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 FOURTH QUARTER AND FULL YEAR RESULTS

Full Year Income Before Income Taxes Increased 24% Year-Over-Year

44% Year-Over-Year Quarterly Growth in Consolidated Contracts

Total Consolidated Lots Controlled Increased 32% Year-Over-Year

47% Year-Over-Year Growth in Annual Land and Land Development Spend

 

MATAWAN, NJ, December 5, 2024 – Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal fourth quarter and year ended October 31, 2024.

 

RESULTS FOR THE THREE-MONTHS AND FULL YEAR ENDED OCTOBER 31, 2024:

• Total revenues, adjusted homebuilding gross margin and total SG&A as a percentage of total revenues for the full year ended October 31, 2024, were within our guidance range. Adjusted EBITDA, adjusted income before income taxes and diluted earnings per share for the full year ended October 31, 2024, exceeded the high end of our guidance, despite income from unconsolidated joint ventures being slightly below the low end of our guidance.

• Total revenues increased 10.4% to $979.6 million in the fourth quarter of fiscal 2024, compared with $887.0 million in the same quarter of the prior year. For the year ended October 31, 2024, total revenues increased 9.0% to $3.00 billion compared with $2.76 billion in fiscal 2023.

• Sale of homes revenues increased 11.8% to $927.5 million (1,747 homes) in the fiscal 2024 fourth quarter compared with $829.7 million (1,517 homes) in the previous year’s fourth quarter. During the year ended October 31, 2024, sale of homes revenues increased 9.3% to $2.88 billion (5,348 homes) compared with $2.63 billion (4,878 homes) in the previous fiscal year.

• Domestic unconsolidated joint ventures⁽¹⁾ sale of homes revenues for the fourth quarter of fiscal 2024 was $141.7 million (235 homes) compared with $144.0 million (196 homes) for the three months ended October 31, 2023. For fiscal 2024, domestic unconsolidated joint ventures sale of homes revenues increased 24.6% to $528.6 million (803 homes) compared with $424.3 million (595 homes) in the year ended October 31, 2023.

• Sale of homes revenues, including domestic unconsolidated joint ventures, increased 9.8% to $1.07 billion (1,982 homes) in the fourth quarter of fiscal 2024 compared with $973.7 million (1,713 homes) during the fourth quarter of fiscal 2023. During the year ended October 31, 2024, sale of homes revenues, including domestic unconsolidated joint ventures, increased 11.4% to $3.40 billion (6,151 homes) compared with $3.05 billion (5,473 homes) during fiscal 2023.

• Homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 18.0% for the three months ended October 31, 2024, compared with 21.4% during the fourth quarter a year ago. In fiscal 2024, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 18.7% compared with 19.6% in the prior fiscal year.

• Homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 21.7% during the fiscal 2024 fourth quarter compared with 24.5% in last year’s fourth quarter. For the year ended October 31, 2024, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was at the midpoint of the guidance range provided at 22.0% compared with 22.7% in the previous fiscal year.

• Total SG&A was $87.7 million, or 9.0% of total revenues, in the fourth quarter of fiscal 2024 compared with $80.8 million, or 9.1% of total revenues, in the fourth quarter of fiscal 2023. Total SG&A was $342.2 million, or 11.4% of total revenues, in fiscal 2024 compared with $304.8 million, or 11.1% of total revenues, in the previous fiscal year.

• Total interest expense as a percent of total revenues was 3.2% for the fourth quarter of fiscal 2024 compared with 4.1% for the fourth quarter of fiscal 2023. For the year ended October 31, 2024, total interest expense as a percent of total revenues was 4.0% compared with 4.9% in the previous fiscal year.

• Income before income taxes for the fourth quarter of fiscal 2024 was $117.9 million compared with $121.4 million in the fourth quarter of the prior fiscal year. For fiscal 2024, income before income taxes increased 23.9% to $317.1 million compared with $256.0 million during the prior fiscal year.

• Income before income taxes excluding land-related charges and loss (gain) on extinguishment of debt, net was $125.8 million in the fourth quarter of fiscal 2024 compared with income before these items of $143.6 million in the fourth quarter of fiscal 2023. For fiscal 2024, income before income taxes excluding land-related charges and loss (gain) on extinguishment of debt, net increased 15.6% to $327.3 million compared with income before these items of $283.1 million in fiscal 2023.

• Net income was $94.3 million, or $12.79 per diluted common share, for the three months ended October 31, 2024, compared with net income of $97.3 million, or $13.05 per diluted common share, in the same period of the previous fiscal year. For fiscal 2024, net income was $242.0 million, or $31.79 per diluted common share, compared with net income of $205.9 million, or $26.88 per diluted common share, during fiscal 2023.

• EBITDA was $151.0 million for the fourth quarter of fiscal 2024 compared with $159.1 million for the fourth quarter of the prior year. For fiscal 2024, EBITDA increased 11.4% to $445.4 million compared with $399.7 million in the prior year.

• Consolidated contracts in the fourth quarter of fiscal 2024 increased 44.5% to 1,355 homes ($705.6 million) compared with 938 homes ($564.1 million) in the same quarter last year. Contracts, including domestic unconsolidated joint ventures, for the three months ended October 31, 2024, increased 47.5% to 1,571 homes ($845.7 million) compared with 1,065 homes ($648.4 million) in the fourth quarter of fiscal 2023.

• As of October 31, 2024, consolidated community count increased 15.0% to 130 communities, compared with 113 communities as of October 31, 2023. Community count, including domestic unconsolidated joint ventures, increased 14.0% to 147 as of October 31, 2024, compared with 129 communities at October 31, 2023.

• Consolidated contracts per community increased 25.3% year over year to 10.4 in the fourth quarter of fiscal 2024, compared with 8.3 contracts per community for the fourth quarter of fiscal 2023. This is significantly higher than our quarterly average since 1997 of 8.8 contracts per community. Contracts per community, including domestic unconsolidated joint ventures, increased 28.9% to 10.7 in the three months ended October 31, 2024, compared with 8.3 contracts per community in the same quarter one year ago.

• The dollar value of consolidated contract backlog, as of October 31, 2024, decreased 11.7% to $936.8 million compared with $1.06 billion as of October 31, 2023. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of October 31, 2024, decreased 6.2% to $1.23 billion compared with $1.32 billion as of October 31, 2023.

• The gross contract cancellation rate for consolidated contracts was 18% for the fourth quarter ended October 31, 2024 compared with 25% in the fiscal 2023 fourth quarter. The gross contract cancellation rate for contracts, including domestic unconsolidated joint ventures, was 18% for the fourth quarter of fiscal 2024 compared with 24% in the fourth quarter of the prior year.

• For the trailing twelve-month period our return on equity (ROE) was 34.6% and adjusted earnings before interest and income taxes return on investment (Adjusted EBIT ROI) was 30.7%. We believe that for the most recently reported trailing twelve-month periods, we had the second highest ROE and the third highest EBIT ROI compared to 14 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).

 

LIQUIDITY AND INVENTORY AS OF OCTOBER 31, 2024:

• During the fourth quarter of fiscal 2024, land and land development spending increased 45.0% to $318.4 million compared with $219.6 million in the same quarter one year ago. For fiscal 2024, land and land development spending increased 46.5% to $995.4 million compared with $679.3 million one year ago. This is the highest amount of quarterly and annual land and land development spend since we started reporting it in fiscal 2010.

• Total liquidity as of October 31, 2024, was $338.2 million, well above our targeted liquidity range of $170 million to $245 million.

• In the fourth quarter of fiscal 2024, approximately 5,500 lots were put under option or acquired in 56 consolidated communities.

• As of October 31, 2024, our total controlled consolidated lots were 41,891, an increase of 32.0% compared with 31,726 lots at the end of the previous year. The total controlled consolidated lots also increased sequentially from 39,516 lots as of July 31, 2024. Based on trailing twelve-month deliveries, the current position equaled a 7.8 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 first quarter of fiscal 2025. Financial guidance below assumes no adverse changes in current market conditions, including 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 $176.04 on October 31, 2024.

 

For the first quarter of fiscal 2025, total revenues are expected to be between $650 million and $750 million, adjusted homebuilding gross margin is expected to be between 17.5% and 18.5%, adjusted income before income taxes is expected to be between $25 million and $35 million and adjusted EBITDA is expected to be between $55 million and $65 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 pleased that our total full year contracts of 6,007 homes and deliveries of 6,151 homes increased by 16% and 12% respectively year over year, which resulted in better-than-expected adjusted income before income taxes and adjusted EBITDA,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “The 48% increase in total quarter contracts followed by the 55% increase in November demonstrates that consumer demand remains strong despite high mortgage rates and geopolitical and economic uncertainty, which persisted throughout this period. We adjusted our balance of pace versus price during the quarter. To spur consumers to action and to help them qualify for mortgages, we offered additional incentives, particularly in the West. Although these contracts are at lower margins, this is a conscious effort and we are very pleased with the tradeoff of pace for margin given our focus on inventory turns, EBIT ROI and quick move in homes.”

 

“After several years of focusing on debt reduction, we shifted our focus in fiscal 2024 to a strategy with growth as the focal point. As evidence of our commitment to growth, during fiscal 2024, our land and land development spend increased 47% year over year, lot count grew 32% year over year and community count increased 14% year over year. The housing market continues to be driven by positive fundamentals. Given the growth in our lot count, community count and land and land development spend, we think we are well positioned to drive delivery growth in excess of 10% on an annual basis over the next few years and to continue to deliver top-tier industry returns to our shareholders,” concluded Mr. Hovnanian.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2024 fourth quarter and full year financial results conference call at 11:00 a.m. E.T. on Thursday, December 5, 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 loss (gain) on extinguishment of debt, net (“Adjusted EBITDA”) and the ratio of Adjusted EBITDA to interest incurred 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 loss (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.

 

Adjusted earnings before interest and income taxes return on investment (“Adjusted EBIT ROI”) is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income. A reconciliation for historical periods of Adjusted EBIT ROI to consolidated EBIT is presented in a table attached to this earnings release.

 

Total liquidity is comprised of $210.0 million of cash and cash equivalents, $3.2 million of restricted cash required to collateralize letters of credit and $125.0 million available under a senior secured revolving credit facility as of October 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) increases in inflation; (5) adverse weather and other environmental conditions and natural disasters; (6) the seasonality of the Company’s business; (7) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (8) reliance on, and the performance of, subcontractors; (9) regional and local economic factors, including dependency on certain sectors of the economy, and employment levels affecting home prices and sales activity in the markets where the Company builds homes; (10) increases in cancellations of agreements of sale; (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) global economic and political instability (18) high leverage and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (19) availability and terms of financing to the Company; (20) the Company’s sources of liquidity; (21) changes in credit ratings; (22) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (23) potential liability as a result of the past or present use of hazardous materials; (24) operations through unconsolidated joint ventures with third parties; (25) significant influence of the Company’s controlling stockholders; (26) availability of net operating loss carryforwards; (27) loss of key management personnel or failure to attract qualified personnel; and (28) 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 2024 and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

 

Hovnanian Enterprises, Inc.
October 31, 2024
Statements of consolidated operations
(In thousands, except per share data)
				Three Months Ended						Year Ended
				October 31,						October 31,
				2024			2023			2024			2023
				(Unaudited)						(Unaudited)
Total revenues				$	979,638		$	887,032		$	3,004,918		$	2,756,016
Costs and expenses (1)					877,221			766,276			2,741,462			2,517,587
(Loss) gain on extinguishment of debt, net					-			(21,556)			1,371			(25,638)
Income from unconsolidated joint ventures					15,448			22,191			52,262			43,160
Income before income taxes					117,865			121,391			317,089			255,951
Income tax provision					23,516			24,126			75,081			50,060
Net income					94,349			97,265			242,008			205,891
Less: preferred stock dividends					2,668			2,668			10,675			10,675
Net income available to common stockholders				$	91,681		$	94,597		$	231,333		$	195,216
Per share data:
Basic:
	Net income per common share			$	13.84		$	13.98		$	34.40		$	28.76
	Weighted average number of common shares outstanding				6,487			6,317			6,479			6,230
Assuming dilution:
	Net income per common share			$	12.79		$	13.05		$	31.79		$	26.88
	Weighted average number of common shares outstanding				7,017			6,764			7,007			6,666

  

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

 

Hovnanian Enterprises, Inc.
October 31, 2024
Reconciliation of income before income taxes excluding land-related charges and loss (gain) on extinguishment of debt, net to income before income taxes
(In thousands)
				Three Months Ended						Year Ended
				October 31,						October 31,
				2024			2023			2024			2023
				(Unaudited)						(Unaudited)
Income before income taxes				$	117,865		$	121,391		$	317,089		$	255,951
Inventory impairments and land option write-offs					7,918			614			11,556			1,536
Loss (gain) on extinguishment of debt, net					-			21,556			(1,371)			25,638
Income before income taxes excluding land-related charges and loss (gain) on extinguishment of debt, net (1)				$	125,783		$	143,561		$	327,274		$	283,125

  

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

 

  

Hovnanian Enterprises, Inc.
October 31, 2024
Gross margin
(In thousands)
				Homebuilding Gross Margin						Homebuilding Gross Margin
				Three Months Ended						Year Ended
				October 31,						October 31,
				2024			2023			2024			2023
				(Unaudited)						(Unaudited)
Sale of homes				$	927,499		$	829,733		$	2,875,488		$	2,630,457
Cost of sales, excluding interest expense and land charges (1)					726,491			626,424			2,241,749			2,032,136
Homebuilding gross margin, before cost of sales interest expense and land charges (2)					201,008			203,309			633,739			598,321
Cost of sales interest expense, excluding land sales interest expense					25,925			25,101			87,717			79,894
Homebuilding gross margin, after cost of sales interest expense, before land charges (2)					175,083			178,208			546,022			518,427
Land charges					7,918			614			8,903			1,536
Homebuilding gross margin				$	167,165		$	177,594		$	537,119		$	516,891
Homebuilding gross margin percentage					18.0%			21.4%			18.7%			19.6%
Homebuilding gross margin percentage, before cost of sales interest expense and land charges (2)					21.7%			24.5%			22.0%			22.7%
Homebuilding gross margin percentage, after cost of sales interest expense, before land charges (2)					18.9%			21.5%			19.0%			19.7%

				Land Sales Gross Margin						Land Sales Gross Margin
				Three Months Ended						Year Ended
				October 31,						October 31,
				2024			2023			2024			2023
				(Unaudited)						(Unaudited)
Land and lot sales				$	26,974		$	32,175		$	42,757		$	48,217
Cost of sales, excluding interest (1)					8,846			10,724			21,635			20,664
Land and lot sales gross margin, excluding interest and land charges					18,128			21,451			21,122			27,553
Land and lot sales interest expense					125			-			2,090			926
Land and lot sales gross margin, including interest				$	18,003		$	21,451		$	19,032		$	26,627

(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 Consolidated Statements of Operations.

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

 

 

Hovnanian Enterprises, Inc.
October 31, 2024
Reconciliation of adjusted EBITDA to net income
(In thousands)
	Three Months Ended						Year Ended
	October 31,						October 31,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
Net income	$	94,349		$	97,265		$	242,008		$	205,891
Income tax provision		23,516			24,126			75,081			50,060
Interest expense		31,120			36,087			120,559			134,902
EBIT (1)		148,985			157,478			437,648			390,853
Depreciation and amortization		2,051			1,575			7,730			8,798
EBITDA (2)		151,036			159,053			445,378			399,651
Inventory impairments and land option write-offs		7,918			614			11,556			1,536
Loss (gain) on extinguishment of debt, net		-			21,556			(1,371)			25,638
Adjusted EBITDA (3)	$	158,954		$	181,223		$	455,563		$	426,825
Interest incurred	$	34,199		$	32,873		$	128,777		$	136,535
Adjusted EBITDA to interest incurred		4.65			5.51			3.54			3.13

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

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

(3) Adjusted EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income. Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation, amortization, inventory impairments and land option write-offs and loss (gain) on extinguishment of debt, net.

Hovnanian Enterprises, Inc.
October 31, 2024
Interest incurred, expensed and capitalized
(In thousands)
	Three Months Ended						Year Ended
	October 31,						October 31,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
Interest capitalized at beginning of period	$	54,592		$	55,274		$	52,060		$	59,600
Plus: interest incurred		34,199			32,873			128,777			136,535
Less: interest expensed		(31,120)			(36,087)			(120,559)			(134,902)
Less: interest contributed to unconsolidated joint ventures (1)		-			-			(5,468)			(9,456)
Plus: interest acquired from unconsolidated joint ventures (2)		-			-			2,861			283
Interest capitalized at end of period (3)	$	57,671		$	52,060		$	57,671		$	52,060

(1) Represents capitalized interest which was included as part of the assets contributed to joint ventures the company entered into during the year ended October 31, 2024 and 2023, respectively. There was no impact to the Consolidated Statement of Operations as a result of these transactions.

(2) Represents capitalized interest which was included as part of the assets purchased from joint ventures the company closed out during the year ended October 31, 2024 and 2023, respectively. There was no impact to the Consolidated Statement of Operations as a result of these transactions.

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

 

Hovnanian Enterprises, Inc.
October 31, 2024
Calculation of Consolidated Adjusted EBIT ROI
												TTM
				For the quarter ended								ended
(Dollars in thousands)				1/31/2024		4/30/2024		7/31/2024		10/31/2024		10/31/2024
Consolidated EBIT				$62,912		$99,904		$125,847		$148,985		$437,648
Impairments and walk away				$302		$237		$3,099		$7,918		$11,556
Gain on extinguishment of debt				$(1,371)		-		-		-		$(1,371)
Adjusted EBIT				$61,843		$100,141		$128,946		$156,903		$447,833
		As of
		10/31/2023		1/31/2024		4/30/2024		7/31/2024		10/31/2024
Total inventories		$1,349,186		$1,463,558		$1,417,058		$1,650,470		$1,644,804
Less liabilities from inventory not owned, net of debt issuance costs		124,254		114,658		86,618		135,559		140,298
Less capitalized interest		52,060		53,672		52,222		54,592		47,888
Plus Investments in and advances to unconsolidated joint ventures		97,886		110,592		150,674		126,318		142,910		Five Quarter Average
Inventories less consolidated inventory not owned and capitalized interest plus liabilities from inventory not owned		$1,270,758		$1,405,820		$1,428,892		$1,586,637		$1,599,528		$1,458,327
Consolidated Adjusted EBIT ROI												30.7%

10

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HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

		October 31,				October 31,
		2024				2023
ASSETS
Homebuilding:
Cash and cash equivalents		$	209,976			$	434,119
Restricted cash and cash equivalents			7,875				8,431
Inventories:
Sold and unsold homes and lots under development			1,195,318				998,841
Land and land options held for future development or sale			238,499				125,587
Consolidated inventory not owned			210,987				224,758
Total inventories			1,644,804				1,349,186
Investments in and advances to unconsolidated joint ventures			142,910				97,886
Receivables, deposits and notes, net			29,400				27,982
Property and equipment, net			43,431				33,946
Prepaid expenses and other assets			82,525				69,886
Total homebuilding			2,160,921				2,021,436
Financial services			203,589				168,671
Deferred tax assets, net			241,064				302,833
Total assets		$	2,605,574			$	2,492,940
LIABILITIES AND EQUITY
Homebuilding:
Nonrecourse mortgages secured by inventory, net of debt issuance costs		$	90,675			$	91,539
Accounts payable and other liabilities			433,273				415,480
Customers’ deposits			41,639				51,419
Liabilities from inventory not owned, net of debt issuance costs			140,298				124,254
Senior notes and credit facilities (net of discounts, premiums and debt issuance costs)			896,218				1,051,491
Accrued interest			14,508				26,926
Total homebuilding			1,616,611				1,761,109
Financial services			183,135				148,181
Income taxes payable			5,479				1,861
Total liabilities			1,805,225				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 October 31, 2024 and October 31, 2023			135,299				135,299
Common stock, Class A, $0.01 par value - authorized 16,000,000 shares; issued 6,415,794 shares at October 31, 2024 and 6,247,308 shares at October 31, 2023			64				62
Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) - authorized 2,400,000 shares; issued 757,023 shares at October 31, 2024 and 776,750 shares at October 31, 2023			8				8
Paid in capital - common stock			749,752				735,946
Retained earnings (Accumulated deficit)			74,136				(157,197	)
Treasury stock - at cost – 1,090,179 shares of Class A common stock at October 31, 2024 and 901,379 shares at October 31, 2023; 27,669 shares of Class B common stock at October 31, 2024 and October 31, 2023			(158,910	)			(132,382	)
Total Hovnanian Enterprises, Inc. stockholders’ equity			800,349				581,736
Noncontrolling interest in consolidated joint ventures			-				53
Total equity			800,349				581,789
Total liabilities and equity		$	2,605,574			$	2,492,940

11

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HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands Except Per Share Data)

(Unaudited)

 

		Three Months Ended October 31,								Year Ended October 31,
			2024				2023				2024				2023
Revenues:
Homebuilding:
Sale of homes			$	927,499			$	829,733			$	2,875,488			$	2,630,457
Land sales and other revenues				29,398				38,227				55,366				65,471
Total homebuilding				956,897				867,960				2,930,854				2,695,928
Financial services				22,741				19,072				74,064				60,088
Total revenues				979,638				887,032				3,004,918				2,756,016
Expenses:
Homebuilding:
Cost of sales, excluding interest				735,337				637,148				2,263,384				2,052,800
Cost of sales interest				26,050				25,101				89,807				80,820
Inventory impairment loss and land option write-offs				7,918				614				11,556				1,536
Total cost of sales				769,305				662,863				2,364,747				2,135,156
Selling, general and administrative				56,071				55,488				202,486				201,578
Total homebuilding expenses				825,376				718,351				2,567,233				2,336,734
Financial services				14,084				11,173				49,940				40,723
Corporate general and administrative				31,610				25,262				139,740				103,196
Other interest				5,070				10,986				30,752				54,082
Other expenses (income), net (1)				1,081				504				(46,203	)			(17,148	)
Total expenses				877,221				766,276				2,741,462				2,517,587
(Loss) gain on extinguishment of debt, net				-				(21,556	)			1,371				(25,638	)
Income from unconsolidated joint ventures				15,448				22,191				52,262				43,160
Income before income taxes				117,865				121,391				317,089				255,951
State and federal income tax (benefit) provision:
State				(2,482	)			445				10,851				3,239
Federal				25,998				23,681				64,230				46,821
Total income taxes				23,516				24,126				75,081				50,060
Net income				94,349				97,265				242,008				205,891
Less: preferred stock dividends				2,668				2,668				10,675				10,675
Net income available to common stockholders			$	91,681			$	94,597			$	231,333			$	195,216
Per share data:
Basic:
Net income per common share			$	13.84			$	13.98			$	34.40			$	28.76
Weighted-average number of common shares outstanding				6,487				6,317				6,479				6,230
Assuming dilution:
Net income per common share			$	12.79			$	13.05			$	31.79			$	26.88
Weighted-average number of common shares outstanding				7,017				6,764				7,007				6,666

 

(1) Includes gain on consolidation of a joint venture of $45.7 million and $19.1 million for the year ended October 31, 2024 and 2023, respectively