Hovnanian Enterprises Reports Fiscal 2016 First Quarter Results

March 9, 2016 9:15 AM

RED BANK, N.J., March 09, 2016 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal first quarter ended January 31, 2016.

RESULTS FOR THE THREE MONTH PERIOD ENDED JANUARY 31, 2016:

Total revenues were $575.6 million in the first quarter of fiscal 2016, an increase of 29.1% compared with $445.7 million in the first quarter of fiscal 2015.
Homebuilding gross margin percentage, before interest expense and land charges included in cost of sales, was 16.6% for the first quarter ended January 31, 2016, compared with 18.2% in last year’s first quarter.
For the first quarter of fiscal 2016, Adjusted EBITDA was $38.8 million compared with $21.3 million during the first quarter of 2015, an 82.5% increase.
The pre-tax loss, excluding land related charges, in the first quarter of fiscal 2016 was $1.5 million compared with a pre-tax loss, excluding land related charges, of $17.5 million in the prior year’s first quarter.
The net loss was $16.2 million, including $11.7 million of land related charges, primarily related to land held for sale in Minnesota, a market we are exiting, or $0.11 per common share, for the first quarter of fiscal 2016, compared with a net loss of $14.4 million, including $2.2 million of land related charges, or $0.10 per common share, in the first quarter of the previous year.
The dollar value of net contracts, including unconsolidated joint ventures, during the first quarter of fiscal 2016 increased 28.2% to $668.5 million compared with $521.2 million in last year’s first quarter. The dollar value of consolidated net contracts increased 24.9% to $628.6 million for the three months ended January 31, 2016 compared with $503.2 million during the same quarter a year ago.
In the first quarter of fiscal 2016, the number of net contracts, including unconsolidated joint ventures, increased 16.5% to 1,592 homes from 1,366 homes during the first quarter of fiscal 2015. The number of consolidated net contracts, during the first quarter of fiscal 2016, increased 16.1% to 1,531 homes compared with 1,319 homes in the prior year’s first quarter.
Consolidated net contracts per active selling community increased 7.6% to 7.1 net contracts per active selling community for the first quarter of fiscal 2016 compared with 6.6 net contracts per active selling community in the first quarter of fiscal 2015. Net contracts per active selling community, including unconsolidated joint ventures, increased 6.1% to 7.0 net contracts per active selling community for the quarter ended January 31, 2016 compared with 6.6 net contracts, including unconsolidated joint ventures, per active selling community in the first quarter of fiscal 2015.
As of January 31, 2016, the dollar value of contract backlog, including unconsolidated joint ventures, was $1.44 billion, an increase of 49.1% compared with $965.2 million as of January 31, 2015. The dollar value of consolidated contract backlog, as of January 31, 2016, increased 39.1% to $1.29 billion compared with $925.5 million as of January 31, 2015.
As of January 31, 2016, the number of homes in contract backlog, including unconsolidated joint ventures, increased 30.2% to 3,238 homes compared with 2,487 homes as of January 31, 2015. The number of homes in consolidated contract backlog, as of January 31, 2016, increased 25.6% to 3,014 homes compared with 2,399 homes as of the end of the first quarter of fiscal 2015.
Consolidated deliveries were 1,422 homes in the first quarter of fiscal 2016, a 23.8% increase compared with 1,149 homes in the first quarter of fiscal 2015. For the three months ended January 31, 2016, deliveries, including unconsolidated joint ventures, increased 20.2% to 1,466 homes compared with 1,220 homes in the first quarter of the prior year.
As of end of the first quarter of fiscal 2016, active selling communities, including unconsolidated joint ventures, increased 9.6% to 228 communities compared with 208 communities at January 31, 2015. As of January 31, 2016, consolidated active selling communities increased 9.0% to 217 communities compared with 199 communities at the end of the prior year’s first quarter.
Total interest expense as a percentage of total revenues was 6.6% during the first quarter of fiscal 2016, a decrease of 160 basis points, compared with 8.2% in the same period of the previous year.
Total SG&A was $63.8 million, or 11.1% of total revenues, during the first quarter of fiscal 2016 compared with $64.6 million, or 14.5% of total revenues, in last year’s first quarter.
The contract cancellation rate, including unconsolidated joint ventures, for the first quarter of fiscal 2016 was 21%, compared with 18% in the first quarter of fiscal 2015.
The valuation allowance was $635.3 million as of January 31, 2016. The valuation allowance is a non-cash reserve against the tax assets for GAAP purposes. For tax purposes, the tax deductions associated with the tax assets may be carried forward for 20 years from the date the deductions were incurred.
During February 2016, the dollar value of consolidated net contracts increased 27.5% to $262.4 million compared with $205.8 million for February of 2015, and the number of consolidated net contracts increased 11.3% to 600 homes in February 2016 from 539 homes in February 2015.

LIQUIDITY AND INVENTORY AS OF JANUARY 31, 2016:

After paying off $233.5 million of debt that matured in October 2015 and January 2016, total liquidity at the end of the first quarter of fiscal 2016 was $152.1 million.
During the first quarter of fiscal 2016, land and land development spending was $116.6 million.
As of January 31, 2016, the land position, including unconsolidated joint ventures, was 38,070 lots, consisting of 18,732 lots under option and 19,338 owned lots, compared with a total of 36,767 lots as of January 31, 2015.
During the first quarter of fiscal 2016, approximately 3,300 lots, including unconsolidated joint ventures, were put under option or acquired in 39 communities.

FINANCIAL GUIDANCE:

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

COMMENTS FROM MANAGEMENT/UPDATED STRATEGIC FOCUS:

“We are pleased by our strong start to the fiscal year, which was highlighted by an 83% increase in adjusted EBITDA and a 49% increase in contract backlog dollars,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “During our first quarter, our 29% total revenue growth resulted in a 500 basis point improvement in our total SG&A and total interest ratios in the aggregate. Rather than focusing on additional revenue growth beyond 2016, we now plan to focus on deleveraging our balance sheet and maximizing our profitability. As part of this strategy we have decided to exit the Minneapolis, MN and Raleigh, NC markets. Additionally, we plan to wind down our operations in Tampa, FL and the San Francisco Bay Area in Northern California by delivering the remaining homes in our existing communities. We are confident these decisions will lead to continued efficiencies and ultimately improved financial performance,” concluded Mr. Hovnanian.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2016 first quarter financial results conference call at 10:30 a.m. E.T. on Wednesday, March 9, 2016. The webcast can be accessed live through the “Investor Relations” section of Hovnanian Enterprises’ website at http://www.khov.com. For those who are not available to listen to the live webcast, an archive of the broadcast will be available under the “Past Events” section of the Investor Relations page on the Hovnanian website at http://www.khov.com. The archive will be available for 12 months.

ABOUT HOVNANIAN ENTERPRISES®, INC.:

Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, is headquartered in Red Bank, New Jersey. The Company is one of the nation’s largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. and West Virginia. The Company’s homes are marketed and sold under the trade names K. Hovnanian® Homes, Brighton Homes® and Parkwood Builders. As the developer of K. Hovnanian’s® Four Seasons communities, the Company is also one of the nation’s largest builders of active lifestyle communities.

Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company’s 2015 annual report, can be accessed through the “Investor Relations” section of the Hovnanian Enterprises’ website at http://www.khov.com. To be added to Hovnanian's investor e-mail list, please send an e-mail to [email protected] or sign up at http://www.khov.com.

NON-GAAP FINANCIAL MEASURES:

Consolidated earnings before interest expense and income taxes (“EBIT”) and before depreciation and amortization (“EBITDA”) and before inventory impairment loss and land option write-offs (“Adjusted EBITDA”) are not U.S. generally accepted accounting principles (GAAP) financial measures. The most directly comparable GAAP financial measure is net loss. The reconciliation of EBIT, EBITDA and Adjusted EBITDA to net loss is presented in a table attached to this earnings release.

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. The reconciliation of Loss Before Income Taxes Excluding Land-Related Charges to Loss Before Income Taxes is presented in a table attached to this earnings release.

Total liquidity is comprised of $147.1 million of cash and cash equivalents, $2.5 million of restricted cash required to collateralize letters of credit and $2.5 million of availability under the unsecured revolving credit facility as of January 31, 2016.

FORWARD-LOOKING STATEMENTS

All statements in this press release that are not historical facts should be considered as “Forward-Looking Statements” within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such forward-looking statements include but are not limited to statements related to the Company’s goals and expectations with respect to its financial results for the current or future financial periods, including total revenues and adjusted pretax profits. Although we believe that our plans, intentions and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. By their nature, forward-looking statements: (1) speak only as of the date they are made, (2) are not guarantees of future performance or results and (3) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic, industry and business conditions and impacts of the sustained homebuilding downturn; (2) adverse weather and other environmental conditions and natural disasters; (3) levels of indebtedness and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (4) the Company's sources of liquidity; (5) changes in credit ratings; (6) changes in market conditions and seasonality of the Company’s business; (7) the availability and cost of suitable land and improved lots; (8) shortages in, and price fluctuations of, raw materials and labor; (9) regional and local economic factors, including dependency on certain sectors of the economy, and employment levels affecting home prices and sales activity in the markets where the Company builds homes; (10) fluctuations in interest rates and the availability of mortgage financing; (11) changes in tax laws affecting the after-tax costs of owning a home; (12) operations through joint ventures with third parties; (13) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (14) product liability litigation, warranty claims and claims made by mortgage investors; (15) levels of competition; (16) availability and terms of financing to the Company; (17) successful identification and integration of acquisitions; (18) significant influence of the Company’s controlling stockholders; (19) availability of net operating loss carryforwards; (20) utility shortages and outages or rate fluctuations; (21) geopolitical risks, terrorist acts and other acts of war; (22) increases in cancellations of agreements of sale; (23) loss of key management personnel or failure to attract qualified personnel; (24) information technology failures and data security breaches; (25) legal claims brought against us and not resolved in our favor; and (26) certain risks, uncertainties and other factors described in detail in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2015 and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

(Financial Tables Follow)

Hovnanian Enterprises, Inc.
January 31, 2016
Statements of Consolidated Operations
(Dollars in Thousands, Except Per Share Data)
	Three Months Ended
	January 31,
		2016			2015
	(Unaudited)
Total Revenues	$	575,605		$	445,714
Costs and Expenses (a)		587,319			466,846
(Loss) Income from Unconsolidated Joint Ventures		(1,480	)		1,452
Loss Before Income Taxes		(13,194	)		(19,680	)
Income Tax Provision (Benefit)		2,979			(5,304	)
Net Loss	$	(16,173	)	$	(14,376	)

Per Share Data:
Basic:
Loss Per Common Share	$	(0.11	)	$	(0.10	)
Weighted Average Number of
Common Shares Outstanding (b)		147,139			146,929
Assuming Dilution:
Loss Per Common Share	$	(0.11	)	$	(0.10	)
Weighted Average Number of
Common Shares Outstanding (b)		147,139			146,929

(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, 2016
Reconciliation of Loss Before Income Taxes Excluding Land-Related Charges to Loss Before Income Taxes

(Dollars in Thousands)

	Three Months Ended
	January 31,
		2016			2015
	(Unaudited)
Loss Before Income Taxes	$	(13,194	)	$	(19,680	)
Inventory Impairment Loss and Land Option Write-Offs		11,681			2,230
Loss Before Income Taxes Excluding Land-Related Charges(a)	$	(1,513	)	$	(17,450	)

(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, 2016
Gross Margin
(Dollars in Thousands)
	Homebuilding Gross Margin
	Three Months Ended
	January 31,
		2016			2015
	(Unaudited)
Sale of Homes	$	556,775		$	433,471
Cost of Sales, Excluding Interest and Land Charges (a)		464,146			354,379
Homebuilding Gross Margin, Excluding Interest and Land Charges		92,629			79,092
Homebuilding Cost of Sales Interest		16,843			11,299
Homebuilding Gross Margin, Including Interest and Excluding Land Charges	$	75,786		$	67,793

Gross Margin Percentage, Excluding Interest and Land Charges		16.6	%		18.2	%
Gross Margin Percentage, Including Interest and Excluding Land Charges		13.6	%		15.6	%

	Land Sales Gross Margin
	Three Months Ended
	January 31,
		2016			2015
	(Unaudited)
Land and Lot Sales	$	-		$	514
Cost of Sales, Excluding Interest and Land Charges (a)		-			433
Land and Lot Sales Gross Margin, Excluding Interest and Land Charges		-			81
Land and Lot Sales Interest		-			19
Land and Lot Sales Gross Margin, Including Interest and Excluding Land Charges	$	-		$	62

(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, 2016
Reconciliation of Adjusted EBITDA to Net Loss
(Dollars in Thousands)
	Three Months Ended
	January 31,
		2016			2015
	(Unaudited)
Net Loss	$	(16,173	)	$	(14,376	)
Income Tax Provision (Benefit)		2,979			(5,304	)
Interest Expense		38,068			36,389
EBIT (a)		24,874			16,709
Depreciation		865			849
Amortization of Debt Costs		1,383			1,472
EBITDA (b)		27,122			19,030
Inventory Impairment Loss and Land Option Write-offs		11,681			2,230
Adjusted EBITDA (c)	$	38,803		$	21,260

Interest Incurred	$	41,959		$	41,472

Adjusted EBITDA to Interest Incurred		0.92			0.51

(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, 2016
Interest Incurred, Expensed and Capitalized
(Dollars in Thousands)
	Three Months Ended
	January 31,
		2016			2015
	(Unaudited)
Interest Capitalized at Beginning of Period	$	123,898		$	109,158
Plus Interest Incurred		41,959			41,472
Less Interest Expensed		38,068			36,389
Less Interest Contributed to Unconsolidated Joint Venture (a)		10,676			-
Interest Capitalized at End of Period (b)	$	117,113		$	114,241

(a) Represents capitalized interest which was included as part of the assets contributed to the joint venture the Company entered into in November 2015. There was no impact to the Condensed Consolidated Statement of Operations as a result of this transaction.
(b) 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)

	January 31,2016(Unaudited)		October 31,2015(1)
ASSETS

Homebuilding:
Cash and cash equivalents	$	147,124	$	245,398
Restricted cash and cash equivalents		6,865		7,299
Inventories:
Sold and unsold homes and lots under development		1,127,416		1,307,850
Land and land options held for future development or sale		186,503		214,503
Consolidated inventory not owned		338,067		122,225
Total inventories		1,651,986		1,644,578
Investments in and advances to unconsolidated joint ventures		69,094		61,209
Receivables, deposits and notes, net		69,629		70,349
Property, plant and equipment, net		46,010		45,534
Prepaid expenses and other assets		81,186		77,671
Total homebuilding		2,071,894		2,152,038

Financial services:
Cash and cash equivalents		5,454		8,347
Restricted cash and cash equivalents		20,072		19,223
Mortgage loans held for sale at fair value		164,961		130,320
Other assets		2,971		2,091
Total financial services		193,458		159,981
Income taxes receivable – including net deferred tax benefits		287,388		290,279
Total assets	$	2,552,740	$	2,602,298

(1) Derived from the audited balance sheet as of October 31, 2015.

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

	January 31,2016(Unaudited)			October 31,2015(1)
LIABILITIES AND EQUITY

Homebuilding:
Nonrecourse mortgages secured by inventory	$	128,668		$	143,863
Accounts payable and other liabilities		348,400			348,516
Customers’ deposits		42,433			44,218
Nonrecourse mortgages secured by operating properties		15,220			15,511
Liabilities from inventory not owned		242,409			105,856
Total homebuilding		777,130			657,964

Financial services:
Accounts payable and other liabilities		27,695			27,908
Mortgage warehouse lines of credit		140,356			108,875
Total financial services		168,051			136,783

Notes payable:
Revolving credit agreement		47,000			47,000
Senior secured notes, net of discount		981,716			981,346
Senior notes, net of discount		607,575			780,319
Senior amortizing notes		10,516			12,811
Senior exchangeable notes		74,720			73,771
Accrued interest		29,172			40,388
Total notes payable		1,750,699			1,935,635
Total liabilities		2,695,880			2,730,382

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, 2016 and at October 31, 2015		135,299			135,299
Common stock, Class A, $0.01 par value – authorized 400,000,000 shares; issued 143,562,913 shares at January 31, 2016 and 143,292,881 shares at October 31, 2015 (including 11,760,763 shares at January 31, 2016 and October 31, 2015 held in treasury)		1,436			1,433
Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) – authorized 60,000,000 shares; issued 16,009,727 shares at January 31, 2016 and 15,676,829 shares at October 31, 2015 (including 691,748 shares at January 31, 2016 and October 31, 2015 held in treasury)		160			157
Paid in capital – common stock		704,862			703,751
Accumulated deficit		(869,537	)		(853,364	)
Treasury stock – at cost		(115,360	)		(115,360	)
Total stockholders’ equity deficit		(143,140	)		(128,084	)
Total liabilities and equity	$	2,552,740		$	2,602,298

(1) Derived from the audited balance sheet as of October 31, 2015.

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Share and Per Share Data)
(Unaudited)

	Three Months Ended January 31,
		2016			2015
Revenues:
Homebuilding:
Sale of homes	$	556,775		$	433,471
Land sales and other revenues		604			1,121
Total homebuilding		557,379			434,592
Financial services		18,226			11,122
Total revenues		575,605			445,714

Expenses:
Homebuilding:
Cost of sales, excluding interest		464,146			354,812
Cost of sales interest		16,843			11,318
Inventory impairment loss and land option write-offs		11,681			2,230
Total cost of sales		492,670			368,360
Selling, general and administrative		47,504			47,646
Total homebuilding expenses		540,174			416,006

Financial services		8,215			7,317
Corporate general and administrative		16,321			16,908
Other interest		21,225			25,071
Other operations		1,384			1,544
Total expenses		587,319			466,846
(Loss) income from unconsolidated joint ventures		(1,480	)		1,452
Loss before income taxes		(13,194	)		(19,680	)
State and federal income tax provision (benefit):
State		4,319			3,132
Federal		(1,340	)		(8,436	)
Total income taxes		2,979			(5,304	)
Net loss	$	(16,173	)	$	(14,376	)

Per share data:
Basic:
Loss per common share	$	(0.11	)	$	(0.10	)
Weighted-average number of common shares outstanding		147,139			146,929
Assuming dilution:
Loss per common share	$	(0.11	)	$	(0.10	)
Weighted-average number of common shares outstanding		147,139			146,929

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)									Communities Under DevelopmentThree Months - January 31, 2016
(UNAUDITED)
		Net Contracts							Deliveries							Contract
		Three Months Ended							Three Months Ended							Backlog
		Jan 31,							Jan 31,							Jan 31,
			2016		2015	% Change				2016		2015	% Change				2016		2015	% Change
Northeast
(NJ, PA)	Home		92		107		(14.0	)%		151		96		57.3	%		234		157		49.0	%
	Dollars	$	39,784	$	56,753		(29.9	)%	$	72,438	$	50,642		43.0	%	$	114,350	$	79,438		43.9	%
	Avg. Price	$	432,432	$	530,402		(18.5	)%	$	479,721	$	527,521		(9.1	)%	$	488,673	$	505,973		(3.4	)%
Mid-Atlantic
(DE, MD, VA, WV)	Home		260		211		23.2	%		206		191		7.9	%		507		391		29.7	%
	Dollars	$	130,316	$	102,109		27.6	%	$	93,552	$	80,911		15.6	%	$	275,863	$	210,121		31.3	%
	Avg. Price	$	501,215	$	483,931		3.6	%	$	454,136	$	423,620		7.2	%	$	544,108	$	537,394		1.2	%
Midwest
(IL, MN, OH)	Home		207		208		(0.5	)%		274		203		35.0	%		577		670		(13.9	)%
	Dollars	$	67,569	$	70,981		(4.8	)%	$	91,840	$	64,410		42.6	%	$	170,020	$	195,167		(12.9	)%
	Avg. Price	$	326,420	$	341,257		(4.3	)%	$	335,181	$	317,290		5.6	%	$	294,662	$	291,294		1.2	%
Southeast
(FL, GA, NC, SC)	Home		213		173		23.1	%		116		121		(4.1	)%		376		284		32.4	%
	Dollars	$	90,259	$	52,290		72.6	%	$	39,194	$	37,784		3.7	%	$	157,001	$	95,577		64.3	%
	Avg. Price	$	423,754	$	302,257		40.2	%	$	337,884	$	312,264		8.2	%	$	417,556	$	336,539		24.1	%
Southwest
(AZ, TX)	Home		560		538		4.1	%		550		477		15.3	%		1,043		831		25.5	%
	Dollars	$	208,642	$	193,584		7.8	%	$	204,189	$	166,609		22.6	%	$	427,164	$	322,294		32.5	%
	Avg. Price	$	372,575	$	359,822		3.5	%	$	371,253	$	349,286		6.3	%	$	409,553	$	387,839		5.6	%
West
(CA)	Home		199		82		142.7	%		125		61		104.9	%		277		66		319.7	%
	Dollars	$	92,073	$	27,440		235.5	%	$	55,562	$	33,115		67.8	%	$	143,396	$	22,936		525.2	%
	Avg. Price	$	462,676	$	334,629		38.3	%	$	444,494	$	542,866		(18.1	)%	$	517,677	$	347,520		49.0	%
Consolidated Total
	Home		1,531		1,319		16.1	%		1,422		1,149		23.8	%		3,014		2,399		25.6	%
	Dollars	$	628,643	$	503,157		24.9	%	$	556,775	$	433,471		28.4	%	$	1,287,794	$	925,533		39.1	%
	Avg. Price	$	410,610	$	381,469		7.6	%	$	391,543	$	377,259		3.8	%	$	427,271	$	385,800		10.7	%
Unconsolidated Joint Ventures
	Home		61		47		29.8	%		44		71		(38.0	)%		224		88		154.5	%
	Dollars	$	39,821	$	18,081		120.2	%	$	20,187	$	27,578		(26.8	)%	$	151,716	$	39,626		282.9	%
	Avg. Price	$	652,803	$	384,707		69.7	%	$	458,795	$	388,421		18.1	%	$	677,304	$	450,292		50.4	%
Grand Total
	Home		1,592		1,366		16.5	%		1,466		1,220		20.2	%		3,238		2,487		30.2	%
	Dollars	$	668,464	$	521,238		28.2	%	$	576,962	$	461,049		25.1	%	$	1,439,510	$	965,159		49.1	%
	Avg. Price	$	419,889	$	381,580		10.0	%	$	393,562	$	377,909		4.1	%	$	444,568	$	388,082		14.6	%

DELIVERIES INCLUDE EXTRAS
Notes:
(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(SEGMENT DATA INCLUDES UNCONSOLIDATED JOINT VENTURES)								Communities Under Development
(UNAUDITED)								Three Months - January 31, 2016
		Net Contracts								Deliveries							Contract
		Three Months Ended								Three Months Ended							Backlog
		Jan 31,								Jan 31,							Jan 31,
			2016		2015	% Change					2016		2015	% Change				2016		2015	% Change
Northeast
(includes unconsolidated joint ventures)	Home		87		108		(19.4		)%		159		108		47.2	%		269		166		62.0	%
(NJ, PA)	Dollars	$	35,494	$	54,601		(35.0		)%	$	74,694	$	54,100		38.1	%	$	129,276	$	82,082		57.5	%
	Avg. Price	$	407,974	$	505,568		(19.3		)%	$	469,773	$	500,924		(6.2	)%	$	480,580	$	494,469		(2.8	)%
Mid-Atlantic
(includes unconsolidated joint ventures)	Home		273		228		19.7		%		216		210		2.9	%		524		424		23.6	%
(DE, MD, VA, WV)	Dollars	$	136,738	$	111,562		22.6		%	$	99,219	$	91,498		8.4	%	$	284,425	$	230,025		23.6	%
	Avg. Price	$	500,874	$	489,307		2.4		%	$	459,347	$	435,704		5.4	%	$	542,796	$	542,512		0.1	%
Midwest
(includes unconsolidated joint ventures)	Home		207		208		(0.5		)%		274		214		28.0	%		577		676		(14.6	)%
(IL, MN, OH)	Dollars	$	67,569	$	71,234		(5.1		)%	$	91,840	$	67,337		36.4	%	$	170,020	$	197,158		(13.8	)%
	Avg. Price	$	326,420	$	342,471		(4.7		)%	$	335,181	$	314,658		6.5	%	$	294,662	$	291,653		1.0	%
Southeast
(includes unconsolidated joint ventures)	Home		220		189		16.4		%		117		141		(17.0	)%		391		309		26.5	%
(FL, GA, NC, SC)	Dollars	$	95,086	$	58,794		61.7		%	$	39,580	$	45,834		(13.6	)%	$	166,366	$	105,952		57.0	%
	Avg. Price	$	432,210	$	311,080		38.9		%	$	338,287	$	325,067		4.1	%	$	425,490	$	342,887		24.1	%
Southwest
(includes unconsolidated joint ventures)	Home		560		538		4.1		%		550		477		15.3	%		1,043		831		25.5	%
(AZ, TX)	Dollars	$	208,642	$	193,584		7.8		%	$	204,189	$	166,609		22.6	%	$	427,164	$	322,294		32.5	%
	Avg. Price	$	372,575	$	359,822		3.5		%	$	371,253	$	349,286		6.3	%	$	409,553	$	387,839		5.6	%
West
(includes unconsolidated joint ventures)	Home		245		95		157.9		%		150		70		114.3	%		434		81		435.8	%
(CA)	Dollars	$	124,935	$	31,463		297.1		%	$	67,440	$	35,671		89.1	%	$	262,259	$	27,648		848.6	%
	Avg. Price	$	509,937	$	331,187		54.0		%	$	449,597	$	509,591		(11.8	)%	$	604,284	$	341,336		77.0	%
Grand Total
	Home		1,592		1,366		16.5		%		1,466		1,220		20.2	%		3,238		2,487		30.2	%
	Dollars	$	668,464	$	521,238		28.2		%	$	576,962	$	461,049		25.1	%	$	1,439,510	$	965,159		49.1	%
	Avg. Price	$	419,889	$	381,580		10.0		%	$	393,562	$	377,909		4.1	%	$	444,568	$	388,082		14.6	%
Consolidated Total
	Home		1,531		1,319		16.1		%		1,422		1,149		23.8	%		3,014		2,399		25.6	%
	Dollars	$	628,643	$	503,157		24.9		%	$	556,775	$	433,471		28.4	%	$	1,287,794	$	925,533		39.1	%
	Avg. Price	$	410,610	$	381,469		7.6		%	$	391,543	$	377,259		3.8	%	$	427,271	$	385,800		10.7	%
Unconsolidated Joint Ventures
	Home		61		47		29.8		%		44		71		(38.0	)%		224		88		154.5	%
	Dollars	$	39,821	$	18,081		120.2		%	$	20,187	$	27,578		(26.8	)%	$	151,716	$	39,626		282.9	%
	Avg. Price	$	652,803	$	384,707		69.7		%	$	458,795	$	388,421		18.1	%	$	677,304	$	450,292		50.4	%

DELIVERIES INCLUDE EXTRAS
Notes:
(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.

Contact:
J. Larry Sorsby
Executive Vice President & CFO
732-747-7800

Jeffrey T. O’Keefe
Vice President, Investor Relations
732-747-7800

Source: Hovnanian Enterprises

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