OREANDA-NEWS. June 03, 2016. Hovnanian Enterprises, Inc. (NYSE:HOV), a leading national homebuilder, reported results for its fiscal second quarter and six months ended April 30, 2016. 

RESULTS FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED APRIL 30, 2016: 

  • Total revenues were \\$654.7 million in the second quarter of fiscal 2016, an increase of 39.6% compared with \\$468.9 million in the second quarter of fiscal 2015. For the six months ended April 30, 2016, total revenues increased 34.5% to \\$1.23 billion compared with \\$914.7 million in the first half of the prior year.
     
  • Total interest expense as a percentage of total revenues was 7.0% during the second quarter of fiscal 2016, a decrease of 50 basis points, compared with 7.5% in the same period of the previous year. For the six months ended April 30, 2016, total interest expense as a percentage of total revenues declined 100 basis points to 6.8% compared with 7.8% during the same period a year ago.
     
  • Total SG&A was \\$69.0 million, or 10.5% of total revenues, a 420 basis point improvement during the second quarter of fiscal 2016 compared with \\$69.1 million, or 14.7% of total revenues, in last year’s second quarter. Total SG&A was \\$132.8 million, or 10.8% of total revenues, a 380 basis point improvement for the first six months of fiscal 2016 compared with \\$133.7 million, or 14.6% of total revenues, in the first half of the prior year.
     
  • Homebuilding gross margin percentage, before interest expense and land charges included in cost of sales, was 16.1% for both the second quarter ended April 30, 2016 and 2015. During the first six months of fiscal 2016, homebuilding gross margin percentage, before interest expense and land charges included in cost of sales, was 16.3% compared with 17.1% in the same period of the previous year.
     
  • The loss before income taxes in the second quarter of fiscal 2016 was \\$17.6 million compared with a loss before income taxes of \\$29.5 million in the prior year’s second quarter. For the first half of fiscal 2016, the loss before income taxes was \\$30.8 million compared with a loss before income taxes of \\$49.2 million during the first six months of fiscal 2015.
     
  • The loss before income taxes, excluding land-related charges, in the second quarter of fiscal 2016 was \\$7.9 million compared with the loss before income taxes, excluding land-related charges, of \\$25.2 million in the prior year’s second quarter. For the first half of fiscal 2016, the loss before income taxes, excluding land-related charges, was \\$9.4 million compared with a loss before income taxes, excluding land-related charges, of \\$42.6 million during the first six months of fiscal 2015.
     
  • Net loss was \\$8.5 million, or \\$0.06 per common share, for the second quarter of fiscal 2016, compared with a net loss of \\$19.6 million, or \\$0.13 per common share, in the second quarter of the previous year. For the six months ended April 30, 2016, the net loss was \\$24.6 million, or \\$0.17 per common share, compared with a net loss of \\$33.9 million, or \\$0.23 per common share, in the first half of fiscal 2015.
     
  • For the second quarter of fiscal 2016, Adjusted EBITDA was \\$39.7 million compared with \\$12.2 million during the second quarter of 2015, a 224.4% increase. For the first half of fiscal 2016, Adjusted EBITDA increased 134.3% to \\$78.5 million compared with \\$33.5 million during the first six months of fiscal 2015.
     
  • As of April 30, 2016, consolidated active selling communities decreased 5.3% to 196 communities compared with 207 communities at the end of the prior year’s second quarter. As of end of the second quarter of fiscal 2016, active selling communities, including unconsolidated joint ventures, decreased 3.7% to 208 communities compared with 216 communities at April 30, 2015.
     
  • The dollar value of consolidated net contracts increased 9.6% to \\$768.1 million for the three months ended April 30, 2016 compared with \\$700.7 million during the same quarter a year ago. The dollar value of net contracts, including unconsolidated joint ventures, during the second quarter of fiscal 2016 increased 5.1% to \\$789.3 million compared with \\$750.9 million in last year’s second quarter.
     
  • The dollar value of consolidated net contracts increased 16.0% to \\$1.40 billion for the first six months of fiscal 2016 compared with \\$1.20 billion in the first half of the previous year. The dollar value of net contracts, including unconsolidated joint ventures, for the six months ended April 30, 2016 increased 14.6% to \\$1.46 billion compared with \\$1.27 billion in the first six months of fiscal 2015.
     
  • The number of consolidated net contracts, during the second quarter of fiscal 2016, increased 0.9% to 1,812 homes compared with 1,796 homes in the prior year’s second quarter. In the second quarter of fiscal 2016, the number of net contracts, including unconsolidated joint ventures, decreased 1.7% to 1,862 homes from 1,894 homes during the second quarter of fiscal 2015.
     
  • The number of consolidated net contracts, during the six month period ended April 30, 2016, increased 7.3% to 3,343 homes compared with 3,115 homes in the same period of the previous year. During the first half of fiscal 2016, the number of net contracts, including unconsolidated joint ventures, was 3,454 homes, an increase of 6.0% from 3,260 homes during the first six months of fiscal 2015.
     
  • Consolidated net contracts per active selling community increased 5.7% to 9.2 net contracts per active selling community for the second quarter of fiscal 2016 compared with 8.7 net contracts per active selling community in the second quarter of fiscal 2015. Net contracts per active selling community, including unconsolidated joint ventures, increased 2.3% to 9.0 net contracts per active selling community for the quarter ended April 30, 2016 compared with 8.8 net contracts, including unconsolidated joint ventures, per active selling community in the second quarter of fiscal 2015.
     
  • As of April 30, 2016, the dollar value of contract backlog, including unconsolidated joint ventures, was \\$1.58 billion, an increase of 27.8% compared with \\$1.23 billion as of April 30, 2015. The dollar value of consolidated contract backlog, as of April 30, 2016, increased 22.1% to \\$1.43 billion compared with \\$1.17 billion as of April 30, 2015.
     
  • As of April 30, 2016, the number of homes in contract backlog, including unconsolidated joint ventures, increased 11.7% to 3,453 homes compared with 3,092 homes as of April 30, 2015. The number of homes in consolidated contract backlog, as of April 30, 2016, increased 8.6% to 3,228 homes compared with 2,972 homes as of the end of the second quarter of fiscal 2015.
     
  • Consolidated deliveries were 1,598 homes in the second quarter of fiscal 2016, a 30.7% increase compared with 1,223 homes in the second quarter of fiscal 2015. For the three months ended April 30, 2016, deliveries, including unconsolidated joint ventures, increased 27.8% to 1,647 homes compared with 1,289 homes in the second quarter of the prior year.
     
  • Consolidated deliveries were 3,020 homes in the first half of fiscal 2016, a 27.3% increase compared with 2,372 homes in the same period in fiscal 2015. For the six months ended April 30, 2016, deliveries, including unconsolidated joint ventures, increased 24.1% to 3,113 homes compared with 2,509 homes in the first half of the prior year.
     
  • The contract cancellation rate, including unconsolidated joint ventures, for the second quarter of fiscal 2016 was 20%, compared with 17% in the second quarter of fiscal 2015.
     
  • The valuation allowance was \\$635.4 million as of April 30, 2016. The valuation allowance is a non-cash reserve against the tax assets for GAAP purposes. For tax purposes, the tax deductions associated with the tax assets may be carried forward for 20 years from the date the deductions were incurred.
     
  • During May 2016, the dollar value of consolidated net contracts increased 0.9% to \\$214.8 million compared with \\$212.8 million for May of 2015, and the number of consolidated net contracts decreased 3.2% to 512 homes in May 2016 from 529 homes in May 2015.

LIQUIDITY AND INVENTORY AS OF APRIL 30, 2016: 

  • After paying off \\$233.5 million of debt that matured in October 2015 and January 2016, total liquidity at the end of the second quarter of fiscal 2016 was \\$125.6 million.
     
  • During the second quarter of fiscal 2016, land and land development spending was \\$186.7 million compared with \\$108.1 million in last year’s second quarter and \\$116.6 million during the first quarter of fiscal 2016.
     
  • As of April 30, 2016, the land position, including unconsolidated joint ventures, was 34,997 lots, consisting of 15,622 lots under option and 19,375 owned lots, compared with a total of 37,140 lots as of April 30, 2015.
     
  • During the second quarter of fiscal 2016, approximately 800 lots, including unconsolidated joint ventures, were put under option or acquired in 22 communities.
     
  • Subsequent To The End Of The Second Quarter
     
    • Closed on land sale transactions to exit the Minneapolis, MN and Raleigh, NC markets.
       
    • Closed on seven communities in the first tranche of a new joint venture with funds managed by GTIS Partners LP.
       
    • Due to the above actions, total liquidity increased by an aggregate of \\$75.1 million.
    • Paid \\$86.5 million principal amount of debt that matured in May 2016.

FINANCIAL GUIDANCE: 

  • Assuming no changes in current market conditions and after the impact from exiting two markets, our guidance for all of fiscal 2016 for total revenues is expected to be between \\$2.7 billion and \\$2.9 billion. Adjusted EBITDA is expected to be between \\$200 million and \\$225 million and income before income taxes, excluding land related charges, gains or losses on extinguishment of debt and other non-recurring items such as legal settlements, is expected to be between \\$25 million and \\$50 million for all of fiscal 2016.

COMMENTS FROM MANAGEMENT: 

“While our revenue grew 40% and Adjusted EBITDA increased over 220%, as we said last quarter, we remain focused on deleveraging our balance sheet and maximizing our profitability rather than on additional growth,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “Along with increasing our land and land development spend during the second quarter to \\$187 million, we have taken the steps we outlined in March to increase our cash position and paid off the \\$87 million principal amount of debt that matured on May 15, 2016. Since October 15, 2015, we have paid off \\$320 million of debt. More importantly, we continue to believe that we will have the liquidity to pay off the remaining debt maturities through the end of 2017. We are certain that we are taking the correct steps that will best position our company for future success. While it is discouraging to report a loss for the first half of fiscal 2016, it is nevertheless a significantly reduced loss, and we anticipate our profitability in the second half of the year will more than offset this loss.” 

WEBCAST INFORMATION: 

Hovnanian Enterprises will webcast its fiscal 2016 second quarter financial results conference call at 11:00 a.m. E.T. on Thursday, June 2, 2016. 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 Red Bank, New Jersey. The Company 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 names K. Hovnanian® Homes, Brighton Homes® and Parkwood Builders. As the developer of K. Hovnanian’s® Four Seasons communities, the Company is also one of the nation’s largest builders of active lifestyle communities. 

Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company’s 2015 annual report, 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 (“Adjusted EBITDA”) are not U.S. generally accepted accounting principles (GAAP) financial measures. The most directly comparable GAAP financial measure is net loss. The reconciliation for historical periods of EBIT, EBITDA and Adjusted EBITDA to net loss is presented in a table attached to this earnings release. 

Loss Before Income Taxes Excluding Land-Related Charges is a non-GAAP financial measure. The most directly comparable GAAP financial measure is Loss Before Income Taxes. The reconciliation for historical periods of Loss Before Income Taxes Excluding Land-Related Charges to Loss Before Income Taxes is presented in a table attached to this earnings release. 

With respect to our expectations under “Financial Guidance” above, for Adjusted EBITDA and Income Before Income Taxes Excluding Land-Related Charges a reconiciliation to the closest corresponding GAAP financial measures is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to land-related charges excluded from these non-GAAP financial measures. We expect the variability of these charges to have a potentially unpredictable, and potentially significant, impact on our future GAAP financial results. 

Total liquidity is comprised of \\$120.7 million of cash and cash equivalents, \\$2.3 million of restricted cash required to collateralize letters of credit and \\$2.6 million of availability under the unsecured revolving credit facility as of April 30, 2016. 

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 the current or future financial periods, including total revenues, Adjusted EBITDA and adjusted income before income taxes. 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 the sustained homebuilding downturn; (2) adverse weather and other environmental conditions and natural disasters; (3) levels of indebtedness and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (4) the Company's sources of liquidity; (5) changes in credit ratings; (6) changes in market conditions and seasonality of the Company’s business; (7) the availability and cost of suitable land and improved lots; (8) shortages in, and price fluctuations of, raw materials and labor; (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) fluctuations in interest rates and the availability of mortgage financing; (11) changes in tax laws affecting the after-tax costs of owning a home; (12) operations through joint ventures with third parties; (13) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (14) product liability litigation, warranty claims and claims made by mortgage investors; (15) levels of competition; (16) availability and terms of financing to the Company; (17) successful identification and integration of acquisitions; (18) significant influence of the Company’s controlling stockholders; (19) availability of net operating loss carryforwards; (20) utility shortages and outages or rate fluctuations; (21) geopolitical risks, terrorist acts and other acts of war; (22) increases in cancellations of agreements of sale; (23) loss of key management personnel or failure to attract qualified personnel; (24) information technology failures and data security breaches; (25) legal claims brought against us and not resolved in our favor; and (26) certain risks, uncertainties and other factors described in detail in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2015 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.
April 30, 2016
Statements of Consolidated Operations
(In Thousands, Except Per Share Data) 
    Three Months Ended Six Months Ended
    April 30, April 30,
     2016   2015   2016   2015 
    (Unaudited) (Unaudited)
Total Revenues\\$654,723  \\$468,949  \\$1,230,328  \\$914,663 
Costs and Expenses (a) 670,981   499,896   1,258,300   966,742 
(Loss) Income from Unconsolidated Joint Ventures (1,346)  1,466   (2,826)  2,918 
Loss Before Income Taxes (17,604)  (29,481)  (30,798)  (49,161)
Income Tax Benefit (9,143)  (9,922)  (6,164)  (15,226)
Net Loss\\$(8,461) \\$(19,559) \\$(24,634) \\$(33,935)
           
Per Share Data:       
Basic:        
 Loss Per Common Share\\$(0.06) \\$(0.13) \\$(0.17) \\$(0.23)
 Weighted Average Number of       
  Common Shares Outstanding (b) 147,334   146,946   147,301   146,762 
Assuming Dilution:       
 Loss Per Common Share\\$(0.06) \\$(0.13) \\$(0.17) \\$(0.23)
 Weighted Average Number of       
  Common Shares Outstanding (b) 147,334   146,946   147,301   146,762 
           
(a)  Includes inventory impairment loss and land option write-offs.    
(b)  For periods with a net loss, basic shares are used in accordance with GAAP rules.  
           
           
Hovnanian Enterprises, Inc.
April 30, 2016
Reconciliation of Loss Before Income Taxes Excluding Land-Related Charges to Loss Before Income Taxes
(Dollars in Thousands)
           
    Three Months EndedSix Months Ended
    April 30, April 30,
     2016   2015   2016   2015 
    (Unaudited) (Unaudited)
Loss Before Income Taxes\\$(17,604) \\$(29,481) \\$(30,798) \\$(49,161)
Inventory Impairment Loss and Land Option Write-Offs 9,669   4,311   21,350   6,541 
Loss Before Income Taxes Excluding Land-Related Charges(a)\\$(7,935) \\$(25,170) \\$(9,448) \\$(42,620)
           
(a) Loss Before Income Taxes Excluding Land-Related Charges is a non-GAAP Financial measure. The most directly comparable GAAP financial measure is Loss Before Income Taxes.
 

 

Hovnanian Enterprises, Inc.
April 30, 2016
Gross Margin
(Dollars in Thousands)
  Homebuilding Gross Margin Homebuilding Gross Margin
  Three Months Ended Six Months Ended
  April 30, April 30,
   2016   2015   2016   2015 
  (Unaudited) (Unaudited)
Sale of Homes \\$626,157  \\$455,172  \\$1,182,932  \\$888,643 
Cost of Sales, Excluding Interest and Land Charges (a)  525,442   381,870   989,588   736,249 
Homebuilding Gross Margin, Excluding Interest and Land Charges  100,715   73,302   193,344   152,394 
Homebuilding Cost of Sales Interest  21,340   11,993   38,183   23,292 
Homebuilding Gross Margin, Including Interest and       
Excluding Land Charges\\$79,375  \\$61,309  \\$155,161  \\$129,102 
         
Gross Margin Percentage, Excluding Interest and Land Charges  16.1%  16.1%  16.3%  17.1%
Gross Margin Percentage, Including Interest and       
Excluding Land Charges 12.7%  13.5%  13.1%  14.5%
         
  Land Sales Gross Margin Land Sales Gross Margin
  Three Months Ended Six Months Ended
  April 30, April 30,
   2016   2015   2016   2015 
  (Unaudited) (Unaudited)
Land and Lot Sales \\$11,154  \\$336  \\$11,154  \\$850 
Cost of Sales, Excluding Interest and Land Charges (a)  10,608   269   10,608   702 
Land and Lot Sales Gross Margin, Excluding Interest       
and Land Charges 546   67   546   148 
Land and Lot Sales Interest  104   20   104   39 
Land and Lot Sales Gross Margin, Including Interest       
and Excluding Land Charges\\$442  \\$47  \\$442  \\$109 
         
         
(a) 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.
 

 

Hovnanian Enterprises, Inc.  
April 30, 2016  
Reconciliation of Adjusted EBITDA to Net Loss 
(Dollars in Thousands) 
 Three Months Ended Six Months Ended
 April 30, April 30,
  2016   2015   2016   2015 
 (Unaudited) (Unaudited)
Net Loss\\$(8,461) \\$(19,559) \\$(24,634) \\$(33,935)
Income Tax Benefit (9,143)  (9,922)  (6,164)  (15,226)
Interest Expense 45,528   35,043   83,596   71,432 
EBIT (a) 27,924   5,562   52,798   22,271 
Depreciation 864   870   1,729   1,719 
Amortization of Debt Costs 1,227   1,489   2,610   2,961 
EBITDA (b) 30,015   7,921   57,137   26,951 
Inventory Impairment Loss and Land Option Write-offs 9,669   4,311   21,350   6,541 
Adjusted EBITDA (c)\\$39,684  \\$12,232  \\$78,487  \\$33,492 
        
Interest Incurred\\$44,224  \\$40,703  \\$86,183  \\$82,175 
        
Adjusted EBITDA to Interest Incurred 0.90   0.30   0.91   0.41 
        
        
        
(a)  EBIT is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net loss. EBIT represents earnings before interest expense and income taxes.
(b)  EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net loss. EBITDA represents earnings before interest expense, income taxes, depreciation and amortization.
(c) Adjusted EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net loss. Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation, amortization and inventory impairment loss and land option write-offs.
        
        
        
Hovnanian Enterprises, Inc. 
April 30, 2016
Interest Incurred, Expensed and Capitalized 
(Dollars in Thousands) 
 Three Months Ended Six Months Ended
 April 30, April 30,
  2016   2015   2016   2015 
 (Unaudited) (Unaudited)
Interest Capitalized at Beginning of Period\\$117,113  \\$114,241  \\$123,898  \\$109,158 
Plus Interest Incurred  44,224    40,703    86,183     82,175 
Less Interest Expensed (a)  45,528    35,043    83,596     71,432 
Less Interest Contributed to Unconsolidated Joint Venture (a)  -     -    10,676   - 
Interest Capitalized at End of Period (b)\\$115,809  \\$119,901  \\$115,809  \\$119,901 
        
(a) Represents capitalized interest which was included as part of the assets contributed to the joint venture the Company entered into in November 2015. There was no impact to the Condensed Consolidated Statement of Operations as a result of this transaction
(b) Capitalized interest amounts are shown gross before allocating any portion of impairments to capitalized interest. 
  

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

  April 30,
2016
(Unaudited)
  October 31,
2015
 (1)
 
         
ASSETS      
       
Homebuilding:      
Cash and cash equivalents \\$120,661   \\$245,398  
Restricted cash and cash equivalents  6,259    7,299  
Inventories:      
Sold and unsold homes and lots under development  1,171,668    1,307,850  
Land and land options held for future development or sale  191,627    214,503  
Consolidated inventory not owned  312,841    122,225  
Total inventories  1,676,136    1,644,578  
Investments in and advances to unconsolidated joint ventures  70,061    61,209  
Receivables, deposits and notes, net  65,055    70,349  
Property, plant and equipment, net  45,670    45,534  
Prepaid expenses and other assets  80,004    77,671  
Total homebuilding  2,063,846    2,152,038  
       
Financial services:      
Cash and cash equivalents  8,993    8,347  
Restricted cash and cash equivalents  19,134    19,223  
Mortgage loans held for sale at fair value  129,999    130,320  
Other assets  2,586    2,091  
Total financial services  160,712    159,981  
Income taxes receivable – including net deferred tax benefits  294,069    290,279  
Total assets \\$2,518,627   \\$2,602,298  
           
(1) Derived from the audited balance sheet as of October 31, 2015. 
           

 HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share and Per Share Amounts) 

  April 30,
2016
(Unaudited)
  October 31,
2015
(1)
 
         
LIABILITIES AND EQUITY      
       
Homebuilding:      
Nonrecourse mortgages secured by inventory \\$125,076   \\$143,863  
Accounts payable and other liabilities  360,946    348,516  
Customers’ deposits  47,976    44,218  
Nonrecourse mortgages secured by operating properties  14,924    15,511  
Liabilities from inventory not owned  220,348    105,856  
Total homebuilding  769,270    657,964  
       
Financial services:      
Accounts payable and other liabilities  27,574    27,908  
Mortgage warehouse lines of credit  109,132    108,875  
Total financial services  136,706    136,783  
       
Notes payable:      
Revolving credit agreement  50,000    47,000  
Senior secured notes, net of discount  982,086    981,346  
Senior notes, net of discount  607,575    780,319  
Senior amortizing notes  10,516    12,811  
Senior exchangeable notes  75,677    73,771  
Accrued interest  39,119    40,388  
Total notes payable  1,764,973    1,935,635  
Total liabilities  2,670,949    2,730,382  
       
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 April 30, 2016 and at October 31, 2015  135,299    135,299  
Common stock, Class A, \\$0.01 par value – authorized 400,000,000 shares; issued 143,563,023 shares at April 30, 2016 and 143,292,881 shares at October 31, 2015 (including 11,760,763 shares at April 30, 2016 and October 31, 2015 held in treasury)  1,436    1,433  
Common stock, Class B, \\$0.01 par value (convertible to Class A at time of sale) – authorized 60,000,000 shares; issued 16,009,617 shares at April 30, 2016 and 15,676,829 shares at October 31, 2015 (including 691,748 shares at April 30, 2016 and October 31, 2015 held in treasury)  160    157  
Paid in capital – common stock  704,141    703,751  
Accumulated deficit  (877,998)   (853,364)  
Treasury stock – at cost  (115,360)    (115,360)  
Total stockholders’ equity deficit  (152,322)    (128,084)  
Total liabilities and equity \\$2,518,627   \\$2,602,298  
           
(1) Derived from the audited balance sheet as of October 31, 2015.  
 
           

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

  Three Months Ended
April 30,		  Six Months Ended
April 30,		 
   2016    2015    2016    2015  
Revenues:            
Homebuilding:            
Sale of homes \\$626,157   \\$455,172   \\$1,182,932   \\$888,643  
Land sales and other revenues  11,563    1,320    12,167    2,441  
Total homebuilding  637,720    456,492    1,195,099    891,084  
Financial services  17,003    12,457    35,229    23,579  
Total revenues  654,723    468,949    1,230,328    914,663  
             
Expenses:            
Homebuilding:            
Cost of sales, excluding interest  536,050    382,139    1,000,196    736,951  
Cost of sales interest  21,444    12,013    38,287    23,331  
Inventory impairment loss and land option write-offs  9,669    4,311    21,350    6,541  
Total cost of sales  567,163    398,463    1,059,833    766,823  
Selling, general and administrative  56,371    52,614    103,875    100,260  
Total homebuilding expenses  623,534    451,077    1,163,708    867,083  
             
Financial services  9,618    7,508    17,833    14,825  
Corporate general and administrative  12,598    16,493    28,919    33,401  
Other interest  24,084    23,030    45,309    48,101  
Other operations  1,147    1,788    2,531    3,332  
Total expenses  670,981    499,896    1,258,300    966,742  
(Loss) income from unconsolidated joint ventures  (1,346)    1,466    (2,826)    2,918  
Loss before income taxes  (17,604)    (29,481)    (30,798)    (49,161)  
State and federal income tax (benefit) provision:            
State  (758)    (414)    3,561    2,718  
Federal  (8,385)    (9,508)    (9,725)    (17,944)  
Total income taxes  (9,143)    (9,922)    (6,164)    (15,226)  
Net loss \\$(8,461)   \\$(19,559)   \\$(24,634)   \\$(33,935)  
             
Per share data:            
Basic:            
Loss per common share \\$(0.06)   \\$(0.13)   \\$(0.17)   \\$(0.23)  
Weighted-average number of common shares outstanding  147,334    146,946    147,301    146,762  
Assuming dilution:            
Loss per common share \\$(0.06)   \\$(0.13)   \\$(0.17)   \\$(0.23)  
Weighted-average number of common shares outstanding  147,334    146,946    147,301    146,762  
                     

 

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)
(UNAUDITED)
     Communities Under Development   
     Three Months - April 30, 2016   
  Net ContractsDeliveriesContract
  Three Months EndedThree Months EndedBacklog
  Apr 30,Apr 30,Apr 30,
   2016  2015 % Change 2016  2015 % Change 2016  2015 % Change
Northeast            
(NJ, PA)Homes 142  140  1.4% 108  70  54.3% 268  227  18.1%
 Dollars\\$74,727 \\$69,717  7.2%\\$53,913 \\$39,123  37.8%\\$135,164 \\$110,032  22.8%
 Avg. Price\\$526,248 \\$497,975  5.7%\\$499,194 \\$558,897  (10.7)%\\$504,343 \\$484,720  4.0%
Mid-Atlantic            
(DE, MD, VA, WV)Homes 285  247  15.4% 194  164  18.3% 598  474  26.2%
 Dollars\\$150,369 \\$116,843  28.7%\\$89,873 \\$76,102  18.1%\\$336,358 \\$250,862  34.1%
 Avg. Price\\$527,609 \\$473,047  11.5%\\$463,262 \\$464,035  (0.2)%\\$562,472 \\$529,245  6.3%
Midwest            
(IL, MN, OH) Homes 216  311  (30.5)% 239  218  9.6% 554  763  (27.4)%
 Dollars\\$69,445 \\$101,807  (31.8)%\\$76,793 \\$73,214  4.9%\\$162,671 \\$223,759  (27.3)%
 Avg. Price\\$321,503 \\$327,353  (1.8)%\\$321,312 \\$335,847  (4.3)%\\$293,630 \\$293,262  0.1%
Southeast            
(FL, GA, NC, SC) Homes 205  205  0.0% 156  158  (1.3)% 425  331  28.4%
 Dollars\\$84,665 \\$66,824  26.7%\\$51,230 \\$49,255  4.0%\\$190,435 \\$113,146  68.3%
 Avg. Price\\$412,996 \\$325,971  26.7%\\$328,396 \\$311,740  5.3%\\$448,083 \\$341,832  31.1%
Southwest            
(AZ, TX)Homes 731  761  (3.9)% 733  532  37.8% 1,041  1,060  (1.8)%
 Dollars\\$262,344 \\$290,901  (9.8)%\\$273,304 \\$189,974  43.9%\\$416,205 \\$423,221  (1.7)%
 Avg. Price\\$358,884 \\$382,262  (6.1)%\\$372,857 \\$357,095  4.4%\\$399,812 \\$399,265  0.1%
West            
(CA)Homes 233  132  76.5% 168  81  107.4% 342  117  192.3%
 Dollars\\$126,505 \\$54,648  131.5%\\$81,044 \\$27,504  194.7%\\$188,859 \\$50,081  277.1%
 Avg. Price\\$542,944 \\$414,000  31.1%\\$482,404 \\$339,552  42.1%\\$552,218 \\$428,047  29.0%
Consolidated Total          
 Homes 1,812  1,796  0.9% 1,598  1,223  30.7% 3,228  2,972  8.6%
 Dollars\\$768,055 \\$700,740  9.6%\\$626,157 \\$455,172  37.6%\\$1,429,692 \\$1,171,101  22.1%
 Avg. Price\\$423,871 \\$390,167  8.6%\\$391,838 \\$372,177  5.3%\\$442,903 \\$394,045  12.4%
Unconsolidated Joint Ventures          
 Homes 50  98  (49.0)% 49  66  (25.8)% 225  120  87.5%
 Dollars\\$21,236 \\$50,132  (57.6)%\\$25,576 \\$27,325  (6.4)%\\$147,376 \\$62,433  136.1%
 Avg. Price\\$424,720 \\$511,551  (17.0)%\\$521,959 \\$414,015  26.1%\\$655,004 \\$520,271  25.9%
Grand Total          
 Homes 1,862  1,894  (1.7)% 1,647  1,289  27.8% 3,453  3,092  11.7%
 Dollars\\$789,291 \\$750,872  5.1%\\$651,733 \\$482,497  35.1%\\$1,577,068 \\$1,233,534  27.8%
 Avg. Price\\$423,894 \\$396,448  6.9%\\$395,709 \\$374,319  5.7%\\$456,724 \\$398,944  14.5%
           
DELIVERIES INCLUDE EXTRAS
Notes:
(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.
 

 

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA INCLUDES UNCONSOLIDATED JOINT VENTURES)
(UNAUDITED)
     Communities Under Development   
     Three Months - April 30, 2016   
  Net ContractsDeliveriesContract
  Three Months EndedThree Months EndedBacklog
  Apr 30,Apr 30,Apr 30,
   2016  2015 % Change 2016  2015 % Change 2016  2015 % Change
Northeast            
(includes unconsolidated joint ventures)Homes 139  150  (7.3)% 114  73  56.2% 294  243  21.0%
(NJ, PA)Dollars\\$71,044 \\$72,656  (2.2)%\\$55,554 \\$39,885  39.3%\\$144,767 \\$114,853  26.0%
 Avg. Price\\$511,110 \\$484,368  5.5%\\$487,315 \\$546,354  (10.8)%\\$492,406 \\$472,647  4.2%
Mid-Atlantic            
(includes unconsolidated joint ventures)Homes 303  275  10.2% 203  187  8.6% 624  512  21.9%
(DE, MD, VA, WV)Dollars\\$158,359 \\$131,083  20.8%\\$95,339 \\$88,164  8.1%\\$347,444 \\$272,944  27.3%
 Avg. Price\\$522,637 \\$476,666  9.6%\\$469,649 \\$471,468  (0.4)%\\$556,802 \\$533,094  4.4%
Midwest            
(includes unconsolidated joint ventures)Homes 216  311  (30.5)% 239  224  6.7% 554  763  (27.4)%
(IL, MN, OH) Dollars\\$69,445 \\$101,571  (31.6)%\\$76,793 \\$74,969  2.4%\\$162,671 \\$223,759  (27.3)%
 Avg. Price\\$321,503 \\$326,594  (1.6)%\\$321,312 \\$334,684  (4.0)%\\$293,630 \\$293,262  0.1%
Southeast            
(includes unconsolidated joint ventures)Homes 221  222  (0.5)% 156  178  (12.4)% 456  353  29.2%
(FL, GA, NC, SC) Dollars\\$94,422 \\$74,030  27.5%\\$51,230 \\$57,538  (11.0)%\\$209,558 \\$122,444  71.1%
 Avg. Price\\$427,247 \\$333,469  28.1%\\$328,396 \\$323,248  1.6%\\$459,558 \\$346,867  32.5%
Southwest            
(includes unconsolidated joint ventures)Homes 731  761  (3.9)% 733  532  37.8% 1,041  1,060  (1.8)%
(AZ, TX)Dollars\\$262,344 \\$290,901  (9.8)%\\$273,304 \\$189,974  43.9%\\$416,205 \\$423,221  (1.7)%
 Avg. Price\\$358,884 \\$382,262  (6.1)%\\$372,857 \\$357,095  4.4%\\$399,812 \\$399,265  0.1%
West            
(includes unconsolidated joint ventures)Homes 252  175  44.0% 202  95  112.6% 484  161  200.6%
(CA)Dollars\\$133,676 \\$80,631  65.8%\\$99,513 \\$31,967  211.3%\\$296,423 \\$76,313  288.4%
 Avg. Price\\$530,462 \\$460,750  15.1%\\$492,640 \\$336,493  46.4%\\$612,443 \\$473,992  29.2%
Grand Total          
 Homes 1,862  1,894  (1.7)% 1,647  1,289  27.8% 3,453  3,092  11.7%
 Dollars\\$789,291 \\$750,872  5.1%\\$651,733 \\$482,497  35.1%\\$1,577,068 \\$1,233,534  27.8%
 Avg. Price\\$423,894 \\$396,448  6.9%\\$395,709 \\$374,319  5.7%\\$456,724 \\$398,944  14.5%
Consolidated Total          
 Homes 1,812  1,796  0.9% 1,598  1,223  30.7% 3,228  2,972  8.6%
 Dollars\\$768,055 \\$700,740  9.6%\\$626,157 \\$455,172  37.6%\\$1,429,692 \\$1,171,101  22.1%
 Avg. Price\\$423,871 \\$390,167  8.6%\\$391,838 \\$372,177  5.3%\\$442,903 \\$394,045  12.4%
Unconsolidated Joint Ventures          
 Homes 50  98  (49.0)% 49  66  (25.8)% 225  120  87.5%
 Dollars\\$21,236 \\$50,132  (57.6)%\\$25,576 \\$27,325  (6.4)%\\$147,376 \\$62,433  136.1%
 Avg. Price\\$424,720 \\$511,551  (17.0)%\\$521,959 \\$414,015  26.1%\\$655,004 \\$520,271  25.9%
           
DELIVERIES INCLUDE EXTRAS
Notes:
(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.
     

 

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)
(UNAUDITED)
     Communities Under Development   
     Six Months - April 30, 2016   
  Net ContractsDeliveriesContract
  Six Months EndedSix Months EndingBacklog
  Apr 30,Apr 30,Apr 30,
   2016  2015 % Change 2016  2015 % Change 2016  2015 % Change
Northeast            
(NJ, PA)Homes 234  247  (5.3)% 259  166  56.0% 268  227  18.1%
 Dollars\\$114,511 \\$126,470  (9.5)%\\$126,351 \\$89,764  40.8%\\$135,164 \\$110,032  22.8%
 Avg. Price\\$489,363 \\$512,024  (4.4)%\\$487,841 \\$540,748  (9.8)%\\$504,343 \\$484,720  4.0%
Mid-Atlantic             
(DE, MD, VA, WV)Homes 545  458  19.0% 400  355  12.7% 598  474  26.2%
 Dollars\\$280,685 \\$218,952  28.2%\\$183,425 \\$157,013  16.8%\\$336,358 \\$250,862  34.1%
 Avg. Price\\$515,017 \\$478,061  7.7%\\$458,562 \\$442,290  3.7%\\$562,472 \\$529,245  6.3%
Midwest            
(IL, MN, OH) Homes 423  519  (18.5)% 513  421  21.9% 554  763  (27.4)%
 Dollars\\$137,014 \\$172,788  (20.7)%\\$168,633 \\$137,624  22.5%\\$162,671 \\$223,759  (27.3)%
 Avg. Price\\$323,911 \\$332,926  (2.7)%\\$328,720 \\$326,899  0.6%\\$293,630 \\$293,262  0.1%
Southeast            
(FL, GA, NC, SC) Homes 418  378  10.6% 272  279  (2.5)% 425  331  28.4%
 Dollars\\$174,924 \\$119,114  46.9%\\$90,424 \\$87,039  3.9%\\$190,435 \\$113,146  68.3%
 Avg. Price\\$418,478 \\$315,118  32.8%\\$332,443 \\$311,967  6.6%\\$448,083 \\$341,832  31.1%
Southwest            
(AZ, TX)Homes 1,291  1,299  (0.6)% 1,283  1,009  27.2% 1,041  1,060  (1.8)%
 Dollars\\$470,986 \\$484,485  (2.8)%\\$477,493 \\$356,584  33.9%\\$416,205 \\$423,221  (1.7)%
 Avg. Price\\$364,823 \\$372,968  (2.2)%\\$372,169 \\$353,403  5.3%\\$399,812 \\$399,265  0.1%
West            
(CA)Homes 432  214  101.9% 293  142  106.3% 342  117  192.3%
 Dollars\\$218,578 \\$82,088  166.3%\\$136,606 \\$60,619  125.4%\\$188,859 \\$50,081  277.1%
 Avg. Price\\$505,969 \\$383,591  31.9%\\$466,231 \\$426,891  9.2%\\$552,218 \\$428,047  29.0%
Consolidated Total          
 Homes 3,343  3,115  7.3% 3,020  2,372  27.3% 3,228  2,972  8.6%
 Dollars\\$1,396,698 \\$1,203,897  16.0%\\$1,182,932 \\$888,643  33.1%\\$1,429,692 \\$1,171,101  22.1%
 Avg. Price\\$417,798 \\$386,484  8.1%\\$391,699 \\$374,639  4.6%\\$442,903 \\$394,045  12.4%
Unconsolidated Joint Ventures          
 Homes 111  145  (23.4)% 93  137  (32.1)% 225  120  87.5%
 Dollars\\$61,057 \\$68,213  (10.5)%\\$45,763 \\$54,904  (16.6)%\\$147,376 \\$62,433  136.1%
 Avg. Price\\$550,061 \\$470,436  16.9%\\$492,074 \\$400,758  22.8%\\$655,004 \\$520,271  25.9%
Grand Total          
 Homes 3,454  3,260  6.0% 3,113  2,509  24.1% 3,453  3,092  11.7%
 Dollars\\$1,457,755 \\$1,272,110  14.6%\\$1,228,695 \\$943,547  30.2%\\$1,577,068 \\$1,233,534  27.8%
 Avg. Price\\$422,048 \\$390,218  8.2%\\$394,698 \\$376,065  5.0%\\$456,724 \\$398,944  14.5%
           
DELIVERIES INCLUDE EXTRAS
Notes:
(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.
 

 

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA INCLUDES UNCONSOLIDATED JOINT VENTURES)
(UNAUDITED)
     Communities Under Development   
     Six Months - April 30, 2016   
  Net ContractsDeliveriesContract
  Six Months EndedSix Months EndedBacklog
  Apr 30,Apr 30,Apr 30,
   2016  2015 % Change 2016  2015 % Change 2016  2015 % Change
Northeast            
(includes unconsolidated joint ventures)Homes 226  258  (12.4)% 273  181  50.8% 294  243  21.0%
(NJ, PA)Dollars\\$106,538 \\$127,257  (16.3)%\\$130,247 \\$93,984  38.6%\\$144,767 \\$114,853  26.0%
 Avg. Price\\$471,407 \\$493,244  (4.4)%\\$477,094 \\$519,249  (8.1)%\\$492,406 \\$472,647  4.2%
Mid-Atlantic            
(includes unconsolidated joint ventures)Homes 576  503  14.5% 419  397  5.5% 624  512  21.9%
(DE, MD, VA, WV)Dollars\\$295,098 \\$242,645  21.6%\\$194,560 \\$179,662  8.3%\\$347,444 \\$272,944  27.3%
 Avg. Price\\$512,322 \\$482,396  6.2%\\$464,343 \\$452,550  2.6%\\$556,802 \\$533,094  4.4%
Midwest            
(includes unconsolidated joint ventures)Homes 423  519  (18.5)% 513  438  17.1% 554  763  (27.4)%
(IL, MN, OH) Dollars\\$137,014 \\$172,805  (20.7)%\\$168,633 \\$142,306  18.5%\\$162,671 \\$223,759  (27.3)%
 Avg. Price\\$323,911 \\$332,957  (2.7)%\\$328,720 \\$324,899  1.2%\\$293,630 \\$293,262  0.1%
Southeast            
(includes unconsolidated joint ventures)Homes 441  411  7.3% 273  319  (14.4)% 456  353  29.2%
(FL, GA, NC, SC) Dollars\\$189,508 \\$132,824  42.7%\\$90,809 \\$103,373  (12.2)%\\$209,558 \\$122,444  71.1%
 Avg. Price\\$429,723 \\$323,173  33.0%\\$332,635 \\$324,052  2.6%\\$459,558 \\$346,867  32.5%
Southwest            
(includes unconsolidated joint ventures)Homes 1,291  1,299  (0.6)% 1,283  1,009  27.2% 1,041  1,060  (1.8)%
(AZ, TX)Dollars\\$470,986 \\$484,485  (2.8)%\\$477,493 \\$356,584  33.9%\\$416,205 \\$423,221  (1.7)%
 Avg. Price\\$364,823 \\$372,968  (2.2)%\\$372,169 \\$353,403  5.3%\\$399,812 \\$399,265  0.1%
West             
(includes unconsolidated joint ventures)Homes 497  270  84.1% 352  165  113.3% 484  161  200.6%
(CA)Dollars\\$258,611 \\$112,094  130.7%\\$166,953 \\$67,638  146.8%\\$296,423 \\$76,313  288.4%
 Avg. Price\\$520,344 \\$415,163  25.3%\\$474,298 \\$409,929  15.7%\\$612,443 \\$473,992  29.2%
Grand Total          
 Homes 3,454  3,260  6.0% 3,113  2,509  24.1% 3,453  3,092  11.7%
 Dollars\\$1,457,755 \\$1,272,110  14.6%\\$1,228,695 \\$943,547  30.2%\\$1,577,068 \\$1,233,534  27.8%
 Avg. Price\\$422,048 \\$390,218  8.2%\\$394,698 \\$376,065  5.0%\\$456,724 \\$398,944  14.5%
Consolidated Total          
 Homes 3,343  3,115  7.3% 3,020  2,372  27.3% 3,228  2,972  8.6%
 Dollars\\$1,396,698 \\$1,203,897  16.0%\\$1,182,932 \\$888,643  33.1%\\$1,429,692 \\$1,171,101  22.1%
 Avg. Price\\$417,798 \\$386,484  8.1%\\$391,699 \\$374,639  4.6%\\$442,903 \\$394,045  12.4%
Unconsolidated Joint Ventures          
 Homes 111  145  (23.4)% 93  137  (32.1)% 225  120  87.5%
 Dollars\\$61,057 \\$68,213  (10.5)%\\$45,763 \\$54,904  (16.6)%\\$147,376 \\$62,433  136.1%
 Avg. Price\\$550,061 \\$470,436  16.9%\\$492,074 \\$400,758  22.8%\\$655,004 \\$520,271  25.9%
           
DELIVERIES INCLUDE EXTRAS 
Notes:
(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.