SEC Filing | Hovnanian Enterprises, Inc.

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hov20220830_8k.htm

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): September 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 September 1, 2022, Hovnanian Enterprises, Inc. (the “Company”) issued a press release announcing its preliminary financial results for the fiscal third quarter ended July 31, 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.

The attached earnings press release contains information about selling, general and administrative costs (“SG&A”) excluding the impact of incremental phantom stock expense, which is a non-GAAP financial measure. The most directly comparable GAAP financial measure is SG&A, to which SG&A excluding the impact of incremental phantom stock expense is reconciled 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.

Management believes adjustments to certain GAAP measures to exclude the impact of incremental phantom stock expense to be relevant and useful information. Phantom stock awards were granted in 2019 in lieu of actual equity under the Company’s long-term incentive plan as a result of dilution concerns associated with the low stock price at the time of grant. The Company does not believe such expense is characteristic of its ongoing operating performance.

Item 9.01.

Financial Statements and Exhibits.

(d)	Exhibits.

Exhibit 99.1	Earnings Press Release-Fiscal Third Quarter Ended July 31, 2022.

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: September 1, 2022

ex_418207.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 THIRD QUARTER RESULTS

81% Year-over-Year Increase in Pretax Profit

Gross Margin Percentage Increased 390 Basis Points Year-over-Year

Interest Expense as Percent of Revenue Declined 140 Basis Points Year-over-Year

Backlog Cancellation Rate Increased to 8% From 6% Last Year

Consolidated Contract Dollars Declined 23% Year-over-Year

Increased Full Year EBITDA, Gross Margin and Adjusted Pretax Profit Guidance

MATAWAN, NJ, September 1, 2022 – Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal third quarter and nine-month period ended July 31, 2022.

RESULTS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED JULY 31, 2022:

●

Total revenues increased 11.1% to $767.6 million in the third quarter of fiscal 2022, compared with $690.7 million in the same quarter of the prior year. For the nine months ended July 31, 2022, total revenues were $2.04 billion compared with $1.97 billion in the same period during the prior year.

●

Homebuilding gross margin percentage, after cost of sales interest expense and land charges, increased 390 basis points to 23.1% for the three months ended July 31, 2022 compared with 19.2% during the same period a year ago. During the first nine months of fiscal 2022, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 22.3%, up 400 basis points, compared with 18.3% during the same period a year ago.

●

Homebuilding gross margin percentage, before cost of sales interest expense and land charges, increased 420 basis points to 26.3% during the fiscal 2022 third quarter compared with 22.1% in last year’s third quarter. For the nine months ended July 31, 2022, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 25.3%, up 390 basis points, compared with 21.4% in the same period of the previous year.

●

Total SG&A was $74.9 million, or 9.8% of total revenues (excluding $0.3 million of incremental phantom stock expense, total SG&A would have been $74.6 million or 9.7% of total revenues), in the fiscal 2022 third quarter compared with $60.3 million, or 8.7% of total revenues (excluding $6.7 million of incremental phantom stock benefit, total SG&A would have been $67.0 million or 9.7% of total revenues), in the previous year’s third quarter. During the first nine months of fiscal 2022, total SG&A was $215.3 million, or 10.6% of total revenues (there was no incremental phantom stock expense), compared with $206.6 million, or 10.5% of total revenues (excluding $10.8 million of incremental phantom stock expense, total SG&A would have been $195.8 million or 9.9% of total revenues), in the same period of the prior fiscal year.

●

Total interest expense as a percent of total revenues improved by 140 basis points to 4.2% for the third quarter of fiscal 2022 compared with 5.6% during the third quarter of fiscal 2021. For the first nine months of fiscal 2022, total interest expense as a percent of total revenues improved 170 basis points to 4.6% compared with 6.3% in the first nine months of the previous fiscal year.

●

Income before income taxes for the third quarter of fiscal 2022 was $111.9 million, up 81.1%, compared with $61.8 million in the third quarter of the prior fiscal year. For the first nine months of fiscal 2022, income before income taxes increased 103.1% to $228.3 million compared with $112.4 million during the same period of the prior fiscal year.

●

Net income was $82.6 million, or $10.82 per diluted common share, for the three months ended July 31, 2022 compared with net income of $47.7 million, or $6.72 per diluted common share, in the third quarter of the previous fiscal year. For the first nine months of fiscal 2022, net income was $169.9 million, or $21.77 per diluted common share, compared with net income, including the $468.6 million benefit of the valuation allowance reduction, of $555.3 million, or $78.51 per diluted common share, in the same period during fiscal 2021.

●

Consolidated contract dollars in the third quarter of fiscal 2022 declined 23.2% to $467.9 million (799 homes) compared with $609.1 million (1,211 homes) in the same quarter last year. Contract dollars, including domestic unconsolidated joint ventures⁽¹⁾, for the three months ended July 31, 2022 declined to $549.5 million (914 homes) compared with $716.2 million (1,376 homes) in the third quarter of fiscal 2021.

●

Consolidated contract dollars in the first nine months of fiscal 2022 were $2.13 billion (3,875 homes) compared with $2.23 billion (4,760 homes) in the same period last year. Contract dollars, including domestic unconsolidated joint ventures⁽¹⁾, for the nine months ended July 31, 2022 were $2.40 billion (4,262, homes) compared with $2.55 billion (5,298 homes) in the first nine months of fiscal 2021.

●

Consolidated contracts per community were 7.4 for the third quarter ended July 31, 2022 compared to 11.6 contracts per community in last year’s third quarter. Contracts per community, including domesticunconsolidated joint ventures, decreased to 7.4 contracts per community for the third quarter of fiscal 2022 compared with 11.5 contracts per community for the third quarter of fiscal 2021.

●

As of the end of the third quarter of fiscal 2022, consolidated community count increased to 108 communities, compared with 104 communities on July 31, 2021. Community count, including domesticunconsolidated joint ventures, was 124 as of July 31, 2022, compared with 120 communities at the end of the previous year’s third quarter.

●

The dollar value of consolidated contract backlog, as of July 31, 2022, increased 2.4% to $1.79 billion compared with $1.75 billion as of July 31, 2021. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of July 31, 2022, increased 4.1% to $2.07 billion compared with $1.99 billion as of July 31, 2021.

●

Sale of home revenues increased 11.1% to $736.7 million (1,412 homes) in the fiscal 2022 third quarter compared with $663.3 million (1,498 homes) in the previous year’s third quarter. During the fiscal 2022 third quarter, sale of homes revenues, including domestic unconsolidated joint ventures, increased to $815.0 million (1,533 homes) compared with $765.5 million (1,677 homes) during the third quarter of fiscal 2021.

●

For the first nine months of fiscal 2022, sale of homes revenues were $1.97 billion (3,939 homes) compared with $1.89 billion (4,501) homes in the first nine months of the previous year. For the first nine months of fiscal 2022, sale of homes revenues, including domestic unconsolidated joint ventures, were $2.20 billion (4,311 homes) compared with $2.16 billion (4,954 homes) during the same period of fiscal 2021.

●

The beginning backlog cancellation rate for consolidated contracts and for contracts including domestic unconsolidated joint ventures were both 8% for the third quarter ended July 31, 2022 compared with 6% for both in the fiscal 2021 third quarter. The historical average beginning backlog cancellation rate since fiscal 2013 is 13%.

●

Primarily due to lower gross contracts, as a result of a sharp rise in mortgage rates since January, year-over-year home price increases, record high inflation levels and fears of an economic recession, the gross contract cancellation rate for consolidated contracts increased to 27% for the third quarter ended July 31, 2022 compared with 16% in the fiscal 2021 third quarter. The gross contract cancellation rate for contracts including domestic unconsolidated joint ventures was 26% for the third quarter of fiscal 2022 compared with 15% in the third 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 JULY 31, 2022:

●

During the third quarter of fiscal 2022, land and land development spending was $204.5 million compared with $177.6 million in the same quarter one year ago. For the first nine months of fiscal 2022, land and land development spending was $554.1 million compared with $531.2 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 July 31, 2022 was $357.4 million, well above our targeted liquidity range of $170 million to $245 million.

●

In the third quarter of fiscal 2022, approximately 1,900 lots were put under option or acquired in 27 consolidated communities.

●

As of July 31, 2022, the total controlled consolidated lots were 31,913 an increase compared with 31,002 lots at the end of the third quarter of the previous year and a decrease compared to 33,501 lots on April 30, 2022. Based on trailing twelve-month deliveries, the current position equaled a 5.7 years’ supply.

●

Amended our existing $125 million senior secured revolving credit agreement extending the maturity date to June 30, 2024, subject to the satisfaction of customary conditions in respect of the collateral securing the borrowings under the revolving credit facility. The revolving credit facility was undrawn as of July 31, 2022.

FINANCIAL GUIDANCE⁽²⁾:

The Company is increasing its gross margin, EBITDA and pretax profit guidance for the full year of fiscal 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 $48.51 at July 29, 2022.

●

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 24.0% and 26.0%, adjusted pretax income is expected to be between $310 million and $325 million, adjusted EBITDA is expected to be between $460 million and $475 million and fully diluted earnings per share is expected to be between $32.00 and $33.50. At the midpoint of our guidance, we anticipate our shareholders' equity to increase year-over-year by approximately 120% at October 31, 2022.

●

Continue to focus on strengthening our balance sheet and anticipate reducing senior secured notes by an additional $100 million during the fourth quarter 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:

“We are pleased that our third quarter adjusted pretax income exceeded our guidance, that Standard and Poor’s recognized our improved balance sheet and financial performance by upgrading our credit rating and that we are raising our full 2022 year guidance,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “Beginning in May of 2022 home demand slowed and continued to slow further through the summer months. We believe this striking shift in homebuyers’ sentiment is due to the sharp rise in mortgage rates since January, year-over-year home price increases, record high inflation levels and fears of an economic recession. In response, to assist our homebuyers in lowering their monthly payments, we began offering concessions and incentives, including buying down mortgage interest rates; however, there has been little downward movement in base home prices for us or our competitors.”

“We are encouraged that website visits and leads have improved in recent weeks and remain above pre-Covid homebuying surge levels. This clearly demonstrates potential homebuyers continue to have strong interest in purchasing a new home. However, we believe consumers have temporarily paused finalizing their home buying decisions until uncertainty surrounding current economic and market conditions dissipates. While it is difficult to predict how long these factors will cause some homebuyers to delay their purchase decision, we remain confident that rising rents, combined with low supply of homes for sale will ultimately drive increased demand for new homes,” concluded Mr. Hovnanian.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2022 third quarter financial results conference call at 11:00 a.m. E.T. on Thursday, September 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.

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.

SG&A excluding the impact of incremental phantom stock expense is a non-GAAP financial measure. The most directly comparable GAAP financial measure is SG&A, to which SG&A excluding the impact of incremental phantom stock expense is reconciled herein.

Total liquidity is comprised of $225.1 million of cash and cash equivalents, $7.3 million of restricted cash required to collateralize letters of credit and $125.0 million availability under the senior secured revolving credit facility as of July 31, 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 Company’s goals and expectations with respect to its financial results for future financial periods and statements regarding demand for homes and underlying factors. 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 Company’s 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 Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (18) availability and terms of financing to the Company; (19) the Company’s sources of liquidity; (20) changes in credit ratings; (21) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (22) operations through unconsolidated joint ventures with third parties; (23) significant influence of the Company’s controlling stockholders; (24) availability of net operating loss carryforwards; (25) loss of key management personnel or failure to attract qualified personnel; (26) increases in inflation; and (27) 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, 2021 and the Company’s 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.

Hovnanian Enterprises, Inc.

July 31, 2022

Statements of consolidated operations

(In thousands, except per share data)

	Three Months Ended					Nine Months Ended
	July 31					July 31
	2022		2021			2022			2021

Total revenues	$	767,593	$	690,683		$	2,035,443		$	1,968,509
Costs and expenses (1)		668,223		633,589			1,824,294			1,865,355
Loss on extinguishment of debt		-		(306	)		(6,795	)		(306	)
Income from unconsolidated joint ventures		12,557		5,011			23,919			9,568
Income before income taxes		111,927		61,799			228,273			112,416
Income tax provision (benefit)		29,313		14,097			58,416			(442,921	)
Net income		82,614		47,702			169,857			555,337
Less: preferred stock dividends		2,669		-			8,007			-
Net income available to common stockholders	$	79,945	$	47,702		$	161,850		$	555,337



Per share data:
Basic:
Net income per common share	$	10.92	$	6.85		$	22.05		$	80.02
Weighted average number of common shares outstanding		6,485		6,315			6,424			6,263
Assuming dilution:
Net income per common share	$	10.82	$	6.72		$	21.77		$	78.51
Weighted average number of common shares outstanding		6,544		6,434			6,507			6,370

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

Hovnanian Enterprises, Inc.

July 31, 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				Nine Months Ended
	July 31				July 31
	2022		2021		2022		2021

Income before income taxes	$	111,927	$	61,799	$	228,273	$	112,416
Inventory impairment loss and land option write-offs		1,173		1,309		1,837		3,267
Loss on extinguishment of debt		-		306		6,795		306
Income before income taxes excluding land-related charges and loss on extinguishment of debt (1)	$	113,100	$	63,414	$	236,905	$	115,989

(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.

Hovnanian Enterprises, Inc.

July 31, 2022

Gross margin

(In thousands)

	Homebuilding Gross Margin						Homebuilding Gross Margin
	Three Months Ended						Nine Months Ended
	July 31,						July 31,
	2022			2021			2022			2021

Sale of homes	$	736,654		$	663,279		$	1,973,843		$	1,894,159
Cost of sales, excluding interest expense and land charges (1)		543,064			516,530			1,474,403			1,488,919
Homebuilding gross margin, before cost of sales interest expense and land charges (2)		193,590			146,749			499,440			405,240
Cost of sales interest expense, excluding land sales interest expense		22,453			17,821			57,855			56,242
Homebuilding gross margin, after cost of sales interest expense, before land charges (2)		171,137			128,928			441,585			348,998
Land charges		1,173			1,309			1,837			3,267
Homebuilding gross margin	$	169,964		$	127,619		$	439,748		$	345,731

Homebuilding Gross margin percentage		23.1	%		19.2	%		22.3	%		18.3	%
Homebuilding Gross margin percentage, before cost of sales interest expense and land charges (2)		26.3	%		22.1	%		25.3	%		21.4	%
Homebuilding Gross margin percentage, after cost of sales interest expense, before land charges (2)		23.2	%		19.4	%		22.4	%		18.4	%

	Land Sales Gross Margin				Land Sales Gross Margin
	Three Months Ended				Nine Months Ended
	July 31,				July 31,
	2022		2021		2022		2021
	(Unaudited)				(Unaudited)
Land and lot sales	$	15,788	$	6,819	$	16,187	$	11,730
Land and lot sales cost of sales, excluding interest and land charges (1)		5,512		5,338		5,772		9,121
Land and lot sales gross margin, excluding interest and land charges		10,276		1,481		10,415		2,609
Land and lot sales interest		-		1,419		21		1,888
Land and lot sales gross margin, including interest and excluding land charges	$	10,276	$	62	$	10,394	$	721

(1) Does not include cost associated with walking away from land options or inventory impairment losses which are recorded as Inventory impairment loss and land option write-offs in the Condensed Consolidated Statements of Operations.

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

Hovnanian Enterprises, Inc.

July 31, 2022

Reconciliation of adjusted EBITDA to net income

(In thousands)

	Three Months Ended				Nine Months Ended
	July 31,				July 31,
	2022		2021		2022		2021
	(Unaudited)				(Unaudited)
Net income	$	82,614	$	47,702	$	169,857	$	555,337
Income tax provision (benefit)		29,313		14,097		58,416		(442,921	)
Interest expense		32,077		38,398		93,318		123,296
EBIT (1)		144,004		100,197		321,591		235,712
Depreciation and amortization		1,520		1,269		4,009		4,091
EBITDA (2)		145,524		101,466		325,600		239,803
Inventory impairment loss and land option write-offs		1,173		1,309		1,837		3,267
Loss on extinguishment of debt		-		306		6,795		306
Adjusted EBITDA (3)	$	146,697	$	103,081	$	334,232	$	243,376

Interest incurred	$	32,644	$	39,181	$	99,299	$	122,508

Adjusted EBITDA to interest incurred		4.49		2.63		3.37		1.99

(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.

July 31, 2022

Interest incurred, expensed and capitalized

(In thousands)

	Three Months Ended				Nine Months Ended
	July 31,				July 31,
	2022		2021		2022		2021
	(Unaudited)				(Unaudited)
Interest capitalized at beginning of period	$	63,573	$	59,772	$	58,159	$	65,010
Plus interest incurred		32,644		39,181		99,299		122,508
Less interest expensed		32,077		38,398		93,318		123,296
Less interest contributed to unconsolidated joint venture (1)		-		-		-		3,667
Plus interest acquired from unconsolidated joint venture (2)		-		3,118		-		3,118
Interest capitalized at end of period (3)	$	64,140	$	63,673	$	64,140	$	63,673

(1) Represents capitalized interest which was included as part of the assets contributed to the joint venture the company entered into in April 2021 during the nine months ended July 31, 2021. There was no impact to the Condensed Consolidated Statement of Operations as a result of this transaction.

(2) Represents capitalized interest which was included as part of the assets purchased from a joint venture the company exited out of in June 2021 during the nine months ended July 31, 2021. There was no impact to the Condensed Consolidated Statement of Operations as a result of this transaction.

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

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

	July 31,			October 31,
	2022			2021
	(Unaudited)			(1)
ASSETS
Homebuilding:
Cash and cash equivalents	$	225,089		$	245,970
Restricted cash and cash equivalents		15,505			16,089
Inventories:
Sold and unsold homes and lots under development		1,130,304			1,019,541
Land and land options held for future development or sale		174,067			135,992
Consolidated inventory not owned		280,910			98,727
Total inventories		1,585,281			1,254,260
Investments in and advances to unconsolidated joint ventures		74,739			60,897
Receivables, deposits and notes, net		45,011			39,934
Property, plant and equipment, net		23,312			18,736
Prepaid expenses and other assets		64,346			56,186
Total homebuilding		2,033,283			1,692,072

Financial services		127,651			202,758

Deferred tax assets, net		376,570			425,678
Total assets	$	2,537,504		$	2,320,508

LIABILITIES AND EQUITY
Homebuilding:
Nonrecourse mortgages secured by inventory, net of debt issuance costs	$	187,754		$	125,089
Accounts payable and other liabilities		424,508			426,381
Customers’ deposits		99,521			68,295
Liabilities from inventory not owned, net of debt issuance costs		178,454			62,762
Senior notes and credit facilities (net of discounts, premiums and debt issuance costs)		1,147,872			1,248,373
Accrued Interest		47,562			28,154
Total homebuilding		2,085,671			1,959,054

Financial services		108,616			182,219
Income taxes payable		4,470			3,851
Total liabilities		2,198,757			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 July 31, 2022 and October 31, 2021		135,299			135,299
Common stock, Class A, $0.01 par value - authorized 16,000,000 shares; issued 6,159,484 shares at July 31, 2022 and 6,066,164 shares at October 31, 2021		62			61
Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) - authorized 2,400,000 shares; issued 733,395 shares at July 31, 2022 and 686,876 shares at October 31, 2021		7			7
Paid in capital - common stock		723,797			722,118
Accumulated deficit		(405,378	)		(567,228	)
Treasury stock - at cost – 470,430 shares of Class A common stock and 27,669 shares of Class B common stock at July 31, 2022 and October 31, 2021		(115,360	)		(115,360	)
Total Hovnanian Enterprises, Inc. stockholders’ equity		338,427			174,897
Noncontrolling interest in consolidated joint ventures		320			487
Total equity		338,747			175,384
Total liabilities and equity	$	2,537,504		$	2,320,508

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

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands Except Per Share Data)

(Unaudited)

	Three Months Ended July 31,					Nine Months Ended July 31,
	2022		2021			2022			2021
Revenues:
Homebuilding:
Sale of homes	$	736,654	$	663,279		$	1,973,843		$	1,894,159
Land sales and other revenues		16,406		7,559			18,052			13,280
Total homebuilding		753,060		670,838			1,991,895			1,907,439
Financial services		14,533		19,845			43,548			61,070
Total revenues		767,593		690,683			2,035,443			1,968,509

Expenses:
Homebuilding:
Cost of sales, excluding interest		548,576		521,868			1,480,175			1,498,040
Cost of sales interest		22,453		19,240			57,876			58,130
Inventory impairment loss and land option write-offs		1,173		1,309			1,837			3,267
Total cost of sales		572,202		542,417			1,539,888			1,559,437
Selling, general and administrative		50,163		42,988			139,410			125,417
Total homebuilding expenses		622,365		585,405			1,679,298			1,684,854

Financial services		10,790		11,238			31,982			32,953
Corporate general and administrative		24,774		17,284			75,893			81,149
Other interest		9,624		19,158			35,442			65,166
Other operations		670		504			1,679			1,233
Total expenses		668,223		633,589			1,824,294			1,865,355
Loss on extinguishment of debt		-		(306	)		(6,795	)		(306	)
Income from unconsolidated joint ventures		12,557		5,011			23,919			9,568
Income before income taxes		111,927		61,799			228,273			112,416
State and federal income tax provision (benefit):
State		6,385		1,476			11,515			(89,272	)
Federal		22,928		12,621			46,901			(353,649	)
Total income taxes		29,313		14,097			58,416			(442,921	)
Net income		82,614		47,702			169,857			555,337
Less: preferred stock dividends		2,669		-			8,007			-
Net income available to common stockholders	$	79,945	$	47,702		$	161,850		$	555,337

Per share data:
Basic:
Net income per common share	$	10.92	$	6.85		$	22.05		$	80.02
Weighted-average number of common shares outstanding		6,485		6,315			6,424			6,263
Assuming dilution:
Net income per common share	$	10.82	$	6.72		$	21.77		$	78.51
Weighted-average number of common shares outstanding		6,544		6,434			6,507			6,370

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
		July 31,							July 31,							July 31,
		2022		2021		% Change			2022		2021		% Change			2022		2021		% Change
Northeast
(NJ, PA)	Home		66		62		6.5	%		78		44		77.3	%		237		160		48.1	%
	Dollars	$	47,109	$	52,066		(9.5	)%	$	60,266	$	35,255		70.9	%	$	184,366	$	122,638		50.3	%
	Avg. Price	$	713,773	$	839,774		(15.0	)%	$	772,641	$	801,250		(3.6	)%	$	777,916	$	766,488		1.5	%
Mid-Atlantic
(DE, MD, VA, WV)	Home		139		176		(21.0	)%		251		189		32.8	%		506		572		(11.5	)%
	Dollars	$	91,100	$	117,341		(22.4	)%	$	168,076	$	106,195		58.3	%	$	330,960	$	361,329		(8.4	)%
	Avg. Price	$	655,396	$	666,710		(1.7	)%	$	669,625	$	561,878		19.2	%	$	654,071	$	631,694		3.5	%
Midwest
(IL, OH)	Home		60		165		(63.6	)%		166		190		(12.6	)%		493		648		(23.9	)%
	Dollars	$	29,999	$	56,848		(47.2	)%	$	61,375	$	60,588		1.3	%	$	166,291	$	205,101		(18.9	)%
	Avg. Price	$	499,983	$	344,533		45.1	%	$	369,729	$	318,884		15.9	%	$	337,304	$	316,514		6.6	%
Southeast
(FL, GA, SC)	Home		114		124		(8.1	)%		148		139		6.5	%		574		440		30.5	%
	Dollars	$	67,402	$	58,522		15.2	%	$	71,484	$	61,978		15.3	%	$	348,019	$	211,859		64.3	%
	Avg. Price	$	591,246	$	471,952		25.3	%	$	483,000	$	445,885		8.3	%	$	606,305	$	481,498		25.9	%
Southwest
(AZ, TX)	Home		336		469		(28.4	)%		590		593		(0.5	)%		966		1,292		(25.2	)%
	Dollars	$	179,005	$	196,481		(8.9	)%	$	266,107	$	212,773		25.1	%	$	510,681	$	524,029		(2.5	)%
	Avg. Price	$	532,753	$	418,936		27.2	%	$	451,029	$	358,808		25.7	%	$	528,655	$	405,595		30.3	%
West
(CA)	Home		84		215		(60.9	)%		179		343		(47.8	)%		407		561		(27.5	)%
	Dollars	$	53,324	$	127,872		(58.3	)%	$	109,346	$	186,490		(41.4	)%	$	251,293	$	325,472		(22.8	)%
	Avg. Price	$	634,810	$	594,753		6.7	%	$	610,872	$	543,703		12.4	%	$	617,428	$	580,164		6.4	%
Consolidated Total
	Home		799		1,211		(34.0	)%		1,412		1,498		(5.7	)%		3,183		3,673		(13.3	)%
	Dollars	$	467,939	$	609,130		(23.2	)%	$	736,654	$	663,279		11.1	%	$	1,791,610	$	1,750,428		2.4	%
	Avg. Price	$	585,656	$	502,998		16.4	%	$	521,710	$	442,776		17.8	%	$	562,868	$	476,566		18.1	%
Unconsolidated Joint Ventures (2)
(excluding KSA JV)	Home		115		165		(30.3	)%		121		179		(32.4	)%		390		399		(2.3	)%
	Dollars	$	81,604	$	107,111		(23.8	)%	$	78,390	$	102,262		(23.3	)%	$	281,220	$	241,346		16.5	%
	Avg. Price	$	709,600	$	649,158		9.3	%	$	647,851	$	571,296		13.4	%	$	721,077	$	604,877		19.2	%
Grand Total
	Home		914		1,376		(33.6	)%		1,533		1,677		(8.6	)%		3,573		4,072		(12.3	)%
	Dollars	$	549,543	$	716,241		(23.3	)%	$	815,044	$	765,541		6.5	%	$	2,072,830	$	1,991,774		4.1	%
	Avg. Price	$	601,251	$	520,524		15.5	%	$	531,666	$	456,494		16.5	%	$	580,137	$	489,139		18.6	%

KSA JV Only
	Home		18		215		(91.6	)%		0		0		0.0	%		2,209		1,666		32.6	%
	Dollars	$	2,788	$	33,802		(91.8	)%	$	0	$	0		0.0	%	$	346,814	$	261,653		32.5	%
	Avg. Price	$	154,889	$	157,219		(1.5	)%	$	0	$	0		0.0	%	$	157,000	$	157,055		(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”.

HOVNANIAN ENTERPRISES, INC.

(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)

(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)

		Contracts (1)							Deliveries							Contract
		Nine Months Ended							Nine Months Ended							Backlog
		July 31,							July 31,							July 31,
		2022		2021		% Change			2022		2021		% Change			2022		2021		% Change
Northeast
(NJ, PA)	Home		249		169		47.3	%		184		139		32.4	%		237		160		48.1	%
	Dollars	$	181,641	$	135,684		33.9	%	$	135,671	$	95,157		42.6	%	$	184,366	$	122,638		50.3	%
	Avg. Price	$	729,482	$	802,864		(9.1	)%	$	737,342	$	684,583		7.7	%	$	777,916	$	766,488		1.5	%
Mid-Atlantic
(DE, MD, VA, WV)	Home		608		647		(6.0	)%		610		581		5.0	%		506		572		(11.5	)%
	Dollars	$	384,950	$	414,059		(7.0	)%	$	396,180	$	311,230		27.3	%	$	330,960	$	361,329		(8.4	)%
	Avg. Price	$	633,141	$	639,968		(1.1	)%	$	649,475	$	535,680		21.2	%	$	654,071	$	631,694		3.5	%
Midwest
(IL, OH)	Home		371		628		(40.9	)%		483		576		(16.1	)%		493		648		(23.9	)%
	Dollars	$	144,833	$	216,775		(33.2	)%	$	172,987	$	181,191		(4.5	)%	$	166,291	$	205,101		(18.9	)%
	Avg. Price	$	390,385	$	345,183		13.1	%	$	358,151	$	314,568		13.9	%	$	337,304	$	316,514		6.6	%
Southeast
(FL, GA, SC)	Home		555		487		14.0	%		402		408		(1.5	)%		574		440		30.5	%
	Dollars	$	326,727	$	223,201		46.4	%	$	200,133	$	188,489		6.2	%	$	348,019	$	211,859		64.3	%
	Avg. Price	$	588,697	$	458,318		28.4	%	$	497,843	$	461,983		7.8	%	$	606,305	$	481,498		25.9	%
Southwest
(AZ, TX)	Home		1,533		2,034		(24.6	)%		1,643		1,808		(9.1	)%		966		1,292		(25.2	)%
	Dollars	$	742,953	$	783,924		(5.2	)%	$	692,093	$	620,120		11.6	%	$	510,681	$	524,029		(2.5	)%
	Avg. Price	$	484,640	$	385,410		25.7	%	$	421,237	$	342,987		22.8	%	$	528,655	$	405,595		30.3	%
West
(CA)	Home		559		795		(29.7	)%		617		989		(37.6	)%		407		561		(27.5	)%
	Dollars	$	345,642	$	453,557		(23.8	)%	$	376,779	$	497,972		(24.3	)%	$	251,293	$	325,472		(22.8	)%
	Avg. Price	$	618,322	$	570,512		8.4	%	$	610,663	$	503,511		21.3	%	$	617,428	$	580,164		6.4	%
Consolidated Total
	Home		3,875		4,760		(18.6	)%		3,939		4,501		(12.5	)%		3,183		3,673		(13.3	)%
	Dollars	$	2,126,746	$	2,227,200		(4.5	)%	$	1,973,843	$	1,894,159		4.2	%	$	1,791,610	$	1,750,428		2.4	%
	Avg. Price	$	548,838	$	467,899		17.3	%	$	501,103	$	420,831		19.1	%	$	562,868	$	476,566		18.1	%
Unconsolidated Joint Ventures (2)
(excluding KSA JV)	Home		387		538		(28.1	)%		372		453		(17.9	)%		390		399		(2.3	)%
	Dollars	$	268,585	$	318,824		(15.8	)%	$	228,984	$	264,442		(13.4	)%	$	281,220	$	241,346		16.5	%
	Avg. Price	$	694,018	$	592,610		17.1	%	$	615,548	$	583,757		5.4	%	$	721,077	$	604,877		19.2	%
Grand Total
	Home		4,262		5,298		(19.6	)%		4,311		4,954		(13.0	)%		3,573		4,072		(12.3	)%
	Dollars	$	2,395,331	$	2,546,024		(5.9	)%	$	2,202,827	$	2,158,601		2.0	%	$	2,072,830	$	1,991,774		4.1	%
	Avg. Price	$	562,020	$	480,563		17.0	%	$	510,978	$	435,729		17.3	%	$	580,137	$	489,139		18.6	%

KSA JV Only
	Home		296		574		(48.4	)%		0		0		0.0	%		2,209		1,666		32.6	%
	Dollars	$	46,430	$	89,980		(48.4	)%	$	0	$	0		0.0	%	$	346,814	$	261,653		32.5	%
	Avg. Price	$	156,858	$	156,760		0.1	%	$	0	$	0		0.0	%	$	157,000	$	157,055		(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.

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
		July 31,								July 31,							July 31,
		2022		2021			% Change			2022		2021		% Change			2022		2021		% Change
Northeast
(unconsolidated joint ventures)	Home		14		10			40.0	%		0		16		(100.0	)%		52		8		550.0	%
(excluding KSA JV)	Dollars	$	11,842	$	14,506			(18.4	)%	$	0	$	21,845		(100.0	)%	$	44,075	$	10,500		319.8	%
(NJ, PA)	Avg. Price	$	845,857	$	1,450,600			(41.7	)%	$	0	$	1,365,313		(100.0	)%	$	847,596	$	1,312,500		(35.4	)%
Mid-Atlantic
(unconsolidated joint ventures)	Home		42		41			2.4	%		51		45		13.3	%		134		123		8.9	%
(DE, MD, VA, WV)	Dollars	$	29,519	$	26,890			9.8	%	$	33,457	$	24,726		35.3	%	$	89,955	$	77,565		16.0	%
	Avg. Price	$	702,833	$	655,854			7.2	%	$	656,020	$	549,467		19.4	%	$	671,306	$	630,610		6.5	%
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		42		92			(54.3	)%		49		70		(30.0	)%		165		231		(28.6	)%
(FL, GA, SC)	Dollars	$	30,481	$	55,830			(45.4	)%	$	33,860	$	32,842		3.1	%	$	126,714	$	137,907		(8.1	)%
	Avg. Price	$	725,738	$	606,848			19.6	%	$	691,020	$	469,171		47.3	%	$	767,964	$	597,000		28.6	%
Southwest
(unconsolidated joint ventures)	Home		0		0			0.0	%		0		21		(100.0	)%		0		0		0.0	%
(AZ, TX)	Dollars	$	0	$	(8	)		(100.0	)%	$	0	$	12,750		(100.0	)%	$	0	$	0		0.0	%
	Avg. Price	$	0	$	0			0.0	%	$	0	$	607,143		(100.0	)%	$	0	$	0		0.0	%
West
(unconsolidated joint ventures)	Home		17		22			(22.7	)%		21		27		(22.2	)%		39		37		5.4	%
(CA)	Dollars	$	9,763	$	9,893			(1.3	)%	$	11,073	$	10,099		9.6	%	$	20,477	$	15,374		33.2	%
	Avg. Price	$	574,294	$	449,682			27.7	%	$	527,286	$	374,037		41.0	%	$	525,051	$	415,514		26.4	%
Unconsolidated Joint Ventures (2)
(excluding KSA JV)	Home		115		165			(30.3	)%		121		179		(32.4	)%		390		399		(2.3	)%
	Dollars	$	81,605	$	107,111			(23.8	)%	$	78,390	$	102,262		(23.3	)%	$	281,221	$	241,346		16.5	%
	Avg. Price	$	709,609	$	649,158			9.3	%	$	647,851	$	571,296		13.4	%	$	721,079	$	604,877		19.2	%

KSA JV Only
	Home		18		215			(91.6	)%		0		0		0.0	%		2,209		1,666		32.6	%
	Dollars	$	2,788	$	33,802			(91.8	)%	$	0	$	0		0.0	%	$	346,814	$	261,653		32.5	%
	Avg. Price	$	154,889	$	157,219			(1.5	)%	$	0	$	0		0.0	%	$	157,000	$	157,055		(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.

HOVNANIAN ENTERPRISES, INC.

(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)

(SEGMENT DATA UNCONSOLIDATED JOINT VENTURES ONLY)

		Contracts (1)							Deliveries							Contract
		Nine Months Ended							Nine Months Ended							Backlog
		July 31,							July 31,							July 31,
		2022		2021		% Change			2022		2021		% Change			2022		2021		% Change
Northeast
(unconsolidated joint ventures)	Home		46		37		24.3	%		4		47		(91.5	)%		52		8		550.0	%
(excluding KSA JV)	Dollars	$	39,580	$	49,318		(19.7	)%	$	5,695	$	63,353		(91.0	)%	$	44,075	$	10,500		319.8	%
(NJ, PA)	Avg. Price	$	860,435	$	1,332,919		(35.4	)%	$	1,423,750	$	1,347,936		5.6	%	$	847,596	$	1,312,500		(35.4	)%
Mid-Atlantic
(unconsolidated joint ventures)	Home		142		90		57.8	%		124		108		14.8	%		134		123		8.9	%
(DE, MD, VA, WV)	Dollars	$	95,483	$	55,178		73.0	%	$	82,136	$	57,050		44.0	%	$	89,955	$	77,565		16.0	%
	Avg. Price	$	672,415	$	613,089		9.7	%	$	662,387	$	528,241		25.4	%	$	671,306	$	630,610		6.5	%
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		129		336		(61.6	)%		175		191		(8.4	)%		165		231		(28.6	)%
(FL, GA, SC)	Dollars	$	97,107	$	182,950		(46.9	)%	$	108,164	$	93,394		15.8	%	$	126,714	$	137,907		(8.1	)%
	Avg. Price	$	752,767	$	544,494		38.3	%	$	618,080	$	488,974		26.4	%	$	767,964	$	597,000		28.6	%
Southwest
(unconsolidated joint ventures)	Home		0		4		(100.0	)%		0		50		(100.0	)%		0		0		0.0	%
(AZ, TX)	Dollars	$	0	$	3,127		(100.0	)%	$	0	$	29,930		(100.0	)%	$	0	$	0		0.0	%
	Avg. Price	$	0	$	781,750		(100.0	)%	$	0	$	598,600		(100.0	)%	$	0	$	0		0.0	%
West
(unconsolidated joint ventures)	Home		70		70		0.0	%		69		56		23.2	%		39		37		5.4	%
(CA)	Dollars	$	36,416	$	27,842		30.8	%	$	32,989	$	20,306		62.5	%	$	20,477	$	15,374		33.2	%
	Avg. Price	$	520,229	$	397,743		30.8	%	$	478,101	$	362,607		31.9	%	$	525,051	$	415,514		26.4	%
Unconsolidated Joint Ventures (2)
(excluding KSA JV)	Home		387		538		(28.1	)%		372		453		(17.9	)%		390		399		(2.3	)%
	Dollars	$	268,586	$	318,824		(15.8	)%	$	228,984	$	264,442		(13.4	)%	$	281,221	$	241,346		16.5	%
	Avg. Price	$	694,021	$	592,610		17.1	%	$	615,548	$	583,757		5.4	%	$	721,079	$	604,877		19.2	%

KSA JV Only
	Home		296		574		(48.4	)%		0		0		0.0	%		2,209		1,666		32.6	%
	Dollars	$	46,430	$	89,980		(48.4	)%	$	0	$	0		0.0	%	$	346,814	$	261,653		32.5	%
	Avg. Price	$	156,858	$	156,760		0.1	%	$	0	$	0		0.0	%	$	157,000	$	157,055		(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.