Form 8-K HOVNANIAN ENTERPRISES For: Mar 12

Delaware

(State or other

jurisdiction

of incorporation)

1-8551

(Commission File Number)

22-1851059

(IRS Employer

Identification No.)

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

HOVNANIAN ENTERPRISES, INC.

(Registrant)

By: 

/s/ J. Larry Sorsby                           

Name:   J. Larry Sorsby

Title:     Executive Vice President and Chief Financial Officer

Exhibit Number

Exhibit

Exhibit 99.1

Earnings Press Release–Fiscal First Quarter Ended January 31, 2015.

HOVNANIAN ENTERPRISES, INC.

News Release

Contact:

J. Larry Sorsby

Jeffrey T. O’Keefe

Executive Vice President & CFO

Vice President, Investor Relations

732-747-7800

732-747-7800

HOVNANIAN ENTERPRISES REPORTS fiscal 2015 First Quarter Results

RESULTS FOR the ThrEE MONTH PERIOD ENDED January 31, 2015:

●

Total revenues were $445.7 million in the fiscal 2015 first quarter, an increase of 22.4% compared with $364.0 million in the prior year’s first quarter.

●

Homebuilding gross margin percentage, before interest expense and land charges included in cost of sales, was 18.2% for the fiscal 2015 first quarter, compared with 18.8% during the first quarter of fiscal 2014.

●

Adjusted EBITDA increased 84.8% to $21.3 million for the quarter ended January 31, 2015 compared to $11.5 million in the fiscal 2014 first quarter.

●

The pre-tax loss for the first quarter ended January 31, 2015 was $19.7 million compared with a pre-tax loss of $23.9 million in the fiscal 2014 first quarter.

●

Net loss was $14.4 million, or $0.10 per common share, for the three months ended January 31, 2015, compared with a net loss of $24.5 million, or $0.17 per common share, in the first quarter of the previous year.

●

Consolidated deliveries were 1,149 homes in the first quarter of fiscal 2015, a 10.9% increase compared with 1,036 homes in the fiscal 2014 first quarter. During the first three months of fiscal 2015, deliveries, including unconsolidated joint ventures, increased 7.2% to 1,220 homes compared with 1,138 homes during the same period last year.

●

As of January 31, 2015, consolidated active selling communities increased 3.1% to 199 communities compared with 193 communities at January 31, 2014.

●

The dollar value of consolidated net contracts increased 23.3% to $503.2 million for the first quarter of fiscal 2015 compared with $408.0 million in the first quarter of the prior year. The dollar value of net contracts, including unconsolidated joint ventures, for the first quarter ended January 31, 2015 increased 14.4% to $521.2 million compared with $455.8 million in last year’s first quarter.

●

During the first quarter of fiscal 2015, the number of consolidated net contracts increased 20.8% to 1,319 homes compared with 1,092 homes in the same period of the previous year. The number of net contracts, including unconsolidated joint ventures, increased 13.6% to 1,366 homes for the three months ended January 31, 2015 from 1,202 homes during the same quarter a year ago.

●

Consolidated net contracts per active selling community increased 15.8% to 6.6 net contracts per active selling community during the fiscal 2015 first quarter compared with 5.7 net contracts per active selling community in last year’s first quarter.

●

As of January 31, 2015, the dollar value of consolidated contract backlog increased 13.5% to $925.5 million compared with $815.3 million as of January 31, 2014. The dollar value of contract backlog, as of January 31, 2015, including unconsolidated joint ventures, was $965.2 million, an increase of 6.7% compared with $904.4 million as of January 31, 2014.

●

As of January 31, 2015, the number of homes in consolidated contract backlog increased 7.9% to 2,399 homes compared with 2,223 homes as of the end of the first quarter of fiscal 2014. Contract backlog, as of January 31, 2015, including unconsolidated joint ventures, increased 1.3% to 2,487 homes compared with 2,456 homes as of January 31, 2014.

●

Total interest expense as a percentage of total revenues declined 80 basis points to 8.2% in the fiscal 2015 first quarter compared with 9.0% in the prior year’s first quarter.

●

Total SG&A was $64.6 million, or 14.5% of total revenues, for the fiscal 2015 first quarter compared to $60.4 million, or 16.6% of total revenues, during the first quarter of fiscal 2014.

●

The contract cancellation rate, including unconsolidated joint ventures, for the three months ended January 31, 2015 was 18%, which was consistent with the rate in the first quarter of the previous year.

●

During February 2015, the dollar value of consolidated net contracts increased 1.4% to $205.8 million compared with $203.0 million for February of 2014 and the number of consolidated net contracts decreased 2.0% to 539 homes from 550 homes in February 2014.

●

The valuation allowance was $642.5 million as of January 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.

Liquidity AND Inventory as of january 31, 2015:

●

During the first quarter of fiscal 2015, land and land development spending was $226.3 million.

●

Total liquidity at the end of the fiscal 2015 first quarter was $325.4 million compared to $338.4 million at January 31, 2014. Total liquidity at January 31, 2015 included $269.3 million of homebuilding cash and cash equivalents, $5.1 million of restricted cash required to collateralize letters of credit and $51.0 million of availability under the unsecured revolving credit facility.

●

As of January 31, 2015, the land position, including unconsolidated joint ventures, was 36,767 lots, consisting of 15,356 lots under option and 21,411 owned lots, an increase of 2,004 lots compared with a total of 34,763 lots as of January 31, 2014.

●

During the first quarter of fiscal 2015, approximately 2,100 lots, including unconsolidated joint ventures, were put under option or acquired in 46 communities.

COMMENTS FROM MANAGEMENT:

Webcast Information:

About Hovnanian Enterprises^®, Inc.:

NON-GAAP FINANCIAL MEASURES:

Hovnanian Enterprises, Inc.

January 31, 2015

Statements of Consolidated Operations

(Dollars in Thousands, Except Per Share Data)

Three Months Ended

January 31,

2015

2014

(Unaudited)

Total Revenues

Costs and Expenses (a)

Income from Unconsolidated Joint Ventures

Loss Before Income Taxes

Income Tax (Benefit) Provision

Net Loss

Per Share Data:

Basic:

Loss Per Common Share

Weighted Average Number of

Common Shares Outstanding (b)

Assuming Dilution:

Loss Per Common Share

Weighted Average Number of

Common Shares Outstanding (b)

(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.

January 31, 2015

Reconciliation of Loss Before Income Taxes Excluding Land-Related Charges

to Loss Before Income Taxes

(Dollars in Thousands)

Three Months Ended

January 31,

2015

2014

(Unaudited)

Loss Before Income Taxes

Inventory Impairment Loss and Land Option Write-Offs

Loss Before Income Taxes Excluding Land-Related Charges (a)

(a) Loss Before Income Taxes Excluding Land-Related Charges is a non-GAAP Financial measure. The most directly comparable GAAP financial measure is Loss Before Income Taxes.

Hovnanian Enterprises, Inc.

January 31, 2015

Gross Margin

(Dollars in Thousands)

Homebuilding Gross Margin

Three Months Ended

January 31,

2015

2014

(Unaudited)

Sale of Homes

Cost of Sales, Excluding Interest and Land Charges (a)

Homebuilding Gross Margin, Excluding Interest and Land Charges

Homebuilding Cost of Sales Interest

Homebuilding Gross Margin, Including Interest and Excluding Land Charges

Gross Margin Percentage, Excluding Interest and Land Charges

Gross Margin Percentage, Including Interest and Excluding Land Charges

Land Sales Gross Margin

Three Months Ended

January 31,

2015

2014

(Unaudited)

Land and Lot Sales

Cost of Sales, Excluding Interest and Land Charges(a)

Land and Lot Sales Gross Margin, Excluding Interest and Land Charges

Land and Lot Sales Interest

Land and Lot Sales Gross Margin, Including Interest and Excluding Land Charges

(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.

January 31, 2015

Reconciliation of Adjusted EBITDA to Net Loss

(Dollars in Thousands)

Three Months Ended

January 31,

2015

2014

(Unaudited)

Net Loss

Income Tax (Benefit) Provision

Interest Expense

EBIT (a)

Depreciation

Amortization of Debt Costs

EBITDA (b)

Inventory Impairment Loss and Land Option Write-offs

Adjusted EBITDA (c)

Interest Incurred

Adjusted EBITDA to Interest Incurred

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

Hovnanian Enterprises, Inc.

January 31, 2015

Interest Incurred, Expensed and Capitalized

(Dollars in Thousands)

Three Months Ended

January 31,

2015

2014

(Unaudited)

Interest Capitalized at Beginning of Period

Plus Interest Incurred

Less Interest Expensed

Interest Capitalized at End of Period (a)

(a) Capitalized interest amounts are shown gross before allocating any portion of impairments, if any, to capitalized interest.

January 31,

2015

October 31,

2014

(Unaudited)

ASSETS

Homebuilding:

Cash and cash equivalents

Restricted cash and cash equivalents

Inventories:

Sold and unsold homes and lots under development

Land and land options held for future development or sale

Consolidated inventory not owned:

Specific performance options

Other options

Total consolidated inventory not owned

Total inventories

Investments in and advances to unconsolidated joint ventures

Receivables, deposits and notes, net

Property, plant and equipment, net

Prepaid expenses and other assets

Total homebuilding

Financial services:

Cash and cash equivalents

Restricted cash and cash equivalents

Mortgage loans held for sale at fair value

Other assets

Total financial services

Income taxes receivable – including net deferred tax benefits

Total assets

January 31,

2015

October 31,

2014

(Unaudited)

LIABILITIES AND EQUITY

Homebuilding:

Nonrecourse mortgages

Accounts payable and other liabilities

Customers’ deposits

Nonrecourse mortgages secured by operating properties

Liabilities from inventory not owned

Total homebuilding

Financial services:

Accounts payable and other liabilities

Mortgage warehouse lines of credit

Total financial services

Notes payable:

Senior secured notes, net of discount

Senior notes, net of discount

Senior amortizing notes

Senior exchangeable notes

Accrued interest

Total notes payable

Total liabilities

Stockholders’ equity deficit:

Preferred stock, $0.01 par value - authorized 100,000 shares; issued and outstanding 5,600 shares with a liquidation preference of $140,000 at January 31, 2015 and at October 31, 2014

Common stock, Class A, $0.01 par value – authorized 400,000,000 shares; issued 143,178,282 shares at January 31, 2015 and 142,836,563 shares at October 31, 2014 (including 11,760,763 shares at January 31, 2015 and October 31, 2014 held in Treasury)

Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) – authorized 60,000,000 shares; issued 15,675,467 shares at January 31, 2015 and 15,497,543 shares at October 31, 2014 (including 691,748 shares at January 31, 2015 and October 31, 2014 held in Treasury)

Paid in capital – common stock

Accumulated deficit

)

Treasury stock – at cost

)

Total stockholders’ equity deficit

)

Total liabilities and equity

Three Months Ended January 31,

2015

2014

Revenues:

Homebuilding:

Sale of homes

Land sales and other revenues

Total homebuilding

Financial services

Total revenues

Expenses:

Homebuilding:

Cost of sales, excluding interest

Cost of sales interest

Inventory impairment loss and land option write-offs

Total cost of sales

Selling, general and administrative

Total homebuilding expenses

Financial services

Corporate general and administrative

Other interest

Other operations

Total expenses

Income from unconsolidated joint ventures

Loss before income taxes

)

State and federal income tax provision (benefit):

State

Federal

Total income taxes

Net loss

)

Per share data:

Basic:

Loss per common share

)

Weighted-average number of common shares outstanding

Assuming dilution:

Loss per common share

)

Weighted-average number of common shares outstanding

HOVNANIAN ENTERPRISES, INC.

(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)

(UNAUDITED)

Communities Under Development

Three Months - January 31, 2015

Net Contracts

Deliveries

Contract

Three Months Ended

Three Months Ended

Backlog

Jan 31,

Jan 31,

Jan 31,

2015

2014

% Change

2015

2014

% Change

2015

2014

% Change

Northeast

(NJ, PA)

Home

107

101

5.9%

96

106

(9.4)%

157

215

(27.0)%

Dollars

$56,753

$52,038

9.1%

$50,642

$53,133

(4.7)%

$79,438

$103,911

(23.6)%

Avg. Price

$530,402

$515,224

2.9%

$527,521

$501,252

5.2%

$505,973

$483,306

4.7%

Mid-Atlantic

(DE, MD, VA, WV)

Home

211

140

50.7%

191

125

52.8%

391

286

36.7%

Dollars

$102,109

$70,897

44.0%

$80,911

$60,350

34.1%

$210,121

$151,714

38.5%

Avg. Price

$483,931

$506,404

(4.4)%

$423,620

$482,803

(12.3)%

$537,394

$530,470

1.3%

Midwest

(IL, MN, OH)

Home

208

168

23.8%

203

169

20.1%

670

604

10.9%

Dollars

$70,981

$48,391

46.7%

$64,410

$43,739

47.3%

$195,167

$155,369

25.6%

Avg. Price

$341,257

$288,042

18.5%

$317,290

$258,810

22.6%

$291,294

$257,233

13.2%

Southeast

(FL, GA, NC, SC)

Home

173

112

54.5%

121

131

(7.6)%

284

289

(1.7)%

Dollars

$52,290

$34,218

52.8%

$37,784

$39,128

(3.4)%

$95,577

$93,746

2.0%

Avg. Price

$302,257

$305,519

(1.1)%

$312,264

$298,687

4.5%

$336,539

$324,382

3.7%

Southwest

(AZ, TX)

Home

538

503

7.0%

477

441

8.2%

831

739

12.4%

Dollars

$193,584

$158,084

22.5%

$166,609

$128,085

30.1%

$322,294

$246,366

30.8%

Avg. Price

$359,822

$314,282

14.5%

$349,286

$290,440

20.3%

$387,839

$333,378

16.3%

West

(CA)

Home

82

68

20.6%

61

64

(4.7)%

66

90

(26.7)%

Dollars

$27,440

$44,390

(38.2)%

$33,115

$30,746

7.7%

$22,936

$64,170

(64.3)%

Avg. Price

$334,629

$652,791

(48.7)%

$542,866

$480,408

13.0%

$347,520

$713,001

(51.3)%

Consolidated Total

Home

1,319

1,092

20.8%

1,149

1,036

10.9%

2,399

2,223

7.9%

Dollars

$503,157

$408,018

23.3%

$433,471

$355,181

22.0%

$925,533

$815,276

13.5%

Avg. Price

$381,469

$373,643

2.1%

$377,259

$342,838

10.0%

$385,800

$366,746

5.2%

Unconsolidated Joint Ventures

Home

47

110

(57.3)%

71

102

(30.4)%

88

233

(62.2)%

Dollars

$18,081

$47,768

(62.1)%

$27,578

$44,576

(38.1)%

$39,626

$89,128

(55.5)%

Avg. Price

$384,707

$434,254

(11.4)%

$388,421

$437,019

(11.1)%

$450,292

$382,522

17.7%

Grand Total

Home

1,366

1,202

13.6%

1,220

1,138

7.2%

2,487

2,456

1.3%

Dollars

$521,238

$455,786

14.4%

$461,049

$399,757

15.3%

$965,159

$904,404

6.7%

Avg. Price

$381,580

$379,190

0.6%

$377,909

$351,279

7.6%

$388,082

$368,243

5.4%

DELIVERIES INCLUDE EXTRAS

Notes:

(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of contracts in the same period.

(2) Segment data excludes unconsolidated joint ventures.

HOVNANIAN ENTERPRISES, INC.

(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)

(UNAUDITED)

Communities Under Development

Three Months - January 31, 2015

Net Contracts

Deliveries

Contract

Three Months Ended

Three Months Ended

Backlog

Jan 31,

Jan 31,

Jan 31,

2015

2014

% Change

2015

2014

% Change

2015

2014

% Change

Northeast

(includes unconsolidated joint ventures)

Home

108

128

(15.6)%

108

120

(10.0)%

166

241

(31.1)%

(NJ, PA)

Dollars

$54,601

$67,369

(19.0)%

$54,100

$62,022

(12.8)%

$82,082

$116,593

(29.6)%

Avg. Price

$505,568

$526,320

(3.9)%

$500,924

$516,854

(3.1)%

$494,469

$483,790

2.2%

Mid-Atlantic

(includes unconsolidated joint ventures)

Home

228

193

18.1%

210

166

26.5%

424

368

15.2%

(DE, MD, VA, WV)

Dollars

$111,562

$93,443

19.4%

$91,498

$78,751

16.2%

$230,025

$190,082

21.0%

Avg. Price

$489,307

$484,163

1.1%

$435,704

$474,402

(8.2)%

$542,512

$516,528

5.0%

Midwest

(includes unconsolidated joint ventures)

Home

208

175

18.9%

214

189

13.2%

676

640

5.6%

(IL, MN, OH)

Dollars

$71,234

$50,432

41.2%

$67,337

$49,183

36.9%

$197,158

$165,183

19.4%

Avg. Price

$342,471

$288,182

18.8%

$314,658

$260,227

20.9%

$291,653

$258,098

13.0%

Southeast

(includes unconsolidated joint ventures)

Home

189

134

41.0%

141

149

(5.4)%

309

378

(18.3)%

(FL, GA, NC, SC)

Dollars

$58,794

$41,376

42.1%

$45,834

$45,100

1.6%

$105,952

$122,010

(13.2)%

Avg. Price

$311,080

$308,773

0.7%

$325,067

$302,677

7.4%

$342,887

$322,779

6.2%

Southwest

(includes unconsolidated joint ventures)

Home

538

503

7.0%

477

441

8.2%

831

739

12.4%

(AZ, TX)

Dollars

$193,584

$158,084

22.5%

$166,609

$128,085

30.1%

$322,294

$246,366

30.8%

Avg. Price

$359,822

$314,282

14.5%

$349,286

$290,442

20.3%

$387,839

$333,378

16.3%

West

(includes unconsolidated joint ventures)

Home

95

69

37.7%

70

73

(4.1)%

81

90

(10.0)%

(CA)

Dollars

$31,463

$45,082

(30.2)%

$35,671

$36,616

(2.6)%

$27,648

$64,170

(56.9)%

Avg. Price

$331,187

$653,366

(49.3)%

$509,591

$501,586

1.6%

$341,336

$713,001

(52.1)%

Grand Total

Home

1,366

1,202

13.6%

1,220

1,138

7.2%

2,487

2,456

1.3%

Dollars

$521,238

$455,786

14.4%

$461,049

$399,757

15.3%

$965,159

$904,404

6.7%

Avg. Price

$381,580

$379,190

0.6%

$377,909

$351,279

7.6%

$388,082

$368,243

5.4%

Consolidated Total

Home

1,319

1,092

20.8%

1,149

1,036

10.9%

2,399

2,223

7.9%

Dollars

$503,157

$408,018

23.3%

$433,471

$355,181

22.0%

$925,533

$815,276

13.5%

Avg. Price

$381,469

$373,643

2.1%

$377,259

$342,838

10.0%

$385,800

$366,746

5.2%

Unconsolidated Joint Ventures

Home

47

110

(57.3)%

71

102

(30.4)%

88

233

(62.2)%

Dollars

$18,081

$47,768

(62.1)%

$27,578

$44,576

(38.1)%

$39,626

$89,128

(55.5)%

Avg. Price

$384,707

$434,254

(11.4)%

$388,421

$437,019

(11.1)%

$450,292

$382,522

17.7%

DELIVERIES INCLUDE EXTRAS

Notes:

(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of contracts in the same period.