11% Sequential Increase in Consolidated
Community CountConsolidated Lots Controlled Grew
11% Year-over-YearFebruary Net Contracts Rebound
to Above Last Year’s Strong Levels
Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national
homebuilder, reported results for its fiscal first quarter ended
January 31, 2019.
“Our first quarter results were in line with our
expectations. During the quarter, when compared to the prior year,
we increased our consolidated land position, grew our earnings from
unconsolidated joint ventures and improved our pretax results,”
stated Ara K. Hovnanian, Chairman of the Board, President and Chief
Executive Officer. “After our weak November net contracts, we are
pleased that contracts per community for December, January and
February have rebounded to levels similar to last year’s strong
results. In fact, for February, contracts per community, community
count and absolute net contracts increased compared with the prior
year.”
“We continue to move forward towards our goal of
growing our community count and revenues, which ultimately should
lead to substantially improved levels of profitability. During the
first quarter, we increased our consolidated community count 11%
compared to October 31, 2018 and grew our consolidated land
position by 11% year over year as well. Our growth in land position
this quarter was entirely driven by an increase in our option lot
position, while our owned land position declined slightly. In
keeping with our strategy of high inventory turns and risk
mitigation, we now control 58% of our land via options. We remain
disciplined in our approach to underwriting new land opportunities
and believe that the strong U.S. economy, along with positive
demographic trends, should bode well for the housing market going
forward,” concluded Mr. Hovnanian.
RESULTS FOR THE THREE-MONTH PERIOD ENDED
JANUARY 31, 2019:
- Total revenues decreased to $380.6 million in the first quarter
of fiscal 2019, compared with $417.2 million in the first quarter
of fiscal 2018.
- While total revenues decreased $36.6 million, homebuilding
revenues for unconsolidated joint ventures increased $37.2 million
to $95.8 million for the first quarter ended January 31, 2019,
compared with $58.6 million in last year’s first
quarter.
- Homebuilding gross margin percentage, after cost of sales
interest expense and land charges, was 14.8% for both the first
quarter of fiscal 2019 and the prior year’s first
quarter.
- Homebuilding gross margin percentage, before cost of sales
interest expense and land charges was 17.8% for the first quarter
of fiscal 2019 compared with 17.9% in the same quarter one year
ago.
- For the first quarter of 2019, total SG&A decreased by $2.0
million, or 3.2%, year over year. Total SG&A was $60.4 million,
or 15.9% of total revenues, in the first quarter of fiscal 2019
compared with $62.4 million, or 14.9% of total revenues, in the
first quarter of fiscal 2018.
- Total interest expense was $32.5 million in the first quarter
of fiscal 2019 compared with $41.4 million in the first quarter of
fiscal 2018.
- Interest incurred (some of which was expensed and some of which
was capitalized) was $38.9 million for the first quarter of fiscal
2019 compared with $41.2 million in the same quarter one year
ago.
- Income from unconsolidated joint ventures was $9.6 million for
the quarter ended January 31, 2019 compared with a loss of $5.2
million in the first quarter of the previous year.
- Loss before income taxes for the quarter ended January 31, 2019
was $17.1 million compared with $30.5 million during the first
quarter of fiscal 2018.
- Loss before income taxes excluding land-related charges and
joint venture write-downs was $16.4 million during the first
quarter of fiscal 2019 compared with a loss before these items of
$29.4 million in the first quarter of fiscal 2018.
- Net loss was $17.5 million, or $0.12 per common share, in the
first quarter of fiscal 2019 compared with a net loss of $30.8
million, or $0.21 per common share, during the same quarter a year
ago.
- Contracts per community, including unconsolidated joint
ventures, decreased 7.9% to 7.0 contracts per community for the
quarter ended January 31, 2019 compared with 7.6 contracts per
community, including unconsolidated joint ventures, in last year’s
first quarter. Consolidated contracts per community decreased 6.8%
to 6.8 contracts per community for the first quarter of fiscal 2019
compared with 7.3 contracts per community in the first quarter of
fiscal 2018.
- As of the end of the first quarter of fiscal 2019, community
count, including unconsolidated joint ventures, was 153
communities. This was a 7.7% sequential increase compared with 142
communities at October 31, 2018 and a 7.3% year-over-year decrease
from 165 communities at January 31, 2018. The consolidated
community count was 137 as of January 31, 2019. This was an 11.4%
sequential increase compared with 123 communities at October 31,
2018 and a 2.1% year-over-year decrease from 140 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, 2019, decreased
14.6% to 1,068 homes from 1,250 homes for the same quarter last
year. The number of consolidated contracts decreased 9.1% to 934
homes, during the first quarter of fiscal 2019, compared with 1,027
homes during the first quarter of fiscal 2018.
- For February 2019, contracts per community, including
unconsolidated joint ventures, was 3.4 compared with 3.3 for the
same month one year ago. During February 2019, the number of
contracts, including unconsolidated joint ventures, increased to
533 homes from 528 homes in February 2018. As of February 28, 2019,
community count, including unconsolidated joint ventures, was 159
communities compared with 158 communities as of February 28,
2018.
- The dollar value of contract backlog, including unconsolidated
joint ventures, as of January 31, 2019, was $972.0 million, a
decrease of 16.8% compared with $1.17 billion as of January 31,
2018. The dollar value of consolidated contract backlog, as of
January 31, 2019, decreased 7.9% to $749.8 million compared with
$814.4 million as of January 31, 2018.
- For the quarter ended January 31, 2019, deliveries, including
unconsolidated joint ventures, decreased 1.9% to 1,119 homes
compared with 1,141 homes during the first quarter of fiscal 2018.
Consolidated deliveries were 967 homes for the first quarter of
fiscal 2019, a 5.7% decrease compared with 1,025 homes during the
same quarter a year ago.
- The contract cancellation rate, including unconsolidated joint
ventures, was 23% in the first quarter of fiscal 2019 compared with
20% in the first quarter of fiscal 2018. The consolidated contract
cancellation rate was 24% for the three months ended January 31,
2019 compared with 18% for the same quarter in fiscal 2018.
LIQUIDITY AND INVENTORY AS OF JANUARY 31,
2019:
- Total liquidity at the end of the of the first quarter of
fiscal 2019 was $215.0 million, well within our target range.
- In the first quarter of fiscal 2019, approximately 2,500 lots
were put under option or acquired in 26 communities, including
unconsolidated joint ventures.
- As of January 31, 2019, consolidated lots controlled increased
by 11.3% to 30,262 year over year from 27,183 lots at January 31,
2018. The consolidated lots under option at the end of the first
quarter of fiscal 2019 were 17,416 lots compared with 14,260
optioned lots at the end of last year’s first quarter. As of
January 31, 2019, the Company owned 12,846 lots compared with
12,923 owned lots at the end of the first quarter of fiscal
2018.
WEBCAST INFORMATION:
Hovnanian Enterprises will webcast its fiscal
2019 first quarter financial results conference call at 11:00 a.m.
E.T. on Thursday, March 7, 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 names K. Hovnanian® Homes and Brighton 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 (“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 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.
(Loss) before income taxes excluding
land-related charges and joint venture write-downs 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 and joint venture write-downs to (loss) before
income taxes is presented in a table attached to this earnings
release.
Total liquidity is comprised of $113.3
million of cash and cash equivalents, $12.7 million of restricted
cash required to collateralize letters of credit and $89.0 million
of availability under the senior secured revolving credit facility
as of January 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; (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) fluctuations in
interest rates and the availability of mortgage financing; (13)
increases in cancellations of agreements of sale; (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. |
January 31, 2019 |
Statements
of consolidated operations |
(In
thousands, except per share data) |
|
|
|
Three Months Ended |
|
|
|
January 31, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Total
revenues |
$380,594 |
|
|
$417,166 |
|
Costs and
expenses (1) |
|
407,262 |
|
|
|
442,461 |
|
Income
(loss) from unconsolidated joint ventures |
|
9,562 |
|
|
|
(5,176 |
) |
(Loss)
before income taxes |
|
(17,106 |
) |
|
|
(30,471 |
) |
Income tax
provision |
|
346 |
|
|
|
338 |
|
Net
(loss) |
$(17,452 |
) |
|
$(30,809 |
) |
|
|
|
|
|
|
Per share
data: |
|
|
|
Basic: |
|
|
|
|
|
Net (loss)
per common share |
$(0.12 |
) |
|
$(0.21 |
) |
|
Weighted
average number of |
|
|
|
|
|
common shares
outstanding (2) |
|
148,958 |
|
|
|
148,028 |
|
Assuming
dilution: |
|
|
|
|
Net (loss)
per common share |
$(0.12 |
) |
|
$(0.21 |
) |
|
Weighted
average number of |
|
|
|
|
|
common shares
outstanding (2) |
|
148,958 |
|
|
|
148,028 |
|
|
|
|
|
|
|
(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. |
January 31, 2019 |
Reconciliation of (loss) before income taxes excluding land-related
charges and joint venture write-downs to (loss) before income
taxes |
(In
thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
January 31, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
(Loss)
before income taxes |
$(17,106 |
) |
|
$(30,471 |
) |
Inventory
impairment loss and land option write-offs |
|
704 |
|
|
|
414 |
|
Unconsolidated joint venture investment write-downs |
|
- |
|
|
|
660 |
|
(Loss)
before income taxes excluding land-related charges and joint
venture write-downs (1) |
$(16,402 |
) |
|
$(29,397 |
) |
|
|
|
|
|
|
(1) (Loss)
before income taxes excluding land-related charges and joint
venture write-downs a is a non-GAAP financial measure. The most
directly comparable GAAP financial measure is (loss) before income
taxes. |
|
Hovnanian
Enterprises, Inc. |
|
|
|
January 31,
2019 |
|
|
|
Gross margin |
|
|
|
(In thousands) |
|
|
|
|
Homebuilding Gross Margin |
|
Three Months Ended |
|
January 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Sale of homes |
$362,135 |
|
|
$401,577 |
|
Cost of sales,
excluding interest expense and land charges (1) |
|
297,570 |
|
|
|
329,527 |
|
Homebuilding gross
margin, before cost of sales interest expense and land charges
(2) |
|
64,565 |
|
|
|
72,050 |
|
Cost of sales interest
expense, excluding land sales interest expense |
|
10,242 |
|
|
|
12,292 |
|
Homebuilding gross
margin, after cost of sales interest expense, before land charges
(2) |
|
54,323 |
|
|
|
59,758 |
|
Land charges |
|
704 |
|
|
|
414 |
|
Homebuilding gross
margin |
$53,619 |
|
|
$59,344 |
|
|
|
|
|
Gross margin
percentage |
|
14.8% |
|
|
|
14.8% |
|
Gross margin
percentage, before cost of sales interest expense and land charges
(2) |
|
17.8% |
|
|
|
17.9% |
|
Gross margin
percentage, after cost of sales interest expense, before land
charges (2) |
|
15.0% |
|
|
|
14.9% |
|
|
|
|
|
|
Land Sales Gross Margin |
|
Three Months Ended |
|
January 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Land and lot sales |
$7,508 |
|
|
$- |
|
Cost of sales,
excluding interest and land charges (1) |
|
7,357 |
|
|
|
- |
|
Land and lot sales
gross margin, excluding interest and land charges |
|
151 |
|
|
|
- |
|
Land and lot sales
interest |
|
- |
|
|
|
- |
|
Land and lot sales
gross margin, including interest and excluding land charges |
$151 |
|
|
$- |
|
|
|
|
|
|
|
|
|
(1) Does
not include cost associated with walking away from land options or
inventory impairment losses which are recorded as Inventory
impairment loss and land option write-offs in the Condensed
Consolidated Statements of Operations. |
(2)
Homebuilding gross margin, before cost of sales interest expense
and land charges, and homebuilding gross margin percentage, before
cost of sales interest expense and land charges, are non-GAAP
financial measures. The most directly comparable GAAP financial
measures are homebuilding gross margin and homebuilding gross
margin percentage, respectively. |
|
Hovnanian Enterprises, Inc. |
January 31, 2019 |
Reconciliation of adjusted EBITDA to net (loss) |
(In
thousands) |
|
Three Months Ended |
|
January 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Net (loss) |
$(17,452 |
) |
|
$(30,809 |
) |
Income tax
provision |
|
346 |
|
|
|
338 |
|
Interest expense |
|
32,515 |
|
|
|
41,423 |
|
EBIT (1) |
|
15,409 |
|
|
|
10,952 |
|
Depreciation and
amortization |
|
979 |
|
|
|
790 |
|
EBITDA (2) |
|
16,383 |
|
|
|
11,742 |
|
Inventory impairment
loss and land option write-offs |
|
704 |
|
|
|
414 |
|
Adjusted EBITDA
(3) |
$17,092 |
|
|
$12,156 |
|
|
|
|
|
Interest incurred |
$38,853 |
|
|
$41,165 |
|
|
|
|
|
Adjusted EBITDA to
interest incurred |
|
0.44 |
|
|
|
0.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
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. |
(2)
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. |
(3)
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. |
|
|
|
January 31,
2019 |
|
|
|
Interest incurred,
expensed and capitalized |
|
|
|
(In thousands) |
|
|
|
|
Three Months Ended |
|
January 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Interest capitalized at
beginning of period |
$68,117 |
|
|
$71,051 |
|
Plus interest
incurred |
|
38,853 |
|
|
|
41,165 |
|
Less interest
expensed |
|
32,515 |
|
|
|
41,423 |
|
Interest capitalized at
end of period (1) |
$74,455 |
|
|
$70,793 |
|
|
|
|
|
(1)
Capitalized interest amounts are shown gross before allocating any
portion of impairments to capitalized interest. |
|
HOVNANIAN ENTERPRISES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In Thousands)
|
January 31,2019 |
|
|
October 31,2018 |
|
(Unaudited) |
|
|
|
(1) |
|
ASSETS |
|
|
|
|
Homebuilding: |
|
|
|
|
Cash and
cash equivalents |
$113,314 |
|
|
$187,871 |
|
Restricted cash and cash
equivalents |
|
12,827 |
|
|
|
12,808 |
|
Inventories: |
|
|
|
|
Sold and
unsold homes and lots under development |
|
970,394 |
|
|
|
878,876 |
|
Land and
land options held for future development or sale |
|
95,361 |
|
|
|
111,368 |
|
Consolidated inventory not owned |
|
112,618 |
|
|
|
87,921 |
|
Total
inventories |
|
1,178,373 |
|
|
|
1,078,165 |
|
Investments in and advances to unconsolidated joint ventures |
|
128,858 |
|
|
|
123,694 |
|
Receivables, deposits and notes, net |
|
32,736 |
|
|
|
35,189 |
|
Property,
plant and equipment, net |
|
20,329 |
|
|
|
20,285 |
|
Prepaid
expenses and other assets |
|
42,890 |
|
|
|
39,150 |
|
Total
homebuilding |
|
1,529,327 |
|
|
|
1,497,162 |
|
|
|
|
|
|
Financial services |
|
94,396 |
|
|
|
164,880 |
|
Total assets |
$1,623,723 |
|
|
$1,662,042 |
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
Homebuilding: |
|
|
|
|
Nonrecourse mortgages secured by inventory, net of debt issuance
costs |
$121,483 |
|
|
$95,557 |
|
Accounts
payable and other liabilities |
|
266,630 |
|
|
|
304,899 |
|
Customers’ deposits |
|
30,495 |
|
|
|
30,086 |
|
Liabilities from inventory not owned, net of debt issuance
costs |
|
82,105 |
|
|
|
63,387 |
|
Revolving
and term loan credit facilities, net of debt issuance costs |
|
237,424 |
|
|
|
201,389 |
|
Notes
payable (net of discount, premium and debt issuance costs) and
accrued interest |
|
1,278,064 |
|
|
|
1,273,446 |
|
Total
homebuilding |
|
2,016,201 |
|
|
|
1,968,764 |
|
|
|
|
|
|
Financial services |
|
74,211 |
|
|
|
143,448 |
|
Income taxes
payable |
|
3,675 |
|
|
|
3,334 |
|
Total liabilities |
|
2,094,087 |
|
|
|
2,115,546 |
|
|
|
|
|
|
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, 2019 and at October 31, 2018 |
|
135,299 |
|
|
|
135,299 |
|
Common
stock, Class A, $0.01 par value – authorized 400,000,000 shares;
issued 144,667,689 shares at January 31, 2019 and 144,596,485
shares at October 31, 2018 |
|
1,447 |
|
|
|
1,446 |
|
Common
stock, Class B, $0.01 par value (convertible to Class A at time of
sale) – authorized 60,000,000 shares; issued 16,264,391 shares at
January 31, 2019 and 16,241,847 shares at October 31, 2018 |
|
162 |
|
|
|
162 |
|
Paid in
capital – common stock |
|
709,396 |
|
|
|
708,805 |
|
Accumulated deficit |
|
(1,201,308 |
) |
|
|
(1,183,856 |
) |
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, 2019 and
October 31, 2018 |
|
(115,360 |
) |
|
|
(115,360 |
) |
Total
stockholders’ equity deficit |
|
(470,364 |
) |
|
|
(453,504 |
) |
Total liabilities and
equity |
$1,623,723 |
|
|
$1,662,042 |
|
(1) Derived from the audited balance sheet as of October
31, 2018.
HOVNANIAN ENTERPRISES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In Thousands Except Per Share
Data)(Unaudited)
|
Three Months Ended January 31, |
|
2019 |
|
|
2018 |
|
Revenues: |
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
Sale of
homes |
$362,135 |
|
|
$401,577 |
|
Land
sales and other revenues |
|
8,851 |
|
|
|
4,701 |
|
Total
homebuilding |
|
370,986 |
|
|
|
406,278 |
|
Financial
services |
|
9,608 |
|
|
|
10,888 |
|
Total
revenues |
|
380,594 |
|
|
|
417,166 |
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
Cost of
sales, excluding interest |
|
304,927 |
|
|
|
329,527 |
|
Cost of
sales interest |
|
10,242 |
|
|
|
12,292 |
|
Inventory
impairment loss and land option write-offs |
|
704 |
|
|
|
414 |
|
Total
cost of sales |
|
315,873 |
|
|
|
342,233 |
|
Selling,
general and administrative |
|
42,736 |
|
|
|
43,231 |
|
Total
homebuilding expenses |
|
358,609 |
|
|
|
385,464 |
|
|
|
|
|
|
|
|
|
Financial
services |
|
8,474 |
|
|
|
8,341 |
|
Corporate
general and administrative |
|
17,664 |
|
|
|
19,135 |
|
Other
interest |
|
22,273 |
|
|
|
29,131 |
|
Other
operations |
|
242 |
|
|
|
390 |
|
Total
expenses |
|
407,262 |
|
|
|
442,461 |
|
Income (loss) from
unconsolidated joint ventures |
|
9,562 |
|
|
|
(5,176 |
) |
(Loss) before income
taxes |
|
(17,106 |
) |
|
|
(30,471 |
) |
State and federal
income tax provision: |
|
|
|
|
|
|
|
State |
|
346 |
|
|
|
338 |
|
Federal |
|
- |
|
|
|
- |
|
Total
income taxes |
|
346 |
|
|
|
338 |
|
Net (loss) |
$(17,452 |
) |
|
$(30,809 |
) |
|
|
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
Net
(loss) per common share |
$(0.12 |
) |
|
$(0.21 |
) |
Weighted-average number of common shares outstanding |
|
148,958 |
|
|
|
148,028 |
|
Assuming dilution: |
|
|
|
|
|
|
|
Net
(loss) per common share |
$(0.12 |
) |
|
$(0.21 |
) |
Weighted-average number of common shares outstanding |
|
148,958 |
|
|
|
148,028 |
|
|
|
|
|
|
|
|
|
HOVNANIAN ENTERPRISES, INC. |
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE) |
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT
VENTURES) |
(UNAUDITED) |
|
|
|
|
|
Three Months - January 31, 2019 |
|
|
|
|
|
Contracts (1) |
Deliveries |
Contract |
|
|
Three Months Ended |
Three Months Ended |
Backlog |
|
|
January 31, |
January 31, |
January 31, |
|
|
2019 |
2018 |
% Change |
2019 |
2018 |
% Change |
2019 |
2018 |
% Change |
Northeast |
|
|
|
|
|
|
|
|
|
|
(NJ,
PA) |
Home |
|
52 |
|
46 |
13.0 |
% |
|
22 |
|
40 |
(45.0) |
% |
|
81 |
|
104 |
(22.1) |
% |
|
Dollars |
$34,950 |
$25,363 |
37.8 |
% |
$12,505 |
$20,192 |
(38.1) |
% |
$52,941 |
$56,949 |
(7.0) |
% |
|
Avg.
Price |
$672,115 |
$551,370 |
21.9 |
% |
$568,409 |
$504,800 |
12.6 |
% |
$653,593 |
$547,582 |
19.4 |
% |
Mid-Atlantic |
|
|
|
|
|
|
|
|
|
|
(DE, MD, VA, WV) |
Home |
|
151 |
|
125 |
20.8 |
% |
|
111 |
|
135 |
(17.8) |
% |
|
336 |
|
318 |
5.7 |
% |
|
Dollars |
$81,514 |
$63,213 |
29.0 |
% |
$53,179 |
$71,009 |
(25.1) |
% |
$208,881 |
$185,939 |
12.3 |
% |
|
Avg.
Price |
$539,828 |
$505,704 |
6.7 |
% |
$479,090 |
$525,988 |
(8.9) |
% |
$621,670 |
$584,715 |
6.3 |
% |
Midwest |
|
|
|
|
|
|
|
|
|
|
(IL, OH) |
Home |
|
127 |
|
165 |
(23.0) |
% |
|
149 |
|
140 |
6.4 |
% |
|
372 |
|
407 |
(8.6) |
% |
|
Dollars |
$37,046 |
$49,416 |
(25.0) |
% |
$44,889 |
$40,517 |
10.8 |
% |
$99,306 |
$107,869 |
(7.9) |
% |
|
Avg.
Price |
$291,701 |
$299,493 |
(2.6) |
% |
$301,268 |
$289,405 |
4.1 |
% |
$266,952 |
$265,034 |
0.7 |
% |
Southeast |
|
|
|
|
|
|
|
|
|
|
(FL, GA, SC) |
Home |
|
95 |
|
127 |
(25.2) |
% |
|
108 |
|
132 |
(18.2) |
% |
|
238 |
|
280 |
(15.0) |
% |
|
Dollars |
$40,460 |
$50,455 |
(19.8) |
% |
$43,883 |
$56,674 |
(22.6) |
% |
$104,714 |
$114,163 |
(8.3) |
% |
|
Avg.
Price |
$425,895 |
$397,286 |
7.2 |
% |
$406,324 |
$429,351 |
(5.4) |
% |
$439,975 |
$407,726 |
7.9 |
% |
Southwest |
|
|
|
|
|
|
|
|
|
|
(AZ, TX) |
Home |
|
362 |
|
411 |
(11.9) |
% |
|
365 |
|
384 |
(4.9) |
% |
|
520 |
|
536 |
(3.0) |
% |
|
Dollars |
$115,338 |
$141,458 |
(18.5) |
% |
$117,863 |
$128,204 |
(8.1) |
% |
$178,329 |
$191,071 |
(6.7) |
% |
|
Avg.
Price |
$318,613 |
$344,180 |
(7.4) |
% |
$322,912 |
$333,865 |
(3.3) |
% |
$342,940 |
$356,476 |
(3.8) |
% |
West |
|
|
|
|
|
|
|
|
|
|
(CA) |
Home |
|
147 |
|
153 |
(3.9) |
% |
|
212 |
|
194 |
9.3 |
% |
|
246 |
|
359 |
(31.5) |
% |
|
Dollars |
$57,018 |
$69,397 |
(17.8) |
% |
$89,816 |
$84,981 |
5.7 |
% |
$105,650 |
$158,379 |
(33.3) |
% |
|
Avg.
Price |
$387,878 |
$453,575 |
(14.5) |
% |
$423,660 |
$438,046 |
(3.3) |
% |
$429,472 |
$441,166 |
(2.7) |
% |
Consolidated |
|
|
|
|
|
|
|
|
|
|
Total |
Home |
|
934 |
|
1,027 |
(9.1) |
% |
|
967 |
|
1,025 |
(5.7) |
% |
|
1,793 |
|
2,004 |
(10.5) |
% |
|
Dollars |
$366,326 |
$399,302 |
(8.3) |
% |
$362,135 |
$401,577 |
(9.8) |
% |
$749,821 |
$814,370 |
(7.9) |
% |
|
Avg.
Price |
$392,212 |
$388,805 |
0.9 |
% |
$374,493 |
$391,782 |
(4.4) |
% |
$418,194 |
$406,372 |
2.9 |
% |
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
Joint Ventures (2) |
Home |
|
134 |
|
223 |
(39.9) |
% |
|
152 |
|
116 |
31.0 |
% |
|
348 |
|
542 |
(35.8) |
% |
|
Dollars |
$85,569 |
$137,221 |
(37.6) |
% |
$95,027 |
$58,099 |
63.6 |
% |
|
$222,223 |
$354,038 |
(37.2) |
% |
|
Avg.
Price |
$638,575 |
$615,338 |
3.8 |
% |
$625,178 |
$500,851 |
24.8 |
% |
$638,572 |
$653,206 |
(2.2) |
% |
Grand |
|
|
|
|
|
|
|
|
|
|
Total |
Home |
|
1,068 |
|
1,250 |
(14.6) |
% |
|
1,119 |
|
1,141 |
(1.9) |
% |
|
2,141 |
|
2,546 |
(15.9) |
% |
|
Dollars |
$451,895 |
$536,523 |
(15.8) |
% |
$457,162 |
$459,676 |
(0.5) |
% |
$972,044 |
$1,168,408 |
(16.8) |
% |
|
Avg.
Price |
$423,123 |
$429,218 |
(1.4) |
% |
$408,545 |
$402,871 |
1.4 |
% |
$454,014 |
$458,919 |
(1.1) |
% |
|
|
|
|
|
|
|
|
|
|
|
DELIVERIES INCLUDE EXTRAS |
Notes: |
(1)
Contracts are defined as new contracts signed during the period for
the purchase of homes, less cancellations of prior contracts.(2)
Represents home deliveries, home revenues and average prices for
our unconsolidated homebuilding joint ventures for the period. We
provide this data as a supplement to our consolidated results as an
indicator of the volume managed in our unconsolidated homebuilding
joint ventures. Our proportionate share of the income or loss of
unconsolidated homebuilding and land development joint ventures is
reflected as a separate line item in our consolidated financial
statements under “Income (loss) from unconsolidated joint
ventures”. |
HOVNANIAN ENTERPRISES, INC. |
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE) |
(SEGMENT DATA FOR UNCONSOLIDATED JOINT VENTURES
ONLY) |
(UNAUDITED) |
|
|
|
|
|
Three Months - January 31, 2019 |
|
|
|
|
|
Contracts (1) |
Deliveries |
Contract |
|
|
Three Months Ended |
Three Months Ended |
Backlog |
|
|
January 31, |
January 31, |
January 31, |
|
|
2019 |
2018 |
% Change |
2019 |
2018 |
% Change |
2019 |
2018 |
% Change |
Northeast |
|
|
|
|
|
|
|
|
|
|
(unconsolidated
joint ventures) |
Home |
|
50 |
|
54 |
(7.4) |
% |
|
56 |
|
30 |
86.7 |
% |
|
113 |
|
241 |
(53.1) |
% |
(NJ, PA) |
Dollars |
$38,853 |
$44,664 |
(13.0) |
% |
$42,425 |
$14,900 |
184.7 |
% |
$90,794 |
$186,443 |
(51.3) |
% |
|
Avg.
Price |
$777,060 |
$827,111 |
(6.1) |
% |
$757,589 |
$496,666 |
52.5 |
% |
$803,487 |
$773,623 |
3.9 |
% |
Mid-Atlantic |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
|
13 |
|
25 |
(48.0) |
% |
|
10 |
|
4 |
150.0 |
% |
|
27 |
|
32 |
(15.6) |
% |
(DE, MD, VA, WV) |
Dollars |
$11,062 |
$19,701 |
(43.9) |
% |
$8,589 |
$3,968 |
116.5 |
% |
$21,312 |
$26,842 |
(20.6) |
% |
|
Avg.
Price |
$850,923 |
$788,040 |
8.0 |
% |
$858,900 |
$992,000 |
(13.4) |
% |
$789,333 |
$838,813 |
(5.9) |
% |
Midwest |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
|
5 |
|
9 |
(44.4) |
% |
|
7 |
|
6 |
16.7 |
% |
|
7 |
|
30 |
(76.7) |
% |
(IL, OH) |
Dollars |
$2,609 |
$6,438 |
(59.5) |
% |
$4,441 |
$3,370 |
31.8 |
% |
$4,243 |
$21,787 |
(80.5) |
% |
|
Avg.
Price |
$521,800 |
$715,333 |
(27.1) |
% |
$634,429 |
$561,666 |
13.0 |
% |
$606,143 |
$726,233 |
(16.5) |
% |
Southeast |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
|
25 |
|
58 |
(56.9) |
% |
|
32 |
|
32 |
0.0 |
% |
|
115 |
|
104 |
10.6 |
% |
(FL, GA, SC) |
Dollars |
$13,092 |
$26,071 |
(49.8) |
% |
$15,589 |
$15,465 |
0.8 |
% |
$60,758 |
$47,416 |
28.1 |
% |
|
Avg.
Price |
$523,680 |
$449,496 |
16.5 |
% |
$487,156 |
$483,281 |
0.8 |
% |
$528,330 |
$455,923 |
15.9 |
% |
Southwest |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
|
26 |
|
49 |
(46.9) |
% |
|
29 |
|
15 |
93.3 |
% |
|
64 |
|
91 |
(29.7) |
% |
(AZ, TX) |
Dollars |
$14,524 |
$28,357 |
(48.8) |
% |
$17,692 |
$8,813 |
100.7 |
% |
$37,296 |
$52,796 |
(29.4) |
% |
|
Avg.
Price |
$558,615 |
$578,713 |
(3.5) |
% |
$610,069 |
$587,533 |
3.8 |
% |
$582,750 |
$580,175 |
0.4 |
% |
West |
|
|
|
|
|
|
|
|
|
|
(unconsolidated joint ventures) |
Home |
|
15 |
|
28 |
(46.4) |
% |
|
18 |
|
29 |
(37.9) |
% |
|
22 |
|
44 |
(50.0) |
% |
(CA) |
Dollars |
$5,429 |
$11,990 |
(54.7) |
% |
$6,291 |
$11,583 |
(45.7) |
% |
$7,820 |
$18,754 |
(58.3) |
% |
|
Avg.
Price |
$361,933 |
$428,216 |
(15.5) |
% |
$349,500 |
$399,413 |
(12.5) |
% |
$355,455 |
$426,227 |
(16.6) |
% |
Unconsolidated Joint Ventures (2) |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
134 |
|
223 |
(39.9) |
% |
|
152 |
|
116 |
31.0 |
% |
|
348 |
|
542 |
(35.8) |
% |
|
Dollars |
$85,569 |
$137,221 |
(37.6) |
% |
$95,027 |
$58,099 |
63.6 |
% |
$222,223 |
$354,038 |
(37.2) |
% |
|
Avg.
Price |
$638,575 |
$615,338 |
3.8 |
% |
$625,178 |
$500,851 |
24.8 |
% |
$638,572 |
$653,206 |
(2.2) |
% |
|
|
|
|
|
|
|
|
|
|
|
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 “Income (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 |
|
|
|
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