Exhibit 99.1
HOVNANIAN ENTERPRISES, INC. | News Release |
| | | |
Contact: | J. Larry Sorsby | Jeffrey T. O’Keefe |
| | Executive Vice President & CFO | Vice President, Investor Relations |
| | 732-747-7800 | 732-747-7800 |
| | | |
HOVNANIAN ENTERPRISES REPORTS fiscal 2013 Third quarter Results
RED BANK, NJ, September 9, 2013 – Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its third quarter and nine months ended July 31, 2013.
RESULTS FOR the THREE and NINE MONTH PERIODs ENDED JULY 31, 2013:
● | Total revenues were $478.4 million for the third quarter of fiscal 2013 up 23.6% compared with $387.0 million in the third quarter of the prior year. For the nine months ended July 31, 2013, total revenues increased 26.2% to $1.26 billion compared with $998.3 million in last year’s first nine months. |
● | Homebuilding gross margin percentage, before interest expense and land charges included in cost of sales, increased 210 basis points to 20.3% during the third quarter of 2013 compared with 18.2% in the same period of the prior year, and was up 140 basis points compared to the 18.9% reported for the second quarter of 2013. |
● | For the nine months ended July 31, 2013, homebuilding gross margin percentage, before interest expense and land charges included in cost of sales, was 18.9% compared with 17.5% during the same period a year ago. |
● | Pre-tax income during the fiscal 2013 third quarter was $11.0 million, excluding land-related charges and gain on extinguishment of debt, compared with a pre-tax loss of $7.4 million in last year’s third quarter. |
● | In the first nine months of fiscal 2013, the pre-tax loss, excluding land-related charges, expenses associated with the debt exchange offer and gain on extinguishment of debt, was $8.2 million compared with a pre-tax loss of $63.1 million in the prior year’s first nine months. |
● | Net income was $8.5 million, or $0.06 per common share, during the third quarter of 2013, compared with $34.7 million, which included a $36.5 million income tax benefit and $6.2 million gain on extinguishment of debt, or $0.25 per common share, in the third quarter of fiscal 2012. |
● | For the nine months ended July 31, 2013, the net loss was $1.5 million, or $0.01 per common share, compared with net income of $18.2 million, which included a $35.3 million income tax benefit and $58.0 million gain on extinguishment of debt, or $0.15 per common share, in the first nine months of fiscal 2012. |
● | Deliveries, including unconsolidated joint ventures, were 1,502 homes for the fiscal 2013 third quarter, up 8.3% compared with 1,387 homes during the third quarter of 2012. For the nine months ended July 31, 2013, deliveries, including unconsolidated joint ventures, were 4,114 homes compared with 3,606 homes in the first nine months of 2012, an increase of 14.1%. |
● | The dollar value of net contracts, including unconsolidated joint ventures, for the three months ended July 31, 2013 increased 7.9% to $546.9 million compared with $507.0 million in the third quarter of the prior year. The number of net contracts increased 1.8% to 1,568 homes in the third quarter of 2013 from 1,541 homes in the 2012 third quarter. |
● | The dollar value of net contracts, including unconsolidated joint ventures, for the first nine months of fiscal 2013 increased 21.6% to $1.71 billion compared with $1.40 billion in first nine months of the prior year. The number of net contracts increased 10.6% to 4,862 homes for the nine months ended July 31, 2013 from 4,395 homes in the first nine months last year. |
● | Contract backlog, as of July 31, 2013, including unconsolidated joint ventures, was $1.03 billion for 2,893 homes, which was an increase of 26.8% and 18.0%, respectively, compared to July 31, 2012. |
● | Total SG&A was $56.4 million, or 11.8% of total revenues, during the fiscal 2013 third quarter compared to $48.1 million, or 12.4% of total revenues, in last year’s third quarter. In the first nine months of fiscal 2013, total SG&A was $157.2 million, or 12.5% of total revenues, compared with $141.6 million or 14.2% of total revenues in first nine months of the prior year. |
● | Total interest expense as a percentage of total revenues declined 250 basis points to 7.5% in the third quarter of 2013 compared with 10.0% in the 2012 third quarter. For the nine months ended July 31, 2013, total interest expense as a percentage of total revenues declined 310 basis points to 8.2% compared with 11.3% in the first nine months of the prior year. |
● | Adjusted EBITDA increased to $48.6 million for the third quarter of fiscal 2013 compared to $33.9 million in the third quarter of the prior year. For the nine months ended July 31, 2013, Adjusted EBITDA was $102.2 million compared with $57.2 million in last year’s first nine months. |
● | The contract cancellation rate, including unconsolidated joint ventures, during the third quarter of 2013 was 18%, compared with 21% in the same period of the prior year. |
● | The valuation allowance was $941.1 million as of July 31, 2013. The valuation allowance is a non-cash reserve against the tax assets for GAAP purposes. For tax purposes, the tax deductions associated with the tax assets may be carried forward for 20 years from the date the deductions were incurred. |
LIQUIDITY AND INVENTORY AS OF JULY 31, 2013:
● | During the third quarter of 2013, $147.7 million was spent on land and land development compared with an average quarterly land and land development spend of $115.0 million for each of the first two quarters of fiscal 2013. Homebuilding cash was $226.7 million as of July 31, 2013, including $5.2 million of restricted cash required to collateralize letters of credit. |
● | As of July 31, 2013, the land position, including unconsolidated joint ventures, was 32,523 lots, consisting of 14,224 lots under option and 18,299 owned lots, compared with a total of 29,089 lots as of July 31, 2012. |
COMMENTS FROM MANAGEMENT:
“We were pleased that we were able to raise home prices, grow revenues and increase our gross margin during the third quarter of fiscal 2013,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “Our emphasis on raising home prices combined with concerns over rising mortgage rates and weakened consumer confidence dampened our home sales during July and August of 2013. We believe we are in a period where consumers are adjusting to current home prices and mortgage rates and remain confident that the combination of pent-up housing demand and the positive long-term demographic trends for housing will drive increased demand for new homes going forward. We continue to project profitability for the full fiscal 2013 year and strong results for our fourth quarter, excluding any expenses related to early retirement of debt,” concluded Mr. Hovnanian.
“We ended the third quarter of fiscal 2013 with $227 million of homebuilding cash,” said J. Larry Sorsby, Executive Vice President and Chief Financial Officer. “During the third quarter, we increased our liquidity beyond the cash we have on hand with the addition of a $75 million revolving credit facility, providing us with increased financial flexibility. This additional liquidity will allow us to invest in even more new land parcels and increase further our participation in the housing industry’s recovery,” concluded Mr. Sorsby.
Webcast Information:
Hovnanian Enterprises will webcast its fiscal 2013 third quarter financial results conference call at 11:00 a.m. E.T. on Monday, September 9, 2013. The webcast can be accessed live through the “Investor Relations” section of Hovnanian Enterprises’ Website athttp://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 “Audio Archives” section of the Investor Relations page on the Hovnanian Website athttp://www.khov.com. The archive will be available for 12 months.
About Hovnanian Enterprises®, Inc.:
Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, is headquartered in Red Bank, New Jersey. The Company is one of the nation’s largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. and West Virginia. The Company’s homes are marketed and sold under the trade names K. Hovnanian® Homes®, Brighton Homes, Parkwood Builders, Town & Country Homes and Oster Homes. As the developer of K. Hovnanian’s® Four Seasons communities, the Company is also one of the nation’s largest builders of active adult homes.
Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company’s 2012 annual report, can be accessed through the “Investor Relations” section of the Hovnanian Enterprises’ website athttp://www.khov.com. To be added to Hovnanian's investor e-mail or fax lists, please send an e-mail toIR@khov.com or sign up athttp://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, expenses associated with debt exchange offer 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 of EBIT, EBITDA and Adjusted EBITDA to net income (loss) is presented in a table attached to this earnings release.
Income (Loss) Before Income Taxes Excluding Land-Related Charges, Expenses Associated with the Debt Exchange Offer 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 of Income (Loss) Before Income Taxes Excluding Land-Related Charges, Expenses Associated with the Debt Exchange Offer and Gain on Extinguishment of Debt to Income (Loss) Before Income Taxes is presented in a table attached to this earnings release.
FORWARD-LOOKING STATEMENTS
All statements in this press release that are not historical facts should be considered as “forward-looking statements.” 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. 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. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic, industry and business conditions and impacts of the sustained homebuilding downturn, (2) adverse weather and other environmental conditions and natural disasters, (3) changes in market conditions and seasonality of the Company’s business, (4) changes in home prices and sales activity in the markets where the Company builds homes, (5) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws, and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in, and price fluctuations of, raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to the Company, (11) utility shortages and outages or rate fluctuations, (12) levels of indebtedness and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness, (13) the Company's sources of liquidity, (14) changes in credit ratings, (15) availability of net operating loss carryforwards, (16) operations through joint ventures with third parties, (17) product liability litigation, warranty claims and claims by mortgage investors, (18) successful identification and integration of acquisitions, (19) significant influence of the Company’s controlling stockholders, (20) changes in tax laws affecting the after-tax costs of owning a home, (21) geopolitical risks, terrorist acts and other acts of war, and (22) other factors described in detail in the Company’s Annual Report on Form 10-K for the year ended October 31, 2012. 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. |
July 31, 2013 |
Statements of Consolidated Operations |
(Dollars in Thousands, Except Per Share Data) |
| | | Three Months Ended | | | Nine Months Ended | |
| | | July 31, | | | July 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | (Unaudited) | | | (Unaudited) | |
Total Revenues | | | $478,357 | | | | $387,011 | | | | $1,259,566 | | | | $998,309 | |
Costs and Expenses (a) | | | 471,659 | | | | 395,910 | | | | 1,278,051 | | | | 1,075,640 | |
Gain on Extinguishment of Debt | | | - | | | | 6,230 | | | | - | | | | 57,966 | |
Income from Unconsolidated Joint Ventures | | | 3,690 | | | | 852 | | | | 6,806 | | | | 2,324 | |
Income (Loss) Before Income Taxes | | | 10,388 | | | | (1,817 | ) | | | (11,679 | ) | | | (17,041 | ) |
Income Tax Provision (Benefit) | | | 1,922 | | | | (36,493 | ) | | | (10,155 | ) | | | (35,254 | ) |
Net Income (Loss) | | | $8,466 | | | | $34,676 | | | | $(1,524 | ) | | | $18,213 | |
| | | | | | | | | | | | | | | | | |
Per Share Data: | | | | | | | | | | | | | | | | |
Basic: | | | | | | | | | | | | | | | | |
Income (Loss) Per Common Share | | | $0.06 | | | | $0.25 | | | | $(0.01 | ) | | | $0.15 | |
Weighted Average Number of Common Shares Outstanding (b) | | | 146,056 | | | | 138,472 | | | | 144,840 | | | | 121,357 | |
Assuming Dilution: | | | | | | | | | | | | | | | | |
Income (Loss) Per Common Share | | | $0.06 | | | | $0.25 | | | | $(0.01 | ) | | | $0.15 | |
Weighted Average Number of Common Shares Outstanding (b) | | | 162,823 | | | | 138,552 | | | | 144,840 | | | | 121,380 | |
(a) Includes inventory impairment loss and land option write-offs. | | | | | | | | | | | | | |
(b) For periods with a net loss, basic shares are used in accordance with GAAP rules. | |
Hovnanian Enterprises, Inc. |
July 31, 2013 |
Reconciliation of Income (Loss) Before Income Taxes Excluding Land-Related |
Charges, Expenses Associated with the Debt Exchange Offer and |
Gain on Extinguishment of Debt to Income (Loss) Before Income Taxes |
(Dollars in Thousands) |
| | | Three Months Ended | | | Nine Months Ended | |
| | | July 31, | | | July 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | (Unaudited) | | | (Unaudited) | |
Income (Loss) Before Income Taxes | | | $10,388 | | | | $(1,817 | ) | | | $(11,679 | ) | | | $(17,041 | ) |
Inventory Impairment Loss and Land Option Write-Offs | | | 623 | | | | 689 | | | | 3,479 | | | | 7,230 | |
Expenses Associated with the Debt Exchange Offer | | | - | | | | - | | | | - | | | | 4,683 | |
Gain on Extinguishment of Debt | | | - | | | | (6,230 | ) | | | - | | | | (57,966 | ) |
Income (Loss) Before Income Taxes ExcludingLand-Related Charges, Expenses Associated with the Debt Exchange Offer and Gain on Extinguishment of Debt (a) | | | $11,011 | | | | $(7,358 | ) | | | $(8,200 | ) | | | $(63,094 | ) |
(a) Income (Loss) Before Income Taxes Excluding Land-Related Charges, Expenses Associated with the Debt Exchange Offer 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. |
July 31, 2013 |
Gross Margin |
(Dollars in Thousands) |
| | | Homebuilding Gross Margin | | | Homebuilding Gross Margin | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | July 31, | | | July 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | (Unaudited) | | | (Unaudited) | |
Sale of Homes | | | $462,376 | | | | $371,481 | | | | $1,206,233 | | | | $936,305 | |
Cost of Sales, Excluding Interest (a) | | | 368,617 | | | | 303,760 | | | | 978,309 | | | | 772,368 | |
Homebuilding Gross Margin, Excluding Interest | | | 93,759 | | | | 67,721 | | | | 227,924 | | | | 163,937 | |
Homebuilding Cost of Sales Interest | | | 13,702 | | | | 14,178 | | | | 35,089 | | | | 34,829 | |
Homebuilding Gross Margin, Including Interest | | | $80,057 | | | | $53,543 | | | | $192,835 | | | | $129,108 | |
| | | | | | | | | | | | | | | | | |
Gross Margin Percentage, Excluding Interest | | | 20.3 | % | | | 18.2 | % | | | 18.9 | % | | | 17.5 | % |
Gross Margin Percentage, Including Interest | | | 17.3 | % | | | 14.4 | % | | | 16.0 | % | | | 13.8 | % |
| | | Land Sales Gross Margin | | | Land Sales Gross Margin | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | July 31, | | | July 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | (Unaudited) | | | (Unaudited) | |
Land Sales | | | $1,940 | | | | $1,823 | | | | $15,218 | | | | $28,737 | |
Cost of Sales, Excluding Interest (a) | | | 1,847 | | | | 1,418 | | | | 14,053 | | | | 21,800 | |
Land Sales Gross Margin, Excluding Interest | | | 93 | | | | 405 | | | | 1,165 | | | | 6,937 | |
Land Sales Interest | | | 55 | | | | 120 | | | | 222 | | | | 5,262 | |
Land Sales Gross Margin, Including Interest | | | $38 | | | | $285 | | | | $943 | | | | $1,675 | |
(a) Does not include cost associated with walking away from land options or inventory impairment losses which are recorded as Inventory impairment loss and land option write-offs in the Condensed Consolidated Statements of Operations. |
Hovnanian Enterprises, Inc. |
July 31, 2013 |
Reconciliation of Adjusted EBITDA to Net Income (Loss) |
(Dollars in Thousands) |
| | | | Three Months Ended July 31, | | | | Nine Months Ended July 31, | |
| | | | 2013 | | | | 2012 | | | | 2013 | | | | 2012 | |
| | | | (Unaudited) | | | | (Unaudited) | |
Net Income (Loss) | | | $8,466 | | | | $34,676 | | | | $(1,524 | ) | | | $18,213 | |
Income Tax Provision (Benefit) | | | 1,922 | | | | (36,493 | ) | | | (10,155 | ) | | | (35,254 | ) |
Interest Expense | | | 35,706 | | | | 38,888 | | | | 103,892 | | | | 112,732 | |
EBIT (a) | | | 46,094 | | | | 37,071 | | | | 92,213 | | | | 95,691 | |
Depreciation | | | 938 | | | | 1,494 | | | | 3,782 | | | | 4,711 | |
Amortization of Debt Costs | | | 907 | | | | 912 | | | | 2,718 | | | | 2,808 | |
EBITDA (b) | | | 47,939 | | | | 39,477 | | | | 98,713 | | | | 103,210 | |
Inventory Impairment Loss and Land Option Write-offs | | | 623 | | | | 689 | | | | 3,479 | | | | 7,230 | |
Expenses Associated with Debt Exchange Offer | | | - | | | | - | | | | - | | | | 4,683 | |
Gain on Extinguishment of Debt | | | - | | | | (6,230 | ) | | | - | | | | (57,966 | ) |
Adjusted EBITDA (c) | | | $48,562 | | | | $33,936 | | | | $102,192 | | | | $57,157 | |
| | | | | | | | | | | | | | | | | |
Interest Incurred | | | $33,195 | | | | $39,477 | | | | $97,813 | | | | $110,315 | |
| | | | | | | | | | | | | | | | | |
Adjusted EBITDA to Interest Incurred | | | 1.46 | | | | 0.86 | | | | 1.04 | | | | 0.52 | |
(a) 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. |
(b) 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. |
(c) 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, expenses associated with debt exchange offer, and gain on extinguishment of debt. |
Hovnanian Enterprises, Inc. |
July 31, 2013 |
Interest Incurred, Expensed and Capitalized |
(Dollars in Thousands) |
| | | Three Months Ended | | | Nine Months Ended | |
| | | July 31, | | | July 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | (Unaudited) | | | (Unaudited) | |
Interest Capitalized at Beginning of Period | | | $112,488 | | | | $118,435 | | | | $116,056 | | | | $121,441 | |
Plus Interest Incurred | | | 33,195 | | | | 39,477 | | | | 97,813 | | | | 110,315 | |
Less Interest Expensed | | | 35,706 | | | | 38,888 | | | | 103,892 | | | | 112,732 | |
Interest Capitalized at End of Period (a) | | | $109,977 | | | | $119,024 | | | | $109,977 | | | | $119,024 | |
(a) Capitalized interest amounts are shown gross before allocating any portion of impairments to capitalized interest. |
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
| | | July 31, 2013 | | | October 31, 2012 | |
| | | (Unaudited) | | | (1) | |
ASSETS | | | | | | | | |
| | | | | | | | | |
Homebuilding: | | | | | | | | |
Cash | | | $221,500 | | | | $258,323 | |
Restricted cash and cash equivalents | | | 11,085 | | | | 41,732 | |
Inventories: | | | | | | | | |
Sold and unsold homes and lots under development | | | 755,496 | | | | 671,851 | |
Land and land options held for future development or sale | | | 252,847 | | | | 218,996 | |
Consolidated inventory not owned | | | 109,665 | | | | 90,619 | |
Total inventories | | | 1,118,008 | | | | 981,466 | |
Investments in and advances to unconsolidated joint ventures | | | 54,346 | | | | 61,083 | |
Receivables, deposits, and notes – net | | | 47,542 | | | | 61,794 | |
Property, plant, and equipment – net | | | 46,906 | | | | 48,524 | |
Prepaid expenses and other assets | | | 59,981 | | | | 66,694 | |
Total homebuilding | | | 1,559,368 | | | | 1,519,616 | |
| | | | | | | | | |
Financial services: | | | | | | | | |
Cash | | | 5,758 | | | | 14,909 | |
Restricted cash and cash equivalents | | | 12,935 | | | | 22,470 | |
Mortgage loans held for sale at fair value | | | 84,026 | | | | 117,024 | |
Other assets | | | 2,039 | | | | 10,231 | |
Total financial services | | | 104,758 | | | | 164,634 | |
Total assets | | | $1,664,126 | | | | $1,684,250 | |
| | (1) | Derived from the audited balance sheet as of October 31, 2012. |
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share and Per Share Amounts)
| | | July 31, 2013 | | | October 31, 2012 | |
| | | (Unaudited) | | | (1) | |
LIABILITIES AND EQUITY | | | | | | | | |
| | | | | | | | | |
Homebuilding: | | | | | | | | |
Nonrecourse mortgages | | | $55,286 | | | | $38,302 | |
Accounts payable and other liabilities | | | 289,496 | | | | 296,510 | |
Customers’ deposits | | | 37,922 | | | | 23,846 | |
Nonrecourse mortgages secured by operating properties | | | 18,000 | | | | 18,775 | |
Liabilities from inventory not owned | | | 94,484 | | | | 77,791 | |
Total homebuilding | | | 495,188 | | | | 455,224 | |
| | | | | | | | | |
Financial services: | | | | | | | | |
Accounts payable and other liabilities | | | 23,690 | | | | 37,609 | |
Mortgage warehouse lines of credit | | | 57,452 | | | | 107,485 | |
Total financial services | | | 81,142 | | | | 145,094 | |
| | | | | | | | | |
Notes payable: | | | | | | | | |
Senior secured notes | | | 978,295 | | | | 977,369 | |
Senior notes | | | 459,145 | | | | 458,736 | |
Senior amortizing notes | | | 20,857 | | | | 23,149 | |
Senior exchangeable notes | | | 65,772 | | | | 76,851 | |
TEU senior subordinated amortizing notes | | | 3,181 | | | | 6,091 | |
Accrued interest | | | 25,002 | | | | 20,199 | |
Total notes payable | | | 1,552,252 | | | | 1,562,395 | |
Income taxes payable | | | 2,748 | | | | 6,882 | |
Total liabilities | | | 2,131,330 | | | | 2,169,595 | |
| | | | | | | | | |
Equity: | | | | | | | | |
Hovnanian Enterprises, Inc. stockholders’ equity deficit: | | | | | | | | |
Preferred stock, $.01 par value - authorized 100,000 shares; issued 5,600 shares with a liquidation preference of $140,000 at July 31, 2013 and at October 31, 2012 | | | 135,299 | | | | 135,299 | |
Common stock, Class A, $.01 par value – authorized 400,000,000 shares; issued136,305,223 shares at July 31, 2013 and 130,055,304 shares at October 31, 2012 (including 11,760,763 shares at July 31, 2013 and October 31, 2012 held in Treasury) | | | 1,363 | | | | 1,300 | |
Common stock, Class B, $.01 par value (convertible to Class A at time of sale) – authorized 60,000,000 shares; issued 15,348,615 shares at July 31, 2013 and 15,350,101 shares at October 31, 2012 (including 691,748 shares at July 31, 2013 and October 31, 2012 held in Treasury) | | | 153 | | | | 154 | |
Paid in capital - common stock | | | 688,145 | | | | 668,735 | |
Accumulated deficit | | | (1,177,227 | ) | | | (1,175,703 | ) |
Treasury stock - at cost | | | (115,360 | ) | | | (115,360 | ) |
Total Hovnanian Enterprises, Inc. stockholders’ equity deficit | | | (467,627 | ) | | | (485,575 | ) |
Noncontrolling interest in consolidated joint ventures | | | 423 | | | | 230 | |
Total equity deficit | | | (467,204 | ) | | | (485,345 | ) |
Total liabilities and equity | | | $1,664,126 | | | | $1,684,250 | |
(1) Derived from the audited balance sheet as of October 31, 2012.
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)
(Unaudited)
| | | Three Months Ended | | | Nine Months Ended | |
| | | July 31, | | | July 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Revenues: | | | | | | | | | | | | | | | | |
Homebuilding: | | | | | | | | | | | | | | | | |
Sale of homes | | | $462,376 | | | | $371,481 | | | | $1,206,233 | | | | $936,305 | |
Land sales and other revenues | | | 3,103 | | | | 4,743 | | | | 18,114 | | | | 36,014 | |
Total homebuilding | | | 465,479 | | | | 376,224 | | | | 1,224,347 | | | | 972,319 | |
Financial services | | | 12,878 | | | | 10,787 | | | | 35,219 | | | | 25,990 | |
Total revenues | | | 478,357 | | | | 387,011 | | | | 1,259,566 | | | | 998,309 | |
| | | | | | | | | | | | | | | | | |
Expenses: | | | | | | | | | | | | | | | | |
Homebuilding: | | | | | | | | | | | | | | | | |
Cost of sales, excluding interest | | | 370,464 | | | | 305,178 | | | | 992,362 | | | | 794,168 | |
Cost of sales interest | | | 13,757 | | | | 14,298 | | | | 35,311 | | | | 40,091 | |
Inventory impairment loss and land option write-offs | | | 623 | | | | 689 | | | | 3,479 | | | | 7,230 | |
Total cost of sales | | | 384,844 | | | | 320,165 | | | | 1,031,152 | | | | 841,489 | |
Selling, general and administrative | | | 42,331 | | | | 36,230 | | | | 116,904 | | | | 104,609 | |
Total homebuilding expenses | | | 427,175 | | | | 356,395 | | | | 1,148,056 | | | | 946,098 | |
| | | | | | | | | | | | | | | | | |
Financial services | | | 6,640 | | | | 6,111 | | | | 21,205 | | | | 16,651 | |
Corporate general and administrative | | | 14,056 | | | | 11,913 | | | | 40,284 | | | | 36,961 | |
Other interest | | | 21,949 | | | | 24,590 | | | | 68,581 | | | | 72,641 | |
Other operations | | | 1,839 | | | | (3,099 | ) | | | (75 | ) | | | 3,289 | |
Total expenses | | | 471,659 | | | | 395,910 | | | | 1,278,051 | | | | 1,075,640 | |
Gain on extinguishment of debt | | | - | | | | 6,230 | | | | - | | | | 57,966 | |
Income from unconsolidated joint ventures | | | 3,690 | | | | 852 | | | | 6,806 | | | | 2,324 | |
Income (loss) before income taxes | | | 10,388 | | | | (1,817 | ) | | | (11,679 | ) | | | (17,041 | ) |
State and federal income tax provision (benefit): | | | | | | | | | | | | | | | | |
State | | | 1,922 | | | | (36,563 | ) | | | (277 | ) | | | (35,461 | ) |
Federal | | | - | | | | 70 | | | | (9,878 | ) | | | 207 | |
Total income taxes | | | 1,922 | | | | (36,493 | ) | | | (10,155 | ) | | | (35,254 | ) |
Net income (loss) | | | $8,466 | | | | $34,676 | | | | $(1,524 | ) | | | $18,213 | |
| | | | | | | | | | | | | | | | | |
Per share data: | | | | | | | | | | | | | | | | |
Basic: | | | | | | | | | | | | | | | | |
Income (loss) per common share | | | $0.06 | | | | $0.25 | | | | $(0.01 | ) | | | $0.15 | |
Weighted-average number of common shares outstanding | | | 146,056 | | | | 138,472 | | | | 144,840 | | | | 121,357 | |
Assuming dilution: | | | | | | | | | | | | | | | | |
Income (loss) per common share | | | $0.06 | | | | $0.25 | | | | $(0.01 | ) | | | $0.15 | |
Weighted-average number of common shares outstanding | | | 162,823 | | | | 138,552 | | | | 144,840 | | | | 121,380 | |
HOVNANIAN ENTERPRISES, INC. | | | | | | | | | | | | | |
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE) | | | Communities Under Development | | | | | | | | | | | | | |
(UNAUDITED) | | | | | | Three Months - July 31, 2013 | | | | |
| | | | Net Contracts (1) Three Months Ended Jul 31, | | | Deliveries Three Months Ended Jul 31, | | | Contract Backlog Jul 31, | |
| | | | 2013 | | | 2012 | | | % Change | | | 2013 | | | 2012 | | | % Change | | | 2013 | | | 2012 | | | % Change | |
Northeast | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(includes unconsolidated joint ventures) | Home | | | 148 | | | | 160 | | | | (7.5 | )% | | | 186 | | | | 206 | | | | (9.7 | )% | | | 326 | | | | 322 | | | | 1.2 | % |
(NJ, PA) | Dollars | | | $74,012 | | | | $82,295 | | | | (10.1 | )% | | | $91,663 | | | | $104,403 | | | | (12.2 | )% | | | $160,826 | | | | $155,056 | | | | 3.7 | % |
| | Avg. Price | | | $500,083 | | | | $514,341 | | | | (2.8 | )% | | | $492,813 | | | | $506,811 | | | | (2.8 | )% | | | $493,331 | | | | $481,540 | | | | 2.4 | % |
Mid-Atlantic | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(includes unconsolidated joint ventures) | Home | | | 194 | | | | 189 | | | | 2.6 | % | | | 256 | | | | 223 | | | | 14.8 | % | | | 419 | | | | 438 | | | | (4.3 | )% |
(DE, MD, VA, WV) | Dollars | | | $96,977 | | | | $82,805 | | | | 17.1 | % | | | $119,698 | | | | $92,484 | | | | 29.4 | % | | | $209,207 | | | | $189,875 | | | | 10.2 | % |
| | Avg. Price | | | $499,881 | | | | $438,124 | | | | 14.1 | % | | | $467,569 | | | | $414,726 | | | | 12.7 | % | | | $499,300 | | | | $433,505 | | | | 15.2 | % |
Midwest | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(includes unconsolidated joint ventures) | Home | | | 258 | | | | 208 | | | | 24.0 | % | | | 184 | | | | 160 | | | | 15.0 | % | | | 691 | | | | 538 | | | | 28.4 | % |
(IL, MN, OH) | Dollars | | | $64,484 | | | | $53,425 | | | | 20.7 | % | | | $46,329 | | | | $36,688 | | | | 26.3 | % | | | $168,220 | | | | $123,274 | | | | 36.5 | % |
| | Avg. Price | | | $249,936 | | | | $256,853 | | | | (2.7 | )% | | | $251,785 | | | | $229,300 | | | | 9.8 | % | | | $243,444 | | | | $229,133 | | | | 6.2 | % |
Southeast | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(includes unconsolidated joint ventures) | Home | | | 217 | | | | 175 | | | | 24.0 | % | | | 153 | | | | 121 | | | | 26.4 | % | | | 436 | | | | 310 | | | | 40.6 | % |
(FL, GA, NC, SC) | Dollars | | | $68,528 | | | | $45,783 | | | | 49.7 | % | | | $43,310 | | | | $30,305 | | | | 42.9 | % | | | $132,383 | | | | $80,384 | | | | 64.7 | % |
| | Avg. Price | | | $315,799 | | | | $261,615 | | | | 20.7 | % | | | $283,075 | | | | $250,455 | | | | 13.0 | % | | | $303,631 | | | | $259,304 | | | | 17.1 | % |
Southwest | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(includes unconsolidated joint ventures) | Home | | | 663 | | | | 614 | | | | 8.0 | % | | | 606 | | | | 529 | | | | 14.6 | % | | | 882 | | | | 635 | | | | 38.9 | % |
(AZ, TX) | Dollars | | | $195,403 | | | | $166,120 | | | | 17.6 | % | | | $181,593 | | | | $139,407 | | | | 30.3 | % | | | $287,719 | | | | $180,660 | | | | 59.3 | % |
| | Avg. Price | | | $294,726 | | | | $270,553 | | | | 8.9 | % | | | $299,658 | | | | $263,529 | | | | 13.7 | % | | | $326,212 | | | | $284,505 | | | | 14.7 | % |
West | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(includes unconsolidated joint ventures) | Home | | | 88 | | | | 195 | | | | (54.9 | )% | | | 117 | | | | 148 | | | | (20.9 | )% | | | 139 | | | | 209 | | | | (33.5 | )% |
(CA) | Dollars | | | $47,470 | | | | $76,522 | | | | (38.0 | )% | | | $56,474 | | | | $57,498 | | | | (1.8 | )% | | | $74,004 | | | | $84,677 | | | | (12.6 | )% |
| | Avg. Price | | | $539,432 | | | | $392,421 | | | | 37.5 | % | | | $482,685 | | | | $388,500 | | | | 24.2 | % | | | $532,405 | | | | $405,150 | | | | 31.4 | % |
Grand Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Home | | | 1,568 | | | | 1,541 | | | | 1.8 | % | | | 1,502 | | | | 1,387 | | | | 8.3 | % | | | 2,893 | | | | 2,452 | | | | 18.0 | % |
| | Dollars | | | $546,874 | | | | $506,950 | | | | 7.9 | % | | | $539,067 | | | | $460,785 | | | | 17.0 | % | | | $1,032,359 | | | | $813,926 | | | | 26.8 | % |
| | Avg. Price | | | $348,772 | | | | $328,974 | | | | 6.0 | % | | | $358,899 | | | | $332,217 | | | | 8.0 | % | | | $356,847 | | | | $331,944 | | | | 7.5 | % |
Consolidated Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Home | | | 1,448 | | | | 1,382 | | | | 4.8 | % | | | 1,341 | | | | 1,212 | | | | 10.6 | % | | | 2,569 | | | | 2,132 | | | | 20.5 | % |
| | Dollars | | | $494,594 | | | | $423,396 | | | | 16.8 | % | | | $462,376 | | | | $371,481 | | | | 24.5 | % | | | $897,186 | | | | $674,159 | | | | 33.1 | % |
| | Avg. Price | | | $341,571 | | | | $306,365 | | | | 11.5 | % | | | $344,800 | | | | $306,502 | | | | 12.5 | % | | | $349,236 | | | | $316,210 | | | | 10.4 | % |
Unconsolidated Joint Ventures | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Home | | | 120 | | | | 159 | | | | (24.5 | )% | | | 161 | | | | 175 | | | | (8.0 | )% | | | 324 | | | | 320 | | | | 1.3 | % |
| | Dollars | | | $52,280 | | | | $83,554 | | | | (37.4 | )% | | | $76,691 | | | | $89,304 | | | | (14.1 | )% | | | $135,173 | | | | $139,767 | | | | (3.3 | )% |
| | Avg. Price | | | $435,667 | | | | $525,494 | | | | (17.1 | )% | | | $476,339 | | | | $510,309 | | | | (6.7 | )% | | | $417,201 | | | | $436,770 | | | | (4.5 | )% |
DELIVERIES INCLUDE EXTRAS |
Notes: |
(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts. |
HOVNANIAN ENTERPRISES, INC. | | | | | | | | | |
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE) | | | Communities Under Development | | | | | | | | | | | | | |
(UNAUDITED) | | | | | | Nine Months - July 31, 2013 | | | | |
| | | | Net Contracts (1) Nine Months Ended Jul 31, | | | Deliveries Nine Months Ended Jul 31, | | | Contract Backlog Jul 31, | |
| | | | 2013 | | | 2012 | | | % Change | | | 2013 | | | 2012 | | | % Change | | | 2013 | | | 2012 | | | % Change | |
Northeast | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(includes unconsolidated joint ventures) | Home | | | 497 | | | | 472 | | | | 5.3 | % | | | 465 | | | | 516 | | | | (9.9 | )% | | | 326 | | | | 322 | | | | 1.2 | % |
(NJ, PA) | Dollars | | | $254,210 | | | | $239,378 | | | | 6.2 | % | | | $234,338 | | | | $255,705 | | | | (8.4 | )% | | | $160,826 | | | | $155,056 | | | | 3.7 | % |
| | Avg. Price | | | $511,490 | | | | $507,157 | | | | 0.9 | % | | | $503,953 | | | | $495,552 | | | | 1.7 | % | | | $493,331 | | | | $481,540 | | | | 2.4 | % |
Mid-Atlantic | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(includes unconsolidated joint ventures) | Home | | | 699 | | | | 625 | | | | 11.8 | % | | | 646 | | | | 557 | | | | 16.0 | % | | | 419 | | | | 438 | | | | (4.3 | )% |
(DE, MD, VA, WV) | Dollars | | | $335,076 | | | | $263,575 | | | | 27.1 | % | | | $289,068 | | | | $227,540 | | | | 27.0 | % | | | $209,207 | | | | $189,875 | | | | 10.2 | % |
| | Avg. Price | | | $479,365 | | | | $421,720 | | | | 13.7 | % | | | $447,474 | | | | $408,508 | | | | 9.5 | % | | | $499,300 | | | | $433,505 | | | | 15.2 | % |
Midwest | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(includes unconsolidated joint ventures) | Home | | | 730 | | | | 638 | | | | 14.4 | % | | | 538 | | | | 400 | | | | 34.5 | % | | | 691 | | | | 538 | | | | 28.4 | % |
(IL, MN, OH) | Dollars | | | $186,336 | | | | $148,245 | | | | 25.7 | % | | | $134,034 | | | | $92,140 | | | | 45.5 | % | | | $168,220 | | | | $123,274 | | | | 36.5 | % |
| | Avg. Price | | | $255,254 | | | | $232,360 | | | | 9.9 | % | | | $249,134 | | | | $230,350 | | | | 8.2 | % | | | $243,444 | | | | $229,133 | | | | 6.2 | % |
Southeast | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(includes unconsolidated joint ventures) | Home | | | 590 | | | | 484 | | | | 21.9 | % | | | 437 | | | | 342 | | | | 27.8 | % | | | 436 | | | | 310 | | | | 40.6 | % |
(FL, GA, NC, SC) | Dollars | | | $175,073 | | | | $122,269 | | | | 43.2 | % | | | $122,030 | | | | $85,326 | | | | 43.0 | % | | | $132,383 | | | | $80,384 | | | | 64.7 | % |
| | Avg. Price | | | $296,733 | | | | $252,622 | | | | 17.5 | % | | | $279,245 | | | | $249,491 | | | | 11.9 | % | | | $303,631 | | | | $259,304 | | | | 17.1 | % |
Southwest | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(includes unconsolidated joint ventures) | Home | | | 2,001 | | | | 1,667 | | | | 20.0 | % | | | 1,625 | | | | 1,363 | | | | 19.2 | % | | | 882 | | | | 635 | | | | 38.9 | % |
(AZ, TX) | Dollars | | | $590,189 | | | | $436,508 | | | | 35.2 | % | | | $463,309 | | | | $344,844 | | | | 34.4 | % | | | $287,719 | | | | $180,660 | | | | 59.3 | % |
| | Avg. Price | | | $294,947 | | | | $261,852 | | | | 12.6 | % | | | $285,113 | | | | $253,004 | | | | 12.7 | % | | | $326,212 | | | | $284,505 | | | | 14.7 | % |
West | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(includes unconsolidated joint ventures) | Home | | | 345 | | | | 509 | | | | (32.2 | )% | | | 403 | | | | 428 | | | | (5.8 | )% | | | 139 | | | | 209 | | | | (33.5 | )% |
(CA) | Dollars | | | $165,289 | | | | $192,723 | | | | (14.2 | )% | | | $173,258 | | | | $149,520 | | | | 15.9 | % | | | $74,004 | | | | $84,677 | | | | (12.6 | )% |
| | Avg. Price | | | $479,099 | | | | $378,630 | | | | 26.5 | % | | | $429,921 | | | | $349,346 | | | | 23.1 | % | | | $532,405 | | | | $405,150 | | | | 31.4 | % |
Grand Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Home | | | 4,862 | | | | 4,395 | | | | 10.6 | % | | | 4,114 | | | | 3,606 | | | | 14.1 | % | | | 2,893 | | | | 2,452 | | | | 18.0 | % |
| | Dollars | | | $1,706,173 | | | | $1,402,698 | | | | 21.6 | % | | | $1,416,037 | | | | $1,155,075 | | | | 22.6 | % | | | $1,032,359 | | | | $813,926 | | | | 26.8 | % |
| | Avg. Price | | | $350,920 | | | | $319,158 | | | | 10.0 | % | | | $344,200 | | | | $320,320 | | | | 7.5 | % | | | $356,847 | | | | $331,944 | | | | 7.5 | % |
Consolidated Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Home | | | 4,338 | | | | 3,848 | | | | 12.7 | % | | | 3,658 | | | | 3,144 | | | | 16.3 | % | | | 2,569 | | | | 2,132 | | | | 20.5 | % |
| | Dollars | | | $1,471,102 | | | | $1,138,104 | | | | 29.3 | % | | | $1,206,233 | | | | $936,305 | | | | 28.8 | % | | | $897,186 | | | | $674,159 | | | | 33.1 | % |
| | Avg. Price | | | $339,120 | | | | $295,765 | | | | 14.7 | % | | | $329,752 | | | | $297,807 | | | | 10.7 | % | | | $349,236 | | | | $316,210 | | | | 10.4 | % |
Unconsolidated Joint Ventures | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Home | | | 524 | | | | 547 | | | | (4.2 | )% | | | 456 | | | | 462 | | | | (1.3 | )% | | | 324 | | | | 320 | | | | 1.3 | % |
| | Dollars | | | $235,071 | | | | $264,594 | | | | (11.2 | )% | | | $209,804 | | | | $218,770 | | | | (4.1 | )% | | | $135,173 | | | | $139,767 | | | | (3.3 | )% |
| | Avg. Price | | | $448,607 | | | | $483,718 | | | | (7.3 | )% | | | $460,095 | | | | $473,528 | | | | (2.8 | )% | | | $417,201 | | | | $436,770 | | | | (4.5 | )% |
DELIVERIES INCLUDE EXTRAS |
Notes: |
(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts. |
