Hovnanian Enterprises Reports Fiscal 2022 Fourth Quarter and Full Year Results


$320 Million Pretax Profit in Fiscal 2022 a 68% Year-over-Year Increase
Gross Margin Percentage Increased 290 Basis Points Year-over-Year for Full Year
Full Year Interest Expense as Percent of Total Revenue Declined 130 Basis Points Year-over-Year

MATAWAN, N.J., Dec. 08, 2022 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal fourth quarter and year ended October 31, 2022.

RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED OCTOBER 31, 2022:

  • Total revenues increased 8.9% to $886.8 million in the fourth quarter of fiscal 2022, compared with $814.3 million in the same quarter of the prior year. For the year ended October 31, 2022, total revenues were $2.92 billion compared with $2.78 billion in the prior year.
  • Homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 19.6% for the three months ended October 31, 2022 compared with 19.4% during the same period a year ago. During fiscal 2022, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 21.5%, an increase of 290 basis points, compared with 18.6% in the prior fiscal year.
  • Homebuilding gross margin percentage, before cost of sales interest expense and land charges, increased 140 basis points to 24.2% during the fiscal 2022 fourth quarter compared with 22.8% in last year’s fourth quarter. For the year ended October 31, 2022, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 25.0%, up 320 basis points, compared with 21.8% in the previous fiscal year.
  • Total SG&A was $80.9 million, or 9.1% of total revenues, in the fourth quarter of fiscal 2022 compared with $70.0 million, or 8.6% of total revenues, in the previous year’s fourth quarter. During fiscal 2022, total SG&A was $296.2 million, or 10.1% of total revenues, compared with $276.6 million, or 9.9% of total revenues, in the same period of the prior fiscal year.
  • Total interest expense as a percent of total revenues improved by 30 basis points to 4.4% for the fourth quarter of fiscal 2022 compared with 4.7% during the fourth quarter of fiscal 2021. For fiscal 2022, total interest expense as a percent of total revenues improved 130 basis points to 4.5% compared with 5.8% in the previous fiscal year.
  • Income before income taxes for the fourth quarter of fiscal 2022 increased 18.1% to $91.5 million compared with $77.4 million in the fourth quarter of the prior fiscal year. For fiscal 2022, income before income taxes increased 68.4% to $319.8 million compared with $189.9 million during the prior fiscal year.
  • Net income was $55.6 million, or $7.24 per diluted common share, for the three months ended October 31, 2022 compared with net income of $52.5 million, or $7.41 per diluted common share, in the fourth quarter of the previous fiscal year. For fiscal 2022, net income was $225.5 million, or $29.00 per diluted common share, compared with net income, including the $468.6 million benefit from the valuation allowance reduction, of $607.8 million, or $85.86 per diluted common share, during fiscal 2021.
  • Consolidated contract dollars in the fourth quarter of fiscal 2022 declined 48.0% to $343.7 million (602 homes) compared with $660.4 million (1,263 homes) in the same quarter last year. Contract dollars, including domestic unconsolidated joint ventures(1), for the three months ended October 31, 2022 declined to $412.9 million (703 homes) compared with $749.5 million (1,389 homes) in the fourth quarter of fiscal 2021.
  • Consolidated contract dollars in fiscal 2022 were $2.47 billion (4,477 homes) compared with $2.89 billion (6,023 homes) last year. Contract dollars, including domestic unconsolidated joint ventures(1), for the year ended October 31, 2022 were $2.81 billion (4,965 homes) compared with $3.30 billion (6,687 homes) in fiscal 2021.
  • Consolidated contracts per community were 5.0 for the fourth quarter ended October 31, 2022 compared to 10.2 contracts per community in last year’s fourth quarter. Contracts per community, including domestic unconsolidated joint ventures, decreased to 5.3 contracts per community for the fourth quarter of fiscal 2022 compared with 9.9 contracts per community for the fourth quarter of fiscal 2021.
  • As of the end of fiscal 2022, consolidated community count was 121 communities, compared with 124 communities on October 31, 2021. Community count, including domestic unconsolidated joint ventures, was 133 as of October 31, 2022, compared with 140 communities at the end of the previous year.
  • The dollar value of consolidated contract backlog, as of October 31, 2022, decreased 22.6% to $1.27 billion compared with $1.64 billion as of October 31, 2021. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of October 31, 2022, decreased 20.0% to $1.50 billion compared with $1.88 billion as of October 31, 2021.
  • Sale of homes revenues increased 11.2% to $866.6 million (1,599 homes) in the fiscal 2022 fourth quarter compared with $779.6 million (1,703 homes) in the previous year’s fourth quarter. During the fiscal 2022 fourth quarter, sale of homes revenues, including domestic unconsolidated joint ventures, increased to $981.2 million (1,779 homes) compared with $860.9 million (1,839 homes) during the fourth quarter of fiscal 2021.
  • For fiscal 2022, sale of homes revenues were $2.84 billion (5,538 homes) compared with $2.67 billion (6,204) homes in the previous year. For fiscal 2022, sale of homes revenues, including domestic unconsolidated joint ventures, were $3.18 billion (6,090 homes) compared with $3.02 billion (6,793 homes) during fiscal 2021.
  • The beginning backlog cancellation rate for consolidated contracts increased to 13% for the fourth quarter ended October 31, 2022 compared with 6% in the fiscal 2021 fourth quarter. The beginning backlog cancellation rate for contracts including domestic unconsolidated joint ventures was 12% for the fourth quarter of fiscal 2022 compared with 6% in the fourth quarter of the prior year. The historical average consolidated beginning backlog cancellation rate since fiscal 2013 is 13%.
  • The gross contract cancellation rate for consolidated contracts increased to 41% for the fourth quarter ended October 31, 2022 compared with 15% in the fiscal 2021 fourth quarter. The gross contract cancellation rate for contracts including domestic unconsolidated joint ventures was 39% for the fourth quarter of fiscal 2022 compared with 14% in the fourth 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 OCTOBER 31, 2022:

  • During the fourth quarter of fiscal 2022, land and land development spending was $205.2 million compared with $167.1 million in the same quarter one year ago. For fiscal 2022, land and land development spending was $759.3 million compared with $698.3 million one year ago.
  • After early retirement of $100 million of senior secured notes in the second quarter of fiscal 2022, total liquidity as of October 31, 2022 was $457.3 million, significantly above our targeted liquidity range of $170 million to $245 million.
  • In the fourth quarter of fiscal 2022, approximately 3,200 lots were put under option or acquired in 23 consolidated communities.
  • As of October 31, 2022, the total controlled consolidated lots were 31,518 an increase compared with 30,874 lots at the end of the fourth quarter of the previous year and a decrease compared to 31,913 lots on July 31, 2022. Based on trailing twelve-month deliveries, the current position equaled a 5.7 years’ supply.

COMMENTS FROM MANAGEMENT:

“We are pleased with the strong performance for our fourth quarter and fiscal year. We exceeded our full year guidance for adjusted pretax income and adjusted EBITDA. Our strong performance in fiscal 2022 was partially the result of deliveries which were contracted during a time when demand for new homes was much stronger than it is today,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “The current level of demand for new homes is significantly lower and continues to be burdened by high levels of inflation, a sharp increase in mortgage rates and concerns about an economic recession.”

“Given the strong margins in our large fourth quarter backlog and to minimize any potential disruption to those deliveries and margins, we were not aggressive with concessions on new contracts during the fourth quarter. Additionally, to eliminate the risk of further mortgage rate increases, consumers are seeking homes where they can close quickly. In response to that demand, we ended the year with 5.6 quick move in homes per community, compared to 3.2 at the end of the third quarter and our long-term average of 4.4 quick move in homes per community. Therefore, we felt it was prudent to postpone larger incentives until the increased level of quick move in homes we started during the third and fourth quarter were closer to being completed. Now that the fourth quarter is behind us and because of the progress we have made on constructing additional quick move in homes, we are now becoming more aggressive in our attempts to find the market price that will spur demand in each of our markets.”

“During a period of declining housing demand, it is important that we focus on preserving liquidity. We ended our fiscal year with $457 million of liquidity, significantly above the $245 million high end of our target range. We remain committed to strengthening our balance sheet and intend to revisit our debt retirement initiatives once market conditions improve. Despite the near-term uncertainty in the housing market, we believe that the long-term fundamentals remain intact and as the economy and mortgage market reach stability, it should lead to a more robust housing market that returns sales pace per community to more normalized levels,” concluded Mr. Hovnanian.

SEGMENT CHANGE/RECLASSIFICATION

Historically, the Company had seven reportable segments consisting of six homebuilding segments (Northeast, Mid-Atlantic, Midwest, Southeast, Southwest and West) and its financial services segment. During the fourth quarter of fiscal 2022, we reevaluated our reportable segments as a result of changes in the business and our management thereof. In particular, we considered the fact that, since our segments were last established, the Company had exited the Minnesota, North Carolina, and Tampa markets and is currently in the process of exiting the Chicago market. As a result, we realigned our homebuilding operating segments and determined that, in addition to our financial services segment, we now have three reportable homebuilding segments comprised of (1) Northeast, (2) Southeast and (3) West. All prior period amounts related to the segment change have been retrospectively reclassified to conform to the new presentation.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2022 fourth quarter financial results conference call at 11:00 a.m. E.T. on Thursday, December 8, 2022. 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 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 impairments and land option write-offs and loss on extinguishment of debt, net (“Adjusted EBITDA”) are not U.S. generally accepted accounting principles (GAAP) financial measures. The most directly comparable GAAP financial measure is net income. The reconciliation for historical periods of EBIT, EBITDA and Adjusted EBITDA to net income is presented in a table attached to this earnings release.

Homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, are non-GAAP financial measures. The most directly comparable GAAP financial measures are homebuilding gross margin and homebuilding gross margin percentage, respectively. The reconciliation for historical periods of homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, to homebuilding gross margin and homebuilding gross margin percentage, respectively, is presented in a table attached to this earnings release.

Adjusted pretax income, which is defined as income before income taxes excluding land-related charges and loss on extinguishment of debt, net is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income before income taxes. The reconciliation for historical periods of adjusted pretax income to income before income taxes is presented in a table attached to this earnings release.

Total liquidity is comprised of $326.2 million of cash and cash equivalents, $6.1 million of restricted cash required to collateralize letters of credit and $125.0 million availability under the senior secured revolving credit facility as of October 31, 2022.

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 and statements regarding demand for homes, customer incentives and underlying factors. 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) shortages in, and price fluctuations of, raw materials and labor, including due to geopolitical events, changes in trade policies, including the imposition of tariffs and duties on homebuilding materials and products and related trade disputes with and retaliatory measures taken by other countries; (3) fluctuations in interest rates and the availability of mortgage financing; (4) adverse weather and other environmental conditions and natural disasters; (5) the seasonality of the Company’s business; (6) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (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) increases in inflation; (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; (26) the outbreak and spread of COVID-19 and the measures that governments, agencies, law enforcement and/or health authorities implement to address it, as well as continuing macroeconomic effects of the pandemic; 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, 2021 and the Company’s Quarterly Reports on Form 10-Q for the quarterly periods during fiscal 2022 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.
October 31, 2022
Statements of consolidated operations
(In thousands, except per share data)
   Three Months Ended Year Ended
   October 31, October 31,
   2022 2021  2022  2021 
   (Unaudited) (Unaudited)
Total revenues$886,788 $814,348  $2,922,231  $2,782,857 
Costs and expenses (1) 800,422  732,742   2,624,716   2,598,097 
Loss on extinguishment of debt, net -  (3,442)  (6,795)  (3,748)
Income (loss) from unconsolidated joint ventures 5,114  (719)  29,033   8,849 
Income before income taxes 91,480  77,445   319,753   189,861 
Income tax provision (benefit) 35,847  24,965   94,263   (417,956)
Net income 55,633  52,480   225,490   607,817 
Less: preferred stock dividends 2,668  -   10,675   - 
Net income available to common stockholders$52,965 $52,480  $214,815  $607,817 
 
 
 
Per share data:
Basic:
 Net income per common share$7.55 $7.53  $30.31  $87.50 
 Weighted average number of           
  common shares outstanding 6,478  6,360   6,437   6,287 
Assuming dilution:           
 Net income per common share$7.24 $7.41  $29.00  $85.86 
 Weighted average number of           
  common shares outstanding 6,750  6,467   6,728   6,395 
 
(1) Includes inventory impairments and land option write-offs.
 
 
Hovnanian Enterprises, Inc.
October 31, 2022
Reconciliation of income before income taxes excluding land-related charges and loss on extinguishment of debt, net to income before income taxes
(In thousands)
 
   Three Months Ended Year Ended
   October 31, October 31,
   2022 2021  2022  2021 
   (Unaudited) (Unaudited)
Income before income taxes$91,480 $77,445  $319,753  $189,861 
Inventory impairments and land option write-offs 12,239  363   14,076   3,630 
Loss on extinguishment of debt, net -  3,442   6,795   3,748 
Income before income taxes excluding land-related charges and loss on extinguishment of debt, net (1)$103,719 $81,250  $340,624  $197,239 
              
(1) Income before income taxes excluding land-related charges and loss on extinguishment of debt, net is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income before income taxes.



Hovnanian Enterprises, Inc.
October 31, 2022
Gross margin
(In thousands)
 Homebuilding Gross Margin Homebuilding Gross Margin
 Three Months Ended Year Ended
 October 31, October 31,
 2022  2021  2022  2021 
 (Unaudited) (Unaudited)
Sale of homes$866,611  $779,551  $2,840,454  $2,673,710 
Cost of sales, excluding interest expense and land charges (1) 656,805   602,097   2,131,208   2,091,016 
Homebuilding gross margin, before cost of sales interest expense and land charges (2) 209,806   177,454   709,246   582,694 
Cost of sales interest expense, excluding land sales interest expense 27,343   25,939   85,198   82,181 
Homebuilding gross margin, after cost of sales interest expense, before land charges (2) 182,463   151,515   624,048   500,513 
Land charges 12,239   363   14,076   3,630 
Homebuilding gross margin$170,224  $151,152  $609,972  $496,883 
            
Homebuilding gross margin percentage 19.6%   19.4%   21.5%   18.6% 
Homebuilding gross margin percentage, before cost of sales interest expense and land charges (2) 24.2%   22.8%   25.0%   21.8% 
Homebuilding gross margin percentage, after cost of sales interest expense, before land charges (2) 21.1%   19.4%   22.0%   18.7% 
            
 Land Sales Gross Margin Land Sales Gross Margin
 Three Months Ended Year Ended
 October 31, October 31,
 2022  2021  2022  2021 
 (Unaudited) (Unaudited)
Land and lot sales$15  $13,634  $16,202  $25,364 
Cost of sales, excluding interest (1) 83   10,059   5,855   19,180 
Land and lot sales gross margin, excluding interest and land charges (68)  3,575   10,347   6,184 
Land and lot sales interest expense 21   31   42   1,919 
Land and lot sales gross margin, including interest$(89) $3,544  $10,305  $4,265 
 
 
(1) Does not include cost associated with walking away from land options or inventory impairments which are recorded as Inventory impairments and land option write-offs in the Consolidated Statements of Operations.

(2) Homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, are non-GAAP financial measures. The most directly comparable GAAP financial measures are homebuilding gross margin and homebuilding gross margin percentage, respectively.



Hovnanian Enterprises, Inc.
October 31, 2022
Reconciliation of adjusted EBITDA to net income
(In thousands)
 Three Months Ended Year Ended
 October 31, October 31,
 2022  2021  2022  2021 
 (Unaudited) (Unaudited)
Net income$55,633  $52,480  $225,490  $607,817 
Income tax provision (benefit) 35,847   24,965   94,263   (417,956)
Interest expense 39,265   38,520   132,583   161,816 
EBIT (1) 130,745   115,965   452,336   351,677 
Depreciation and amortization 1,448   1,189   5,457   5,280 
EBITDA (2) 132,193   117,154   457,793   356,957 
Inventory impairments and land option write-offs 12,239   363   14,076   3,630 
Loss on extinguishment of debt, net -   3,442   6,795   3,748 
Adjusted EBITDA (3)$144,432  $120,959  $478,664  $364,335 
            
Interest incurred$34,725  $33,006  $134,024  $155,514 
            
Adjusted EBITDA to interest incurred 4.16   3.66   3.57   2.34 
            
            
(1) EBIT is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income. EBIT represents earnings before interest expense and income taxes.
(2) EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income. EBITDA represents earnings before interest expense, income taxes, depreciation and amortization.
(3) Adjusted EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income. Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation, amortization, inventory impairments and land option write-offs and loss on extinguishment of debt, net.
 
 
Hovnanian Enterprises, Inc.
October 31, 2022
Interest incurred, expensed and capitalized
(In thousands)
 Three Months Ended Year Ended
 October 31, October 31,
 2022  2021  2022  2021 
 (Unaudited) (Unaudited)
Interest capitalized at beginning of period$64,140  $63,673  $58,159  $65,010 
Plus: interest incurred 34,725   33,006   134,024   155,514 
Less: interest expensed (39,265)  (38,520)  (132,583)  (161,816)
Less: interest contributed to unconsolidated joint venture (1) -   -   -   (3,667)
Plus: interest acquired from unconsolidated joint venture (2) -   -   -   3,118 
Interest capitalized at end of period (3)$59,600  $58,159  $59,600  $58,159 
            
(1) Represents capitalized interest which was included as part of the assets contributed to the joint venture the company entered into in April 2021 during the year ended October 31, 2021. There was no impact to the Consolidated Statement of Operations as a result of this transaction.
(2) Represents capitalized interest which was included as part of the assets purchased from a joint venture the company exited out of in June 2021 during the year ended October 31, 2021. There was no impact to the Consolidated Statement of Operations as a result of this transaction.
(3) Capitalized interest amounts are shown gross before allocating any portion of impairments to capitalized interest.



HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)

 October 31,  October 31, 
 2022  2021 
        
ASSETS       
Homebuilding:       
Cash and cash equivalents$326,198  $245,970 
Restricted cash and cash equivalents 13,382   16,089 
Inventories:       
Sold and unsold homes and lots under development 1,058,183   1,019,541 
Land and land options held for future development or sale 152,406   135,992 
Consolidated inventory not owned 308,595   98,727 
Total inventories 1,519,184   1,254,260 
Investments in and advances to unconsolidated joint ventures 74,940   60,897 
Receivables, deposits and notes, net 37,837   39,934 
Property and equipment, net 25,819   18,736 
Prepaid expenses and other assets 63,884   56,186 
Total homebuilding 2,061,244   1,692,072 
        
Financial services 155,993   202,758 
        
Deferred tax assets, net 344,793   425,678 
Total assets$2,562,030  $2,320,508 
        
LIABILITIES AND EQUITY       
Homebuilding:       
Nonrecourse mortgages secured by inventory, net of debt issuance costs$144,805  $125,089 
Accounts payable and other liabilities 439,952   426,381 
Customers’ deposits 74,020   68,295 
Liabilities from inventory not owned, net of debt issuance costs 202,492   62,762 
Senior notes and credit facilities (net of discounts, premiums and debt issuance costs) 1,146,547   1,248,373 
Accrued interest 32,415   28,154 
Total homebuilding 2,040,231   1,959,054 
        
Financial services 135,581   182,219 
        
Income taxes payable 3,167   3,851 
Total liabilities 2,178,979   2,145,124 
        
Equity:       
Hovnanian Enterprises, Inc. stockholders' equity:       
Preferred stock, $0.01 par value - authorized 100,000 shares; issued and outstanding 5,600 shares
with a liquidation preference of $140,000 at October 31, 2022 and October 31, 2021
 135,299   135,299 
Common stock, Class A, $0.01 par value - authorized 16,000,000 shares; issued 6,159,886 shares at
October 31, 2022 and 6,066,164 shares at October 31, 2021
 62   61 
Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) - authorized
2,400,000 shares; issued 733,374 shares at October 31, 2022 and 686,876 shares at October 31, 2021
 7   7 
Paid in capital - common stock 727,663   722,118 
Accumulated deficit (352,413)  (567,228)
Treasury stock - at cost – 782,901 shares of Class A common stock at October 31, 2022 and 470,430
shares at October 31, 2021; 27,669 shares of Class B common stock at October 31, 2022 and October 31, 2021
 (127,582)  (115,360)
Total Hovnanian Enterprises, Inc. stockholders’ equity 383,036   174,897 
Noncontrolling interest in consolidated joint ventures 15   487 
Total equity 383,051   175,384 
Total liabilities and equity$2,562,030  $2,320,508 



HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

  Three Months Ended October 31,Years Ended October 31, 
 2022  2021  2022  2021 
                
Revenues:               
Homebuilding:               
Sale of homes$866,611  $779,551  $2,840,454  $2,673,710 
Land sales and other revenues 2,185   14,175   20,237   27,455 
Total homebuilding 868,796   793,726   2,860,691   2,701,165 
Financial services 17,992   20,622   61,540   81,692 
Total revenues 886,788   814,348   2,922,231   2,782,857 
                
Expenses:               
Homebuilding:               
Cost of sales, excluding interest 656,888   612,156   2,137,063   2,110,196 
Cost of sales interest 27,364   25,970   85,240   84,100 
Inventory impairments and land option write-offs 12,239   363   14,076   3,630 
Total cost of sales 696,491   638,489   2,236,379   2,197,926 
Selling, general and administrative 54,126   44,475   193,536   169,892 
Total homebuilding expenses 750,617   682,964   2,429,915   2,367,818 
                
Financial services 10,437   11,176   42,419   44,129 
Corporate general and administrative 26,725   25,545   102,618   106,694 
Other interest 11,901   12,550   47,343   77,716 
Other expenses, net 742   507   2,421   1,740 
Total expenses 800,422   732,742   2,624,716   2,598,097 
Loss on extinguishment of debt, net -   (3,442)  (6,795)  (3,748)
Income (loss) from unconsolidated joint ventures 5,114   (719)  29,033   8,849 
Income before income taxes 91,480   77,445   319,753   189,861 
State and federal income tax provision (benefit):               
State 22,684   6,924   34,199   (82,348)
Federal 13,163   18,041   60,064   (335,608)
Total income taxes 35,847   24,965   94,263   (417,956)
Net income 55,633   52,480   225,490   607,817 
Less: preferred stock dividends 2,668   -   10,675   - 
Net income available to common stockholders$52,965  $52,480  $214,815  $607,817 
                
Per share data:               
Basic:               
Net income per common share$7.55  $7.53  $30.31  $87.50 
Weighted-average number of common shares outstanding 6,478   6,360   6,437   6,287 
Assuming dilution:               
Net income per common share$7.24  $7.41  $29.00  $85.86 
Weighted-average number of common shares outstanding 6,750   6,467   6,728   6,395 



HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)
 
  Contracts (1)DeliveriesContract
  Three Months EndedThree Months EndedBacklog
  October 31,October 31,October 31,
  20222021% Change20222021% Change20222021% Change
Northeast (2)                
(DE, IL, MD, NJ, OH, PA, VA, WV)Home 232 418(44.5)%  618 52717.3%  850 1,285(33.9)% 
 Dollars$145,816$245,121(40.5)% $363,260$266,59736.3% $464,173$675,031(31.2)% 
 Avg. Price$628,517$586,4147.2% $587,799$505,87716.2% $546,086$525,3164.0% 
Southeast                
(FL, GA, SC)Home 176 1750.6%  248 19427.8%  502 42119.2% 
 Dollars$86,248$97,285(11.3)% $123,378$87,71840.7% $310,889$221,42540.4% 
 Avg. Price$490,045$555,914(11.8)% $497,492$452,15510.0% $619,301$525,95017.7% 
West                
(AZ, CA, TX)Home 194 670(71.0)%  733 982(25.4)%  834 1,541(45.9)% 
 Dollars$111,616$317,986(64.9)% $379,973$425,236(10.6)% $493,617$742,250(33.5)% 
 Avg. Price$575,340$474,60721.2% $518,381$433,03119.7% $591,867$481,66822.9% 
Consolidated Total                
 Home 602 1,263(52.3)%  1,599 1,703(6.1)%  2,186 3,247(32.7)% 
 Dollars$343,680$660,392(48.0)% $866,611$779,55111.2% $1,268,679$1,638,706(22.6)% 
 Avg. Price$570,897$522,8769.2% $541,971$457,75218.4% $580,366$504,68315.0% 
Unconsolidated Joint Ventures (2, 3)                
(excluding KSA JV)Home 101 126(19.8)%  180 13632.4%  311 375(17.1)% 
 Dollars$69,190$89,062(22.3)% $114,633$81,35140.9% $235,777$241,619(2.4)% 
 Avg. Price$685,050$706,841(3.1)% $636,850$598,1696.5% $758,125$644,31717.7% 
Grand Total                
 Home 703 1,389(49.4)%  1,779 1,839(3.3)%  2,497 3,622(31.1)% 
 Dollars$412,870$749,454(44.9)% $981,244$860,90214.0% $1,504,456$1,880,325(20.0)% 
 Avg. Price$587,296$539,5648.8% $551,571$468,13617.8% $602,505$519,14016.1% 
 
KSA JV Only                
 Home 4 247(98.4)%  0 00.0%  2,213 1,91315.7% 
 Dollars$606$38,731(98.4)% $0$00.0% $347,420$300,38415.7% 
 Avg. Price$151,500$156,806(3.4)% $0$00.0% $156,991$157,0220.0% 
 
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) Reflects the reclassification of 14 homes and $7.4 million of contract backlog as of October 31, 2021 from unconsolidated joint ventures to the consolidated Northeast segment. This is related to our acquisition of the remaining assets and liabilities from one of our unconsolidated joint ventures which was dissolved during the fourth quarter of fiscal 2021.
(3) 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 EXCLUDES UNCONSOLIDATED JOINT VENTURES)
 
  Contracts (1)DeliveriesContract
  Year EndedYear EndedBacklog
  October 31,October 31,October 31,
  20222021% Change20222021% Change20222021% Change
Northeast (2)                
(DE, IL, MD, NJ, OH, PA, VA, WV)Home 1,460 1,862(21.6)%  1,895 1,8233.9%  850 1,285(33.9)% 
 Dollars$857,240$1,011,639(15.3)% $1,068,098$854,17525.0% $464,173$675,031(31.2)% 
 Avg. Price$587,151$543,3088.1% $563,640$468,55520.3% $546,086$525,3164.0% 
Southeast                
(FL, GA, SC)Home 731 66210.4%  650 6028.0%  502 42119.2% 
 Dollars$412,975$320,48528.9% $323,511$276,20717.1% $310,889$221,42540.4% 
 Avg. Price$564,945$484,11816.7% $497,709$458,8168.5% $619,301$525,95017.7% 
West                
(AZ, CA, TX)Home 2,286 3,499(34.7)%  2,993 3,779(20.8)%  834 1,541(45.9)% 
 Dollars$1,200,211$1,555,468(22.8)% $1,448,845$1,543,328(6.1)% $493,617$742,250(33.5)% 
 Avg. Price$525,027$444,54618.1% $484,078$408,39618.5% $591,867$481,66822.9% 
Consolidated Total                
 Home 4,477 6,023(25.7)%  5,538 6,204(10.7)%  2,186 3,247(32.7)% 
 Dollars$2,470,426$2,887,592(14.4)% $2,840,454$2,673,7106.2% $1,268,679$1,638,706(22.6)% 
 Avg. Price$551,804$479,42815.1% $512,902$430,96619.0% $580,366$504,68315.0% 
Unconsolidated Joint Ventures (2, 3)                
(excluding KSA JV)Home 488 664(26.5)%  552 589(6.3)%  311 375(17.1)% 
 Dollars$337,775$407,886(17.2)% $343,617$345,793(0.6)% $235,777$241,619(2.4)% 
 Avg. Price$692,162$614,28612.7% $622,495$587,0856.0% $758,125$644,31717.7% 
Grand Total                
 Home 4,965 6,687(25.8)%  6,090 6,793(10.3)%  2,497 3,622(31.1)% 
 Dollars$2,808,201$3,295,478(14.8)% $3,184,071$3,019,5035.5% $1,504,456$1,880,325(20.0)% 
 Avg. Price$565,599$492,81914.8% $522,836$444,50217.6% $602,505$519,14016.1% 
                 
KSA JV Only                
 Home 300 821(63.5)%  0 00.0%  2,213 1,91315.7% 
 Dollars$47,036$128,711(63.5)% $0$00.0% $347,420$300,38415.7% 
 Avg. Price$156,787$156,7730.0% $0$00.0% $156,991$157,0220.0% 
                 
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) Reflects the reclassification of 14 homes and $7.4 million of contract backlog as of October 31, 2021 from unconsolidated joint ventures to the consolidated Northeast segment. This is related to our acquisition of the remaining assets and liabilities from one of our unconsolidated joint ventures which was dissolved during the fourth quarter of fiscal 2021.
(3) 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)
 
  Contracts (1)DeliveriesContract
  Three Months EndedThree Months EndedBacklog
  October 31,October 31,October 31,
  20222021% Change20222021% Change20222021% Change
Northeast (2)                
Unconsolidated Joint VenturesHome 67 644.7%  81 5547.3%  172 12636.5% 
(Excluding KSA JV)Dollars$46,714$47,497(1.6)% $55,740$41,32834.9% $125,004$86,79744.0% 
(DE, IL, MD, NJ, OH, PA, VA, WV)Avg. Price$697,224$742,141(6.1)% $688,148$751,418(8.4)% $726,767$688,8655.5% 
Southeast                
(Unconsolidated Joint Ventures)Home 31 45(31.1)%  67 653.1%  129 211(38.9)% 
(FL, GA, SC)Dollars$20,693$33,563(38.3)% $41,979$33,69924.6% $105,428$137,771(23.5)% 
 Avg. Price$667,516$745,844(10.5)% $626,552$518,44620.9% $817,271$652,94325.2% 
West                
(Unconsolidated Joint Ventures)Home 3 17(82.4)%  32 16100.0%  10 38(73.7)% 
(AZ, CA, TX)Dollars$1,782$8,001(77.7)% $16,914$6,324167.5% $5,345$17,051(68.7)% 
 Avg. Price$594,000$470,64726.2% $528,563$395,25033.7% $534,500$448,71119.1% 
Unconsolidated Joint Ventures (2, 3)                
(Excluding KSA JV)Home 101 126(19.8)%  180 13632.4%  311 375(17.1)% 
 Dollars$69,190$89,062(22.3)% $114,633$81,35140.9% $235,777$241,619(2.4)% 
 Avg. Price$685,050$706,841(3.1)% $636,850$598,1696.5% $758,125$644,31717.7% 
 
KSA JV Only                
 Home 4 247(98.4)%  0 00.0%  2,213 1,91315.7% 
 Dollars$606$38,731(98.4)% $0$00.0% $347,420$300,38415.7% 
 Avg. Price$151,500$156,806(3.4)% $0$00.0% $156,991$157,0220.0% 
 
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) Reflects the reclassification of 14 homes and $7.4 million of contract backlog as of October 31, 2021 from unconsolidated joint ventures to the consolidated Northeast segment. This is related to our acquisition of the remaining assets and liabilities from one of our unconsolidated joint ventures which was dissolved during the fourth quarter of fiscal 2021.
(3) 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)
 
  Contracts (1)DeliveriesContract
  Year EndedYear EndedBacklog
October 31,
  October 31,October 31,
  20222021% Change20222021% Change20222021% Change
Northeast (2)                
(Unconsolidated Joint Ventures)Home 255 19232.8%  209 211(0.9)%  172 12636.5% 
(Excluding KSA JV)Dollars$181,777$152,40219.3% $143,571$162,140(11.5)% $125,004$86,79744.0% 
(DE, IL, MD, NJ, OH, PA, VA, WV)Avg. Price$712,851$793,760(10.2)% $686,943$768,436(10.6)% $726,767$688,8655.5% 
Southeast                
(Unconsolidated Joint Ventures)Home 160 381(58.0)%  242 256(5.5)%  129 211(38.9)% 
(FL, GA, SC)Dollars$117,800$216,513(45.6)% $150,143$127,09318.1% $105,428$137,771(23.5)% 
 Avg. Price$736,250$568,27629.6% $620,426$496,45725.0% $817,271$652,94325.2% 
West                
(Unconsolidated Joint Ventures)Home 73 91(19.8)%  101 122(17.2)%  10 38(73.7)% 
(AZ, CA, TX)Dollars$38,198$38,971(2.0)% $49,903$56,560(11.8)% $5,345$17,051(68.7)% 
 Avg. Price$523,260$428,25322.2% $494,089$463,6076.6% $534,500$448,71119.1% 
Unconsolidated Joint Ventures (2, 3)                
(Excluding KSA JV)Home 488 664(26.5)%  552 589(6.3)%  311 375(17.1)% 
 Dollars$337,775$407,886(17.2)% $343,617$345,793(0.6)% $235,777$241,619(2.4)% 
 Avg. Price$692,162$614,28612.7% $622,495$587,0856.0% $758,125$644,31717.7% 
 
KSA JV Only                
 Home 300 821(63.5)%  0 00.0%  2,213 1,91315.7% 
 Dollars$47,036$128,711(63.5)% $0$00.0% $347,420$300,38415.7% 
 Avg. Price$156,787$156,7730.0% $0$00.0% $156,991$157,0220.0% 
 
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) Reflects the reclassification of 14 homes and $7.4 million of contract backlog as of October 31, 2021 from unconsolidated joint ventures to the consolidated Northeast segment. This is related to our acquisition of the remaining assets and liabilities from one of our unconsolidated joint ventures which was dissolved during the fourth quarter of fiscal 2021.
(3) 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 SorsbyJeffrey T. O’Keefe
 Executive Vice President & CFOVice President, Investor Relations
 732-747-7800732-747-7800