hov20220527_8k.htm
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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): June 1, 2022
 
HOVNANIAN ENTERPRISES, INC.
(Exact Name of Registrant as Specified in its Charter)
 
Delaware
(State or Other
Jurisdiction
of Incorporation)
1-8551
(Commission File Number)
22-1851059
(IRS Employer
Identification No.)
 
90 Matawan Road, Fifth Floor
Matawan, New Jersey 07747
(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:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act.
 
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Class A Common Stock $0.01 par value per share
HOV
New York Stock Exchange
Preferred Stock Purchase Rights (1)
N/A
New York Stock Exchange
Depositary Shares each representing 1/1,000th of a share of 7.625% Series A Preferred Stock
HOVNP
The Nasdaq Stock Market LLC
 
(1) Each share of Class A Common Stock includes an associated Preferred Stock Purchase Right. Each Preferred Stock Purchase Right initially represents the right, if such Preferred Stock Purchase Right becomes exercisable, to purchase from the Company one ten-thousandth of a share of its Series B Junior Preferred Stock for each share of Common Stock. The Preferred Stock Purchase Rights currently cannot trade separately from the underlying Common Stock.
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company   
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐ 
 
 

 
 
Item 2.02.
Results of Operations and Financial Condition.
 
On June 1, 2022, Hovnanian Enterprises, Inc. (the “Company”) issued a press release announcing its preliminary financial results for the fiscal second quarter ended April 30, 2022. 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 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”) and also contains the ratio of Adjusted EBITDA to interest incurred, which are non-GAAP financial measures. The most directly comparable GAAP financial measure for EBIT, EBITDA and Adjusted EBITDA is net income. A reconciliation for historical periods of EBIT, EBITDA and Adjusted EBITDA to net income is contained in the earnings press release.
 
The attached earnings press release contains information about 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, which are non-GAAP financial measures. The most directly comparable GAAP financial measures are homebuilding gross margin and homebuilding gross margin percentage, respectively. A 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 contained in the earnings press release.
 
The attached earnings press release contains information about adjusted pretax income, which is defined as income before income taxes excluding land-related charges and loss on extinguishment of debt, which is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income before income taxes. A reconciliation for historical periods of adjusted pretax income to income 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 and benchmark the Company’s financial performance without the effects of various items the Company does not believe are characteristic of its ongoing operating performance. 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, income before income taxes, net income 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, the Company’s calculation of EBITDA may be different than the calculation used by other companies, and, therefore, comparability may be affected.
 
Management believes homebuilding gross margin, before cost of sales interest expense and land charges, enables investors to better understand the Company’s operating performance. This measure is also useful internally, helping management to evaluate the Company’s operating results on a consolidated basis and relative to other companies in the Company’s industry. In particular, the magnitude and volatility of land charges for the Company, and for other homebuilders, have been significant and, as such, have made financial analysis of the Company’s industry more difficult. Homebuilding metrics excluding land charges, as well as interest amortized to cost of sales, and other similar presentations prepared by analysts and other companies are frequently used to assist investors in understanding and comparing the operating characteristics of homebuilding activities by eliminating many of the differences in companies’ respective levels of impairments and levels of debt. Homebuilding gross margin, before cost of sales interest expense and land charges, should be considered in addition to, but not as an alternative to, homebuilding gross margin determined in accordance with GAAP as an indicator of operating performance. Additionally, the Company’s calculation of homebuilding gross margin, before cost of sales interest expense and land charges, may be different than the calculation used by other companies, and, therefore, comparability may be affected. 
 
Management believes adjusted pretax income to be relevant and useful information because it provides a better metric of the Company’s operating performance. Adjusted pretax income should be considered in addition to, but not as a substitute for, income before income taxes, net income 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, the Company’s calculation of adjusted pretax income 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
   
Exhibit 104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
 
 

 
 
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.
 
 
HOVNANIAN ENTERPRISES, INC.
 
(Registrant)
     
 
By: 
/s/ Brad G. O’Connor                                          
   
Name: Brad G. O’Connor
   
Title: Senior Vice President, Treasurer and
   
Chief Accounting Officer
 
 
Date: June 1, 2022
 
 
 
 
ex_381406.htm
 

Exhibit 99.1

 

HOVNANIAN ENTERPRISES, INC.         

News Release

 



     

Contact:

J. Larry Sorsby

Jeffrey T. O’Keefe

 

Executive Vice President & CFO

Vice President, Investor Relations

 

732-747-7800

732-747-7800

     

 

HOVNANIAN ENTERPRISES REPORTS FISCAL 2022 SECOND QUARTER RESULTS

 

161% Year-over-Year Increase in Pretax Profit

Gross Margin Percentage Increased 520 Basis Points Year-over-Year

5% Increase in Consolidated Dollar Amount of Contracts

16% Increase in Consolidated Backlog Dollars to $2.06 Billion

Early Retirement of $100 Million of Senior Secured Notes

 

MATAWAN, NJ, June 1, 2022 – Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal second quarter and six-month period ended April 30, 2022.

 

RESULTS FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED APRIL 30, 2022:

 

 

 

Total revenues were $702.5 million in the second quarter of fiscal 2022, compared with $703.2 million in the same quarter of the prior year. For the six months ended April 30, 2022, total revenues were $1.27 billion compared with $1.28 billion in the same period during the prior year.

 

 

Homebuilding gross margin percentage, after cost of sales interest expense and land charges, increased 520 basis points to 23.3% for the three months ended April 30, 2022 compared with 18.1% during the same period a year ago. During the first half of fiscal 2022, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 21.8%, up 410 basis points, compared with 17.7% during the same period a year ago.

 

 

Homebuilding gross margin percentage, before cost of sales interest expense and land charges, increased 530 basis points to 26.6% during the fiscal 2022 second quarter compared with 21.3% in last year’s second quarter. For the six months ended April 30, 2022, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 24.7%, up 370 basis points, compared with 21.0% in the same period of the previous year.

 

 

Total SG&A was $68.2 million, or 9.7% of total revenues, in the fiscal 2022 second quarter compared with $82.6 million, or 11.7% of total revenues, in the previous year’s second quarter. During the first six months of fiscal 2022, total SG&A was $140.4 million, or 11.1% of total revenues, compared with $146.3 million, or 11.4% of total revenues, in the same period of the prior fiscal year.

 

 

Total interest expense as a percent of total revenues improved by 130 basis points to 4.9% for the second quarter of fiscal 2022 compared with 6.2% during the second quarter of fiscal 2021. For the first half of fiscal 2022, total interest expense as a percent of total revenues improved 180 basis points to 4.8% compared with 6.6% in the first half of the previous fiscal year.

 

1

 

 

Income before income taxes for the second quarter of fiscal 2022 was $80.9 million, up 160.8%, compared with $31.0 million in the second quarter of the prior fiscal year. For the first six month of fiscal 2022, income before income taxes increased 129.9% to $116.3 million compared with $50.6 million during the same period of the prior fiscal year.

 

 

Adjusted pretax income, which is income before income taxes excluding $0.6 million of land-related charges and $6.8 million loss on extinguishment of debt, was $88.3 million in the second quarter of fiscal 2022 compared with $31.1 million in the fiscal 2021 second quarter. For the six months ended April 30, 2022, adjusted pretax income was $123.8 million compared with $52.6 million during the first six months of fiscal 2021.

 

 

Net income was $62.4 million, or $8.39 per diluted common share, for the three months ended April 30, 2022 compared with net income, including the $468.6 million benefit of the valuation allowance reduction, of $488.7 million, or $69.65 per diluted common share, in the second quarter of the previous fiscal year. For the first six months of fiscal 2022, net income was $87.2 million, or $11.44 per diluted common share, compared with net income, including the $468.6 million benefit of the valuation allowance reduction, of $507.6 million, or $72.71 per diluted common share in the same period during fiscal 2021.

 

 

Net income was $62.4 million, or $8.39 per diluted common share, for the three months ended April 30, 2022 compared with net income, excluding the $468.6 million benefit of the valuation allowance reduction, of $20.0 million or $2.85 per diluted common share in the second quarter of the previous fiscal year. For the first six months of fiscal 2022, net income was $87.2 million, or $11.44 per diluted common share, compared with net income, excluding the $468.6 million benefit of the valuation allowance reduction, of $39.0 million, or $5.58 per diluted common share in the same period during fiscal 2021.

 

 

Consolidated contract dollars in the second quarter of fiscal 2022 increased 4.9% to $860.5 million (1,525 homes) compared with $820.4 million (1,771 homes) in the same quarter last year. Contract dollars, including domestic unconsolidated joint ventures(1), for the three months ended April 30, 2022 were $975.2 million (1,689 homes) compared with $930.2 million (1,960 homes) in the second quarter of fiscal 2021.

 

 

Consolidated contract dollars in the first half of fiscal 2022 increased 2.5% to $1.66 billion (3,076 homes) compared with $1.62 billion (3,549 homes) in the same period last year. Contract dollars, including domestic unconsolidated joint ventures(1), for the six months ended April 30, 2022 were $1.85 billion (3,348 homes) compared with $1.83 billion (3,922 homes) in the first half of fiscal 2021.

 

 

Consolidated contracts per community were at a strong, above historical average pace of 15.0 for the second quarter ended April 30, 2022 compared to the white-hot pace of 18.3 contracts per community in last year’s second quarter. Contracts per community, including domestic unconsolidated joint ventures, decreased to 14.1 contracts per community for the second quarter of fiscal 2022, which is above the historical average pace, compared with 16.8 contracts per community for the second quarter of fiscal 2021.

 

 

As of the end of the second quarter of fiscal 2022, consolidated community count was up 5.2% to 102 communities, compared with 97 communities at April 30, 2021. Community count, including domestic unconsolidated joint ventures, was 120 as of April 30, 2022, compared with 117 communities at the end of the previous year’s second quarter.

 

 

The dollar value of consolidated contract backlog, as of April 30, 2022, increased 16.1% to $2.06 billion compared with $1.77 billion as of April 30, 2021. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of April 30, 2022, increased 14.6% to $2.34 billion compared with $2.04 billion as of April 30, 2021.

 

2

 

 

Sale of home revenues increased to $685.8 million (1,353 homes) in the fiscal 2022 second quarter compared with $679.5 million (1,618 homes) in the previous year’s second quarter. During the fiscal 2022 second quarter, sale of homes revenues, including domestic unconsolidated joint ventures, increased to $772.8 million (1,495 homes) compared with $770.6 million (1,773 homes) during the second quarter of fiscal 2021.

 

 

For the first half of fiscal 2022, sale of homes revenues were $1.24 billion (2,527 homes) compared with $1.24 billion (3,003) homes in the first six months of the previous year. For the first half of the fiscal 2022, sale of homes revenues, including domestic unconsolidated joint ventures, were $1.39 billion (2,778 homes) compared with $1.39 billion (3,277 homes) during the same period of fiscal 2021.

 

 

The contract cancellation rate for consolidated contracts was 17% for the second quarter ended April 30, 2022 compared with 16% in the fiscal 2021 second quarter. The contract cancellation rate for contracts including domestic unconsolidated joint ventures was 16% for the second quarter of fiscal 2022 compared with 15% in the second quarter of the prior year.

 

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

 

LIQUIDITY AND INVENTORY AS OF APRIL 30, 2022:

 

 

 

During the second quarter of fiscal 2022, land and land development spending was $154.8 million compared with $175.0 million in the same quarter one year ago. For the first half of fiscal 2022, land and land development spending was $349.6 million compared with $353.6 million in the same period one year ago.

 

 

After early retirement of $100 million of senior secured notes in the second quarter of fiscal 2022 in addition to the $181 million of senior secured notes retired in fiscal 2021, total liquidity as of April 30, 2022 was $282.2 million, above our targeted liquidity range of $170 million to $245 million.

 

 

In the second quarter of fiscal 2022, approximately 3,200 lots were put under option or acquired in 28 consolidated communities.

 

 

As of April 30, 2022, the total controlled consolidated lots increased 19.3% to 33,501 compared with 28,077 lots at the end of the second quarter of the previous year. Based on trailing twelve-month deliveries, the current position equaled a 5.8 years’ supply.

 

FINANCIAL GUIDANCE(2):

 

 

The Company is reiterating its financial guidance for the full year of fiscal 2022 and is providing guidance for the third quarter of 2022. Financial guidance below assumes no adverse changes in current market conditions, including further deterioration in the supply chain, material increase in mortgage rates, or increased inflation and excludes further impact to SG&A expenses from phantom stock expense related solely to stock price movements from the closing price of $46.02 at April 29, 2022.

 

3

 

 

For the third quarter of fiscal 2022, total revenues are expected to be between $780 million and $830 million, gross margin, before cost of sales interest expense and land charges, is expected to be between 24.0% and 26.0% and adjusted pretax income is expected to be between $70 million and $85 million.

 

 

For fiscal 2022, total revenues are expected to be between $2.80 billion and $3.00 billion, gross margin, before cost of sales interest expense and land charges, is expected to be between 23.5% and 25.5%, adjusted pretax income is expected to be between $260 million and $310 million, adjusted EBITDA is expected to be between $410 million and $460 million and fully diluted earnings per share is expected to be between $26.50 and $32.00. At the midpoint of our guidance, we anticipate our shareholders' equity to increase by approximately 105% by October 31, 2022.

 

 

Continue to focus on leverage levels and anticipate reducing senior secured notes by at least an additional $100 million during the second half of fiscal 2022.

 

(2)The Company cannot provide a reconciliation between its non-GAAP projections and the most directly comparable GAAP measures without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items required for the reconciliation. These items include, but are not limited to, land-related charges, inventory impairment loss and land option write-offs and loss (gain) on extinguishment of debt. These items are uncertain, depend on various factors and could have a material impact on GAAP reported results.

 

COMMENTS FROM MANAGEMENT:

 

 

“Despite continued challenges due to supply chain disruptions, labor tightness, increasing mortgage rates and permitting/inspection delays, we are pleased our adjusted pretax income increased 184% year over year and was above the high end of our guidance range. We also reduced our senior secured notes by an additional $100 million during the second quarter of fiscal 2022,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “New homes sales face a persistent headwind from rising mortgage rates, increasing home prices and fears of a recession. Despite those concerns, demand for our homes throughout the second quarter of fiscal 2022 remained strong. During the second quarter of 2022 our contracts per community were 15.0, which was above the pre-Covid 2019 second quarter pace of 10.5 and the normal historical average (1997 through 2002) second quarter pace of 13.5 contracts per community.”

 

“We already have over 100% of our expected third and fourth quarter deliveries in contract backlog and we are beginning to build our fiscal 2023 backlog. This provides us with a high level of confidence that we are on track to achieve our adjusted profit guidance for fiscal 2022. Since August of 2021, we have paid off $281 million of senior secured notes prior to their maturity and anticipate paying off at least another $100 million of senior secured notes in the second half of fiscal 2022. Additionally, by the end of 2022, we expect our equity to increase year over year by more than 100% to approximately $365 million. We remain focused on increasing profitability and further strengthening our balance sheet,” concluded Mr. Hovnanian.

 

WEBCAST INFORMATION:

   

 

Hovnanian Enterprises will webcast its fiscal 2022 second quarter financial results conference call at 11:00 a.m. E.T. on Wednesday, June 1, 2022. The webcast can be accessed live through the “Investor Relations” section of Hovnanian Enterprises’ website at http://www.khov.com. For those who are not available to listen to the live webcast, an archive of the broadcast will be available under the “Past Events” section of the Investor Relations page on the Hovnanian website at http://www.khov.com. The archive will be available for 12 months.

 

ABOUT HOVNANIAN ENTERPRISES, INC.:

 

 

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

 

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

 

4

 

 

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 income. The reconciliation for historical periods of EBIT, EBITDA and Adjusted EBITDA to net income is presented in a table attached to this earnings release.

 

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

 

Adjusted pretax income, which is defined as income before income taxes excluding land-related charges and loss on extinguishment of debt is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income before income taxes. The reconciliation for historical periods of adjusted pretax income to income before income taxes is presented in a table attached to this earnings release.

 

Total liquidity is comprised of $149.4 million of cash and cash equivalents, $7.8 million of restricted cash required to collateralize letters of credit and $125.0 million availability under the senior secured revolving credit facility as of April 30, 2022.

 

 

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 Companys 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) shortages in, and price fluctuations of, raw materials and labor, including due to geopolitical events, 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; (3) the outbreak and spread of COVID-19 and the measures that governments, agencies, law enforcement and/or health authorities implement to address it, as well as continuing macroeconomic effects of the pandemic; (4) adverse weather and other environmental conditions and natural disasters; (5) the seasonality of the Companys business; (6) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (7) reliance on, and the performance of, subcontractors; (8) regional and local economic factors, including dependency on certain sectors of the economy, and employment levels affecting home prices and sales activity in the markets where the Company builds homes; (9) increases in cancellations of agreements of sale; (10) fluctuations in interest rates and the availability of mortgage financing; (11) changes in tax laws affecting the after-tax costs of owning a home; (12) legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors; (13) levels of competition; (14) utility shortages and outages or rate fluctuations; (15) information technology failures and data security breaches; (16) negative publicity; (17) high leverage and restrictions on the Companys operations and activities imposed by the agreements governing the Companys outstanding indebtedness; (18) availability and terms of financing to the Company; (19) the Companys sources of liquidity; (20) changes in credit ratings; (21) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (22) operations through unconsolidated joint ventures with third parties; (23) significant influence of the Companys controlling stockholders; (24) availability of net operating loss carryforwards; (25) loss of key management personnel or failure to attract qualified personnel; (26) increases in inflation; and (27) certain risks, uncertainties and other factors described in detail in the Companys Annual Report on Form 10-K for the fiscal year ended October 31, 2021 and the Companys Quarterly Reports on Form 10-Q for the quarterly periods during fiscal 2022 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.

 

5

 

Hovnanian Enterprises, Inc.

April 30, 2022

Statements of consolidated operations

(In thousands, except per share data)

 

   

Three Months Ended

   

Six Months Ended

 
   

April 30,

   

April 30,

 
   

2022

   

2021

   

2022

   

2021

 
   

(Unaudited)

   

(Unaudited)

 

Total revenues

    $702,537       $703,162       $1,267,850       $1,277,826  

Costs and expenses (1)

    617,968       674,771       1,156,071       1,231,766  

Loss on extinguishment of debt

    (6,795 )     -       (6,795 )     -  

Income from unconsolidated joint ventures

    3,171       2,641       11,362       4,557  

Income before income taxes

    80,945       31,032       116,346       50,617  

Income tax provision (benefit)

    18,510       (457,644 )     29,103       (457,018 )

Net income

    62,435       488,676       87,243       507,635  

Less: preferred stock dividends

    2,669       -       5,338       -  

Net income available to common stockholders

    $59,766       $488,676       $81,905       $507,635  
                                 
                                 
                                 

Per share data:

                               

Basic:

                               

Net income per common share

    $8.50       $71.11       $11.62       $74.00  

Weighted average number of common shares outstanding

    6,396       6,248       6,392       6,236  

Assuming dilution:

                               

Net income per common share

    $8.39       $69.65       $11.44       $72.71  

Weighted average number of common shares outstanding

    6,477       6,368       6,492       6,331  

 

(1) Includes inventory impairment loss and land option write-offs.

 

Hovnanian Enterprises, Inc.

April 30, 2022

Reconciliation of income before income taxes excluding land-related charges and loss on extinguishment of debt to income before income taxes

(In thousands)

 

   

Three Months Ended

   

Six Months Ended

 
   

April 30,

   

April 30,

 
   

2022

   

2021

   

2022

   

2021

 
   

(Unaudited)

   

(Unaudited)

 

Income before income taxes

    $80,945       $31,032       $116,346       $50,617  

Inventory impairment loss and land option write-offs

    565       81       664       1,958  

Loss on extinguishment of debt

    6,795       -       6,795       -  

Income before income taxes excluding land-related charges and loss on extinguishment of debt (1)

    $88,305       $31,113       $123,805       $52,575  

 

(1) Income before income taxes excluding land-related charges and loss on extinguishment of debt is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income before income taxes.

 

 

 

6

 

Hovnanian Enterprises, Inc.

April 30, 2022

Gross margin

(In thousands)

 

   

Homebuilding Gross Margin

   

Homebuilding Gross Margin

 
   

Three Months Ended

   

Six Months Ended

 
   

April 30,

   

April 30,

 
   

2022

   

2021

   

2022

   

2021

 
   

(Unaudited)

   

(Unaudited)

 

Sale of homes

    $685,823       $679,515       $1,237,189       $1,230,880  

Cost of sales, excluding interest expense and land charges (1)

    503,466       535,017       931,339       972,389  

Homebuilding gross margin, before cost of sales interest expense and land charges (2)

    182,357       144,498       305,850       258,491  

Cost of sales interest expense, excluding land sales interest expense

    21,678       21,704       35,402       38,421  

Homebuilding gross margin, after cost of sales interest expense, before land charges (2)

    160,679       122,794       270,448       220,070  

Land charges

    565       81       664       1,958  

Homebuilding gross margin

    $160,114       $122,713       $269,784       $218,112  
                                 

Homebuilding Gross margin percentage

    23.3 %     18.1 %     21.8 %     17.7 %

Homebuilding Gross margin percentage, before cost of sales interest expense and land charges (2)

    26.6 %     21.3 %     24.7 %     21.0 %

Homebuilding Gross margin percentage, after cost of sales interest expense, before land charges (2)

    23.4 %     18.1 %     21.9 %     17.9 %

 

   

Land Sales Gross Margin

   

Land Sales Gross Margin

 
   

Three Months Ended

   

Six Months Ended

 
   

April 30,

   

April 30,

 
   

2022

   

2021

   

2022

   

2021

 
   

(Unaudited)

   

(Unaudited)

 

Land and lot sales

    $365       $1,549       $399       $4,911  

Land and lot sales cost of sales, excluding interest and land charges (1)

    216       1,517       260       3,783  

Land and lot sales gross margin, excluding interest and land charges

    149       32       139       1,128  

Land and lot sales interest

    -       21       21       469  

Land and lot sales gross margin, including interest and excluding land charges

    $149       $11       $118       $659  

 

(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.

 

7

 

Hovnanian Enterprises, Inc.

April 30, 2022

Reconciliation of adjusted EBITDA to net income (loss)

(In thousands)

 

   

Three Months Ended

   

Six Months Ended

 
   

April 30,

   

April 30,

 
   

2022

   

2021

   

2022

   

2021

 
   

(Unaudited)

   

(Unaudited)

 

Net income

    $62,435       $488,676       $87,243       $507,635  

Income tax provision (benefit)

    18,510       (457,644 )     29,103       (457,018 )

Interest expense

    34,103       43,758       61,241       84,898  

EBIT (1)

    115,048       74,790       177,587       135,515  

Depreciation and amortization

    1,314       1,484       2,489       2,822  

EBITDA (2)

    116,362       76,274       180,076       138,337  

Inventory impairment loss and land option write-offs

    565       81       664       1,958  

Loss on extinguishment of debt

    6,795       -       6,795       -  

Adjusted EBITDA (3)

    $123,722       $76,355       $187,535       $140,295  
                                 

Interest incurred

    $33,872       $41,870       $66,655       $83,327  
                                 

Adjusted EBITDA to interest incurred

    3.65       1.82       2.81       1.68  

 

(1) EBIT is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income. EBIT represents earnings before interest expense and income taxes.

(2) EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income. EBITDA represents earnings before interest expense, income taxes, depreciation and amortization.

(3) Adjusted EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income. 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.

April 30, 2022

Interest incurred, expensed and capitalized

(In thousands)

 

   

Three Months Ended

   

Six Months Ended

 
   

April 30,

   

April 30,

 
   

2022

   

2021

   

2022

   

2021

 
   

(Unaudited)

   

(Unaudited)

 

Interest capitalized at beginning of period

    $63,804       $65,327       $58,159       $65,010  

Plus interest incurred

    33,872       41,870       66,655       83,327  

Less interest expensed

    34,103       43,758       61,241       84,898  

Less interest contributed to unconsolidated joint venture (1)

    -       3,667       -       3,667  

Interest capitalized at end of period (2)

    $63,573       $59,772       $63,573       $59,772  

 

(1) Represents capitalized interest which was included as part of the assets contributed to the joint venture the company entered into during the six months ended April 30, 2021. There was no impact to the 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.

 

8

 

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

 

   

April 30,

   

October 31,

 
   

2022

   

2021

 
   

(Unaudited)

      (1)  

ASSETS

               

Homebuilding:

               

Cash and cash equivalents

    $149,431       $245,970  

Restricted cash and cash equivalents

    14,283       16,089  

Inventories:

               

Sold and unsold homes and lots under development

    1,140,199       1,019,541  

Land and land options held for future development or sale

    152,796       135,992  

Consolidated inventory not owned

    199,172       98,727  

Total inventories

    1,492,167       1,254,260  

Investments in and advances to unconsolidated joint ventures

    67,344       60,897  

Receivables, deposits and notes, net

    39,420       39,934  

Property, plant and equipment, net

    21,559       18,736  

Prepaid expenses and other assets

    61,155       56,186  

Total homebuilding

    1,845,359       1,692,072  
                 

Financial services

    138,253       202,758  
                 

Deferred tax assets, net

    400,557       425,678  

Total assets

    $2,384,169       $2,320,508  
                 

LIABILITIES AND EQUITY

               

Homebuilding:

               

Nonrecourse mortgages secured by inventory, net of debt issuance costs

    $196,192       $125,089  

Accounts payable and other liabilities

    407,926       426,381  

Customers’ deposits

    100,445       68,295  

Liabilities from inventory not owned, net of debt issuance costs

    123,793       62,762  

Senior notes and credit facilities (net of discounts, premiums and debt issuance costs)

    1,149,129       1,248,373  

Accrued Interest

    28,367       28,154  

Total homebuilding

    2,005,852       1,959,054  
                 

Financial services

    116,980       182,219  

Income taxes payable

    2,938       3,851  

Total liabilities

    2,125,770       2,145,124  
                 

Equity:

               

Hovnanian Enterprises, Inc. stockholders' equity:

               

Preferred stock, $0.01 par value - authorized 100,000 shares; issued and outstanding 5,600 shares with a liquidation preference of $140,000 at April 30, 2022 and October 31, 2021

    135,299       135,299  

Common stock, Class A, $0.01 par value - authorized 16,000,000 shares; issued 6,105,811 shares at April 30, 2022 and 6,066,164 shares at October 31, 2021

    61       61  

Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) - authorized 2,400,000 shares; issued 704,215 shares at April 30, 2022 and 686,876 shares at October 31, 2021

    7       7  

Paid in capital - common stock

    723,319       722,118  

Accumulated deficit

    (485,323

)

    (567,228

)

Treasury stock - at cost – 470,430 shares of Class A common stock and 27,669 shares of Class B common stock at April 30, 2022 and October 31, 2021

    (115,360

)

    (115,360

)

Total Hovnanian Enterprises, Inc. stockholders’ equity

    258,003       174,897  

Noncontrolling interest in consolidated joint ventures

    396       487  

Total equity

    258,399       175,384  

Total liabilities and equity

    $2,384,169       $2,320,508  

 

(1) Derived from the audited balance sheet as of October 31, 2021

 

9

 

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands Except Per Share Data)

(Unaudited)

 

   

Three Months Ended April 30,

   

Six Months Ended April 30,

 
   

2022

   

2021

   

2022

   

2021

 

Revenues:

                               

Homebuilding:

                               

Sale of homes

    $685,823       $679,515       $1,237,189       $1,230,880  

Land sales and other revenues

    1,008       1,919       1,646       5,721  

Total homebuilding

    686,831       681,434       1,238,835       1,236,601  

Financial services

    15,706       21,728       29,015       41,225  

Total revenues

    702,537       703,162       1,267,850       1,277,826  
                                 

Expenses:

                               

Homebuilding:

                               

Cost of sales, excluding interest

    503,682       536,534       931,599       976,172  

Cost of sales interest

    21,678       21,725       35,423       38,890  

Inventory impairment loss and land option write-offs

    565       81       664       1,958  

Total cost of sales

    525,925       558,340       967,686       1,017,020  

Selling, general and administrative

    46,501       42,204       89,247       82,429  

Total homebuilding expenses

    572,426       600,544       1,056,933       1,099,449  
                                 

Financial services

    10,792       11,361       21,192       21,715  

Corporate general and administrative

    21,684       40,382       51,119       63,865  

Other interest

    12,425       22,033       25,818       46,008  

Other operations

    641       451       1,009       729  

Total expenses

    617,968       674,771       1,156,071       1,231,766  

Loss on extinguishment of debt

    (6,795

)

    -       (6,795

)

    -  

Income from unconsolidated joint ventures

    3,171       2,641       11,362       4,557  

Income before income taxes

    80,945       31,032       116,346       50,617  

State and federal income tax provision (benefit):

                               

State

    2,587       (91,374

)

    5,130       (90,748

)

Federal

    15,923       (366,270

)

    23,973       (366,270

)

Total income taxes

    18,510       (457,644

)

    29,103       (457,018

)

Net income

    62,435       488,676       87,243       507,635  

Less: preferred stock dividends

    2,669       -       5,338       -  

Net income available to common stockholders

    $59,766       $488,676       $81,905       $507,635  
                                 

Per share data:

                               

Basic:

                               

Net income per common share

    $8.50       $71.11       $11.62       $74.00  

Weighted-average number of common shares outstanding

    6,396       6,248       6,392       6,236  

Assuming dilution:

                               

Net income per common share

    $8.39       $69.65       $11.44       $72.71  

Weighted-average number of common shares outstanding

    6,477       6,368       6,492       6,331  

 

10

 

HOVNANIAN ENTERPRISES, INC.

(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)

(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)

 

   

Contracts (1)

 

Deliveries

 

Contract

 
   

Three Months Ended

 

Three Months Ended

 

Backlog

 
   

April 30,

 

April 30,

 

April 30,

 
   

2022

2021

% Change

 

2022

2021

% Change

 

2022

2021

% Change

 

Northeast

                                           

(NJ, PA)

Home

  87   64   35.9 %   78   42   85.7 %   249   142   75.4 %
 

Dollars

  $64,464   $49,948   29.1 %   $55,048   $28,686   91.9 %   $197,523   $105,828   86.6 %
 

Avg. Price

  $740,966   $780,438   (5.1 )%   $705,744   $683,000   3.3 %   $793,265   $745,268   6.4 %

Mid-Atlantic

                                           

(DE, MD, VA, WV)

Home

  264   242   9.1 %   191   216   (11.6 )%   618   585   5.6 %
 

Dollars

  $162,134   $152,237   6.5 %   $128,704   $112,124   14.8 %   $407,936   $350,183   16.5 %
 

Avg. Price

  $614,144   $629,079   (2.4 )%   $673,843   $519,093   29.8 %   $660,091   $598,603   10.3 %

Midwest

                                           

(IL, OH)

Home

  144   225   (36.0 )%   155   203   (23.6 )%   599   673   (11.0 )%
 

Dollars

  $55,041   $80,541   (31.7 )%   $56,690   $64,010   (11.4 )%   $197,667   $208,841   (5.4 )%
 

Avg. Price

  $382,229   $357,960   6.8 %   $365,742   $315,320   16.0 %   $329,995   $310,314   6.3 %

Southeast

                                           

(FL, GA, SC)

Home

  213   153   39.2 %   150   167   (10.2 )%   608   392   55.1 %
 

Dollars

  $132,871   $66,485   99.9 %   $73,154   $80,863   (9.5 )%   $352,101   $185,139   90.2 %
 

Avg. Price

  $623,808   $434,542   43.6 %   $487,693   $484,210   0.7 %   $579,113   472,293   22.6 %

Southwest

                                           

(AZ, TX)

Home

  541   829   (34.7 )%   555   633   (12.3 )%   1,220   1,416   (13.8 )%
 

Dollars

  $273,858   $319,618   (14.3 )%   $231,656   $217,165   6.7 %   $597,783   $540,321   10.6 %
 

Avg. Price

  $506,207   $385,546   31.3 %   $417,396   $343,073   21.7 %   $489,986   $381,583   28.4 %

West

                                           

(CA)

Home

  276   258   7.0 %   224   357   (37.3 )%   502   689   (27.1 )%
 

Dollars

  $172,177   $151,571   13.6 %   $140,571   $176,667   (20.4 )%   $307,315   $384,089   (20.0 )%
 

Avg. Price

  $623,830   $587,484   6.2 %   $627,549   $494,866   26.8 %   $612,181   $557,459   9.8 %

Consolidated Total

                                           
 

Home

  1,525   1,771   (13.9 )%   1,353   1,618   (16.4 )%   3,796   3,897   (2.6 )%
 

Dollars

  $860,545   $820,400   4.9 %   $685,823   $679,515   0.9 %   $2,060,325   $1,774,401   16.1 %
 

Avg. Price

  $564,292   $463,241   21.8 %   $506,891   $419,972   20.7 %   $542,762   $455,325   19.2 %

Unconsolidated Joint Ventures (2)

                                           

(excluding KSA JV)

Home

  164   189   (13.2 )%   142   155   (8.4 )%   396   476   (16.8 )%
 

Dollars

  $114,673   $109,806   4.4 %   $86,974   $91,067   (4.5 )%   $278,006   $266,673   4.2 %
 

Avg. Price

  $699,226   $580,984   20.4 %   $612,493   $587,529   4.2 %   $702,035   $560,237   25.3 %

Grand Total

                                           
 

Home

  1,689   1,960   (13.8 )%   1,495   1,773   (15.7 )%   4,192   4,373   (4.1 )%
 

Dollars

  $975,218   $930,206   4.8 %   $772,797   $770,582   0.3 %   $2,338,331   $2,041,074   14.6 %
 

Avg. Price

  $577,394   $474,595   21.7 %   $516,921   $434,620   18.9 %   $557,808   $466,745   19.5 %
                                             

KSA JV Only

                                           
 

Home

  51   146   (65.1 )%   0   0   0.0 %   2,191   1,451   51.0 %
 

Dollars

  $7,895   $22,805   (65.4 )%   $0   $0   0.0 %   $344,026   $227,851   51.0 %
 

Avg. Price

  $154,804   $156,199   (0.9 )%   $0   $0   0.0 %   $157,018   $157,030   (0.0 )%

 

DELIVERIES INCLUDE EXTRAS

Notes:

(1) Contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.

(2) Represents home deliveries, home revenues and average prices for our unconsolidated homebuilding joint ventures for the period. We provide this data as a supplement to our consolidated results as an indicator of the volume managed in our unconsolidated homebuilding joint ventures. Our proportionate share of the income or loss of unconsolidated homebuilding and land development joint ventures is reflected as a separate line item in our consolidated financial statements under “Income from unconsolidated joint ventures”.

 

11

 

HOVNANIAN ENTERPRISES, INC.

(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)

(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)

 

   

Contracts (1)

 

Deliveries

 

Contract

 
   

Six Months Ended

 

Six Months Ending

 

Backlog

 
   

April 30,

 

April 30,

 

April 30,

 
   

2022

2021

% Change

 

2022

2021

% Change

 

2022

2021

% Change

 

Northeast

                                           

(NJ, PA)

Home

  183   107   71.0 %   106   95   11.6 %   249   142   75.4 %
 

Dollars

  $134,532   $83,618   60.9 %   $75,405   $59,902   25.9 %   $197,523   $105,828   86.6 %
 

Avg. Price

  $735,148   $781,477   (5.9 )%   $711,368   $630,547   12.8 %   $793,265   $745,268   6.4 %

Mid-Atlantic

                                           

(DE, MD, VA, WV)

Home

  469   471   (0.4 )%   359   392   (8.4 )%   618   585   5.6 %
 

Dollars

  $293,850   $296,718   (1.0 )%   $228,104   $205,035   11.3 %   $407,936   $350,183   16.5 %
 

Avg. Price

  $626,546   $629,975   (0.5 )%   $635,387   $523,048   21.5 %   $660,091   $598,603   10.3 %

Midwest

                                           

(IL, OH)

Home

  311   463   (32.8 )%   317   386   (17.9 )%   599   673   (11.0 )%
 

Dollars

  $114,834   $159,927   (28.2 )%   $111,612   $120,603   (7.5 )%   $197,667   $208,841   (5.4 )%
 

Avg. Price

  $369,241   $345,417   6.9 %   $352,088   $312,443   12.7 %   $329,995   $310,314   6.3 %

Southeast

                                           

(FL, GA, SC)

Home

  441   363   21.5 %   254   269   (5.6 )%   608   392   55.1 %
 

Dollars

  $259,325   $164,679   57.5 %   $128,649   $126,511   1.7 %   $352,101   $185,139   90.2 %
 

Avg. Price

  $588,039   $453,661   29.6 %   $506,492   $470,301   7.7 %   $579,113   $472,293   22.6 %

Southwest

                                           

(AZ, TX)

Home

  1,197   1,565   (23.5 )%   1,053   1,215   (13.3 )%   1,220   1,416   (13.8 )%
 

Dollars

  $563,948   $587,443   (4.0 )%   $425,986   $407,347   4.6 %   $597,783   $540,321   10.6 %
 

Avg. Price

  $471,135   $375,363   25.5 %   $404,545   $335,265   20.7 %   $489,986   $381,583   28.4 %

West

                                           

(CA)

Home

  475   580   (18.1 )%   438   646   (32.2 )%   502   689   (27.1 )%
 

Dollars

  $292,318   $325,685   (10.2 )%   $267,433   $311,482   (14.1 )%   $307,315   $384,089   (20.0 )%
 

Avg. Price

  $615,406   $561,524   9.6 %   $610,578   $482,170   26.6 %   $612,181   $557,459   9.8 %

Consolidated Total

                                           
 

Home

  3,076   3,549   (13.3 )%   2,527   3,003   (15.9 )%   3,796   3,897   (2.6 )%
 

Dollars

  $1,658,807   $1,618,070   2.5 %   $1,237,189   $1,230,880   0.5 %   $2,060,325   $1,774,401   16.1 %
 

Avg. Price

  $539,274   $455,923   18.3 %   $489,588   $409,883   19.4 %   $542,762   $455,325   19.2 %

Unconsolidated Joint Ventures (2)

                                           

(excluding KSA JV)

Home

  272   373   (27.1 )%   251   274   (8.4 )%   396   476   (16.8 )%
 

Dollars

  $186,981   $211,714   (11.7 )%   $150,594   $162,180   (7.1 )%   $278,006   $266,673   4.2 %
 

Avg. Price

  $687,430   $567,598   21.1 %   $599,976   $591,897   1.4 %   $702,035   $560,237   25.3 %

Grand Total

                                           
 

Home

  3,348   3,922   (14.6 )%   2,778   3,277   (15.2 )%   4,192   4,373   (4.1 )%
 

Dollars

  $1,845,788   $1,829,784   0.9 %   $1,387,783   $1,393,060   (0.4 )%   $2,338,331   $2,041,074   14.6 %
 

Avg. Price

  $551,310   $466,544   18.2 %   $499,562   $425,102   17.5 %   $557,808   $466,745   19.5 %
                                             

KSA JV Only

                                           
 

Home

  278   359   (22.6 )%   0   0   0.0 %   2,191   1,451   51.0 %
 

Dollars

  $43,642   $56,178   (22.3 )%   $0   $0   0.0 %   $344,026   $227,851   51.0 %
 

Avg. Price

  $156,986   $156,485   0.3 %   $0   $0   0.0 %   $157,018   $157,030   (0.0 )%

 

DELIVERIES INCLUDE EXTRAS

Notes:

(1) Contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.

(2) Represents home deliveries, home revenues and average prices for our unconsolidated homebuilding joint ventures for the period. We provide this data as a supplement to our consolidated results as an indicator of the volume managed in our unconsolidated homebuilding joint ventures. Our proportionate share of the income or loss of unconsolidated homebuilding and land development joint ventures is reflected as a separate line item in our consolidated financial statements under “Income from unconsolidated joint ventures”.

 

12

 

HOVNANIAN ENTERPRISES, INC.

(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)

(SEGMENT DATA UNCONSOLIDATED JOINT VENTURES ONLY)

 

   

Contracts (1)

 

Deliveries

 

Contract

 
   

Three Months Ended

 

Three Months Ended

 

Backlog

 
   

April 30,

 

April 30,

 

April 30,

 
   

2022

2021

 

% Change

 

2022

2021

% Change

 

2022

2021

% Change

 

Northeast

                                             

(unconsolidated joint ventures)

Home

  19   14     35.7 %   0   17   (100.0 )%   38   14   171.4 %

(excluding KSA JV)

Dollars

  $19,932   $16,977     17.4 %   $0   $23,813   (100.0 )%   $32,233   $17,839   80.7 %

(NJ, PA)

Avg. Price

  $1,049,053   $1,212,643     (13.5 )%   $0   $1,400,765   (100.0 )%   $848,237   $1,274,214   (33.4 )%

Mid-Atlantic

                                             

(unconsolidated joint ventures)

Home

  63   26     142.3 %   46   33   39.4 %   143   127   12.6 %

(DE, MD, VA, WV)

Dollars

  $42,226   $14,962     182.2 %   $31,159   $17,923   73.8 %   $93,893   $75,401   24.5 %
 

Avg. Price

  $670,254   $575,462     16.5 %   $677,369   $543,121   24.9 %   $656,594   $593,709   10.6 %

Midwest

                                             

(unconsolidated joint ventures)

Home

  0   0     0.0 %   0   0   0.0 %   0   0   0.0 %

(IL, OH)

Dollars

  $0   $0     0.0 %   $0   $0   0.0 %   $0   $0   0.0 %
 

Avg. Price

  $0   $0     0.0 %   $0   $0   0.0 %   $0   $0   0.0 %

Southeast

                                             

(unconsolidated joint ventures)

Home

  49   127     (61.4 )%   74   70   5.7 %   172   272   (36.8 )%

(FL, GA, SC)

Dollars

  $35,101   $69,362     (49.4 )%   $45,621   $33,510   36.1 %   $130,093   $145,096   (10.3 )%
 

Avg. Price

  $716,347   $546,157     31.2 %   $616,500   $478,714   28.8 %   $756,355   $533,441   41.8 %

Southwest

                                             

(unconsolidated joint ventures)

Home

  0   0     0.0 %   0   14   (100.0 )%   0   21   (100.0 )%

(AZ, TX)

Dollars

  $0   $(17 )   (100.0 )%   $0   $8,441   (100.0 )%   $0   $12,758   (100.0 )%
 

Avg. Price

  $0   $0     0.0 %   $0   $602,929   (100.0 )%   $0   $607,524   (100.0 )%

West

                                             

(unconsolidated joint ventures)

Home

  33   22     50.0 %   22   21   4.8 %   43   42   2.4 %

(CA)

Dollars

  $17,414   $8,522     104.3 %   $10,194   $7,380   38.1 %   $21,787   $15,579   39.8 %
 

Avg. Price

  $527,697   $387,364     36.2 %   $463,363   $351,429   31.9 %   $506,674   $370,929   36.6 %

Unconsolidated Joint Ventures (2)

                                             

(excluding KSA JV)

Home

  164   189     (13.2 )%   142   155   (8.4 )%   396   476   (16.8 )%
 

Dollars

  $114,673   $109,806     4.4 %   $86,974   $91,067   (4.5 )%   $278,006   $266,673   4.2 %
 

Avg. Price

  $699,226   $580,984     20.4 %   $612,493   $587,529   4.2 %   $702,035   $560,237   25.3 %
                                               

KSA JV Only

                                             
 

Home

  51   146     (65.1 )%   0   0   0.0 %   2,191   1,451   51.0 %
 

Dollars

  $7,895   $22,805     (65.4 )%   $0   $0   0.0 %   $344,026   $227,851   51.0 %
 

Avg. Price

  $154,804   $156,199     (0.9 )%   $0   $0   0.0 %   $157,018   157,030   (0.0 )%

 

DELIVERIES INCLUDE EXTRAS

Notes:

(1) Contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.

(2) Represents home deliveries, home revenues and average prices for our unconsolidated homebuilding joint ventures for the period. We provide this data as a supplement to our consolidated results as an indicator of the volume managed in our unconsolidated homebuilding joint ventures. Our proportionate share of the income or loss of unconsolidated homebuilding and land development joint ventures is reflected as a separate line item in our consolidated financial statements under “Income from unconsolidated joint ventures”.

 

13

 

HOVNANIAN ENTERPRISES, INC.

(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)

(SEGMENT DATA UNCONSOLIDATED JOINT VENTURES ONLY)

 

   

Contracts (1)

 

Deliveries

 

Contract

 
   

Six Months Ended

 

Six Months Ended

 

Backlog

 
   

April 30,

 

April 30,

 

April 30,

 
   

2022

2021

% Change

 

2022

2021

% Change

 

2022

2021

% Change

 

Northeast

                                           

(unconsolidated joint ventures)

Home

  32   27   18.5 %   4   31   (87.1 )%   38   14   171.4 %

(excluding KSA JV)

Dollars

  $27,738   $34,812   (20.3 )%   $5,695   $41,508   (86.3 )%   $32,233   $17,839   80.7 %

(NJ, PA)

Avg. Price

  $866,813   $1,289,333   (32.8 )%   $1,423,750   $1,338,968   6.3 %   $848,237   $1,274,214   (33.4 )%

Mid-Atlantic

                                           

(unconsolidated joint ventures)

Home

  100   49   104.1 %   73   63   15.9 %   143   127   12.6 %

(DE, MD, VA, WV)

Dollars

  $65,964   $28,288   133.2 %   $48,679   $32,324   50.6 %   $93,893   $75,401   24.5 %
 

Avg. Price

  $659,640   $577,306   14.3 %   $666,836   $513,079   30.0 %   $656,594   $593,709   10.6 %

Midwest

                                           

(unconsolidated joint ventures)

Home

  0   1   (100.0 )%   0   1   (100.0 )%   0   0   0.0 %

(IL, OH)

Dollars

  $0   $409   (100.0 )%   $0   $409   (100.0 )%   $0   $0   0.0 %
 

Avg. Price

  $0   $409,000   (100.0 )%   $0   $409,000   (100.0 )%   $0   $0   0.0 %

Southeast

                                           

(unconsolidated joint ventures)

Home

  87   244   (64.3 )%   126   121   4.1 %   172   272   (36.8 )%

(FL, GA, SC)

Dollars

  $66,626   $127,120   (47.6 )%   $74,304   $60,552   22.7 %   $130,093   $145,096   (10.3 )%
 

Avg. Price

  $765,816   $520,984   47.0 %   $589,714   $500,430   17.8 %   $756,355   $533,441   41.8 %

Southwest

                                           

(unconsolidated joint ventures)

Home

  0   4   (100.0 )%   0   29   (100.0 )%   0   21   (100.0 )%

(AZ, TX)

Dollars

  $0   $3,135   (100.0 )%   $0   $17,180   (100.0 )%   $0   $12,758   (100.0 )%
 

Avg. Price

  $0   $783,750   (100.0 )%   $0   $592,414   (100.0 )%   $0   $607,524   (100.0 )%

West

                                           

(unconsolidated joint ventures)

Home

  53   48   10.4 %   48   29   65.5 %   43   42   2.4 %

(CA)

Dollars

  $26,653   $17,949   48.5 %   $21,916   $10,207   114.7 %   $21,787   $15,579   39.8 %
 

Avg. Price

  $502,887   $373,938   34.5 %   $456,583   $351,966   29.7 %   $506,674   $370,929   36.6 %

Unconsolidated Joint Ventures (2)

                                           

(excluding KSA JV)

Home

  272   373   (27.1 )%   251   274   (8.4 )%   396   476   (16.8 )%
 

Dollars

  $186,981

 

$211,713   (11.7 )%   $150,594   $162,180   (7.1 )%   $278,006   $266,673   4.2 %
 

Avg. Price

  $687,430   $567,595   21.1 %   $599,976   $591,898   1.4 %   $702,035   $560,237   25.3 %
                                             

KSA JV Only

                                           
 

Home

  278   359   (22.6 )%   0   0   0.0 %   2,191   1,451   51.0 %
 

Dollars

  $43,642   $56,178   (22.3 )%   $0   $0   0.0 %   $344,026   $227,851   51.0 %
 

Avg. Price

  $156,986   $156,485   0.3 %   $0   $0   0.0 %   $157,018   $157,030   (0.0 )%

 

DELIVERIES INCLUDE EXTRAS

Notes:

(1) Contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.

(2) Represents home deliveries, home revenues and average prices for our unconsolidated homebuilding joint ventures for the period. We provide this data as a supplement to our consolidated results as an indicator of the volume managed in our unconsolidated homebuilding joint ventures. Our proportionate share of the income or loss of unconsolidated homebuilding and land development joint ventures is reflected as a separate line item in our consolidated financial statements under “Income from unconsolidated joint ventures”.

 

14