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Hovnanian Enterprises Reports Second Quarter Fiscal 2011 Results
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RED BANK, N.J., Jun 7, 2011 (GlobeNewswire via COMTEX) -- Hovnanian Enterprises, Inc. (NYSE:HOV), a leading national homebuilder, reported results for its second quarter and six months ended April 30, 2011.

RESULTS FOR THE THREE AND SIX MONTH PERIODS ENDED APRIL 30, 2011:

  • Total revenues were $255.1 million for the second quarter ended April 30, 2011 compared with $318.6 million in last year's second quarter. During the first six months of fiscal 2011, total revenues were $507.7 million compared with $638.2 million in the same period of the prior year.
  • Homebuilding gross margin percentage, before interest expense included in cost of sales, was 14.8% for the three months ended April 30, 2011, compared to 17.3% during the same quarter a year ago. For the six month period ended April 30, 2011, homebuilding gross margin percentage, before interest expense included in cost of sales, was 15.8% compared with 16.6% in the year earlier period.
  • Consolidated pre-tax land-related charges in the fiscal 2011 second quarter were $16.9 million, compared with $1.2 million in the prior year's second quarter. For the first half of fiscal 2011, consolidated pre-tax land-related charges were $30.5 million compared with $6.2 million during the first half of 2010.
  • Excluding land-related charges and (loss) gain on extinguishment of debt, the pre-tax loss for the quarter ended April 30, 2011 was $55.1 million compared with $44.0 million in the second quarter of 2010. During the first six months of fiscal 2011, the pre-tax loss, excluding land-related charges and (loss) gain on extinguishment of debt, was $106.2 million compared with $96.6 million in last year's first half.
  • For the second quarter of fiscal 2011, the after-tax net loss was $72.7 million, or $0.69 per common share, compared with $28.6 million, or $0.36 per common share, in the second quarter of the prior year. During the six months ended April 30, 2011, the after-tax net loss was $136.8 million, or $1.49 per common share, compared with net income of $207.6 million, or $2.60 per fully diluted common share in the first half of last year, which as a result of tax legislation changes included a federal income tax benefit of $291.3 million.
  • Net contracts during the second quarter of 2011, including unconsolidated joint ventures, decreased 17% to 1,166 homes compared with the same period of the prior year. For the six months ended April 30, 2011, net contracts, including unconsolidated joint ventures, were 2,016 homes, a 15% decrease from the same period a year ago.
  • Contract backlog, as of April 30, 2011, including unconsolidated joint ventures, was 1,551 homes with a sales value of $513.3 million, a decrease of 21% and 17%, respectively, compared to April 30, 2010. Compared to the first quarter of fiscal 2011, contract backlog, including unconsolidated joint ventures, increased 15% on a units basis and 18% on a dollar basis in the second quarter of fiscal 2011.
  • The contract cancellation rate, excluding unconsolidated joint ventures, in the fiscal 2011 second quarter was 20%, compared with 17% in the prior year's second quarter.
  • At April 30, 2011, there were 206 active selling communities, including unconsolidated joint ventures, compared with 188 active selling communities at April 30, 2010.
  • Deliveries, including unconsolidated joint ventures, were 967 homes for the fiscal 2011 second quarter, compared with 1,197 homes during the second quarter of fiscal 2010. For the first half of the year ended April 30, 2011, deliveries, including unconsolidated joint ventures, were 1,859 homes compared to 2,326 homes in the first six months of 2010.
  • The valuation allowance was $840.6 million as of April 30, 2011. 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.

CASH AND INVENTORY AS OF APRIL 30, 2011:

  • As of April 30, 2011, homebuilding cash was $415.2 million, including restricted cash required to collateralize letters of credit.
  • Cash flow in the second quarter of fiscal 2011 was negative $88.5 million, after spending approximately $125 million of cash to purchase approximately 1,440 lots and to develop land across the Company.
  • As of April 30, 2011, the land position, including unconsolidated joint ventures, was 32,546 lots, consisting of 10,542 lots under option and 22,004 owned lots.
  • For the fiscal 2011 second quarter, approximately 1,170 of the lots purchased were within 84 newly identified communities (defined as communities controlled subsequent to January 31, 2009).
  • Approximately 1,650 lots were put under option in 41 newly identified communities during the second quarter of fiscal 2011.

RECENT NET CONTRACT RESULTS:

  • For the month of May 2011, net contracts, including unconsolidated joint ventures, were 501 homes compared with 390 homes last year and 392 homes during April 2011, an increase of 28% over both periods.
  • Net contracts per community for the month of May 2011, including unconsolidated joint ventures, increased to 2.4 compared with 2.0 in the prior year and 1.9 in April 2011, an increase of 20% and 26%, respectively.

COMMENTS FROM MANAGEMENT:

"On a per community basis, our net contracts, including unconsolidated joint ventures, held steady at 1.9 contracts per community per month throughout the quarter, but were still well below the elevated levels of a year ago that benefited from the federal homebuyer tax credit," commented Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. "While the spring selling season has been disappointing, there were a couple of bright spots, including a 28% year-over-year increase in net contracts in May, an increase in our community count during the second quarter and a sequential increase in backlog at April 30, 2011."

"Importantly, we took additional steps throughout the second quarter to better position our balance sheet and now have only $70 million of debt that matures through the end of fiscal 2014. At the same time, we continue to find appealing land opportunities that meet our investment thresholds. Getting these new communities up and running will allow us to grow our top line and better leverage our general, administrative and interest expenses, moving us ever closer down the path to profitability. Based on our backlog, current sales paces and prices and new community openings, we believe our loss will be less in the next two quarters and that cash flow will improve. We remain confident that we have the liquidity to weather the remainder of this downturn, and will continue to position ourselves in preparation for the inevitable housing recovery," concluded Mr. Hovnanian.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2011 second quarter financial results conference call at 11:00 a.m. E.T. on Wednesday, June 8, 2011. 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 "Audio Archives" 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(R), 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, Kentucky, Maryland, 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(R) Homes(R), Matzel & Mumford, Brighton Homes, Parkwood Builders, Town & Country Homes and Oster Homes. As the developer of K. Hovnanian's(R) 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 2010 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 or fax lists, please send an e-mail to IR@khov.com or sign up at http://www.khov.com.

The Hovnanian Enterprises, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7499

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 and loss (gain) on extinguishment of debt ("Adjusted EBITDA") are not U.S. generally accepted accounting principles (GAAP) financial measures. The most directly comparable GAAP financial measure is net (loss) income. The reconciliation of net (loss) income to EBITDA and Adjusted EBITDA 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 Net Cash provided by (or used in) Operating Activities. The Company uses cash flow to mean the amount of Net Cash provided by (or used in) Operating Activities for the period, as reported on the Consolidated Statement of Cash Flows, excluding changes in mortgage notes receivable at the mortgage company, plus (or minus) the amount of Net Cash provided by (or used in) Investing Activities. For the second quarter of 2011, cash flow was negative $88.5 million, which was derived from $98.4 million from net cash used in operating activities plus the change in mortgage notes receivable of $9.7 million plus $0.2 million of net cash provided by investing activities.

Loss Before Income Taxes Excluding Land-Related Charges and Loss (Gain) on Extinguishment of Debt is a non-GAAP financial measure. The most directly comparable GAAP financial measure is Loss Before Income Taxes. The reconciliation of Loss Before Income Taxes to Loss Before Income Taxes Excluding Land-Related Charges and Loss (Gain) on Extinguishment of Debt is presented in a table attached to this earnings release.

FORWARD-LOOKING STATEMENTS

All statements in this press release that are not historical facts should be considered as "forward-looking statements". Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic and industry and business conditions and impacts of the sustained homebuilding downturn, (2) adverse weather and other environmental conditions and natural disasters, (3) changes in market conditions and seasonality of the Company's business, (4) changes in home prices and sales activity in the markets where the Company builds homes, (5) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws, and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in, and price fluctuations of, raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to the Company, (11) utility shortages and outages or rate fluctuations, (12) levels of indebtedness and restrictions on the Company's operations and activities imposed by the agreements governing the Company's outstanding indebtedness, (13) the Company's sources of liquidity, (14) changes in credit ratings, (15) availability of net operating loss carryforwards, (16) operations through joint ventures with third parties, (17) product liability litigation and warranty claims, (18) successful identification and integration of acquisitions, (19) significant influence of the Company's controlling stockholders, (20) geopolitical risks, terrorist acts and other acts of war, and (21) other factors described in detail in the Company's Annual Report on Form 10-K/A for the year ended October 31, 2010 and the Company's quarterly reports on Form 10-Q for the quarters ended January 31, 2011 and April 30, 2011, respectively. 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.
  April 30, 2011
  Statements of Consolidated Operations
  (Dollars in Thousands, Except Per Share Data)
                                           Three Months Ended           Six Months Ended
                                                April 30,                  April 30,
                                        -------------------------  -------------------------
                                            2011         2010          2011         2010
                                        ------------  -----------  ------------  -----------
                                               (Unaudited)                (Unaudited)
  Total Revenues                           $ 255,097    $ 318,585     $ 507,664    $ 638,230
  Costs and Expenses (a)                     323,903      364,173       640,041      740,987
  (Loss) Gain on Extinguishment of
   Debt                                      (1,644)       17,217       (1,644)       19,791
  (Loss) Income from Unconsolidated
   Joint Ventures                            (3,232)          391       (4,224)           18
                                        ------------  -----------  ------------  -----------
  Loss Before Income Taxes                  (73,682)     (27,980)     (138,245)     (82,948)
  Income Tax (Provision) Benefit             (1,015)          654       (1,436)    (290,503)
                                        ------------  -----------  ------------  -----------
  Net (Loss) Income                       $ (72,667)   $ (28,634)   $ (136,809)    $ 207,555
                                        ============  ===========  ============  ===========
  Per Share Data:
  Basic:
   (Loss) Income Per Common Share           $ (0.69)     $ (0.36)      $ (1.49)       $ 2.64
   Weighted Average Number of Common
    Shares Outstanding (b)                   105,894       78,668        92,020       78,610
  Assuming Dilution:
   (Loss) Income Per Common Share           $ (0.69)     $ (0.36)      $ (1.49)       $ 2.60
   Weighted Average Number of Common
    Shares Outstanding (b)                   105,894       78,668        92,020       79,794
  (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.
  April 30, 2011
  Reconciliation of Loss Before Income Taxes to Loss Before Income Taxes
  Excluding Land-Related Charges and Loss (Gain) on Extinguishment of Debt
  (Dollars in Thousands)
                                           Three Months Ended           Six Months Ended
                                                April 30,                  April 30,
                                        -------------------------  -------------------------
                                            2011         2010          2011         2010
                                        ------------  -----------  ------------  -----------
                                               (Unaudited)                (Unaudited)
  Loss Before Income Taxes                $ (73,682)   $ (27,980)   $ (138,245)   $ (82,948)
  Inventory Impairment Loss and Land
   Option Write-Offs                          16,925        1,186        30,450        6,152
  Loss (Gain) on Extinguishment of
   Debt                                        1,644     (17,217)         1,644     (19,791)
                                        ------------  -----------  ------------  -----------
  Loss Before Income Taxes Excluding
   Land-Related Charges and Loss
   (Gain) on Extinguishment of Debt
   (a)                                    $ (55,113)   $ (44,011)   $ (106,151)   $ (96,587)
                                        ============  ===========  ============  ===========
  (a) Loss Before Income Taxes Excluding Land-Related Charges and Loss (Gain) on
   Extinguishment of Debt is a non-GAAP Financial measure. The most directly comparable GAAP
   financial measure is Loss Before Income Taxes.
  Hovnanian Enterprises, Inc.
  April 30, 2011
  Gross Margin
  (Dollars in Thousands)
                                        Homebuilding Gross Margin  Homebuilding Gross Margin
                                           Three Months Ended           Six Months Ended
                                                April 30,                  April 30,
                                        -------------------------  -------------------------
                                            2011         2010          2011         2010
                                        ------------  -----------  ------------  -----------
                                               (Unaudited)                (Unaudited)
  Sale of Homes                            $ 246,974    $ 310,493     $ 482,859    $ 619,846
  Cost of Sales, Excluding Interest
   (a)                                       210,463      256,913       406,377      516,721
                                        ------------  -----------  ------------  -----------
  Homebuilding Gross Margin, Excluding
   Interest                                   36,511       53,580        76,482      103,125
  Homebuilding Cost of Sales Interest         13,956       18,524        27,449       38,372
                                        ------------  -----------  ------------  -----------
  Homebuilding Gross Margin, Including
   Interest                                 $ 22,555     $ 35,056      $ 49,033     $ 64,753
                                        ============  ===========  ============  ===========
  Gross Margin Percentage, Excluding
   Interest                                    14.8%        17.3%         15.8%        16.6%
  Gross Margin Percentage, Including
   Interest                                     9.1%        11.3%         10.2%        10.4%

                                         Land Sales Gross Margin    Land Sales Gross Margin
                                           Three Months Ended           Six Months Ended
                                                April 30,                  April 30,
                                        -------------------------  -------------------------
                                            2011         2010          2011         2010
                                        ------------  -----------  ------------  -----------
                                               (Unaudited)                (Unaudited)
  Land Sales                                      --        $ 335       $ 8,043      $ 1,035
  Cost of Sales, Excluding Interest
   (a)                                            --           13         5,516           21
                                        ------------  -----------  ------------  -----------
  Land Sales Gross Margin, Excluding
   Interest                                       --          322         2,527        1,014
  Land Sales Interest                             --          221         2,133          221
                                        ------------  -----------  ------------  -----------
  Land Sales Gross Margin, Including
   Interest                                       --        $ 101         $ 394        $ 793
                                        ============  ===========  ============  ===========
  (a) Does not include cost associated with walking away from land options or inventory
   impairment losses which are recorded as Inventory impairment loss and land option
   write-offs in the Condensed Consolidated Statements of Operations.
  Hovnanian Enterprises, Inc.
  April 30, 2011
  Reconciliation of Adjusted EBITDA to Net (Loss) Income
  (Dollars in Thousands)
                                           Three Months Ended           Six Months Ended
                                                April 30,                  April 30,
                                        -------------------------  -------------------------
                                            2011         2010          2011         2010
                                        ------------  -----------  ------------  -----------
                                               (Unaudited)                (Unaudited)
  Net (Loss) Income                       $ (72,667)   $ (28,634)   $ (136,809)    $ 207,555
  Income Tax (Provision) Benefit             (1,015)          654       (1,436)    (290,503)
  Interest Expense                            38,843       42,101        78,454       87,556
                                        ------------  -----------  ------------  -----------
  EBIT (a)                                  (34,839)       14,121      (59,791)        4,608
  Depreciation                                 2,246        3,071         4,565        6,457
  Amortization of Debt Costs                   1,012          815         1,857        1,621
                                        ------------  -----------  ------------  -----------
  EBITDA (b)                                (31,581)       18,007      (53,369)       12,686
  Inventory Impairment Loss and Land
   Option Write-offs                          16,925        1,186        30,450        6,152
  Loss (Gain) on Extinguishment of
   Debt                                        1,644     (17,217)         1,644     (19,791)
                                        ------------  -----------  ------------  -----------
  Adjusted EBITDA (c)                     $ (13,012)      $ 1,976    $ (21,275)      $ (953)
                                        ============  ===========  ============  ===========
  Interest Incurred                         $ 39,895     $ 38,201      $ 77,722     $ 78,343
  Adjusted EBITDA to Interest Incurred        (0.33)         0.05        (0.27)       (0.01)

  (a) EBIT is a non-GAAP financial measure. The most directly comparable GAAP financial
   measure is net (loss) income. 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 (loss) income. 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 (loss) income. Adjusted EBITDA represents earnings before
   interest expense, income taxes, depreciation, amortization, inventory impairment loss and
   land option write-offs, and loss (gain) on extinguishment of debt.

  Hovnanian Enterprises, Inc.
  April 30, 2011
  Interest Incurred, Expensed and Capitalized
  (Dollars in Thousands)
                                           Three Months Ended           Six Months Ended
                                                April 30,                  April 30,
                                        -------------------------  -------------------------
                                            2011         2010          2011         2010
                                        ------------  -----------  ------------  -----------
                                               (Unaudited)                (Unaudited)
  Interest Capitalized at Beginning of
   Period                                  $ 134,504    $ 159,026     $ 136,288    $ 164,340
  Plus Interest Incurred                      39,895       38,201        77,722       78,342
  Less Interest Expensed                      38,843       42,101        78,454       87,556
                                        ------------  -----------  ------------  -----------
  Interest Capitalized at End of
   Period (a)                              $ 135,556    $ 155,126     $ 135,556    $ 155,126
                                        ============  ===========  ============  ===========
  (a) The Company incurred significant inventory impairments in recent years, which are
   determined based on total inventory including capitalized interest. However, the
   capitalized interest amounts are shown gross before allocating any portion of impairments
   to capitalized interest.
         HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED BALANCE SHEETS
             (In Thousands Except Share Amounts)

                                     April 30,   October 31,
                                       2011         2010
                                    -----------  -----------
  ASSETS                            (Unaudited)      (1)
  Homebuilding:
   Cash and cash equivalents          $ 348,119    $ 359,124
                                    -----------  -----------

   Restricted cash                       85,346      108,983
                                    -----------  -----------
   Inventories:
     Sold and unsold homes and
      lots under development            655,918      591,729
                                    -----------  -----------
     Land and land options held
      for future development or
      sale                              308,601      348,474
                                    -----------  -----------
     Consolidated inventory not
      owned:
       Specific performance
        options                          12,064       21,065
       Variable interest entities            --       32,710
       Other options                      1,026        7,962
                                    -----------  -----------
       Total consolidated
        inventory not owned              13,090       61,737
                                    -----------  -----------

       Total inventories                977,609    1,001,940
                                    -----------  -----------
   Investments in and advances to
    unconsolidated joint ventures        66,375       38,000
                                    -----------  -----------
   Receivables, deposits, and
    notes                                50,504       61,023
                                    -----------  -----------
   Property, plant, and equipment
    -- net                               58,663       62,767
                                    -----------  -----------
   Prepaid expenses and other
    assets                               87,323       83,928
                                    -----------  -----------

       Total homebuilding             1,673,939    1,715,765
                                    -----------  -----------
  Financial services:
   Cash and cash equivalents              5,611        8,056
   Restricted cash                        6,621        4,022
   Mortgage loans held for sale          47,372       86,326
   Other assets                           3,012        3,391
                                    -----------  -----------

       Total financial services          62,616      101,795
                                    -----------  -----------

  Total assets                      $ 1,736,555  $ 1,817,560
                                    ===========  ===========
  (1) Derived from the audited balance sheet as of October
   31, 2010.

         HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED BALANCE SHEETS
             (In Thousands Except Share Amounts)

                                                 October 31,
                                     April 30,
                                       2011         2010
                                    -----------  -----------
  LIABILITIES AND EQUITY            (Unaudited)      (1)
  Homebuilding:
   Nonrecourse land mortgages          $ 18,934      $ 4,313
   Accounts payable and other
    liabilities                         277,269      319,749
   Customers' deposits                   15,227        9,520
   Nonrecourse mortgages secured
    by operating properties              20,210       20,657
   Liabilities from inventory not
    owned                                13,090       53,249
                                    -----------  -----------

       Total homebuilding               344,730      407,488
                                    -----------  -----------
  Financial services:
   Accounts payable and other
    liabilities                          16,865       16,142
   Mortgage warehouse line of
    credit                               33,528       73,643
                                    -----------  -----------

       Total financial services          50,393       89,785
                                    -----------  -----------
  Notes payable:
   Senior secured notes                 785,372      784,592
   Senior notes                         827,460      711,585
   Senior subordinated notes                 --      120,170
   TEU senior subordinated
    amortizing notes                     15,615           --
   Accrued interest                      22,319       23,968
                                    -----------  -----------

       Total notes payable            1,650,766    1,640,315
                                    -----------  -----------

   Income taxes payable                  40,483       17,910
                                    -----------  -----------

  Total liabilities                   2,086,372    2,155,498
                                    -----------  -----------
  Equity:
  Hovnanian Enterprises, Inc.
   stockholders' equity deficit:
   Preferred stock, $.01 par value
    - authorized 100,000 shares;
    Issued 5,600 shares with a
    liquidation preference of
    $140,000 at April 30, 2011 and
    at October 31, 2010                 135,299      135,299
   Common stock, Class A, $.01 par
    value -- authorized
    200,000,000 shares; issued
    91,430,549 shares at April 30,
    2011 and 74,809,683 shares at
    October 31, 2010 (including
    11,694,720 shares at April 30,
    2011 and October 31, 2010 held
    in Treasury)                            914          748
   Common stock, Class B, $.01 par
    value (convertible to Class A
    at time of sale) -- authorized
    30,000,000 shares; issued
    15,253,812 shares at April 30,
    2011 and 15,256,543 shares at
    October 31, 2010 (including
    691,748 shares at April 30,
    2011 and October 31, 2010 held
    in Treasury)                            153          153
   Paid in capital - common stock       589,123      463,908
   Accumulated deficit                (960,228)    (823,419)
   Treasury stock - at cost           (115,257)    (115,257)
                                    -----------  -----------
       Total Hovnanian
        Enterprises, Inc.
        stockholders' equity
        deficit                       (349,996)    (338,568)
   Noncontrolling interest in
    consolidated joint ventures             179          630
                                    -----------  -----------

       Total equity deficit           (349,817)    (337,938)
                                    -----------  -----------

  Total liabilities and equity      $ 1,736,555  $ 1,817,560
                                    ===========  ===========
  (1) Derived from the audited balance sheet as of October
   31, 2010.
                  HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In Thousands Except Per Share Data)
                                   (Unaudited)
                             Three Months Ended April   Six Months Ended April
                                        30,                      30,
                                2011         2010          2011         2010
                             -----------  -----------  ------------  ---------
  Revenues:
   Homebuilding:
     Sale of homes             $ 246,974    $ 310,493     $ 482,859  $ 619,846
     Land sales and other
      revenues                     2,819        1,033        12,407      3,719
                             -----------  -----------  ------------  ---------
       Total homebuilding        249,793      311,526       495,266    623,565
   Financial services              5,304        7,059        12,398     14,665
                             -----------  -----------  ------------  ---------

       Total revenues            255,097      318,585       507,664    638,230
                             -----------  -----------  ------------  ---------
  Expenses:
   Homebuilding:
     Cost of sales,
      excluding interest         210,463      256,926       411,893    516,742
     Cost of sales interest       13,956       18,745        29,582     38,593
     Inventory impairment
      loss and land option
      write-offs                  16,925        1,186        30,450      6,152
                             -----------  -----------  ------------  ---------
       Total cost of sales       241,344      276,857       471,925    561,487
     Selling, general and
      administrative              39,837       42,359        80,044     85,431
                             -----------  -----------  ------------  ---------
       Total homebuilding
        expenses                 281,181      319,216       551,969    646,918
   Financial services              5,177        5,631        10,647     11,026
   Corporate general and
    administrative                11,952       14,203        26,960     30,416
   Other interest                 24,887       23,356        48,872     48,963

   Other operations                  706        1,767         1,593      3,664
                             -----------  -----------  ------------  ---------

       Total expenses            323,903      364,173       640,041    740,987
                             -----------  -----------  ------------  ---------
   (Loss) gain on
    extinguishment of debt       (1,644)       17,217       (1,644)     19,791
                             -----------  -----------  ------------  ---------
   (Loss) income from
    unconsolidated joint
    ventures                     (3,232)          391       (4,224)         18
                             -----------  -----------  ------------  ---------

   Loss before income taxes     (73,682)     (27,980)     (138,245)   (82,948)
                             -----------  -----------  ------------  ---------
   State and federal income
    tax (benefit)
    provision:
     State                         (372)          657           293        828
     Federal                       (643)          (3)       (1,729)  (291,331)
                             -----------  -----------  ------------  ---------

       Total income taxes        (1,015)          654       (1,436)  (290,503)
                             -----------  -----------  ------------  ---------

   Net (loss) income          $ (72,667)   $ (28,634)   $ (136,809)  $ 207,555
                             ===========  ===========  ============  =========
   Per share data:
   Basic:
     (Loss) income per
      common share              $ (0.69)     $ (0.36)      $ (1.49)     $ 2.64
     Weighted-average
      number of common
      shares outstanding         105,894       78,668        92,020     78,610
   Assuming dilution:
     (Loss) income per
      common share              $ (0.69)     $ (0.36)      $ (1.49)     $ 2.60
     Weighted-average
      number of common
      shares outstanding         105,894       78,668        92,020     79,794
 HOVNANIAN ENTERPRISES, INC.
 (DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
 (UNAUDITED)                                             Communities Under Development
                                                            Three Months - 4/30/2011
                                    Net Contracts(1)                    Deliveries
                                   Three Months Ended               Three Months Ended              Contract Backlog
                                        April 30,                       April 30,                       April 30,
                           -------------------------------------------------------------------------------------------------
                                2011        2010     % Change    2011       2010     % Change   2011       2010     % Change
                           -------------------------------------------------------------------------------------------------
 Northeast
                   Home               125        146  (14.4)%          82        149  (45.0)%        249        416  (40.1)%
                   Dollars       $ 57,394   $ 52,208     9.9%    $ 36,126   $ 56,955  (36.6)%  $ 106,387  $ 175,029  (39.2)%
                   Avg.
                    Price       $ 459,152  $ 357,589    28.4%   $ 440,561  $ 382,248    15.3%  $ 427,257  $ 420,745     1.5%
 Mid-Atlantic
                   Home               162        202  (19.8)%         127        176  (27.8)%        274        356  (23.0)%
                   Dollars       $ 55,874   $ 73,704  (24.2)%    $ 46,643   $ 67,634  (31.0)%  $ 113,349  $ 137,805  (17.7)%
                   Avg.
                    Price       $ 344,901  $ 364,871   (5.5)%   $ 367,268  $ 384,284   (4.4)%  $ 413,682  $ 387,093     6.9%
 Midwest
                   Home                98        149  (34.2)%          89         70    27.1%        215        306  (29.7)%
                   Dollars       $ 20,521   $ 27,289  (24.8)%    $ 17,466   $ 16,029     9.0%   $ 38,592   $ 53,609  (28.0)%
                   Avg.
                    Price       $ 209,398  $ 183,148    14.3%   $ 196,247  $ 228,986  (14.3)%  $ 179,498  $ 175,193     2.5%
 Southeast
                   Home                98        112  (12.5)%          73         93  (21.5)%        107        132  (18.9)%
                   Dollars       $ 23,345   $ 25,334   (7.9)%    $ 16,684   $ 22,041  (24.3)%   $ 27,450   $ 31,767  (13.6)%
                   Avg.
                    Price       $ 238,214  $ 226,205     5.3%   $ 228,548  $ 237,000   (3.6)%  $ 256,542  $ 240,659     6.6%
 Southwest
                   Home               444        530  (16.2)%         403        465  (13.3)%        375        393   (4.6)%
                   Dollars      $ 104,010  $ 114,166   (8.9)%    $ 97,339  $ 103,428   (5.9)%   $ 99,358   $ 89,512    11.0%
                   Avg.
                    Price       $ 234,257  $ 215,408     8.8%   $ 241,536  $ 222,426     8.6%  $ 264,955  $ 227,766    16.3%
 West
                   Home               119        175  (32.0)%         125        165  (24.2)%         73        186  (60.8)%
                   Dollars       $ 32,423   $ 43,857  (26.1)%    $ 32,716   $ 44,406  (26.3)%   $ 19,946   $ 46,926  (57.5)%
                   Avg.
                    Price       $ 272,462  $ 250,611     8.7%   $ 261,728  $ 269,127   (2.7)%  $ 273,233  $ 252,290     8.3%
 Consolidated Total
                   Home             1,046      1,314  (20.4)%         899      1,118  (19.6)%      1,293      1,789  (27.7)%
                   Dollars      $ 293,567  $ 336,558  (12.8)%   $ 246,974  $ 310,493  (20.5)%  $ 405,082  $ 534,648  (24.2)%
                   Avg.
                    Price       $ 280,657  $ 256,132     9.6%   $ 274,721  $ 277,722   (1.1)%  $ 313,288  $ 298,853     4.8%
 Unconsolidated
  Joint Ventures
                   Home               120         85    41.2%          68         79  (13.9)%        258        176    46.6%
                   Dollars       $ 53,520   $ 33,097    61.7%    $ 29,291   $ 33,106  (11.5)%  $ 108,207   $ 84,208    28.5%
                   Avg.
                    Price       $ 446,000  $ 389,376    14.5%   $ 430,750  $ 419,063     2.8%  $ 419,407  $ 478,455  (12.3)%
 Total
                   Home             1,166      1,399  (16.7)%         967      1,197  (19.2)%      1,551      1,965  (21.1)%
                   Dollars      $ 347,086  $ 369,655   (6.1)%   $ 276,265  $ 343,599  (19.6)%  $ 513,289  $ 618,856  (17.1)%
                   Avg.
                    Price       $ 297,672  $ 264,228    12.7%   $ 285,693  $ 287,050   (0.5)%  $ 330,941  $ 314,940     5.1%
 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)
 (UNAUDITED)                                             Communities Under Development
                                                            Six Months - 4/30/2011
                                    Net Contracts(1)                    Deliveries
                                    Six Months Ended                 Six Months Ended               Contract Backlog
                                        April 30,                       April 30,                       April 30,
                           -------------------------------------------------------------------------------------------------
                                2011        2010     % Change    2011       2010     % Change   2011       2010     % Change
                           -------------------------------------------------------------------------------------------------
 Northeast
                   Home               217        276  (21.4)%         183        317  (42.3)%        249        416  (40.1)%
                   Dollars       $ 94,829  $ 107,587  (11.9)%    $ 79,410  $ 125,669  (36.8)%  $ 106,387  $ 175,029  (39.2)%
                   Avg.
                    Price       $ 437,000  $ 389,808    12.1%   $ 433,934  $ 396,432     9.5%  $ 427,257  $ 420,745     1.5%
 Mid-Atlantic
                   Home               289        328  (11.9)%         248        358  (30.7)%        274        356  (23.0)%
                   Dollars      $ 107,888  $ 120,653  (10.6)%    $ 92,906  $ 133,710  (30.5)%  $ 113,349  $ 137,805  (17.7)%
                   Avg.
                    Price       $ 373,315  $ 367,845     1.5%   $ 374,621  $ 373,492     0.3%  $ 413,682  $ 387,093     6.9%
 Midwest
                   Home               163        234  (30.3)%         170        181   (6.1)%        215        306  (29.7)%
                   Dollars       $ 32,852   $ 43,710  (24.8)%    $ 31,500   $ 39,433  (20.1)%   $ 38,592   $ 53,609  (28.0)%
                   Avg.
                    Price       $ 201,546  $ 186,795     7.9%   $ 185,294  $ 217,862  (14.9)%  $ 179,498  $ 175,193     2.5%
 Southeast
                   Home               166        184   (9.8)%         141        187  (24.6)%        107        132  (18.9)%
                   Dollars       $ 38,985   $ 42,570   (8.4)%    $ 32,188   $ 46,718  (31.1)%   $ 27,450   $ 31,767  (13.6)%
                   Avg.
                    Price       $ 234,849  $ 231,359     1.5%   $ 228,284  $ 249,829   (8.6)%  $ 256,542  $ 240,659     6.6%
 Southwest
                   Home               801        886   (9.6)%         763        844   (9.6)%        375        393   (4.6)%
                   Dollars      $ 189,796  $ 193,822   (2.1)%   $ 184,566  $ 185,552   (0.5)%   $ 99,358   $ 89,512    11.0%
                   Avg.
                    Price       $ 236,949  $ 218,762     8.3%   $ 241,895  $ 219,848    10.0%  $ 264,955  $ 227,766    16.3%
 West
                   Home               202        318  (36.5)%         239        322  (25.8)%         73        186  (60.8)%
                   Dollars       $ 54,705   $ 79,898  (31.5)%    $ 62,289   $ 88,764  (29.8)%   $ 19,946   $ 46,926  (57.5)%
                   Avg.
                    Price       $ 270,817  $ 251,252     7.8%   $ 260,623  $ 275,665   (5.5)%  $ 273,233  $ 252,290     8.3%
 Consolidated Total
                   Home             1,838      2,226  (17.4)%       1,744      2,209  (21.1)%      1,293      1,789  (27.7)%
                   Dollars      $ 519,055  $ 588,240  (11.8)%   $ 482,859  $ 619,846  (22.1)%  $ 405,082  $ 534,648  (24.2)%
                   Avg.
                    Price       $ 282,402  $ 264,259     6.9%   $ 276,869  $ 280,600   (1.3)%  $ 313,288  $ 298,853     4.8%
 Unconsolidated
  Joint Ventures
                   Home               178        134    32.8%         115        117   (1.7)%        258        176    46.6%
                   Dollars       $ 77,116   $ 56,725    35.9%    $ 51,825   $ 54,006   (4.0)%  $ 108,207   $ 84,208    28.5%
                   Avg.
                    Price       $ 433,236  $ 423,321     2.3%   $ 450,652  $ 461,590   (2.4)%  $ 419,407  $ 478,455  (12.3)%
 Total
                   Home             2,016      2,360  (14.6)%       1,859      2,326  (20.1)%      1,551      1,965  (21.1)%
                   Dollars      $ 596,171  $ 644,965   (7.6)%   $ 534,684  $ 673,852  (20.7)%  $ 513,289  $ 618,856  (17.1)%
                   Avg.
                    Price       $ 295,720  $ 273,290     8.2%   $ 287,619  $ 289,704   (0.7)%  $ 330,941  $ 314,940     5.1%
 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.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Hovnanian Enterprises, Inc.

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