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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
CURRENT REPORT

 PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): February 22, 2024
 
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 February 22, 2024, Hovnanian Enterprises, Inc. (the “Company”) issued a press release announcing its preliminary financial results for the fiscal first quarter ended January 31, 2024. 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 impairments and land option write-offs and gain 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 income before income taxes, which is defined as income before income taxes excluding land-related charges and gain 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 income before income taxes 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 the SG&A, to which SG&A excluding the impact of incremental phantom stock expense is reconciled in the earnings press release.

 

The attached earnings press release contains information about income before income taxes excluding the impact of incremental phantom stock expense, which is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income before income taxes, to which income before income taxes excluding the impact of incremental phantom stock expense is reconciled in the earnings press release.

 

The attached earnings press release contains information about earnings before interest and taxes return on investment (“EBIT ROI”), 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 EBIT ROI 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 income before taxes to be relevant and useful information because it provides a better metric of the Company’s operating performance. Adjusted income before taxes 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 income before taxes 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 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.

 

Management believes EBIT ROI to be relevant and useful information because it is a measure of operational performance irrespective of the capital structure of the Company. EBIT ROI should be considered in addition to, but not as a substitute for income before income taxes 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 EBIT ROI may be different than the calculation used by other companies, and, therefore, comparability may be affected. 

 

Item 9.01.
Financial Statements and Exhibits.
 
(d)
Exhibits.
 
Exhibit 99.1
Earnings Press Release-Fiscal First Quarter Ended January 31, 2024.
 
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: Chief Financial Officer and Treasurer
 
 
Date: February 22, 2024

Exhibit 99.1

HOVNANIAN ENTERPRISES, INC.             

News Release

 

     
Contact: Brad G. O’Connor Jeffrey T. O’Keefe
  Chief Financial Officer & Treasurer Vice President, Investor Relations
  732-747-7800 732-747-7800
     

 

HOVNANIAN ENTERPRISES REPORTS FISCAL 2024 FIRST QUARTER RESULTS

Net Contracts per Community Increased 48% Year-Over-Year

Income Before Income Taxes Increased 80% Year-Over-Year

$230 Million was the Highest Quarterly Land and Land Development Spend in 57 Quarters

15% Year-Over-Year Growth in Total Revenues

 

 

MATAWAN, NJ, February 22, 2024 – Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal first quarter ended January 31, 2024.

 

RESULTS FOR THE THREE-MONTHS ENDED JANUARY 31, 2024:

  • Total revenues increased 15.3% to $594.2 million (including 1,063 deliveries) in the first quarter of fiscal 2024, compared with $515.4 million (including 938 deliveries) in the same quarter of the prior year.
  • Domestic unconsolidated joint venture deliveries for the first quarter of 2024 increased 56.1% to 167 homes compared with 107 homes for the three months ended January 31, 2023.
  • Homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 18.3% for the three months ended January 31, 2024, compared with 18.7% during the first quarter a year ago.
  • Homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 21.8% in both the fiscal 2024 and fiscal 2023 first quarters.
  • Total SG&A was $86.1 million, or 14.5% of total revenues, in the first quarter of fiscal 2024. Excluding $7.5 million of incremental phantom stock expense, total SG&A would have been $78.6 million or 13.2% of total revenues, in the first quarter of fiscal 2024. Total SG&A, in the first quarter of fiscal 2023 was $73.4 million, or 14.2% of total revenues. Excluding $1.4 million of incremental phantom stock expense, total SG&A would have been $72.0 million or 14.0% of total revenues, in the previous year’s first quarter.
1



  • Total interest expense as a percent of total revenues was 5.1% for the first quarter of fiscal 2024 compared with 5.8% for the first quarter of fiscal 2023.
  • Income before income taxes for the first quarter of fiscal 2024 increased 80.4% to $32.6 million compared with $18.0 million in the first quarter of the prior fiscal year.
  • For the first quarter of fiscal 2024, income before income taxes excluding $7.5 million of incremental phantom stock expense would have been $40.1 million. Income before income taxes excluding $1.4 million of incremental phantom stock expense, would have been $19.4 million in the first quarter of fiscal 2023.
  • Net income was $23.9 million, or $2.91 per diluted common share, for the three months ended January 31, 2024, compared with net income of $18.7 million, or $2.26 per diluted common share, in the same period of the previous fiscal year.
  • EBITDA increased 30.1% to $64.5 million for the first quarter of fiscal 2024 compared with $49.6 million for the first quarter of the prior year.
  • Consolidated contracts in the first quarter of fiscal 2024 increased 43.0% to 1,127 homes ($624.4 million) compared with 788 homes ($415.1 million) in the same quarter last year. Contracts, including domestic unconsolidated joint ventures1, for the three months ended January 31, 2024, increased 43.2% to 1,279 homes ($724.5 million) compared with 893 homes ($486.8 million) in the first quarter of fiscal 2023.
  • As of January 31, 2024, consolidated community count was 118 communities, compared with 113 communities at October 31, 2023 and 121 communities on January 31, 2023. Community count, including domestic unconsolidated joint ventures, was 135 as of January 31, 2024, compared with 129 communities at October 31, 2023 and 132 communities at the end of the first quarter of the prior fiscal year.
  • Consolidated contracts per community increased 47.7% year-over-year to 9.6 in the first quarter of fiscal 2024 compared with 6.5 contracts per community for the first quarter of fiscal 2023. Contracts per community, including domestic unconsolidated joint ventures, increased 39.7% to 9.5 in the three months ended January 31, 2024, compared with 6.8 contracts per community in the same quarter one year ago.
  • The dollar value of consolidated contract backlog, as of January 31, 2024, decreased 5.6% to $1.11 billion compared with $1.18 billion as of January 31, 2023. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of January 31, 2024, decreased 4.4% to $1.35 billion compared with $1.41 billion as of January 31, 2023.
  • The gross contract cancellation rate for consolidated contracts was 14% for the first quarter ended January 31, 2024 compared with 30% in the fiscal 2023 first quarter. The gross contract cancellation rate for contracts, including domestic unconsolidated joint ventures, was 14% for the first quarter of fiscal 2024 compared with 29% in the first quarter of the prior year
  • For the trailing twelve-month period our return on equity (ROE) was 40.1% and earnings before interest and income taxes return on investment (EBIT ROI) was 32.6%. We believe for the most recently reported trailing twelve-month periods, we had the highest ROE and the third highest EBIT ROI compared to 15 of our publicly traded peers. 

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

 

2



LIQUIDITY AND INVENTORY AS OF JANUARY 31, 2024:

  • During the first quarter of fiscal 2024, land and land development spending was $230.4 million compared with $134.4 million in the same quarter one year ago. This is the highest amount of quarterly land and land development spend since we started reporting it in fiscal 2010.
  • Total liquidity as of January 31, 2024 was $313.1 million, above our targeted liquidity range of $170 million to $245 million.
  • In the first quarter of fiscal 2024, approximately 3,800 lots were put under option or acquired in 43 consolidated communities.
  • As of January 31, 2024, our total controlled consolidated lots were 33,576, an increase compared with both 29,123 lots at the end of the first quarter of the previous year and 31,726 lots at October 31, 2023. Based on trailing twelve-month deliveries, the current position equaled a 6.7 years supply

FINANCIAL GUIDANCE(2):

 

The Company is providing guidance for total revenues, adjusted homebuilding gross margin, adjusted income before income taxes and adjusted EBITDA for the second quarter of fiscal 2024. Financial guidance below assumes no adverse changes in current market conditions, including further deterioration in our supply chain or material increases in mortgage rates, inflation or cancellation rates, and excludes further impact to SG&A expenses from phantom stock expense related solely to stock price movements from the closing price of $168.97 on January 31, 2024.

 

For the second quarter of fiscal 2024, total revenues are expected to be between $675 million and $775 million, adjusted homebuilding gross margin is expected to be between 21.5% and 23.0%, adjusted income before income taxes is expected to be between $45 million and $55 million and adjusted EBITDA is expected to be between $80 million and $90 million.

 

(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, net. These items are uncertain, depend on various factors and could have a material impact on GAAP reported results.

 

COMMENTS FROM MANAGEMENT:

 

We are off to a solid start to fiscal 2024, with 80% year over year growth in our income before income taxes for the first quarter. Excluding incremental phantom stock expense, we were at or above the high end of the guidance range for our first quarter total revenues, adjusted income before income taxes and adjusted EBITDA,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “Along with the growth in profitability, the past few months have drawn attention to the relative strength of demand for new homes, which can best be exemplified by our 48% growth in consolidated contracts per community during the first quarter of fiscal 2024. Total internet leads in January 2024 increased 16% year over year and 43% from December 2023, giving us confidence that demand remains strong. There are many factors that underpin the current levels of demand, including the downward trend in mortgage rates, the tightness of existing homes for sale, favorable signs from the employment market and overall growth in the broader economy.

 

Despite those encouraging developments, affordability remains challenging, and we continue to offer mortgage rate buydowns in order to make our homes more affordable to homebuyers,” said Mr. Hovnanian. As demonstrated by reducing debt for several years and refinancing much of our remaining debt last fall, we remain committed to repairing our balance sheet. However, we are now in a position where we can also focus on growing our revenues and achieving higher levels of profitability. All these positive trends impacting our company and our industry leave us optimistic of the trajectory of the 2024 spring selling season over the short term and the general direction of the housing market over the longer term.

 

3


WEBCAST INFORMATION:

 

Hovnanian Enterprises will webcast its fiscal 2024 first quarter financial results conference call at 11:00 a.m. E.T. on Thursday, February 22, 2024. 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, 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.

 

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 gain 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 income before income taxes, which is defined as income before income taxes excluding land-related charges and gain 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 income before income taxes 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.

 

Income before income taxes excluding the impact of incremental phantom stock expense is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income before income taxes, to which income before income taxes excluding the impact of incremental phantom stock expense is reconciled herein.

 

4



Total liquidity is comprised of $183.1 million of cash and cash equivalents, $5.0 million of restricted cash required to collateralize letters of credit and $125.0 million availability under the senior secured revolving credit facility as of January 31, 2024.

 

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 instability in the banking sector; (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; (26) public health issues such as major epidemic or pandemic; 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, 2023 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.

January 31, 2024

Statements of consolidated operations

(In thousands, except per share data)

 

 

 

 

 

Three Months Ended

 

 

 

 

 

January 31,

 

 

 

 

 

2024

 

2023

 

 

 

 

 

(Unaudited)

Total revenues

 

$

594,196 

 

$

  515,366 

Costs and expenses (1)

 

 

577,956 

 

 

  504,479 

Gain on extinguishment of debt, net

 

 

1,371 

 

 

- 

Income from unconsolidated joint ventures

 

 

14,952 

 

 

7,160 

Income before income taxes

 

 

32,563 

 

 

18,047 

Income tax provision (benefit)

 

 

8,659 

 

 

(669)

Net income

 

 

23,904 

 

 

18,716 

Less: preferred stock dividends

 

 

2,669 

 

 

2,669 

Net income available to common stockholders

 

$

21,235 

 

$

16,047 

 

 

Per share data:

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

Net income per common share

 

$

  3.11 

 

$

  2.37 

 

Weighted average number of common shares outstanding

 

 

6,496 

 

 

6,186 

Assuming dilution:

 

 

 

 

 

 

 

Net income per common share

 

$

  2.91 

 

$

  2.26 

 

Weighted average number of common shares outstanding

 

 

6,937 

 

 

6,468 

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


Hovnanian Enterprises, Inc.

January 31, 2024

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

(In thousands)

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

January 31,

 

 

 

 

 

2024

 

2023

 

 

 

 

 

(Unaudited)

Income before income taxes

 

$

32,563 

 

$

18,047 

Inventory impairments and land option write-offs

 

 

302 

 

 

477 

Gain on extinguishment of debt, net

 

 

(1,371)

 

 

- 

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

 

$

31,494 

 

$

18,524 


(1) Income before income taxes excluding land-related charges and gain 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.

January 31, 2024

Gross margin

(In thousands)

 

 

Homebuilding Gross Margin

 

 

Three Months Ended

 

 

January 31,

 

 

2024

 

2023

 

 

(Unaudited)

Sale of homes

 

$

573,636

 

$

499,645

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

 

 

448,448

 

 

390,963

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

 

 

125,188

 

 

108,682

Cost of sales interest expense, excluding land sales interest expense

 

 

  19,898

 

 

15,001

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

 

 

105,290

 

 

93,681

Land charges

 

 

302

 

 

477

Homebuilding gross margin

 

$

104,988

 

$

93,204

 

Homebuilding gross margin percentage

 

 

18.3%

 

 

18.7%

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

 

 

21.8%

 

 

21.8%

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

 

 

18.4%

 

 

18.8%


 

 

Land Sales Gross Margin

 

 

Three Months Ended

 

 

January 31,

 

 

2024

 

2023

 

 

(Unaudited)

Land and lot sales

 

$

1,340

 

$

329

Cost of sales, excluding interest (1)

 

 

765

 

 

77

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

 

 

575

 

 

252

Land and lot sales interest expense

 

 

  -

 

 

21

Land and lot sales gross margin, including interest

 

$

575

 

$

231


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

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

 

7



Hovnanian Enterprises, Inc.

January 31, 2024

Reconciliation of adjusted EBITDA to net income

(In thousands)

 

Three Months Ended

 

January 31,

 

2024

 

2023

 

(Unaudited)

Net income

$

23,904 

 

$

18,716 

Income tax provision (benefit)

 

8,659 

 

 

(669)

Interest expense

 

30,349 

 

 

30,115 

EBIT (1)

 

62,912 

 

 

48,162 

Depreciation and amortization

 

1,598 

 

 

1,410 

EBITDA (2)

 

64,510 

 

 

49,572 

Inventory impairments and land option write-offs

 

302 

 

 

477 

Gain on extinguishment of debt, net

 

(1,371)

 

 

- 

Adjusted EBITDA (3)

$

63,441 

 

$

50,049 

 

 

 

 

 

 

Interest incurred

$

31,961 

 

$

34,326 

 

 

 

 

 

 

Adjusted EBITDA to interest incurred

 

1.98 

 

 

1.46 


(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 gain on extinguishment of debt, net.


Hovnanian Enterprises, Inc.

January 31, 2024

Interest incurred, expensed and capitalized

(In thousands)

 

Three Months Ended

 

January 31,

 

2024

 

2023

 

(Unaudited)

Interest capitalized at beginning of period

$

52,060 

 

$

59,600 

Plus: interest incurred

 

31,961 

 

 

34,326 

Less: interest expensed

 

(30,349)

 

 

(30,115)

Less: interest contributed to unconsolidated joint venture (1)

 

- 

 

 

(3,016)

Interest capitalized at end of period (2)

$

53,672 

 

$

60,795 


(1) Represents capitalized interest which was included as part of the assets contributed to joint ventures the company entered into during the three months ended January 31, 2023. There was no impact to the Condensed Consolidated Statement of Operations as a result of these transactions.

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

 

8



Hovnanian Enterprises, Inc.

January 31, 2024

Calculation of Consolidated Adjusted EBIT ROI

 

 

 

 

 

 

 

 

 

 

 

 

TTM

 

 

 

 

For the quarter ended

 

ended

(Dollars in thousands)

 

 

 

4/30/2023

 

7/31/2023

 

10/31/2023

 

1/31/2024

 

1/31/2024

Consolidated EBIT

 

 

 

$82,049

 

$103,164

 

$157,478

 

$62,912 

 

$405,603

Impairments and walk away

 

 

 

$137

 

$308

 

$614

 

$302 

 

$1,361

(Loss) gain on extinguishment of debt

 

 

 

$0

 

$4,082

 

$21,556

 

$(1,371)

 

$24,267

Adjusted EBIT

 

 

 

$82,186

 

$107,554

 

$179,648

 

$61,843 

 

$431,231

 

 

As of

 

 

 

 

1/31/2023

 

4/30/2023

 

7/31/2023

 

10/31/2023

 

1/31/2024

 

 

Total inventories

 

$1,507,038

 

$1,484,992

 

$1,411,260

 

$1,349,186

 

$1,463,558

 

 

Less liabilities from inventory not owned, net of debt issuance costs

 

209,579

 

200,299

 

145,979

 

124,254

 

114,658

 

 

Less capitalized interest

 

60,795

 

60,274

 

55,274

 

52,060

 

53,672

 

 

Plus investments in and advances to unconsolidated joint ventures

 

101,013

 

85,820

 

85,260

 

97,886

 

110,592

 

Five

Quarter

Plus goodwill

 

-

 

-

 

-

 

-

 

-

 

Average

Inventories less liabilities from inventory not owned and capitalized interest plus investments in and advances to unconsolidated joint ventures and goodwill

 

$1,337,677

 

$1,310,239

 

$1,295,267

 

$1,270,758

 

$1,405,820

 

$1,323,952

Consolidated Adjusted EBIT ROI

 

32.6%

 

9


HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

 

 

January 31,

 

 

October 31,

 

 

 

2024

 

 

2023

 

 

 

 

 (Unaudited)

 

 

 

 (1)

 

ASSETS

 

 

 

 

 

 

 

 

Homebuilding:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

183,118

 

 

$

434,119

 

Restricted cash and cash equivalents

 

 

8,369

 

 

 

8,431

 

Inventories:

 

 

 

 

 

 

 

 

Sold and unsold homes and lots under development

 

 

1,092,347

 

 

 

998,841

 

Land and land options held for future development or sale

 

 

173,134

 

 

 

125,587

 

Consolidated inventory not owned

 

 

198,077

 

 

 

224,758

 

Total inventories

 

 

1,463,558

 

 

 

1,349,186

 

Investments in and advances to unconsolidated joint ventures

 

 

110,592

 

 

 

97,886

 

Receivables, deposits and notes, net

 

 

24,208

 

 

 

27,982

 

Property and equipment, net

 

 

37,441

 

 

 

33,946

 

Prepaid expenses and other assets

 

 

68,127

 

 

 

69,886

 

Total homebuilding

 

 

1,895,413

 

 

 

2,021,436

 

 

 

 

 

 

 

 

 

 

Financial services

 

 

149,633

 

 

 

168,671

 

 

 

 

 

 

 

 

 

 

Deferred tax assets, net

 

 

295,332

 

 

 

302,833

 

Total assets

 

$

2,340,378

 

 

$

2,492,940

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Homebuilding:

 

 

 

 

 

 

 

 

Nonrecourse mortgages secured by inventory, net of debt issuance costs

 

$

99,553

 

 

$

91,539

 

Accounts payable and other liabilities

 

 

360,207

 

 

 

415,480

 

Customers’ deposits

 

 

51,798

 

 

 

51,419

 

Liabilities from inventory not owned, net of debt issuance costs

 

 

114,658

 

 

 

124,254

 

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

 

 

934,617

 

 

 

1,051,491

 

Accrued interest

 

 

41,472

 

 

 

26,926

 

Total homebuilding

 

 

1,602,305

 

 

 

1,761,109

 

 

 

 

 

 

 

 

 

 

Financial services

 

 

128,402

 

 

 

148,181

 

 

 

 

 

 

 

 

 

 

Income taxes payable

 

 

2,583

 

 

 

1,861

 

Total liabilities

 

 

1,733,290

 

 

 

1,911,151

 

 

 

 

 

 

 

 

 

 

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 January 31, 2024 and October 31, 2023

 

 

135,299

 

 

 

135,299

 

Common stock, Class A, $0.01 par value - authorized 16,000,000 shares; issued 6,247,939 shares at January 31, 2024 and 6,247,308 shares at October 31, 2023

 

 

62

 

 

 

62

 

Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) - authorized 2,400,000 shares; issued 776,734 shares at January 31, 2024 and 776,750 shares at October 31, 2023

 

 

8

 

 

 

8

 

Paid in capital - common stock

 

 

740,063

 

 

 

735,946

 

Accumulated deficit

 

 

(135,962

)

 

 

(157,197

)

Treasury stock - at cost – 901,379 shares of Class A common stock at January 31, 2024  and October 31, 2023; 27,669 shares of Class B common stock at January 31, 2024 and October 31, 2023

 

 

(132,382

)

 

 

(132,382

)

Total Hovnanian Enterprises, Inc. stockholders’ equity

 

 

607,088

 

 

 

581,736

 

Noncontrolling interest in consolidated joint ventures

 

 

-

 

 

 

53

 

Total equity

 

 

607,088

 

 

 

581,789

 

Total liabilities and equity

 

$

2,340,378

 

 

$

2,492,940

 

(1) Derived from the audited balance sheet as of October 31, 2023

10



HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended January 31,

 

 

 

2024

 

 

2023

 

Revenues:

 

 

 

 

 

 

 

 

Homebuilding:

 

 

 

 

 

 

 

 

Sale of homes

 

$

573,636

 

 

$

499,645

 

Land sales and other revenues

 

 

5,292

 

 

 

3,557

 

Total homebuilding

 

 

578,928

 

 

 

503,202

 

Financial services

 

 

15,268

 

 

 

12,164

 

Total revenues

 

 

594,196

 

 

 

515,366

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

Homebuilding:

 

 

 

 

 

 

 

 

Cost of sales, excluding interest

 

 

449,213

 

 

 

391,040

 

Cost of sales interest

 

 

19,898

 

 

 

15,022

 

Inventory impairments and land option write-offs

 

 

302

 

 

 

477

 

Total cost of sales

 

 

469,413

 

 

 

406,539

 

Selling, general and administrative

 

 

48,937

 

 

 

47,918

 

Total homebuilding expenses

 

 

518,350

 

 

 

454,457

 

 

 

 

 

 

 

 

 

 

Financial services

 

 

11,471

 

 

 

9,053

 

Corporate general and administrative

 

 

37,133

 

 

 

25,490

 

Other interest

 

 

10,451

 

 

 

15,093

 

Other expenses, net

 

 

551

 

 

 

386

 

Total expenses

 

 

577,956

 

 

 

504,479

 

Gain on extinguishment of debt, net

 

 

1,371

 

 

 

-

 

Income from unconsolidated joint ventures

 

 

14,952

 

 

 

7,160

 

Income before income taxes

 

 

32,563

 

 

 

18,047

 

State and federal income tax provision (benefit):

 

 

 

 

 

 

 

 

State

 

 

2,206

 

 

 

2,211

 

Federal

 

 

6,453

 

 

 

(2,880

)

Total income taxes

 

 

8,659

 

 

 

(669

)

Net income

 

 

23,904

 

 

 

18,716

 

Less: preferred stock dividends

 

 

2,669

 

 

 

2,669

 

Net income available to common stockholders

 

$

21,235

 

 

$

16,047

 

 

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

Net income per common share

 

$

3.11

 

 

$

2.37

 

Weighted-average number of common shares outstanding

 

 

6,496

 

 

 

6,186

 

Assuming dilution:

 

 

 

 

 

 

 

 

Net income per common share

 

$

2.91

 

 

$

2.26

 

Weighted-average number of common shares outstanding

 

 

6,937

 

 

 

6,468

 


11


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

 

January 31,

January 31,

January 31,

 

2024

2023

% Change

2024

2023

% Change

2024

2023

% Change

Northeast (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Home

 

383

 

311

23.2%

 

332

 

371

(10.5)%

 

668

 

782

(14.6)%

 

Dollars

$

248,753

$

185,850

33.8%

$

189,989

$

210,874

(9.9)%

$

478,864

$

432,508

10.7%

 

Avg. Price

$

649,486

$

597,588

8.7%

$

572,256

$

568,394

0.7%

$

716,862

$

553,079

29.6%

Southeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(FL, GA, SC)

Home

 

110

 

164

(32.9)%

 

195

 

141

38.3%

 

530

 

525

1.0%

 

Dollars

$

68,671

$

82,191

(16.4)%

$

105,628

$

73,736

43.3%

$

267,294

$

319,344

(16.3)%

 

Avg. Price

$

624,282

$

501,165

24.6%

$

541,682

$

522,950

3.6%

$

504,328

$

608,274

(17.1)%

West

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(AZ, CA, TX)

Home

 

634

 

313

102.6%

 

536

 

426

25.8%

 

690

 

721

(4.3)%

 

Dollars

$

306,928

$

147,087

108.7%

$

278,019

$

215,035

29.3%

$

365,172

$

425,669

(14.2)%

 

Avg. Price

$

484,114

$

469,927

3.0%

$

518,692

$

504,777

2.8%

$

529,235

$

590,387

(10.4)%

Consolidated Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home

 

1,127

 

788

43.0%

 

1,063

 

938

13.3%

 

1,888

 

2,028

(6.9)%

 

Dollars

$

624,352

$

415,128

50.4%

$

573,636

$

499,645

14.8%

$

1,111,330

$

1,177,521

(5.6)%

 

Avg. Price

$

553,995

$

526,812

5.2%

$

539,639

$

532,671

1.3%

$

588,628

$

580,632

1.4%

Unconsolidated Joint Ventures (2) (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Excluding KSA JV)

Home

 

152

 

105

44.8%

 

167

 

107

56.1%

 

357

 

317

12.6%

 

Dollars

$

100,105

$

71,681

39.7%

$

116,935

$

78,670

48.6%

$

238,809

$

235,429

1.4%

 

Avg. Price

$

658,586

$

682,676

(3.5)%

$

700,210

$

735,234

(4.8)%

$

668,933

$

742,677

(9.9)%

Grand Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home

 

1,279

 

893

43.2%

 

1,230

 

1,045

17.7%

 

2,245

 

2,345

(4.3)%

 

Dollars

$

724,457

$

486,809

48.8%

$

690,571

$

578,315

19.4%

$

1,350,139

$

1,412,950

(4.4)%

 

Avg. Price

$

566,425

$

545,139

3.9%

$

561,440

$

553,411

1.5%

$

601,398

$

602,537

(0.2)%

 

KSA JV Only

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home

 

69

 

9

666.7%

 

39

 

0

0.0%

 

80

 

2,222

(96.4)%

 

Dollars

$

14,108

$

1,398

909.2%

$

8,274

$

0

0.0%

$

13,958

$

348,818

(96.0)%

 

Avg. Price

$

204,464

$

155,333

31.6%

$

212,154

$

0

0.0%

$

174,475

$

156,984

11.1%

 

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 January 31, 2023 from the consolidated Northeast segment to unconsolidated joint ventures. This is related to the assets and liabilities contributed to the joint venture the company entered into during the three months ended January 31, 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

 

January 31,

January 31,

January 31,

 

2024

2023

% Change

2024

2023

% Change

2024

2023

% Change

Northeast (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unconsolidated Joint Ventures)

Home

 

71

 

50

42.0%

 

91

 

65

40.0%

 

140

 

165

(15.2)%

(Excluding KSA JV)

Dollars

$

57,356

$

39,933

43.6%

$

68,176

$

50,776

34.3%

$

110,741

$

120,802

(8.3)%

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

Avg. Price

$

807,831

$

798,660

1.1%

$

749,187

$

781,169

(4.1)%

$

791,007

$

732,133

8.0%

Southeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unconsolidated Joint Ventures)

Home

 

55

 

39

41.0%

 

50

 

31

61.3%

 

191

 

137

39.4%

(FL, GA, SC)

Dollars

$

31,168

$

22,965

35.7%

$

35,278

$

22,197

58.9%

$

115,747

$

106,196

9.0%

 

Avg. Price

$

566,691

$

588,846

(3.8)%

$

705,560

$

716,032

(1.5)%

$

606,005

$

775,153

(21.8)%

West

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unconsolidated Joint Ventures)

Home

 

26

 

16

62.5%

 

26

 

11

136.4%

 

26

 

15

73.3%

(AZ, CA, TX)

Dollars

$

11,581

$

8,783

31.9%

$

13,481

$

5,697

136.6%

$

12,321

$

8,431

46.1%

 

Avg. Price

$

445,423

$

548,938

(18.9)%

$

518,500

$

517,909

0.1%

$

473,885

$

562,067

(15.7)%

Unconsolidated Joint Ventures (2) (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Excluding KSA JV)

Home

 

152

 

105

44.8%

 

167

 

107

56.1%

 

357

 

317

12.6%

 

Dollars

$

100,105

$

71,681

39.7%

$

116,935

$

78,670

48.6%

$

238,809

$

235,429

1.4%

 

Avg. Price

$

658,586

$

682,676

(3.5)%

$

700,210

$

735,234

(4.8)%

$

668,933

$

742,678

(9.9)%

 

KSA JV Only

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home

 

69

 

9

666.7%

 

39

 

0

0.0%

 

80

 

2,222

(96.4)%

 

Dollars

$

14,108

$

1,398

909.2%

$

8,274

$

0

0.0%

$

13,958

$

348,818

(96.0)%

 

Avg. Price

$

204,464

$

155,333

31.6%

$

212,154

$

0

0.0%

$

174,475

$

156,984

11.1%

 

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 January 31, 2023 from the consolidated Northeast segment to unconsolidated joint ventures. This is related to the assets and liabilities contributed to the joint venture the company entered into during the three months ended January 31, 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”.