Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal fourth quarter and year ended October 31, 2020.

RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED OCTOBER 31, 2020:

  • Total revenues were $683.4 million in the fourth quarter of fiscal 2020, compared with $713.6 million, a decrease of 4.2%, in the same period of the prior year. For the year ended October 31, 2020, total revenues increased 16.2% to $2.34 billion compared with $2.02 billion in the prior fiscal year.
  • Homebuilding gross margin percentage, after cost of sales interest expense and land charges, increased 290 basis points to 17.4% for the three months ended October 31, 2020 compared with 14.5% during the same period a year ago. During fiscal 2020, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 14.7% compared with 14.2% last year.
  • Homebuilding gross margin percentage, before cost of sales interest expense and land charges, increased 130 basis points to 20.2% during the fiscal 2020 fourth quarter compared with 18.9% in last year’s fourth quarter. For the year ended October 31, 2020, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 18.4% compared with 18.1% in the prior year.
  • Total SG&A was $65.6 million, or 9.6% of total revenues, in the fiscal 2020 fourth quarter compared with $53.9 million, or 7.6% of total revenues, in the previous year’s fourth quarter. During fiscal 2020, total SG&A was $241.8 million, or 10.3% of total revenues, compared with $233.1 million, or 11.6% of total revenues, in the prior fiscal year.
  • Total interest expense was $40.6 million for the fourth quarter of fiscal 2020 compared with $50.3 million during the fourth quarter of fiscal 2019. For the year ended October 31, 2020, total interest expense was $178.1 million compared with $160.8 million last year.
  • Income from unconsolidated joint ventures was $3.1 million for the fourth quarter ended October 31, 2020 compared with $8.4 million in the fiscal 2019 fourth quarter. For fiscal 2020, income from unconsolidated joint ventures was $16.6 million compared with $28.9 million a year ago.
  • Income before income taxes for the fourth quarter of fiscal 2020 was $42.4 million compared with a loss of $0.6 million in the fourth quarter of the prior fiscal year. For fiscal 2020, income before income taxes was $55.4 million compared with a loss of $39.7 million during fiscal 2019.
  • Adjusted pretax income, which is income before income taxes excluding land-related charges, joint venture write-downs and gain or loss on extinguishment of debt, was $45.1 million in the fourth quarter of fiscal 2020 compared with income before these items of $44.5 million in the fiscal 2019 fourth quarter. For the year ended October 31, 2020, adjusted pretax income was $50.9 million compared with income before these items of $9.9 million during fiscal 2019.
  • Net income was $40.6 million, or $5.54 per diluted common share, for the three months ended October 31, 2020 compared with a net loss of $1.8 million, or $0.30 per common share, in the fourth quarter of the previous fiscal year. For fiscal 2020, net income was $50.9 million, or $7.03 per diluted common share, compared with a net loss of $42.1 million, or $7.06 per common share, in fiscal 2019.
  • EBITDA increased 65.9% to $84.5 million for the fourth quarter of fiscal 2020 compared with $50.9 million in the same quarter of the prior year. For fiscal 2020, EBITDA increased 90.6% to $238.8 million compared with $125.3 million in fiscal 2019.
  • Financial services income before income taxes was $12.1 million for the fourth quarter of fiscal 2020, up 34.1% compared with $9.0 million in the fourth quarter of fiscal 2019. For fiscal 2020, financial services income before income taxes was $32.1 million, up 82.1% compared with $17.6 million one year ago.
  • Consolidated contracts per community increased 73.7% to 16.5 contracts per community for the fourth quarter ended October 31, 2020 compared with 9.5 contracts per community in last year’s fourth quarter. Contracts per community, including domestic unconsolidated joint ventures(1), increased 74.7% to 15.9 for the fourth quarter of fiscal 2020 compared with 9.1 for the fourth quarter of fiscal 2019.
  • The number of consolidated contracts increased 42.6% to 1,918 homes during the fiscal 2020 fourth quarter, compared with 1,345 homes in last year’s fourth quarter. The number of contracts, including domestic unconsolidated joint ventures, for the three months ended October 31, 2020, increased 44.9% to 2,143 homes from 1,479 homes during the same quarter a year ago.
  • For fiscal 2020, the number of consolidated contracts increased 30.2% to 6,953 homes compared with 5,340 homes in fiscal 2019. The number of contracts, including domestic unconsolidated joint ventures, for the year ended October 31, 2020, increased 28.7% to 7,692 homes from 5,976 homes a year ago.
  • As of the end of the fourth quarter of fiscal 2020, community count, including domestic unconsolidated joint ventures, was 135 communities, compared with 162 communities at October 31, 2019. Consolidated community count was 116 as of October 31, 2020, compared with 141 communities at the end of the previous year’s fourth quarter. The decline was primarily a result of selling out of communities at a faster than anticipated pace, 15 delayed community openings and contributing four consolidated communities to unconsolidated joint ventures earlier this year.
  • For November 2020, consolidated contracts per community increased 48.3% to 4.3 compared with 2.9 for the same month one year ago. During November 2020, the number of consolidated contracts increased 22.0% to 493 homes from 404 homes in November 2019.
  • The dollar value of consolidated contract backlog, as of October 31, 2020, increased 61.3% to $1.42 billion compared with $880.1 million as of October 31, 2019. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of October 31, 2020, increased 54.0% to $1.60 billion compared with $1.04 billion as of October 31, 2019.
  • Consolidated deliveries were 1,572 homes in the fiscal 2020 fourth quarter compared with 1,709 homes in the previous year’s fourth quarter. For the fiscal 2020 fourth quarter, deliveries, including domestic unconsolidated joint ventures, were 1,735 homes compared with 1,941 homes during the fourth quarter of fiscal 2019.
  • For fiscal 2020, consolidated deliveries increased 15.0% to 5,686 homes compared with 4,946 homes in the previous year. For fiscal 2020, deliveries, including domestic unconsolidated joint ventures, increased 12.3% to 6,414 homes compared with 5,713 homes during fiscal 2019.
  • The contract cancellation rate for consolidated contracts was 18% for the fourth quarter ended October 31, 2020 compared with 21% in the fiscal 2019 fourth quarter. The contract cancellation rate for contracts including domestic unconsolidated joint ventures was 17% for the fourth quarter of fiscal 2020 compared with 22% in the fourth 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 OCTOBER 31, 2020:

  • During the fourth quarter of fiscal 2020, land and land development spending was $229.3 million, an increase compared with $162.8 million in last year’s fourth quarter. For the year ended October 31, 2020, land and land development spending was $624.2 million compared with $562.8 million one year ago.
  • Total liquidity at the end of the fourth quarter of fiscal 2020 was $399.1 million, significantly above our targeted liquidity range of $170 million to $245 million.
  • In the fourth quarter of fiscal 2020, 2,400 lots were put under option or acquired in 28 consolidated communities.
  • As of October 31, 2020, consolidated lots controlled totaled 26,049, which, based on trailing twelve-month deliveries, equaled a 4.6 years’ supply.

COMMENTS FROM MANAGEMENT:

“We are pleased with our results for the fourth quarter of fiscal 2020. Our total revenues, gross margin percentage, adjusted EBITDA and adjusted pretax income exceeded the guidance that we gave on our third quarter conference call,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “Demand for new homes remains strong due to historically low interest rates, a limited supply of existing homes, favorable demographic trends and strong consumer demand. Starting in June, we pivoted to increasing home prices, consciously trading off a slightly lower sales pace for improved margins,” said Mr. Hovnanian.

“Looking back on the full year results, the $55 million of pretax income for fiscal 2020 was the highest level of full year profitability we achieved since fiscal 2006. Given our $1.4 billion consolidated contract backlog, more than 60% ahead of last year, we expect that fiscal 2021 will be a year when we can grow our revenues to between $2.5 and $2.7 billion, achieve more operating efficiencies and further improve our profitability,” stated Mr. Hovnanian. “We currently control all the lots needed to meet our growth expectations in fiscal 2021. Furthermore, we control almost 90% of the lots needed to meet our delivery objectives for fiscal 2022. After ending the year with $399 million of liquidity, significantly above our targeted range, our land acquisition teams remain busy securing additional land parcels to achieve our home delivery goals for fiscal 2022 and beyond,” concluded Mr. Hovnanian.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2020 fourth quarter financial results conference call at 11:00 a.m. E.T. on Wednesday, December 9, 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.

Adjusted pretax income, which is defined as income before income taxes excluding land-related charges, joint venture write-downs 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 adjusted pretax income to income (loss) before income taxes is presented in a table attached to this earnings release.

Total liquidity is comprised of $262.5 million of cash and cash equivalents, $11.6 million of restricted cash required to collateralize letters of credit and $125.0 million availability under the senior secured revolving credit facility as of October 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) the outbreak and spread of COVID-19 and the measures that 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) the seasonality of the Company’s business; (5) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (6) shortages in, and price fluctuations of, raw materials and labor, including due to changes in trade policies and the imposition of tariffs and duties on homebuilding materials and products and related trade disputes with, and retaliatory measures taken by, other countries; (7) reliance on, and the performance of, subcontractors; (8) 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; (9) increases in cancellations of agreements of sale; (10) fluctuations in interest rates and the availability of mortgage financing; (11) changes in tax laws affecting the after-tax costs of owning a home; (12) legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors; (13) levels of competition; (14) utility shortages and outages or rate fluctuations; (15) information technology failures and data security breaches; (16) negative publicity; (17) high leverage and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (18) availability and terms of financing to the Company; (19) the Company’s sources of liquidity; (20) changes in credit ratings; (21) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (22) operations through unconsolidated joint ventures with third parties; (23) significant influence of the Company’s controlling stockholders; (24) availability of net operating loss carryforwards; (25) loss of key management personnel or failure to attract qualified personnel; and (26) certain risks, uncertainties and other factors described in detail in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 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.

Hovnanian Enterprises, Inc.
October 31, 2020
Statements of consolidated operations
(In thousands, except per share data)
        Three Months Ended   Year Ended
        October 31,   October 31,
          2020       2019       2020       2019  
                                     
        (Unaudited)   (Unaudited)
Total revenues $683,358     $713,590     $2,343,901     $2,016,916  
Costs and expenses (1)   644,060       680,116       2,318,400       2,043,080  
(Loss) gain on extinguishment of debt   -       (42,436 )     13,337       (42,436 )
Income from unconsolidated joint ventures   3,146       8,376       16,565       28,932  
Income (loss) before income taxes   42,444       (586 )     55,403       (39,668 )
Income tax provision   1,810       1,221       4,475       2,449  
Net income (loss) $40,634     $(1,807 )   $50,928     $(42,117 )
 
Per share data:              
Basic:                
  Net income (loss) per common share $5.97     $(0.30 )   $7.48     $(7.06 )
  Weighted average number of              
    common shares outstanding (2)   6,221       5,982       6,189       5,968  
Assuming dilution:              
  Net income (loss) per common share $5.54     $(0.30 )   $7.03     $(7.06 )
  Weighted average number of              
    common shares outstanding (2)   6,699       5,982       6,584       5,968  
                     
(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.
October 31, 2020
Reconciliation of income before income taxes excluding land-related charges, joint venture write-downs and loss (gain) on extinguishment of debt to income (loss) before income taxes
(In thousands)
        Three Months Ended   Year Ended
        October 31,   October 31,
          2020       2019       2020       2019  
                                     
        (Unaudited)   (Unaudited)
Income (loss) before income taxes $42,444     $(586 )   $55,403     $(39,668 )
Inventory impairment loss and land option write-offs   2,611       2,687       8,813       6,288  
Unconsolidated joint venture investment write-downs   -       -       -       854  
Loss (gain) on extinguishment of debt   -       42,436       (13,337 )     42,436  
Income before income taxes excluding land-related charges, joint venture write-downs and loss (gain) on extinguishment of debt (1) $45,055     $44,537     $50,879     $9,910  
 
(1) Income before income taxes excluding land-related charges, joint venture write-downs 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.  
October 31, 2020  
Gross margin  
(In thousands)  
    Homebuilding Gross Margin   Homebuilding Gross Margin
    Three Months Ended   Year Ended
    October 31,   October 31,
      2020       2019       2020       2019  
                                 
    (Unaudited)   (Unaudited)
Sale of homes   $643,516     $692,146     $2,252,029     $1,949,682  
Cost of sales, excluding interest expense and land charges (1)     513,416       561,284       1,837,332       1,596,237  
Homebuilding gross margin, before cost of sales interest expense and land charges (2)     130,100       130,862       414,697       353,445  
Cost of sales interest expense, excluding land sales interest expense     15,707       27,556       74,174       70,520  
Homebuilding gross margin, after cost of sales interest expense, before land charges (2)     114,393       103,306       340,523       282,925  
Land charges     2,611       2,687       8,813       6,288  
Homebuilding gross margin   $111,782     $100,619     $331,710     $276,637  
                 
Homebuilding gross margin percentage     17.4 %     14.5 %     14.7 %     14.2 %
Homebuilding gross margin percentage, before cost of sales interest expense and land charges (2)     20.2 %     18.9 %     18.4 %     18.1 %
Homebuilding gross margin percentage, after cost of sales interest expense, before land charges (2)     17.8 %     14.9 %     15.1 %     14.5 %
 
    Land Sales Gross Margin   Land Sales Gross Margin
    Three Months Ended   Year Ended
    October 31,   October 31,
      2020       2019       2020       2019  
                                 
    (Unaudited)   (Unaudited)
Land and lot sales   $16,805     $1,161     $16,905     $9,211  
Land and lot sales cost of sales, excluding interest and land charges (1)     10,993       1,150       11,154       8,540  
Land and lot sales gross margin, excluding interest and land charges     5,812       11       5,751       671  
Land and lot sales interest     84       -       156       205  
Land and lot sales gross margin, including interest and excluding land charges   $5,728     $11     $5,595     $466  
 
 
(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 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.
October 31, 2020
Reconciliation of adjusted EBITDA to net income (loss)
(Dollars in thousands)
  Three Months Ended   Year Ended
  October 31,   October 31,
    2020       2019       2020       2019  
                               
  (Unaudited)   (Unaudited)
Net income (loss) $40,634     $(1,807 )   $50,928     $(42,117 )
Income tax provision   1,810       1,221       4,475       2,449  
Interest expense   40,648       50,299       178,131       160,781  
EBIT (1)   83,092       49,713       233,534       121,113  
Depreciation and amortization   1,407       1,230       5,304       4,172  
EBITDA (2)   84,499       50,943       238,838       125,285  
Inventory impairment loss and land option write-offs   2,611       2,687       8,813       6,288  
Loss (gain) on extinguishment of debt   -       42,436       (13,337 )     42,436  
Adjusted EBITDA (3) $87,110     $96,066     $234,314     $174,009  
               
Interest incurred $41,660     $43,566     $176,457     $165,906  
               
Adjusted EBITDA to interest incurred   2.09       2.21       1.33       1.05  
 
(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, amortization, inventory impairment loss and land option write-offs and loss (gain) on extinguishment of debt.
 
 
Hovnanian Enterprises, Inc.
October 31, 2020
Interest incurred, expensed and capitalized
(In thousands)
  Three Months Ended   Year Ended
  October 31,   October 31,
    2020       2019       2020       2019  
                               
  (Unaudited)   (Unaudited)
Interest capitalized at beginning of period $63,998     $77,997     $71,264     $68,117  
Plus interest incurred   41,660       43,566       176,457       165,906  
Less interest expensed   40,648       50,299       178,131       160,781  
Less interest contributed to unconsolidated joint venture (1)   -       -       4,580       1,978  
Interest capitalized at end of period (2) $65,010     $71,264     $65,010     $71,264  
 
(1) Represents capitalized interest which was included as part of the assets contributed to the joint ventures the Company entered into in December 2019 and June 2019 during the years ended October 31, 2020 and 2019, respectively. There was no impact to the Consolidated Statement of Operations as a result of these transactions.
 
(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)

  October 31,     October 31,  
(In thousands) 2020     2019  
ASSETS            
Homebuilding:            
Cash and cash equivalents $262,489       $130,976  
Restricted cash and cash equivalents 14,731       20,905  
Inventories:            
Sold and unsold homes and lots under development 921,594       993,647  
Land and land options held for future development or sale 91,957       108,565  
Consolidated inventory not owned 182,224       190,273  
Total inventories 1,195,775       1,292,485  
Investments in and advances to unconsolidated joint ventures 103,164       127,038  
Receivables, deposits and notes, net 33,686       44,914  
Property, plant and equipment, net 18,185       20,127  
Prepaid expenses and other assets 58,705       45,704  
Total homebuilding 1,686,735       1,682,149  
             
Financial services 140,607       199,275  
Total assets $1,827,342       $1,881,424  
             
LIABILITIES AND EQUITY            
Homebuilding:            
Nonrecourse mortgages secured by inventory, net of debt issuance costs $135,122     $203,585  
Accounts payable and other liabilities 359,274       320,193  
Customers’ deposits 48,286       35,872  
Liabilities from inventory not owned, net of debt issuance costs 131,204       141,033  
Senior notes and credit facilities (net of discount, premium and debt issuance costs) 1,431,110       1,479,990  
Accrued interest 35,563       19,081  
Total homebuilding 2,140,559       2,199,754  
             
Financial services 119,045       169,145  
Income taxes payable 3,832       2,301  
Total liabilities 2,263,436       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 October 31, 2020 and 2019 135,299       135,299  
Common stock, Class A, $0.01 par value - authorized 16,000,000 shares; issued 5,990,310 shares at October 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 649,886 shares at October 31, 2020 and 650,363 shares at October 31, 2019 7       7  
Paid in capital - common stock 718,110       715,504  
Accumulated deficit (1,175,045 )     (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 October 31, 2020 and 2019 (115,360 )     (115,360 )
Total Hovnanian Enterprises, Inc. stockholders’ equity deficit (436,929 )     (490,463 )
Noncontrolling interest in consolidated joint ventures 835       687  
Total equity deficit (436,094 )     (489,776 )
Total liabilities and equity $1,827,342       $1,881,424  

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

  Three Months Ended October 31,     Year Ended October 31,  
  2020     2019     2020     2019  
                             
Revenues:                            
Homebuilding:                            
Sale of homes $643,516       $692,146       $2,252,029       $1,949,682  
Land sales and other revenues   17,350         1,971         19,710         13,082  
Total homebuilding   660,866         694,117         2,271,739         1,962,764  
Financial services   22,492         19,473         72,162         54,152  
Total revenues   683,358         713,590         2,343,901         2,016,916  
                             
Expenses:                            
Homebuilding:                            
Cost of sales, excluding interest   524,409         562,434         1,848,486         1,604,777  
Cost of sales interest   15,791         27,556         74,330         70,725  
Inventory impairment loss and land option write-offs   2,611         2,687         8,813         6,288  
Total cost of sales   542,811         592,677         1,931,629         1,681,790  
Selling, general and administrative   39,374         36,310         161,261         166,784  
Total homebuilding expenses   582,185         628,987         2,092,890         1,848,574  
                             
Financial services   10,383         10,446         40,060         36,525  
Corporate general and administrative   26,213         17,572         80,553         66,364  
Other interest   24,857         22,743         103,801         90,056  
Other operations   422         368         1,096         1,561  
Total expenses   644,060         680,116         2,318,400         2,043,080  
(Loss) gain on extinguishment of debt   -         (42,436 )       13,337         (42,436 )
Income from unconsolidated joint ventures   3,146         8,376         16,565         28,932  
Income (loss) before income taxes   42,444         (586 )       55,403         (39,668 )
State and federal income tax provision:                            
State   1,810         1,221         4,475         2,449  
Federal   -         -         -         -  
Total income taxes   1,810         1,221         4,475         2,449  
Net income (loss) $40,634       $(1,807 )     $50,928       $(42,117 )
                             
Per share data:                            
Basic:                            
Net income (loss) per common share $5.97       $(0.30 )     $7.48       $(7.06 )
Weighted-average number of common shares outstanding   6,221         5,982         6,189         5,968  
Assuming dilution:                            
Net income (loss) per common share $5.54       $(0.30 )     $7.03       $(7.06 )
Weighted-average number of common shares outstanding   6,699         5,982         6,584         5,968  

 

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
    October 31, October 31, October 31,
      2020   2019 % Change   2020   2019 % Change   2020   2019 % Change
Northeast                    
(NJ, PA) Home   95   72 31.9%     78   112 (30.4)%     130   152 (14.5)%  
  Dollars $63,326 $37,860 67.3%   $42,218 $70,650 (40.2)%   $82,111 $86,557 (5.1)%  
  Avg. Price $666,589 $525,833 26.8%   $541,256 $630,804 (14.2)%   $631,623 $569,454 10.9%  
Mid-Atlantic                    
(DE, MD, VA, WV) Home   253   181 39.8%     219   240 (8.8)%     557   343 62.4%  
  Dollars $135,364 $86,296 56.9%   $114,221 $135,866 (15.9)%   $291,115 $193,387 50.5%  
  Avg. Price $535,036 $476,773 12.2%   $521,557 $566,108 (7.9)%   $522,648 $563,810 (7.3)%  
Midwest                    
(IL, OH) Home   249   177 40.7%     187   232 (19.4)%     596   450 32.4%  
  Dollars $79,999 $54,682 46.3%   $59,498 $68,714 (13.4)%   $169,517 $122,681 38.2%  
  Avg. Price $321,281 $308,938 4.0%   $318,171 $296,181 7.4%   $284,424 $272,624 4.3%  
Southeast                    
(FL, GA, SC) Home   163   179 (8.9)%     169   193 (12.4)%     298   282 5.7%  
  Dollars $74,765 $69,765 7.2%   $73,741 $76,414 (3.5)%   $146,971 $121,921 20.5%  
  Avg. Price $458,681 $389,749 17.7%   $436,337 $395,927 10.2%   $493,191 $432,344 14.1%  
Southwest                    
(AZ, TX) Home   712   496 43.5%     584   621 (6.0)%     1,066   663 60.8%  
  Dollars $245,813 $166,723 47.4%   $194,505 $213,089 (8.7)%   $360,225 $230,898 56.0%  
  Avg. Price $345,243 $336,135 2.7%   $333,057 $343,138 (2.9)%   $337,922 $348,261 (3.0)%  
West                    
(CA) Home   446   240 85.8%     335   311 7.7%     755   301 150.8%  
  Dollars $229,656 $102,460 124.1%   $159,332 $127,413 25.1%   $369,887 $124,700 196.6%  
  Avg. Price $514,924 $426,917 20.6%   $475,618 $409,688 16.1%   $489,917 $414,286 18.3%  
Consolidated                    
Total Home   1,918   1,345 42.6%     1,572   1,709 (8.0)%     3,402   2,191 55.3%  
  Dollars $828,923 $517,786 60.1%   $643,515 $692,146 (7.0)%   $1,419,826 $880,144 61.3%  
  Avg. Price $432,181 $384,971 12.3%   $409,361 $405,001 1.1%   $417,350 $401,709 3.9%  
Unconsolidated Joint Ventures (2)                    
(excluding KSA JV) Home   225   134 67.9%     163   232 (29.7)%     326   259 25.9%  
  Dollars $135,906 $80,126 69.6%   $102,043 $145,098 (29.7)%   $184,524 $161,807 14.0%  
  Avg. Price $604,027 $597,955 1.0%   $626,031 $625,422 0.1%   $566,025 $624,737 (9.4)%  
Grand Total                    
  Home   2,143   1,479 44.9%     1,735   1,941 (10.6)%     3,728   2,450 52.2%  
  Dollars $964,829 $597,912 61.4%   $745,558 $837,244 (11.0)%   $1,604,350 $1,041,951 54.0%  
  Avg. Price $450,224 $404,268 11.4%   $429,716 $431,347 (0.4)%   $430,351 $425,286 1.2%  
                     
KSA JV Only                    
  Home   326   71 359.2%     0   0 0.0%     1,092   202 440.6%  
  Dollars $51,110 $11,517 343.8%   $0 $0 0.0%   $171,673 $32,316 431.2%  
  Avg. Price $156,779 $162,211 (3.3)%   $0 $0 0.0%   $157,209 $159,982 (1.7)%  
 
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
    Year Ended Year Ended Backlog
    October 31, October 31, October 31,
      2020   2019 % Change   2020   2019 % Change   2020   2019 % Change
Northeast                    
(NJ, PA) Home   326   293 11.3%     348   192 81.3%     130   152 (14.5)%  
  Dollars $171,181 $172,950 (1.0)%   $175,627 $116,889 50.3%   $82,111 $86,557 (5.1)%  
  Avg. Price $525,095 $590,273 (11.0)%   $504,675 $608,797 (17.1)%   $631,623 $569,454 10.9%  
Mid-Atlantic                    
(DE, MD, VA, WV) Home   990   728 36.0%     755   652 15.8%     557   343 62.4%  
  Dollars $510,229 $385,862 32.2%   $402,647 $356,674 12.9%   $291,115 $193,387 50.5%  
  Avg. Price $515,383 $530,030 (2.8)%   $533,307 $547,046 (2.5)%   $522,648 $563,810 (7.3)%  
Midwest                    
(IL, OH) Home   873   736 18.6%     727   680 6.9%     596   450 32.4%  
  Dollars $272,170 $219,266 24.1%   $225,334 $203,734 10.6%   $169,517 $122,681 38.2%  
  Avg. Price $311,764 $297,916 4.6%   $309,950 $299,609 3.5%   $284,424 $272,624 4.3%  
Southeast                    
(FL, GA, SC) Home   599   576 4.0%     548   545 0.6%     298   282 5.7%  
  Dollars $270,277 $233,645 15.7%   $232,333 $219,860 5.7%   $146,971 $121,921 20.5%  
  Avg. Price $451,214 $405,634 11.2%   $423,965 $403,413 5.1%   $493,191 $432,344 14.1%  
Southwest                    
(AZ, TX) Home   2,636   2,006 31.4%     2,233   1,866 19.7%     1,066   663 60.8%  
  Dollars $872,630 $677,244 28.9%   $743,301 $627,201 18.5%   $360,225 $230,898 56.0%  
  Avg. Price $331,043 $337,609 (1.9)%   $332,871 $336,121 (1.0)%   $337,922 $348,261 (3.0)%  
West                    
(CA) Home   1,529   1,001 52.7%     1,075   1,011 6.3%     755   301 150.8%  
  Dollars $717,973 $411,577 74.4%   $472,786 $425,324 11.2%   $369,887 $124,700 196.6%  
  Avg. Price $469,570 $411,166 14.2%   $439,801 $420,696 4.5%   $489,917 $414,286 18.3%  
Consolidated Total                    
  Home   6,953   5,340 30.2%     5,686   4,946 15.0%     3,402   2,191 55.3%  
  Dollars $2,814,460 $2,100,544 34.0%   $2,252,028 $1,949,682 15.5%   $1,419,826 $880,144 61.3%  
  Avg. Price $404,784 $393,360 2.9%   $396,065 $394,194 0.5%   $417,350 $401,709 3.9%  
Unconsolidated Joint Ventures (2)                    
(excluding KSA JV) Home   739   636 16.2%     728   767 (5.1)%     326   259 25.9%  
  Dollars $432,570 $398,476 8.6%   $432,602 $483,697 (10.6)%   $184,524 $161,807 14.0%  
  Avg. Price $585,345 $626,535 (6.6)%   $594,234 $630,635 (5.8)%   $566,025 $624,737 (9.4)%  
Grand Total                    
  Home   7,692   5,976 28.7%     6,414   5,713 12.3%     3,728   2,450 52.2%  
  Dollars $3,247,030 $2,499,020 29.9%   $2,684,630 $2,433,379 10.3%   $1,604,350 $1,041,951 54.0%  
  Avg. Price $422,131 $418,176 0.9%   $418,558 $425,937 (1.7)%   $430,351 $425,286 1.2%  
                     
KSA JV Only                    
  Home   890   204 336.3%     0   7 (100.0)%     1,092   202 440.6%  
  Dollars $139,356 $32,943 323.0%   $0 $1,627 (100.0)%   $171,673 $32,316 431.2%  
  Avg. Price $156,580 $161,485 (3.0)%   $0 $232,429 (100.0)%   $157,210 $159,982 (1.7)%  
                     
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
    October 31, October 31, October 31,
      2020   2019 % Change   2020   2019 % Change   2020   2019 % Change
Northeast                    
(unconsolidated joint ventures) Home   16   47 (66.0)%     31   82 (62.2)%     18   76 (76.3)%  
(excluding KSA JV) Dollars $24,384 $33,054 (26.2)%   $31,421 $62,284 (49.6)%   $24,535 $63,680 (61.5)%  
(NJ, PA) Avg. Price $1,524,000 $703,277 116.7%   $1,013,581 $759,561 33.4%   $1,363,056 $837,895 62.7%  
Mid-Atlantic                    
(unconsolidated joint ventures) Home   63   11 472.7%     21   26 (19.2)%     90   21 328.6%  
(DE, MD, VA, WV) Dollars $33,382 $5,862 469.5%   $10,378 $15,816 (34.4)%   $46,821 $11,121 321.0%  
  Avg. Price $529,873 $532,909 (0.6)%   $494,190 $608,308 (18.8)%   $520,233 $529,571 (1.8)%  
Midwest                    
(unconsolidated joint ventures) Home   2   4 (50.0)%     2   3 (33.3)%     0   3 (100.0)%  
(IL, OH) Dollars $950 $1,800 (47.2)%   $950 $1,400 (32.1)%   $0 $1,285 (100.0)%  
  Avg. Price $475,000 $450,000 5.6%   $475,000 $466,667 1.8%   $0 $428,333 (100.0)%  
Southeast                    
(unconsolidated joint ventures) Home   89   31 187.1%     69   60 15.0%     149   88 69.3%  
(FL, GA, SC) Dollars $49,970 $16,611 200.8%   $36,307 $33,080 9.8%   $78,528 $47,678 64.7%  
  Avg. Price $561,461 $535,839 4.8%   $526,188 $551,333 (4.6)%   $527,034 $541,795 (2.7)%  
Southwest                    
(unconsolidated joint ventures) Home   30   30 0.0%     30   40 (25.0)%     46   45 2.2%  
(AZ, TX) Dollars $18,553 $18,347 1.1%   $19,509 $24,793 (21.3)%   $26,803 $28,318 (5.3)%  
  Avg. Price $618,433 $611,567 1.1%   $650,300 $619,825 4.9%   $582,674 $629,289 (7.4)%  
West                    
(unconsolidated joint ventures) Home   25   11 127.3%     10   21 (52.4)%     23   26 (11.5)%  
(CA) Dollars $8,667 $4,452 94.7%   $3,478 $7,725 (55.0)%   $7,837 $9,725 (19.4)%  
  Avg. Price $346,680 $404,727 (14.3)%   $347,800 $367,857 (5.5)%   $340,739 $374,038 (8.9)%  
Unconsolidated Joint Ventures (2)                  
(excluding KSA JV) Home   225   134 67.9%     163   232 (29.7)%     326   259 25.9%  
  Dollars $135,906 $80,126 69.6%   $102,043 $145,098 (29.7)%   $184,524 $161,807 14.0%  
  Avg. Price $604,027 $597,955 1.0%   $626,031 $625,422 0.1%   $566,025 $624,737 (9.4)%  
                     
KSA JV Only                    
  Home   326   71 359.2%     0   0 0.0%     1,092   202 440.6%  
  Dollars $51,110 $11,517 343.8%   $0 $0 0.0%   $171,673 $32,316 431.2%  
  Avg. Price $156,779 $162,211 (3.3)%   $0 $0 0.0%   $157,210 $159,982 (1.7)%  
 
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
    Year Ended Year Ended Backlog
    October 31, October 31, October 31,
      2020   2019 % Change   2020   2019 % Change   2020   2019 % Change
Northeast                    
(unconsolidated joint ventures) Home   146   235 (37.9)%     204   273 (25.3)%     18   76 (76.3)%  
(excluding KSA JV) Dollars $128,526 $183,450 (29.9)%   $167,671 $213,137 (21.3)%   $24,535 $63,680 (61.5)%  
(NJ, PA) Avg. Price $880,315 $780,638 12.8%   $821,917 $780,722 5.3%   $1,363,056 $837,895 62.7%  
Mid-Atlantic                    
(unconsolidated joint ventures) Home   133   37 259.5%     85   69 23.2%     90   21 328.6%  
(DE, MD, VA, WV) Dollars $68,605 $25,020 174.2%   $42,759 $49,083 (12.9)%   $46,821 $11,121 321.0%  
  Avg. Price $515,827 $676,216 (23.7)%   $503,047 $711,348 (29.3)%   $520,233 $529,571 (1.8)%  
Midwest                    
(unconsolidated joint ventures) Home   13   16 (18.8)%     16   22 (27.3)%     0   3 (100.0)%  
(IL, OH) Dollars $6,059 $8,272 (26.8)%   $7,344 $13,063 (43.8)%   $0 $1,285 (100.0)%  
  Avg. Price $466,077 $517,000 (9.8)%   $459,000 $593,773 (22.7)%   $0 $428,333 (100.0)%  
Southeast                    
(unconsolidated joint ventures) Home   274   153 79.1%     248   187 32.6%     149   88 69.3%  
(FL, GA, SC) Dollars $140,517 $82,141 71.1%   $122,562 $97,718 25.4%   $78,528 $47,678 64.7%  
  Avg. Price $512,836 $536,869 (4.5)%   $494,202 $522,556 (5.4)%   $527,034 $541,795 (2.7)%  
Southwest                    
(unconsolidated joint ventures) Home   106   116 (8.6)%     105   138 (23.9)%     46   45 2.2%  
(AZ, TX) Dollars $65,700 $70,802 (7.2)%   $67,215 $82,948 (19.0)%   $26,803 $28,318 (5.3)%  
  Avg. Price $619,811 $610,362 1.5%   $640,143 $601,072 6.5%   $582,674 $629,289 (7.4)%  
West                    
(unconsolidated joint ventures) Home   67   79 (15.2)%     70   78 (10.3)%     23   26 (11.5)%  
(CA) Dollars $23,163 $28,791 (19.5)%   $25,051 $27,748 (9.7)%   $7,837 $9,725 (19.4)%  
  Avg. Price $345,716 $364,443 (5.1)%   $357,871 $355,744 0.6%   $340,739 $374,038 (8.9)%  
Unconsolidated Joint Ventures (2)                  
(excluding KSA JV) Home   739   636 16.2%     728   767 (5.1)%     326   259 25.9%  
  Dollars $432,570 $398,476 8.6%   $432,602 $483,697 (10.6)%   $184,524 $161,807 14.0%  
  Avg. Price $585,345 $626,535 (6.6)%   $594,234 $630,635 (5.8)%   $566,025 $624,737 (9.4)%  
                     
KSA JV Only                    
  Home   890   204 336.3%     0   7 (100.0)%     1,092   202 440.6%  
  Dollars $139,356 $32,943 323.0%   $0 $1,627 (100.0)%   $171,673 $32,316 431.2%  
  Avg. Price $156,580 $161,485 (3.0)%   $0 $232,429 (100.0)%   $157,210 $159,982 (1.7)%  
                     
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