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hov20230525_8k.htm
false 0000357294 0000357294 2023-05-31 2023-05-31 0000357294 hov:ClassACommonStock001ParValuePerShareCustomMember 2023-05-31 2023-05-31 0000357294 hov:PreferredStockPurchaseRights1CustomMember 2023-05-31 2023-05-31 0000357294 hov:DepositarySharesEachRepresenting11000thOfAShareOf7625SeriesAPreferredStockCustomMember 2023-05-31 2023-05-31
 
 
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): May 31, 2023
 
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 May 31, 2023, Hovnanian Enterprises, Inc. (the “Company”) issued a press release announcing its preliminary financial results for the fiscal second quarter ended April 30, 2023. 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, land option write-offs and loss on extinguishment of debt, net (“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, net, 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: May 31, 2023
 
 
 
ex_526750.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 2023 SECOND QUARTER RESULTS

Achieved Income Before Income Taxes of $46 Million

Exceeded High End of Guidance for Adjusted Pretax Income by 32%

Net Contracts per Community Increased 100% versus First Quarter 2023

Consolidated Community Count Increased 12% Year over Year

Redeemed in May $100 Million of Principal Amount of 7.75% Senior Secured Notes Due February 2026

 

 

MATAWAN, NJ, May 31, 2023 – Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal second quarter and six months ended April 30, 2023.

 

RESULTS FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED APRIL 30, 2023:

 

 

●

Total revenues were $703.7 million in the second quarter of fiscal 2023, compared with $702.5 million in the same quarter of the prior year. For the six months ended April 30, 2023, total revenues were $1.22 billion compared with $1.27 billion in the first half of fiscal 2022.

 

 

●

Sale of homes revenues decreased 2.2% to $670.7 million (1,225 homes) in the fiscal 2023 second quarter compared with $685.8 million (1,353 homes) in the previous year’s second quarter. During the fiscal 2023 second quarter, sale of homes revenues, including domestic unconsolidated joint ventures(1), decreased 2.8% to $751.4 million (1,346 homes) compared with $772.8 million (1,495 homes) during the second quarter of fiscal 2022.

 

 

●

Sale of homes revenues decreased 5.4% to $1.17 billion (2,163 homes) in the first half of fiscal 2023 compared with $1.24 billion (2,527 homes) in the same period of the previous year. During the first six months of fiscal 2023, sale of homes revenues, including domestic unconsolidated joint ventures, decreased 4.2% to $1.33 billion (2,391 homes) compared with $1.39 billion (2,778 homes) during the same period of fiscal 2022.

 

 

●

Homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 17.8% for the three months ended April 30, 2023, compared with 23.3% during the second quarter a year ago. During the first six months of fiscal 2023, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 18.1% compared with 21.8% in the same period of the prior fiscal year.

 

 

●

Homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 20.9% during the fiscal 2023 second quarter compared with 26.6% in last year’s second quarter. For the six months ended April 30, 2023, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 21.2% compared with 24.7% in the first six months of the previous fiscal year.

 

1
 

 

 

●

Total SG&A was $75.5 million, or 10.7% of total revenues, in the second quarter of fiscal 2023 compared with $68.2 million, or 9.7% of total revenues, in the previous year’s second quarter. During the first half of fiscal 2023, total SG&A was $148.9 million, or 12.2% of total revenues, compared with $140.4 million, or 11.1% of total revenues, in the same period of the prior fiscal year.

 

 

●

Total interest expense as a percent of total revenues was 5.1% for the second quarter of fiscal 2023 compared with 4.9% during the second quarter of fiscal 2022. For the six months ended April 30, 2023, total interest expense as a percent of total revenues was 5.4% compared with 4.8% in the same period of the previous fiscal year.

 

 

●

Income before income taxes for the second quarter of fiscal 2023 was $46.1 million compared with $80.9 million in the second quarter of the prior fiscal year. For the first six months of fiscal 2023, income before income taxes was $64.2 million compared with $116.3 million during the first half of the prior fiscal year.

 

 

●

Net income was $34.1 million, or $4.47 per diluted common share, for the three months ended April 30, 2023, compared with net income of $62.4 million, or $8.39 per diluted common share, in the same quarter of the previous fiscal year. For the first six months of fiscal 2023, net income was $52.9 million, or $6.74 per diluted common share, compared with net income of $87.2 million, or $11.44 per diluted common share, during the same period of fiscal 2022.

 

 

●

EBITDA was $86.6 million for the second quarter of fiscal 2023 compared with $116.4 million in the same quarter of the prior year. For the first six months of fiscal 2023, EBITDA was $136.1 million compared with $180.1 million in the same period of the prior year.

 

 

●

Consolidated contracts in the second quarter of fiscal 2023 declined 3.1% to 1,477 homes ($785.7 million) compared with 1,525 homes ($860.5 million) in the same quarter last year. Contracts, including domestic unconsolidated joint ventures, for the three months ended April 30, 2023 declined to 1,614 homes ($876.8 million) compared with 1,689 homes ($975.2 million) in the second quarter of fiscal 2022.

 

 

●

As of April 30, 2023, consolidated community count increased 11.8% to 114 communities, compared with 102 communities on April 30, 2022. Community count, including domestic unconsolidated joint ventures, was 128 as of April 30, 2023, compared with 120 communities at the end of the previous fiscal year’s second quarter.

 

 

●

The dollar value of consolidated contract backlog, as of April 30, 2023, decreased 35.7% to $1.32 billion compared with $2.06 billion as of April 30, 2022. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of April 30, 2023, decreased 34.2% to $1.54 billion compared with $2.34 billion as of April 30, 2022.

 

 

●

The gross contract cancellation rate for consolidated contracts was 18% for the second quarter ended April 30, 2023 compared with 17% in the fiscal 2022 second quarter. The gross contract cancellation rate for contracts including domestic unconsolidated joint ventures was 18% for the second quarter of fiscal 2023 compared with 16% in the second quarter of the prior year.

 

 

●

Consolidated contracts per community increased 100% sequentially to 13.0 in the second quarter of fiscal 2023 compared with 6.5 contracts per community for the first quarter of fiscal 2023. During the second quarter of fiscal 2023, contracts per community improved to 4.7 in the month of April, higher than every other month this fiscal year.

 

 

●

Consolidated contracts for preliminary May results through May 29, 2023 increased 29.8% to 436 compared with 336 contracts in May 2022. Consolidated contracts per community for preliminary May results through May 29, 2023 were 3.9, an 18.2% increase, compared with 3.3 for May 2022.

 

2
 

 

(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, 2023:

 

 

●

During the second quarter of fiscal 2023, land and land development spending was $156.5 million compared with $154.8 million in the same quarter one year ago. For the first half of fiscal 2023, land and land development spending was $290.9 million compared with $349.6 million in the same period one year ago.

 

 

●

Total liquidity as of April 30, 2023 was $463.8 million, significantly above our targeted liquidity range of $170 million to $245 million.

 

 

●

In May of 2023, we redeemed $100 million principal amount of our 7.75% senior secured notes due February 15, 2026 at a purchase price of 101.937% plus accrued and unpaid interest. We have retired early $494 million of debt since the beginning of fiscal 2020.

 

 

●

In the second quarter of fiscal 2023, approximately 1,000 lots were put under option or acquired in 14 consolidated communities.

 

 

●

As of April 30, 2023, the total controlled consolidated lots were 28,657, a decrease compared with 33,501 lots at the end of the second quarter of the previous year and a decrease compared to 29,123 lots on January 31, 2023. Based on trailing twelve-month deliveries, the current position equaled a 5.5 years’ supply.

 

FINANCIAL GUIDANCE(2):

 

The Company is providing guidance for total revenues, adjusted gross margin, adjusted EBITDA and adjusted pretax income for the third quarter of fiscal 2023 and for the full fiscal year and fully diluted earnings per share for fiscal 2023. 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 $73.77 on April 28, 2023.

 

For the third quarter of fiscal 2023, total revenues are expected to be between $630 million and $730 million, adjusted homebuilding gross margin, before cost of sales interest expense and land charges, is expected to be between 21.5% and 22.5%, adjusted pretax income is expected to be between $50 million and $60 million, and adjusted EBITDA is expected to be between $85 million and $95 million.

 

For fiscal 2023, total revenues are expected to be between $2.50 billion and $2.65 billion, adjusted homebuilding gross margin, before cost of sales interest expense and land charges, is expected to be between 21.0% and 22.5%, adjusted pretax income is expected to be between $180 million and $200 million, adjusted EBITDA is expected to be between $320 million and $340 million and fully diluted earnings per share is expected to be between $17.00 and $20.00. At the midpoint of our guidance, we anticipate our common shareholders' equity to increase by approximately 60% by October 31, 2023 to $58.50 per share compared to last year’s year end value of $37 per share.

 

(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 impairments 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.

 

3
 

 

COMMENTS FROM MANAGEMENT:

 

“Considering the doubling of mortgage rates, turmoil in the banking industry, concerns about high inflation and the general uncertainty in the economy, we are pleased with our performance in the second quarter of fiscal 2023. Our total revenues, total SG&A as a percentage of total revenues, adjusted EBITDA and adjusted pretax income all exceeded the upper end of our guidance. We experienced strong consumer demand for quick move in homes, which resulted in higher deliveries, revenues and profits but slightly lower margins than we forecasted,” stated Ara K. Hovnanian, Chairman of the Board, President, and Chief Executive Officer. “Overall, the housing market has clearly rebounded from the slowdown during the second half of last year caused by the steep increase in mortgage rates.”

 

“The strength of the new home market is supported by favorable demographics and a historically low level of existing homes for sale. As home demand increased, we raised home prices in approximately 69% of our communities during the second quarter of fiscal 2023. Our liquidity position is strong, and we remain focused on both increasing our land supply and strengthening our balance sheet. In May, we redeemed $100 million of debt in advance of its maturity. We are encouraged by the uptick in sales and believe that the outlook for housing demand will remain strong over the long term,” concluded Mr. Hovnanian.

 

SEGMENT CHANGE/RECLASSIFICATION

 

Historically, the Company had seven reportable segments consisting of six homebuilding segments (Northeast, Mid-Atlantic, Midwest, Southeast, Southwest and West) and its financial services segment. During the fourth quarter of fiscal 2022, we reevaluated our reportable segments as a result of changes in the business and our management thereof. In particular, we considered the fact that, since our segments were last established, the Company had exited the Minnesota, North Carolina, and Tampa markets and is currently in the process of exiting the Chicago market. As a result, we realigned our homebuilding operating segments and determined that, in addition to our financial services segment, we now have three reportable homebuilding segments comprised of (1) Northeast, (2) Southeast and (3) West. All prior period amounts related to the segment change have been retrospectively reclassified to conform to the new presentation.

 

WEBCAST INFORMATION:

 

Hovnanian Enterprises will webcast its fiscal 2023 second quarter financial results conference call at 11:00 a.m. E.T. on Wednesday, May 31, 2023. 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 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 impairments and land option write-offs and loss on extinguishment of debt, net (“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, net 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 $333.3 million of cash and cash equivalents, $5.5 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, 2023.

 

 

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, mortgage rates, inflation, supply chain issues, customer incentives 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) fluctuations in interest rates and the availability of mortgage financing, including as a result of bank sector instability; (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) increases in inflation; (11) changes in tax laws affecting the after-tax costs of owning a home; (12) legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors; (13) levels of competition; (14) utility shortages and outages or rate fluctuations; (15) information technology failures and data security breaches; (16) negative publicity; (17) high leverage and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (18) availability and terms of financing to the Company; (19) the Company’s sources of liquidity; (20) changes in credit ratings; (21) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (22) operations through unconsolidated joint ventures with third parties; (23) significant influence of the Company’s controlling stockholders; (24) availability of net operating loss carryforwards; (25) loss of key management personnel or failure to attract qualified personnel; and (26) certain risks, uncertainties and other factors described in detail in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2022 and the Company’s Quarterly Reports on Form 10-Q for the quarterly periods during fiscal 2023 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, 2023

  

Statements of consolidated operations

  

(In thousands, except per share data)

  
   

Three Months Ended

    

Six Months Ended

  
   

April 30,

    

April 30,

  
   

2023

    

2022

    

2023

    

2022

  
   

(Unaudited)

    

(Unaudited)

  

Total revenues

   $ 703,661     $ 702,537     $ 1,219,027     $ 1,267,850  

Costs and expenses (1)

     662,946       617,968       1,167,425       1,156,071  

Loss on extinguishment of debt, net

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

Income from unconsolidated joint ventures

     5,408       3,171       12,568       11,362  

Income before income taxes

     46,123       80,945       64,170       116,346  

Income tax provision

     11,977       18,510       11,308       29,103  

Net income

     34,146       62,435       52,862       87,243  

Less: preferred stock dividends

     2,669       2,669       5,338       5,338  

Net income available to common stockholders

   $ 31,477     $ 59,766     $ 47,524     $ 81,905  
                                 
                                 
                                 

Per share data:

                                

Basic:

                                

Net income per common share

   $ 4.68     $ 8.50     $ 7.05     $ 11.62  

Weighted average number of common shares outstanding

     6,166       6,396       6,176       6,392  

Assuming dilution:

                                

Net income per common share

   $ 4.47     $ 8.39     $ 6.74     $ 11.44  

Weighted average number of common shares outstanding

     6,462       6,477       6,463       6,492  

 

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

 

 

Hovnanian Enterprises, Inc.

  

April 30, 2023

  

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

  

(In thousands)

  
                                 
   

Three Months Ended

    

Six Months Ended

  
   

April 30,

    

April 30,

  
   

2023

    

2022

    

2023

    

2022

  
   

(Unaudited)

    

(Unaudited)

  

Income before income taxes

   $ 46,123     $ 80,945     $ 64,170     $ 116,346  

Inventory impairments and land option write-offs

     137       565       614       664  

Loss on extinguishment of debt, net

     -       6,795       -       6,795  

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

   $ 46,260     $ 88,305     $ 64,784     $ 123,805  

 

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

 

6
 

 

Hovnanian Enterprises, Inc.

  

April 30, 2023

  

Gross margin

  

(In thousands)

  
   

Homebuilding Gross Margin

Three Months Ended

April 30,

     Homebuilding Gross Margin
Six Months Ended
April 30,		  
   

2023

    

2022

    

2023

    

2022

  
   

(Unaudited)

    

(Unaudited)

  

Sale of homes

   $ 670,708     $ 685,823     $ 1,170,353     $ 1,237,189  

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

     530,759       503,466       921,722       931,339  

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

     139,949       182,357       248,631       305,850  

Cost of sales interest expense, excluding land sales interest expense

     20,521       21,678       35,522       35,402  

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

     119,428       160,679       213,109       270,448  

Land charges

     137       565       614       664  

Homebuilding gross margin

   $ 119,291     $ 160,114     $ 212,495     $ 269,784  
                                 

Homebuilding gross margin percentage

     17.8 %     23.3 %     18.1 %     21.8 %

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

     20.9 %     26.6 %     21.2 %     24.7 %

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

     17.8 %     23.4 %     18.2 %     21.9 %
                                 

 

    Land Sales Gross Margin
Three Months Ended
April 30,		     Land Sales Gross Margin
Six Months Ended
April 30,		  
   

2023

    

2022

    

2023

    

2022

  
   

(Unaudited)

   (Unaudited)  

Land and lot sales

   $ 15,284     $ 365     $ 15,613     $ 399  

Cost of sales, excluding interest (1)

     9,863       216       9,940       260  

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

     5,421       149       5,673       139  

Land and lot sales interest expense

     904       -       925       21  

Land and lot sales gross margin, including interest

   $ 4,517     $ 149     $ 4,748     $ 118  

 

 

(1) Does not include cost associated with walking away from land options or inventory impairments which are recorded as Inventory impairments 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, 2023

 

Reconciliation of adjusted EBITDA to net income

  

(In thousands)

  
   

Three Months Ended

    

Six Months Ended

  
   

April 30,

    

April 30,

  
   

2023

    

2022

    

2023

    

2022

  
   

(Unaudited)

    

(Unaudited)

  

Net income

   $ 34,146     $ 62,435     $ 52,862     $ 87,243  

Income tax provision

     11,977       18,510       11,308       29,103  

Interest expense

     35,926       34,103       66,041       61,241  

EBIT (1)

     82,049       115,048       130,211       177,587  

Depreciation and amortization

     4,514       1,314       5,924       2,489  

EBITDA (2)

     86,563       116,362       136,135       180,076  

Inventory impairments and land option write-offs

     137       565       614       664  

Loss on extinguishment of debt, net

     -       6,795       -       6,795  

Adjusted EBITDA (3)

   $ 86,700     $ 123,722     $ 136,749     $ 187,535  
                                 

Interest incurred

   $ 35,122     $ 33,872     $ 69,448     $ 66,655  
                                 

Adjusted EBITDA to interest incurred

     2.47       3.65       1.97       2.81  

 

(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 and inventory impairments and land option write-offs and loss on extinguishment of debt, net.

 

 

Hovnanian Enterprises, Inc.

  

April 30, 2023

  

Interest incurred, expensed and capitalized

  

(In thousands)

  
   

Three Months Ended

    

Six Months Ended

  
   

April 30,

    

April 30,

  
   

2023

    

2022

    

2023

    

2022

  
   

(Unaudited)

    

(Unaudited)

  

Interest capitalized at beginning of period

   $ 60,795     $ 63,804     $ 59,600     $ 58,159  

Plus: interest incurred

     35,122       33,872       69,448       66,655  

Less: interest expensed

     (35,926 )     (34,103 )     (66,041 )     (61,241 )

Less: interest contributed to unconsolidated joint venture (1)

     -       -       (3,016 )     -  

Plus: interest acquired from unconsolidated joint venture (2)

     283       -       283       -  

Interest capitalized at end of period (3)

   $ 60,274     $ 63,573     $ 60,274     $ 63,573  

 

(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, 2023. 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 closed out during the six months ended April 30, 2023. 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.

 

8
 

 

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

 

   

April 30,

    

October 31,

  
   

2023

    

2022

  
   

(Unaudited)

     (1)  
                 

ASSETS

                

Homebuilding:

                

Cash and cash equivalents

   $ 333,254     $ 326,198  

Restricted cash and cash equivalents

     7,916       13,382  

Inventories:

                

Sold and unsold homes and lots under development

     1,060,410       1,058,183  

Land and land options held for future development or sale

     123,832       152,406  

Consolidated inventory not owned

     300,750       308,595  

Total inventories

     1,484,992       1,519,184  

Investments in and advances to unconsolidated joint ventures

     85,820       74,940  

Receivables, deposits and notes, net

     37,210       37,837  

Property and equipment, net

     27,952       25,819  

Prepaid expenses and other assets

     56,756       63,884  

Total homebuilding

     2,033,900       2,061,244  
                 

Financial services

     113,162       155,993  
                 

Deferred tax assets, net

     336,692       344,793  

Total assets

   $ 2,483,754     $ 2,562,030  
                 

LIABILITIES AND EQUITY

                

Homebuilding:

                

Nonrecourse mortgages secured by inventory, net of debt issuance costs

   $ 134,124     $ 144,805  

Accounts payable and other liabilities

     376,866       439,952  

Customers’ deposits

     71,359       74,020  

Liabilities from inventory not owned, net of debt issuance costs

     200,299       202,492  

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

     1,144,090       1,146,547  

Accrued interest

     36,220       32,415  

Total homebuilding

     1,962,958       2,040,231  
                 

Financial services

     91,299       135,581  
                 

Income taxes payable

     -       3,167  

Total liabilities

     2,054,257       2,178,979  
                 

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, 2023 and October 31, 2022

     135,299       135,299  

Common stock, Class A, $0.01 par value - authorized 16,000,000 shares; issued 6,179,884 shares at April 30, 2023 and 6,159,886 shares at October 31, 2022

     62       62  

Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) - authorized 2,400,000 shares; issued 747,976 shares at April 30, 2023 and 733,374 shares at October 31, 2022

     7       7  

Paid in capital - common stock

     731,374       727,663  

Accumulated deficit

     (304,889

)

     (352,413

)

Treasury stock - at cost – 901,379 shares of Class A common stock at April 30, 2023 and 782,901 shares at October 31, 2022; 27,669 shares of Class B common stock at April 30, 2023 and October 31, 2022

     (132,382

)

     (127,582

)

Total Hovnanian Enterprises, Inc. stockholders’ equity

     429,471       383,036  

Noncontrolling interest in consolidated joint ventures

     26       15  

Total equity

     429,497       383,051  

Total liabilities and equity

   $ 2,483,754     $ 2,562,030  

 

 

(1)

Derived from the audited balance sheet as of October 31, 2022.

 

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,

  
   

2023

    

2022

    

2023

    

2022

  

Revenues:

                                

Homebuilding:

                                

Sale of homes

   $ 670,708     $ 685,823     $ 1,170,353     $ 1,237,189  

Land sales and other revenues

     18,750       1,008       22,307       1,646  

Total homebuilding

     689,458       686,831       1,192,660       1,238,835  

Financial services

     14,203       15,706       26,367       29,015  

Total revenues

     703,661       702,537       1,219,027       1,267,850  
                                 

Expenses:

                                

Homebuilding:

                                

Cost of sales, excluding interest

     540,622       503,682       931,662       931,599  

Cost of sales interest

     21,425       21,678       36,447       35,423  

Inventory impairments and land option write-offs

     137       565       614       664  

Total cost of sales

     562,184       525,925       968,723       967,686  

Selling, general and administrative

     50,456       46,501       98,374       89,247  

Total homebuilding expenses

     612,640       572,426       1,067,097       1,056,933  
                                 

Financial services

     10,152       10,792       19,205       21,192  

Corporate general and administrative

     25,079       21,684       50,569       51,119  

Other interest

     14,501       12,425       29,594       25,818  

Other expenses, net

     574       641       960       1,009  

Total expenses

     662,946       617,968       1,167,425       1,156,071  

Loss on extinguishment of debt, net

     -       (6,795

)

     -       (6,795

)

Income from unconsolidated joint ventures

     5,408       3,171       12,568       11,362  

Income before income taxes

     46,123       80,945       64,170       116,346  

State and federal income tax provision:

                                

State

     1,083       2,587       3,294       5,130  

Federal

     10,894       15,923       8,014       23,973  

Total income taxes

     11,977       18,510       11,308       29,103  

Net income

     34,146       62,435       52,862       87,243  

Less: preferred stock dividends

     2,669       2,669       5,338       5,338  

Net income available to common stockholders

   $ 31,477     $ 59,766     $ 47,524     $ 81,905  
                                 

Per share data:

                                

Basic:

                                

Net income per common share

   $ 4.68     $ 8.50     $ 7.05     $ 11.62  

Weighted-average number of common shares outstanding

     6,166       6,396       6,176       6,392  

Assuming dilution:

                                

Net income per common share

   $ 4.47     $ 8.39     $ 6.74     $ 11.44  

Weighted-average number of common shares outstanding

     6,462       6,477       6,463       6,492  

 

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,
     

2023

  

2022

% Change

2023

2022

% Change

2023

2022

% Change

Northeast (2)

                                

(DE, IL, MD, NJ, OH, VA, WV)

Home

  

413

  

495

(16.6)%

  

358

  

424

(15.6)%

  

875

  

1,466

(40.3)%
 

Dollars

$

260,320

$

281,639

(7.6)%

$

211,535

$

240,442

(12.0)%

$

513,574

$

803,126

(36.1)%
 

Avg. Price

$

630,315

$

568,968

10.8%

$

590,880

$

567,080

4.2%

$

586,942

$

547,835

7.1%

Southeast

                                

(FL, GA, SC)

Home

  

275

  

213

29.1%

  

174

  

150

16.0%

  

626

  

608

3.0%
 

Dollars

$

132,954

$

132,871

0.1%

$

100,905

$

73,154

37.9%

$

351,392

$

352,101

(0.2)%
 

Avg. Price

$

483,469

$

623,808

(22.5)%

$

579,914

$

487,693

18.9%

$

561,329

$

579,113

(3.1)%

West

                                

(AZ, CA, TX)

Home

  

789

  

817

(3.4)%

  

693

  

779

(11.0)%

  

817

  

1,722

(52.6)%
 

Dollars

$

392,418

$

446,035

(12.0)%

$

358,268

$

372,227

(3.8)%

$

459,819

$

905,098

(49.2)%
 

Avg. Price

$

497,361

$

545,942

(8.9)%

$

516,981

$

477,827

8.2%

$

562,814

$

525,609

7.1%

Consolidated Total

                                
 

Home

  

1,477

  

1,525

(3.1)%

  

1,225

  

1,353

(9.5)%

  

2,318

  

3,796

(38.9)%
 

Dollars

$

785,692

$

860,545

(8.7)%

$

670,708

$

685,823

(2.2)%

$

1,324,785

$

2,060,325

(35.7)%
 

Avg. Price

$

531,951

$

564,292

(5.7)%

$

547,517

$

506,891

8.0%

$

571,521

$

542,762

5.3%

Unconsolidated Joint Ventures

                               

(Excluding KSA JV) (2) (3)

Home

  

137

  

164

(16.5)%

  

121

  

142

(14.8)%

  

295

  

396

(25.5)%
 

Dollars

$

91,063

$

114,673

(20.6)%

$

80,677

$

86,974

(7.2)%

$

213,533

$

278,006

(23.2)%
 

Avg. Price

$

664,693

$

699,226

(4.9)%

$

666,752

$

612,493

8.9%

$

723,841

$

702,035

3.1%

Grand Total

                                
 

Home

  

1,614

  

1,689

(4.4)%

  

1,346

  

1,495

(10.0)%

  

2,613

  

4,192

(37.7)%
 

Dollars

$

876,755

$

975,218

(10.1)%

$

751,385

$

772,797

(2.8)%

$

1,538,318

$

2,338,331

(34.2)%
 

Avg. Price

$

543,219

$

577,394

(5.9)%

$

558,236

$

516,921

8.0%

$

588,717

$

557,808

5.5%
 

KSA JV Only

                                
 

Home

  

1

  

51

(98.0)%

  

0

  

0

0.0%

  

2,223

  

2,191

1.5%
 

Dollars

$

157

$

7,895

(98.0)%

$

0

$

0

0.0%

$

348,976

$

344,026

1.4%
 

Avg. Price

$

157,000

$

154,804

1.4%

$

0

$

0

0.0%

$

156,984

$

157,018

(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) Reflects the reclassification of 38 homes and $32.3 million of contract backlog as of April 30, 2023 from the unconsolidated joint ventures to the consolidated Northeast segment. This is related to the assets and liabilities acquired from a joint venture the company closed out during the three months ended April 30, 2023.

(3) 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,
     

2023

  

2022

% Change

2023

2022

% Change

2023

2022

% Change

Northeast (2)

                                

(DE, IL, MD, NJ, OH, VA, WV)

Home

  

724

  

963

(24.8)%

  

729

  

782

(6.8)%

  

875

  

1,466

(40.3)%
 

Dollars

$

446,170

$

543,216

(17.9)%

$

422,409

$

415,121

1.8%

$

513,574

$

803,126

(36.1)%
 

Avg. Price

$

616,257

$

564,087

9.2%

$

579,436

$

530,845

9.2%

$

586,942

$

547,835

7.1%

Southeast

                                

(FL, GA, SC)

Home

  

439

  

441

(0.5)%

  

315

  

254

24.0%

  

626

  

608

3.0%
 

Dollars

$

215,145

$

259,325

(17.0)%

$

174,641

$

128,649

35.7%

$

351,392

$

352,101

(0.2)%
 

Avg. Price

$

490,080

$

588,039

(16.7)%

$

554,416

$

506,492

9.5%

$

561,329

$

579,113

(3.1)%

West

                                

(AZ, CA, TX)

Home

  

1,102

  

1,672

(34.1)%

  

1,119

  

1,491

(24.9)%

  

817

  

1,722

(52.6)%
 

Dollars

$

539,505

$

856,266

(37.0)%

$

573,303

$

693,419

(17.3)%

$

459,819

$

905,098

(49.2)%
 

Avg. Price

$

489,569

$

512,121

(4.4)%

$

512,335

$

465,070

10.2%

$

562,814

$

525,609

7.1%

Consolidated Total

                                
 

Home

  

2,265

  

3,076

(26.4)%

  

2,163

  

2,527

(14.4)%

  

2,318

  

3,796

(38.9)%
 

Dollars

$

1,200,820

$

1,658,807

(27.6)%

$

1,170,353

$

1,237,189

(5.4)%

$

1,324,785

$

2,060,325

(35.7)%
 

Avg. Price

$

530,163

$

539,274

(1.7)%

$

541,079

$

489,588

10.5%

$

571,521

$

542,762

5.3%

Unconsolidated Joint Ventures

                               

(Excluding KSA JV) (2) (3)

Home

  

242

  

272

(11.0)%

  

228

  

251

(9.2)%

  

295

  

396

(25.5)%
 

Dollars

$

162,744

$

186,981

(13.0)%

$

159,347

$

150,594

5.8%

$

213,533

$

278,006

(23.2)%
 

Avg. Price

$

672,496

$

687,430

(2.2)%

$

698,890

$

599,976

16.5%

$

723,841

$

702,035

3.1%

Grand Total

                                
 

Home

  

2,507

  

3,348

(25.1)%

  

2,391

  

2,778

(13.9)%

  

2,613

  

4,192

(37.7)%
 

Dollars

$

1,363,564

$

1,845,788

(26.1)%

$

1,329,700

$

1,387,783

(4.2)%

$

1,538,318

$

2,338,331

(34.2)%
 

Avg. Price

$

543,903

$

551,310

(1.3)%

$

556,127

$

499,562

11.3%

$

588,717

$

557,808

5.5%
 

KSA JV Only

                                
 

Home

  

10

  

278

(96.4)%

  

0

  

0

0.0%

  

2,223

  

2,191

1.5%
 

Dollars

$

1,555

$

43,642

(96.4)%

$

0

$

0

0.0%

$

348,976

$

344,026

1.4%
 

Avg. Price

$

155,500

$

156,986

(0.9)%

$

0

$

0

0.0%

$

156,984

$

157,018

(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) Reflects the reclassification of 8 homes and $6.6 million of contract backlog as of April 30, 2023 from the consolidated Northeast segment to unconsolidated joint ventures. This is related to the assets and liabilities contributed to a joint venture the company entered into during the three months ended January 31, 2023. Also reflects the reclassification of 38 homes and $32.3 million of contract backlog as of April 30, 2023 from the unconsolidated joint ventures to the consolidated Northeast segment. This is related to the assets and liabilities acquired from a joint venture the company closed out during the three months ended April 30, 2023.

(3) 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,
     

2023

2022

% Change

2023

2022

% Change

2023

2022

% Change

Northeast (2)

                                

(Unconsolidated Joint Ventures)

Home

  

49

  

82

(40.2)%

  

61

  

46

32.6%

  

115

  

181

(36.5)%

(Excluding KSA JV)

Dollars

$

35,988

$

62,158

(42.1)%

$

41,573

$

31,159

33.4%

$

82,935

$

126,126

(34.2)%

(DE, IL, MD, NJ, OH, VA, WV)

Avg. Price

$

734,449

$

758,024

(3.1)%

$

681,525

$

677,369

0.6%

$

721,174

$

696,829

3.5%

Southeast

                                

(Unconsolidated Joint Ventures)

Home

  

73

  

49

49.0%

  

49

  

74

(33.8)%

  

161

  

172

(6.4)%

(FL, GA, SC)

Dollars

$

46,755

$

35,101

33.2%

$

33,050

$

45,621

(27.6)%

$

119,901

$

130,093

(7.8)%
 

Avg. Price

$

640,479

$

716,347

(10.6)%

$

674,490

$

616,500

9.4%

$

744,727

$

756,355

(1.5)%

West

                                

(Unconsolidated Joint Ventures)

Home

  

15

  

33

(54.5)%

  

11

  

22

(50.0)%

  

19

  

43

(55.8)%

(AZ, CA, TX)

Dollars

$

8,320

$

17,414

(52.2)%

$

6,054

$

10,194

(40.6)%

$

10,697

$

21,787

(50.9)%
 

Avg. Price

$

554,667

$

527,697

5.1%

$

550,364

$

463,363

18.8%

$

563,000

$

506,674

11.1%

Unconsolidated Joint Ventures

                             

(Excluding KSA JV) (2) (3)

Home

  

137

  

164

(16.5)%

  

121

  

142

(14.8)%

  

295

  

396

(25.5)%
 

Dollars

$

91,063

$

114,673

(20.6)%

$

80,677

$

86,974

(7.2)%

$

213,533

$

278,006

(23.2)%
 

Avg. Price

$

664,693

$

699,226

(4.9)%

$

666,752

$

612,493

8.9%

$

723,841

$

702,035

3.1%
 

KSA JV Only

                                
 

Home

  

1

  

51

(98.0)%

  

0

  

0

0.0%

  

2,223

  

2,191

1.5%
 

Dollars

$

157

$

7,895

(98.0)%

$

0

$

0

0.0%

$

348,976

$

344,026

1.4%
 

Avg. Price

$

157,000

$

154,804

1.4%

$

0

$

0

0.0%

$

156,984

$

157,018

(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) Reflects the reclassification of 38 homes and $32.3 million of contract backlog as of April 30, 2023 from the unconsolidated joint ventures to the consolidated Northeast segment. This is related to the assets and liabilities acquired from a joint venture the company closed out during the three months ended April 30, 2023.

(3) 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,
     

2023

2022

% Change

2023

2022

% Change

2023

2022

% Change

Northeast (2)

                                

(Unconsolidated Joint Ventures)

Home

  

99

  

132

(25.0)%

  

126

  

77

63.6%

  

115

  

181

(36.5)%

(Excluding KSA JV)

Dollars

$

75,921

$

93,702

(19.0)%

$

92,349

$

54,374

69.8%

$

82,935

$

126,126

(34.2)%

(DE, IL, MD, NJ, OH, VA, WV)

Avg. Price

$

766,879

$

709,864

8.0%

$

732,929

$

706,156

3.8%

$

721,174

$

696,829

3.5%

Southeast

                                

(Unconsolidated Joint Ventures)

Home

  

112

  

87

28.7%

  

80

  

126

(36.5)%

  

161

  

172

(6.4)%

(FL, GA, SC)

Dollars

$

69,720

$

66,626

4.6%

$

55,247

$

74,304

(25.6)%

$

119,901

$

130,093

(7.8)%
 

Avg. Price

$

622,500

$

765,816

(18.7)%

$

690,588

$

589,714

17.1%

$

744,727

$

756,355

(1.5)%

West

                                

(Unconsolidated Joint Ventures)

Home

  

31

  

53

(41.5)%

  

22

  

48

(54.2)%

  

19

  

43

(55.8)%

(AZ, CA, TX)

Dollars

$

17,103

$

26,653

(35.8)%

$

11,751

$

21,916

(46.4)%

$

10,697

$

21,787

(50.9)%
 

Avg. Price

$

551,710

$

502,887

9.7%

$

534,136

$

456,583

17.0%

$

563,000

$

506,674

11.1%

Unconsolidated Joint Ventures

                               

(Excluding KSA JV) (2) (3)

Home

  

242

  

272

(11.0)%

  

228

  

251

(9.2)%

  

295

  

396

(25.5)%
 

Dollars

$

162,744

$

186,981

(13.0)%

$

159,347

$

150,594

5.8%

$

213,533

$

278,006

(23.2)%
 

Avg. Price

$

672,496

$

687,430

(2.2)%

$

698,890

$

599,976

16.5%

$

723,841

$

702,035

3.1%
 

KSA JV Only

                                
 

Home

  

10

  

278

(96.4)%

  

0

  

0

0.0%

  

2,223

  

2,191

1.5%
 

Dollars

$

1,555

$

43,642

(96.4)%

$

0

$

0

0.0%

$

348,976

$

344,026

1.4%
 

Avg. Price

$

155,500

$

156,986

(0.9)%

$

0

$

0

0.0%

$

156,984

$

157,018

(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) Reflects the reclassification of 8 homes and $6.6 million of contract backlog as of April 30, 2023 from the consolidated Northeast segment to unconsolidated joint ventures. This is related to the assets and liabilities contributed to a joint venture the company entered into during the three months ended January 31, 2023. Also reflects the reclassification of 38 homes and $32.3 million of contract backlog as of April 30, 2023 from the unconsolidated joint ventures to the consolidated Northeast segment. This is related to the assets and liabilities acquired from a joint venture the company closed out during the three months ended April 30, 2023.

(3) 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