Total Lots Controlled Increased Year Over
Year for First Time in Two YearsEnhanced Capital
Structure Through Over $500 Million of Financing
Transactions
Hovnanian Enterprises, Inc. (NYSE:HOV), a leading national
homebuilder, reported results for its fiscal first quarter ended
January 31, 2018.
“For the first time in two years, we increased
the number of total lots we controlled, which should ultimately
lead to community count, revenue and profit growth,” stated Ara K.
Hovnanian, Chairman of the Board, President and Chief Executive
Officer. “Hovnanian’s position is further strengthened by our
recent financing transactions with GSO, along with a commitment for
an additional $216 million of capital from GSO which together
extend our debt maturities and provide additional stability to our
capital structure.”
“The Company remains in a transition period due
to the adverse impacts from having to pay off $320 million of debt
in late 2015 and 2016 when the high yield market was closed to us
and other companies with similar credit ratings. As a result, we
were unable to replenish our land position sufficiently in 2016 and
2017. This led to a reduction in community count and revenues,
impacting our overall profitability. We are confident the most
challenging quarter for fiscal 2018 is behind us and we expect
future quarters this year should yield improved operating results,
as we continue to rebuild our company,” concluded Mr.
Hovnanian.
RESULTS FOR THE THREE-MONTHS ENDED
JANUARY 31, 2018:
- Total revenues decreased 24.4% to $417.2 million in the first
quarter of fiscal 2018, compared with $552.0 million in the first
quarter of fiscal 2017.
- Homebuilding revenues for unconsolidated joint ventures
decreased 9.8% to $58.6 million for the first quarter ended January
31, 2018, compared with $64.9 million in last year’s first
quarter.
- Homebuilding gross margin percentage, after interest expense
and land charges included in cost of sales, was 14.8% for the first
quarter of fiscal 2018 compared with 13.5% in the prior year’s
first quarter.
- Homebuilding gross margin percentage, before interest expense
and land charges included in cost of sales, was 17.9% for the first
quarter of fiscal 2018 compared with 17.2% in the same period one
year ago.
- Total SG&A was $62.4 million, or 14.9% of total revenues,
in the first quarter of fiscal 2018 compared with $60.1 million, or
10.9% of total revenues, in the first quarter of fiscal
2017.
- Interest incurred (some of which was expensed and some of which
was capitalized) was $41.2 million for the first quarter of fiscal
2018 compared with $38.7 million in the same quarter one year
ago.
- Total interest expense was $41.4 million in the first quarter
of fiscal 2018 compared with $40.9 million in the first quarter of
fiscal 2017.
- Loss before income taxes for the quarter ended January 31, 2018
was $30.5 million compared to income before income taxes of $0.3
million during the first quarter of fiscal 2017.
- Net loss was $30.8 million, or $0.21 per common share, in the
first quarter of fiscal 2018 compared with a net loss of $0.1
million, or $0.00 per common share, during the same quarter a year
ago.
- Contracts per community, including unconsolidated joint
ventures, increased 2.7% to 7.6 contracts per community for the
quarter ended January 31, 2018 compared with 7.4 contracts per
community, including unconsolidated joint ventures, in last year’s
first quarter. Consolidated contracts per community decreased 2.7%
to 7.3 contracts per community for the first quarter of fiscal 2018
compared with 7.5 contracts per community in the first quarter of
fiscal 2017.
- For February 2018, contracts per community, including
unconsolidated joint ventures, increased 6.5% to 3.3 contracts per
community compared to 3.1 contracts per community for the same
month one year ago. During February 2018, the number of contracts,
including unconsolidated joint ventures, decreased 6.0% to 528
homes from 562 homes in February 2017 and the dollar value of
contracts, including unconsolidated joint ventures, decreased 3.2%
to $227.8 million in February 2018 compared with $235.3 million for
February 2017.
- As of the end of the first quarter of fiscal 2018, community
count, including unconsolidated joint ventures, was 165
communities. This was a 5.1% sequential increase compared with 157
communities at October 31, 2017 and a 6.8% year-over-year decrease
from 177 communities at January 31, 2017. Consolidated community
count decreased 10.8% to 140 communities as of January 31, 2018
from 157 communities at the end of the prior year’s first
quarter.
- The number of contracts, including unconsolidated joint
ventures, for the first quarter ended January 31, 2018, decreased
4.7% to 1,250 homes from 1,312 homes for the same quarter last
year. The number of consolidated contracts, during the first
quarter of fiscal 2018, decreased 12.4% to 1,027 homes compared
with 1,173 homes during the first quarter of 2017.
- The dollar value of contract backlog, including unconsolidated
joint ventures, as of January 31, 2018, was $1.17 billion, a
decrease of 2.1% compared with $1.19 billion as of January 31,
2017. The dollar value of consolidated contract backlog, as of
January 31, 2018, decreased 20.2% to $814.4 million compared with
$1.02 billion as of January 31, 2017.
- For the quarter ended January 31, 2018, deliveries, including
unconsolidated joint ventures, decreased 18.4% to 1,141 homes
compared with 1,398 homes during the first quarter of fiscal 2017.
Consolidated deliveries were 1,025 homes for the first quarter of
fiscal 2018, a 20.5% decrease compared with 1,290 homes during the
same quarter a year ago.
- The contract cancellation rate, including unconsolidated joint
ventures, was 20% in both the first quarter of fiscal 2018 and the
first quarter of fiscal 2017. The consolidated contract
cancellation rate for the three months ended January 31, 2018 was
18%, compared with 19% in the first quarter of the prior
year.
- The valuation allowance was $661.1 million as of January 31,
2018, after adjusting for the Tax Cuts and Jobs Acts of 2017. 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.
LIQUIDITY AND INVENTORY AS OF JANUARY
31, 2018:
- Total liquidity at the end of the first quarter of fiscal 2018
was $292.0 million.
- As of January 31, 2018, consolidated lots controlled increased
sequentially to 27,183 from 25,329 lots at October 31, 2017 and
increased year over year from 26,234 lots at January 31, 2017. The
total consolidated land position was 27,183 lots, consisting of
14,260 lots under option and 12,923 owned lots, as of January 31,
2018.
- In the first quarter of fiscal 2018, approximately 3,400 lots
were put under option or acquired in 39 communities, including
unconsolidated joint ventures.
- Paid off $56.0 million principal amount of debt that matured on
December 1, 2017.
RECENT FINANCING TRANSACTIONS:
- Refinanced $133 million of 7.0% senior notes due 2019, with a
5% unsecured term loan maturing in 2027 from GSO Capital Partners
LP, Blackstone’s credit platform, and certain funds managed or
advised by it (collectively the “GSO Entities”).
- Accepted $170 million of 8.0% senior notes due 2019 tendered in
an exchange offer for the issuance of $91 million of 13.5%
unsecured notes due 2026, $90 million of 5.0% unsecured notes due
2040 and $27 million of cash for the purchase of $26 million of the
tendered 8.0% senior notes. An additional 5.0% unsecured term loan
commitment from GSO Entities will be used to refinance $66 million
of 8.0% senior notes.
- Commitment for $125 million senior secured revolver/term loan
from GSO Entities, which we intend to draw in September 2018 to
repay the $75 million super priority term loan due in 2019 and to
provide $50 million of incremental liquidity.
- In January 2019, additional liquidity provided by $25 million
commitment from GSO Entities to purchase additional 10.5% senior
secured notes due 2024, at a price approximating the then
prevailing yield, which today would be approximately 8%.
- Received consent from 10.5% senior secured note holders to
eliminate restrictions on our ability to repurchase or acquire our
unsecured notes.
WEBCAST INFORMATION:
Hovnanian Enterprises will webcast its fiscal
2018 first quarter financial results conference call at 11:00 a.m.
E.T. on Thursday, March 8, 2018. 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. 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 2017
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 and gain 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). The reconciliation for
historical periods of EBIT, EBITDA and Adjusted EBITDA to net
(loss) is presented in a table attached to this earnings
release.
Homebuilding gross margin, before costs
of sales interest expense and land charges, and homebuilding gross
margin percentage, before costs 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 costs of sales interest expense and land charges, and
homebuilding gross margin percentage, before costs 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.
(Loss) Before Income Taxes Excluding
Land-Related Charges, Joint Venture Write-Downs and Gain 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 (Loss) Before Income Taxes Excluding
Land-Related Charges, Joint Venture Write-Downs and Gain 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 $278.2
million of cash and cash equivalents, $2.7 million of restricted
cash required to collateralize letters of credit and $11.1 million
of availability under the unsecured revolving credit facility as of
January 31, 2018.
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
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, 2017 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. |
January 31, 2018 |
Statements
of Consolidated Operations |
(Dollars
in Thousands, Except Per Share Data) |
|
|
|
Three Months Ended |
|
|
|
January 31, |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
Total
Revenues |
$417,166 |
|
|
$552,009 |
|
Costs and
Expenses (a) |
|
442,461 |
|
|
|
557,666 |
|
Gain on
Extinguishment of Debt |
|
- |
|
|
|
7,646 |
|
(Loss) from
Unconsolidated Joint Ventures |
|
(5,176 |
) |
|
|
(1,666 |
) |
(Loss)
Income Before Income Taxes |
|
(30,471 |
) |
|
|
323 |
|
Income Tax
Provision |
|
338 |
|
|
|
466 |
|
Net
(Loss) |
$(30,809 |
) |
|
$(143 |
) |
|
|
|
|
|
|
Per Share
Data: |
|
|
|
Basic: |
|
|
|
|
Net (Loss)
Per Common Share |
$(0.21 |
) |
|
$(0.00 |
) |
|
Weighted
Average Number of |
|
|
|
|
|
Common Shares
Outstanding (b) |
|
148,028 |
|
|
|
147,535 |
|
Assuming
Dilution: |
|
|
|
|
Net (Loss)
Per Common Share |
$(0.21 |
) |
|
$(0.00 |
) |
|
Weighted
Average Number of |
|
|
|
|
|
Common Shares
Outstanding (b) |
|
148,028 |
|
|
|
147,535 |
|
|
|
|
|
|
|
(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. |
January 31, 2018 |
Reconciliation of (Loss) Before Income Taxes Excluding Land-Related
Charges, Joint Venture Write-Downs and Gain on Extinguishment of
Debt to (Loss) Income Before Income Taxes |
(Dollars in
Thousands) |
|
|
|
|
|
|
Three Months Ended |
|
|
|
January 31, |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
(Loss)
Income Before Income Taxes |
$(30,471 |
) |
|
$323 |
|
Inventory
Impairment Loss and Land Option Write-Offs |
|
414 |
|
|
|
3,184 |
|
Unconsolidated Joint Venture Write-Downs |
|
660 |
|
|
|
- |
|
Gain on
Extinguishment of Debt |
|
- |
|
|
|
7,646 |
|
(Loss)
Before Income Taxes Excluding Land-Related Charges, Joint Venture
Write-Downs and Gain on Extinguishment of Debt (a) |
$(29,397 |
) |
|
$(4,139 |
) |
|
|
|
|
|
|
(a) (Loss)
Before Income Taxes Excluding Land-Related Charges, Joint Venture
Write-Downs and Gain 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. |
January 31, 2018 |
Gross
Margin |
(Dollars in
Thousands) |
|
|
Homebuilding Gross Margin |
|
|
Three Months Ended |
|
|
January 31, |
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
Sale of Homes |
|
$401,577 |
|
|
$531,415 |
|
Cost of Sales,
Excluding Interest Expense (a) |
|
329,527 |
|
|
439,917 |
|
Homebuilding Gross Margin, Before Cost of Sales Interest Expense
and Land Charges (b) |
72,050 |
|
|
91,498 |
|
Cost of Sales Interest
Expense, Excluding Land Sales Interest Expense |
|
12,292 |
|
|
16,574 |
|
Homebuilding Gross Margin, After Cost of Sales Interest Expense,
Before Land Charges (b) |
59,758 |
|
|
74,924 |
|
Land Charges |
|
414 |
|
|
3,184 |
|
Homebuilding Gross
Margin |
|
$59,344 |
|
|
$71,740 |
|
|
|
|
|
|
Gross Margin
Percentage |
|
14.8 |
% |
|
13.5 |
% |
Gross Margin
Percentage, Before Cost of Sales Interest Expense and Land Charges
(b) |
|
17.9 |
% |
|
17.2 |
% |
Gross
Margin Percentage, After Cost of Sales Interest Expense, Before
Land Charges (b) |
14.9 |
% |
|
14.1 |
% |
|
|
|
|
|
|
|
|
|
|
Land Sales Gross Margin |
|
|
Three Months Ended |
|
|
January 31, |
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
Land and Lot Sales |
|
$ - |
|
|
$7,001 |
|
Cost of Sales,
Excluding Interest and Land Charges (a) |
|
- |
|
|
5,110 |
|
Land and Lot Sales
Gross Margin, Excluding Interest and Land Charges |
|
- |
|
|
1,891 |
|
Land and Lot Sales
Interest |
|
- |
|
|
1,748 |
|
Land and Lot Sales
Gross Margin, Including Interest and Excluding Land Charges |
|
$ - |
|
|
$143 |
|
|
|
|
|
|
|
|
|
|
|
(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. |
|
(b)
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. |
January 31, 2018 |
Reconciliation of Adjusted EBITDA to Net (Loss) |
(Dollars in
Thousands) |
|
Three Months Ended |
|
January 31, |
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
Net (Loss) |
$(30,809 |
) |
|
$(143 |
) |
Income Tax
Provision |
|
338 |
|
|
|
466 |
|
Interest Expense |
|
41,423 |
|
|
|
40,949 |
|
EBIT (a) |
|
10,952 |
|
|
|
41,272 |
|
Depreciation |
|
790 |
|
|
|
1,012 |
|
Amortization of Debt
Costs |
|
- |
|
|
|
1,632 |
|
EBITDA (b) |
|
11,742 |
|
|
|
43,916 |
|
Inventory Impairment
Loss and Land Option Write-offs |
|
414 |
|
|
|
3,184 |
|
Gain on Extinguishment
of Debt |
|
- |
|
|
|
7,646 |
|
Adjusted EBITDA
(c) |
$12,156 |
|
|
$39,454 |
|
|
|
|
|
Interest Incurred |
$41,165 |
|
|
$38,699 |
|
|
|
|
|
Adjusted EBITDA to
Interest Incurred |
|
0.30 |
|
|
|
1.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, inventory impairment loss and land
option write-offs and gain on extinguishment of debt. |
|
|
|
Hovnanian Enterprises, Inc. |
January 31, 2018 |
Interest
Incurred, Expensed and Capitalized |
(Dollars in
Thousands) |
|
Three Months Ended |
|
January 31, |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
Interest Capitalized at
Beginning of Period |
$71,051 |
|
|
$96,688 |
|
Plus Interest
Incurred |
|
41,165 |
|
|
|
38,699 |
|
Less Interest
Expensed |
|
41,423 |
|
|
|
40,949 |
|
Interest Capitalized at
End of Period (a) |
$70,793 |
|
|
$94,438 |
|
|
|
|
|
(a)
Capitalized interest amounts are shown gross before allocating any
portion of impairments, if any, to capitalized interest. |
|
|
HOVNANIAN ENTERPRISES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In Thousands)
|
January 31,2018 |
|
|
October 31,2017 |
|
|
(Unaudited) |
|
|
(1) |
|
ASSETS |
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
Cash and
cash equivalents |
$278,158 |
|
|
$463,697 |
|
Restricted cash and cash equivalents |
3,213 |
|
|
2,077 |
|
Inventories: |
|
|
|
|
|
Sold and
unsold homes and lots under development |
807,714 |
|
|
744,119 |
|
Land and
land options held for future development or sale |
151,925 |
|
|
140,924 |
|
Consolidated inventory not owned |
93,875 |
|
|
124,784 |
|
Total
inventories |
1,053,514 |
|
|
1,009,827 |
|
Investments in and advances to unconsolidated joint ventures |
92,262 |
|
|
115,090 |
|
Receivables, deposits and notes, net |
53,816 |
|
|
58,149 |
|
Property,
plant and equipment, net |
19,505 |
|
|
52,919 |
|
Prepaid
expenses and other assets |
43,544 |
|
|
37,026 |
|
Total
homebuilding |
1,544,012 |
|
|
1,738,785 |
|
|
|
|
|
|
|
Financial services cash
and cash equivalents |
4,130 |
|
|
5,623 |
|
Financial services
other assets |
97,795 |
|
|
156,490 |
|
Total assets |
$1,645,937 |
|
|
$1,900,898 |
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
Nonrecourse mortgages secured by inventory, net of debt issuance
costs |
$64,450 |
|
|
$64,512 |
|
Accounts
payable and other liabilities |
289,099 |
|
|
335,057 |
|
Customers’ deposits |
34,389 |
|
|
33,772 |
|
Nonrecourse mortgages secured by operating properties |
- |
|
|
13,012 |
|
Liabilities from inventory not owned, net of debt issuance
costs |
68,040 |
|
|
91,101 |
|
Revolving
credit facility |
52,000 |
|
|
52,000 |
|
Notes
payable and term loan, net of discount and debt issuance costs |
1,545,324 |
|
|
1,627,674 |
|
Total
homebuilding |
2,053,302 |
|
|
2,217,128 |
|
|
|
|
|
|
|
Financial services |
81,638 |
|
|
141,914 |
|
Income taxes
payable |
2,186 |
|
|
2,227 |
|
Total liabilities |
2,137,126 |
|
|
2,361,269 |
|
|
|
|
|
|
|
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 January 31, 2018 and at October 31, 2017 |
135,299 |
|
|
135,299 |
|
Common
stock, Class A, $0.01 par value – authorized 400,000,000 shares;
issued 144,403,778 shares at January 31, 2018 and 144,046,073
shares at October 31, 2017 |
1,444 |
|
|
1,440 |
|
Common
stock, Class B, $0.01 par value (convertible to Class A at time of
sale) – authorized 60,000,000 shares; issued 16,162,230 shares at
January 31, 2018 and 15,999,355 shares at October 31, 2017 |
162 |
|
|
160 |
|
Paid in
capital – common stock |
706,451 |
|
|
706,466 |
|
Accumulated deficit |
(1,219,185 |
) |
|
(1,188,376 |
) |
Treasury
stock – at cost – 11,760,763 shares of Class A common stock and
691,748 shares of Class B common stock at January 31, 2018 and
October 31, 2017 |
(115,360 |
) |
|
(115,360 |
) |
Total
stockholders’ equity deficit |
(491,189 |
) |
|
(460,371 |
) |
Total liabilities and
equity |
$1,645,937 |
|
|
$1,900,898 |
|
(1) Derived from the audited balance sheet as of October 31,
2017.
HOVNANIAN ENTERPRISES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In
Thousands Except Share and Per Share Data)(Unaudited)
|
|
Three Months Ended January 31, |
|
|
|
2018 |
|
2017 |
|
Revenues: |
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
Sale of
homes |
|
$401,577 |
|
$531,415 |
|
Land
sales and other revenues |
|
4,701 |
|
7,745 |
|
Total
homebuilding |
|
406,278 |
|
539,160 |
|
Financial
services |
|
10,888 |
|
12,849 |
|
Total
revenues |
|
417,166 |
|
552,009 |
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
Cost of
sales, excluding interest |
|
329,527 |
|
445,027 |
|
Cost of
sales interest |
|
12,292 |
|
18,322 |
|
Inventory
impairment loss and land option write-offs |
|
414 |
|
3,184 |
|
Total
cost of sales |
|
342,233 |
|
466,533 |
|
Selling,
general and administrative |
|
43,231 |
|
44,408 |
|
Total
homebuilding expenses |
|
385,464 |
|
510,941 |
|
|
|
|
|
|
|
Financial
services |
|
8,341 |
|
6,855 |
|
Corporate
general and administrative |
|
19,135 |
|
15,656 |
|
Other
interest |
|
29,131 |
|
22,627 |
|
Other
operations |
|
390 |
|
1,587 |
|
Total
expenses |
|
442,461 |
|
557,666 |
|
Gain on extinguishment
of debt |
|
- |
|
7,646 |
|
(Loss) from
unconsolidated joint ventures |
|
(5,176 |
) |
(1,666 |
) |
(Loss) income before
income taxes |
|
(30,471 |
) |
323 |
|
State and federal
income tax provision (benefit): |
|
|
|
|
|
State |
|
338 |
|
(18 |
) |
Federal |
|
- |
|
484 |
|
Total
income taxes |
|
338 |
|
466 |
|
Net (loss) |
|
$(30,809 |
) |
$(143 |
) |
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
Basic: |
|
|
|
|
|
Net
(loss) per common share |
|
$(0.21 |
) |
$(0.00 |
) |
Weighted-average number of common shares outstanding |
|
148,028 |
|
147,535 |
|
Assuming dilution: |
|
|
|
|
|
Net
(loss) per common share |
|
$(0.21 |
) |
$(0.00 |
) |
Weighted-average number of common shares outstanding |
|
148,028 |
|
147,535 |
|
|
|
|
|
|
|
|
|
|
|
|
|
HOVNANIAN ENTERPRISES, INC. |
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE) |
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT
VENTURES) |
(UNAUDITED) |
|
|
|
|
|
Three Months - January 31, 2018 |
|
|
|
|
|
Contracts(1) |
Deliveries |
Contract |
|
|
Three Months Ended |
Three Months Ended |
Backlog |
|
|
January 31, |
January 31, |
January 31, |
|
|
|
2018 |
|
2017 |
% Change |
|
2018 |
|
2017 |
% Change |
|
2018 |
|
2017 |
% Change |
Northeast |
|
|
|
|
|
|
|
|
|
|
(NJ, PA) |
Home |
|
46 |
|
83 |
(44.6 |
)% |
|
40 |
|
104 |
(61.5 |
)% |
|
104 |
|
183 |
(43.2 |
)% |
|
Dollars |
$25,363 |
$38,045 |
(33.3 |
)% |
$20,192 |
$52,907 |
(61.8 |
)% |
$56,949 |
$84,649 |
(32.7 |
)% |
|
Avg. Price |
$551,370 |
$458,369 |
20.3 |
% |
$504,800 |
$508,726 |
(0.8 |
)% |
$547,582 |
$462,563 |
18.4 |
% |
Mid-Atlantic |
|
|
|
|
|
|
|
|
|
|
(DE, MD, VA, WV) |
Home |
|
125 |
|
190 |
(34.2 |
)% |
|
135 |
|
204 |
(33.8 |
)% |
|
318 |
|
416 |
(23.6 |
)% |
|
Dollars |
$63,213 |
$102,246 |
(38.2 |
)% |
$71,009 |
$100,159 |
(29.1 |
)% |
$185,939 |
$251,062 |
(25.9 |
)% |
|
Avg. Price |
$505,704 |
$538,138 |
(6.0 |
)% |
$525,988 |
$490,975 |
7.1 |
% |
$584,715 |
$603,516 |
(3.1 |
)% |
Midwest |
|
|
|
|
|
|
|
|
|
|
(IL, OH) |
Home |
|
165 |
|
145 |
13.8 |
% |
|
140 |
|
150 |
(6.7 |
)% |
|
407 |
|
369 |
10.3 |
% |
|
Dollars |
$49,416 |
$45,566 |
8.4 |
% |
$40,517 |
$43,651 |
(7.2 |
)% |
$107,869 |
$106,443 |
1.3 |
% |
|
Avg. Price |
$299,493 |
$314,250 |
(4.7 |
)% |
$289,405 |
$291,007 |
(0.6 |
)% |
$265,034 |
$288,462 |
(8.1 |
)% |
Southeast |
|
|
|
|
|
|
|
|
|
|
(FL, GA, SC) |
Home |
|
127 |
|
108 |
17.6 |
% |
|
132 |
|
138 |
(4.3 |
)% |
|
280 |
|
302 |
(7.3 |
)% |
|
Dollars |
$50,455 |
$46,451 |
8.6 |
% |
$56,674 |
$56,386 |
0.5 |
% |
$114,163 |
$135,236 |
(15.6 |
)% |
|
Avg. Price |
$397,286 |
$430,104 |
(7.6 |
)% |
$429,351 |
$408,594 |
5.1 |
% |
$407,726 |
$447,801 |
(8.9 |
)% |
Southwest |
|
|
|
|
|
|
|
|
|
|
(AZ, TX) |
Home |
|
411 |
|
485 |
(15.3 |
)% |
|
384 |
|
531 |
(27.7 |
)% |
|
536 |
|
717 |
(25.2 |
)% |
|
Dollars |
$141,458 |
$170,884 |
(17.2 |
)% |
$128,204 |
$183,260 |
(30.0 |
)% |
$191,071 |
$273,268 |
(30.1 |
)% |
|
Avg. Price |
$344,180 |
$352,338 |
(2.3 |
)% |
$333,865 |
$345,123 |
(3.3 |
)% |
$356,476 |
$381,126 |
(6.5 |
)% |
West |
|
|
|
|
|
|
|
|
|
|
(CA) |
Home |
|
153 |
|
162 |
(5.6 |
)% |
|
194 |
|
163 |
19.0 |
% |
|
359 |
|
285 |
26.0 |
% |
|
Dollars |
$69,397 |
$84,423 |
(17.8 |
)% |
$84,981 |
$95,052 |
(10.6 |
)% |
$158,379 |
$169,512 |
(6.6 |
)% |
|
Avg. Price |
$453,575 |
$521,130 |
(13.0 |
)% |
$438,046 |
$583,140 |
(24.9 |
)% |
$441,166 |
$594,780 |
(25.8 |
)% |
Consolidated Segment Total |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
1,027 |
|
1,173 |
(12.4 |
)% |
|
1,025 |
|
1,290 |
(20.5 |
)% |
|
2,004 |
|
2,272 |
(11.8 |
)% |
|
Dollars |
$399,302 |
$487,615 |
(18.1 |
)% |
$401,577 |
$531,415 |
(24.4 |
)% |
$814,370 |
$1,020,170 |
(20.2 |
)% |
|
Avg. Price |
$388,805 |
$415,699 |
(6.5 |
)% |
$391,782 |
$411,949 |
(4.9 |
)% |
$406,372 |
$449,018 |
(9.5 |
)% |
Unconsolidated Joint Ventures(2) |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
223 |
|
139 |
60.4 |
% |
|
116 |
|
108 |
7.4 |
% |
|
542 |
|
291 |
86.3 |
% |
|
Dollars |
$137,221 |
$80,300 |
70.9 |
% |
$58,099 |
$64,641 |
(10.1 |
)% |
$354,038 |
$173,222 |
104.4 |
% |
|
Avg. Price |
$615,338 |
$577,697 |
6.5 |
% |
$500,851 |
$598,531 |
(16.3 |
)% |
$653,206 |
$595,264 |
9.7 |
% |
Grand Total |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
1,250 |
|
1,312 |
(4.7 |
)% |
|
1,141 |
|
1,398 |
(18.4 |
)% |
|
2,546 |
|
2,563 |
(0.7 |
)% |
|
Dollars |
$536,523 |
$567,915 |
(5.5 |
)% |
$459,676 |
$596,056 |
(22.9 |
)% |
$1,168,408 |
$1,193,392 |
(2.1 |
)% |
|
Avg. Price |
$429,218 |
$432,862 |
(0.8 |
)% |
$402,871 |
$426,363 |
(5.5 |
)% |
$458,919 |
$465,623 |
(1.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
DELIVERIES INCLUDE EXTRAS |
Notes: |
(1)
Contracts are defined as new contracts signed during the period for
the purchase of homes, less cancellations of prior contracts. |
(2)
Represents home deliveries, home revenues and average prices for
our unconsolidated homebuilding joint ventures for the period. We
provide this data as a supplement to our consolidated results as an
indicator of the volume managed in our unconsolidated homebuilding
joint ventures. Our proportionate share of the income or loss of
unconsolidated homebuilding and land development joint ventures is
reflected as a separate line item in our consolidated financial
statements under “(Loss) from unconsolidated joint
ventures.” |
|
|
HOVNANIAN ENTERPRISES, INC. |
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE) |
(SEGMENT DATA UNCONSOLIDATED JOINT VENTURES
ONLY) |
(UNAUDITED) |
|
|
|
|
|
Three Months - January 31, 2018 |
|
|
|
|
|
Contracts(1) |
Deliveries |
Contract |
|
|
Three Months Ended |
Three Months Ended |
Backlog |
|
|
January 31, |
January 31, |
January 31, |
|
|
|
2018 |
|
2017 |
% Change |
|
2018 |
|
2017 |
% Change |
|
2018 |
|
2017 |
% Change |
Northeast |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
|
54 |
|
25 |
116.0 |
% |
|
30 |
|
6 |
400.0 |
% |
|
241 |
|
46 |
423.9 |
% |
(NJ, PA) |
Dollars |
$44,664 |
$12,075 |
269.9 |
% |
$14,900 |
$1,740 |
756.3 |
% |
$186,443 |
$20,598 |
805.2 |
% |
|
Avg. Price |
$827,111 |
$483,000 |
71.2 |
% |
$496,666 |
$290,000 |
71.3 |
% |
$773,623 |
$447,782 |
72.8 |
% |
Mid-Atlantic |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
|
25 |
|
17 |
47.1 |
% |
|
4 |
|
10 |
(60.0 |
)% |
|
32 |
|
47 |
(31.9 |
)% |
(DE, MD, VA, WV) |
Dollars |
$19,701 |
$9,428 |
109.0 |
% |
$3,968 |
$5,189 |
(23.5 |
)% |
$26,842 |
$34,328 |
(21.8 |
)% |
|
Avg. Price |
$788,040 |
$554,588 |
42.1 |
% |
$992,000 |
$518,900 |
91.1 |
% |
$838,813 |
$730,383 |
14.8 |
% |
Midwest |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
|
9 |
|
10 |
(10.0 |
)% |
|
6 |
|
7 |
(14.3 |
)% |
|
30 |
|
15 |
100.0 |
% |
(IL, OH) |
Dollars |
$6,438 |
$7,226 |
(10.9 |
)% |
$3,370 |
$5,616 |
(40.0 |
)% |
$21,787 |
$11,198 |
94.6 |
% |
|
Avg. Price |
$715,333 |
$722,600 |
(1.0 |
)% |
$561,666 |
$802,286 |
(30.0 |
)% |
$726,233 |
$746,533 |
(2.7 |
)% |
Southeast |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
|
58 |
|
35 |
65.7 |
% |
|
32 |
|
24 |
33.3 |
% |
|
104 |
|
99 |
5.1 |
% |
(FL, GA, SC) |
Dollars |
$26,071 |
$16,879 |
54.5 |
% |
$15,465 |
$9,840 |
57.2 |
% |
$47,416 |
$50,762 |
(6.6 |
)% |
|
Avg. Price |
$449,496 |
$482,260 |
(6.8 |
)% |
$483,281 |
$409,995 |
17.9 |
% |
$455,923 |
$512,748 |
(11.1 |
)% |
Southwest |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
|
49 |
|
12 |
308.3 |
% |
|
15 |
|
0 |
0.0 |
% |
|
91 |
|
19 |
378.9 |
% |
(AZ, TX) |
Dollars |
$28,357 |
$8,666 |
227.2 |
% |
$8,813 |
$0 |
0.0 |
% |
$52,796 |
$13,143 |
301.7 |
% |
|
Avg. Price |
$578,713 |
$722,171 |
(19.9 |
)% |
$587,533 |
$0 |
0.0 |
% |
$580,175 |
$691,742 |
(16.1 |
)% |
West |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
|
28 |
|
40 |
(30.0 |
)% |
|
29 |
|
61 |
(52.5 |
)% |
|
44 |
|
65 |
(32.3 |
)% |
(CA) |
Dollars |
$11,990 |
$26,026 |
(53.9 |
)% |
$11,583 |
$42,256 |
(72.6 |
)% |
$18,754 |
$43,193 |
(56.6 |
)% |
|
Avg. Price |
$428,216 |
$650,650 |
(34.2 |
)% |
$399,413 |
$692,721 |
(42.3 |
)% |
$426,227 |
$664,506 |
(35.9 |
)% |
Unconsolidated Joint Ventures(2) |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
223 |
|
139 |
60.4 |
% |
|
116 |
|
108 |
7.4 |
% |
|
542 |
|
291 |
86.3 |
% |
|
Dollars |
$137,221 |
$80,300 |
70.9 |
% |
$58,099 |
$64,641 |
(10.1 |
)% |
$354,038 |
$173,222 |
104.4 |
% |
|
Avg. Price |
$615,338 |
$577,697 |
6.5 |
% |
$500,851 |
$598,531 |
(16.3 |
)% |
$653,206 |
$595,264 |
9.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
DELIVERIES INCLUDE EXTRAS |
Notes: |
(1)
Contracts are defined as new contracts signed during the period for
the purchase of homes, less cancellations of prior contracts. |
(2)
Represents home deliveries, home revenues and average prices for
our unconsolidated homebuilding joint ventures for the period. We
provide this data as a supplement to our consolidated results as an
indicator of the volume managed in our unconsolidated homebuilding
joint ventures. Our proportionate share of the income or loss of
unconsolidated homebuilding and land development joint ventures is
reflected as a separate line item in our consolidated financial
statements under “(Loss) from unconsolidated joint ventures.” |
|
|
|
|
|
|
|
Contact: |
|
J. Larry Sorsby |
|
Jeffrey T. O’Keefe |
|
|
Executive Vice President & CFO |
|
Vice President, Investor Relations |
|
|
732-747-7800 |
|
732-747-7800 |
|
|
|
|
|
Hovnanian Enterprises (NYSE:HOV)
Historical Stock Chart
From Aug 2024 to Sep 2024
Hovnanian Enterprises (NYSE:HOV)
Historical Stock Chart
From Sep 2023 to Sep 2024