Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national
homebuilder, reported results for its fiscal first quarter ended
January 31, 2021.
RESULTS FOR THE FIRST
QUARTER ENDED JANUARY 31, 2021: |
|
- Total revenues increased 16.3% to
$574.7 million in the first quarter of fiscal 2021, compared with
$494.1 million in the same quarter of the prior year.
- Homebuilding gross margin
percentage, after cost of sales interest expense and land charges,
increased 440 basis points to 17.3% for the three months ended
January 31, 2021 compared with 12.9% during the same period a year
ago.
- Homebuilding gross margin
percentage, before cost of sales interest expense and land charges,
increased 340 basis points to 20.7% during the fiscal 2021 first
quarter compared with 17.3% in last year’s first quarter.
- Total SG&A was $63.7 million,
or 11.1% of total revenues, in the fiscal 2021 first quarter
compared with $60.4 million, or 12.2% of total revenues, in the
previous year’s first quarter.
- Total interest expense was $41.1
million for the first quarter of fiscal 2021 compared with $43.1
million during the first quarter of fiscal 2020.
- Income from unconsolidated joint
ventures was $1.9 million for the first quarter ended January 31,
2021 compared with $1.5 million in the fiscal 2020 first
quarter.
- Income before income taxes for the first quarter of fiscal 2021
was $19.6 million compared with a loss of $7.4 million in the first
quarter of the prior fiscal year.
- Adjusted pretax income, which is
income before income taxes excluding land-related charges and gain
on extinguishment of debt, was $21.5 million in the first quarter
of fiscal 2021 compared with a loss before these items of $14.1
million in the fiscal 2020 first quarter.
- Net income was $19.0 million, or
$2.75 per diluted common share, for the three months ended January
31, 2021 compared with a net loss of $9.1 million, or $1.49 per
common share, in the first quarter of the previous fiscal
year.
- EBITDA increased 67.8% to $62.1
million for the first quarter of fiscal 2021 compared with $37.0
million in the same quarter of the prior year.
- For the first quarter of fiscal
2021, Adjusted EBITDA increased 110.6% to $63.9 million compared
with $30.4 million in the first quarter of fiscal 2020.
- Financial services income before
income taxes was $9.1 million for the first quarter of fiscal 2021,
up 105.0% compared with $4.5 million in the first quarter of fiscal
2020.
- Consolidated contracts per
community increased 74.2% to 16.9 contracts per community for the
first quarter ended January 31, 2021 compared with 9.7 contracts
per community in last year’s first quarter. Contracts per
community, including domestic unconsolidated joint ventures(1),
increased 69.9% to 15.8 for the first quarter of fiscal 2021
compared with 9.3 for the first quarter of fiscal 2020.
- The number of consolidated
contracts increased 34.5% to 1,778 homes during the fiscal 2021
first quarter, compared with 1,322 homes in last year’s first
quarter. The number of contracts, including domestic unconsolidated
joint ventures, for the three months ended January 31, 2021
increased 31.5% to 1,962 homes from 1,492 homes during the same
quarter a year ago.
- As of the end of the first quarter
of fiscal 2021, community count, including domestic unconsolidated
joint ventures, was 124 communities, compared with 160 communities
at January 31, 2020. Consolidated community count was 105 as of
January 31, 2021, compared with 136 communities at the end of the
previous year’s first quarter. The decline was primarily a result
of selling out of communities at a faster than anticipated pace and
delayed community openings.
- Despite 1,385 first quarter
consolidated deliveries, consolidated lots controlled increased by
733 lots sequentially to 26,782 at January 31, 2021 from 26,049
lots at October 31, 2020, which illustrated our ability to control
more lots than we delivered.
- Plan to reactivate approximately
half of the lots representing multiple products in a large 1,400
home masterplan community in Northern California.
- During February 2021, we raised
home prices more aggressively to further increase margins and
attempt to slow down our sales pace. After experiencing a 100.0%
year-over-year increase in contracts per community in the month of
January 2021, the contracts per community for February 2021 only
increased 27.1% to 6.1 compared with 4.8 for the same month one
year ago.
- The dollar value of February 2021
consolidated contracts increased 8.6% to $283.0 million compared
with $260.7 million in February last year; however, the number of
consolidated contracts declined to 613 homes compared to 647 homes
in February 2020.
- The dollar value of consolidated
contract backlog, as of January 31, 2021, increased 85.2% to $1.67
billion compared with $899.6 million as of January 31, 2020. The
dollar value of contract backlog, including domestic unconsolidated
joint ventures, as of January 31, 2021, increased 70.3% to $1.88
billion compared with $1.10 billion as of January 31, 2020.
- Consolidated deliveries increased
12.1% to 1,385 homes in the fiscal 2021 first quarter compared with
1,236 homes in the previous year’s first quarter. For the fiscal
2021 first quarter, deliveries, including domestic unconsolidated
joint ventures, increased 8.6% to 1,504 homes compared with 1,385
homes during the first quarter of fiscal 2020.
- The contract cancellation rate for
consolidated contracts was 17% for the first quarter ended January
31, 2021 compared with 19% in the fiscal 2020 first quarter. The
contract cancellation rate for contracts including domestic
unconsolidated joint ventures was 16% for the first quarter of
fiscal 2021 compared with 19% in the first quarter of the prior
year.
(1)When we refer to “Domestic
Unconsolidated Joint Ventures”, we are excluding results from our
single community unconsolidated joint venture in the Kingdom of
Saudi Arabia (KSA).
LIQUIDITY AND INVENTORY AS OF JANUARY 31,
2021: |
|
- During the first quarter of fiscal
2021, land and land development spending was $178.6 million, an
increase compared with $117.9 million in last year’s first
quarter.
- Total liquidity at the end of the
first quarter of fiscal 2021 was $306.4 million, above our targeted
liquidity range of $170 million to $245 million.
- Delivered 1,385 homes, but
contracted to buy 2,140 new lots, net of walk aways, during the
first quarter of fiscal 2021.
- As of January 31, 2021,
consolidated lots controlled totaled 26,782, which, based on
trailing twelve-month deliveries, equaled a 4.6 years’ supply.
- Assuming no changes in current
market conditions, for the second quarter of fiscal 2021, total
revenues are expected to be between $700 million and $750 million;
adjusted pretax income is expected to be between $30 million and
$45 million and adjusted EBITDA is expected to be between $75
million and $90 million.
- Assuming no changes in current
market conditions, for all of fiscal 2021, total revenues are
expected to be between $2.65 billion and $2.80 billion; adjusted
pretax income is expected to be between $140 million and $160
million and adjusted EBITDA is expected to be between $300 million
and $340 million.
(2)The Company
cannot provide a reconciliation between its non-GAAP projections
and the most directly comparable GAAP measures without unreasonable
efforts because it is unable to predict with reasonable certainty
the ultimate outcome of certain significant items required for the
reconciliation. These items include, but are not limited to,
land-related charges, inventory impairment loss and land option
write-offs and loss (gain) on extinguishment of debt. These items
are uncertain, depend on various factors and could have a material
impact on GAAP reported results.
COMMENTS FROM
MANAGEMENT: |
|
“We are pleased with our fiscal 2021 first
quarter results, as they exceeded the guidance we provided on our
last conference call for gross margin percentage, total SG&A
ratio, adjusted EBITDA and adjusted pretax income,” stated Ara K.
Hovnanian, Chairman of the Board, President and Chief Executive
Officer. “Contracts per community this quarter increased 74%,
clearly indicating that demand for our homes remains very strong.
We plan to continue to increase home prices in order to stay ahead
of rising costs, maximize our profits and to better align our sales
pace with our production capacity.”
“Our 85% increase in backlog dollars to $1.67
billion at the end of the first quarter sets us on solid footing to
achieve dramatic year over year improvements in our fiscal 2021
financial performance. We ended the quarter with $306 million of
liquidity, which provides us with ample capital to control land for
future communities. We have made great progress in our land
position, and virtually all the land we need to meet our projected
deliveries in fiscal 2021 and 2022 is already under contract.
Today, our land acquisition teams are primarily focused on
obtaining control of land for home deliveries in fiscal 2023 and
beyond,” said Mr. Hovnanian.
“We remain committed to further strengthening
our balance sheet. In July 2021, one year prior to maturity, we
currently plan to pay off in full the $111 million of our 10.0%
senior secured notes due July 2022. Additionally, we also presently
intend to pay off the remaining balance of $70 million of our 10.5%
senior secured notes due July 2024 in advance of their maturity.
The combination of our expected improved financial performance this
year and the potential DTA valuation allowance reversal is expected
to meaningfully increase our year end book value per share. Those
increases to book value combined with executing on our debt
reduction strategy this year would significantly improve our
balance sheet,” stated J. Larry Sorsby, Executive Vice President
and Chief Financial Officer.
Hovnanian Enterprises will webcast its fiscal
2021 first quarter financial results conference call at 11:00 a.m.
E.T. on Tuesday, March 2, 2021. The webcast can be accessed live
through the “Investor Relations” section of Hovnanian Enterprises’
website at http://www.khov.com. For those who are not available to
listen to the live webcast, an archive of the broadcast will be
available under the “Past Events” section of the Investor Relations
page on the Hovnanian website at http://www.khov.com. The archive
will be available for 12 months.
ABOUT
HOVNANIAN ENTERPRISES, INC.: |
|
Hovnanian Enterprises, Inc., founded in 1959 by
Kevork S. Hovnanian, is headquartered in Matawan, New Jersey and,
through its subsidiaries, is one of the nation’s largest
homebuilders with operations in Arizona, California, Delaware,
Florida, Georgia, Illinois, Maryland, New Jersey, Ohio,
Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. and
West Virginia. The Company’s homes are marketed and sold under the
trade name K. Hovnanian® Homes. Additionally, the Company’s
subsidiaries, as developers of K. Hovnanian’s® Four Seasons
communities, make the Company one of the nation’s largest builders
of active lifestyle communities.
Additional information on Hovnanian Enterprises,
Inc. can be accessed through the “Investor Relations” section of
the Hovnanian Enterprises’ website at http://www.khov.com. To be
added to Hovnanian's investor e-mail list, please send an e-mail to
IR@khov.com or sign up at http://www.khov.com.
NON-GAAP FINANCIAL
MEASURES: |
|
Consolidated earnings before interest
expense and income taxes (“EBIT”) and before depreciation and
amortization (“EBITDA”) and before inventory impairment loss and
land option write-offs and 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 income (loss). The reconciliation for
historical periods of EBIT, EBITDA and Adjusted EBITDA to net
income (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.
Adjusted pretax income, which is defined
as income before income taxes excluding land-related charges and
gain on extinguishment of debt is a non-GAAP financial measure. The
most directly comparable GAAP financial measure is income (loss)
before income taxes. The reconciliation for historical periods of
adjusted pretax income to income (loss) before income taxes is
presented in a table attached to this earnings
release.
Total liquidity is comprised of $172.1
million of cash and cash equivalents, $9.3 million of restricted
cash required to collateralize letters of credit and $125.0 million
availability under the senior secured revolving credit facility as
of January 31, 2021.
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) the outbreak and
spread of COVID-19 and the measures that governments, agencies, law
enforcement and/or health authorities implement to address it; (2)
changes in general and local economic, industry and business
conditions and impacts of a significant homebuilding downturn; (3)
adverse weather and other environmental conditions and natural
disasters; (4) the seasonality of the Company’s business; (5) the
availability and cost of suitable land and improved lots and
sufficient liquidity to invest in such land and lots; (6) shortages
in, and price fluctuations of, raw materials and labor, including
due to changes in trade policies and the imposition of tariffs and
duties on homebuilding materials and products and related trade
disputes with, and retaliatory measures taken by, other countries;
(7) reliance on, and the performance of, subcontractors; (8)
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; (9) increases in cancellations of agreements of sale;
(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) legal claims brought against
us and not resolved in our favor, such as product liability
litigation, warranty claims and claims made by mortgage investors;
(13) levels of competition; (14) utility shortages and outages or
rate fluctuations; (15) information technology failures and data
security breaches; (16) negative publicity; (17) high leverage and
restrictions on the Company’s operations and activities imposed by
the agreements governing the Company’s outstanding indebtedness;
(18) availability and terms of financing to the Company; (19) the
Company’s sources of liquidity; (20) changes in credit ratings;
(21) government regulation, including regulations concerning
development of land, the home building, sales and customer
financing processes, tax laws and the environment; (22) operations
through unconsolidated joint ventures with third parties; (23)
significant influence of the Company’s controlling stockholders;
(24) availability of net operating loss carryforwards; (25) loss of
key management personnel or failure to attract qualified personnel;
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, 2020 and the Company’s Quarterly
Reports on Form 10-Q for the quarterly periods during fiscal 2021
and subsequent filings with the Securities and Exchange Commission.
Except as otherwise required by applicable securities laws, we
undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, changed circumstances or any other
reason.
Hovnanian
Enterprises, Inc. |
January
31, 2021 |
Statements of
consolidated operations |
(In thousands,
except per share data) |
|
|
|
|
Three Months Ended |
|
|
|
|
January 31, |
|
|
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Total
revenues |
$574,664 |
|
$494,056 |
|
Costs and expenses
(1) |
|
556,995 |
|
|
512,488 |
|
Gain on
extinguishment of debt |
|
- |
|
|
9,456 |
|
Income from
unconsolidated joint ventures |
|
1,916 |
|
|
1,540 |
|
Income (loss)
before income taxes |
|
19,585 |
|
|
(7,436 |
) |
Income tax
provision |
|
626 |
|
|
1,712 |
|
Net income
(loss) |
$18,959 |
|
$(9,148 |
) |
|
|
|
|
|
|
|
Per share
data: |
|
|
|
Basic: |
|
|
|
|
|
|
Net income (loss)
per common share |
$2.79 |
|
$(1.49 |
) |
|
Weighted average
number of |
|
|
|
|
|
common shares
outstanding (2) |
|
6,225 |
|
|
6,161 |
|
Assuming
dilution: |
|
|
|
|
Net income (loss)
per common share |
$2.75 |
|
$(1.49 |
) |
|
Weighted average
number of |
|
|
|
|
|
common shares
outstanding (2) |
|
6,303 |
|
|
6,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2021 |
Reconciliation of
income (loss) before income taxes excluding land-related charges
and gain on extinguishment of debt to income (loss) before income
taxes |
(In
thousands) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
January 31, |
|
|
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
Income (loss)
before income taxes |
$19,585 |
|
$(7,436 |
) |
Inventory
impairment loss and land option write-offs |
|
1,877 |
|
|
2,828 |
|
Gain on
extinguishment of debt |
|
- |
|
|
(9,456 |
) |
Income (loss)
before income taxes excluding land-related charges and gain on
extinguishment of debt (1) |
$21,462 |
|
$(14,064 |
) |
|
|
(1) Income (loss)
before income taxes excluding land-related charges and gain on
extinguishment of debt is a non-GAAP financial measure. The most
directly comparable GAAP financial measure is income (loss) before
income taxes. |
Hovnanian
Enterprises, Inc. |
January
31, 2021 |
Gross margin |
(In
thousands) |
|
Homebuilding Gross Margin |
|
Three Months Ended |
|
January 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
(Unaudited) |
Sale of homes |
$551,365 |
|
|
$479,233 |
|
Cost of sales, excluding
interest expense and land charges (1) |
|
437,372 |
|
|
|
396,318 |
|
Homebuilding gross margin,
before cost of sales interest expense and land charges (2) |
|
113,993 |
|
|
|
82,915 |
|
Cost of sales interest
expense, excluding land sales interest expense |
|
16,717 |
|
|
|
18,136 |
|
Homebuilding gross margin,
after cost of sales interest expense, before land charges (2) |
|
97,276 |
|
|
|
64,779 |
|
Land charges |
|
1,877 |
|
|
|
2,828 |
|
Homebuilding gross margin |
$95,399 |
|
|
$61,951 |
|
|
|
|
|
Homebuilding gross margin
percentage |
|
17.3 |
% |
|
|
12.9 |
% |
Homebuilding gross margin
percentage, before cost of sales interest expense and land charges
(2) |
|
20.7 |
% |
|
|
17.3 |
% |
Homebuilding gross margin
percentage, after cost of sales interest expense, before land
charges (2) |
|
17.6 |
% |
|
|
13.5 |
% |
|
|
|
|
|
Land Sales Gross Margin |
|
Three Months Ended |
|
January 31, |
|
|
2021 |
|
|
|
2020 |
|
|
(Unaudited) |
Land and lot sales |
$3,362 |
|
|
$25 |
|
Land and lot sales cost of
sales, excluding interest and land charges (1) |
|
2,266 |
|
|
|
37 |
|
Land and lot sales gross
margin, excluding interest and land charges |
|
1,096 |
|
|
|
(12 |
) |
Land and lot sales
interest |
|
448 |
|
|
|
- |
|
Land and lot sales gross
margin, including interest and excluding land charges |
$648 |
|
|
$(12 |
) |
|
|
|
|
|
|
|
|
(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, 2021 |
Reconciliation of
adjusted EBITDA to net income (loss) |
(In
thousands) |
|
Three Months Ended |
|
January 31, |
|
|
2021 |
|
|
2020 |
|
|
|
|
(Unaudited) |
Net income (loss) |
$18,959 |
|
$(9,148 |
) |
Income tax provision |
|
626 |
|
|
1,712 |
|
Interest expense |
|
41,140 |
|
|
43,139 |
|
EBIT (1) |
|
60,725 |
|
|
35,703 |
|
Depreciation and
amortization |
|
1,338 |
|
|
1,279 |
|
EBITDA (2) |
|
62,063 |
|
|
36,982 |
|
Inventory impairment loss and
land option write-offs |
|
1,877 |
|
|
2,828 |
|
Gain on extinguishment of
debt |
|
- |
|
|
(9,456 |
) |
Adjusted EBITDA (3) |
$63,940 |
|
$30,354 |
|
|
|
|
|
Interest incurred |
$41,457 |
|
$44,334 |
|
|
|
|
|
Adjusted EBITDA to interest
incurred |
|
1.54 |
|
|
0.68 |
|
|
|
(1) EBIT is a
non-GAAP financial measure. The most directly comparable GAAP
financial measure is net income (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 income (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 income (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, 2021 |
Interest incurred,
expensed and capitalized |
(In
thousands) |
|
Three Months Ended |
|
January 31, |
|
|
2021 |
|
|
2020 |
|
|
|
|
(Unaudited) |
Interest capitalized at
beginning of period |
$65,010 |
|
$71,264 |
|
Plus interest incurred |
|
41,457 |
|
|
44,334 |
|
Less interest expensed |
|
41,140 |
|
|
43,139 |
|
Less interest contributed to
unconsolidated joint venture (1) |
|
- |
|
|
4,580 |
|
Interest capitalized at end of
period (2) |
$65,327 |
|
$67,879 |
|
|
|
(1) Represents
capitalized interest which was included as part of the assets
contributed to the joint venture the company entered into during
the three months ended January 31, 2020. There was no impact to the
Condensed Consolidated Statement of Operations as a result of this
transaction. |
(2) Capitalized
interest amounts are shown gross before allocating any portion of
impairments to capitalized interest. |
HOVNANIAN ENTERPRISES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)
|
January 31, |
|
October 31, |
|
|
2021 |
|
2020 |
|
|
(Unaudited) |
|
(1) |
|
ASSETS |
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$172,098 |
|
|
$262,489 |
|
|
Restricted cash and cash equivalents |
|
|
12,628 |
|
|
|
14,731 |
|
|
Inventories: |
|
|
|
|
|
|
Sold and unsold homes and lots under development |
|
|
1,011,893 |
|
|
|
921,594 |
|
|
Land and land options held for future development or sale |
|
|
103,276 |
|
|
|
91,957 |
|
|
Consolidated inventory not owned |
|
|
165,980 |
|
|
|
182,224 |
|
|
Total inventories |
|
|
1,281,149 |
|
|
|
1,195,775 |
|
|
Investments in and advances to unconsolidated joint ventures |
|
|
93,509 |
|
|
|
103,164 |
|
|
Receivables, deposits and notes, net |
|
|
41,240 |
|
|
|
33,686 |
|
|
Property, plant and equipment, net |
|
|
17,812 |
|
|
|
18,185 |
|
|
Prepaid expenses and other assets |
|
|
60,667 |
|
|
|
58,705 |
|
|
Total homebuilding |
|
|
1,679,103 |
|
|
|
1,686,735 |
|
|
|
|
|
|
|
|
|
Financial services |
|
|
171,596 |
|
|
|
140,607 |
|
|
Total assets |
|
$1,850,699 |
|
|
$1,827,342 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
Nonrecourse mortgages secured by inventory, net of debt issuance
costs |
|
$127,264 |
|
|
$135,122 |
|
|
Accounts payable and other liabilities |
|
|
328,806 |
|
|
|
359,274 |
|
|
Customers’ deposits |
|
|
57,261 |
|
|
|
48,286 |
|
|
Liabilities from inventory not owned, net of debt issuance
costs |
|
|
119,432 |
|
|
|
131,204 |
|
|
Senior notes and credit facilities (net of discounts, premiums and
debt issuance costs) |
|
|
1,430,213 |
|
|
|
1,431,110 |
|
|
Accrued Interest |
|
|
50,041 |
|
|
|
35,563 |
|
|
Total homebuilding |
|
|
2,113,017 |
|
|
|
2,140,559 |
|
|
|
|
|
|
|
|
|
Financial services |
|
|
149,628 |
|
|
|
119,045 |
|
|
Income taxes payable |
|
|
4,389 |
|
|
|
3,832 |
|
|
Total liabilities |
|
|
2,267,034 |
|
|
|
2,263,436 |
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
Hovnanian Enterprises, Inc.
stockholders' equity deficit: |
|
|
|
|
|
|
Preferred stock, $0.01 par value - authorized 100,000 shares;
issued and outstanding 5,600 shares with a |
|
|
|
|
|
|
|
|
|
liquidation preference of $140,000 at January 31, 2021 and October
31, 2020 |
|
|
135,299 |
|
|
|
135,299 |
|
|
Common stock, Class A, $0.01 par value - authorized 16,000,000
shares; issued 5,997,562 shares at |
|
|
|
|
|
|
|
|
|
January 31, 2021 and 5,990,310 shares at October 31, 2020 |
|
|
60 |
|
|
|
60 |
|
|
Common stock, Class B, $0.01 par value (convertible to Class A at
time of sale) - authorized 2,400,000 |
|
|
|
|
|
|
|
|
|
shares; issued 652,211 shares at January 31, 2021 and 649,886
shares at October 31, 2020 |
|
|
7 |
|
|
|
7 |
|
|
Paid in capital - common stock |
|
|
718,832 |
|
|
|
718,110 |
|
|
Accumulated deficit |
|
|
(1,156,086 |
) |
|
|
(1,175,045 |
) |
|
Treasury stock - at cost – 470,430 shares of Class A common stock
and 27,669 shares of Class B common |
|
|
|
|
|
|
|
|
|
stock at January 31, 2021 and October 31, 2020 |
|
|
(115,360 |
) |
|
|
(115,360 |
) |
|
Total Hovnanian Enterprises, Inc. stockholders’ equity deficit |
|
|
(417,248 |
) |
|
|
(436,929 |
) |
|
Noncontrolling interest in
consolidated joint ventures |
|
|
913 |
|
|
|
835 |
|
|
Total equity deficit |
|
|
(416,335 |
) |
|
|
(436,094 |
) |
|
Total liabilities and
equity |
|
$1,850,699 |
|
|
$1,827,342 |
|
|
(1) Derived from the audited
balance sheet as of October 31, 2020.
HOVNANIAN ENTERPRISES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In
Thousands Except Per Share Data)(Unaudited)
|
|
Three Months Ended January 31, |
|
|
|
2021 |
|
|
2020 |
|
Revenues: |
|
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
|
Sale of homes |
|
|
$551,365 |
|
|
|
$479,233 |
|
Land sales and other revenues |
|
|
|
3,802 |
|
|
|
|
809 |
|
Total homebuilding |
|
|
|
555,167 |
|
|
|
|
480,042 |
|
Financial services |
|
|
|
19,497 |
|
|
|
|
14,014 |
|
Total revenues |
|
|
|
574,664 |
|
|
|
|
494,056 |
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
Homebuilding: |
|
|
|
|
|
|
|
|
Cost of sales, excluding interest |
|
|
|
439,638 |
|
|
|
|
396,355 |
|
Cost of sales interest |
|
|
|
17,165 |
|
|
|
|
18,136 |
|
Inventory impairment loss and land option write-offs |
|
|
|
1,877 |
|
|
|
|
2,828 |
|
Total cost of sales |
|
|
|
458,680 |
|
|
|
|
417,319 |
|
Selling, general and administrative |
|
|
|
40,225 |
|
|
|
|
40,674 |
|
Total homebuilding expenses |
|
|
|
498,905 |
|
|
|
|
457,993 |
|
|
|
|
|
|
|
|
|
|
Financial services |
|
|
|
10,354 |
|
|
|
|
9,554 |
|
Corporate general and administrative |
|
|
|
23,483 |
|
|
|
|
19,744 |
|
Other interest |
|
|
|
23,975 |
|
|
|
|
25,003 |
|
Other operations |
|
|
|
278 |
|
|
|
|
194 |
|
Total expenses |
|
|
|
556,995 |
|
|
|
|
512,488 |
|
Gain on extinguishment of
debt |
|
|
|
- |
|
|
|
|
9,456 |
|
Income from unconsolidated
joint ventures |
|
|
|
1,916 |
|
|
|
|
1,540 |
|
Income (loss) before income
taxes |
|
|
|
19,585 |
|
|
|
|
(7,436 |
) |
State and federal income tax
provision: |
|
|
|
|
|
|
|
|
State |
|
|
|
626 |
|
|
|
|
1,712 |
|
Federal |
|
|
|
- |
|
|
|
|
- |
|
Total income taxes |
|
|
|
626 |
|
|
|
|
1,712 |
|
Net income (loss) |
|
|
$18,959 |
|
|
|
$(9,148 |
) |
|
|
|
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
Net income (loss) per common share |
|
|
$2.79 |
|
|
|
$(1.49 |
) |
Weighted-average number of common shares outstanding |
|
|
|
6,225 |
|
|
|
|
6,161 |
|
Assuming dilution: |
|
|
|
|
|
|
|
|
Net income (loss) per common share |
|
|
$2.75 |
|
|
|
$(1.49 |
) |
Weighted-average number of common shares outstanding |
|
|
|
6,303 |
|
|
|
|
6,161 |
|
HOVNANIAN
ENTERPRISES, INC. |
(DOLLARS
IN THOUSANDS EXCEPT AVG. PRICE) |
(SEGMENT
DATA EXCLUDES UNCONSOLIDATED
JOINT VENTURES) |
(UNAUDITED) |
|
Contracts (1) |
Deliveries |
Contract |
|
Three Months Ended |
Three Months Ended |
Backlog |
|
January 31, |
January 31, |
January 31, |
|
|
2021 |
|
2020 |
% Change |
|
2021 |
|
2020 |
% Change |
|
2021 |
|
2020 |
% Change |
Northeast |
|
|
|
|
|
|
|
|
|
|
(NJ, PA) |
Home |
|
43 |
|
63 |
(31.7)% |
|
|
53 |
|
81 |
(34.6)% |
|
|
120 |
|
134 |
(10.4)% |
|
|
Dollars |
$33,670 |
$33,003 |
2.0% |
|
$31,216 |
$45,264 |
(31.0)% |
|
$84,566 |
$74,296 |
13.8% |
|
|
Avg. Price |
$783,023 |
$523,857 |
49.5% |
|
$588,981 |
$558,815 |
5.4% |
|
$704,717 |
$554,448 |
27.1% |
|
Mid-Atlantic |
|
|
|
|
|
|
|
|
|
|
(DE, MD, VA, WV) |
Home |
|
229 |
|
183 |
25.1% |
|
|
176 |
|
155 |
13.5% |
|
|
610 |
|
350 |
74.3% |
|
|
Dollars |
$144,481 |
$93,702 |
54.2% |
|
$92,911 |
$87,589 |
6.1% |
|
$342,685 |
$189,646 |
80.7% |
|
|
Avg. Price |
$630,921 |
$512,033 |
23.2% |
|
$527,903 |
$565,090 |
(6.6)% |
|
$561,779 |
$541,846 |
3.7% |
|
Midwest |
|
|
|
|
|
|
|
|
|
|
(IL, OH) |
Home |
|
238 |
|
187 |
27.3% |
|
|
183 |
|
159 |
15.1% |
|
|
651 |
|
478 |
36.2% |
|
|
Dollars |
$79,386 |
$58,276 |
36.2% |
|
$56,593 |
$46,392 |
22.0% |
|
$192,310 |
$134,566 |
42.9% |
|
|
Avg. Price |
$333,555 |
$311,636 |
7.0% |
|
$309,251 |
$291,774 |
6.0% |
|
$295,407 |
$281,519 |
4.9% |
|
Southeast |
|
|
|
|
|
|
|
|
|
|
(FL, GA, SC) |
Home |
|
210 |
|
155 |
35.5% |
|
|
102 |
|
97 |
5.2% |
|
|
406 |
|
305 |
33.1% |
|
|
Dollars |
$98,194 |
$67,158 |
46.2% |
|
$45,648 |
$36,680 |
24.4% |
|
$199,517 |
$139,505 |
43.0% |
|
|
Avg. Price |
$467,590 |
$433,277 |
7.9% |
|
$447,529 |
$378,144 |
18.3% |
|
$491,421 |
$457,393 |
7.4% |
|
Southwest |
|
|
|
|
|
|
|
|
|
|
(AZ, TX) |
Home |
|
736 |
|
528 |
39.4% |
|
|
582 |
|
493 |
18.1% |
|
|
1,220 |
|
698 |
74.8% |
|
|
Dollars |
$267,825 |
$178,433 |
50.1% |
|
$190,182 |
$163,703 |
16.2% |
|
$437,868 |
$245,627 |
78.3% |
|
|
Avg. Price |
$363,893 |
$337,941 |
7.7% |
|
$326,773 |
$332,055 |
(1.6)% |
|
$358,908 |
$351,901 |
2.0% |
|
West |
|
|
|
|
|
|
|
|
|
|
(CA) |
Home |
|
322 |
|
206 |
56.3% |
|
|
289 |
|
251 |
15.1% |
|
|
788 |
|
256 |
207.8% |
|
|
Dollars |
$174,114 |
$90,832 |
91.7% |
|
$134,815 |
$99,605 |
35.3% |
|
$409,186 |
$115,927 |
253.0% |
|
|
Avg. Price |
$540,727 |
$440,932 |
22.6% |
|
$466,488 |
$396,833 |
17.6% |
|
$519,272 |
$452,840 |
14.7% |
|
Consolidated Total |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
1,778 |
|
1,322 |
34.5% |
|
|
1,385 |
|
1,236 |
12.1% |
|
|
3,795 |
|
2,221 |
70.9% |
|
|
Dollars |
$797,670 |
$521,404 |
53.0% |
|
$551,365 |
$479,233 |
15.1% |
|
$1,666,132 |
$899,567 |
85.2% |
|
|
Avg. Price |
$448,633 |
$394,405 |
13.7% |
|
$398,097 |
$387,729 |
2.7% |
|
$439,033 |
$405,028 |
8.4% |
|
Unconsolidated joint ventures (2) |
|
|
|
|
|
|
|
|
|
|
(excluding KSA JV) |
Home |
|
184 |
|
170 |
8.2% |
|
|
119 |
|
149 |
(20.1)% |
|
|
391 |
|
336 |
16.4% |
|
|
Dollars |
$101,907 |
$106,917 |
(4.7)% |
|
$71,113 |
$86,349 |
(17.6)% |
|
$215,318 |
$205,122 |
5.0% |
|
|
Avg. Price |
$553,842 |
$628,921 |
(11.9)% |
|
$597,588 |
$579,523 |
3.1% |
|
$550,685 |
$610,482 |
(9.8)% |
|
Grand Total |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
1,962 |
|
1,492 |
31.5% |
|
|
1,504 |
|
1,385 |
8.6% |
|
|
4,186 |
|
2,557 |
63.7% |
|
|
Dollars |
$899,577 |
$628,321 |
43.2% |
|
$622,478 |
$565,582 |
10.1% |
|
$1,881,450 |
$1,104,689 |
70.3% |
|
|
Avg. Price |
$458,500 |
$421,127 |
8.9% |
|
$413,882 |
$408,362 |
1.4% |
|
$449,462 |
$432,025 |
4.0% |
|
|
|
|
|
|
|
|
|
|
|
|
KSA JV Only |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
213 |
|
95 |
124.2% |
|
|
0 |
|
0 |
0.0% |
|
|
1,305 |
|
297 |
339.4% |
|
|
Dollars |
$33,373 |
$14,841 |
124.9% |
|
$0 |
$0 |
0.0% |
|
$205,046 |
$47,157 |
334.8% |
|
|
Avg. Price |
$156,681 |
$156,220 |
0.3% |
|
$0 |
$0 |
0.0% |
|
$157,123 |
$158,779 |
(1.0)% |
|
|
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 from unconsolidated joint ventures”. |
HOVNANIAN
ENTERPRISES, INC. |
(DOLLARS
IN THOUSANDS EXCEPT AVG. PRICE) |
(SEGMENT
DATA UNCONSOLIDATED JOINT VENTURES ONLY) |
(UNAUDITED) |
|
Contracts (1) |
Deliveries |
Contract |
|
Three Months Ended |
Three Months Ended |
Backlog |
|
January 31, |
January 31, |
January 31, |
|
|
2021 |
|
2020 |
% Change |
|
2021 |
|
2020 |
% Change |
|
2021 |
|
2020 |
% Change |
Northeast |
|
|
|
|
|
|
|
|
|
|
unconsolidated joint ventures |
Home |
|
13 |
|
57 |
(77.2)% |
|
|
14 |
|
50 |
(72.0)% |
|
|
17 |
|
83 |
(79.5)% |
|
(excluding KSA JV) |
Dollars |
$17,835 |
$45,300 |
(60.6)% |
|
$17,695 |
$37,096 |
(52.3)% |
|
$24,675 |
$71,882 |
(65.7)% |
|
(NJ, PA) |
Avg. Price |
$1,371,923 |
$794,737 |
72.6% |
|
$1,263,929 |
$741,920 |
70.4% |
|
$1,451,471 |
$866,048 |
67.6% |
|
Mid-Atlantic |
|
|
|
|
|
|
|
|
|
|
(Unconsolidated Joint Ventures) |
Home |
|
23 |
|
17 |
35.3% |
|
|
30 |
|
12 |
150.0% |
|
|
83 |
|
47 |
76.6% |
|
(DE, MD, VA, WV) |
Dollars |
$13,326 |
$9,265 |
43.8% |
|
$14,401 |
$6,180 |
133.0% |
|
$45,745 |
$24,061 |
90.1% |
|
|
Avg. Price |
$579,391 |
$545,000 |
6.3% |
|
$480,033 |
$515,000 |
(6.8)% |
|
$551,145 |
$511,936 |
7.7% |
|
Midwest |
|
|
|
|
|
|
|
|
|
|
unconsolidated joint ventures |
Home |
|
1 |
|
6 |
(83.3)% |
|
|
1 |
|
4 |
(75.0)% |
|
|
0 |
|
5 |
(100.0)% |
|
(IL, OH) |
Dollars |
$409 |
$2,894 |
(85.9)% |
|
$409 |
$1,710 |
(76.1)% |
|
$0 |
$2,469 |
(100.0)% |
|
|
Avg. Price |
$409,000 |
$482,333 |
(15.2)% |
|
$409,000 |
$427,500 |
(4.3)% |
|
$0 |
$493,800 |
(100.0)% |
|
Southeast |
|
|
|
|
|
|
|
|
|
|
unconsolidated joint ventures |
Home |
|
117 |
|
37 |
216.2% |
|
|
51 |
|
45 |
13.3% |
|
|
215 |
|
115 |
87.0% |
|
(FL, GA, SC) |
Dollars |
$57,758 |
$21,395 |
170.0% |
|
$27,042 |
$23,049 |
17.3% |
|
$109,244 |
$58,919 |
85.4% |
|
|
Avg. Price |
$493,658 |
$578,243 |
(14.6)% |
|
$530,235 |
$512,200 |
3.5% |
|
$508,112 |
$512,339 |
(0.8)% |
|
Southwest |
|
|
|
|
|
|
|
|
|
|
unconsolidated joint ventures |
Home |
|
4 |
|
35 |
(88.6)% |
|
|
15 |
|
17 |
(11.8)% |
|
|
35 |
|
63 |
(44.4)% |
|
(AZ, TX) |
Dollars |
$3,152 |
$21,798 |
(85.5)% |
|
$8,739 |
$10,539 |
(17.1)% |
|
$21,216 |
$39,577 |
(46.4)% |
|
|
Avg. Price |
$788,000 |
$622,800 |
26.5% |
|
$582,600 |
$619,941 |
(6.0)% |
|
$606,171 |
$628,206 |
(3.5)% |
|
West |
|
|
|
|
|
|
|
|
|
|
unconsolidated joint ventures |
Home |
|
26 |
|
18 |
44.4% |
|
|
8 |
|
21 |
(61.9)% |
|
|
41 |
|
23 |
78.3% |
|
(CA) |
Dollars |
$9,427 |
$6,265 |
50.5% |
|
$2,827 |
$7,775 |
(63.6)% |
|
$14,438 |
$8,214 |
75.8% |
|
|
Avg. Price |
$362,577 |
$348,056 |
4.2% |
|
$353,375 |
$370,238 |
(4.6)% |
|
$352,146 |
$357,130 |
(1.4)% |
|
Unconsolidated Joint Ventures (2) |
|
|
|
|
|
|
|
|
|
|
(Excluding KSA JV) |
Home |
|
184 |
|
170 |
8.2% |
|
|
119 |
|
149 |
(20.1)% |
|
|
391 |
|
336 |
16.4% |
|
|
Dollars |
$101,907 |
$106,917 |
(4.7)% |
|
$71,113 |
$86,349 |
(17.6)% |
|
$215,318 |
$205,122 |
5.0% |
|
|
Avg. Price |
$553,842 |
$628,921 |
(11.9)% |
|
$597,588 |
$579,523 |
3.1% |
|
$550,685 |
$610,482 |
(9.8)% |
|
|
|
|
|
|
|
|
|
|
|
|
KSA JV Only |
|
|
|
|
|
|
|
|
|
|
|
Home |
|
213 |
|
95 |
124.2% |
|
|
0 |
|
0 |
0.0% |
|
|
1,305 |
|
297 |
339.4% |
|
|
Dollars |
$33,373 |
$14,841 |
124.9% |
|
$0 |
$0 |
0.0% |
|
$205,046 |
$47,157 |
334.8% |
|
|
Avg. Price |
$156,681 |
$156,220 |
0.3% |
|
$0 |
$0 |
0.0% |
|
$157,123 |
$158,779 |
(1.0)% |
|
|
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 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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