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CST: 19/09/2019 22:35:26   

Hovnanian Enterprises Reports Fiscal 2019 Third Quarter Results

14 Days ago

Total Revenues Increased 6% Year-over-Year
12% Year-over-Year Expansion in Consolidated Community Count
Consolidated Contracts Grew 23% Year-over-Year
12% Year-over-Year Increase in Consolidated Contract Backlog
10% Year-over-Year Growth in Consolidated Contracts Per Community

MATAWAN, N.J., Sept. 05, 2019 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal third quarter and the nine-month period ended July 31, 2019.

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

  • Total revenues increased 5.5% to $482.0 million in the third quarter of fiscal 2019, compared with $456.7 million in the third quarter of fiscal 2018. For the nine months ended July 31, 2019, total revenues decreased to $1.30 billion compared with $1.38 billion in the same period during the prior fiscal year.
     
  • Homebuilding revenues for unconsolidated joint ventures was $121.2 million for the third quarter ended July 31, 2019, compared with $194.5 million in last year’s third quarter. During the first nine months of fiscal 2019, homebuilding revenues for unconsolidated joint ventures was $342.7 million compared with $350.0 million in the same period during the previous year.
     
  • Homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 14.0% for the third quarter of fiscal 2019 compared with 15.4% during the prior year’s third quarter. For the nine months ended July 31, 2019, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 14.0% compared with 14.6% last year.
     
  • Homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 18.4% for both the third quarter of fiscal 2019 and the third quarter of fiscal 2018. During the first nine months of fiscal 2019, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 17.7% compared with 18.0% in the same period of the previous fiscal year.
     
  • Total SG&A was $58.5 million, or 12.1% of total revenues, in the third quarter of fiscal 2019 compared with $53.9 million, or 11.8% of total revenues, in the same quarter one year ago. For the first nine months of fiscal 2019, total SG&A was $179.3 million, or 13.8% of total revenues, compared with $178.0 million, or 12.9% of total revenues, in the same period of the prior fiscal year.
     
  • Total interest expense was $41.4 million in the third quarter of fiscal 2019 compared with $38.3 million in the third quarter of fiscal 2018. Total interest expense was $110.5 million for the first nine months of fiscal 2019 compared with $125.2 million for the same period in fiscal 2018.
     
  • Interest incurred (some of which was expensed and some of which was capitalized) was $42.1 million for the third quarter of fiscal 2019 compared with $40.4 million in the same quarter one year ago. For the nine months ended July 31, 2019, interest incurred (some of which was expensed and some of which was capitalized) was $122.3 million compared with $121.6 million last year.
     
  • Income from unconsolidated joint ventures was $3.7 million for the quarter ended July 31, 2019 compared with $10.7 million in the third quarter of the previous year. For the first nine months of fiscal 2019, income from unconsolidated joint ventures was $20.6 million compared with $6.9 million in the same period a year ago.
     
  • Loss before income taxes for the quarter ended July 31, 2019 was $7.1 million compared with income of $0.1 million during the third quarter of fiscal 2018. For the first nine months of fiscal 2019, the loss before income taxes was $39.1 million compared with a loss of $40.0 million during same period of fiscal 2018.
     
  • Net loss was $7.6 million, or $1.27 per common share, in the third quarter of fiscal 2019 compared with a net loss of $1.0 million, or $0.18 per common share, during the same quarter a year ago. For the first nine months of fiscal 2019, net loss was $40.3 million, or $6.76 per common share, compared with a net loss of $41.7 million, or $7.03 per common share, in the same period during fiscal 2018.
     
  • Consolidated contracts per community increased 10.0% to 11.0 contracts per community for the third quarter of fiscal 2019 compared with 10.0 contracts per community in the third quarter of fiscal 2018. Contracts per community, including domestic unconsolidated joint ventures(1), increased 3.9% to 10.6 contracts per community for the quarter ended July 31, 2019 compared with 10.2 contracts per community, including domestic unconsolidated joint ventures, in last year’s third quarter.
     
  • The consolidated community count was 138 as of July 31, 2019. This was a 12.2% year-over-year increase from 123 communities at the end of the prior year’s third quarter. As of the end of the third quarter of fiscal 2019, community count, including domestic unconsolidated joint ventures, was 159 communities. This was a 12.0% year-over-year increase compared with 142 communities at July 31, 2018.
     
  • The number of consolidated contracts increased 22.6% to 1,515 homes, during the third quarter of fiscal 2019, compared with 1,236 homes during the third quarter of fiscal 2018. The number of contracts, including domestic unconsolidated joint ventures, for the third quarter ended July 31, 2019, increased 16.6% to 1,690 homes from 1,449 homes for the same quarter last year.
     
  • The number of consolidated contracts increased 8.9% to 3,995 homes, during the nine-month period ended July 31, 2019, compared with 3,667 homes in the same period of the previous fiscal year. During the first nine months of fiscal 2019, the number of contracts, including domestic unconsolidated joint ventures, was 4,497 homes, an increase of 3.0% from 4,368 homes during the same period in fiscal 2018.
     
  • For August 2019, consolidated contracts per community were 3.2 compared with 2.6 for the same month one year ago. During August 2019, the number of consolidated contracts increased 37.8% to 445 homes from 323 homes in August 2018.
     
  • The dollar value of consolidated contract backlog, as of July 31, 2019, increased 11.4% to $1.05 billion compared with $946.5 million as of July 31, 2018. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of July 31, 2019, was $1.28 billion, a decrease of 2.4% compared with $1.31 billion as of July 31, 2018.
     
  • Consolidated deliveries were 1,185 homes for the third quarter of fiscal 2019, a 3.8% increase compared with 1,142 homes during the same quarter a year ago. For the quarter ended July 31, 2019, deliveries, including domestic unconsolidated joint ventures, decreased 3.5% to 1,377 homes compared with 1,427 homes during the third quarter of fiscal 2018.
     
  • Consolidated deliveries were 3,237 homes in the first nine months of fiscal 2019, a 4.3% decrease compared with 3,382 homes in the same period in fiscal 2018. For the nine months ended July 31, 2019, deliveries, including domestic unconsolidated joint ventures, decreased 4.3% to 3,772 homes compared with 3,940 homes in the same period of the prior fiscal year.
     
  • The contract cancellation rate for both consolidated contracts and contracts including unconsolidated joint ventures were 19% for both the three months ended July 31, 2019 and the same quarter in fiscal 2018.

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

LIQUIDITY AND INVENTORY AS OF JULY 31, 2019:

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

COMMENTS FROM MANAGEMENT:

“During the third quarter of fiscal 2019, we continued to make progress towards our growth objectives. We achieved year-over-year growth in total revenues, contracts, community count, contracts per community and contract backlog. Further, we saw a sequential increase in our gross margin, before cost of sales interest expense and land charges, to 18.4% in the third quarter of fiscal 2019 from 16.9% in the second quarter of fiscal 2019,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “The improvements we experienced in these metrics are a solid indicator that we are moving in the right direction.”

“Given our pipeline of future community openings, we expect our community count to increase in the fourth quarter of fiscal 2019. We continue to believe that our strategy of using options to control a significant majority of our lots is a strong risk mitigator should housing demand fluctuate in the future. Assuming no adverse changes in current market conditions and excluding land related charges, gains or losses on extinguishment of debt and other non-recurring items, we expect to achieve pretax profitability for the full 2019 fiscal year,” concluded Mr. Hovnanian.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2019 third quarter financial results conference call at 11:00 a.m. E.T. on Thursday, September 5, 2019. The webcast can be accessed live through the “Investor Relations” section of Hovnanian Enterprises’ website at http://www.khov.com. For those who are not available to listen to the live webcast, an archive of the broadcast will be available under the “Past Events” section of the Investor Relations page on the Hovnanian website at http://www.khov.com. The archive will be available for 12 months.

ABOUT HOVNANIAN ENTERPRISES, INC.:

Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, is headquartered in Matawan, New Jersey and, through its subsidiaries, is one of the nation’s largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. and West Virginia. The Company’s homes are marketed and sold under the trade name K. HovnanianÒ Homes. Additionally, the Company’s subsidiaries, as developers of K. Hovnanian’sÒ Four Seasons communities, make the Company one of the nation’s largest builders of active lifestyle communities.

Additional information on Hovnanian Enterprises, Inc. can be accessed through the “Investor Relations” section of the Hovnanian Enterprises’ website at http://www.khov.com. To be added to Hovnanian's investor e-mail list, please send an e-mail to IR@khov.com or sign up at http://www.khov.com.

NON-GAAP FINANCIAL MEASURES:

Consolidated earnings before interest expense and income taxes (“EBIT”) and before depreciation and amortization (“EBITDA”) and before inventory impairment loss and land option write-offs and loss on extinguishment of debt (“Adjusted EBITDA”) are not U.S. generally accepted accounting principles (GAAP) financial measures. The most directly comparable GAAP financial measure is net (loss). The reconciliation for historical periods of EBIT, EBITDA and Adjusted EBITDA to net (loss) is presented in a table attached to this earnings release.

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

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

Total liquidity is comprised of $83.6 million of cash and cash equivalents, $16.5 million of restricted cash required to collateralize letters of credit and $125.0 million of availability under the senior secured revolving credit facility as of July 31, 2019.

FORWARD-LOOKING STATEMENTS

All statements in this press release that are not historical facts should be considered as “Forward-Looking Statements” within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such forward-looking statements include but are not limited to statements related to the Company’s goals and expectations with respect to its financial results for future financial periods. Although we believe that our plans, intentions and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are not guarantees of future performance or results and (iii) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic, industry and business conditions and impacts of a significant homebuilding downturn; (2) adverse weather and other environmental conditions and natural disasters; (3) high leverage and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (4) availability and terms of financing to the Company; (5) the Company’s sources of liquidity; (6) changes in credit ratings; (7) the seasonality of the Company’s business; (8) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (9) shortages in, and price fluctuations of, raw materials and labor; (10) reliance on, and the performance of, subcontractors; (11) regional and local economic factors, including dependency on certain sectors of the economy, and employment levels affecting home prices and sales activity in the markets where the Company builds homes; (12) fluctuations in interest rates and the availability of mortgage financing; (13) increases in cancellations of agreements of sale;  (14) changes in tax laws affecting the after-tax costs of owning a home; (15) operations through unconsolidated joint ventures with third parties; (16) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (17) legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors; (18) levels of competition; (19) successful identification and integration of acquisitions; (20) significant influence of the Company’s controlling stockholders; (21) availability of net operating loss carryforwards; (22) utility shortages and outages or rate fluctuations; (23) changes in trade policies, including the imposition of tariffs and duties on homebuilding materials and products, and related trade disputes with and retaliatory measures taken by other countries; (24) geopolitical risks, terrorist acts and other acts of war; (25) loss of key management personnel or failure to attract qualified personnel; (26) information technology failures and data security breaches; (27) negative publicity; and (28) certain risks, uncertainties and other factors described in detail in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2018 and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

(Financial Tables Follow)

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


 
Hovnanian Enterprises, Inc.
July 31, 2019
Gross margin
(In thousands)
    Homebuilding Gross Margin   Homebuilding Gross Margin   Homebuilding Gross Margin
    Three Months Ended   Nine Months Ended   Three Months Ended
    July 31,   July 31,   April 30, (3)
      2019       2018       2019       2018       2019  
             
             
    (Unaudited)   (Unaudited)   (Unaudited)
Sale of homes   $467,849     $442,859     $1,257,536     $1,312,553     $427,552  
Cost of sales, excluding interest expense and land charges (1)      381,906         361,303        1,034,953         1,076,132       355,477  
Homebuilding gross margin, before cost of sales interest expense and land charges (2)     85,943        81,556        222,583         236,421       72,075  
Cost of sales interest expense, excluding land sales interest expense     18,824        13,424       42,964        41,025       13,898  
Homebuilding gross margin, after cost of sales interest expense, before land charges (2)     67,119        68,132        179,619         195,396       58,177  
Land charges       1,435         96         3,601       3,183       1,462  
Homebuilding gross margin   $65,684     $68,036     $176,018     $192,213     $56,715  
                     
Gross margin percentage     14.0 %     15.4 %     14.0 %     14.6 %     13.3 %
Gross margin percentage, before cost of sales interest expense and land charges (2)     18.4 %     18.4 %     17.7 %     18.0 %     16.9 %
Gross margin percentage, after cost of sales interest expense, before land charges (2)     14.3 %     15.4 %     14.3 %     14.9 %     13.6 %
                     
                     
    Land Sales Gross Margin   Land Sales Gross Margin    
    Three Months Ended   Nine Months Ended    
    July 31,   July 31,    
      2019       2018       2019       2018      
             
    (Unaudited)   (Unaudited)    
Land and lot sales   $542        $-      $8,050      $20,505       
Land and lot cost of sales, excluding interest and land charges (1)      33         -          7,390        7,710       
Land and lot sales gross margin, excluding interest and land charges       509         -          660         12,795       
Land and lot sales interest       205         -          205        4,055       
Land and lot sales gross margin, including interest and excluding land charges   $304        $-      $455      $8,740       
 
     
(1) Does not include cost associated with walking away from land options or inventory impairment losses which are recorded as Inventory impairment loss and land option write-offs in the Condensed Consolidated Statements of Operations.
 

(2) Homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, are non-GAAP financial measures. The most directly comparable GAAP financial measures are homebuilding gross margin and homebuilding gross margin percentage, respectively.
 

(3) Second quarter gross margin reconciliation included because it is referenced in the “Comments from Management” section of the press release.


Hovnanian Enterprises, Inc.
July 31, 2019
Reconciliation of adjusted EBITDA to net (loss)
(In thousands)
  Three Months Ended   Nine Months Ended
  July 31,   July 31,
       
    2019       2018       2019       2018  
                               
                               
                               
       
       
       
       
       
  (Unaudited)   (Unaudited)
Net (loss) $(7,601 )   $(1,026 )   $(40,310 )   $(41,658 )
Income tax provision   537       1,104       1,228       1,687  
Interest expense   41,406       38,283       110,482       125,158  
EBIT (1)   34,342       38,361       71,400       85,187  
Depreciation and amortization   1,004       811       2,942       2,320  
EBITDA (2)   35,346       39,172       74,342       87,507  
Inventory impairment loss and land option write-offs   1,435       96       3,601       3,183  
Loss on extinguishment of debt    -         4,266             5,706  
Adjusted EBITDA (3) $36,781     $43,534     $77,943     $96,396  
               
Interest incurred $42,104     $40,438     $122,340     $121,617  
               
Adjusted EBITDA to interest incurred   0.87       1.08       0.64       0.79  
 
 
 
(1)  EBIT is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net (loss). EBIT represents earnings before interest expense and income taxes.
(2)  EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net (loss). EBITDA represents earnings before interest expense, income taxes, depreciation and amortization.
(3)  Adjusted EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net (loss). Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation, amortization, inventory impairment loss and land option write-offs and loss on extinguishment of debt.
 
 
Hovnanian Enterprises, Inc.
July 31, 2019
Interest incurred, expensed and capitalized
(In thousands)
  Three Months Ended   Nine Months Ended
  July 31,   July 31,
    2019       2018       2019       2018  
                               
  (Unaudited)   (Unaudited)
Interest capitalized at beginning of period $79,277     $65,355     $68,117     $71,051  
Plus interest incurred   42,104         40,438        122,340         121,617  
Less interest expensed   41,406         38,283        110,482         125,158  
Less interest contributed to unconsolidated joint venture (1)     1,978               1,978        -   
Interest capitalized at end of period (2) $77,997     $67,510     $77,997     $67,510  
 
(1) Represents capitalized interest which was included as part of the assets contributed to the joint venture the company entered into in June 2019. There was no impact to the Condensed Consolidated Statement of Operations as a result of this transaction.

 
(2) Capitalized interest amounts are shown gross before allocating any portion of impairments to capitalized interest.


   
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
 
   
    July 31,
2019
    October 31,
2018
 
    (Unaudited)        (1)  
ASSETS            
Homebuilding:            
Cash and cash equivalents   $83,634     $187,871  
Restricted cash and cash equivalents     16,919       12,808  
Inventories:            
Sold and unsold homes and lots under development     1,106,100       878,876  
Land and land options held for future development or sale     69,176       111,368  
Consolidated inventory not owned     179,642       87,921  
Total inventories     1,354,918       1,078,165  
Investments in and advances to unconsolidated joint ventures     134,111       123,694  
Receivables, deposits and notes, net     32,536       35,189  
Property, plant and equipment, net     20,488       20,285  
Prepaid expenses and other assets     43,492       39,150  
Total homebuilding     1,686,098       1,497,162  
             
Financial services     109,164       164,880  
Total assets   $1,795,262     $1,662,042  
             
LIABILITIES AND EQUITY            
Homebuilding:            
Nonrecourse mortgages secured by inventory, net of debt issuance costs   $207,172     $95,557  
Accounts payable and other liabilities     324,984       304,899  
Customers’ deposits     40,358       30,086  
Liabilities from inventory not owned, net of debt issuance costs     138,441       63,387  
Revolving and term loan credit facilities, net of debt issuance costs     201,493       201,389  
Notes payable (net of discount, premium and debt issuance costs) and accrued interest     1,284,624       1,273,446  
Total homebuilding     2,197,072       1,968,764  
             
Financial services     89,740       143,448  
Income taxes payable     1,521       3,334  
Total liabilities     2,288,333       2,115,546  
             
Equity:
Hovnanian Enterprises, Inc. stockholders’ equity deficit:
           
Preferred stock, $0.01 par value - authorized 100,000 shares; issued and outstanding 5,600 shares with a liquidation preference of $140,000 at July 31, 2019 and at October 31, 2018     135,299       135,299  
Common stock, Class A, $0.01 par value - authorized 16,000,000 shares; issued 5,792,858 shares at July 31, 2019 and 5,783,858 shares at October 31, 2018     58       58  
Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) - authorized 2,400,000 shares; issued 650,449 shares at July 31, 2019 and 649,673 shares at October 31, 2018     6       6  
Paid in capital - common stock     710,517       710,349  
Accumulated deficit     (1,224,166 )     (1,183,856 )
Treasury stock - at cost – 470,430 shares of Class A common stock and 27,669 shares of Class B common stock at July 31, 2019 and October 31, 2018     (115,360 )     (115,360 )
Total Hovnanian Enterprises, Inc. stockholders’ equity deficit     (493,646 )     (453,504 )
Noncontrolling interest in consolidated joint ventures     575       -  
Total equity deficit     (493,071 )     (453,504 )
Total liabilities and equity   $1,795,262     $1,662,042  
  1. Derived from the audited balance sheet as of October 31, 2018


   
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)
(Unaudited)
 
   
    Three Months Ended
July 31,
    Nine Months Ended
July 31,
 
      2019       2018       2019       2018  
                         
Revenues:                        
Homebuilding:                        
Sale of homes   $467,849     $442,859     $1,257,536     $1,312,553  
Land sales and other revenues     1,428       844       11,111       26,918  
Total homebuilding     469,277       443,703       1,268,647       1,339,471  
Financial services     12,764       13,009       34,679       36,951  
Total revenues     482,041       456,712       1,303,326       1,376,422  
                         
Expenses:                        
Homebuilding:                        
Cost of sales, excluding interest     381,939       361,303       1,042,343       1,083,842  
Cost of sales interest     19,029       13,424       43,169       45,080  
Inventory impairment loss and land option write-offs     1,435       96       3,601       3,183  
Total cost of sales     402,403       374,823       1,089,113       1,132,105  
Selling, general and administrative     43,559       37,544       130,474       126,319  
Total homebuilding expenses     445,962       412,367       1,219,587       1,258,424  
                         
Financial services     8,927       8,986       26,079       26,125  
Corporate general and administrative     14,959       16,393       48,792       51,672  
Other interest     22,377       24,859       67,313       80,078  
Other operations     622       495       1,193       1,287  
Total expenses     492,847       463,100       1,362,964       1,417,586  
Loss on extinguishment of debt     -       (4,266 )     -       (5,706 )
Income from unconsolidated joint ventures     3,742       10,732       20,556       6,899  
(Loss) income before income taxes     (7,064     78       (39,082     (39,971 )
State and federal income tax provision:                        
State     537       1,104       1,228       1,687  
Federal     -       -       -       -  
Total income taxes     537       1,104       1,228       1,687  
Net (loss)   $(7,601 )   $(1,026 )   $(40,310 )   $(41,658 )
                         
Per share data:                        
Basic and assuming dilution:                        
Net (loss) per common share   $(1.27 )   $(0.18 )   $(6.76 )   $(7.03 )
Weighted-average number of common shares outstanding     5,971       5,947       5,964       5,935  



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



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



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



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


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

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