| Hovnanian Enterprises Reports Fiscal 2007 Results |
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RED BANK, N.J., Dec. 18 /PRNewswire-FirstCall/ -- Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fourth quarter and fiscal year ended October 31, 2007.
Results for the 3 months and 12 months ended October 31, 2007:
-- Excluding unconsolidated joint ventures, the Company delivered 13,564
homes with an aggregate sales value of $4.6 billion in fiscal 2007,
down 24.4% from 17,940 home deliveries with an aggregate sales value of
$5.9 billion in fiscal 2006. In the fourth quarter, the Company
delivered 3,969 homes with an aggregate sales value of $1.3 billion in
fiscal 2007, a decline of 22.0% in sales value from the fourth quarter
in fiscal 2006.
-- Total revenues were $4.8 billion for fiscal 2007, a decrease of 21.9%
compared to last year. Fourth quarter revenues were $1.4 billion for
fiscal 2007, down 20.3% from last year's fourth quarter.
-- The Company generated $376 million of positive cash flow from
operations during the fourth quarter of fiscal 2007 and reduced total
debt outstanding by $390 million.
-- Excluding land-related and intangible charges, the Company reported a
pretax loss of $21 million for the twelve month period. For the fourth
quarter, the pretax loss excluding land-related and intangible charges
was $30 million. Including all land-related and intangible charges,
the Company reported a pre-tax loss of $647 million for the full year
and $413 million for the fourth quarter.
-- During the fourth quarter of fiscal 2007, the Company incurred a total
of $383 million of pretax charges including land impairments of $168
million, intangible impairments of $78 million and write-offs of
predevelopment costs and land deposits of $105 million, as well as $32
million representing its equity portion of write-offs and impairment
charges in unconsolidated joint ventures. Similar charges in the
fourth quarter of fiscal 2006 totaled $322 million.
-- For the full year, the Company recognized pre-tax charges totaling $626
million, including $332 million related to land impairments, $135
million of charges associated with intangible impairments, write-off of
predevelopment costs and land deposits of $126 million and $33 million
representing its equity portion of write-offs and impairment charges in
unconsolidated joint ventures. Similar charges in fiscal 2006 totaled
$343 million.
FAS 109 Non-Cash Tax Charge:
-- After a recent consultation with its auditors and the Company's own
research regarding the application of FAS 109, the Company concluded it
should book a $216 million after-tax non-cash valuation allowance
during its fourth quarter by recording a reserve of that amount against
its deferred tax assets. The FAS 109 charge was for GAAP purposes
only. For tax purposes, the tax deductions associated with the
Company's deferred tax assets may be carried forward for 20 years. The
Company is confident that it will generate sufficient profits in the
future to ultimately fully utilize its deferred tax assets.
-- This accounting determination resulted in a $54 million tax expense in
the fourth quarter instead of a $162 million tax benefit that
management had anticipated.
-- Including the effect of this accounting interpretation, the Company
reported an after tax loss of $469 million or $7.42 per common share
for the final three months of fiscal 2007, compared with a net loss of
$118 million, or $1.88 per common share, in the fourth quarter of
fiscal 2006. For the full year, the Company reported an after tax loss
of $638 million or $10.11 per common share in 2007, compared with net
income of $139 million, or $2.14 per fully diluted common share, in
fiscal 2006.
Balance Sheet as of October 31, 2007:
-- The Company ended the year with $1.3 billion in total stockholders'
equity or $19.07 per common share and reduced its total debt
outstanding by $390 million from the end of the third quarter, leaving
$207 million drawn on its $1.5 billion revolving credit facility after
repayment of $140 million of 10-1/2% senior notes that matured in
October and were discharged early in August.
-- The Company's average ratio of net recourse debt to capital for the
year was 56.3% and the ratio was 61.4% at year end. Excluding the
impact of the FAS 109 charge, the Company's ratio of net recourse debt
to capital at year end would have been 57.8%.
-- As of October 31, 2007, the Company had 36,104 lots controlled under
option contracts, down from a peak of 87,129 at the end of April 2006.
In addition, the Company owned 28,680 lots, down from a peak at
July 31, 2006 of 36,500 lots, and a reduction of 3,896 lots from the
end of the third quarter in 2007. The total land position of 64,784
lots represents a 47% decline from the peak total land position at
April 30, 2006.
-- The reduction of owned lots from July 31, 2007 resulted in a $597
million decline in total Inventory on the Company's balance sheet at
October 31, 2007, a 14.5% reduction in just three months. This
reduction in owned lots included the effect of a 13% decline in unsold
homes and models, from 3,242 at July 31, 2007 to 2,822 at year end.
-- The Company also terminated option contracts covering a total of 8,986
lots during the fourth quarter.
Other Key Operating Data:
-- Homebuilding gross margin, before interest expense included in cost of
sales, was 15.1% for the 12 months of fiscal 2007 and 10.9% in the 2007
fourth quarter, compared with 23.1% for fiscal 2006 and 20.4% in the
fourth quarter of 2006.
-- Pretax income from Financial Services in fiscal 2007 was $27.9 million,
a reduction of 10.1% compared with fiscal 2006. For the fourth
quarter, Financial Services contributed pretax income of $7.1 million,
down 36.3% from last year's fourth quarter.
-- The Company had 431 active selling communities on October 31, 2007,
excluding unconsolidated joint ventures, a decline of 18 active
communities from the end of the third quarter on July 31, 2007. The
Company had 427 active selling communities on October 31, 2006,
excluding unconsolidated joint ventures.
-- During fiscal 2007, the Company delivered 1,364 homes through
unconsolidated joint ventures, compared with 2,261 homes last year.
The Company delivered 471 homes through unconsolidated joint ventures
in the fourth quarter, compared with 566 homes in last year's fourth
quarter.
-- The number of net contracts for fiscal 2007, excluding unconsolidated
joint ventures, declined 20.0% to 11,006 contracts. For the fourth
quarter, the Company recorded 2,781 net contracts excluding
unconsolidated joint ventures, a decline of 10.3% from the fourth
quarter of 2006.
-- The Company's contract cancellation rate, excluding unconsolidated
joint ventures, for the fourth quarter of fiscal 2007 was 40%, compared
with the rate of 35% reported in both the fourth quarter of 2006 and
the third quarter of fiscal 2007.
-- Contract backlog as of October 31, 2007, excluding unconsolidated joint
ventures, was 5,938 homes with a sales value of $2.0 billion, down
31.3% compared to contract backlog with a sales value of $2.9 billion
at the end of last year.
Projections for Fiscal 2008:
-- The Company continues to project positive cash flow from operations in
excess of $100 million for fiscal 2008.
Comments From Management:
"Considering the challenging market conditions that homebuilders are continuing to face, we are pleased to have exceeded our expectations for cash generation in the fourth quarter and to have paid down our debt levels more than we projected," commented Ara K. Hovnanian, President and Chief Executive Officer of the Company. "We are focused on generating cash and strengthening our balance sheet by reducing both our debt and inventory levels while at the same time reducing our operating costs and overhead costs to prevent further contraction in our margins. We are continuing to carefully manage our land development expenditures and generate cash by delivering significantly more lots under homes than the number of lots we are purchasing," stated Mr. Hovnanian. "We have reduced our total land position 47% from the peak in April of 2006, and we expect to see this come down even further during fiscal 2008," said J. Larry Sorsby, Executive Vice President and Chief Financial Officer. "In addition, a significant portion of our remaining lot option contracts are in markets that have been less impacted by the housing slowdown, including more than 6,500 lots in Texas and about 4,400 lots in North Carolina. The vast majority of the remaining lot option position, which includes about 7,700 lots in the Northeast and 8,500 in the Washington D.C. market, have been renegotiated in price, terms or both, such that they remain economically viable even in today's market conditions." "Our bank group provided a waiver under our $1.5 billion revolving credit facility as of October 31, 2007 for the covenants related to tangible net worth that were impacted by the non-cash FAS 109 tax charge," Mr. Sorsby said. "We have strong, longstanding relationships with many of the banks in our revolving credit facility, and we have initiated discussions with the bank group to further modify our covenants with respect to future periods. Based on our initial discussions, we believe that we will be able to successfully negotiate changes that are needed to the credit agreement to adjust for the change in tax treatment, as well as to provide us with adequate operating room as we manage through the remainder of the current housing slowdown. We expect to close the amendment in January," Mr. Sorsby said. "We remain focused on strengthening our balance sheet," Mr. Sorsby continued. "We intend to use cash that we generate during fiscal 2008 to enhance our liquidity and further reduce our net outstanding debt. We anticipate increasing our bank borrowings modestly in the first half of the year, with reductions weighted towards the second half of the year, which follows our typical seasonal pattern. Also, as a result of restrictions in the indentures governing our senior and senior subordinated notes, we will not pay dividends on our Series A Preferred Stock during fiscal 2008," Mr. Sorsby concluded. "Our industry is currently experiencing a cyclical correction," stated Mr. Hovnanian. "However, after a very slow period for new sales contracts in October and November, we have experienced an improvement in sales pace during the first three weeks of December. This is encouraging given that December is historically a slower sales month." "Our belief in the housing industry's long-term demographic fundamentals remains strong," Mr. Hovnanian continued. "Fixed 30 year mortgage rates remain at historically low levels and the price of new homes have declined in most markets across the country. While there is evidence that the United States economy has slowed, GDP growth has exceeded expectations and jobs are still being created. Most importantly, household formation marches on, and it is the main driver of long-term demand for housing. While the factors that created this downturn are different than any other throughout our 48 year history, we know that stronger demand for new homes will return. What is not known is how long the market will take to rebound. Today we are taking the steps necessary to ensure that we will be in the best position possible through this slow period and when the inevitable recovery takes place," concluded Mr. Hovnanian. Hovnanian Enterprises will webcast its fiscal 2007 financial results conference call at 11:00 a.m. E.T. on Wednesday, December 19, 2007. The webcast can be accessed live through the "Investor Relations" section of Hovnanian Enterprises' Web site 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 "Audio Archives" section of the Investor Relations page on the Hovnanian Web site at http://www.khov.com. The archive will be available for 12 months. About Hovnanian Enterprises: Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, 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, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt 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 2006 annual report, can be accessed through the "Investor Relations" section of Hovnanian Enterprises' website at http://www.khov.com. To be added to Hovnanian's investor e-mail or fax lists, please send an e-mail to IR@khov.com or sign up at http://www.khov.com. Hovnanian Enterprises, Inc. is a member of the Public Home Builders Council of America ("PHBCA") (http://www.phbca.org), a nonprofit group devoted to improving understanding of the business practices of America's largest publicly-traded home building companies, the competitive advantages they bring to the home building market, and their commitment to creating value for their home buyers and stockholders. The PHBCA's 14 member companies build one out of every five homes in the United States. Non-GAAP Financial Measures: Consolidated earnings before interest expense, income taxes, depreciation and amortization ("EBITDA") and before inventory impairment loss and land option write-offs ("Adjusted EBITDA") are not generally accepted accounting principle (GAAP) financial measures. The most directly comparable GAAP financial measure is net income. The reconciliation of EBITDA and Adjusted EBITDA to net income is presented in a table attached to this earnings release. Cash flow is a non-GAAP financial measure. The most directly comparable GAAP financial measure is Cash Flow from Operating Activities. The Company uses cash flow to mean cash flow from operating activities and cash flow from investing activities excluding changes in mortgage notes receivable at the mortgage company. Pretax (Loss) Income Excluding Land Related Charges and Intangible Impairments is a non-GAAP financial measure. The most directly comparable GAAP financial measure is (Loss) Income BeforeIncome Taxes. The reconciliation of Pretax (Loss) Income Excluding Land Related Charges and Intangible Impairments to (Loss) Income BeforeIncome Taxes is presented in a table attached to this earnings release. Note: All statements in this Press Release that are not historical facts should be considered as "forward-looking statements" within the meaning 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 risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic and industry and business conditions, (2) adverse weather 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, 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) operations through joint ventures with third parties, (14) product liability litigation and warranty claims, (15) successful identification and integration of acquisitions, (16) significant influence of the Company's controlling stockholders, (17) geopolitical risks, terrorist acts and other acts of war and (18) other factors described in detail in the Company's Form 10-K for the year ended October 31, 2006.
Hovnanian Enterprises, Inc.
October 31, 2007
Statements of Pretax (Loss) Income Excluding Land Related Charges and
Intangible Impairments
(Dollars in Thousands)
Three Months Ended, Twelve Months Ended,
October 31, October 31,
----------------------- -----------------------
2007 2006 2007 2006
------------ --------- ----------- ----------
(Unaudited) (Unaudited)
Total Revenues $1,391,869 $1,745,603 $4,798,921 $6,148,235
Costs and Expenses (a) 1,428,442 1,613,233 4,824,685 5,590,069
Income from Unconsolidated
Joint Ventures (b) 6,511 3,885 4,877 17,718
----------------------- -----------------------
Pretax (Loss) Income Excluding
Land Related Charges and
Intangible Impairments (30,062) 136,255 (20,887) 575,884
================================================
(a) Excludes inventory impairment loss and land option write-offs, and
intangible impairments.
(b) Excludes our share of land related charges and intangible impairments
recorded by our unconsolidated joint ventures.
Reconciliation of (Loss) Income Before Income Taxes to Pretax (Loss)
Income Excluding Land Related Charges and Intangible Impairments
(Dollars in Thousands)
Three Months Ended, Twelve Months Ended,
October 31, October 31,
-------------------- --------------------
2007 2006 2007 2006
--------- -------- --------- --------
(Loss) Income Before Income
Taxes (412,771) (185,545) (646,966) 233,106
Inventory Impairment Loss and
Land Option Write-Offs 273,353 315,226 457,773 336,204
Intangible Impairments 77,556 4,241 135,206 4,241
Unconsolidated Joint Venture
Intangible and Land Related
Charges 31,800 2,333 33,100 2,333
Pretax (Loss) Income Excluding
Land Related Charges and
------------------------------------------
Intangible Impairments $(30,062) $136,255 $(20,887) $575,884
==========================================
Hovnanian Enterprises, Inc.
October 31, 2007
Gross Margin
(Dollars in Thousands)
Homebuilding Gross Margin Homebuilding Gross Margin
Three Months Ended Twelve Months Ended
October 31, October 31,
2007 2006 2007 2006
(Unaudited) (Unaudited)
Sale of Homes $1,308,219 $1,677,816 $4,581,375 $5,903,387
Cost of Sales,
excluding
interest(a) 1,165,509 1,334,913 3,890,474 4,538,795
Homebuilding Gross
Margin, excluding
interest 142,710 342,903 690,901 1,364,592
Homebuilding Cost of
Sales interest 45,598 45,369 130,825 106,892
Homebuilding Gross
Margin, including
interest $97,112 $297,534 $560,076 $1,257,700
Gross Margin Percentage,
excluding interest 10.9% 20.4% 15.1% 23.1%
Gross Margin Percentage,
including interest 7.4% 17.7% 12.2% 21.3%
Land Sales Gross Margin Land Sales Gross Margin
Three Months Ended Twelve Months Ended
October 31, October 31,
2007 2006 2007 2006
(Unaudited) (Unaudited)
Land Sales $42,107 $36,551 $107,955 $140,389
Cost of Sales,
excluding interest(a) 36,094 12,910 87,179 94,286
Land Sales Gross Margin,
excluding interest 6,013 23,641 20,776 46,103
Land Sales interest 874 507 1,132 1,437
Land Sales Gross Margin,
including interest $5,139 $23,134 $19,644 $44,666
(a) Does not include cost associated with walking away from land options
which are recorded as inventory impairment loses in the Statement of
Consolidated Operations.
Hovnanian Enterprises, Inc.
October 31, 2007
Reconciliation of Adjusted EBITDA to Net (Loss) Income
(Dollars in Thousands)
Three Months Ended Twelve Months Ended
October 31, October 31,
2007 2006 2007 2006
(Unaudited) (Unaudited)
Net (Loss) Income $(466,593) $(115,259) $(627,119) $149,533
Income Tax (Benefit)
Provision 53,822 (70,286) (19,847) 83,573
Interest expense 47,223 47,322 141,754 111,944
EBIT(1) (365,548) (138,223) (505,212) 345,050
Depreciation 4,754 4,296 18,283 14,884
Amortization of Debt
Costs 503 640 2,576 2,293
Amortization of
Intangibles 83,700 16,430 162,124 54,821
EBITDA(2) (276,591) (116,857) (322,229) 417,048
Inventory Impairment
Loss and Land Option
Write-offs 273,353 315,226 457,773 336,204
Adjusted EBITDA(3) $(3,238) $198,369 $135,544 $ 753,252
INTEREST INCURRED $46,262 $57,858 $194,547 $ 166,427
ADJUSTED EBITDA TO
INTEREST INCURRED (0.07) 3.43 0.70 4.53
(1) EBIT is a non-GAAP financial measure. The 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 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 comparable GAAP
financial measure is net income. Adjusted EBITDA represents earnings
before interest expense, income taxes, depreciation, amortization and
inventory impairment loss and land option write-offs.
Hovnanian Enterprises, Inc.
October 31, 2007
Interest Incurred, Expensed and Capitalized
(Dollars in Thousands)
Three Months Ended Twelve Months Ended
October 31, October 31,
2007 2006 2007 2006
(Unaudited) (Unaudited)
Interest Capitalized at
Beginning of Period $156,603 $92,313 $102,849 $48,366
Plus Interest Incurred 46,262 57,858 194,547 166,427
Less Interest Expensed 47,223 47,322 141,754 111,944
Interest Capitalized at
End of Period $155,642 $102,849 $155,642 $102,849
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)
October 31, 2007 October 31, 2006
ASSETS
Homebuilding:
Cash and cash equivalents $12,275 $43,635
-------------------------------
Restricted cash 6,594 9,479
-------------------------------
Inventories-at the lower of cost or fair
value
Sold and unsold homes and lots under
development 2,792,436 3,297,766
-------------------------------
Land and land options held for future
development or sale 446,135 362,760
-------------------------------
Consolidated inventory not owned:
Specific performance options 12,123 20,340
Variable interest entities 139,914 208,167
Other options 127,726 181,808
-------------------------------
Total consolidated inventory not owned 279,763 410,315
-------------------------------
Total inventories 3,518,334 4,070,841
-------------------------------
Investments in and advances to
unconsolidated joint ventures 176,365 212,581
-------------------------------
Receivables, deposits, and notes 109,856 94,750
-------------------------------
Property, plant, and equipment-net 106,792 110,704
-------------------------------
Prepaid expenses and other assets 174,032 175,603
-------------------------------
Goodwill 32,658 32,658
-------------------------------
Definite life intangibles 4,224 165,053
-------------------------------
Total homebuilding 4,141,130 4,915,304
-------------------------------
Financial services:
Cash and cash equivalents 3,958 10,688
Restricted cash 11,572 1,585
Mortgage loans held for sale 182,627 281,958
Other assets 6,851 10,686
-------------------------------
Total financial services 205,008 304,917
-------------------------------
Income taxes receivable -- including
deferred tax benefits 194,410 259,814
-------------------------------
Total assets $4,540,548 $5,480,035
===============================
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)
October 31, October 31,
2007 2006
LIABILITIES AND STOCKHOLDERS' EQUITY
Homebuilding:
Nonrecourse land mortgages $9,430 $26,088
Accounts payable and other liabilities 515,422 582,393
Customers' deposits 65,221 184,943
Nonrecourse mortgages secured by operating
properties 22,985 23,684
Liabilities from inventory not owned 189,935 205,067
-------------------------
Total homebuilding 802,993 1,022,175
-------------------------
Financial services:
Accounts payable and other liabilities 19,597 12,158
Mortgage warehouse line of credit 171,133 270,171
-------------------------
Total financial services 190,730 282,329
-------------------------
Notes payable:
Revolving and term credit agreements 206,750
Senior notes 1,510,600 1,649,778
Senior subordinated notes 400,000 400,000
Accrued interest 43,944 51,105
-------------------------
Total notes payable 2,161,294 2,100,883
-------------------------
Total liabilities 3,155,017 3,405,387
-------------------------
Minority interest from inventory not owned 62,238 130,221
-------------------------
Minority interest from consolidated joint
ventures 1,490 2,264
-------------------------
Stockholders' equity:
Preferred stock, $.01 par value-authorized 100,000
shares; issued 5,600 shares with a liquidation
preference of $140,000, at October 31, 2007 and
October 31, 2006 135,299 135,299
Common stock, Class A, $.01 par value-authorized
200,000,000 shares; issued 59,263,887 shares at
October 31, 2007; and 58,653,723 shares at October
31, 2006 (including 11,694,720 shares at October
31, 2007 and 11,494,720 shares at October 31, 2006
held in Treasury) 593 587
Common stock, Class B, $.01 par value (convertible
to Class A at time of sale)-authorized
30,000,000 shares; issued 15,338,840 shares at
October 31, 2007; and issued 15,343,410 shares at
October 31, 2006 (including 691,748 shares at
October 31, 2007 and October 31, 2006 held in
Treasury) 153 153
Paid in capital -- common stock 276,998 253,262
Retained earnings 1,024,017 1,661,810
Treasury stock -- at cost (115,257) (108,948)
-------------------------
Total stockholders' equity 1,321,803 1,942,163
-------------------------
Total liabilities and stockholders' equity $4,540,548 $5,480,035
=========================
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Share Amounts)
Three Months Ended Year Ended
October 31, October 31, October 31, October 31,
2007 2006 2007 2006
Revenues:
Homebuilding:
Sale of homes $1,308,219 $1,677,816 $4,581,375 $5,903,387
Land sales and other
revenues 64,150 41,303 141,355 155,250
Total homebuilding 1,372,369 1,719,119 4,722,730 6,058,637
Financial services 19,500 26,484 76,191 89,598
Total revenues 1,391,869 1,745,603 4,798,921 6,148,235
Expenses:
Homebuilding:
Cost of sales, excluding
interest 1,201,603 1,347,823 3,977,653 4,633,081
Cost of sales interest 46,472 45,876 131,957 108,329
Inventory impairment
loss and land option
write-offs 273,353 315,226 457,773 336,204
Total cost of
sales 1,521,428 1,708,925 4,567,383 5,077,614
Selling, general and
administrative 137,558 152,723 539,362 593,860
Total homebuilding
expenses 1,658,986 1,861,648 5,106,745 5,671,474
Financial services 12,444 15,412 48,321 58,586
Corporate general and
administrative 21,559 16,404 85,878 96,781
Other interest 751 1,446 9,797 3,615
Other operations 1,911 21,360 4,799 45,237
Intangible amortization 83,700 16,430 162,124 54,821
Total expenses 1,779,351 1,932,700 5,417,664 5,930,514
(Loss)income from
unconsolidated joint
ventures (25,289) 1,552 (28,223) 15,385
(Loss)income before
income taxes (412,771) (185,545) (646,966) 233,106
State and federal income
tax(benefit)/provision:
State 6,970 (5,846) 7,088 1,366
Federal 46,852 (64,440) (26,935) 82,207
Total taxes 53,822 (70,286) (19,847) 83,573
Net (loss)income (466,593) (115,259) (627,119) 149,533
Less: preferred stock
dividends 2,668 2,669 10,674 10,675
Net (loss)income
available to common
stockholders $(469,261) $(117,928) $(637,793) $138,858
Per share data:
Basic:
(Loss)income per common
share $(7.42) $(1.88) $(10.11) $2.21
Weighted average number
of common shares
outstanding 63,207 62,758 63,079 62,822
Assuming dilution:
(Loss)income per
common share $(7.42) $(1.88) $(10.11) $2.14
Weighted average number
of common shares
outstanding 63,207 62,758 63,079 64,838
HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(UNAUDITED) Communities Under Development
Three Months - 10/31/07
Net Contracts (1)
Three Months Ended
October 31,
2007 2006 % Change
Northeast
Homes 554 410 35.1%
Dollars 218,424 178,882 22.1%
Avg. Price 394,268 436,298 (9.6%)
Mid-Atlantic
Homes 333 362 (8.0%)
Dollars 119,188 149,168 (20.1%)
Avg. Price 357,920 412,066 (13.1%)
Southeast
Homes 308 508 (39.4%)
Dollars 76,451 142,701 (46.4%)
Avg. Price 248,216 280,907 (11.6%)
Southwest
Homes 751 974 (22.9%)
Dollars 168,440 212,366 (20.7%)
Avg. Price 224,288 218,035 2.9%
Midwest
Homes 355 291 22.0%
Dollars 71,678 61,748 16.1%
Avg. Price 201,910 212,192 4.8%
West
Homes 480 555 13.5%
Dollars 165,023 235,475 (29.9%)
Avg. Price 343,798 424,279 (19.0%)
Consolidated Total
Homes 2,781 3,100 (10.3%)
Dollars 819,204 980,340 (16.4%)
Avg. Price 294,572 316,239 (6.9%)
Unconsolidated Joint
Ventures
Homes 161 148 8.8%
Dollars 55,750 31,833 75.1%
Avg. Price 346,273 215,088 61.0%
Total
Homes 2,942 3,248 (9.4%)
Dollars 874,954 1,012,173 (13.6%)
Avg. Price 297,401 311,630 (4.6%)
Deliveries
Three Months Ended
October 31,
2007 2006 % Change
Northeast
Homes 645 783 (17.6%)
Dollars 298,039 358,355 (16.8%)
Avg. Price 462,076 457,669 1.0%
Mid-Atlantic Homes 595 684 (13.0%)
Dollars 258,178 309,148 (16.5%)
Avg. Price 433,913 451,971 (4.0%)
Southeast
Homes 594 1,010 (41.2%)
Dollars 155,560 267,762 (41.9%)
Avg. Price 261,886 265,111 (1.2%)
Southwest Homes 1,129 1,304 (13.4%)
Dollars 255,670 290,159 (11.9%)
Avg. Price 226,457 222,515 1.8%
Midwest
Homes 358 281 27.4%
Dollars 81,138 63,353 28.1%
Avg. Price 226,642 225,456 0.5%
West
Homes 648 855 (24.2%)
Dollars 259,634 389,039 (33.3%)
Avg. Price 400,670 455,016 (11.9%)
Consolidated Total
Homes 3,969 4,917 (19.3%)
Dollars 1,308,219 1,677,816 (22.0%)
Avg. Price 329,609 341,228 (3.4%)
Unconsolidated Joint
Ventures
Homes 471 566 (16.8%)
Dollars 205,416 219,921 (6.6%)
Avg. Price 436,128 388,553 12.2%
Total
Homes 4,440 5,483 (19.0%)
Dollars 1,513,635 1,897,737 (20.2%)
Avg. Price 340,909 346,113 (1.5%)
Contract Backlog
October 31,
2007 2006 % Change
Northeast
Homes 975 1,218 (20.0%)
Dollars 503,445 591,849 (14.9%)
Avg. Price 516,354 485,919 6.3%)
Mid-Atlantic
Homes 753 1,134 (33.6%)
Dollars 358,778 562,670 (36.2%)
Avg. Price 476,465 496,182 (4.0%)
Southeast
Homes 2,151 3,813 (43.6%)
Dollars 614,575 1,093,299 (43.8%)
Avg. Price 285,716 286,729 (0.4%)
Southwest
Homes 751 999 (24.8%)
Dollars 174,206 224,482 (22.4%)
Avg. Price 231,966 224,707 3.2%
Midwest
Homes 759 668 13.6%
Dollars 153,171 117,148 30.8%
Avg. Price 201,806 175,371 15.1%
West
Homes 549 664 (17.3%)
Dollars 205,716 334,102 (38.4%)
Avg. Price 374,710 503,166 (25.5%)
Consolidated Total
Homes 5,938 8,496 (30.1%)
Dollars 2,009,891 2,923,550 (31.3%)
Avg. Price 338,479 344,109 (1.6%)
Unconsolidated Joint Ventures
Homes 427 1,130 (62.2%)
Dollars 202,422 517,970 (60.9%)
Avg. Price 474,056 458,381 3.4%
Total
Homes 6,365 9,626 (33.9%)
Dollars 2,212,313 3,441,520 (35.7%)
Avg. Price 347,575 357,523 (2.8%)
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)
(UNAUDITED)
Communities Under Development
Twelve Months - 10/31/2007
Net Contracts (1)
Twelve Months Ended
October 31,
2007 2006 % Change
Northeast
Homes 1,756 1,823 (3.7%)
Dollars 802,459 808,736 (0.8%)
Avg. Price 456,981 443,629 3.0%
Mid-Atlantic
Homes 1,545 1,737 (11.1%)
Dollars 677,581 837,170 (19.1%)
Avg. Price 438,564 481,963 (9.0%)
Southeast (2)
Homes 1,109 2,806 (60.5%)
Dollars 312,070 826,387 (62.2%)
Avg. Price 281,397 294,507 (4.5%)
Southwest
Homes 3,395 3,955 (14.2%)
Dollars 758,340 848,352 (10.6%)
Avg. Price 223,370 214,501 4.1%
Midwest
Homes 1,134 942 20.4%
Dollars 248,744 186,750 33.2%
Avg. Price 219,351 198,248 10.6%
West
Homes 2,067 2,498 (17.3%)
Dollars 833,986 1,107,833 (24.7%)
Avg. Price 403,476 443,488 (9.0%)
Consolidated Total
Homes 11,006 13,761 (20.0%)
Dollars 3,633,180 4,615,228 (21.3%)
Avg. Price 330,109 335,385 (1.6%)
Unconsolidated Joint
Ventures
Homes 661 1,051 (37.1%)
Dollars 211,797 355,390 (40.4%)
Avg. Price 320,418 338,145 (5.2%)
Total
Homes 11,667 14,812 (21.2%)
Dollars 3,844,977 4,970,618 (22.6%)
Avg. Price 329,560 335,580 (1.8%)
Deliveries
Twelve Months Ended
October 31,
2007 2006 % Change
Northeast
Homes 1,999 2,188 (8.6%)
Dollars 935,476 992,713 (5.8%)
Avg. Price 467,972 453,708 3.1%
Mid-Atlantic
Homes 1,926 1,984 (2.9%)
Dollars 885,599 980,691 (9.7%)
Avg. Price 459,813 494,300 (7.0%)
Southeast (2)
Homes 2,771 5,074 (45.4%)
Dollars 745,240 1,243,501 (40.1%)
Avg. Price 268,943 245,073 9.7%
Southwest
Homes 3,643 4,252 (14.3%)
Dollars 828,574 925,918 (10.5%)
Avg. Price 227,443 217,761 4.4%
Midwest
Homes 1,043 855 22.0%
Dollars 226,804 173,699 30.6%
Avg. Price 217,453 203,157 7.0%
West
Homes 2,182 3,587 (39.2%)
Dollars 959,682 1,586,865 (39.5%)
Avg. Price 439,818 442,393 (0.6%)
Consolidated Total
Homes 13,564 17,940 (24.4%)
Dollars 4,581,375 5,903,387 (22.4%)
Avg. Price 337,760 329,063 2.6%
Unconsolidated Joint
Ventures
Homes 1,364 2,261 (39.7%)
Dollars 535,051 868,222 (38.4%)
Avg. Price 392,266 383,999 2.2%
Total
Homes 14,928 20,201 (26.1%)
Dollars 5,116,426 6,771,609 (24.4%)
Avg. Price 342,740 335,212 2.2%
Contract Backlog
October 31,
2007 2006 % Change
Northeast
Homes 975 1,218 (20.0%)
Dollars 503,445 591,849 (14.9%)
Avg. Price 516,354 485,919 6.3%
Mid-Atlantic
Homes 753 1,134 (33.6%)
Dollars 358,778 562,670 (36.2%)
Avg. Price 476,465 496,182 (4.0%)
Southeast (2)
Homes 2,151 3,813 (43.6%)
Dollars 614,575 1,093,299 (43.8%)
Avg. Price 285,716 286,729 (0.4%)
Southwest
Homes 751 999 (24.8%)
Dollars 174,206 224,482 (22.4%)
Avg. Price 231,966 224,707 3.2%
Midwest
Homes 759 668 13.6%
Dollars 153,171 117,148 30.8%
Avg. Price 201,806 175,371 15.1%
West
Homes 549 664 (17.3%)
Dollars 205,716 334,102 (38.4%)
Avg. Price 374,710 503,166 (25.5%)
Consolidated Total
Homes 5,938 8,496 (30.1%)
Dollars 2,009,891 2,923,550 (31.3%)
Avg. Price 338,479 344,109 (1.6%)
Unconsolidated Joint
Ventures
Homes 427 1,130 (62.2%)
Dollars 202,422 517,970 (60.9%)
Avg. Price 474,056 458,381 3.4%
Total
Homes 6,365 9,626 (33.9%)
Dollars 2,212,313 3,441,520 (35.7%)
Avg. Price 347,575 357,523 (2.8%)
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.
(2) The number and the dollar amount of net contracts in the Southeast in
fiscal 2007 include the effect of the CraftBuilt Homes acquisition,
which closed in April 2006.
SOURCE Hovnanian Enterprises, Inc. CONTACT: Kevin C. Hake, Senior Vice President, Finance and Treasurer, or Jeffrey T. O'Keefe, Director of Investor Relations, both of Hovnanian Enterprises, Inc., +1-732-747-7800/ |