U.S. Markets closed

Hovnanian Enterprises Reports Fiscal 2019 Fourth Quarter Results

Despite a $42 Million Loss on Extinguishment of Debt, Pretax Income was Roughly Breakeven
Pretax Income, Excluding Loss on Extinguishment of Debt and Land Related Charges, was $45 Million
Total Revenues Increased 16% Year-over-Year
15% Year-over-Year Expansion in Consolidated Community Count
Consolidated Contracts Grew 34% Year-over-Year

MATAWAN, N.J., Dec. 05, 2019 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (HOV), a leading national homebuilder, reported results for its fiscal fourth quarter and year ended October 31, 2019.

RESULTS FOR THE THREE-MONTH PERIOD AND YEAR ENDED OCTOBER 31, 2019:
  • Total revenues increased 16.1% to $713.6 million in the fourth quarter of fiscal 2019, compared with $614.8 million in the fourth quarter of fiscal 2018. For the year ended October 31, 2019, total revenues increased to $2.02 billion compared with $1.99 billion in the same period during the prior fiscal year.
     
  • Homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 14.5% for the fourth quarter of fiscal 2019 compared with 16.5% during the prior year’s fourth quarter. For the year ended October 31, 2019, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 14.2% compared with 15.2% last year.
     
  • Homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 18.9% for the fourth quarter of fiscal 2019 compared with 19.2% in the fourth quarter of fiscal 2018. Sequentially, on the same basis, gross margin increased 50 basis points from 18.4% in the third quarter of fiscal 2019. For fiscal 2019, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 18.1% compared with 18.4% in the previous fiscal year.
     
  • Total SG&A was $53.9 million, or 7.6% of total revenues, in the fourth quarter of fiscal 2019 compared `with $50.8 million, or 8.3% of total revenues, in the same quarter one year ago. For fiscal 2019, total SG&A was $233.1 million, or 11.6% of total revenues, compared with $228.8 million, or 11.5% of total revenues, in the prior fiscal year.
     
  • Interest incurred (some of which was expensed and some of which was capitalized) was $43.6 million for the fourth quarter of fiscal 2019 compared with $39.4 million in the same quarter one year ago. For the year ended October 31, 2019, interest incurred (some of which was expensed and some of which was capitalized) was $165.9 million compared with $161.0 million last year.
     
  • Income from unconsolidated joint ventures was $8.4 million for the quarter ended October 31, 2019 compared with $17.1 million in the fourth quarter of the previous year. For fiscal 2019, income from unconsolidated joint ventures was $28.9 million compared with $24.0 million in the same period a year ago.
     
  • Including a $42.4 million loss on early extinguishment of debt, loss before income taxes for the quarter ended October 31, 2019 was $0.6 million compared with income of $48.1 million during the fourth quarter of fiscal 2018. For fiscal 2019, the loss before income taxes was $39.7 million compared with income of $8.1 million during same period of fiscal 2018.
     
  • Income before income taxes excluding land-related charges, joint venture write-downs and loss on extinguishment of debt, was $44.5 million during the fourth quarter of fiscal 2019 compared with income before these items of $50.9 million in the fourth quarter of fiscal 2018. For fiscal 2019, income before income taxes, excluding land-related charges, joint venture write-downs and loss on extinguishment of debt, was $9.9 million compared with income before these items of $20.4 million during all of fiscal 2018.
     
  • Net loss was $1.8 million, or $0.30 per common share, in the fourth quarter of fiscal 2019 compared with net income of $46.2 million, or $7.75 per common share, during the same quarter a year ago. For fiscal 2019, net loss was $42.1 million, or $7.06 per common share, compared with net income of $4.5 million, or $0.73 per common share, in the same period during fiscal 2018.
     
  • Consolidated contracts per community increased 15.9% to 9.5 contracts per community for the fourth quarter of fiscal 2019 compared with 8.2 contracts per community in the fourth quarter of fiscal 2018. Contracts per community, including domestic unconsolidated joint ventures(1), increased 9.6% to 9.1 contracts per community for the quarter ended October 31, 2019 compared with 8.3 contracts per community, including domestic unconsolidated joint ventures, in last year’s fourth quarter.
     
  • The consolidated community count was 141 as of October 31, 2019. This was a 14.6% year-over-year increase from 123 communities at the end of the prior year’s fourth quarter. As of the end of the fourth quarter of fiscal 2019, community count, including domestic unconsolidated joint ventures, was 162 communities. This was a 14.1% year-over-year increase compared with 142 communities at October 31, 2018.
     
  • The number of consolidated contracts increased 34.0% to 1,345 homes, during the fourth quarter of fiscal 2019, compared with 1,004 homes during the fourth quarter of fiscal 2018. The number of contracts, including domestic unconsolidated joint ventures, for the fourth quarter ended October 31, 2019, increased 25.9% to 1,479 homes from 1,175 homes for the same quarter last year.
     
  • The number of consolidated contracts increased 14.3% to 5,340 homes, during the year ended October 31, 2019, compared with 4,671 homes in the previous fiscal year. During all of fiscal 2019, the number of contracts, including domestic unconsolidated joint ventures, was 5,976 homes, an increase of 7.8% from 5,543 homes during the same period in fiscal 2018.
     
  • For November 2019, consolidated contracts per community were 2.9 compared with 2.2 for the same month one year ago. During November 2019, the number of consolidated contracts increased 41.8% to 404 homes from 285 homes in November 2018.
     
  • The dollar value of consolidated contract backlog, as of October 31, 2019, increased 18.0% to $880.1 million compared with $745.6 million as of October 31, 2018. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of October 31, 2019, was $1.04 billion, an increase of 6.7% compared with $976.3 million as of October 31, 2018.
     
  • Consolidated deliveries were 1,709 homes for the fourth quarter of fiscal 2019, a 16.7% increase compared with 1,465 homes during the same quarter a year ago. For the quarter ended October 31, 2019, deliveries, including domestic unconsolidated joint ventures, increased 6.8% to 1,941 homes compared with 1,818 homes during the fourth quarter of fiscal 2018.
     
  • Consolidated deliveries were 4,946 homes in all of fiscal 2019, a 2.0% increase compared with 4,847 homes in the same period in fiscal 2018. For the year ended October 31, 2019, deliveries, including domestic unconsolidated joint ventures, decreased slightly to 5,713 homes compared with 5,758 homes in the same period of the prior fiscal year.
     
  • The contract cancellation rate for consolidated contracts was 21% for the fourth quarter of fiscal 2019 compared with 23% for the same quarter one year ago. The contract cancellation rate for contracts including domestic unconsolidated joint ventures was 22% for both the three months ended October 31, 2019 and the same quarter in fiscal 2018.

(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).

REFINANCED OR EXCHANGED OVER $800 MILLION OF DEBT AND EXTENDED MATURITIES:
  • The Company issued $350.0 million of 7.75% Senior Secured 1.125 Lien Notes due 2026 in part for cash and in part in exchange for, and cash payments made in connection with, the exchange of $221.0 million of existing 10% Senior Secured Notes due 2022 and $114.0 million of existing 10.5% Senior Secured Notes due 2024 and exchanged $99.6 million of existing 10.5% Senior Secured Notes due 2024 for $103.1 million of 11.25% Senior Secured 1.5 Lien Notes due 2026.
  • The Company also issued $282.3 million of 10.5% Senior Secured 1.25 Lien Notes due 2026, the net proceeds of which, together with cash on hand, were used to refinance its 9.5% Senior Secured Notes due 2020, 2.0% Senior Secured Notes due 2021, and 5.0% Senior Secured Notes due 2021.
     
  • Additionally, the Company entered into a $125.0 million 7.75% secured first lien revolver maturing in December 2022 to replace its prior 10.0% secured first lien revolver, which had revolving commitments terminating in December 2019.
LIQUIDITY AND INVENTORY AS OF OCTOBER 31, 2019:
  • Total liquidity at the end of the of the fourth quarter of fiscal 2019 was $275.9 million, which is above the $245 million upper end of our target range.
     
  • In the fourth quarter of fiscal 2019, approximately 2,400 lots were put under option or acquired in 35 communities, including unconsolidated joint ventures.
     
  • As of October 31, 2019, consolidated lots controlled totaled 29,378; which, based on trailing twelve-month deliveries, equaled a 5.9 years supply.
COMMENTS FROM MANAGEMENT:

“The fourth quarter was illustrative of our efforts towards achieving our growth strategy. We experienced solid double-digit percentage gains in deliveries, total revenues, community count, contracts, backlog and contracts per community,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “Our adjusted pretax profit of $45 million for the quarter beat consensus estimates and made us profitable on this basis for the full year. Our increased level of revenues and the resultant lower SG&A expense ratio for the fourth quarter demonstrate the benefits of leveraging our SG&A expenses with higher revenues. We are encouraged by the current housing environment and economic backdrop which we believe should allow us to execute on our objectives.”

J. Larry Sorsby, Chief Financial Officer and Executive Vice President commented, “During the fourth quarter, we took steps to significantly improve our capital structure and better position the Company to execute on our growth strategy. We successfully exchanged or refinanced over $800 million of debt. We eliminated all maturities until 2022 and pushed out over 50% of the debt maturing in 2022 and 2024. Additionally, we simplified the capital structure by creating a single collateral pool for all secured debt holders. The long-term benefits of extending our debt maturities far outweighed the short-term impact of the $42 million charge for the early extinguishment of debt. At the end of the fourth quarter, we had $276 million of liquidity, which enables us to continue to invest in new land to further our community count, revenues and profitability growth in the future.”

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2019 fourth quarter financial results conference call at 11:00 a.m. E.T. on Thursday, December 5, 2019. The webcast can be accessed live through the “Investor Relations” section of Hovnanian Enterprises’ website at http://www.khov.com. For those who are not available to listen to the live webcast, an archive of the broadcast will be available under the “Past Events” section of the Investor Relations page on the Hovnanian website at http://www.khov.com. The archive will be available for 12 months.

ABOUT HOVNANIAN ENTERPRISES, INC.:

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

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

 
NON-GAAP FINANCIAL MEASURES:

Consolidated earnings before interest expense and income taxes (“EBIT”) and before depreciation and amortization (“EBITDA”) and before inventory impairment loss and land option write-offs and loss on extinguishment of debt (“Adjusted EBITDA”) are not U.S. generally accepted accounting principles (GAAP) financial measures. The most directly comparable GAAP financial measure is net (loss) income. The reconciliation for historical periods of EBIT, EBITDA and Adjusted EBITDA to net (loss) 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.

Income before income taxes excluding land-related charges, joint venture write-downs and loss on extinguishment of debt is a non-GAAP financial measure. The most directly comparable GAAP financial measure is (loss) income before income taxes. The reconciliation for historical periods of income before income taxes excluding land-related charges, joint venture write-downs and loss on extinguishment of debt to (loss) income before income taxes is presented in a table attached to this earnings release.

Total liquidity is comprised of $131.0 million of cash and cash equivalents, $19.9 million of restricted cash required to collateralize letters of credit and $125.0 million of availability under the senior secured revolving credit facility as of October 31, 2019.

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. 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) adverse weather and other environmental conditions and natural disasters; (3) high leverage and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (4) availability and terms of financing to the Company; (5) the Company’s sources of liquidity; (6) changes in credit ratings; (7) the seasonality of the Company’s business; (8) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (9) shortages in, and price fluctuations of, raw materials and labor including due to changes in trade policies, such as the imposition of tariffs and duties on homebuilding materials and products, and related trade disputes with and retaliatory measures taken by other countries; (10) reliance on, and the performance of, subcontractors; (11) 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; (12) increases in cancellations of agreements of sale; (13) fluctuations in interest rates and the availability of mortgage financing; (14) changes in tax laws affecting the after-tax costs of owning a home; (15) operations through unconsolidated joint ventures with third parties; (16) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (17) legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors; (18) levels of competition; (19) successful identification and integration of acquisitions; (20) significant influence of the Company’s controlling stockholders; (21) availability of net operating loss carryforwards; (22) utility shortages and outages or rate fluctuations; (23) geopolitical risks, terrorist acts and other acts of war; (24) loss of key management personnel or failure to attract qualified personnel; (25) information technology failures and data security breaches; (26) negative publicity; 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, 2018 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.

(Financial Tables Follow)



 
Hovnanian Enterprises, Inc.
October 31, 2019
Statements of consolidated operations
(In thousands, except per share data)
      Three Months Ended   Year Ended
      October 31,   October 31,
        2019       2018       2019       2018  
           
      (Unaudited)   (Unaudited)
Total revenues $713,590     $614,811     $2,016,916     $1,991,233  
Costs and expenses (1)   680,116       581,998       2,043,080       1,999,584  
Loss on extinguishment of debt   (42,436 )     (1,830 )     (42,436 )     (7,536 )
Income from unconsolidated joint ventures   8,376       17,134       28,932       24,033  
(Loss) income before income taxes   (586 )     48,117       (39,668 )     8,146  
Income tax provision   1,221       1,939       2,449       3,626  
Net (loss) income $(1,807 )   $46,178     $(42,117 )   $4,520  
                   
Per share data:              
Basic:              
  Net (loss) income per common share $(0.30 )   $7.75     $(7.06 )   $0.73  
  Weighted average number of              
    common shares outstanding (2)   5,982       5,957       5,968       5,941  
Assuming dilution:              
  Net (loss) income per common share $(0.30 )   $7.34     $(7.06 )   $0.72  
  Weighted average number of              
    common shares outstanding (2)   5,982       6,077       5,968       6,072  
                   
(1)  Includes inventory impairment loss and land option write-offs.
                                   
(2)  For periods with a net (loss), basic shares are used in accordance with GAAP rules.
                   
                   
                   
Hovnanian Enterprises, Inc.
October 31, 2019
Reconciliation of income before income taxes excluding land-related charges, joint venture write-downs and loss on extinguishment of debt to (loss) income before income taxes
(In thousands)
      Three Months Ended   Year Ended
      October 31,   October 31,
        2019       2018       2019       2018  
           
      (Unaudited)   (Unaudited)
(Loss) income before income taxes $(586 )   $48,117     $(39,668 )   $8,146  
Inventory impairment loss and land option write-offs   2,687       318       6,288       3,501  
Unconsolidated joint venture investment write-downs   -       601       854       1,261  
Loss on extinguishment of debt   42,436       1,830       42,436       7,536  
Income before income taxes excluding land-related charges, joint venture write-downs and loss on extinguishment of debt (1) $44,537     $50,866     $9,910     $20,444  
                   
(1) Income before income taxes excluding land-related charges, joint venture write-downs and loss on extinguishment of debt is a non-GAAP financial measure. The most directly comparable GAAP financial measure is (loss) income before income taxes.
 


 
Hovnanian Enterprises, Inc.
October 31, 2019
Gross margin
(In thousands)
    Homebuilding Gross Margin   Homebuilding Gross Margin   Homebuilding
Gross Margin
    Three Months Ended   Year Ended   Three Months
Ended
    October 31,   October 31,   July 31, (3)
      2019       2018       2019       2018       2019  
             
    (Unaudited)   (Unaudited)   (Unaudited)
Sale of homes   $692,146     $593,675     $1,949,682     $1,906,228     $467,849  
Cost of sales, excluding interest expense and land charges (1)      561,284         479,762        1,596,237         1,555,894        381,906  
Homebuilding gross margin, before cost of sales interest expense and land charges (2)      130,862         113,913        353,445         350,334       85,943  
Cost of sales interest expense, excluding land sales interest expense     27,556        15,563       70,520        56,588       18,824  
Homebuilding gross margin, after cost of sales interest expense, before land charges (2)      103,306        98,350        282,925         293,746       67,119  
Land charges       2,687       318         6,288       3,501         1,435  
Homebuilding gross margin   $100,619     $98,032     $276,637     $290,245     $65,684  
                     
Gross margin percentage     14.5 %     16.5 %     14.2 %     15.2 %     14.0 %
Gross margin percentage, before cost of sales interest expense and land charges (2)     18.9 %     19.2 %     18.1 %     18.4 %     18.4 %
Gross margin percentage, after cost of sales interest expense, before land charges (2)     14.9 %     16.6 %     14.5 %     15.4 %     14.3 %
                     
    Land Sales Gross Margin   Land Sales Gross Margin    
    Three Months Ended   Year Ended    
    October 31,   October 31,    
      2019       2018       2019       2018      
    (Unaudited)   (Unaudited)    
Land and lot sales   $1,161     $3,772     $9,211     $24,277      
Land and lot sales cost of sales, excluding interest and land charges (1)       1,150       2,951         8,540        10,661      
Land and lot sales gross margin, excluding interest and land charges      11       821         671        13,616      
Land and lot sales interest     -         42         205       4,097      
Land and lot sales gross margin, including interest and excluding land charges   $11     $779     $466     $9,519      
                     
(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.
 
(3) Third quarter gross margin reconciliation is included because it is referenced in the “Results for the Three-Month Period and Year Ended October 31, 2019” section of the press release. 
 


 
Hovnanian Enterprises, Inc.
October 31, 2019
Reconciliation of adjusted EBITDA to net (loss) income
(In thousands)
  Three Months Ended   Year Ended
  October 31,   October 31,
    2019       2018       2019       2018  
       
       
  (Unaudited)   (Unaudited)
Net (loss) income $(1,807 )   $46,178     $(42,117 )   $4,520  
Income tax provision   1,221       1,939       2,449       3,626  
Interest expense   50,299       38,824       160,781       163,982  
EBIT (1)   49,713       86,941       121,113       172,128  
Depreciation and amortization   1,230       836       4,172       3,156  
EBITDA (2)   50,943       87,777       125,285       175,284  
Inventory impairment loss and land option write-offs   2,687       318       6,288       3,501  
Loss on extinguishment of debt   42,436       1,830       42,436       7,536  
Adjusted EBITDA (3) $96,066     $89,925     $174,009     $186,321  
               
Interest incurred $43,566     $39,431     $165,906     $161,048  
               
Adjusted EBITDA to interest incurred   2.21       2.28       1.05       1.16  
               
(1)  EBIT is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net (loss) 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 (loss) 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 (loss) income. Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation, amortization, inventory impairment loss and land option write-offs and loss on extinguishment of debt.
               
               
               
Hovnanian Enterprises, Inc.
October 31, 2019
Interest incurred, expensed and capitalized
(In thousands)
  Three Months Ended   Year Ended
  October 31,   October 31,
    2019       2018       2019       2018  
       
  (Unaudited)   (Unaudited)
Interest capitalized at beginning of period $77,997     $67,510     $68,117     $71,051  
Plus interest incurred   43,566       39,431       165,906       161,048  
Less interest expensed   50,299       38,824       160,781       163,982  
Less interest contributed to unconsolidated joint venture (1)   -       -       1,978       -  
Interest capitalized at end of period (2) $71,264     $68,117     $71,264     $68,117  
               
(1) Represents capitalized interest which was included as part of the assets contributed to the joint venture the company entered into in June 2019. There was no impact to the Consolidated Statement of Operations as a result of this transaction.
 
(2) Capitalized interest amounts are shown gross before allocating any portion of impairments to capitalized interest.
 



HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

    October 31,
2019
    October 31,
2018
 
ASSETS   (Unaudited)     (1)  
Homebuilding:            
Cash and cash equivalents   $130,976     $187,871  
Restricted cash and cash equivalents     20,905       12,808  
Inventories:            
Sold and unsold homes and lots under development     993,647       878,876  
Land and land options held for future development or sale     108,565       111,368  
Consolidated inventory not owned     190,273       87,921  
Total inventories     1,292,485       1,078,165  
Investments in and advances to unconsolidated joint ventures     127,038       123,694  
Receivables, deposits and notes, net     44,914       35,189  
Property, plant and equipment, net     20,127       20,285  
Prepaid expenses and other assets     45,704       39,150  
Total homebuilding     1,682,149       1,497,162  
Financial services     199,275       164,880  
Total assets   $1,881,424     $1,662,042  
             
LIABILITIES AND EQUITY            
Homebuilding:            
Nonrecourse mortgages secured by inventory, net of debt issuance costs   $203,585     $95,557  
Accounts payable and other liabilities     320,193       304,899  
Customers’ deposits     35,872       30,086  
Liabilities from inventory not owned, net of debt issuance costs     141,033       63,387  
Revolving and term loan credit facilities, net of debt issuance costs     201,528       201,389  
Notes payable (net of discount, premium and debt issuance costs) and accrued interest     1,297,543       1,273,446  
Total homebuilding     2,199,754       1,968,764  
Financial services     169,145       143,448  
Income taxes payable     2,301       3,334  
Total liabilities     2,371,200       2,115,546  
             
Equity:            
Hovnanian Enterprises, Inc. stockholders' equity deficit:            
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, 2019 and 2018     135,299       135,299  
Common stock, Class A, $0.01 par value - authorized 16,000,000 shares; issued 5,973,727 shares at October 31, 2019 and 5,783,858 shares at October 31, 2018     60       58  
Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) - authorized 2,400,000 shares; issued 650,363 shares at October 31, 2019 and 649,673 shares at October 31, 2018     7       6  
Paid in capital - common stock     715,504       710,349  
Accumulated deficit     (1,225,973 )     (1,183,856 )
Treasury stock - at cost – 470,430 shares of Class A common stock and 27,669 shares of Class B common stock at October 31, 2019 and 2018     (115,360 )     (115,360 )
Total Hovnanian Enterprises, Inc. stockholders’ equity deficit     (490,463 )     (453,504 )
Noncontrolling interest in consolidated joint ventures     687       -  
Total equity deficit     (489,776 )     (453,504 )
Total liabilities and equity   $1,881,424     $1,662,042  

(1) Derived from the audited balance sheet as of October 31, 2018



HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)
(Unaudited)

    Three Months Ended     Years Ended  
    October 31,     October 31,  
    2019     2018     2019     2018  
                         
Revenues:                        
Homebuilding:                        
Sale of homes   $692,146     $596,675     $1,949,682     $1,906,228  
Land sales and other revenues     1,971       4,732       13,082       31,650  
Total homebuilding     694,117       598,407       1,962,764       1,937,878  
Financial services     19,473       16,404       54,152       53,355  
Total revenues     713,590       614,811       2,016,916       1,991,233  
                         
Expenses:                        
Homebuilding:                        
Cost of sales, excluding interest     562,434       482,713       1,604,777       1,566,555  
Cost of sales interest     27,556       15,605       70,725       60,685  
Inventory impairment loss and land option write-offs     2,687       318       6,288       3,501  
Total cost of sales     592,677       498,636       1,681,790       1,630,741  
Selling, general and administrative     36,310       32,883       166,784       159,202  
Total homebuilding expenses     628,987       531,519       1,848,574       1,789,943  
                         
Financial services     10,446       9,003       36,525       35,128  
Corporate general and administrative     17,572       17,960       66,364       69,632  
Other interest     22,743       23,219       90,056       103,297  
Other operations     368       297       1,561       1,584  
Total expenses     680,116       581,998       2,043,080       1,999,584  
Loss on extinguishment of debt     (42,436 )     (1,830 )     (42,436 )     (7,536 )
Income (loss) from unconsolidated joint ventures     8,376       17,134       28,932       24,033  
(Loss) income before income taxes     (586 )
    48,117       (39,668 )     8,146  
State and federal income tax provision:                        
State     1,221       1,939       2,449       3,626  
Federal     -       -       -       -  
Total income taxes     1,221       1,139       2,449       3,626  
Net (loss) income   $(1,807 )
  $46,178     $(42,117 )   $4,520  
                         
Per share data:                        
Basic:                        
Net (loss) income per common share   $(0.30 )
  $7.75     $(7.06 )   $0.73  
Weighted-average number of common shares outstanding     5,982       5,957       5,968       5,941  
Assuming dilution:                        
Net (loss) income per common share   $(0.30 )
  $7.34     $(7.06 )   $0.72  
Weighted-average number of common shares outstanding     5,982       6,077       5,968       6,072  
                                 


...
 
HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)
(UNAUDITED)    Three Months - October 31, 2019
    Contracts (1) Deliveries Contract
    Three Months Ended Three Months Ended Backlog
    October 31, October 31, October 31,
      2019   2018 % Change   2019   2018 % Change   2019   2018 % Change
Northeast                    
(NJ, PA) Home   72   27 166.7%     112   44 154.5%     152   51 198.0%  
  Dollars $37,860 $16,044 136.0%   $70,650 $25,606 175.9%     86,557   30,496 183.8%  
  Avg. Price $525,833 $594,222 (11.5)%   $630,804 $581,955 8.4%   $569,454 $597,961 (4.8)%  
Mid-Atlantic                    
(DE, MD, VA, WV) Home   181   159 13.8%     240   187 28.3%     343   296 15.9%  
  Dollars $86,296 $84,027 2.7%   $135,866 $99,493 36.6%   $193,387 $180,546 7.1%  
  Avg. Price $476,773 $528,472 (9.8)%   $566,108 $532,048 6.4%   $563,810 $609,953 (7.6)%  
Midwest                    
(IL, OH) Home   177   146 21.2%     232   222 4.5%     450   394 14.2%  
  Dollars $54,682 $44,167 23.8%   $68,714 $67,395 2.0%   $122,681 $107,149 14.5%  
  Avg. Price $308,938 $302,514 2.1%   $296,181 $303,581 (2.4)%   $272,624 $271,952 0.2%  
Southeast                    
(FL, GA, SC) Home   179   106 68.9%     193   185 4.3%     282   251 12.4%  
  Dollars $69,765 $41,126 69.6%     76,414   72,828 4.9%   $121,921 $108,137 12.7%  
  Avg. Price $389,749 $387,981 0.5%   $395,927 $393,665 0.6%   $432,344 $430,825 0.4%  
Southwest                    
(AZ, TX) Home   496   371 33.7%     621   554 12.1%     663   523 26.8%  
  Dollars $166,723 $123,485 35.0%   $213,089 $193,000 10.4%   $230,898 $180,854 27.7%  
  Avg. Price $336,135