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Hovnanian Enterprises Reports Fiscal 2015 Results

Exceeded Fourth Quarter Gross Margin and Profit Guidance

49% Increase in Contract Backlog Dollars

RED BANK, N.J., Dec. 4, 2015 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE:HOV), a leading national homebuilder, reported results for its fiscal fourth quarter and year ended October 31, 2015.

RESULTS FOR THE THREE AND TWELVE MONTH PERIODS ENDED OCTOBER 31, 2015:

  • Total revenues were $693.2 million in the fourth quarter of fiscal 2015, a decrease of 0.7% compared with $698.4 million in the fourth quarter of fiscal 2014. For the twelve months ended October 31, 2015, total revenues increased 4.1% to $2.15 billion compared with $2.06 billion in the prior fiscal year.
  • Homebuilding gross margin percentage, before interest expense and land charges included in cost of sales, was 18.0% for the fourth quarter ended October 31, 2015, compared with 19.3% in last year's fourth quarter, and 17.8% for the third quarter of fiscal 2015. During all of fiscal 2015, homebuilding gross margin percentage, before interest expense and land charges included in cost of sales, was 17.6% compared with 19.9% in the same period of the previous year.
  • Pre-tax income, excluding land related charges and losses on extinguishment of debt, in the fourth quarter of fiscal 2015 was $41.8 million compared with $39.3 million in the prior year's fourth quarter. For all of fiscal 2015, the pre-tax loss, excluding land related charges and losses on extinguishment of debt, was $9.7 million compared with income of $26.6 million during fiscal 2014.
  • Net income was $25.5 million, or $0.16 per fully diluted common share, for the fourth quarter of fiscal 2015, compared with net income, excluding the $285.1 million tax benefit from the reduction of our deferred tax asset valuation allowance, of $37.4 million, or $0.23 per fully diluted common share, in the fourth quarter of the previous year. For the year ended October 31, 2015, the net loss was $16.1 million, or $0.11 per common share, compared with net income, excluding the $285.1 million tax benefit from the reduction of our deferred tax asset valuation allowance, of $22.0 million, or $0.14 per fully diluted common share, in fiscal 2014.
  • The dollar value of net contracts, including unconsolidated joint ventures, during the fourth quarter of fiscal 2015 increased 28.7% to $684.3 million compared with $531.9 million in last year's fourth quarter. The dollar value of consolidated net contracts increased 22.1% to $624.9 million for the three months ended October 31, 2015 compared with $511.8 million during the same quarter a year ago.
  • In the fourth quarter of fiscal 2015, the number of net contracts, including unconsolidated joint ventures, increased 20.7% to 1,629 homes for the fourth quarter of fiscal 2015 from 1,350 homes during the fourth quarter of fiscal 2014. The number of consolidated net contracts increased 18.0% to 1,535 homes compared with 1,301 homes in the prior year's fourth quarter.
  • The dollar value of net contracts, including unconsolidated joint ventures, for the twelve months ended October 31, 2015 increased 18.7% to $2.65 billion compared with $2.23 billion in fiscal 2014. The dollar value of consolidated net contracts increased 16.2% to $2.45 billion for all of fiscal 2015 compared with $2.11 billion in the previous year.
  • For the year ended October 31, 2015, the number of net contracts, including unconsolidated joint ventures, increased 11.3% to 6,547 homes from 5,883 homes in the previous year. The number of consolidated net contracts for the full year increased 11.2% to 6,183 homes compared with 5,559 homes in the prior year.
  • Net contracts per active selling community, including unconsolidated joint ventures, increased 10.9% to 7.1 net contracts per active selling community for the quarter ended October 31, 2015 compared with 6.4 net contracts, including unconsolidated joint ventures, per active selling community in the fourth quarter of fiscal 2014. Consolidated net contracts per active selling community increased 7.7% to 7.0 net contracts per active selling community for the quarter ended October 31, 2015 compared with 6.5 net contracts per active selling community in the fourth quarter of fiscal 2014.
  • As of October 31, 2015, the dollar value of contract backlog, including unconsolidated joint ventures, was $1.35 billion, an increase of 49.0% compared with $905.0 million as of October 31, 2014. The dollar value of consolidated contract backlog increased 42.1% to $1.22 billion compared with $855.8 million as of October 31, 2014.
  • As of October 31, 2015, the number of homes in contract backlog, including unconsolidated joint ventures, increased 32.9% to 3,112 homes compared with 2,341 homes as of October 31, 2014. The number of homes in consolidated contract backlog increased 30.3% to 2,905 homes compared with 2,229 homes as of the end of the fourth quarter of fiscal 2014.
  • Consolidated deliveries were 1,727 homes in the fourth quarter of fiscal 2015, a 2.0% decrease compared with 1,762 homes in the fourth quarter of fiscal 2014. For the three months ended October 31, 2015, deliveries, including unconsolidated joint ventures, decreased 6.5% to 1,792 homes compared with 1,916 homes in the fourth quarter of the prior year.
  • For the year ended October 31, 2015, consolidated deliveries were 5,507 homes, a 0.2% increase compared with 5,497 homes last year. During all of fiscal 2015, deliveries, including unconsolidated joint ventures, decreased 2.7% to 5,776 homes compared with 5,934 homes in the same period of the previous year.
  • As of October 31, 2015, consolidated active selling communities increased 9.0% to 219 communities compared with 201 communities at October 31, 2014 and increased 6.3% compared to 206 communities at July 31, 2015.
  • Total interest expense as a percentage of total revenues was 5.9% during the fourth quarter of fiscal 2015 compared with 5.3% in the same period of the previous year. For the twelve months ended October 31, 2015, total interest expense as a percentage of total revenues was 7.0% compared with 6.9% for the same period a year ago.
  • Total SG&A was $49.4 million, including a $15.2 million benefit from the reduction of our construction defect reserves, or 7.1% of total revenues, during the fourth quarter of fiscal 2015 compared with $65.2 million, or 9.3% of total revenues, in last year's fourth quarter. Total SG&A was $250.9 million, or 11.7% of total revenues, for all of fiscal 2015 compared with $254.9 million, or 12.4% of total revenues, in the prior year.
  • The contract cancellation rate, including unconsolidated joint ventures, for the fourth quarter of fiscal 2015 was 20%, compared with 22% in the fourth quarter of fiscal 2014.
  • The valuation allowance was $635.3 million as of October 31, 2015. 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.
  • During November 2015, the dollar value of net contracts, including unconsolidated joint ventures, increased 26.9% to $220.1 million compared with $173.5 million for November of 2014 and the number of net contracts, including unconsolidated joint ventures, increased 22.5% to 517 homes in November 2015 from 422 homes in November 2014. During November 2015, the dollar value of consolidated net contracts increased 16.3% to $194.6 million compared with $167.3 million for November of 2014 and the number of consolidated net contracts increased 16.9% to 477 homes in November 2015 from 408 homes in November 2014.

LIQUIDITY AND INVENTORY AS OF OCTOBER 31, 2015:

  • During the fourth quarter of fiscal 2015, land and land development spending was $192.1 million. For the year ended October 31, 2015, land and land development spending was $656.5 million.
  • After paying off $60.8 million of debt that matured on October 15, 2015, total liquidity at the end of the fourth quarter of fiscal 2015 was $250.1 million compared with $309.2 million at October 31, 2014.
  • As of October 31, 2015, the land position, including unconsolidated joint ventures, was 37,659 lots, consisting of 16,441 lots under option and 21,218 owned lots, compared with a total of 37,558 lots as of October 31, 2014.
  • During the fourth quarter of fiscal 2015, approximately 3,500 lots, including unconsolidated joint ventures, were put under option or acquired in 49 communities.

FINANCIAL GUIDANCE:

  • Assuming no changes in current market conditions, we reiterate our prior guidance that total revenues for all of fiscal 2016 are expected to be between $2.7 billion and $3.1 billion and pretax profit excluding land related charges, gains or losses on extinguishment of debt and other non-recurring items such as legal settlements are expected to be between $40 million and $100 million for all of fiscal 2016.

COMMENTS FROM MANAGEMENT:

"We were pleased that we exceeded the guidance we gave for gross margin percentage, total SG&A ratio and adjusted pretax profit for the fourth quarter of fiscal 2015, despite some delays in delivering homes primarily related to longer cycle times in certain markets," stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. "Our 71% growth in inventory over the past three years combined with the 49% year-over-year increase we achieved in our contract backlog dollars at October 31, 2015, and the 29% year-over-year increase in net contract dollars during the fourth quarter of fiscal 2015, gives us confidence in our ability to significantly increase revenues and profitability during fiscal 2016. Given the $300 million of land banking arrangements that we recently announced, we are comfortable with our liquidity position as we begin fiscal 2016," concluded Mr. Hovnanian.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2015 fourth quarter financial results conference call at 11:00 a.m. E.T. on Friday, December 4, 2015. 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 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® and Parkwood Builders. 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 2014 annual report, can be accessed through the "Investor Relations" section of the Hovnanian Enterprises' website at http://www.khov.com. To be added to Hovnanian's investor e-mail list, please send an e-mail to IR@khov.com or sign up at http://www.khov.com.

NON-GAAP FINANCIAL MEASURES:

Consolidated earnings before interest expense and income taxes ("EBIT") and before depreciation and amortization ("EBITDA") and before inventory impairment loss and land option write-offs and loss 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 and Loss 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 and Loss on Extinguishment of Debt to Income (Loss) Before Income Taxes is presented in a table attached to this earnings release.

Total liquidity is comprised of $245.4 million of cash and cash equivalents, $2.6 million of restricted cash required to collateralize letters of credit and $2.1 million of availability under the unsecured revolving credit facility as of October 31, 2015.

Net Income (Loss) Before Tax Benefit from the Reduction of Deferred Tax Asset Valuation Allowance is a non-GAAP financial measure. The most directly comparable GAAP financial measure is Net Income (Loss). The reconciliation of Net Income (Loss) Before Tax Benefit from the Reduction of Deferred Tax Asset Valuation Allowance to Net Income (Loss) 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" within the meaning of the "Safe Harbor" provision 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 the current or future periods, including total revenues and adjusted pre-tax profit. 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 the sustained homebuilding downturn; (2) adverse weather and other environmental conditions and natural disasters; (3) levels of indebtedness and restrictions on the Company's operations and activities imposed by the agreements governing the Company's outstanding indebtedness; (4) the Company's sources of liquidity; (5) changes in credit ratings; (6) changes in market conditions and seasonality of the Company's business; (7) the availability and cost of suitable land and improved lots; (8) shortages in, and price fluctuations of, raw materials and labor; (9) 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; (10) fluctuations in interest rates and the availability of mortgage financing; (11) changes in tax laws affecting the after-tax costs of owning a home; (12) operations through joint ventures with third parties; (13) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (14) product liability litigation, warranty claims and claims made by mortgage investors; (15) levels of competition; (16) availability and terms of financing to the Company; (17) successful identification and integration of acquisitions; (18) significant influence of the Company's controlling stockholders; (19) availability of net operating loss carryforwards; (20) utility shortages and outages or rate fluctuations; (21) geopolitical risks, terrorist acts and other acts of war; and (22) 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, 2014 and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

(Financial Tables Follow)

Hovnanian Enterprises, Inc.
October 31, 2015
Statements of Consolidated Operations
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Twelve Months Ended
October 31, October 31,
2015 2014 2015 2014
(Unaudited) (Unaudited)
Total Revenues $693,204 $698,394 $2,148,480 $2,063,380
Costs and Expenses (a) 657,506 666,446 2,174,414 2,049,942
Loss on Extinguishment of Debt -- -- -- (1,155)
Income from Unconsolidated Joint Ventures 1,699 4,048 4,169 7,897
Income (Loss) Before Income Taxes 37,397 35,996 (21,765) 20,180
Income Tax Provision (Benefit) 11,878 (286,468) (5,665) (286,964)
Net Income (Loss) $25,519 $322,464 $(16,100) $307,144
Per Share Data:
Basic:
Income (Loss) Per Common Share $0.17 $2.15 $(0.11) $2.05
Weighted Average Number of Common Shares Outstanding (b) 147,057 146,413 146,899 146,271
Assuming Dilution:
Income (Loss) Per Common Share $0.16 $1.95 $(0.11) $1.87
Weighted Average Number of Common Shares Outstanding (b) 160,299 161,720 146,899 162,441
(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.
October 31, 2015
Reconciliation of Income (Loss) Before Income Taxes Excluding Land-Related Charges and Loss on Extinguishment of Debt to Income (Loss) Before Income Taxes
(Dollars in Thousands)
Three Months Ended Twelve Months Ended
October 31, October 31,
2015 2014 2015 2014
(Unaudited) (Unaudited)
Income (Loss) Before Income Taxes $37,397 $35,996 $(21,765) $20,180
Inventory Impairment Loss and Land Option Write-Offs 4,426 3,297 12,044 5,224
Loss on Extinguishment of Debt -- -- -- 1,155
Income (Loss) Before Income Taxes Excluding Land-Related Charges and Loss on Extinguishment of Debt (a) $41,823 $39,293 $(9,721) $26,559
(a) Income (Loss) Before Income Taxes Excluding Land-Related Charges and Loss 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.
October 31, 2015
Gross Margin
(Dollars in Thousands)
Homebuilding Gross Margin Homebuilding Gross Margin
Three Months Ended Twelve Months Ended
October 31, October 31,
2015 2014 2015 2014
(Unaudited) (Unaudited)
Sale of Homes $673,330 $681,523 $2,088,129 $2,013,013
Cost of Sales, Excluding Interest and Land Charges (a) 552,462 550,242 1,721,336 1,612,122
Homebuilding Gross Margin, Excluding Interest and Land Charges 120,868 131,281 366,793 400,891
Homebuilding Cost of Sales Interest 19,959 15,854 59,574 53,101
Homebuilding Gross Margin, Including Interest and Excluding Land Charges $100,909 $115,427 $307,219 $347,790
Gross Margin Percentage, Excluding Interest and Land Charges 18.0% 19.3% 17.6% 19.9%
Gross Margin Percentage, Including Interest and Excluding Land Charges 15.0% 16.9% 14.7% 17.3%
Land Sales Gross Margin Land Sales Gross Margin
Three Months Ended Twelve Months Ended
October 31, October 31,
2015 2014 2015 2014
(Unaudited) (Unaudited)
Land and Lot Sales -- $2,327 $850 $5,224
Cost of Sales, Excluding Interest and Land Charges (a) -- 1,492 702 3,077
Land and Lot Sales Gross Margin, Excluding Interest and Land Charges -- 835 148 2,147
Land and Lot Sales Interest -- 388 39 865
Land and Lot Sales Gross Margin, Including Interest and Excluding Land Charges -- $447 $109 $1,282
(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 Consolidated Statements of Operations.
Hovnanian Enterprises, Inc.
October 31, 2015
Reconciliation of Net Income (Loss) Before Tax Benefit from the Reduction of Deferred Tax Asset
Valuation Allowance to Net Income (Loss)
(Dollars in Thousands)
Three Months Ended Twelve Months Ended
October 31, October 31,
2015 2014 2015 2014
(Unaudited) (Unaudited)
Net Income (Loss) $25,519 $322,464 $(16,100) $307,144
Tax Benefit from the Reduction of Deferred Tax Asset Valuation Allowance -- 285,131 -- 285,131
Net Income (Loss) Before Tax Benefit from the Reduction of Deferred Tax Asset Valuation Allowance (a) $25,519 $37,333 $(16,100) $22,013
Assuming Dilution:
Income (Loss) Before Tax Benefit from the Reduction of Deferred Tax Asset Valuation Allowance Per Common Share $0.16 $0.23 $(0.11) $0.14
Weighted Average Number of Common Shares Outstanding (b) 160,299 161,720 146,899 162,441
(a) Net Income (Loss) Before Tax Benefit from the Reduction of Deferred Tax Asset Valuation Allowance is a non-GAAP financial measure. The most directly comparable GAAP financial measure is Net Income (Loss).
(b) For periods with a net loss, basic shares are used in accordance with GAAP rules.
Hovnanian Enterprises, Inc.
October 31, 2015
Reconciliation of Adjusted EBITDA to Net Income (Loss)
(Dollars in Thousands)
Three Months Ended Twelve Months Ended
October 31, October 31,
2015 2014 2015 2014
(Unaudited) (Unaudited)
Net Income (loss) $25,519 $322,464 $(16,100) $307,144
Income Tax Provision (Benefit) 11,878 (286,468) (5,665) (286,964)
Interest Expense 41,200 36,935 151,448 141,344
EBIT (a) 78,597 72,931 129,683 161,524
Depreciation 835 846 3,388 3,417
Amortization of Debt Costs 1,008 1,152 5,459 4,392
EBITDA (b) 80,440 74,929 138,530 169,333
Inventory Impairment Loss and Land Option Write-offs 4,426 3,297 12,044 5,224
Loss on Extinguishment of Debt -- -- -- 1,155
Adjusted EBITDA (c) $84,866 $78,226 $150,574 $175,712
Interest Incurred $42,157 $37,336 $166,188 $145,409
Adjusted EBITDA to Interest Incurred 2.01 2.10 0.91 1.21
(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 and loss on extinguishment of debt.
Hovnanian Enterprises, Inc.
October 31, 2015
Interest Incurred, Expensed and Capitalized
(Dollars in Thousands)
Three Months Ended Twelve Months Ended
October 31, October 31,
2015 2014 2015 2014
(Unaudited) (Unaudited)
Interest Capitalized at Beginning of Period $122,941 $108,757 $109,158 $105,093
Plus Interest Incurred 42,157 37,336 166,188 145,409
Less Interest Expensed 41,200 36,935 151,448 141,344
Interest Capitalized at End of Period (a) $123,898 $109,158 $123,898 $109,158
(a) 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)
October 31,
2015
October 31,
2014
(Unaudited) (1)
ASSETS
Homebuilding:
Cash and cash equivalents $245,398 $255,117
Restricted cash and cash equivalents 7,299 13,086
Inventories:
Sold and unsold homes and lots under development 1,307,850 961,994
Land and land options held for future development or sale 214,503 273,463
Consolidated inventory not owned:
Specific performance options 1,242 3,479
Other options 120,983 105,374
Total consolidated inventory not owned 122,225 108,853
Total inventories 1,644,578 1,344,310
Investments in and advances to unconsolidated joint ventures 61,209 63,883
Receivables, deposits and notes, net 70,349 92,546
Property, plant and equipment, net 45,534 46,744
Prepaid expenses and other assets 77,671 69,358
Total homebuilding 2,152,038 1,885,044
Financial services:
Cash and cash equivalents 8,347 6,781
Restricted cash and cash equivalents 19,223 16,236
Mortgage loans held for sale at fair value 130,320 95,338
Other assets 2,091 1,988
Total financial services 159,981 120,343
Income taxes receivable – including net deferred tax benefits 290,279 284,543
Total assets $2,602,298 $2,289,930
(1) Derived from the audited balance sheet as of October 31, 2014
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)
October 31,
2015
October 31,
2014
(Unaudited) (1)
LIABILITIES AND EQUITY
Homebuilding:
Nonrecourse land mortgages $143,863 $103,908
Accounts payable and other liabilities 348,516 370,876
Customers' deposits 44,218 34,969
Nonrecourse mortgages secured by operating properties 15,511 16,619
Liabilities from inventory not owned 105,856 92,381
Total homebuilding 657,964 618,753
Financial services:
Accounts payable and other liabilities 27,908 22,278
Mortgage warehouse line of credit 108,875 76,919
Total financial services 136,783 99,197
Notes payable:
Revolving credit agreement 47,000 --
Senior secured notes, net of discount 981,346 979,935
Senior notes, net of discount 780,319 590,472
Senior amortizing notes 12,811 17,049
Senior exchangeable notes 73,771 70,101
Accrued interest 40,388 32,222
Total notes payable 1,935,635 1,689,779
Total liabilities 2,730,382 2,407,729
Equity:
Stockholders' equity deficit:
Preferred stock, $.01 par value - authorized 100,000 shares; issued 5,600 shares with a liquidation preference of $140,000 at October 31, 2015 and at October 31, 2014 135,299 135,299
Common stock, Class A, $.01 par value – authorized 400,000,000 shares; issued 143,292,881 shares at October 31, 2015 and 142,836,563 shares at October 31, 2014 (including 11,760,763 shares at October 31, 2015 and October 31, 2014, respectively, held in Treasury) 1,433 1,428
Common stock, Class B, $.01 par value (convertible to Class A at time of sale) – authorized 60,000,000 shares; issued 15,676,829 shares at October 31, 2015 and 15,497,543 shares at October 31, 2014 (including 691,748 shares at October 31, 2015 and October 31, 2014 held in Treasury) 157 155
Paid in capital - common stock 703,751 697,943
Accumulated deficit (853,364) (837,264)
Treasury stock - at cost (115,360) (115,360)
Total stockholders' equity deficit (128,084) (117,799)
Total liabilities and equity $2,602,298 $2,289,930
(1) Derived from the audited balance sheet as of October 31, 2014
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)
(Unaudited)
Three Months Ended October 31, Twelve Months Ended October 31,
2015 2014 2015 2014
Revenues:
Homebuilding:
Sale of homes $673,330 $681,523 $2,088,129 $2,013,013
Land sales and other revenues 1,148 3,069 3,686 7,953
Total homebuilding 674,478 684,592 2,091,815 2,020,966
Financial services 18,726 13,802 56,665 42,414
Total revenues 693,204 698,394 2,148,480 2,063,380
Expenses:
Homebuilding:
Cost of sales, excluding interest 552,462 551,734 1,722,038 1,615,199
Cost of sales interest 19,959 16,242 59,613 53,966
Inventory impairment loss and land option write-offs 4,426 3,297 12,044 5,224
Total cost of sales 576,847 571,273 1,793,695 1,674,389
Selling, general and administrative 36,145 48,619 188,403 191,537
Total homebuilding expenses 612,992 619,892 1,982,098 1,865,926
Financial services 8,903 8,025 31,972 28,616
Corporate general and administrative 13,231 16,538 62,506 63,375
Other interest 21,241 20,693 91,835 87,378
Other operations 1,139 1,298 6,003 4,647
Total expenses 657,506 666,446 2,174,414 2,049,942
Loss on extinguishment of debt -- -- -- (1,155)
Income from unconsolidated joint ventures 1,699 4,048 4,169 7,897
Income (loss) before income taxes 37,397 35,996 (21,765) 20,180
State and federal income tax provision (benefit):
State 576 (13,936) 4,293 (12,452)
Federal 11,302 (272,532) (9,958) (274,512)
Total income taxes 11,878 (286,468) (5,665) (286,964)
Net income (loss) $25,519 $322,464 $(16,100) $307,144
Per share data:
Basic:
Income (loss) per common share $0.17 $2.15 $(0.11) $2.05
Weighted-average number of common shares outstanding 147,057 146,413 146,899 146,271
Assuming dilution:
Income (loss) per common share $0.16 $1.95 $(0.11) $1.87
Weighted-average number of common shares outstanding 160,299 161,720 146,899 162,441

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES) Communities Under Development
(UNAUDITED) Three Months - October 31, 2015
Net Contracts Deliveries Contract
Three Months Ended Three Months Ended Backlog
Oct 31, Oct 31, Oct 31,
2015 2014 % Change 2015 2014 % Change 2015 2014 % Change
Northeast
(NJ, PA) Home 143 102 40.2% 136 182 (25.3)% 293 146 100.7%
Dollars $66,846 $51,176 30.6% $63,175 $95,886 (34.1)% $147,004 $73,327 100.5%
Avg. Price $467,455 $501,725 (6.8)% $464,522 $526,845 (11.8)% $501,719 $502,240 (0.1)%
Mid-Atlantic
(DE, MD, VA, WV) Home 236 190 24.2% 256 244 4.9% 453 371 22.1%
Dollars $114,191 $96,981 17.7% $127,233 $113,144 12.5% $239,099 $188,923 26.6%
Avg. Price $483,860 $510,425 (5.2)% $497,004 $463,709 7.2% $527,812 $509,227 3.6%
Midwest
(IL, MN, OH) Home 232 233 (0.4)% 284 263 8.0% 644 665 (3.2)%
Dollars $73,693 $77,917 (5.4)% $91,122 $78,203 16.5% $194,290 $188,595 3.0%
Avg. Price $317,640 $334,406 (5.0)% $320,852 $297,354 7.9% $301,692 $283,601 6.4%
Southeast
(FL, GA, NC, SC) Home 168 149 12.8% 220 178 23.6% 279 232 20.3%
Dollars $58,382 $51,495 13.4% $63,074 $57,297 10.1% $105,935 $81,071 30.7%
Avg. Price $347,512 $345,603 0.6% $286,698 $321,895 (10.9)% $379,699 $349,443 8.7%
Southwest
(AZ, TX) Home 571 547 4.4% 686 747 (8.2)% 1,033 770 34.2%
Dollars $216,371 $194,178 11.4% $262,713 $254,668 3.2% $422,711 $295,319 43.1%
Avg. Price $378,933 $354,988 6.7% $382,963 $340,919 12.3% $409,207 $383,532 6.7%
West
(CA) Home 185 80 131.3% 145 148 (2.0)% 203 45 351.1%
Dollars $95,419 $40,030 138.4% $66,013 $82,325 (19.8)% $106,886 $28,612 273.6%
Avg. Price $515,780 $500,375 3.1% $455,262 $556,248 (18.2)% $526,531 $635,822 (17.2)%
Consolidated Total
Home 1,535 1,301 18.0% 1,727 1,762 (2.0)% 2,905 2,229 30.3%
Dollars $624,902 $511,777 22.1% $673,330 $681,523 (1.2)% $1,215,925 $855,847 42.1%
Avg. Price $407,102 $393,372 3.5% $389,884 $386,789 0.8% $418,563 $383,960 9.0%
Unconsolidated Joint Ventures
Home 94 49 91.8% 65 154 (57.8)% 207 112 84.8%
Dollars $59,441 $20,133 195.2% $37,730 $58,712 (35.7)% $132,082 $49,123 168.9%
Avg. Price $632,347 $410,877 53.9% $580,467 $381,245 52.3% $638,077 $438,601 45.5%
Grand Total
Home 1,629 1,350 20.7% 1,792 1,916 (6.5)% 3,112 2,341 32.9%
Dollars $684,343 $531,910 28.7% $711,060 $740,235 (3.9)% $1,348,007 $904,970 49.0%
Avg. Price $420,100 $394,008 6.6% $396,797 $386,344 2.7% $433,164 $386,574 12.1%
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)
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES) Communities Under Development
(UNAUDITED) Twelve Months - October 31, 2015
Net Contracts Deliveries Contract
Twelve Months Ended Twelve Months Ended Backlog
Oct 31, Oct 31, Oct 31,
2015 2014 % Change 2015 2014 % Change 2015 2014 % Change
Northeast
(NJ, PA) Home 527 476 10.7% 380 550 (30.9)% 293 146 100.7%
Dollars $262,726 $243,055 8.1% $189,049 $274,734 (31.3)% $147,004 $73,327 100.5%
Avg. Price $498,531 $510,620 (2.4)% $497,497 $499,516 (0.4)% $501,719 $502,240 (0.1)%
Mid-Atlantic
(DE, MD, VA, WV) Home 936 801 16.9% 854 701 21.8% 453 371 22.1%
Dollars $448,307 $379,514 18.1% $398,132 $331,759 20.0% $239,099 $188,923 26.6%
Avg. Price $478,961 $473,801 1.1% $466,197 $473,266 (1.5)% $527,812 $509,227 3.6%
Midwest
(IL, MN, OH) Home 937 849 10.4% 958 789 21.4% 644 665 (3.2)%
Dollars $317,059 $263,837 20.2% $311,364 $225,958 37.8% $194,290 $188,595 3.0%
Avg. Price $338,376 $310,762 8.9% $325,015 $286,386 13.5% $301,692 $283,601 6.4%
Southeast
(FL, GA, NC, SC) Home 722 576 25.3% 675 652 3.5% 279 232 20.3%
Dollars $232,272 $185,035 25.5% $207,407 $202,620 2.4% $105,935 $81,071 30.7%
Avg. Price $321,706 $321,241 0.1% $307,269 $310,768 (1.1)% $379,699 $349,443 8.7%
Southwest
(AZ, TX) Home 2,526 2,482 1.8% 2,263 2,389 (5.3)% 1,033 770 34.2%
Dollars $949,763 $826,707 14.9% $822,371 $747,753 10.0% $422,711 $295,319 43.1%
Avg. Price $375,995 $333,081 12.9% $363,399 $312,998 16.1% $409,207 $383,532 6.7%
West
(CA) Home 535 375 42.7% 377 416 (9.4)% 203 45 351.1%
Dollars $238,080 $208,273 14.3% $159,806 $230,189 (30.6)% $106,886 $28,612 273.6%
Avg. Price $445,010 $555,395 (19.9)% $423,889 $553,337 (23.4)% $526,531 $635,822 (17.2)%
Consolidated Total
Home 6,183 5,559 11.2% 5,507 5,497 0.2% 2,905 2,229 30.3%
Dollars $2,448,207 $2,106,421 16.2% $2,088,129 $2,013,013 3.7% $1,215,925 $855,847 42.1%
Avg. Price $395,958 $378,921 4.5% $379,177 $366,202 3.5% $418,563 $383,960 9.0%
Unconsolidated Joint Ventures
Home 364 324 12.3% 269 437 (38.4)% 207 112 84.8%
Dollars $202,879 $127,270 59.4% $119,920 $164,082 (26.9)% $132,082 $49,123 168.9%
Avg. Price $557,359 $392,809 41.9% $445,799 $375,475 18.7% $638,077 $438,601 45.5%
Grand Total
Home 6,547 5,883 11.3% 5,776 5,934 (2.7)% 3,112 2,341 32.9%
Dollars $2,651,086 $2,233,691 18.7% $2,208,049 $2,177,095 1.4% $1,348,007 $904,970 49.0%
Avg. Price $404,931 $379,686 6.6% $382,280 $366,885 4.2% $433,164 $386,574 12.1%
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)
(SEGMENT DATA INCLUDES UNCONSOLIDATED JOINT VENTURES) Communities Under Development
(UNAUDITED) Three Months - October 31, 2015
Net Contracts Deliveries Contract
Three Months Ended Three Months Ended Backlog
Oct 31, Oct 31, Oct 31,
2015 2014 % Change 2015 2014 % Change 2015 2014 % Change
Northeast
(includes unconsolidated joint ventures) Home 156 105 48.6% 141 193 (26.9)% 341 166 105.4%
(NJ, PA) Dollars $73,417 $52,988 38.6% $69,345 $98,668 (29.7)% $168,476 $81,581 106.5%
Avg. Price $470,623 $504,648 (6.7)% $491,808 $511,233 (3.8)% $494,065 $491,447 0.5%
Mid-Atlantic
(includes unconsolidated joint ventures) Home 244 202 20.8% 288 296 (2.7)% 467 406 15.0%
(DE, MD, VA, WV) Dollars $118,957 $103,555 14.9% $145,192 $140,246 3.5% $246,906 $209,961 17.6%
Avg. Price $487,533 $512,650 (4.9)% $504,141 $473,804 6.4% $528,707 $517,145 2.2%
Midwest
(includes unconsolidated joint ventures) Home 232 235 (1.3)% 284 288 (1.4)% 644 682 (5.6)%
(IL, MN, OH) Dollars $73,693 $78,603 (6.2)% $91,121 $85,032 7.2% $194,290 $193,260 0.5%
Avg. Price $317,640 $334,481 (5.0)% $320,850 $295,251 8.7% $301,692 $283,373 6.5%
Southeast
(includes unconsolidated joint ventures) Home 176 168 4.8% 226 234 (3.4)% 288 261 10.3%
(FL, GA, NC, SC) Dollars $62,941 $58,601 7.4% $65,449 $75,978 (13.9)% $110,860 $92,992 19.2%
Avg. Price $357,617 $348,814 2.5% $289,596 $324,692 (10.8)% $384,930 $356,293 8.0%
Southwest
(includes unconsolidated joint ventures) Home 571 547 4.4% 686 747 (8.2)% 1,033 770 34.2%
(AZ, TX) Dollars $216,371 $194,178 11.4% $262,713 $254,668 3.2% $422,711 $295,319 43.1%
Avg. Price $378,932 $354,988 6.7% $382,963 $340,919 12.3% $409,207 $383,532 6.7%
West
(includes unconsolidated joint ventures) Home 250 93 168.8% 167 158 5.7% 339 56 505.4%
(CA) Dollars $138,964 $43,985 215.9% $77,240 $85,643 (9.8)% $204,764 $31,857 542.8%
Avg. Price $555,857 $472,957 17.5% $462,513 $542,044 (14.7)% $604,024 $568,872 6.2%
Grand Total
Home 1,629 1,350 20.7% 1,792 1,916 (6.5)% 3,112 2,341 32.9%
Dollars $684,343 $531,910 28.7% $711,060 $740,235 (3.9)% $1,348,007 $904,970 49.0%
Avg. Price $420,100 $394,008 6.6% $396,797 $386,344 2.7% $433,164 $386,574 12.1%
Consolidated Total
Home 1,535 1,301 18.0% 1,727 1,762 (2.0)% 2,905 2,229 30.3%
Dollars $624,902 $511,777 22.1% $673,330 $681,523 (1.2)% $1,215,925 $855,847 42.1%
Avg. Price $407,102 $393,372 3.5% $389,884 $386,789 0.8% $418,563 $383,960 9.0%
Unconsolidated Joint Ventures
Home 94 49 91.8% 65 154 (57.8)% 207 112 84.8%
Dollars $59,441 $20,133 195.2% $37,730 $58,712 (35.7)% $132,082 $49,123 168.9%
Avg. Price $632,347 $410,877 53.9% $580,467 $381,245 52.3% $638,077 $438,601 45.5%
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)
(SEGMENT DATA INCLUDES UNCONSOLIDATED JOINT VENTURES) Communities Under Development
(UNAUDITED) Twelve Months - October 31, 2015
Net Contracts Deliveries Contract
Twelve Months Ended Twelve Months Ended Backlog
Oct 31, Oct 31, Oct 31,
2015 2014 % Change 2015 2014 % Change 2015 2014 % Change
Northeast
(includes unconsolidated joint ventures) Home 577 530 8.9% 402 597 (32.7)% 341 166 105.4%
(NJ, PA) Dollars $286,792 $264,303 8.5% $199,896 $293,970 (32.0)% $168,476 $81,581 106.5%
Avg. Price $497,040 $498,684 (0.3)% $497,255 $492,413 1.0% $494,065 $491,447 0.5%
Mid-Atlantic
(includes unconsolidated joint ventures) Home 1,006 925 8.8% 945 860 9.9% 467 406 15.0%
(DE, MD, VA, WV) Dollars $485,551 $436,416 11.3% $448,605 $401,845 11.6% $246,906 $209,961 17.6%
Avg. Price $482,654 $471,801 2.3% $474,714 $467,261 1.6% $528,707 $517,145 2.2%
Midwest
(includes unconsolidated joint ventures) Home 940 891 5.5% 978 863 13.3% 644 682 (5.6)%
(IL, MN, OH) Dollars $317,989 $275,550 15.4% $316,960 $246,224 28.7% $194,290 $193,260 0.5%
Avg. Price $338,286 $309,260 9.4% $324,090 $285,312 13.6% $301,692 $283,373 6.5%
Southeast
(includes unconsolidated joint ventures) Home 773 658 17.5% 746 790 (5.6)% 288 261 10.3%
(FL, GA, NC, SC) Dollars $254,484 $215,186 18.3% $236,617 $247,928 (4.6)% $110,860 $92,992 19.2%
Avg. Price $329,216 $327,031 0.7% $317,181 $313,832 1.1% $384,930 $356,293 8.0%
Southwest
(includes unconsolidated joint ventures) Home 2,526 2,482 1.8% 2,263 2,389 (5.3)% 1,033 770 34.2%
(AZ, TX) Dollars $949,763 $826,707 14.9% $822,371 $747,753 10.0% $422,711 $295,319 43.1%
Avg. Price $375,995 $333,081 12.9% $363,399 $312,998 16.1% $409,207 $383,532 6.7%
West
(includes unconsolidated joint ventures) Home 725 397 82.6% 442 435 1.6% 339 56 505.4%
(CA) Dollars $356,507 $215,529 65.4% $183,600 $239,375 (23.3)% $204,764 $31,857 542.8%
Avg. Price $491,734 $542,895 (9.4)% $415,384 $550,290 (24.5)% $604,024 $568,872 6.2%
Grand Total
Home 6,547 5,883 11.3% 5,776 5,934 (2.7)% 3,112 2,341 32.9%
Dollars $2,651,086 $2,233,691 18.7% $2,208,049 $2,177,095 1.4% $1,348,007 $904,970 49.0%
Avg. Price $404,931 $379,686 6.6% $382,280 $366,885 4.2% $433,164 $386,574 12.1%
Consolidated Total
Home 6,183 5,559 11.2% 5,507 5,497 0.2% 2,905 2,229 30.3%
Dollars $2,448,207 $2,106,421 16.2% $2,088,129 $2,013,013 3.7% $1,215,925 $855,847 42.1%
Avg. Price $395,958 $378,921 4.5% $379,177 $366,202 3.5% $418,563 $383,960 9.0%
Unconsolidated Joint Ventures
Home 364 324 12.3% 269 437 (38.4)% 207 112 84.8%
Dollars $202,879 $127,270 59.4% $119,920 $164,082 (26.9)% $132,082 $49,123 168.9%
Avg. Price $557,359 $392,809 41.9% $445,799 $375,475 18.7% $638,077 $438,601 45.5%
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.

CONTACT: J. Larry Sorsby Executive Vice President & CFO 732-747-7800 Jeffrey T. O'Keefe Vice President, Investor Relations 732-747-7800

Source:Hovnanian Enterprises, Inc.