Hovnanian Enterprises 8K Results of Operations and Financial Condition | HOV 5 Dec 23

Exhibit 99.1

HOVNANIAN ENTERPRISES, INC.

News Release


Contact:	Brad G. O’Connor	Jeffrey T. O’Keefe
	Chief Financial Officer & Treasurer	Vice President, Investor Relations
	732-747-7800	732-747-7800

HOVNANIAN ENTERPRISES REPORTS FISCAL 2023 FOURTH QUARTER AND FULL YEAR RESULTS

$121 million of Quarterly Pretax Income Best in More Than 16 Years

Net Contracts per Community Increased 66% Year-Over-Year

Book Value Rose 80% Year-Over-Year to $73 per Share

Refinanced Over $600 Million of Secured Debt, Extending Maturities Until the Fourth Quarters of 2028 and 2029, Including $114 Million of Bond Redemptions that Occurred after the Quarter End

Total Liquidity Climbed to $564 Million, the Highest in More Than 14 Years

Provided Guidance for a Significant Year-Over-Year Profit Increase in the First Quarter

MATAWAN, NJ, December 5, 2023 – Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal fourth quarter and year ended October 31, 2023.

RESULTS FOR THE THREE-MONTHS AND FULL YEAR ENDED OCTOBER 31, 2023:

●

Total revenues were $887.0 million (including 1,517 deliveries) in the fourth quarter of fiscal 2023, compared with $886.8 million (including 1,599 deliveries) in the same quarter of the prior year. For the year ended October 31, 2023, total revenues were $2.76 billion (including 4,878 deliveries) compared with $2.92 billion (including 5,538 deliveries) in fiscal 2022.

●

Domestic unconsolidated joint venture deliveries for the fourth quarter of 2023 increased 8.9% to 196 homes compared with 180 homes for the three months ended October 31, 2022. Domestic unconsolidated joint venture deliveries for fiscal 2023 increased 7.8% to 595 homes from 552 homes in fiscal 2022. Additionally, deliveries of homes through our unconsolidated joint venture in the Kingdom of Saudi Arabia contributed $9.4 million of income from unconsolidated joint ventures for the quarter.

●

Homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 21.4% for the three months ended October 31, 2023, compared with 19.6% during the fourth quarter a year ago. In fiscal 2023, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 19.6% compared with 21.5% in the prior fiscal year.

●

Homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 24.5% in the fiscal 2023 fourth quarter compared with 24.2% in last year’s fourth quarter. For the year ended October 31, 2023, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 22.7% compared with 25.0% in the previous fiscal year.

●

Total SG&A was $80.8 million, or 9.1% of total revenues, in the fourth quarter of fiscal 2023 compared with $80.9 million, or 9.1% of total revenues, in the previous year’s fourth quarter. In fiscal 2023, total SG&A was $304.8 million, or 11.1% of total revenues, compared with $296.2 million, or 10.1% of total revenues, in the prior fiscal year.

●

Total interest expense as a percent of total revenues was 4.1% for the fourth quarter of fiscal 2023 compared with 4.4% for the fourth quarter of fiscal 2022. For the year ended October 31, 2023, total interest expense as a percent of total revenues was 4.9% compared with 4.5% in the previous fiscal year.

●

Income before income taxes for the fourth quarter of fiscal 2023 increased 32.7% to $121.4 million compared with $91.5 million in the fourth quarter of the prior fiscal year. For fiscal 2023, income before income taxes was $256.0 million compared with $319.8 million in the prior fiscal year.

●

Income before income taxes excluding land-related charges and loss on extinguishment of debt increased 38.4% to $143.6 million in the fourth quarter of fiscal 2023 compared with income before these items of $103.7 million in the fourth quarter of fiscal 2022. For fiscal 2023, income before income taxes excluding land-related charges and loss on extinguishment of debt was $283.1 million compared with income before these items of $340.6 million for fiscal 2022.

●

Net income was $97.3 million, or $13.05 per diluted common share, for the three months ended October 31, 2023, compared with net income of $55.6 million, or $7.24 per diluted common share, in the same period of the previous fiscal year. For fiscal 2023, net income was $205.9 million, or $26.88 per diluted common share, compared with net income of $225.5 million, or $29.00 per diluted common share, in fiscal 2022.

●

EBITDA increased 20.3% to $159.1 million for the fourth quarter of fiscal 2023 compared with $132.2 million for the fourth quarter of the prior year. For fiscal 2023, EBITDA was $399.7 million compared with $457.8 million in the prior year.

●

Adjusted EBITDA increased 25.5% to $181.2 million for the fourth quarter of fiscal 2023 compared with $144.4 million for the fourth quarter of the prior year. For fiscal 2023, adjusted EBITDA was $426.8 million compared with $478.7 million in the prior year.

●

Consolidated contracts in the fourth quarter of fiscal 2023 increased 55.8% to 938 homes ($564.1 million) compared with 602 homes ($343.7 million) in the same quarter last year. Contracts, including domestic unconsolidated joint ventures¹, for the three months ended October 31, 2023, increased 51.5% to 1,065 homes ($648.4 million) compared with 703 homes ($412.9 million) in the fourth quarter of fiscal 2022.

●

As of October 31, 2023, consolidated community count was 113 communities, compared with 102 communities at July 31, 2023 and 121 communities on October 31, 2022. Community count, including domesticunconsolidated joint ventures, was 129 as of October 31, 2023 compared with 122 communities at July 31, 2023 and 133 communities at the end of the prior year.

●

Consolidated contracts per community increased 66.0% year-over-year to 8.3 in the fourth quarter of fiscal 2023 compared with 5.0 contracts per community for the fourth quarter of fiscal 2022. Contracts per community, including domestic unconsolidated joint ventures, increased 56.6% to 8.3 in the three months ended October 31, 2023 compared with 5.3 contracts per community in the same quarter one year ago.

●

The dollar value of consolidated contract backlog, as of October 31, 2023, decreased 16.4% to $1.06 billion compared with $1.27 billion as of October 31, 2022. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of October 31, 2023, decreased 12.5% to $1.32 billion compared with $1.50 billion as of October 31, 2022.

●

The gross contract cancellation rate for consolidated contracts was 25% for the fourth quarter ended October 31, 2023 compared with 41% in the fiscal 2022 fourth quarter. The gross contract cancellation rate for contracts, including domestic unconsolidated joint ventures, was 24% for the fourth quarter of fiscal 2023 compared with 39% in the fourth quarter of the prior year.

⁽¹⁾When we refer to “Domestic Unconsolidated Joint Ventures”, we are excluding results from our multi-community unconsolidated joint venture in the Kingdom of Saudi Arabia (KSA).

LIQUIDITY AND INVENTORY AS OF OCTOBER 31, 2023:

●

During the fourth quarter of fiscal 2023, land and land development spending was $219.6 million compared with $205.2 million in the same quarter one year ago. For fiscal 2023, land and land development spending was $679.3 million compared with $759.3 million for the previous year.

●

Total liquidity as of October 31, 2023 was $564.2 million, the highest level since the third quarter of fiscal 2009 and significantly above our targeted liquidity range of $170 million to $245 million.

●

In August of 2023, we redeemed $100 million principal amount of our 7.75% Senior Secured 1.125 Lien Notes due 2026, at a purchase price of $102.2 million, which included accrued and unpaid interest and in September 2023, we repurchased $45.0 million principal amount of our 10.0% Senior Secured 1.75 Lien Notes due 2025 at a purchase price of $46.7 million, which included accrued and unpaid interest.

●

In November 2023, in conjunction with the debt refinancing, discussed below, the Company retired an additional $113.5 million principal amount of its 10.00% Senior Secured 1.75 Lien Notes due 2025, at par plus accrued and unpaid interest, two years in advance of maturity. We have reduced our total debt by $704 million, or 40.2%, since the beginning of fiscal 2020.

●

In the fourth quarter of fiscal 2023, approximately 4,800 lots were put under option or acquired in 49 consolidated communities.

●

As of October 31, 2023, our total controlled consolidated lots were 31,726, an increase compared with both 31,518 lots at the end of the fourth quarter of the previous year and 29,487 lots at July 31, 2023. Based on trailing twelve-month deliveries, the current position equaled a 6.5 years’ supply.

●

Total homebuilding debt to capitalization as of October 31, 2023 was 66.3%, a significant improvement from 88.7% as of October 31, 2021. Net homebuilding debt to net capitalization as of October 31, 2023 was 54.9%, an even more significant improvement from 86.6% as of October 31, 2021.

DEBT REFINANCING:

●

The Company issued and sold in a private placement $225.0 million aggregate principal amount of new 8.0% Senior Secured 1.125 Lien Notes due 2028 and $430.0 million aggregate principal amount of new 11.75% Senior Secured 1.25 Lien Notes due 2029.

●

The Company redeemed with the proceeds from the new issuances all outstanding amounts of each series of its existing secured notes consisting of 7.75% Senior Secured 1.125 Lien Notes due 2026, 10.5% Senior Secured 1.25 Lien Notes due 2026, 11.25% Senior Secured 1.5 Lien Notes due 2026 and 10.0% Senior Secured 1.75 Lien Notes due 2025.

●

The Company entered into a Third Amendment to the Credit Agreement governing its $125 million secured revolving credit facility which, among other things, extended the final scheduled maturity thereof by two years to June 30, 2026.

●

Key benefits of the refinancing

Increased maturity runway: The transaction refinanced all of the Company’s secured debt maturing in fiscal 2026 and proactively extended these maturities until the fourth quarters of fiscal 2028 and fiscal 2029.

Nominal increase in interest incurred: Given the recent rise in interest rates, we are pleased that the transaction resulted in almost no increase in annual interest incurred.

Extended the revolver maturity: The transaction extended the maturity of the revolver, which was the nearest term maturity, from next fiscal year to the third quarter of fiscal 2026.

FINANCIAL GUIDANCE⁽²⁾:

The Company is providing guidance for total revenues, adjusted homebuilding gross margin, adjusted income before income taxes and adjusted EBITDA for the first quarter of fiscal 2024. Financial guidance below assumes no adverse changes in current market conditions, including further deterioration in our supply chain or material increases in mortgage rates, inflation or cancellation rates, and excludes further impact to SG&A expenses from phantom stock expense related solely to stock price movements from the closing price of $69.48 on October 31, 2023.

For the first quarter of fiscal 2024, total revenues are expected to be between $525 million and $625 million, adjusted homebuilding gross margin is expected to be between 22.0% and 23.5%, adjusted income before income taxes is expected to be between $25 million and $40 million and adjusted EBITDA is expected to be between $55 million and $70 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 impairments and land option write-offs and loss on extinguishment of debt, net. These items are uncertain, depend on various factors and could have a material impact on GAAP reported results.

COMMENTS FROM MANAGEMENT:

“We are thrilled with our operating results for the fourth quarter and the fiscal year, as they far exceeded our expectations at the onset of the year. Total revenues, adjusted EBITDA, adjusted income before income taxes, EPS, and book value per common share all exceeded the upper end of our guidance,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “Demand for new homes remains healthy and is supported by strong demographic trends, a resilient job market and a low supply of existing homes for sale. Our sales pace declined in the fourth quarter as mortgage rates rose and affordability worsened. However, we had an ample supply of QMI homes, which, when combined with rate buydowns through our mortgage company, allowed us to offer incentives to help make homes more affordable for our homebuyers. This led to a 66% year-over-year improvement in contracts per community for the quarter. We will continue to adjust incentives to maintain an acceptable sales pace. Fortunately, while sales slowed during the quarter, gross margins remained high, which helps absorb the higher cost of incentives and rate buy downs.”

“We ended the year with $564 million of total liquidity, which is more than twice the upper end of our target range. We refinanced over $600 million of secured debt, including $114 million from redemptions that occurred after year end, which extended the maturities from the first and second quarters of fiscal 2026 until the fourth quarters of fiscal 2028 and fiscal 2029. Our excess liquidity will allow us to further grow our land position and thus increase our community count, which should result in higher levels of profitability in future years. At the same time, our strong cash flow allows us to continue to strengthen our balance sheet. Given our rapidly growing book value and significant debt reductions, which benefited from enhanced cash flow that resulted from our deferred tax asset, we think it is appropriate to consider a variety of metrics, including return on equity, enterprise value to adjusted EBITDA, EBIT return on investment and price to earnings multiple, when establishing a fair value for our stock. As we look ahead, we are excited about our prospects given the strength of long-term fundamentals underlying the new home market.”

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2023 fourth quarter financial results conference call at 11:00 a.m. E.T. on Tuesday, December 5, 2023. 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, 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 income before income taxes, 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 income before income taxes to income before income taxes is presented in a table attached to this earnings release.

Net homebuilding debt to net capitalization ratio is a non-GAAP financial measure we calculate by dividing (i) nonrecourse mortgages secured by inventory, net of debt issuance costs and senior notes and credit facilities (net of discounts, premiums and debt issuance costs), net of cash and cash equivalents (“net homebuilding debt”), by (ii) the sum of net homebuilding debt and total equity (“net capitalization”). Because we use the ratio of net homebuilding debt to net capitalization to evaluate our performance against other companies in the homebuilding industry, we believe this measure is also relevant and useful to investors for that reason. The calculation of net homebuilding debt to net capitalization ratio is presented in a table attached to this earnings release.

Total liquidity is comprised of $434.1 million of cash and cash equivalents, $5.1 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, 2023.

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, mortgage rates, inflation, supply chain issues, 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, including as a result of instability in the banking sector; (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) public health issues such as major epidemic or 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, 2022 and the Company’s Quarterly Reports on Form 10-Q for the quarterly periods during fiscal 2023 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, 2023

Statements of consolidated operations

(In thousands, except per share data)

	Three Months Ended					Year Ended
	October 31,					October 31,
	2023			2022		2023			2022
	(Unaudited)					(Unaudited)
Total revenues	$	887,032		$	886,788	$	2,756,016		$	2,922,231
Costs and expenses (1)		766,276			800,422		2,517,587			2,624,716
Loss on extinguishment of debt, net		(21,556	)		-		(25,638	)		(6,795	)
Income from unconsolidated joint ventures		22,191			5,114		43,160			29,033
Income before income taxes		121,391			91,480		255,951			319,753
Income tax provision		24,126			35,847		50,060			94,263
Net income		97,265			55,633		205,891			225,490
Less: preferred stock dividends		2,668			2,668		10,675			10,675
Net income available to common stockholders	$	94,597		$	52,965	$	195,216		$	214,815



Per share data:
Basic:
Net income per common share	$	13.98		$	7.55	$	28.76		$	30.31
Weighted average number of common shares outstanding		6,317			6,478		6,230			6,437
Assuming dilution:
Net income per common share	$	13.05		$	7.24	$	26.88		$	29.00
Weighted average number of common shares outstanding		6,764			6,750		6,666			6,728

(1) Includes inventory impairments and land option write-offs.

Hovnanian Enterprises, Inc.

October 31, 2023

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,
	2023		2022		2023		2022
	(Unaudited)				(Unaudited)
Income before income taxes	$	121,391	$	91,480	$	255,951	$	319,753
Inventory impairments and land option write-offs		614		12,239		1,536		14,076
Loss on extinguishment of debt, net		21,556		-		25,638		6,795
Income before income taxes excluding land-related charges and loss on extinguishment of debt, net (1)	$	143,561	$	103,719	$	283,125	$	340,624

(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, 2023

Gross margin

(In thousands)

	Homebuilding Gross Margin						Homebuilding Gross Margin
	Three Months Ended						Year Ended
	October 31,						October 31,
	2023			2022			2023			2022
	(Unaudited)						(Unaudited)
Sale of homes	$	829,733		$	866,611		$	2,630,457		$	2,840,454
Cost of sales, excluding interest expense and land charges (1)		626,424			656,805			2,032,136			2,131,208
Homebuilding gross margin, before cost of sales interest expense and land charges (2)		203,309			209,806			598,321			709,246
Cost of sales interest expense, excluding land sales interest expense		25,101			27,343			79,894			85,198
Homebuilding gross margin, after cost of sales interest expense, before land charges (2)		178,208			182,463			518,427			624,048
Land charges		614			12,239			1,536			14,076
Homebuilding gross margin	$	177,594		$	170,224		$	516,891		$	609,972

Homebuilding gross margin percentage		21.4	%		19.6	%		19.6	%		21.5	%
Homebuilding gross margin percentage, before cost of sales interest expense and land charges (2)		24.5	%		24.2	%		22.7	%		25.0	%
Homebuilding gross margin percentage, after cost of sales interest expense, before land charges (2)		21.5	%		21.1	%		19.7	%		22.0	%

	Land Sales Gross Margin					Land Sales Gross Margin
	Three Months Ended					Year Ended
	October 31,					October 31,
	2023		2022			2023		2022
	(Unaudited)					(Unaudited)
Land and lot sales	$	32,175	$	15		$	48,217	$	16,202
Cost of sales, excluding interest (1)		10,724		83			20,664		5,855
Land and lot sales gross margin, excluding interest and land charges		21,451		(68	)		27,553		10,347
Land and lot sales interest expense		-		21			926		42
Land and lot sales gross margin, including interest	$	21,451	$	(89	)	$	26,627	$	10,305

(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 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, 2023
Reconciliation of adjusted EBITDA to net income
(In thousands)

	Three Months Ended				Year Ended
	October 31,				October 31,
	2023		2022		2023		2022
	(Unaudited)				(Unaudited)
Net income	$	97,265	$	55,633	$	205,891	$	225,490
Income tax provision		24,126		35,847		50,060		94,263
Interest expense		36,087		39,265		134,902		132,583
EBIT (1)		157,478		130,745		390,853		452,336
Depreciation and amortization		1,575		1,448		8,798		5,457
EBITDA (2)		159,053		132,193		399,651		457,793
Inventory impairments and land option write-offs		614		12,239		1,536		14,076
Loss on extinguishment of debt, net		21,556		-		25,638		6,795
Adjusted EBITDA (3)	$	181,223	$	144,432	$	426,825	$	478,664

Interest incurred	$	32,873	$	34,725	$	136,535	$	134,024

Adjusted EBITDA to interest incurred		5.51		4.16		3.13		3.57

(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 and inventory impairments and land option write-offs and loss on extinguishment of debt, net.

Hovnanian Enterprises, Inc.
October 31, 2023
Interest incurred, expensed and capitalized
(In thousands)

	Three Months Ended						Year Ended
	October 31,						October 31,
	2023			2022			2023			2022
	(Unaudited)						(Unaudited)
Interest capitalized at beginning of period	$	55,274		$	64,140		$	59,600		$	58,159
Plus: interest incurred		32,873			34,725			136,535			134,024
Less: interest expensed		(36,087	)		(39,265	)		(134,902	)		(132,583	)
Less: interest contributed to unconsolidated joint venture (1)		-			-			(9,456	)		-
Plus: interest acquired from unconsolidated joint venture (2)		-			-			283			-
Interest capitalized at end of period (3)	$	52,060		$	59,600		$	52,060		$	59,600

(1) Represents capitalized interest which was included as part of the assets contributed to joint ventures the company entered into during the year ended October 31, 2023. There was no impact to the Consolidated Statement of Operations as a result of these transactions.

(2) Represents capitalized interest which was included as part of the assets purchased from a joint venture the company closed out during the year ended October 31, 2023. 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.
October 31, 2023
Net Homebuilding Debt to Net Capitalization Reconciliation
(In thousands)

	Year Ended
	October 31,
	2023			2021
	(Unaudited)
Nonrecourse mortgages secured by inventory, net of debt issuance costs	$	91,539		$	125,089
Senior notes and credit facilities (net of discounts, premiums and debt issuance costs)		1,051,491			1,248,373
Total homebuilding debt	$	1,143,030		$	1,373,462
Total equity		581,736			174,897
Total capitalization	$	1,724,766		$	1,548,359

Total homebuilding debt to capitalization		66.3	%		88.7	%

Total homebuilding debt	$	1,143,030		$	1,373,462
Cash and cash equivalents		434,119			245,970
Net homebuilding debt	$	708,911		$	1,127,492
Total equity	$	581,736		$	174,897
Net capitalization	$	1,290,647		$	1,302,389

Net homebuilding debt to net capitalization		54.9	%		86.6	%

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

	October 31,			October 31,
	2023			2022

ASSETS
Homebuilding:
Cash and cash equivalents	$	434,119		$	326,198
Restricted cash and cash equivalents		8,431			13,382
Inventories:
Sold and unsold homes and lots under development		998,841			1,058,183
Land and land options held for future development or sale		125,587			152,406
Consolidated inventory not owned		224,758			308,595
Total inventories		1,349,186			1,519,184
Investments in and advances to unconsolidated joint ventures		97,886			74,940
Receivables, deposits and notes, net		27,982			37,837
Property and equipment, net		33,946			25,819
Prepaid expenses and other assets		69,886			63,884
Total homebuilding		2,021,436			2,061,244

Financial services		168,671			155,993

Deferred tax assets, net		302,833			344,793
Total assets	$	2,492,940		$	2,562,030

LIABILITIES AND EQUITY
Homebuilding:
Nonrecourse mortgages secured by inventory, net of debt issuance costs	$	91,539		$	144,805
Accounts payable and other liabilities		415,480			439,952
Customers’ deposits		51,419			74,020
Liabilities from inventory not owned, net of debt issuance costs		124,254			202,492
Senior notes and credit facilities (net of discounts, premiums and debt issuance costs)		1,051,491			1,146,547
Accrued interest		26,926			32,415
Total homebuilding		1,761,109			2,040,231

Financial services		148,181			135,581

Income taxes payable		1,861			3,167
Total liabilities		1,911,151			2,178,979

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, 2023 and October 31, 2022		135,299			135,299
Common stock, Class A, $0.01 par value - authorized 16,000,000 shares; issued 6,247,308 shares at October 31, 2023 and 6,159,886 shares at October 31, 2022		62			62
Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) - authorized 2,400,000 shares; issued 776,750 shares at October 31, 2023 and 733,374 shares at October 31, 2022		8			7
Paid in capital - common stock		735,946			727,663
Accumulated deficit		(157,197	)		(352,413	)
Treasury stock - at cost – 901,379 shares of Class A common stock at October 31, 2023 and 782,901 shares at October 31, 2022; 27,669 shares of Class B common stock at October 31, 2023 and October 31, 2022		(132,382	)		(127,582	)
Total Hovnanian Enterprises, Inc. stockholders’ equity		581,736			383,036
Noncontrolling interest in consolidated joint ventures		53			15
Total equity		581,789			383,051
Total liabilities and equity	$	2,492,940		$	2,562,030

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,
	2023			2022		2023			2022

Revenues:
Homebuilding:
Sale of homes	$	829,733		$	866,611	$	2,630,457		$	2,840,454
Land sales and other revenues		38,227			2,185		65,471			20,237
Total homebuilding		867,960			868,796		2,695,928			2,860,691
Financial services		19,072			17,992		60,088			61,540
Total revenues		887,032			886,788		2,756,016			2,922,231

Expenses:
Homebuilding:
Cost of sales, excluding interest		637,148			656,888		2,052,800			2,137,063
Cost of sales interest		25,101			27,364		80,820			85,240
Inventory impairment loss and land option write-offs		614			12,239		1,536			14,076
Total cost of sales		662,863			696,491		2,135,156			2,236,379
Selling, general and administrative		55,488			54,126		201,578			193,536
Total homebuilding expenses		718,351			750,617		2,336,734			2,429,915

Financial services		11,173			10,437		40,723			42,419
Corporate general and administrative		25,262			26,725		103,196			102,618
Other interest		10,986			11,901		54,082			47,343
Other expense (income), net (1)		504			742		(17,148	)		2,421
Total expenses		766,276			800,422		2,517,587			2,624,716
Loss on extinguishment of debt, net		(21,556	)		-		(25,638	)		(6,795	)
Income from unconsolidated joint ventures		22,191			5,114		43,160			29,033
Income before income taxes		121,391			91,480		255,951			319,753
State and federal income tax provision:
State		445			22,684		3,239			34,199
Federal		23,681			13,163		46,821			60,064
Total income taxes		24,126			35,847		50,060			94,263
Net income		97,265			55,633		205,891			225,490
Less: preferred stock dividends		2,668			2,668		10,675			10,675
Net income available to common stockholders	$	94,597		$	52,965	$	195,216		$	214,815

Per share data:
Basic:
Net income per common share	$	13.98		$	7.55	$	28.76		$	30.31
Weighted-average number of common shares outstanding		6,317			6,478		6,230			6,437
Assuming dilution:
Net income per common share	$	13.05		$	7.24	$	26.88		$	29.00
Weighted-average number of common shares outstanding		6,764			6,750		6,666			6,728

(1)	Includes gain on consolidation of a joint venture of $19.1 million for the year ended October 31, 2023.

HOVNANIAN ENTERPRISES, INC.

(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)

(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)

		Contracts (1)							Deliveries							Contract
		Three Months Ended							Three Months Ended							Backlog
		October 31,							October 31,							October 31,
		2023		2022		% Change			2023		2022		% Change			2023		2022		% Change
Northeast
(DE, IL, MD, NJ, OH, VA, WV)	Home		355		232		53.0	%		532		618		(13.9	)%		617		850		(27.4	)%
	Dollars	$	251,558	$	145,816		72.5	%	$	309,935	$	363,260		(14.7	)%	$	420,100	$	464,173		(9.5	)%
	Avg. Price	$	708,614	$	628,517		12.7	%	$	582,585	$	587,799		(0.9	)%	$	680,875	$	546,086		24.7	%
Southeast
(FL, GA, SC)	Home		136		176		(22.7	)%		231		248		(6.9	)%		615		502		22.5	%
	Dollars	$	75,170	$	86,248		(12.8	)%	$	123,942	$	123,378		0.5	%	$	304,251	$	310,889		(2.1	)%
	Avg. Price	$	552,721	$	490,045		12.8	%	$	536,545	$	497,492		7.9	%	$	494,717	$	619,301		(20.1	)%
West
(AZ, CA, TX)	Home		447		194		130.4	%		754		733		2.9	%		592		834		(29.0	)%
	Dollars	$	237,361	$	111,616		112.7	%	$	395,856	$	379,973		4.2	%	$	336,263	$	493,617		(31.9	)%
	Avg. Price	$	531,009	$	575,340		(7.7	)%	$	525,008	$	518,381		1.3	%	$	568,012	$	591,867		(4.0	)%
Consolidated Total
	Home		938		602		55.8	%		1,517		1,599		(5.1	)%		1,824		2,186		(16.6	)%
	Dollars	$	564,089	$	343,680		64.1	%	$	829,733	$	866,611		(4.3	)%	$	1,060,614	$	1,268,679		(16.4	)%
	Avg. Price	$	601,374	$	570,897		5.3	%	$	546,956	$	541,971		0.9	%	$	581,477	$	580,366		0.2	%
Unconsolidated Joint Ventures (2)
(Excluding KSA JV)	Home		127		101		25.7	%		196		180		8.9	%		372		311		19.6	%
	Dollars	$	84,273	$	69,190		21.8	%	$	144,004	$	114,633		25.6	%	$	255,639	$	235,777		8.4	%
	Avg. Price	$	663,567	$	685,050		(3.1	)%	$	734,714	$	636,850		15.4	%	$	687,202	$	758,125		(9.4	)%
Grand Total
	Home		1,065		703		51.5	%		1,713		1,779		(3.7	)%		2,196		2,497		(12.1	)%
	Dollars	$	648,362	$	412,870		57.0	%	$	973,737	$	981,244		(0.8	)%	$	1,316,253	$	1,504,456		(12.5	)%
	Avg. Price	$	608,791	$	587,296		3.7	%	$	568,440	$	551,571		3.1	%	$	599,387	$	602,505		(0.5	)%

KSA JV Only
	Home		1		4		(75.0	)%		2,176		0		0.0	%		50		2,213		(97.7	)%
	Dollars	$	147	$	606		(75.7	)%	$	341,318	$	0		0.0	%	$	8,124	$	347,420		(97.7	)%
	Avg. Price	$	147,000	$	151,500		(3.0	)%	$	156,856	$	0		0.0	%	$	162,480	$	156,991		3.5	%

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 EXCLUDES UNCONSOLIDATED JOINT VENTURES)

		Contracts (1)							Deliveries							Contract
		Years Ended							Years Ended							Backlog
		October 31,							October 31,							October 31,
		2023		2022		% Change			2023		2022		% Change			2023		2022		% Change
Northeast (2) (3)
(DE, IL, MD, NJ, OH, VA, WV)	Home		1,445		1,460		(1.0	)%		1,618		1,895		(14.6	)%		617		850		(27.4	)%
	Dollars	$	937,153	$	857,240		9.3	%	$	933,156	$	1,068,098		(12.6	)%	$	420,100	$	464,173		(9.5	)%
	Avg. Price	$	648,549	$	587,151		10.5	%	$	576,734	$	563,640		2.3	%	$	680,875	$	546,086		24.7	%
Southeast (3)
(FL, GA, SC)	Home		948		731		29.7	%		776		650		19.4	%		615		502		22.5	%
	Dollars	$	445,970	$	412,975		8.0	%	$	419,656	$	323,511		29.7	%	$	304,251	$	310,889		(2.1	)%
	Avg. Price	$	470,432	$	564,945		(16.7	)%	$	540,794	$	497,709		8.7	%	$	494,717	$	619,301		(20.1	)%
West (3)
(AZ, CA, TX)	Home		2,254		2,286		(1.4	)%		2,484		2,993		(17.0	)%		592		834		(29.0	)%
	Dollars	$	1,126,011	$	1,200,211		(6.2	)%	$	1,277,645	$	1,448,845		(11.8	)%	$	336,263	$	493,617		(31.9	)%
	Avg. Price	$	499,561	$	525,027		(4.9	)%	$	514,350	$	484,078		6.3	%	$	568,012	$	591,867		(4.0	)%
Consolidated Total
	Home		4,647		4,477		3.8	%		4,878		5,538		(11.9	)%		1,824		2,186		(16.6	)%
	Dollars	$	2,509,134	$	2,470,426		1.6	%	$	2,630,457	$	2,840,454		(7.4	)%	$	1,060,614	$	1,268,679		(16.4	)%
	Avg. Price	$	539,947	$	551,804		(2.1	)%	$	539,249	$	512,902		5.1	%	$	581,477	$	580,366		0.2	%
Unconsolidated Joint Ventures
(Excluding KSA JV) (2) (3) (4)	Home		525		488		7.6	%		595		552		7.8	%		372		311		19.6	%
	Dollars	$	357,456	$	337,775		5.8	%	$	424,335	$	343,617		23.5	%	$	255,639	$	235,777		8.4	%
	Avg. Price	$	680,869	$	692,162		(1.6	)%	$	713,168	$	622,495		14.6	%	$	687,202	$	758,125		(9.4	)%
Grand Total
	Home		5,172		4,965		4.2	%		5,473		6,090		(10.1	)%		2,196		2,497		(12.1	)%
	Dollars	$	2,866,590	$	2,808,201		2.1	%	$	3,054,792	$	3,184,071		(4.1	)%	$	1,316,253	$	1,504,456		(12.5	)%
	Avg. Price	$	554,252	$	565,599		(2.0	)%	$	558,157	$	522,836		6.8	%	$	599,387	$	602,505		(0.5	)%

KSA JV Only
	Home		13		300		(95.7	)%		2,176		0		0.0	%		50		2,213		(97.7	)%
	Dollars	$	2,022	$	47,036		(95.7	)%	$	341,318	$	0		0.0	%	$	8,124	$	347,420		(97.7	)%
	Avg. Price	$	155,538	$	156,787		(0.8	)%	$	156,856	$	0		0.0	%	$	162,480	$	156,991		3.5	%

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 38 homes and $32.3 million of contract backlog as of April 30, 2023 from the unconsolidated joint ventures to the consolidated Northeast segment. This is related to the assets and liabilities acquired from a joint venture the company closed out during the three months ended April 30, 2023.

(3) Reflects the reclassification of 90 homes and $73.7 million, 59 homes and $33.0 million, and 12 homes and $5.7 million of contract backlog from the consolidated Northeast, Southeast and West segments, respectively, to unconsolidated joint ventures as of July 31, 2023. This is related to the assets and liabilities contributed to a joint venture by the company during the three months ended July 31, 2023.

(4) 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)							Deliveries							Contract
		Three Months Ended							Three Months Ended							Backlog
		October 31,							October 31,							October 31,
		2023		2022		% Change			2023		2022		% Change			2023		2022		% Change
Northeast
(Unconsolidated Joint Ventures)	Home		61		67		(9.0	)%		99		81		22.2	%		160		172		(7.0	)%
(Excluding KSA JV)	Dollars	$	45,261	$	46,714		(3.1	)%	$	78,491	$	55,740		40.8	%	$	121,561	$	125,004		(2.8	)%
(DE, IL, MD, NJ, OH, VA, WV)	Avg. Price	$	741,984	$	697,224		6.4	%	$	792,838	$	688,148		15.2	%	$	759,756	$	726,767		4.5	%
Southeast
(Unconsolidated Joint Ventures)	Home		49		31		58.1	%		73		67		9.0	%		186		129		(7.0	)%
(FL, GA, SC)	Dollars	$	29,476	$	20,693		42.4	%	$	52,360	$	41,979		24.7	%	$	119,857	$	105,428		(2.8	)%
	Avg. Price	$	601,551	$	667,516		(9.9	)%	$	717,260	$	626,552		14.5	%	$	644,392	$	817,271		4.5	%
West
(Unconsolidated Joint Ventures)	Home		17		3		466.7	%		24		32		(25.0	)%		26		10		(7.0	)%
(AZ, CA, TX)	Dollars	$	9,536	$	1,782		435.1	%	$	13,153	$	16,914		(22.2	)%	$	14,221	$	5,345		(2.8	)%
	Avg. Price	$	560,941	$	594,000		(5.6	)%	$	548,042	$	528,563		3.7	%	$	546,962	$	534,500		4.5	%
Unconsolidated Joint Ventures (2)
(Excluding KSA JV)	Home		127		101		25.7	%		196		180		8.9	%		372		311		(7.0	)%
	Dollars	$	84,273	$	69,190		21.8	%	$	144,004	$	114,633		25.6	%	$	255,639	$	235,777		(2.8	)%
	Avg. Price	$	663,567	$	685,050		(3.1	)%	$	734,714	$	636,850		15.4	%	$	687,202	$	758,125		4.5	%

KSA JV Only
	Home		1		4		(75.0	)%		2,176		0		0.0	%		50		2,213		(7.0	)%
	Dollars	$	147	$	606		(75.7	)%	$	341,318	$	0		0.0	%	$	8,124	$	347,420		(2.8	)%
	Avg. Price	$	147,000	$	151,500		(3.0	)%	$	156,856	$	0		0.0	%	$	162,480	$	156,991		4.5	%

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.

HOVNANIAN ENTERPRISES, INC.

(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)

(SEGMENT DATA UNCONSOLIDATED JOINT VENTURES ONLY)

		Contracts (1)							Deliveries							Contract
		Years Ended							Years Ended							Backlog
		October 31,							October 31,							October 31,
		2023		2022		% Change			2023		2022		% Change			2023		2022		% Change
Northeast (2) (3)
(Unconsolidated Joint Ventures)	Home		234		255		(8.2	)%		306		209		46.4	%		160		172		(7.0	)%
(Excluding KSA JV)	Dollars	$	178,235	$	181,777		(1.9	)%	$	229,747	$	143,571		60.0	%	$	121,561	$	125,004		(2.8	)%
(DE, IL, MD, NJ, OH, VA, WV)	Avg. Price	$	761,688	$	712,851		6.9	%	$	750,807	$	686,943		9.3	%	$	759,756	$	726,767		4.5	%
Southeast (3)
(Unconsolidated Joint Ventures)	Home		219		160		36.9	%		221		242		(8.7	)%		186		129		44.2	%
(FL, GA, SC)	Dollars	$	139,492	$	117,800		18.4	%	$	158,014	$	150,143		5.2	%	$	119,857	$	105,428		13.7	%
	Avg. Price	$	636,950	$	736,250		(13.5	)%	$	714,995	$	620,426		15.2	%	$	644,392	$	817,271		(21.2	)%
West (3)
(Unconsolidated Joint Ventures)	Home		72		73		(1.4	)%		68		101		(32.7	)%		26		10		160.0	%
(AZ, CA, TX)	Dollars	$	39,729	$	38,198		4.0	%	$	36,574	$	49,903		(26.7	)%	$	14,221	$	5,345		166.1	%
	Avg. Price	$	551,792	$	523,260		5.5	%	$	537,853	$	494,089		8.9	%	$	546,962	$	534,500		2.3	%
Unconsolidated Joint Ventures
(Excluding KSA JV) (2) (3) (4)	Home		525		488		7.6	%		595		552		7.8	%		372		311		19.6	%
	Dollars	$	357,456	$	337,775		5.8	%	$	424,335	$	343,617		23.5	%	$	255,639	$	235,777		8.4	%
	Avg. Price	$	680,869	$	692,162		(1.6	)%	$	713,168	$	622,495		14.6	%	$	687,202	$	758,125		(9.4	)%

KSA JV Only
	Home		13		300		(95.7	)%		2,176		0		0.0	%		50		2,213		(97.7	)%
	Dollars	$	2,022	$	47,036		(95.7	)%	$	341,318	$	0		0.0	%	$	8,124	$	347,420		(97.7	)%
	Avg. Price	$	155,538	$	156,787		(0.8	)%	$	156,856	$	0		0.0	%	$	162,480	$	156,991		3.5	%

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.

Hovnanian Enterprises (HOV) 8-KResults of Operations and Financial Condition