
|
9,456 |
|
|
|
- |
|
Income from unconsolidated
joint ventures |
|
1,540 |
|
|
|
9,562 |
|
(Loss) before income
taxes |
|
(7,436 |
) |
|
|
(17,106 |
) |
State and federal income tax
provision: |
|
|
|
|
|
State |
|
1,712 |
|
|
|
346 |
|
Federal |
|
- |
|
|
|
- |
|
Total income taxes |
|
1,712 |
|
|
|
346 |
|
Net (loss) |
$(9,148 |
) |
|
$(17,452 |
) |
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
Basic and assuming
dilution: |
|
|
|
|
|
Net (loss) per common share |
$(1.49 |
) |
|
$(2.93 |
) |
Weighted-average number of common shares outstanding |
|
6,161 |
|
|
|
5,958 |
|
HOVNANIAN
ENTERPRISES, INC. |
(DOLLARS
IN THOUSANDS EXCEPT AVG. PRICE) |
(SEGMENT
DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES ONLY) |
(UNAUDITED) |
|
|
|
|
|
|
Three Months - January 31, 2020 |
|
|
|
|
|
Contracts (1) |
Deliveries |
Contract |
|
|
Three Months Ended |
Three Months Ended |
Backlog |
|
|
January 31, |
January 31, |
January 31, |
|
|
2020 |
2019 |
% Change |
2020 |
2019 |
% Change |
2020 |
2019 |
% Change |
Northeast |
|
|
|
|
|
|
|
|
|
|
(NJ, PA) |
Home |
63 |
52 |
21.2% |
|
81 |
22 |
268.2% |
|
134 |
81 |
65.4% |
|
|
Dollars |
$33,003 |
$34,950 |
(5.6)% |
|
$45,264 |
$12,505 |
262.0% |
|
$74,296 |
$52,941 |
40.3% |
|
|
Avg. Price |
$523,857 |
$672,115 |
(22.1)% |
|
$558,815 |
$568,409 |
(1.7)% |
|
$554,448 |
$653,593 |
(15.2)% |
|
Mid-Atlantic |
|
|
|
|
|
|
|
|
|
|
(DE, MD, VA, WV) |
Home |
183 |
151 |
21.2% |
|
155 |
111 |
39.6% |
|
350 |
336 |
4.2% |
|
|
Dollars |
$93,702 |
$81,514 |
15.0% |
|
$87,589 |
$53,179 |
64.7% |
|
$189,646 |
$208,881 |
(9.2)% |
|
|
Avg. Price |
$512,033 |
$539,828 |
(5.1)% |
|
$565,090 |
$479,090 |
18.0% |
|
$541,846 |
$621,670 |
(12.8)% |
|
Midwest |
|
|
|
|
|
|
|
|
|
|
(IL, OH) |
Home |
187 |
127 |
47.2% |
|
159 |
149 |
6.7% |
|
478 |
372 |
28.5% |
|
|
Dollars |
$58,276 |
$37,046 |
57.3% |
|
$46,392 |
$44,889 |
3.3% |
|
$134,566 |
$99,306 |
35.5% |
|
|
Avg. Price |
$311,636 |
$291,701 |
6.8% |
|
$291,774 |
$301,268 |
(3.2)% |
|
$281,519 |
$266,952 |
5.5% |
|
Southeast |
|
|
|
|
|
|
|
|
|
|
(FL, GA, SC) |
Home |
155 |
95 |
63.2% |
|
97 |
108 |
(10.2)% |
|
305 |
238 |
28.2% |
|
|
Dollars |
$67,158 |
$40,460 |
66.0% |
|
$36,680 |
$43,883 |
(16.4)% |
|
$139,505 |
$104,714 |
33.2% |
|
|
Avg. Price |
$433,277 |
$425,895 |
1.7% |
|
$378,144 |
$406,324 |
(6.9)% |
|
$457,393 |
$439,975 |
4.0% |
|
Southwest |
|
|
|
|
|
|
|
|
|
|
(AZ, TX) |
Home |
528 |
362 |
45.9% |
|
493 |
365 |
35.1% |
|
698 |
520 |
34.2% |
|
|
Dollars |
$178,433 |
$115,338 |
54.7% |
|
$163,703 |
$117,863 |
38.9% |
|
$245,627 |
$178,329 |
37.7% |
|
|
Avg. Price |
$337,941 |
$318,613 |
6.1% |
|
$332,055 |
$322,912 |
2.8% |
|
$351,901 |
$342,940 |
2.6% |
|
West |
|
|
|
|
|
|
|
|
|
|
(CA) |
Home |
206 |
147 |
40.1% |
|
251 |
212 |
18.4% |
|
256 |
246 |
4.1% |
|
|
Dollars |
$90,832 |
$57,018 |
59.3% |
|
$99,605 |
$89,816 |
10.9% |
|
$115,927 |
$105,650 |
9.7% |
|
|
Avg. Price |
$440,932 |
$387,878 |
13.7% |
|
$396,833 |
$423,660 |
(6.3)% |
|
$452,840 |
$429,472 |
5.4% |
|
Consolidated Total |
|
|
|
|
|
|
|
|
|
|
|
Home |
1,322 |
934 |
41.5% |
|
1,236 |
967 |
27.8% |
|
2,221 |
1,793 |
23.9% |
|
|
Dollars |
$521,404 |
$366,326 |
42.3% |
|
$479,233 |
$362,135 |
32.3% |
|
$899,567 |
$749,821 |
20.0% |
|
|
Avg. Price |
$394,405 |
$392,212 |
0.6% |
|
$387,729 |
$374,493 |
3.5% |
|
$405,028 |
$418,194 |
(3.1)% |
|
Unconsolidated Joint Ventures (2) |
|
|
|
|
|
|
|
|
|
|
(excluding KSA JV) |
Home |
170 |
132 |
28.8% |
|
149 |
149 |
0.0% |
|
336 |
344 |
(2.3)% |
|
|
Dollars |
$106,917 |
$84,936 |
25.9% |
|
$86,349 |
$94,231 |
(8.4)% |
|
$205,122 |
$221,386 |
(7.3)% |
|
|
Avg. Price |
$628,921 |
$643,455 |
(2.3)% |
|
$579,523 |
$632,423 |
(8.4)% |
|
$610,482 |
$643,564 |
(5.1)% |
|
Grand Total |
|
|
|
|
|
|
|
|
|
|
|
Home |
1,492 |
1,066 |
40.0% |
|
1,385 |
1,116 |
24.1% |
|
2,557 |
2,137 |
19.7% |
|
|
Dollars |
$628,321 |
$451,262 |
39.2% |
|
$565,582 |
$456,366 |
23.9% |
|
$1,104,689 |
$971,207 |
13.7% |
|
|
Avg. Price |
$421,127 |
$423,322 |
(0.5)% |
|
$408,362 |
$408,930 |
(0.1)% |
|
$432,025 |
$454,472 |
(4.9)% |
|
|
|
|
|
|
|
|
|
|
|
|
KSA JV Only |
|
|
|
|
|
|
|
|
|
|
|
Home |
95 |
2 |
4,650.0% |
|
0 |
3 |
(100.0)% |
|
297 |
4 |
7,325.0% |
|
|
Dollars |
$14,841 |
$633 |
2,244.5% |
|
$0 |
$796 |
(100.0)% |
|
$47,157 |
$837 |
5,534.1% |
|
|
Avg. Price |
$156,220 |
$316,500 |
(50.6)% |
|
$0 |
$265,374 |
(100.0)% |
|
$158,779 |
$209,333 |
(24.2)% |
|
|
|
|
|
|
|
|
|
|
|
|
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 - January 31, 2020 |
|
|
|
|
|
Net Contracts (1) |
Deliveries |
Contract |
|
|
Three Months Ended |
Three Months Ended |
Backlog |
|
|
January 31, |
January 31, |
January 31, |
|
|
2020 |
2019 |
% Change |
2020 |
2019 |
% Change |
2020 |
2019 |
% Change |
Northeast |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
57 |
48 |
18.8% |
|
50 |
53 |
(5.7)% |
|
83 |
109 |
(23.9)% |
|
(excluding KSA JV) |
Dollars |
$45,300 |
$38,220 |
18.5% |
|
$37,096 |
$41,629 |
(10.9)% |
|
$71,882 |
$89,957 |
(20.1)% |
|
(NJ, PA) |
Avg. Price |
$794,737 |
$796,250 |
(0.2)% |
|
$741,920 |
$785,453 |
(5.5)% |
|
$866,048 |
$825,294 |
4.9% |
|
Mid-Atlantic |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
17 |
13 |
30.8% |
|
12 |
10 |
20.0% |
|
47 |
27 |
74.1% |
|
(DE, MD, VA, WV) |
Dollars |
$9,265 |
$11,062 |
(16.2)% |
|
$6,180 |
$8,589 |
(28.0)% |
|
$24,061 |
$21,312 |
12.9% |
|
|
Avg. Price |
$545,000 |
$850,923 |
(36.0)% |
|
$515,000 |
$858,900 |
(40.0)% |
|
$511,936 |
$789,333 |
(35.1)% |
|
Midwest |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
6 |
5 |
20.0% |
|
4 |
7 |
(42.9)% |
|
5 |
7 |
(28.6)% |
|
(IL, OH) |
Dollars |
$2,894 |
$2,609 |
10.9% |
|
$1,710 |
$4,441 |
(61.5)% |
|
$2,469 |
$4,243 |
(41.8)% |
|
|
Avg. Price |
$482,333 |
$521,800 |
(7.6)% |
|
$427,500 |
$634,429 |
(32.6)% |
|
$493,800 |
$606,143 |
(18.5)% |
|
Southeast |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
37 |
25 |
48.0% |
|
45 |
32 |
40.6% |
|
115 |
115 |
0.0% |
|
(FL, GA, SC) |
Dollars |
$21,395 |
$13,092 |
63.4% |
|
$23,049 |
$15,589 |
47.9% |
|
$58,919 |
$60,758 |
(3.0)% |
|
|
Avg. Price |
$578,243 |
$523,680 |
10.4% |
|
$512,200 |
$487,156 |
5.1% |
|
$512,339 |
$528,330 |
(3.0)% |
|
Southwest |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
35 |
26 |
34.6% |
|
17 |
29 |
(41.4)% |
|
63 |
64 |
(1.6)% |
|
(AZ, TX) |
Dollars |
$21,798 |
$14,524 |
50.1% |
|
$10,539 |
$17,692 |
(40.4)% |
|
$39,577 |
$37,296 |
6.1% |
|
|
Avg. Price |
$622,800 |
$558,615 |
11.5% |
|
$619,941 |
$610,069 |
1.6% |
|
$628,206 |
$582,750 |
7.8% |
|
West |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
18 |
15 |
20.0% |
|
21 |
18 |
16.7% |
|
23 |
22 |
4.5% |
|
(CA) |
Dollars |
$6,265 |
$5,429 |
15.4% |
|
$7,775 |
$6,291 |
23.6% |
|
$8,214 |
$7,820 |
5.0% |
|
|
Avg. Price |
$348,056 |
$361,933 |
(3.8)% |
|
$370,238 |
$349,500 |
5.9% |
|
$357,130 |
$355,455 |
0.5% |
|
Unconsolidated Joint Ventures (2) |
|
|
|
|
|
|
|
|
|
|
(excluding KSA JV) |
Home |
170 |
132 |
28.8% |
|
149 |
149 |
0.0% |
|
336 |
344 |
(2.3)% |
|
|
Dollars |
$106,917 |
$84,936 |
25.9% |
|
$86,349 |
$94,231 |
(8.4)% |
|
$205,122 |
$221,386 |
(7.3)% |
|
|
Avg. Price |
$628,921 |
$643,455 |
(2.3)% |
|
$579,523 |
$632,423 |
(8.4)% |
|
$610,482 |
$643,564 |
(5.1)% |
|
|
|
|
|
|
|
|
|
|
|
|
KSA JV Only |
|
|
|
|
|
|
|
|
|
|
|
Home |
95 |
2 |
4,650.0% |
|
0 |
3 |
(100.0)% |
|
297 |
4 |
7,325.0% |
|
|
Dollars |
$14,841 |
$633 |
2,244.5% |
|
$0 |
$796 |
(100.0)% |
|
$47,157 |
$837 |
5,534.1% |
|
|
Avg. Price |
$156,220 |
$316,500 |
(50.6)% |
|
$0 |
$265,374 |
(100.0)% |
|
$158,779 |
$209,333 |
(24.2)% |
|
|
|
|
|
|
|
|
|
|
|
|
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 Sorsby |
Jeffrey T. O’Keefe |
|
Executive Vice President & CFO |
Vice President, Investor Relations |
|
732-747-7800 |
732-747-7800 |
|
|
|
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