Exhibit 99.1
HOVNANIAN ENTERPRISES, INC. | News Release | |
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Contact: | Kevin C. Hake | Jeffrey T. O’Keefe |
| Senior Vice President Finance and Treasurer | Director of Investor Relations |
| 732-747-7800 | 732-747-7800 |
HOVNANIAN ENTERPRISES REPORTS FISCAL
2006 SECOND QUARTER RESULTS; MAINTAINS FISCAL 2006 EPS PROJECTION
Highlights for the Quarter Ended April 30, 2006
• Net income available to common stockholders was $101.0 million for the second quarter, or $1.55 per fully diluted common share, compared with $106.1 million, or $1.62 per fully diluted common share, in last year’s second quarter. Total revenues increased 30% to $1.6 billion.
• Management is reaffirming its projection for the fiscal year ending October 31, 2006 of earnings between $7.20 and $7.40 per fully diluted common share, compared to fiscal 2005 earnings of $7.16 per fully diluted common share.
• Earnings for the trailing twelve months ended April 30, 2006 represent an after-tax return on beginning common equity (ROE) of 33.8%, and a 19.4% return on beginning capital (ROC).
• Contract backlog as of April 30, 2006, including unconsolidated joint ventures, was 13,384 homes with a sales value of $4.8 billion, up 23% from the sales value of contract backlog at April 30, 2005.
• The dollar value of net contracts for the second quarter of 2006, including unconsolidated joint ventures, decreased 18% to $1.5 billion, compared to $1.9 billion in last year’s second quarter. The number of net contracts, including unconsolidated joint ventures, declined 19% to 4,342 contracts.
• Excluding unconsolidated joint ventures, the Company delivered 4,555 homes with an aggregate sales value of $1.5 billion in the second quarter of fiscal 2006, compared to deliveries of 3,748 homes with an aggregate sales value of $1.2 billion in the second quarter of fiscal 2005. In the second quarter of fiscal 2006, the Company delivered 612 homes in unconsolidated joint ventures, compared with 351 homes in last year’s second quarter.
RED BANK, NJ, May 31, 2006 – Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported net income available to common stockholders of $101.0 million, or $1.55 per fully diluted common share, on $1.6 billion in total revenues for the quarter ended April 30, 2006. This is slightly greater than the company’s prior guidance. For the six-month period ended April 30, 2006, revenues reached $2.9 billion, a 26% increase from $2.3 billion in revenues in the year earlier period. Net income available to common stockholders for the first half of fiscal 2006 was $182.4 million, or $2.80 per fully diluted common share, compared to $187.6 million, or $2.87 per fully diluted common share, in the same period a year ago.
Consistent with prior guidance, second quarter land sale profits were approximately $0.18 per fully diluted common share. Homebuilding gross margin in the 2006 second quarter, excluding interest expense in cost of sales, was 23.7%, compared with 26.4% in the 2005 second quarter. Total stockholders’ equity grew 44% to $1.98 billion at April 30, 2006 from $1.37 billion on April 30, 2005. The Company was operating 411 active selling communities on April 30, 2006, excluding unconsolidated joint ventures, compared with 308 at the end of the second quarter last year.
Comments from Management
“Our performance in the first half of fiscal 2006 was just behind last year’s record-setting performance, and our current sales pace, along with our strong contract backlog, positions us to conclude another solid year of deliveries, revenues and earnings, despite the current environment of slowing housing markets,” said Ara K. Hovnanian, President and Chief Executive Officer of the Company. “Our return on beginning common equity for fiscal 2006 is projected to be nearly 30%, significantly higher than the average ROE among companies comprising the S&P 500.
“In the near term, we continue to experience a more challenging sales environment in most of our markets, when compared with conditions over the past few years,” Mr. Hovnanian continued. “However, we believe the slowdown has been affected primarily by a sharp increase in investor resale inventory in some of our markets and community locations, combined with much more cautious buyer sentiment. Fortunately, economic and demographic fundamentals remain strong. Thus, we expect our more regulated markets, including New Jersey, California, Florida and metropolitan Washington, D.C., will return to a stronger level of sales contracts as the market overhang is absorbed and buyer sentiment improves. In the interim, we are managing our company and our land position cautiously, as we have done in past downturns during our 47-year history,” Mr. Hovnanian stated. “And we have taken steps to prepare our sales associates and our communities to meet the more competitive environment that we are currently experiencing.
“As many of our housing markets have continued to cool off from the white-hot levels of previous years, we have renegotiated option contracts on numerous land parcels – primarily those negotiated within the last twelve months that no longer adequately reflect the pricing and returns available in the current sales environment,” Mr. Hovnanian said. “We also walked away from about $5.6 million of deposits on land parcels that we controlled through options when we were unable to successfully renegotiate the purchase terms. This amount was charged off and reflected in our second quarter earnings, impacting net results by $0.05 per fully diluted common share. For years, we have employed a strategy of controlling land predominantly with options to allow us to efficiently manage inventories under changing market conditions. Our disciplined approach allows us to achieve the best possible returns commensurate with prudent risk for the Company and our shareholders,” Mr. Hovnanian concluded.
“We expect earnings for the fiscal year ending October 31, 2006 to be in the range of $7.20 to $7.40 per fully diluted common share, slightly higher than what we achieved in 2005,” said J. Larry Sorsby, Executive Vice President and Chief Financial Officer. “Given our current $4.8 billion sales backlog and our recent sales pace, we are well positioned to deliver on these expectations. More than 85% of our projected deliveries are either in sales backlog or delivered as of April 30th. We expect earnings for the third quarter to be in a range of $1.40 to $1.50 per fully diluted common share,” Mr. Sorsby continued. “We expect to continue to manage the Company’s average ratio of net recourse debt-to-capitalization below 50% for fiscal 2006. The ratio at April 30, 2006, which is typically near a seasonal peak for the year, was 50.6%.”
In Closing
“We have consciously slowed our new land acquisition activity by underwriting transactions to our hurdle of a 30 percent unleveraged Internal Rate of Return while utilizing today’s market environment including lower net prices and lower monthly sales pace assumptions. Additionally, to compete in today’s environment, we have made adjustments in our advertising and selling efforts, as well as our pricing strategies,” said Mr. Hovnanian. “Sales contracts have slowed from the white-hot pace we enjoyed the past couple of years, but they continue at sound historical levels. Our resolve and long-term focus to become a better, more efficient homebuilder has not changed. As we move ahead, we expect to be able to continue generating strong returns,” Mr. Hovnanian concluded.
Hovnanian Enterprises will webcast its second quarter earnings conference call at 11:00 a.m. E.T. on Thursday, June 1, 2006, hosted by Ara K. Hovnanian, President and Chief Executive Officer of the Company. The webcast can be accessed live through the “Investor Relations” section of Hovnanian Enterprises’ Web site at http://www.khov.com. For those who are not available to listen to the live webcast, an archive of the broadcast will be available under the “Audio Archives” section of the Investor Relations page on the Hovnanian Web site at http://www.khov.com. The archive will be available for 12 months.
The Company’s summary projection for the fiscal year ending October 31, 2006 will be available today on the “Company Projections” section of the “Investor Relations” section of the Company’s website at http://www.khov.com.
About Hovnanian Enterprises
Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, is headquartered in Red Bank, New Jersey. The Company is one of the nation’s largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company’s homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt Homes. As the developer of K. Hovnanian’s Four Seasons communities, the Company is also one of the nation’s largest builders of active adult homes.
Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company’s 2005 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.
Hovnanian Enterprises, Inc. is a member of the Public Home Builders Council of America (“PHBCA”) (http://www.phbca.org), a nonprofit group devoted to improving understanding of the business practices of America’s largest publicly-traded home building companies, the competitive advantages they bring to the home building market, and their commitment to creating value for their home buyers and stockholders. The PHBCA’s 14 member companies build one out of every five homes in the United States.
Non-GAAP Financial Measures:
Consolidated earnings before interest expense, income taxes, depreciation and amortization (“EBITDA”) is not a generally accepted accounting principle (GAAP) financial measure. The most directly comparable GAAP financial measure is net income. The reconciliation of EBITDA to net income is presented in a table attached to this earnings release.
Note: All statements in this Press Release that are not historical facts should be considered as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic and business conditions, (2) adverse weather conditions and natural disasters, (3) changes in market conditions, (4) changes in home prices and sales activity in the markets where the Company builds homes, (5) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in, and price fluctuations of, raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to the Company, (11) utility shortages and outages or rate fluctuations, (12) geopolitical risks, terrorist acts and other acts of war and (13) other factors described in detail in the Company’s Form 10-K for the year ended October 31, 2005.
(Financial Tables Follow)
Hovnanian Enterprises, Inc.
April 30, 2006
Statements of Consolidated Income
(Dollars in Thousands, Except Per Share)
|
| Three Months Ended, |
| Six Months Ended, |
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| April 30, |
| April 30, |
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| 2006 |
| 2005 |
| 2006 |
| 2005 |
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| (Unaudited) |
| (Unaudited) |
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Total Revenues |
| $ | 1,574,121 |
| $ | 1,209,469 |
| $ | 2,852,113 |
| $ | 2,264,030 |
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Total Expenses |
| 1,421,070 |
| 1,042,082 |
| 2,571,411 |
| 1,966,172 |
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Income From Unconsolidated Joint Ventures |
| 9,497 |
| 7,140 |
| 17,072 |
| 8,575 |
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Income Before Income Taxes |
| 162,548 |
| 174,527 |
| 297,774 |
| 306,433 |
| ||||
Provision for Taxes |
| 58,899 |
| 68,391 |
| 110,029 |
| 118,815 |
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Net Income |
| 103,649 |
| 106,136 |
| 187,745 |
| 187,618 |
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Less: Preferred Stock Dividends |
| 2,669 |
| — |
| 5,338 |
| — |
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Net Income Available to Common Stockholders |
| $ | 100,980 |
| $ | 106,136 |
| $ | 182,407 |
| $ | 187,618 |
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Per Share Data: |
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Basic: |
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Income per common share |
| $ | 1.60 |
| $ | 1.71 |
| $ | 2.90 |
| $ | 3.01 |
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Weighted Average Number of Common Shares Outstanding |
| 62,919 |
| 62,233 |
| 62,864 |
| 62,237 |
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Assuming Dilution: |
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Income per common share |
| $ | 1.55 |
| $ | 1.62 |
| $ | 2.80 |
| $ | 2.87 |
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Weighted Average Number of Common Shares Outstanding |
| 65,106 |
| 65,498 |
| 65,254 |
| 65,459 |
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Hovnanian Enterprises, Inc.
April 30, 2006
Gross Margin
(Dollars in Thousands)
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| Homebuilding Gross Margin |
| Homebuilding Gross Margin |
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| Three Months Ended |
| Six Months Ended |
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| April 30, |
| April 30, |
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|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
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| (Unaudited) |
| (Unaudited) |
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Sale of Homes |
| $ | 1,479,548 |
| $ | 1,189,672 |
| $ | 2,725,745 |
| $ | 2,205,641 |
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Cost of Sales, excluding interest |
| 1,128,530 |
| 875,016 |
| 2,055,352 |
| 1,632,101 |
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Homebuilding Gross Margin, excluding interest |
| $ | 351,018 |
| $ | 314,656 |
| $ | 670,393 |
| $ | 573,540 |
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Homebuilding Cost of Sales interest |
| 19,861 |
| 18,441 |
| 35,972 |
| 36,020 |
| ||||
Homebuilding Gross Margin, including interest |
| $ | 331,157 |
| $ | 296,215 |
| $ | 634,421 |
| $ | 537,520 |
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Gross Margin Percentage, excluding interest |
| 23.7 | % | 26.4 | % | 24.6 | % | 26.0 | % | ||||
Gross Margin Percentage, including interest |
| 22.4 | % | 24.9 | % | 23.3 | % | 24.4 | % |
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| Land Sales Gross Margin |
| Land Sales Gross Margin |
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| Three Months Ended |
| Six Months Ended |
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|
| April 30, |
| April 30, |
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|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
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| (Unaudited) |
| (Unaudited) |
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Land Sales |
| $ | 70,238 |
| $ | 1,173 |
| $ | 80,793 |
| $ | 24,177 |
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Cost of Sales, excluding interest (a) |
| 51,769 |
| 1,811 |
| 59,634 |
| 15,981 |
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Land Sales Gross Margin, excluding interest |
| $ | 18,469 |
| $ | (638 | ) | $ | 21,159 |
| $ | 8,196 |
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Land Sales interest |
| 422 |
| 23 |
| 880 |
| 211 |
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Land Sales Gross Margin, including interest |
| $ | 18,047 |
| $ | (661 | ) | $ | 20,279 |
| $ | 7,985 |
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(a) Does not include costs associated with walking away from land options which are recorded as inventory impairment losses in the income statement.
Hovnanian Enterprises, Inc.
April 30, 2006
Reconciliation of EBITDA to Net Income
(Dollars in Thousands)
|
| Three Months Ended |
| Six Months Ended |
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|
| April 30, |
| April 30, |
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|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
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| (Unaudited) |
| (Unaudited) |
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Net Income |
| $ | 103,649 |
| $ | 106,136 |
| $ | 187,745 |
| $ | 187,618 |
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Income Taxes |
| 58,899 |
| 68,391 |
| 110,029 |
| 118,815 |
| ||||
Interest expense |
| 20,983 |
| 19,003 |
| 38,372 |
| 36,925 |
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EBIT (1) |
| $ | 183,531 |
| $ | 193,530 |
| $ | 336,146 |
| $ | 343,358 |
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Depreciation |
| 3,233 |
| 1,893 |
| 6,319 |
| 3,513 |
| ||||
Amortization of Debt Costs |
| 573 |
| 348 |
| 1,009 |
| 709 |
| ||||
Amortization of Intangibles |
| 13,391 |
| 10,386 |
| 25,060 |
| 20,474 |
| ||||
Other Amortization |
| — |
| — |
| — |
| 528 |
| ||||
EBITDA(2) |
| $ | 200,728 |
| $ | 206,157 |
| $ | 368,534 |
| $ | 368,582 |
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INTEREST INCURRED |
| $ | 36,250 |
| $ | 22,904 |
| $ | 67,054 |
| $ | 43,948 |
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EBITDA TO INTEREST INCURRED |
| 5.54 |
| 9.00 |
| 5.50 |
| 8.39 |
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(1) EBIT is a non-GAAP financial measure. The comparable GAAP financial measure is net income. EBIT represents earnings before interest expense and income taxes.
(2) EBITDA is a non-GAAP financial measure. The comparable GAAP financial measure is net income. EBITDA represents earnings before interest expense, income taxes, depreciation and amortization.
Hovnanian Enterprises, Inc.
April 30, 2006
Interest Incurred, Expensed and Capitalized
(Dollars in Thousands)
|
| Three Months Ended |
| Six Months Ended |
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|
| April 30, |
| April 30, |
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|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
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| (Unaudited) |
| (Unaudited) |
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Interest Capitalized at Beginning of Period |
| $ | 61,781 |
| $ | 40,587 |
| $ | 48,366 |
| $ | 37,465 |
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Plus Interest Incurred |
| 36,250 |
| 22,904 |
| 67,054 |
| 43,948 |
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Less Interest Expensed |
| 20,983 |
| 19,003 |
| 38,372 |
| 36,925 |
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Interest Capitalized at End of Period |
| $ | 77,048 |
| $ | 44,488 |
| $ | 77,048 |
| $ | 44,488 |
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Hovnanian Enterprises, Inc.
April 30, 2006
Summary Financial Projection
(Dollars in Millions, except per share or where noted)
(Unaudited)
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| Trailing |
| Projection |
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| Fiscal Yr. |
| Fiscal Yr. |
| Fiscal Yr. |
| 12 Mos. |
| Fiscal Yr. |
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|
| 10/31/03 |
| 10/31/04 |
| 10/31/05 |
| 04/30/06 |
| 10/31/06* |
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Total Revenues ($ Billion) |
| $ | 3.20 |
| $ | 4.15 |
| $ | 5.35 |
| $ | 5.94 |
| $6.50 - $6.70 |
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Income Before Income Taxes |
| $ | 411.5 |
| $ | 549.8 |
| $ | 780.6 |
| $ | 771.9 |
| $760.0 - $780.0 |
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Pre-tax Margin |
| 12.9 | % | 13.2 | % | 14.6 | % | 13.0 | % | 11.5% - 11.8% |
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Net Income Available to Common Stockholders ** |
| $ | 257.4 |
| $ | 348.7 |
| $ | 469.1 |
| $ | 463.9 |
| $471.0 - $484.0 |
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Earnings Per Common Share (fully diluted) |
| $ | 3.93 |
| $ | 5.35 |
| $ | 7.16 |
| $ | 7.09 |
| $7.20 - $7.40 |
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* 2006 Projection is based on two quarters of projected results and two quarters of actual data.
** Net Income less preferred dividends paid; preferred dividends were $0 in fiscal 2003 and 2004.
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)
|
| April 30, |
| October 31, |
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ASSETS |
| 2006 |
| 2005 |
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| (unaudited) |
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Homebuilding: |
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Cash and cash equivalents |
| $ | 47,525 |
| $ | 201,641 |
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Restricted cash |
| 8,766 |
| 17,189 |
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Inventories - At the lower of cost or fair value: |
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Sold and unsold homes and lots under development |
| 3,306,101 |
| 2,459,431 |
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Land and land options held for future development or sale |
| 561,220 |
| 595,806 |
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Consolidated Inventory Not Owned: |
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Specific performance options |
| 10,696 |
| 9,289 |
| ||
Variable interest entities |
| 381,178 |
| 242,825 |
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Other options |
| 136,530 |
| 129,269 |
| ||
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Total Consolidated Inventory Not Owned |
| 528,404 |
| 381,383 |
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Total Inventories |
| 4,395,725 |
| 3,436,620 |
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Investments in and advances to unconsolidated joint ventures |
| 211,556 |
| 187,205 |
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Receivables, deposits, and notes |
| 82,206 |
| 125,388 |
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Property, plant, and equipment - net |
| 110,509 |
| 96,891 |
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Prepaid expenses and other assets |
| 165,642 |
| 125,662 |
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Goodwill |
| 32,658 |
| 32,658 |
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Definite life intangibles |
| 204,875 |
| 249,506 |
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Total Homebuilding |
| 5,259,462 |
| 4,472,760 |
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Financial Services: |
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Cash and cash equivalents |
| 6,504 |
| 10,669 |
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Mortgage loans held for sale |
| 214,190 |
| 211,248 |
| ||
Other assets |
| 6,482 |
| 15,375 |
| ||
Total Financial Services |
| 227,176 |
| 237,292 |
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Income Taxes Receivable – Including Deferred Tax Benefits |
| 96,650 |
| 9,903 |
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Total Assets |
| $ | 5,583,288 |
| $ | 4,719,955 |
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See notes to condensed consolidated financial statements (unaudited).
9
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)
|
| April 30, |
| October 31, |
| ||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
| 2006 |
| 2005 |
| ||
|
| (unaudited) |
|
|
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Homebuilding: |
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Nonrecourse land mortgages |
| $ | 38,117 |
| $ | 48,673 |
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Accounts payable and other liabilities |
| 500,286 |
| 510,529 |
| ||
Customers’ deposits |
| 238,709 |
| 259,930 |
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Nonrecourse mortgages secured by operating properties |
| 24,017 |
| 24,339 |
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Liabilities from inventory not owned |
| 254,691 |
| 177,014 |
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Total Homebuilding |
| 1,055,820 |
| 1,020,485 |
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Financial Services: |
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Accounts payable and other liabilities |
| 8,887 |
| 8,461 |
| ||
Mortgage warehouse line of credit |
| 195,189 |
| 198,856 |
| ||
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Total Financial Services |
| 204,076 |
| 207,317 |
| ||
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Notes Payable: |
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Revolving credit agreement |
| 275,000 |
|
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Senior notes |
| 1,399,247 |
| 1,098,739 |
| ||
Senior subordinated notes |
| 400,000 |
| 400,000 |
| ||
Accrued interest |
| 25,375 |
| 20,808 |
| ||
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Total Notes Payable |
| 2,099,622 |
| 1,519,547 |
| ||
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Total Liabilities |
| 3,359,518 |
| 2,747,349 |
| ||
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Minority interest from inventory not owned |
| 243,339 |
| 180,170 |
| ||
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Minority interest from consolidated joint ventures |
| 3,241 |
| 1,079 |
| ||
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Stockholders’ Equity: |
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|
| ||
Preferred Stock, $.01 par value-authorized 100,000 shares; issued 5,600 shares at April 30, 2006 and at October 31, 2005 with a liquidation preference of $140,000. |
|
|
|
|
| ||
Common Stock, Class A, $.01 par value-authorized 200,000,000 shares; issued 58,378,455 shares at April 30, 2006 and 57,976,455 shares at October 31, 2005 (including 11,295,656 shares at April 30, 2006 and 10,995,656 shares at October 31, 2005 held in Treasury) |
| 584 |
| 580 |
| ||
Common Stock, Class B, $.01 par value (convertible to Class A at time of sale) authorized 30,000,000 shares; issued 15,363,534 shares at April 30, 2006 and 15,370,250 shares at October 31, 2005 (including 691,748 shares at April 30, 2006 and October 31, 2005 held in Treasury) |
| 154 |
| 154 |
| ||
Paid in Capital |
| 369,317 |
| 371,390 |
| ||
Retained Earnings |
| 1,705,359 |
| 1,522,952 |
| ||
Deferred Compensation |
|
|
| (19,648 | ) | ||
Treasury Stock - at cost |
| (98,224 | ) | (84,071 | ) | ||
|
|
|
|
|
| ||
Total Stockholders’ Equity |
| 1,977,190 |
| 1,791,357 |
| ||
|
|
|
|
|
| ||
Total Liabilities and Stockholders’ Equity |
| $ | 5,583,288 |
| $ | 4,719,955 |
|
See notes to condensed consolidated financial statements (unaudited).
10
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
(Unaudited)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| April 30, |
| April 30, |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
| ||||
Homebuilding: |
|
|
|
|
|
|
|
|
| ||||
Sale of homes |
| $ | 1,479,548 |
| $ | 1,189,672 |
| $ | 2,725,745 |
| $ | 2,205,641 |
|
Land sales and other revenues |
| 73,382 |
| 3,528 |
| 85,915 |
| 27,927 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total Homebuilding |
| 1,552,930 |
| 1,193,200 |
| 2,811,660 |
| 2,233,568 |
| ||||
Financial Services |
| 21,191 |
| 16,269 |
| 40,453 |
| 30,462 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total Revenues |
| 1,574,121 |
| 1,209,469 |
| 2,852,113 |
| 2,264,030 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Expenses: |
|
|
|
|
|
|
|
|
| ||||
Homebuilding: |
|
|
|
|
|
|
|
|
| ||||
Cost of sales, excluding interest |
| 1,180,299 |
| 876,827 |
| 2,114,986 |
| 1,648,083 |
| ||||
Cost of sales interest |
| 20,283 |
| 18,464 |
| 36,852 |
| 36,231 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total Cost of Sales |
| 1,200,582 |
| 895,291 |
| 2,151,838 |
| 1,684,314 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative |
| 151,853 |
| 106,704 |
| 287,087 |
| 203,292 |
| ||||
Inventory impairment loss |
| 5,595 |
| 1,500 |
| 8,704 |
| 1,998 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total Homebuilding |
| 1,358,030 |
| 1,003,495 |
| 2,447,629 |
| 1,889,604 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Financial Services |
| 14,517 |
| 11,467 |
| 28,047 |
| 21,387 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Corporate General and Administrative |
| 25,911 |
| 14,916 |
| 53,633 |
| 30,794 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other Interest |
| 700 |
| 539 |
| 1,520 |
| 694 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other Operations |
| 8,521 |
| 1,279 |
| 15,522 |
| 3,219 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Intangible Amortization |
| 13,391 |
| 10,386 |
| 25,060 |
| 20,474 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total Expenses |
| 1,421,070 |
| 1,042,082 |
| 2,571,411 |
| 1,966,172 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income from unconsolidated joint ventures |
| 9,497 |
| 7,140 |
| 17,072 |
| 8,575 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income Before Income Taxes |
| 162,548 |
| 174,527 |
| 297,774 |
| 306,433 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
State and Federal Income Taxes: |
|
|
|
|
|
|
|
|
| ||||
State |
| 6,235 |
| 10,318 |
| 11,109 |
| 15,764 |
| ||||
Federal |
| 52,664 |
| 58,073 |
| 98,920 |
| 103,051 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total Taxes |
| 58,899 |
| 68,391 |
| 110,029 |
| 118,815 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net Income |
| 103,649 |
| 106,136 |
| 187,745 |
| 187,618 |
| ||||
Less: Preferred Stock Dividends |
| 2,669 |
|
|
| 5,338 |
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net Income Available to Common Stockholders |
| $ | 100,980 |
| $ | 106,136 |
| $ | 182,407 |
| $ | 187,618 |
|
|
|
|
|
|
|
|
|
|
| ||||
Per Share Data: |
|
|
|
|
|
|
|
|
| ||||
Basic: |
|
|
|
|
|
|
|
|
| ||||
Income per common share |
| $ | 1.60 |
| $ | 1.71 |
| $ | 2.90 |
| $ | 3.01 |
|
Weighted average number of common shares outstanding |
| 62,919 |
| 62,233 |
| 62,864 |
| 62,237 |
| ||||
Assuming dilution: |
|
|
|
|
|
|
|
|
| ||||
Income per common share |
| $ | 1.55 |
| $ | 1.62 |
| $ | 2.80 |
| $ | 2.87 |
|
Weighted average number of common shares outstanding |
| 65,106 |
| 65,498 |
| 65,254 |
| 65,459 |
|
See notes to condensed consolidated financial statements (unaudited).
HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(UNAUDITED)
Communities Under Development
Three Months - 4/30/06
|
|
|
| Net Contracts (1) |
| Deliveries |
|
|
| ||||||||||||
|
|
|
| Three Months Ended |
| Three Months Ended |
| Contract Backlog |
| ||||||||||||
|
|
|
| April 30, |
| April 30, |
| April 30, |
| ||||||||||||
|
|
|
| 2006 |
| 2005 |
| % Change |
| 2006 |
| 2005 |
| % Change |
| 2006 |
| 2005 |
| % Change |
|
NorthEast Region (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 761 |
| 734 |
| 3.7 | % | 646 |
| 725 |
| (10.9 | )% | 2,275 |
| 2,100 |
| 8.3 | % |
|
| Dollars |
| 277,581 |
| 253,736 |
| 9.4 | % | 232,952 |
| 267,245 |
| (12.8 | )% | 869,734 |
| 732,039 |
| 18.8 | % |
|
| Avg. Price |
| 364,758 |
| 345,689 |
| 5.5 | % | 360,607 |
| 368,614 |
| (2.2 | )% | 382,301 |
| 348,590 |
| 9.7 | % |
SouthEast Region (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 1,248 |
| 1,518 |
| (17.8 | )% | 1,807 |
| 1,118 |
| 61.6 | % | 6,743 |
| 3,236 |
| 108.4 | % |
|
| Dollars |
| 499,535 |
| 538,285 |
| (7.2 | )% | 562,214 |
| 334,900 |
| 67.9 | % | 2,199,767 |
| 1,144,365 |
| 92.2 | % |
|
| Avg. Price |
| 400,268 |
| 354,601 |
| 12.9 | % | 311,131 |
| 299,553 |
| 3.9 | % | 326,230 |
| 353,636 |
| (7.7 | )% |
SouthWest Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 1,235 |
| 1,222 |
| 1.1 | % | 1,054 |
| 900 |
| 17.1 | % | 1,406 |
| 1,428 |
| (1.5 | )% |
|
| Dollars |
| 265,790 |
| 235,487 |
| 12.9 | % | 232,289 |
| 164,133 |
| 41.5 | % | 315,309 |
| 272,554 |
| 15.7 | % |
|
| Avg. Price |
| 215,215 |
| 192,706 |
| 11.7 | % | 220,388 |
| 182,370 |
| 20.8 | % | 224,259 |
| 190,864 |
| 17.5 | % |
West Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 718 |
| 1,216 |
| (41.0 | )% | 1,048 |
| 1,005 |
| 4.3 | % | 1,163 |
| 2,072 |
| (43.9 | )% |
|
| Dollars |
| 343,303 |
| 506,363 |
| (32.2 | )% | 452,093 |
| 423,394 |
| 6.8 | % | 587,465 |
| 862,048 |
| (31.9 | )% |
|
| Avg. Price |
| 478,138 |
| 416,417 |
| 14.8 | % | 431,386 |
| 421,288 |
| 2.4 | % | 505,129 |
| 416,046 |
| 21.4 | % |
Consolidated Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 3,962 |
| 4,690 |
| (15.5 | )% | 4,555 |
| 3,748 |
| 21.5 | % | 11,587 |
| 8,836 |
| 31.1 | % |
|
| Dollars |
| 1,386,209 |
| 1,533,871 |
| (9.6 | )% | 1,479,548 |
| 1,189,672 |
| 24.4 | % | 3,972,275 |
| 3,011,006 |
| 31.9 | % |
|
| Avg. Price |
| 349,876 |
| 327,051 |
| 7.0 | % | 324,818 |
| 317,415 |
| 2.3 | % | 342,822 |
| 340,766 |
| 0.6 | % |
Unconsolidated Joint Ventures (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 380 |
| 638 |
| (40.4 | )% | 612 |
| 351 |
| 74.4 | % | 1,797 |
| 2,150 |
| (16.4 | )% |
|
| Dollars |
| 129,757 |
| 320,437 |
| (59.5 | )% | 244,402 |
| 123,732 |
| 97.5 | % | 810,115 |
| 879,482 |
| (7.9 | )% |
|
| Avg. Price |
| 341,467 |
| 502,252 |
| (32.0 | )% | 399,350 |
| 352,513 |
| 13.3 | % | 450,815 |
| 409,061 |
| 10.2 | % |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 4,342 |
| 5,328 |
| (18.5 | )% | 5,167 |
| 4,099 |
| 26.1 | % | 13,384 |
| 10,986 |
| 21.8 | % |
|
| Dollars |
| 1,515,966 |
| 1,854,308 |
| (18.2 | )% | 1,723,950 |
| 1,313,404 |
| 31.3 | % | 4,782,390 |
| 3,890,488 |
| 22.9 | % |
|
| Avg. Price |
| 349,140 |
| 348,031 |
| 0.3 | % | 333,646 |
| 320,421 |
| 4.1 | % | 357,321 |
| 354,131 |
| 0.9 | % |
DELIVERIES INCLUDE EXTRAS
Notes:
(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.
(2) The number and the dollar amount of net contracts in the Northeast in the 2006 second quarter include the effect of the Oster Homes acquisition, which closed in August 2005.
(3) The number and the dollar amount of net contracts in the Southeast in the 2006 second quarter include the effects of the Cambridge Homes, First Home Builders of Florida and CraftBuilt Homes acquisitions, which closed in March 2005, August 2005 and April 2006, respectively.
(4) The number and the dollar amount of net contracts in Unconsolidated Joint Ventures in the 2006 second quarter include the effect of the Town & Country Homes acquisition, which closed in March 2005.
HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(UNAUDITED)
Communities Under Development
Six Months - 4/30/06
|
|
|
| Net Contracts (1) |
| Deliveries |
|
|
| ||||||||||||
|
|
|
| Six Months Ended |
| Six Months Ended |
| Contract Backlog |
| ||||||||||||
|
|
|
| April 30, |
| April 30, |
| April 30, |
| ||||||||||||
|
|
|
| 2006 |
| 2005 |
| % Change |
| 2006 |
| 2005 |
| % Change |
| 2006 |
| 2005 |
| % Change |
|
NorthEast Region (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 1,369 |
| 1,256 |
| 9.0 | % | 1,258 |
| 1,412 |
| (10.9 | )% | 2,275 |
| 2,100 |
| 8.3 | % |
|
| Dollars |
| 501,982 |
| 443,341 |
| 13.2 | % | 458,454 |
| 505,706 |
| (9.3 | )% | 869,734 |
| 732,039 |
| 18.8 | % |
|
| Avg. Price |
| 366,678 |
| 352,979 |
| 3.9 | % | 364,431 |
| 358,149 |
| 1.8 | % | 382,301 |
| 348,590 |
| 9.7 | % |
SouthEast Region (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 2,615 |
| 2,367 |
| 10.5 | % | 3,334 |
| 2,020 |
| 65.0 | % | 6,743 |
| 3,236 |
| 108.4 | % |
|
| Dollars |
| 1,000,936 |
| 823,167 |
| 21.6 | % | 1,029,870 |
| 598,734 |
| 72.0 | % | 2,199,767 |
| 1,144,365 |
| 92.2 | % |
|
| Avg. Price |
| 382,767 |
| 347,768 |
| 10.1 | % | 308,899 |
| 296,403 |
| 4.2 | % | 326,230 |
| 353,636 |
| (7.7 | )% |
SouthWest Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 2,036 |
| 2,119 |
| (3.9 | )% | 1,926 |
| 1,615 |
| 19.3 | % | 1,406 |
| 1,428 |
| (1.5 | )% |
|
| Dollars |
| 436,494 |
| 400,535 |
| 9.0 | % | 415,548 |
| 300,044 |
| 38.5 | % | 315,309 |
| 272,554 |
| 15.7 | % |
|
| Avg. Price |
| 214,388 |
| 189,021 |
| 13.4 | % | 215,757 |
| 185,786 |
| 16.1 | % | 224,259 |
| 190,864 |
| 17.5 | % |
West Region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 1,292 |
| 2,122 |
| (39.1 | )% | 1,882 |
| 1,967 |
| (4.3 | )% | 1,163 |
| 2,072 |
| (43.9 | )% |
|
| Dollars |
| 600,454 |
| 860,487 |
| (30.2 | )% | 821,873 |
| 801,157 |
| 2.6 | % | 587,465 |
| 862,048 |
| (31.9 | )% |
|
| Avg. Price |
| 464,748 |
| 405,508 |
| 14.6 | % | 436,702 |
| 407,299 |
| 7.2 | % | 505,129 |
| 416,046 |
| 21.4 | % |
Consolidated Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 7,312 |
| 7,864 |
| (7.0 | )% | 8,400 |
| 7,014 |
| 19.8 | % | 11,587 |
| 8,836 |
| 31.1 | % |
|
| Dollars |
| 2,539,866 |
| 2,527,530 |
| 0.5 | % | 2,725,745 |
| 2,205,641 |
| 23.6 | % | 3,972,275 |
| 3,011,006 |
| 31.9 | % |
|
| Avg. Price |
| 347,356 |
| 321,405 |
| 8.1 | % | 324,493 |
| 314,463 |
| 3.2 | % | 342,822 |
| 340,766 |
| 0.6 | % |
Unconsolidated Joint |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 654 |
| 704 |
| (7.1 | )% | 1,197 |
| 373 |
| 220.9 | % | 1,797 |
| 2,150 |
| (16.4 | )% |
|
| Dollars |
| 238,329 |
| 361,784 |
| (34.1 | )% | 459,014 |
| 135,317 |
| 239.2 | % | 810,115 |
| 879,482 |
| (7.9 | )% |
|
| Avg. Price |
| 364,417 |
| 513,898 |
| (29.1 | )% | 383,470 |
| 362,780 |
| 5.7 | % | 450,815 |
| 409,061 |
| 10.2 | % |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Homes |
| 7,966 |
| 8,568 |
| (7.0 | )% | 9,597 |
| 7,387 |
| 29.9 | % | 13,384 |
| 10,986 |
| 21.8 | % |
|
| Dollars |
| 2,778,195 |
| 2,889,314 |
| (3.8 | )% | 3,184,759 |
| 2,340,958 |
| 36.0 | % | 4,782,390 |
| 3,890,488 |
| 22.9 | % |
|
| Avg. Price |
| 348,757 |
| 337,222 |
| 3.4 | % | 331,849 |
| 316,902 |
| 4.7 | % | 357,321 |
| 354,131 |
| 0.9 | % |
DELIVERIES INCLUDE EXTRAS
Notes:
(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.
(2) The number and the dollar amount of net contracts in the Northeast in the 2006 first half include the effect of the Oster Homes acquisition, which closed in August 2005.
(3) The number and the dollar amount of net contracts in the Southeast in the 2006 first half include the effects of the Cambridge Homes, First Home Builders of Florida and CraftBuilt Homes acquisitions, which closed in March 2005, August 2005 and April 2006, respectively.
(4) The number and the dollar amount of net contracts in Unconsolidated Joint Ventures in the 2006 first half include the effect of the Town & Country Homes acquisition, which closed in March 2005.