UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 9, 2016
HOVNANIAN ENTERPRISES, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware (State or other jurisdiction of incorporation) |
1-8551 (Commission File Number) |
22-1851059 (IRS Employer Identification No.) |
110 West Front Street
P.O. Box 500
Red Bank, New Jersey 07701
(Address of Principal Executive Offices) (Zip Code)
(732) 747-7800
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On March 9, 2016, Hovnanian Enterprises, Inc. (the “Company”) issued a press release announcing its preliminary financial results for the fiscal first quarter ended January 31, 2016. A copy of the press release is attached as Exhibit 99.1.
The information in this Current Report on Form 8-K and the Exhibit attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
The attached earnings press release contains information about EBIT, EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. The most directly comparable GAAP financial measure is net loss. A reconciliation of EBIT, EBITDA and Adjusted EBITDA to net loss is contained in the earnings press release. The earnings press release contains information about Loss Before Income Taxes Excluding Land-Related Charges, which is a non-GAAP financial measure. The most directly comparable GAAP financial measure is Loss Before Income Taxes. A reconciliation of Loss Before Income Taxes Excluding Land-Related Charges to Loss Before Income Taxes is contained in the earnings press release.
Management believes EBITDA to be relevant and useful information as EBITDA is a standard measure commonly reported and widely used by analysts, investors and others to measure our financial performance and our ability to service our debt obligations. EBITDA is also one of several metrics used by our management to measure the cash generated from our operations. EBITDA does not take into account substantial costs of doing business, such as income taxes and interest expense. While many in the financial community consider EBITDA to be an important measure of comparative operating performance, it should be considered in addition to, but not as a substitute for, loss before income taxes, net loss, cash flow (used in) provided by operating activities and other measures of financial performance and liquidity prepared in accordance with accounting principles generally accepted in the United States that are presented on the financial statements included in the Company’s reports filed with the Securities and Exchange Commission. Additionally, our calculation of EBITDA may be different than the calculation used by other companies, and, therefore, comparability may be affected.
Management believes Loss Before Income Taxes Excluding Land-Related Charges to be relevant and useful information because it provides a better metric of the Company’s operating performance. Loss Before Income Taxes Excluding Land-Related Charges should be considered in addition to, but not as a substitute for, loss before income taxes, net loss and other measures of financial performance prepared in accordance with accounting principles generally accepted in the United States that are presented on the financial statements included in the Company’s reports filed with the Securities and Exchange Commission. Additionally, our calculation of Loss Before Income Taxes Excluding Land-Related Charges may be different than the calculation used by other companies, and, therefore, comparability may be affected.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit 99.1 Earnings Press Release–Fiscal First Quarter Ended January 31, 2016.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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HOVNANIAN ENTERPRISES, INC. |
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(Registrant) |
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By: |
/s/ J. Larry Sorsby |
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Name: J. Larry Sorsby |
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Title: Executive Vice President and Chief Financial Officer |
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Date: March 9, 2016
INDEX TO EXHIBITS
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Exhibit Number |
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Exhibit |
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Exhibit 99.1 |
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Earnings Press Release–Fiscal First Quarter Ended January 31, 2016. |
Exhibit 99.1
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HOVNANIAN ENTERPRISES, INC. |
News Release |
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Contact: |
J. Larry Sorsby |
Jeffrey T. O’Keefe |
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Executive Vice President & CFO |
Vice President, Investor Relations | |
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732-747-7800 |
732-747-7800 | |
HOVNANIAN ENTERPRISES REPORTS fiscal 2016 First quarter Results
RED BANK, NJ, March 9, 2016 – Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal first quarter ended January 31, 2016.
RESULTS FOR the ThrEE MONTH PERIOD ENDED January 31, 2016:
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Total revenues were $575.6 million in the first quarter of fiscal 2016, an increase of 29.1% compared with $445.7 million in the first quarter of fiscal 2015. |
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Homebuilding gross margin percentage, before interest expense and land charges included in cost of sales, was 16.6% for the first quarter ended January 31, 2016, compared with 18.2% in last year’s first quarter. |
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For the first quarter of fiscal 2016, Adjusted EBITDA was $38.8 million compared with $21.3 million during the first quarter of 2015, an 82.5% increase. |
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The pre-tax loss, excluding land related charges, in the first quarter of fiscal 2016 was $1.5 million compared with a pre-tax loss, excluding land related charges, of $17.5 million in the prior year’s first quarter. |
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The net loss was $16.2 million, including $11.7 million of land related charges, primarily related to land held for sale in Minnesota, a market we are exiting, or $0.11 per common share, for the first quarter of fiscal 2016, compared with a net loss of $14.4 million, including $2.2 million of land related charges, or $0.10 per common share, in the first quarter of the previous year. |
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The dollar value of net contracts, including unconsolidated joint ventures, during the first quarter of fiscal 2016 increased 28.2% to $668.5 million compared with $521.2 million in last year’s first quarter. The dollar value of consolidated net contracts increased 24.9% to $628.6 million for the three months ended January 31, 2016 compared with $503.2 million during the same quarter a year ago. |
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In the first quarter of fiscal 2016, the number of net contracts, including unconsolidated joint ventures, increased 16.5% to 1,592 homes from 1,366 homes during the first quarter of fiscal 2015. The number of consolidated net contracts, during the first quarter of fiscal 2016, increased 16.1% to 1,531 homes compared with 1,319 homes in the prior year’s first quarter. |
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Consolidated net contracts per active selling community increased 7.6% to 7.1 net contracts per active selling community for the first quarter of fiscal 2016 compared with 6.6 net contracts per active selling community in the first quarter of fiscal 2015. Net contracts per active selling community, including unconsolidated joint ventures, increased 6.1% to 7.0 net contracts per active selling community for the quarter ended January 31, 2016 compared with 6.6 net contracts, including unconsolidated joint ventures, per active selling community in the first quarter of fiscal 2015. |
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As of January 31, 2016, the dollar value of contract backlog, including unconsolidated joint ventures, was $1.44 billion, an increase of 49.1% compared with $965.2 million as of January 31, 2015. The dollar value of consolidated contract backlog, as of January 31, 2016, increased 39.1% to $1.29 billion compared with $925.5 million as of January 31, 2015. |
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As of January 31, 2016, the number of homes in contract backlog, including unconsolidated joint ventures, increased 30.2% to 3,238 homes compared with 2,487 homes as of January 31, 2015. The number of homes in consolidated contract backlog, as of January 31, 2016, increased 25.6% to 3,014 homes compared with 2,399 homes as of the end of the first quarter of fiscal 2015. |
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Consolidated deliveries were 1,422 homes in the first quarter of fiscal 2016, a 23.8% increase compared with 1,149 homes in the first quarter of fiscal 2015. For the three months ended January 31, 2016, deliveries, including unconsolidated joint ventures, increased 20.2% to 1,466 homes compared with 1,220 homes in the first quarter of the prior year. |
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As of end of the first quarter of fiscal 2016, active selling communities, including unconsolidated joint ventures, increased 9.6% to 228 communities compared with 208 communities at January 31, 2015. As of January 31, 2016, consolidated active selling communities increased 9.0% to 217 communities compared with 199 communities at the end of the prior year’s first quarter. |
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Total interest expense as a percentage of total revenues was 6.6% during the first quarter of fiscal 2016, a decrease of 160 basis points, compared with 8.2% in the same period of the previous year. |
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Total SG&A was $63.8 million, or 11.1% of total revenues, during the first quarter of fiscal 2016 compared with $64.6 million, or 14.5% of total revenues, in last year’s first quarter. |
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The contract cancellation rate, including unconsolidated joint ventures, for the first quarter of fiscal 2016 was 21%, compared with 18% in the first quarter of fiscal 2015. |
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The valuation allowance was $635.3 million as of January 31, 2016. The valuation allowance is a non-cash reserve against the tax assets for GAAP purposes. For tax purposes, the tax deductions associated with the tax assets may be carried forward for 20 years from the date the deductions were incurred. |
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During February 2016, the dollar value of consolidated net contracts increased 27.5% to $262.4 million compared with $205.8 million for February of 2015, and the number of consolidated net contracts increased 11.3% to 600 homes in February 2016 from 539 homes in February 2015. |
Liquidity AND Inventory as of January 31, 2016:
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After paying off $233.5 million of debt that matured in October 2015 and January 2016, total liquidity at the end of the first quarter of fiscal 2016 was $152.1 million. |
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During the first quarter of fiscal 2016, land and land development spending was $116.6 million. |
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As of January 31, 2016, the land position, including unconsolidated joint ventures, was 38,070 lots, consisting of 18,732 lots under option and 19,338 owned lots, compared with a total of 36,767 lots as of January 31, 2015. |
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During the first quarter of fiscal 2016, approximately 3,300 lots, including unconsolidated joint ventures, were put under option or acquired in 39 communities. |
Financial Guidance:
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Assuming no changes in current market conditions, we reiterate our prior guidance that total revenues for all of fiscal 2016 are expected to be between $2.7 billion and $3.1 billion and pretax profit excluding land related charges, gains or losses on extinguishment of debt and other non-recurring items such as legal settlements are expected to be between $40 million and $100 million for all of fiscal 2016. |
COMMENTS FROM MANAGEMENT/Updated Strategic focus:
“We are pleased by our strong start to the fiscal year, which was highlighted by an 83% increase in adjusted EBITDA and a 49% increase in contract backlog dollars,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “During our first quarter, our 29% total revenue growth resulted in a 500 basis point improvement in our total SG&A and total interest ratios in the aggregate. Rather than focusing on additional revenue growth beyond 2016, we now plan to focus on deleveraging our balance sheet and maximizing our profitability. As part of this strategy we have decided to exit the Minneapolis, MN and Raleigh, NC markets. Additionally, we plan to wind down our operations in Tampa, FL and the San Francisco Bay Area in Northern California by delivering the remaining homes in our existing communities. We are confident these decisions will lead to continued efficiencies and ultimately improved financial performance,” concluded Mr. Hovnanian.
Webcast Information:
Hovnanian Enterprises will webcast its fiscal 2016 first quarter financial results conference call at 10:30 a.m. E.T. on Wednesday, March 9, 2016. 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 Red Bank, New Jersey. The Company is one of the nation’s largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. and West Virginia. The Company’s homes are marketed and sold under the trade names K. Hovnanian® Homes, Brighton Homes® and Parkwood Builders. As the developer of K. Hovnanian’s® Four Seasons communities, the Company is also one of the nation’s largest builders of active lifestyle communities.
Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company’s 2015 annual report, 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 (“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 of EBIT, EBITDA and Adjusted EBITDA to net loss is presented in a table attached to this earnings release.
Loss Before Income Taxes Excluding Land-Related Charges is a non-GAAP financial measure. The most directly comparable GAAP financial measure is Loss Before Income Taxes. The reconciliation of Loss Before Income Taxes Excluding Land-Related Charges to Loss Before Income Taxes is presented in a table attached to this earnings release.
Total liquidity is comprised of $147.1 million of cash and cash equivalents, $2.5 million of restricted cash required to collateralize letters of credit and $2.5 million of availability under the unsecured revolving credit facility as of January 31, 2016.
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 the current or future financial periods, including total revenues and adjusted pretax profits. 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: (1) speak only as of the date they are made, (2) are not guarantees of future performance or results and (3) 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 the sustained homebuilding downturn; (2) adverse weather and other environmental conditions and natural disasters; (3) levels of indebtedness and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (4) the Company's sources of liquidity; (5) changes in credit ratings; (6) changes in market conditions and seasonality of the Company’s business; (7) the availability and cost of suitable land and improved lots; (8) shortages in, and price fluctuations of, raw materials and labor; (9) 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; (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) operations through joint ventures with third parties; (13) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (14) product liability litigation, warranty claims and claims made by mortgage investors; (15) levels of competition; (16) availability and terms of financing to the Company; (17) successful identification and integration of acquisitions; (18) significant influence of the Company’s controlling stockholders; (19) availability of net operating loss carryforwards; (20) utility shortages and outages or rate fluctuations; (21) geopolitical risks, terrorist acts and other acts of war; (22) increases in cancellations of agreements of sale; (23) loss of key management personnel or failure to attract qualified personnel; (24) information technology failures and data security breaches; (25) legal claims brought against us and not resolved in our favor; 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, 2015 and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
(Financial Tables Follow)
Hovnanian Enterprises, Inc.
January 31, 2016
Statements of Consolidated Operations
(Dollars in Thousands, Except Per Share Data)
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Three Months Ended |
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January 31, |
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2016 |
2015 |
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(Unaudited) |
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Total Revenues |
$575,605 | $445,714 | ||||
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Costs and Expenses (a) |
587,319 | 466,846 | ||||
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(Loss) Income from Unconsolidated Joint Ventures |
(1,480 | ) | 1,452 | |||
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Loss Before Income Taxes |
(13,194 | ) | (19,680 | ) | ||
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Income Tax Provision (Benefit) |
2,979 | (5,304 | ) | |||
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Net Loss |
$(16,173 | ) | $(14,376 | ) | ||
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Per Share Data: |
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Basic: |
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Loss Per Common Share |
$(0.11 | ) | $(0.10 | ) | ||
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Weighted Average Number of |
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Common Shares Outstanding (b) |
147,139 | 146,929 | ||||
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Assuming Dilution: |
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Loss Per Common Share |
$(0.11 | ) | $(0.10 | ) | ||
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Weighted Average Number of |
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Common Shares Outstanding (b) |
147,139 | 146,929 | ||||
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(a) |
Includes inventory impairment loss and land option write-offs. |
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(b) |
For periods with a net loss, basic shares are used in accordance with GAAP rules. |
Hovnanian Enterprises, Inc.
January 31, 2016
Reconciliation of Loss Before Income Taxes Excluding Land-Related Charges to Loss Before Income Taxes
(Dollars in Thousands)
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Three Months Ended |
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January 31, |
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2016 |
2015 |
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(Unaudited) |
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Loss Before Income Taxes |
$(13,194 | ) | $(19,680 | ) | ||
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Inventory Impairment Loss and Land Option Write-Offs |
11,681 | 2,230 | ||||
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Loss Before Income Taxes Excluding Land-Related Charges(a) |
$(1,513 | ) | $(17,450 | ) | ||
(a) Loss Before Income Taxes Excluding Land-Related Charges is a non-GAAP Financial measure. The most directly comparable GAAP financial measure is Loss Before Income Taxes.
Hovnanian Enterprises, Inc.
January 31, 2016
Gross Margin
(Dollars in Thousands)
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Homebuilding Gross Margin |
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Three Months Ended |
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January 31, |
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2016 |
2015 |
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(Unaudited) |
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Sale of Homes |
$556,775 | $433,471 | ||||
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Cost of Sales, Excluding Interest and Land Charges (a) |
464,146 | 354,379 | ||||
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Homebuilding Gross Margin, Excluding Interest and Land Charges |
92,629 | 79,092 | ||||
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Homebuilding Cost of Sales Interest |
16,843 | 11,299 | ||||
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Homebuilding Gross Margin, Including Interest and Excluding Land Charges |
$75,786 | $67,793 | ||||
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Gross Margin Percentage, Excluding Interest and Land Charges |
16.6 | % | 18.2 | % | ||
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Gross Margin Percentage, Including Interest and Excluding Land Charges |
13.6 | % | 15.6 | % | ||
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Land Sales Gross Margin |
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Three Months Ended |
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January 31, |
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2016 |
2015 |
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(Unaudited) |
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Land and Lot Sales |
$- | $514 | ||||
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Cost of Sales, Excluding Interest and Land Charges (a) |
- | 433 | ||||
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Land and Lot Sales Gross Margin, Excluding Interest and Land Charges |
- | 81 | ||||
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Land and Lot Sales Interest |
- | 19 | ||||
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Land and Lot Sales Gross Margin, Including Interest and Excluding Land Charges |
$- | $62 | ||||
(a) 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.
Hovnanian Enterprises, Inc.
January 31, 2016
Reconciliation of Adjusted EBITDA to Net Loss
(Dollars in Thousands)
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Three Months Ended |
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January 31, |
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2016 |
2015 |
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(Unaudited) |
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Net Loss |
$(16,173 | ) | $(14,376 | ) | ||
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Income Tax Provision (Benefit) |
2,979 | (5,304 | ) | |||
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Interest Expense |
38,068 | 36,389 | ||||
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EBIT (a) |
24,874 | 16,709 | ||||
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Depreciation |
865 | 849 | ||||
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Amortization of Debt Costs |
1,383 | 1,472 | ||||
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EBITDA (b) |
27,122 | 19,030 | ||||
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Inventory Impairment Loss and Land Option Write-offs |
11,681 | 2,230 | ||||
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Adjusted EBITDA (c) |
$38,803 | $21,260 | ||||
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Interest Incurred |
$41,959 | $41,472 | ||||
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Adjusted EBITDA to Interest Incurred |
0.92 | 0.51 | ||||
(a) 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.
(b) 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.
(c) 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 and inventory impairment loss and land option write-offs.
Hovnanian Enterprises, Inc.
January 31, 2016
Interest Incurred, Expensed and Capitalized
(Dollars in Thousands)
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Three Months Ended |
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January 31, |
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2016 |
2015 |
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(Unaudited) |
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Interest Capitalized at Beginning of Period |
$123,898 | $109,158 | ||||
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Plus Interest Incurred |
41,959 | 41,472 | ||||
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Less Interest Expensed |
38,068 | 36,389 | ||||
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Less Interest Contributed to Unconsolidated Joint Venture (a) |
10,676 | - | ||||
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Interest Capitalized at End of Period (b) |
$117,113 | $114,241 | ||||
(a) Represents capitalized interest which was included as part of the assets contributed to the joint venture the Company entered into in November 2015. There was no impact to the Condensed Consolidated Statement of Operations as a result of this transaction.
(b) 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)
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January 31, 2016 |
October 31, 2015 |
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(Unaudited) |
(1) | |||||
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ASSETS |
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Homebuilding: |
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Cash and cash equivalents |
$147,124 | $245,398 | ||||
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Restricted cash and cash equivalents |
6,865 | 7,299 | ||||
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Inventories: |
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Sold and unsold homes and lots under development |
1,127,416 | 1,307,850 | ||||
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Land and land options held for future development or sale |
186,503 | 214,503 | ||||
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Consolidated inventory not owned |
338,067 | 122,225 | ||||
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Total inventories |
1,651,986 | 1,644,578 | ||||
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Investments in and advances to unconsolidated joint ventures |
69,094 | 61,209 | ||||
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Receivables, deposits and notes, net |
69,629 | 70,349 | ||||
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Property, plant and equipment, net |
46,010 | 45,534 | ||||
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Prepaid expenses and other assets |
81,186 | 77,671 | ||||
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Total homebuilding |
2,071,894 | 2,152,038 | ||||
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Financial services: |
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Cash and cash equivalents |
5,454 | 8,347 | ||||
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Restricted cash and cash equivalents |
20,072 | 19,223 | ||||
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Mortgage loans held for sale at fair value |
164,961 | 130,320 | ||||
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Other assets |
2,971 | 2,091 | ||||
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Total financial services |
193,458 | 159,981 | ||||
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Income taxes receivable – including net deferred tax benefits |
287,388 | 290,279 | ||||
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Total assets |
$2,552,740 | $2,602,298 |
(1) Derived from the audited balance sheet as of October 31, 2015.
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share and Per Share Amounts)
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January 31, 2016 |
October 31, 2015 |
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(Unaudited) |
(1) | |||||
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LIABILITIES AND EQUITY |
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Homebuilding: |
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Nonrecourse mortgages secured by inventory |
$128,668 | $143,863 | ||||
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Accounts payable and other liabilities |
348,400 | 348,516 | ||||
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Customers’ deposits |
42,433 | 44,218 | ||||
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Nonrecourse mortgages secured by operating properties |
15,220 | 15,511 | ||||
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Liabilities from inventory not owned |
242,409 | 105,856 | ||||
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Total homebuilding |
777,130 | 657,964 | ||||
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Financial services: |
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Accounts payable and other liabilities |
27,695 | 27,908 | ||||
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Mortgage warehouse lines of credit |
140,356 | 108,875 | ||||
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Total financial services |
168,051 | 136,783 | ||||
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Notes payable: |
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Revolving credit agreement |
47,000 | 47,000 | ||||
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Senior secured notes, net of discount |
981,716 | 981,346 | ||||
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Senior notes, net of discount |
607,575 | 780,319 | ||||
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Senior amortizing notes |
10,516 | 12,811 | ||||
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Senior exchangeable notes |
74,720 | 73,771 | ||||
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Accrued interest |
29,172 | 40,388 | ||||
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Total notes payable |
1,750,699 | 1,935,635 | ||||
|
Total liabilities |
2,695,880 | 2,730,382 | ||||
|
Stockholders’ equity deficit: |
||||||
|
Preferred stock, $0.01 par value - authorized 100,000 shares; issued and outstanding 5,600 shares with a liquidation preference of $140,000 at January 31, 2016 and at October 31, 2015 |
135,299 | 135,299 | ||||
|
Common stock, Class A, $0.01 par value – authorized 400,000,000 shares; issued 143,562,913 shares at January 31, 2016 and 143,292,881 shares at October 31, 2015 (including 11,760,763 shares at January 31, 2016 and October 31, 2015 held in treasury) |
1,436 | 1,433 | ||||
|
Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) – authorized 60,000,000 shares; issued 16,009,727 shares at January 31, 2016 and 15,676,829 shares at October 31, 2015 (including 691,748 shares at January 31, 2016 and October 31, 2015 held in treasury) |
160 | 157 | ||||
|
Paid in capital – common stock |
704,862 | 703,751 | ||||
|
Accumulated deficit |
(869,537 |
) |
(853,364 |
) | ||
|
Treasury stock – at cost |
(115,360 |
) |
(115,360 |
) | ||
|
Total stockholders’ equity deficit |
(143,140 |
) |
(128,084 |
) | ||
|
Total liabilities and equity |
$2,552,740 | $2,602,298 |
(1) Derived from the audited balance sheet as of October 31, 2015.
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Share and Per Share Data)
(Unaudited)
|
Three Months Ended January 31, |
||||||
|
2016 |
2015 |
|||||
|
Revenues: |
||||||
|
Homebuilding: |
||||||
|
Sale of homes |
$556,775 | $433,471 | ||||
|
Land sales and other revenues |
604 | 1,121 | ||||
|
Total homebuilding |
557,379 | 434,592 | ||||
|
Financial services |
18,226 | 11,122 | ||||
|
Total revenues |
575,605 | 445,714 | ||||
|
Expenses: |
||||||
|
Homebuilding: |
||||||
|
Cost of sales, excluding interest |
464,146 | 354,812 | ||||
|
Cost of sales interest |
16,843 | 11,318 | ||||
|
Inventory impairment loss and land option write-offs |
11,681 | 2,230 | ||||
|
Total cost of sales |
492,670 | 368,360 | ||||
|
Selling, general and administrative |
47,504 | 47,646 | ||||
|
Total homebuilding expenses |
540,174 | 416,006 | ||||
|
Financial services |
8,215 | 7,317 | ||||
|
Corporate general and administrative |
16,321 | 16,908 | ||||
|
Other interest |
21,225 | 25,071 | ||||
|
Other operations |
1,384 | 1,544 | ||||
|
Total expenses |
587,319 | 466,846 | ||||
|
(Loss) income from unconsolidated joint ventures |
(1,480 |
) |
1,452 | |||
|
Loss before income taxes |
(13,194 |
) |
(19,680 |
) | ||
|
State and federal income tax provision (benefit): |
||||||
|
State |
4,319 | 3,132 | ||||
|
Federal |
(1,340 |
) |
(8,436 |
) | ||
|
Total income taxes |
2,979 | (5,304 |
) | |||
|
Net loss |
$(16,173 |
) |
$(14,376 |
) | ||
|
Per share data: |
||||||
|
Basic: |
||||||
|
Loss per common share |
$(0.11 |
) |
$(0.10 |
) | ||
|
Weighted-average number of common shares outstanding |
147,139 | 146,929 | ||||
|
Assuming dilution: |
||||||
|
Loss per common share |
$(0.11 |
) |
$(0.10 |
) | ||
|
Weighted-average number of common shares outstanding |
147,139 | 146,929 | ||||
|
HOVNANIAN ENTERPRISES, INC. |
||||||||||
|
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE) |
||||||||||
|
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES) |
Communities Under Development |
|||||||||
|
(UNAUDITED) |
Three Months - January 31, 2016 | |||||||||
|
Net Contracts |
Deliveries |
Contract | ||||||||
|
Three Months Ended |
Three Months Ended |
Backlog | ||||||||
|
Jan 31, |
Jan 31, |
Jan 31, | ||||||||
|
2016 |
2015 |
% Change |
2016 |
2015 |
% Change |
2016 |
2015 |
% Change | ||
|
Northeast |
||||||||||
|
(NJ, PA) |
Home |
92 |
107 |
(14.0)% |
151 |
96 |
57.3% |
234 |
157 |
49.0% |
|
Dollars |
$39,784 |
$56,753 |
(29.9)% |
$72,438 |
$50,642 |
43.0% |
$114,350 |
$79,438 |
43.9% | |
|
Avg. Price |
$432,432 |
$530,402 |
(18.5)% |
$479,721 |
$527,521 |
(9.1)% |
$488,673 |
$505,973 |
(3.4)% | |
|
Mid-Atlantic |
||||||||||
|
(DE, MD, VA, WV) |
Home |
260 |
211 |
23.2% |
206 |
191 |
7.9% |
507 |
391 |
29.7% |
|
Dollars |
$130,316 |
$102,109 |
27.6% |
$93,552 |
$80,911 |
15.6% |
$275,863 |
$210,121 |
31.3% | |
|
Avg. Price |
$501,215 |
$483,931 |
3.6% |
$454,136 |
$423,620 |
7.2% |
$544,108 |
$537,394 |
1.2% | |
|
Midwest |
||||||||||
|
(IL, MN, OH) |
Home |
207 |
208 |
(0.5)% |
274 |
203 |
35.0% |
577 |
670 |
(13.9)% |
|
Dollars |
$67,569 |
$70,981 |
(4.8)% |
$91,840 |
$64,410 |
42.6% |
$170,020 |
$195,167 |
(12.9)% | |
|
Avg. Price |
$326,420 |
$341,257 |
(4.3)% |
$335,181 |
$317,290 |
5.6% |
$294,662 |
$291,294 |
1.2% | |
|
Southeast |
||||||||||
|
(FL, GA, NC, SC) |
Home |
213 |
173 |
23.1% |
116 |
121 |
(4.1)% |
376 |
284 |
32.4% |
|
Dollars |
$90,259 |
$52,290 |
72.6% |
$39,194 |
$37,784 |
3.7% |
$157,001 |
$95,577 |
64.3% | |
|
Avg. Price |
$423,754 |
$302,257 |
40.2% |
$337,884 |
$312,264 |
8.2% |
$417,556 |
$336,539 |
24.1% | |
|
Southwest |
||||||||||
|
(AZ, TX) |
Home |
560 |
538 |
4.1% |
550 |
477 |
15.3% |
1,043 |
831 |
25.5% |
|
Dollars |
$208,642 |
$193,584 |
7.8% |
$204,189 |
$166,609 |
22.6% |
$427,164 |
$322,294 |
32.5% | |
|
Avg. Price |
$372,575 |
$359,822 |
3.5% |
$371,253 |
$349,286 |
6.3% |
$409,553 |
$387,839 |
5.6% | |
|
West |
||||||||||
|
(CA) |
Home |
199 |
82 |
142.7% |
125 |
61 |
104.9% |
277 |
66 |
319.7% |
|
Dollars |
$92,073 |
$27,440 |
235.5% |
$55,562 |
$33,115 |
67.8% |
$143,396 |
$22,936 |
525.2% | |
|
Avg. Price |
$462,676 |
$334,629 |
38.3% |
$444,494 |
$542,866 |
(18.1)% |
$517,677 |
$347,520 |
49.0% | |
|
Consolidated Total |
||||||||||
|
Home |
1,531 |
1,319 |
16.1% |
1,422 |
1,149 |
23.8% |
3,014 |
2,399 |
25.6% | |
|
Dollars |
$628,643 |
$503,157 |
24.9% |
$556,775 |
$433,471 |
28.4% |
$1,287,794 |
$925,533 |
39.1% | |
|
Avg. Price |
$410,610 |
$381,469 |
7.6% |
$391,543 |
$377,259 |
3.8% |
$427,271 |
$385,800 |
10.7% | |
|
Unconsolidated Joint Ventures |
||||||||||
|
Home |
61 |
47 |
29.8% |
44 |
71 |
(38.0)% |
224 |
88 |
154.5% | |
|
Dollars |
$39,821 |
$18,081 |
120.2% |
$20,187 |
$27,578 |
(26.8)% |
$151,716 |
$39,626 |
282.9% | |
|
Avg. Price |
$652,803 |
$384,707 |
69.7% |
$458,795 |
$388,421 |
18.1% |
$677,304 |
$450,292 |
50.4% | |
|
Grand Total |
||||||||||
|
Home |
1,592 |
1,366 |
16.5% |
1,466 |
1,220 |
20.2% |
3,238 |
2,487 |
30.2% | |
|
Dollars |
$668,464 |
$521,238 |
28.2% |
$576,962 |
$461,049 |
25.1% |
$1,439,510 |
$965,159 |
49.1% | |
|
Avg. Price |
$419,889 |
$381,580 |
10.0% |
$393,562 |
$377,909 |
4.1% |
$444,568 |
$388,082 |
14.6% | |
|
DELIVERIES INCLUDE EXTRAS |
Notes:
(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.
| HOVNANIAN ENTERPRISES, INC. | ||||||||||||||||||||
| (DOLLARS IN THOUSANDS EXCEPT AVG. PRICE) | ||||||||||||||||||||
| (SEGMENT DATA INCLUDES UNCONSOLIDATED JOINT VENTURES) | Communities Under Development | |||||||||||||||||||
| (UNAUDITED) | Three Months - January 31, 2016 | |||||||||||||||||||
| Net Contracts | Deliveries | Contract | ||||||||||||||||||
| Three Months Ended | Three Months Ended | Backlog | ||||||||||||||||||
| Jan 31, | Jan 31, | Jan 31, | ||||||||||||||||||
|
2016 |
2015 |
% Change |
2016 |
2015 |
% Change |
2016 |
2015 |
% Change | ||||||||||||
|
Northeast |
||||||||||||||||||||
|
(includes unconsolidated joint ventures) |
Home |
87 |
108 |
(19.4)% |
159 |
108 |
47.2% |
269 |
166 |
62.0% | ||||||||||
|
(NJ, PA) |
Dollars |
$35,494 |
$54,601 |
(35.0)% |
$74,694 |
$54,100 |
38.1% |
$129,276 |
$82,082 |
57.5% | ||||||||||
|
Avg. Price |
$407,974 |
$505,568 |
(19.3)% |
$469,773 |
$500,924 |
(6.2)% |
$480,580 |
$494,469 |
(2.8)% | |||||||||||
|
Mid-Atlantic |
||||||||||||||||||||
|
(includes unconsolidated joint ventures) |
Home |
273 |
228 |
19.7% |
216 |
210 |
2.9% |
524 |
424 |
23.6% | ||||||||||
|
(DE, MD, VA, WV) |
Dollars |
$136,738 |
$111,562 |
22.6% |
$99,219 |
$91,498 |
8.4% |
$284,425 |
$230,025 |
23.6% | ||||||||||
|
Avg. Price |
$500,874 |
$489,307 |
2.4% |
$459,347 |
$435,704 |
5.4% |
$542,796 |
$542,512 |
0.1% | |||||||||||
|
Midwest |
||||||||||||||||||||
|
(includes unconsolidated joint ventures) |
Home |
207 |
208 |
(0.5)% |
274 |
214 |
28.0% |
577 |
676 |
(14.6)% | ||||||||||
|
(IL, MN, OH) |
Dollars |
$67,569 |
$71,234 |
(5.1)% |
$91,840 |
$67,337 |
36.4% |
$170,020 |
$197,158 |
(13.8)% | ||||||||||
|
Avg. Price |
$326,420 |
$342,471 |
(4.7)% |
$335,181 |
$314,658 |
6.5% |
$294,662 |
$291,653 |
1.0% | |||||||||||
|
Southeast |
||||||||||||||||||||
|
(includes unconsolidated joint ventures) |
Home |
220 |
189 |
16.4% |
117 |
141 |
(17.0)% |
391 |
309 |
26.5% | ||||||||||
|
(FL, GA, NC, SC) |
Dollars |
$95,086 |
$58,794 |
61.7% |
$39,580 |
$45,834 |
(13.6)% |
$166,366 |
$105,952 |
57.0% | ||||||||||
|
Avg. Price |
$432,210 |
$311,080 |
38.9% |
$338,287 |
$325,067 |
4.1% |
$425,490 |
$342,887 |
24.1% | |||||||||||
|
Southwest |
||||||||||||||||||||
|
(includes unconsolidated joint ventures) |
Home |
560 |
538 |
4.1% |
550 |
477 |
15.3% |
1,043 |
831 |
25.5% | ||||||||||
|
(AZ, TX) |
Dollars |
$208,642 |
$193,584 |
7.8% |
$204,189 |
$166,609 |
22.6% |
$427,164 |
$322,294 |
32.5% | ||||||||||
|
Avg. Price |
$372,575 |
$359,822 |
3.5% |
$371,253 |
$349,286 |
6.3% |
$409,553 |
$387,839 |
5.6% | |||||||||||
|
West |
||||||||||||||||||||
|
(includes unconsolidated joint ventures) |
Home |
245 |
95 |
157.9% |
150 |
70 |
114.3% |
434 |
81 |
435.8% | ||||||||||
|
(CA) |
Dollars |
$124,935 |
$31,463 |
297.1% |
$67,440 |
$35,671 |
89.1% |
$262,259 |
$27,648 |
848.6% | ||||||||||
|
Avg. Price |
$509,937 |
$331,187 |
54.0% |
$449,597 |
$509,591 |
(11.8)% |
$604,284 |
$341,336 |
77.0% | |||||||||||
|
Grand Total |
||||||||||||||||||||
|
Home |
1,592 |
1,366 |
16.5% |
1,466 |
1,220 |
20.2% |
3,238 |
2,487 |
30.2% | |||||||||||
|
Dollars |
$668,464 |
$521,238 |
28.2% |
$576,962 |
$461,049 |
25.1% |
$1,439,510 |
$965,159 |
49.1% | |||||||||||
|
Avg. Price |
$419,889 |
$381,580 |
10.0% |
$393,562 |
$377,909 |
4.1% |
$444,568 |
$388,082 |
14.6% | |||||||||||
|
Consolidated Total |
||||||||||||||||||||
|
Home |
1,531 |
1,319 |
16.1% |
1,422 |
1,149 |
23.8% |
3,014 |
2,399 |
25.6% | |||||||||||
|
Dollars |
$628,643 |
$503,157 |
24.9% |
$556,775 |
$433,471 |
28.4% |
$1,287,794 |
$925,533 |
39.1% | |||||||||||
|
Avg. Price |
$410,610 |
$381,469 |
7.6% |
$391,543 |
$377,259 |
3.8% |
$427,271 |
$385,800 |
10.7% | |||||||||||
|
Unconsolidated Joint Ventures |
||||||||||||||||||||
|
Home |
61 |
47 |
29.8% |
44 |
71 |
(38.0)% |
224 |
88 |
154.5% | |||||||||||
|
Dollars |
$39,821 |
$18,081 |
120.2% |
$20,187 |
$27,578 |
(26.8)% |
$151,716 |
$39,626 |
282.9% | |||||||||||
|
Avg. Price |
$652,803 |
$384,707 |
69.7% |
$458,795 |
$388,421 |
18.1% |
$677,304 |
$450,292 |
50.4% | |||||||||||
|
DELIVERIES INCLUDE EXTRAS |
Notes:
(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.
12