HOV Hovnanian Enterprises Inc

Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal second quarter and six-month period ended April 30, 2020.

RESULTS FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED APRIL 30, 2020:

• Total revenues increased 22.2% to $538.4 million in the second quarter of fiscal 2020, compared with $440.7 million in the same period of the prior year. For the six months ended April 30, 2020, total revenues increased 25.7% to $1.03 billion compared with $821.3 million in the same period during the prior fiscal year.

• Homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 14.5% for the three months ended April 30, 2020 compared with 13.3% during the same quarter a year ago. During the first half of fiscal 2020, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 13.7% compared with 14.0% during the same period last year.

• Homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 18.2% during the fiscal 2020 second quarter compared with 16.9% in last year’s second quarter. For the six months ended April 30, 2020, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 17.8% compared with 17.3% in the same period of the previous fiscal year.

• Total SG&A was $55.9 million, or 10.4% of total revenues, in the fiscal 2020 second quarter compared with $60.3 million, or 13.7% of total revenues, in the previous year’s second quarter. During the first six months of fiscal 2020, total SG&A was $116.3 million, or 11.3% of total revenues, compared with $120.7 million, or 14.7% of total revenues, in the same period of the prior fiscal year.

• Interest incurred (some of which was expensed and some of which was capitalized) was $45.3 million for the second quarter of fiscal 2020 compared with $41.4 million during the second quarter of fiscal 2019. For the six months ended April 30, 2020, interest incurred (some of which was expensed and some of which was capitalized) was $89.7 million compared with $80.2 million during the same period last year.

• Income from unconsolidated joint ventures was $6.2 million for the second quarter ended April 30, 2020 compared with $7.3 million in the fiscal 2019 second quarter. For the first half of fiscal 2020, income from unconsolidated joint ventures was $7.8 million compared with $16.8 million in the same period a year ago.

• Income before income taxes for the second quarter of fiscal 2020 was $4.2 million compared with a loss of $14.9 million in the second quarter of the prior fiscal year. For the first six months of fiscal 2020, the loss before income taxes was $3.3 million compared with a loss of $32.0 million during the same period of fiscal 2019.

• Net income was $4.1 million, or $0.63 per common share, for the three months ended April 30, 2020 compared with a net loss of $15.3 million, or $2.56 per common share, in the second quarter of the previous fiscal year. For the first six months of fiscal 2020, net loss was $5.1 million, or $0.82 per common share, compared with a net loss of $32.7 million, or $5.49 per common share, in the same period during fiscal 2019.

• EBITDA increased 125.1% to $50.9 million for the second quarter of fiscal 2020 compared with $22.6 million in the same quarter of the prior year. For the first half of fiscal 2020, EBITDA was $87.9 million, an 125.4% increase, compared with $39.0 million in the first half of fiscal 2019.

• Adjusted EBITDA increased 116.3% to $52.1 million in the second quarter ended April 30, 2020 compared with $24.1 million in the same quarter one year ago. For the six months ended April 30, 2020, adjusted EBITDA increased 100.3% to $82.4 million compared with $41.2 million for the same period in the prior fiscal year.

• Adjusted pretax income, which is income before income taxes, excluding land-related charges and loss (gain) on extinguishment of debt, improved to $5.4 million in the second quarter of fiscal 2020 compared with a loss before these items of $13.5 million in the fiscal 2019 second quarter. For the six months ended April 30, 2020, loss before income taxes, excluding land-related charges and loss (gain) on extinguishment of debt, was $8.7 million compared with a loss before these items of $29.9 million during the same period in fiscal 2019.

• Financial services income before income taxes was $4.7 million for the second quarter of fiscal 2020 compared with $3.6 million in the second quarter of fiscal 2019. For the first half of fiscal 2020, financial services income before income taxes was $9.2 million compared with $4.8 million in the same period one year ago.

• Consolidated contracts per community increased 7.6% to 11.3 contracts per community for the second quarter ended April 30, 2020 compared with 10.5 contracts per community in last year’s second quarter. Contracts per community, including domestic unconsolidated joint ventures(1), were 10.6 for both the second quarter of fiscal 2020 and the second quarter of fiscal 2019.

• The number of consolidated contracts decreased 3.8% to 1,487 homes, during the fiscal 2020 second quarter, compared with 1,546 homes in last year’s second quarter. The number of contracts, including domestic unconsolidated joint ventures, for the three months ended April 30, 2020, decreased 5.7% to 1,642 homes from 1,741 homes during the same quarter a year ago.

• For the first half of fiscal 2020, the number of consolidated contracts increased 13.3% to 2,809 homes compared with 2,480 homes in the first half of fiscal 2019. The number of contracts, including domestic unconsolidated joint ventures, for the six months ended April 30, 2020, increased 11.6% to 3,134 homes from 2,807 homes during the same period a year ago.

• Consolidated community count was 132 as of April 30, 2020, compared with 147 communities at the end of the previous year’s second quarter. The decline was primarily a result of selling at a faster than anticipated pace, delayed community openings and contributing four consolidated communities to unconsolidated joint ventures earlier this year. As of the end of the second quarter of fiscal 2020, community count, including domestic unconsolidated joint ventures, was 155 communities, compared with 164 communities at April 30, 2019.

• For May 2020, consolidated contracts per community increased 43.2% to 5.3 compared with 3.7 for the same month one year ago. During May 2020, the number of consolidated contracts increased 28.2% to 687 homes from 536 homes in May 2019.

• The dollar value of consolidated contract backlog, as of April 30, 2020, was $958.1 million compared with $949.9 million as of April 30, 2019. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of April 30, 2020, was $1.13 billion compared with $1.17 billion as of April 30, 2019.

• Consolidated deliveries were 1,325 homes in the fiscal 2020 second quarter, a 22.1% increase compared with 1,085 homes in the previous year’s second quarter. For the fiscal 2020 second quarter, deliveries, including domestic unconsolidated joint ventures, increased 18.3% to 1,513 homes compared with 1,279 homes during the second quarter of fiscal 2019.

• For the first half of fiscal 2020, consolidated deliveries increased 24.8% to 2,561 homes compared with 2,052 homes in the first six months of the previous year. For the first half of fiscal 2020, deliveries, including domestic unconsolidated joint ventures, increased 21.0% to 2,898 homes compared with 2,395 homes during the same period of fiscal 2019.

• The contract cancellation rate for consolidated contracts was 23% for the second quarter ended April 30, 2020 compared with 19% in the fiscal 2019 second quarter. The contract cancellation rate for contracts including domestic unconsolidated joint ventures was 23% for the second quarter of fiscal 2020 compared with 19% in the second 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 APRIL 30, 2020:

• Total liquidity at the end of the of the second quarter of fiscal 2020 was $247.1 million. The Revolver was fully drawn down during the quarter as a precautionary measure to maximize financial flexibility and increase the Company’s cash position.

• During the second quarter of fiscal 2020, land and land development spending was $114.4 million, an increase compared with $110.2 million in last year’s second quarter. For the six months ended April 30, 2020, land and land development spending was $232.3 million compared with $252.6 million for the same period one year ago.

• In the second quarter of fiscal 2020, 1,289 lots were put under option or acquired in 18 consolidated communities.

• As of April 30, 2020, consolidated lots controlled totaled 26,734, which, based on trailing twelve-month deliveries, equaled a 4.9 years’ supply.

COMMENTS FROM MANAGEMENT:

“In spite of the challenging effects the COVID-19 pandemic had on the last half of our second quarter, our total revenues increased 22%, our homebuilding gross margin improved 120 basis points, adjusted EBITDA increased by 116% and our adjusted pretax income was $5 million compared to a $13 million loss in the previous year’s second quarter,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “We are striving for even better performance in the future. Fortunately, our contract pace has recently been improving.”

“Notwithstanding the recent improvements in our contract pace, given the high unemployment rate and uncertainty surrounding the recovery of the overall economy, in the near term, we maintain a cautious outlook. In response to COVID-19, we are streamlining our organizational structure and reducing our workforce. We expect these steps to result in approximately $20 million in annual overhead savings beginning in fiscal 2021. As the market rebounds from the pandemic, we believe this new organizational alignment should allow us to be even more cost efficient in pursuing our growth plans and should result in a more rapid repair of our balance sheet,” concluded Mr. Hovnanian.

“Given the uncertain economic environment, early in the pandemic, we took measures to preserve our cash position by delaying certain land purchases, land development activity and beginning construction activity on some unsold homes. In light of the improved contract pace in May, we are beginning to cautiously move forward with our land and land development activities in most markets. In spite of the adverse impacts of COVID-19, we remain confident that we can pursue our long-term growth plans and still maintain our liquidity within our targeted range of $170 million to $245 million,” concluded Larry Sorsby, Executive Vice President and Chief Financial Officer.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2020 second quarter financial results conference call at 11:00 a.m. E.T. on Thursday, June 4, 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 loss (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 income (loss). The reconciliation for historical periods of EBIT, EBITDA and Adjusted EBITDA to net income (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.

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

Total liquidity is comprised of $232.8 million of cash and cash equivalents, $14.3 million of restricted cash required to collateralize letters of credit and no availability under the senior secured revolving credit facility as of April 30, 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) the material and adverse disruption, and the expected continued disruption, to our business caused by the present outbreak and worldwide spread of COVID-19 and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it; (2) changes in general and local economic, industry and business conditions and impacts of a significant homebuilding downturn; (3) adverse weather and other environmental conditions and natural disasters; (4) high leverage and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (5) availability and terms of financing to the Company; (6) the Company’s sources of liquidity; (7) changes in credit ratings; (8) the seasonality of the Company’s business; (9) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (10) 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; (11) reliance on, and the performance of, subcontractors; (12) 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; (13) increases in cancellations of agreements of sale; (14) fluctuations in interest rates and the availability of mortgage financing; (15) changes in tax laws affecting the after-tax costs of owning a home; (16) operations through unconsolidated joint ventures with third parties; (17) government regulation, including regulations concerning development of land, the homebuilding, sales and customer financing processes, tax laws and the environment; (18) legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors; (19) levels of competition; (20) successful identification and integration of acquisitions; (21) significant influence of the Company’s controlling stockholders; (22) availability of net operating loss carryforwards; (23) utility shortages and outages or rate fluctuations; (24) geopolitical risks, terrorist acts and other acts of war; (25) diseases, pandemics or other severe public health events; (26) loss of key management personnel or failure to attract qualified personnel; (27) information technology failures and data security breaches; (28) negative publicity; and (29) 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 the Company’s Quarterly Reports on Form 10-Q for the quarterly periods during fiscal 2020 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, 2020
Statements of consolidated operations
(In thousands, except per share data)
				Three Months Ended								Six Months Ended
				April 30,								April 30,
					2020				2019				2020				2019
				(Unaudited)								(Unaudited)
Total revenues				$538,351				$440,691				$1,032,407				$821,285
Costs and expenses (1)					540,219				462,855				1,052,707				870,117
(Loss) gain on extinguishment of debt					(174	)			-				9,282				-
Income from unconsolidated joint ventures					6,221				7,252				7,761				16,814
Income (loss) before income taxes					4,179				(14,912	)			(3,257	)			(32,018	)
Income tax provision					100				345				1,812				691
Net income (loss)				$4,079				$(15,257		)		$(5,069		)		$(32,709		)
Per share data:
Basic:
	Net income (loss) per common share			$0.63				$(2.56		)		$(0.82		)		$(5.49		)
	Weighted average number of
		common shares outstanding (2)			6,172				5,962				6,166				5,960
Assuming dilution:
	Net income (loss) per common share			$0.60				$(2.56		)		$(0.82		)		$(5.49		)
	Weighted average number of
		common shares outstanding (2)			6,432				5,962				6,166				5,960
(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, 2020
Reconciliation of income (loss) before income taxes excluding land-related charges and loss (gain) on extinguishment of debt to income (loss) before income taxes
(In thousands)
				Three Months Ended								Six Months Ended
				April 30,								April 30,
					2020				2019				2020				2019
				(Unaudited)								(Unaudited)
Income (loss) before income taxes				$4,179				$(14,912		)		$(3,257		)		$(32,018		)
Inventory impairment loss and land option write-offs					1,010				1,462				3,838				2,166
Loss (gain) on extinguishment of debt					174				-				(9,282	)			-
Income (loss) before income taxes excluding land-related charges and loss (gain) on extinguishment of debt (1)				$5,363				$(13,450		)		$(8,701		)		$(29,852		)
(1) Income (loss) before income taxes excluding land-related charges and loss (gain) on extinguishment of debt is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income (loss) before income taxes.

Hovnanian Enterprises, Inc.
April 30, 2020
Gross margin
(In thousands)
		Homebuilding Gross Margin								Homebuilding Gross Margin
		Three Months Ended								Six Months Ended
		April 30,								April 30,
			2020				2019				2020					2019
		(Unaudited)								(Unaudited)
Sale of homes		$523,347				$427,552				$1,002,580					$789,687
Cost of sales, excluding interest expense and land charges (1)			427,944				355,477				824,262					653,047
Homebuilding gross margin, before cost of sales interest expense and land charges (2)			95,403				72,075				178,318					136,640
Cost of sales interest expense, excluding land sales interest expense			18,537				13,898				36,673					24,140
Homebuilding gross margin, after cost of sales interest expense, before land charges (2)			76,866				58,177				141,645					112,500
Land charges			1,010				1,462				3,838					2,166
Homebuilding gross margin		$75,856				$56,715				$137,807					$110,334
Gross margin percentage			14.5	%			13.3	%			13.7		%			14.0	%
Gross margin percentage, before cost of sales interest expense and land charges (2)			18.2	%			16.9	%			17.8		%			17.3	%
Gross margin percentage, after cost of sales interest expense, before land charges (2)			14.7	%			13.6	%			14.1		%			14.2	%
		Land Sales Gross Margin								Land Sales Gross Margin
		Three Months Ended								Six Months Ended
		April 30,								April 30,
			2020				2019				2020					2019
		(Unaudited)								(Unaudited)
Land and lot sales		$50					$-			$75					$7,508
Land and lot sales cost of sales, excluding interest and land charges (1)			83				-				120					7,357
Land and lot sales gross margin, excluding interest and land charges			(33	)			-				(45		)			151
Land and lot sales interest			52				-				52					-
Land and lot sales gross margin, including interest and excluding land charges		$(85		)			$-			$(97			)		$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.
April 30, 2020
Reconciliation of adjusted EBITDA to net income (loss)
(In thousands)
	Three Months Ended								Six Months Ended
	April 30,								April 30,
		2020				2019				2020				2019
	(Unaudited)								(Unaudited)
Net income (loss)	$4,079				$(15,257		)		$(5,069	)		$(32,709		)
Income tax provision		100				345				1,812				691
Interest expense		45,458				36,561				88,597				69,076
EBIT (1)		49,637				21,649				85,340				37,058
Depreciation and amortization		1,263				959				2,542				1,938
EBITDA (2)		50,900				22,608				87,882				38,996
Inventory impairment loss and land option write-offs		1,010				1,462				3,838				2,166
Loss (gain) on extinguishment of debt		174				-				(9,282	)			-
Adjusted EBITDA (3)	$52,084				$24,070				$82,438				$41,162
Interest incurred	$45,323				$41,383				$89,657				$80,236
Adjusted EBITDA to interest incurred		1.15				0.58				0.92				0.51
(1) EBIT is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income (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 income (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 income (loss). Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation and amortization, inventory impairment loss and land option write-offs and (loss) gain on extinguishment of debt.
Hovnanian Enterprises, Inc.
April 30, 2020
Interest incurred, expensed and capitalized
(In thousands)
	Three Months Ended								Six Months Ended
	April 30,								April 30,
		2020				2019				2020				2019
	(Unaudited)								(Unaudited)
Interest capitalized at beginning of period	$67,879				$74,455				$71,264				$68,117
Plus interest incurred		45,323				41,383				89,657				80,236
Less interest expensed		45,458				36,561				88,597				69,076
Less interest contributed to unconsolidated joint venture (1)		-				-				4,580				-
Interest capitalized at end of period (2)	$67,744				$79,277				$67,744				$79,277
(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)

		April 30,				October 31,
		2020				2019
		(Unaudited)				(1)
ASSETS
Homebuilding:
Cash and cash equivalents		$232,801				$130,976
Restricted cash and cash equivalents			16,052				20,905
Inventories:
Sold and unsold homes and lots under development			1,009,313				993,647
Land and land options held for future development or sale			80,955				108,565
Consolidated inventory not owned			198,229				190,273
Total inventories			1,288,497				1,292,485
Investments in and advances to unconsolidated joint ventures			139,347				127,038
Receivables, deposits and notes, net			32,728				44,914
Property, plant and equipment, net			19,453				20,127
Prepaid expenses and other assets			65,391				45,704
Total homebuilding			1,794,269				1,682,149
Financial services			111,302				199,275
Total assets		$1,905,571				$1,881,424
LIABILITIES AND EQUITY
Homebuilding:
Nonrecourse mortgages secured by inventory, net of debt issuance costs		$211,761				$203,585
Accounts payable and other liabilities			295,927				320,193
Customers’ deposits			35,127				35,872
Liabilities from inventory not owned, net of debt issuance costs			144,536				141,033
Senior notes and credit facilities (net of discount, premium and debt issuance costs)			1,583,507				1,479,990
Accrued interest			36,452				19,081
Total homebuilding			2,307,310				2,199,754
Financial services			90,417				169,145
Income taxes payable			2,917				2,301
Total liabilities			2,400,644				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 April 30, 2020 and October 31, 2019			135,299				135,299
Common stock, Class A, $0.01 par value – authorized 16,000,000 shares; issued 5,977,601 shares at April 30, 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 652,154 shares at April 30, 2020 and 650,363 shares at October 31, 2019			7				7
Paid in capital – common stock			715,243				715,504
Accumulated deficit			(1,231,042	)			(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 April 30, 2020 and October 31, 2019			(115,360	)			(115,360	)
Total Hovnanian Enterprises, Inc. stockholders' equity deficit			(495,793	)			(490,463	)
Noncontrolling interest in consolidated joint ventures			720				687
Total equity deficit			(495,073	)			(489,776	)
Total liabilities and equity		$1,905,571				$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 EndedApril 30,								Six Months EndedApril 30,
		2020				2019				2020				2019
Revenues:
Homebuilding:
Sale of homes		$523,347				$427,552				$1,002,580				$789,687
Land sales and other revenues			643				832				1,452				9,683
Total homebuilding			523,990				428,384				1,004,032				799,370
Financial services			14,361				12,307				28,375				21,915
Total revenues			538,351				440,691				1,032,407				821,285
Expenses:
Homebuilding:
Cost of sales, excluding interest			428,027				355,477				824,382				660,404
Cost of sales interest			18,589				13,898				36,725				24,140
Inventory impairment loss and land option write-offs			1,010				1,462				3,838				2,166
Total cost of sales			447,626				370,837				864,945				686,710
Selling, general and administrative			40,605				44,179				81,279				86,915
Total homebuilding expenses			488,231				415,016				946,224				773,625
Financial services			9,630				8,678				19,184				17,152
Corporate general and administrative			15,275				16,169				35,019				33,833
Other interest			26,869				22,663				51,872				44,936
Other operations			214				329				408				571
Total expenses			540,219				462,855				1,052,707				870,117
(Loss) gain on extinguishment of debt			(174	)			-				9,282				-
Income from unconsolidated joint ventures			6,221				7,252				7,761				16,814
Income (loss) before income taxes			4,179				(14,912	)			(3,257	)			(32,018	)
State and federal income tax provision:
State			100				345				1,812				691
Federal			-				-				-				-
Total income taxes			100				345				1,812				691
Net income (loss)		$4,079				$(15,257		)		$(5,069		)		$(32,709		)
Per share data:
Basic:
Net income (loss) per common share		$0.63				$(2.56		)		$(0.82		)		$(5.49		)
Weighted-average number of common shares outstanding			6,172				5,962				6,166				5,960
Assuming dilution:
Net income (loss) per common share		$0.60				$(2.56		)		$(0.82		)		$(5.49		)
Weighted-average number of common shares outstanding			6,432				5,962				6,166				5,960

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)
(UNAUDITED)
		Contracts (1)						Deliveries						Contract
		Three Months Ended						Three Months Ended						Backlog
		April 30,						April 30,						April 30,
			2020		2019	% Change			2020		2019	% Change			2020		2019	% Change
Northeast
(NJ, PA)	Home		66		104	(36.5)%			94		23	308.7%			106		162	(34.6)%
	Dollars	$23,266		$62,580		(62.8)%		$46,791		$13,040		258.8%		$50,771		$102,481		(50.5)%
	Avg. Price	$352,515		$601,731		(41.4)%		$497,777		$566,957		(12.2)%		$478,972		$632,599		(24.3)%
Mid-Atlantic
(DE, MD, VA, WV	Home		247		199	24.1%			168		142	18.3%			429		393	9.2%
	Dollars	$128,652		$118,245		8.8%		$89,677		$80,818		11.0%		$228,622		$246,307		(7.2)%
	Avg. Price	$520,858		$594,196		(12.3)%		$533,792		$569,141		(6.2)%		$532,918		$626,735		(15.0)%
Midwest
(IL, OH)	Home		174		235	(26.0)%			184		141	30.5%			468		466	0.4%
	Dollars	$54,501		$68,744		(20.7)%		$56,543		$42,870		31.9%		$132,523		$125,181		5.9%
	Avg. Price	$313,224		$292,528		7.1%		$307,299		$304,035		1.1%		$283,169		$268,629		5.4%
Southeast
(FL, GA, SC)	Home		109		155	(29.7)%			127		123	3.3%			287		270	6.3%
	Dollars	$48,508		$64,772		(25.1)%		$56,317		$49,346		14.1%		$131,695		$120,140		9.6%
	Avg. Price	$445,028		$417,884		6.5%		$443,441		$401,187		10.5%		$458,868		$444,963		3.1%
Southwest
(AZ, TX)	Home		582		559	4.1%			515		431	19.5%			765		648	18.1%
	Dollars	$187,493		$192,630		(2.7)%		$170,485		$143,634		18.7%		$262,634		$227,325		15.5%
	Avg. Price	$322,153		$344,597		(6.5)%		$331,039		$333,258		(0.7)%		$343,312		$350,810		(2.1)%
West
(CA)	Home		309		294	5.1%			237		225	5.3%			328		315	4.1%
	Dollars	$139,418		$120,616		15.6%		$103,534		$97,844		5.8%		$151,812		$128,422		18.2%
	Avg. Price	$451,191		$410,259		10.0%		$436,852		$434,862		0.5%		$462,841		$407,689		13.5%
Consolidated Total
	Home		1,487		1,546	(3.8)%			1,325		1,085	22.1%			2,383		2,254	5.7%
	Dollars	$581,838		$627,587		(7.3)%		$523,347		$427,552		22.4%		$958,057		$949,856		0.9%
	Avg. Price	$391,282		$405,942		(3.6)%		$394,979		$394,057		0.2%		$402,038		$421,409		(4.6)%
Unconsolidated Joint Ventures (2)
(excluding KSA JV)	Home		155		195	(20.5)%			188		194	(3.1)%			303		345	(12.2)%
	Dollars	$82,890		$125,835		(34.1)%		$112,196		$124,664		(10.0)%		$175,817		$222,558		(21.0)%
	Avg. Price	$534,774		$645,308		(17.1)%		$596,787		$642,598		(7.1)%		$580,254		$645,096		(10.1)%
Grand Total
	Home		1,642		1,741	(5.7)%			1,513		1,279	18.3%			2,686		2,599	3.3%
	Dollars	$664,728		$753,422		(11.8)%		$635,543		$552,216		15.1%		$1,133,874		$1,172,414		(3.3)%
	Avg. Price	$404,828		$432,752		(6.5)%		$420,055		$431,756		(2.7)%		$422,142		$451,102		(6.4)%
KSA JV Only
	Home		284		34	735.3%			0		1	(100.0)%			581		37	1,470.3%
	Dollars	$44,393		$5,447		715.0%		$0		$112		(100.0)%		$91,551		$6,172		1,383.3%
	Avg. Price	$156,317		$160,206		(2.4)%		$0		$112,000		(100.0)%		$157,575		$166,811		(5.5)%
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 from unconsolidated joint ventures”.

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)
(UNAUDITED)
		Contracts (1)						Deliveries						Contract
		Six Months Ended						Six Months Ending						Backlog
		April 30,						April 30,						April 30,
			2020		2019	% Change			2020		2019	% Change			2020		2019	% Change
Northeast
(NJ, PA)	Home		129		156	(17.3)%			175		45	288.9%			106		162	(34.6)%
	Dollars	$56,269		$97,530		(42.3)%		$92,055		$25,545		260.4%		$50,771		$102,481		(50.5)%
	Avg. Price	$436,194		$625,192		(30.2)%		$526,029		$567,667		(7.3)%		$478,972		$632,599		(24.3)%
Mid-Atlantic
(DE, MD, VA, WV	Home		430		350	22.9%			323		253	27.7%			429		393	9.2%
	Dollars	$222,354		$199,759		11.3%		$177,266		$133,997		32.3%		$228,622		$246,307		(7.2)%
	Avg. Price	$517,102		$570,740		(9.4)%		$548,811		$529,632		3.6%		$532,918		$626,735		(15.0)%
Midwest
(IL, OH)	Home		361		362	(0.3)%			343		290	18.3%			468		466	0.4%
	Dollars	$112,777		$105,790		6.6%		$102,935		$87,759		17.3%		$132,523		$125,181		5.9%
	Avg. Price	$312,402		$292,238		6.9%		$300,102		$302,617		(0.8)%		$283,169		$268,629		5.4%
Southeast
(FL, GA, SC)	Home		264		250	5.6%			224		231	(3.0)%			287		270	6.3%
	Dollars	$115,666		$105,232		9.9%		$92,997		$93,229		(0.2)%		$131,695		$120,140		9.6%
	Avg. Price	$438,129		$420,928		4.1%		$415,165		$403,589		2.9%		$458,868		$444,963		3.1%
Southwest
(AZ, TX)	Home		1,110		921	20.5%			1,008		796	26.6%			765		648	18.1%
	Dollars	$365,926		$307,968		18.8%		$334,188		$261,497		27.8%		$262,634		$227,325		15.5%
	Avg. Price	$329,663		$334,384		(1.4)%		$331,536		$328,514		0.9%		$343,312		$350,810		(2.1)%
West
(CA)	Home		515		441	16.8%			488		437	11.7%			328		315	4.1%
	Dollars	$230,250		$177,634		29.6%		$203,139		$187,660		8.2%		$151,812		$128,422		18.2%
	Avg. Price	$447,087		$402,798		11.0%		$416,268		$429,428		(3.1)%		$462,841		$407,689		13.5%
Consolidated Total
	Home		2,809		2,480	13.3%			2,561		2,052	24.8%			2,383		2,254	5.7%
	Dollars	$1,103,242		$993,913		11.0%		$1,002,580		$789,687		27.0%		$958,057		$949,856		0.9%
	Avg. Price	$392,753		$400,771		(2.0)%		$391,480		$384,838		1.7%		$402,038		$421,409		(4.6)%
Unconsolidated Joint Ventures (2)
(excluding KSA JV)	Home		325		327	(0.6)%			337		343	(1.7)%			303		345	(12.2)%
	Dollars	$189,807		$210,770		(9.9)%		$198,545		$218,895		(9.3)%		$175,817		$222,558		(21.0)%
	Avg. Price	$584,022		$644,557		(9.4)%		$589,154		$638,178		(7.7)%		$580,254		$645,096		(10.1)%
Grand Total
	Home		3,134		2,807	11.6%			2,898		2,395	21.0%			2,686		2,599	3.3%
	Dollars	$1,293,049		$1,204,683		7.3%		$1,201,125		$1,008,582		19.1%		$1,133,874		$1,172,414		(3.3)%
	Avg. Price	$412,587		$429,171		(3.9)%		$414,467		$421,120		(1.6)%		$422,142		$451,102		(6.4)%
KSA JV Only
	Home		379		36	952.8%			0		4	(100.0)%			581		37	1,470.3%
	Dollars	$59,234		$6,081		874.1%		$0		$908		(100.0)%		$91,551		$6,172		1,383.3%
	Avg. Price	$156,290		$168,917		(7.5)%		$0		$227,000		(100.0)%		$157,575		$166,811		(5.5)%
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 from unconsolidated joint ventures”.

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA UNCONSOLIDATED JOINT VENTURES ONLY)
(UNAUDITED)
		Contracts (1)						Deliveries						Contract
		Three Months Ended						Three Months Ended						Backlog
		April 30,						April 30,						April 30,
			2020		2019	% Change			2020		2019	% Change			2020		2019	% Change
Northeast
(unconsolidated joint ventures)	Home		34		75	(54.7)%			56		76	(26.3)%			61		108	(43.5)%
(excluding KSA JV)	Dollars	$25,083		$59,244		(57.7)%		$48,259		$59,728		(19.2)%		$48,707		$89,473		(45.6)%
(NJ, PA)	Avg. Price	$737,735		$789,920		(6.6)%		$861,768		$785,895		9.7%		$798,475		$828,454		(3.6)%
Mid-Atlantic
(unconsolidated joint ventures)	Home		17		4	325.0%			19		14	35.7%			45		17	164.7%
(DE, MD, VA, WV)	Dollars	$8,609		$3,606		138.7%		$9,536		$10,831		(12.0)%		$23,133		$14,086		64.2%
	Avg. Price	$506,412		$901,250		(43.8)%		$501,895		$773,643		(35.1)%		$514,067		$828,588		(38.0)%
Midwest
(unconsolidated joint ventures)	Home		4		2	100.0%			6		4	50.0%			3		5	(40.0)%
(IL, OH)	Dollars	$1,754		$1,354		29.5%		$2,859		$2,735		4.5%		$1,363		$2,862		(52.4)%
	Avg. Price	$438,500		$677,000		(35.2)%		$476,667		$683,750		(30.3)%		$454,333		$572,400		(20.6)%
Southeast
(unconsolidated joint ventures)	Home		82		58	41.4%			60		49	22.4%			137		124	10.5%
(FL, GA, SC)	Dollars	$37,309		$31,519		18.4%		$27,678		$25,985		6.5%		$68,550		$66,292		3.4%
	Avg. Price	$454,988		$543,431		(16.3)%		$461,300		$530,306		(13.0)%		$500,365		$534,613		(6.4)%
Southwest
(unconsolidated joint ventures)	Home		10		36	(72.2)%			27		32	(15.6)%			46		68	(32.4)%
(AZ, TX)	Dollars	$7,421		$22,859		(67.5)%		$17,026		$18,622		(8.6)%		$29,973		$41,535		(27.8)%
	Avg. Price	$742,100		$635,000		16.9%		$630,593		$581,938		8.4%		$651,587		$610,809		6.7%
West
(unconsolidated joint ventures)	Home		8		20	(60.0)%			20		19	5.3%			11		23	(52.2)%
(CA)	Dollars	$2,714		$7,253		(62.6)%		$6,838		$6,763		1.1%		$4,091		$8,310		(50.8)%
	Avg. Price	$339,250		$362,650		(6.5)%		$341,900		$355,947		(3.9)%		$371,909		$361,304		2.9%
Unconsolidated Joint Ventures (2)
(excluding KSA JV)	Home		155		195	(20.5)%			188		194	(3.1)%			303		345	(12.2)%
	Dollars	$82,890		$125,835		(34.1)%		$112,196		$124,664		(10.0)%		$175,817		$222,558		(21.0)%
	Avg. Price	$534,774		$645,308		(17.1)%		$596,787		$642,598		(7.1)%		$580,254		$645,096		(10.1)%
KSA JV Only
	Home		284		34	735.3%			0		1	(100.0)%			581		37	1,470.3%
	Dollars	$44,393		$5,447		715.0%		$0		$112		(100.0)%		$91,551		$6,172		1,383.3%
	Avg. Price	$156,317		$160,206		(2.4)%		$0		$112,000		(100.0)%		$157,575		$166,811		(5.5)%
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 from unconsolidated joint ventures”.

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA UNCONSOLIDATED JOINT VENTURES ONLY)
(UNAUDITED)
		Contracts (1)						Deliveries						Contract
		Six Months Ended						Six Months Ended						Backlog
		April 30,						April 30,						April 30,
			2020		2019	% Change			2020		2019	% Change			2020		2019	% Change
Northeast
(unconsolidated joint ventures)	Home		91		123	(26.0)%			106		129	(17.8)%			61		108	(43.5)%
(excluding KSA JV)	Dollars	$70,383		$97,463		(27.8)%		$85,355		$101,357		(15.8)%		$48,707		$89,473		(45.6)%
(NJ, PA)	Avg. Price	$773,440		$792,382		(2.4)%		$805,236		$785,713		2.5%		$798,475		$828,454		(3.6)%
Mid-Atlantic
(unconsolidated joint ventures)	Home		34		17	100.0%			31		24	29.2%			45		17	164.7%
(DE, MD, VA, WV)	Dollars	$17,874		$14,668		21.9%		$15,716		$19,420		(19.1)%		$23,133		$14,086		64.2%
	Avg. Price	$525,706		$862,824		(39.1)%		$506,968		$809,167		(37.3)%		$514,067		$828,588		(38.0)%
Midwest
(unconsolidated joint ventures)	Home		10		7	42.9%			10		11	(9.1)%			3		5	(40.0)%
(IL, OH)	Dollars	$4,648		$3,963		17.3%		$4,569		$7,176		(36.3)%		$1,363		$2,862		(52.4)%
	Avg. Price	$464,800		$566,143		(17.9)%		$456,900		$652,364		(30.0)%		$454,333		$572,400		(20.6)%
Southeast
(unconsolidated joint ventures)	Home		119		83	43.4%			105		81	29.6%			137		124	10.5%
(FL, GA, SC)	Dollars	$58,704		$44,611		31.6%		$50,727		$41,574		22.0%		$68,550		$66,292		3.4%
	Avg. Price	$493,311		$537,482		(8.2)%		$483,114		$513,259		(5.9)%		$500,365		$534,613		(6.4)%
Southwest
(unconsolidated joint ventures)	Home		45		62	(27.4)%			44		61	(27.9)%			46		68	(32.4)%
(AZ, TX)	Dollars	$29,219		$37,383		(21.8)%		$27,565		$36,314		(24.1)%		$29,973		$41,535		(27.8)%
	Avg. Price	$649,311		$602,952		7.7%		$626,477		$595,311		5.2%		$651,587		$610,809		6.7%
West
(unconsolidated joint ventures)	Home		26		35	(25.7)%			41		37	10.8%			11		23	(52.2)%
(CA)	Dollars	$8,979		$12,682		(29.2)%		$14,613		$13,054		11.9%		$4,091		$8,310		(50.8)%
	Avg. Price	$345,346		$362,343		(4.7)%		$356,415		$352,811		1.0%		$371,909		$361,304		2.9%
Unconsolidated Joint Ventures (2)
(excluding KSA JV)	Home		325		327	(0.6)%			337		343	(1.7)%			303		345	(12.2)%
	Dollars	$189,807		$210,770		(9.9)%		$198,545		$218,895		(9.3)%		$175,817		$222,558		(21.0)%
	Avg. Price	$584,022		$644,557		(9.4)%		$589,154		$638,178		(7.7)%		$580,254		$645,096		(10.1)%
KSA JV Only
	Home		379		36	952.8%			0		4	(100.0)%			581		37	1,470.3%
	Dollars	$59,234		$6,081		874.1%		$0		$908		(100.0)%		$91,551		$6,172		1,383.3%
	Avg. Price	$156,290		$168,917		(7.5)%		$0		$227,000		(100.0)%		$157,575		$166,811		(5.5)%
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 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