RED BANK, N.J., Dec. 18 /PRNewswire-FirstCall/ -- Hovnanian Enterprises, Inc. , a leading national homebuilder, reported net income available to common stockholders of $138.9 million, or $2.14 per fully diluted common share, on $6.1 billion in total revenues for the full year ended October 31, 2006. In fiscal 2005, net income available to common stockholders was $469.1 million, or $7.16 per fully diluted common shares, on total revenues of $5.3 billion.
Homebuilding gross margin, before interest expense included in cost of sales, was 23.1% for fiscal 2006, a 330 basis point decline from an all-time record of 26.4% in the prior year. Total SG&A expense was 11.2% in fiscal 2006, compared with 10.0% in 2005. The Company's pretax income from Financial Services in fiscal 2006 rose 29% over 2005, to $31.0 million.
For the three-month period ended October 31, 2006, revenues were $1.7 billion, compared to $1.8 billion for the fourth quarter of fiscal 2005. After charges related to inventory impairments and land option write-offs, the Company reported a loss to common stockholders for the fiscal 2006 fourth quarter of $117.9 million, or $1.88 per fully diluted common share, compared to net income available to common stockholders of $165.4 million, or $2.53 per fully diluted common share, for the same period a year ago.
Comments From Management
"Overall we are disappointed with our results in fiscal 2006," commented Ara K. Hovnanian, President and Chief Executive Officer of the Company. "Although our deliveries and revenues increased over the record year of 2005, our gross margins fell 330 basis points -- as we cut pricing and offered incentives to improve affordability and remain competitive in a period of a slower housing demand."
"We did not anticipate the suddenness or magnitude of the fall in pricing that occurred this year in many of our communities. Our profitability and the pace of new home sales in our markets continues to be adversely impacted by high contract cancellation rates, increases in the number of resale listings and increases in the number of new homes available for sale," Mr. Hovnanian said. The Company's contract cancellation rate for the fourth quarter was 35%, compared with 25% in the fourth quarter of 2005 and a 33% rate reported in the third quarter of fiscal 2006.
"Conditions in some markets like Texas and North Carolina have been holding up better than those in our other markets. Despite healthy job growth, steadily increasing GDP, strong household formation, and low mortgage rates, most housing markets have been adversely impacted by heightened inventories of both new and existing homes for sale, along with shifting consumer sentiment which has kept many homebuyers on the sidelines waiting for an even better deal on a new home," Mr. Hovnanian added. "Over the past two months, we have started to see a glimmer of hopeful indicators that the markets may be stabilizing, including modest declines in resale inventories, improving consumer confidence, particularly in the University of Michigan survey which specifically tracks consumer attitudes toward buying homes, and healthy levels of buyer traffic at many of our communities. Thus, as we begin calendar 2007, we are cautiously optimistic that some of our more challenging markets will begin to experience decreasing cancellations and an improved sales pace. However, we may not get a good read on the market until the spring selling season begins in earnest. Until we experience an actual improvement in our pace of net contracts, we are continuing to manage assuming that current conditions remain with us for the foreseeable future."
"In the fourth quarter, we decided to walk away from $141 million in land deposits and predevelopment costs and took impairment charges of $174 million," said J. Larry Sorsby, Executive Vice President and Chief Financial Officer. "We successfully renegotiated a number of our land option contracts in the third and fourth quarters of fiscal 2006, and we have also walked away from our deposits and predevelopment costs on many option contracts where it did not make economic sense to proceed. Although it is painful to incur these write-offs, we believe it is much better than proceeding to build-out these communities at very low returns or losses over the coming years," Mr. Sorsby said. The Company ended the year with 427 active communities, which is below its prior estimate of 440 communities as a result of walking away from certain options and negotiating delays in the takedown on other communities. As of October 31, 2006, the Company had 60,714 lots held under option contracts and controlled a total of 94,618 lots, a 22% decline from the peak level controlled as of April 30, 2006.
"Although we are concerned with the uncertainty currently evident in housing markets, we are providing initial guidance for fiscal 2007, based on our standard practice of assuming that our sales pace and pricing in each of our communities remains as it is today and that market conditions do not deteriorate further," Mr. Sorsby continued. "On that basis, assuming that the economy remains reasonably healthy and mortgage rates remain stable, we are projecting fiscal 2007 earnings between $1.50 to $2.00 per fully diluted common share on 16,000 to 18,000 home deliveries, including 1,000 to 1,500 deliveries from unconsolidated joint ventures. For the first quarter of fiscal 2007 we anticipate modest earnings of between $0.05 and $0.10 per fully diluted share with earnings significantly weighted to the second half of the year. We believe that the overall U.S. housing market may hit the bottom in the first half of 2007. However, the housing market is likely to bounce along the bottom for several quarters before pricing and sales pace improves."
"As we go forward, we will continue to exercise discipline with regard to our balance sheet. We significantly slowed our land purchases during the second half of 2006," said Mr. Sorsby. "However, we have 60 more communities open at the start of fiscal 2007 than we had available for sale a year ago. While our inventories are expected to grow through the first two quarters of fiscal 2007, for the full year we expect the net change in inventories to be close to zero. We anticipate that our average ratio of net recourse debt to capitalization will average close to our target of 50% during fiscal 2007," Mr. Sorsby concluded.
In Closing
"We believe the quick reaction of the housing markets to set pricing for new homes at lower levels is a significant positive that should allow us to return to a more profitable business environment sooner," Mr. Hovnanian said. "We have been through downturns in the housing industry many times during our 47 years of operation. Each time, we have emerged as a stronger and better company, with an improved market share. We are confident that we will weather the current slowdown with a similar result. Despite incurring $336 million of land-related charges in 2006, our common stockholders' equity grew by 9.1%."
"We are working hard to manage our Company through this period conservatively and effectively. That has resulted in some tough decisions regarding our staffing and our subcontractor base. We believe that the steps we are taking today are necessary to maintain our competitive position in the face of the current conditions, and to position us for recovery as we move through fiscal 2007 and into 2008," Mr. Hovnanian concluded.
Hovnanian Enterprises will webcast its fourth quarter earnings conference call at 11:00 a.m. E.T. on Tuesday, December 19, 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, 2007 is available 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, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt Homes. As the developer of K. Hovnanian's Four Seasons communities, the Company is also one of the nation's largest builders of active adult homes.
Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company's 2005 annual report, can be accessed through the "Investor Relations" section of Hovnanian Enterprises' website at http://www.khov.com/. To be added to Hovnanian's investor e-mail or fax lists, please send an e-mail to
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)
Statements of Consolidated Operations
(Dollars in Thousands, Except Per Share)
Three Months Ended, Twelve Months Ended,
October 31, October 31,
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Total Revenues $1,745,603 $1,771,661 $6,148,235 $5,348,417
Costs and Expenses (a) 1,932,700 1,504,957 5,930,514 4,602,871
Income from
Unconsolidated Joint
Ventures 1,552 12,557 15,385 35,039
---------- ---------- ---------- ----------
(Loss) Income Before
Income Taxes (185,545) 279,261 233,106 780,585
Income Tax (Benefit)
Provision (70,286) 111,126 83,573 308,738
---------- ---------- ---------- ----------
Net (Loss) Income (115,259) 168,135 149,533 471,847
---------- ---------- ---------- ----------
Less: Preferred Stock
Dividends 2,669 2,758 10,675 2,758
------------------------------------------------
Net (Loss) Income
Available to Common
Stockholders $(117,928) $165,377 $138,858 $469,089
================================================
Per Share Data:
Basic:
(Loss) income per
common share $(1.88) $2.64 $2.21 $7.51
Weighted Average
Number of
Common Shares
Outstanding 62,758 62,721 62,822 62,490
Assuming Dilution:
(Loss) income per
common share $(1.88) $2.53 $2.14 $7.16
Weighted Average
Number of
Common Shares
Outstanding 62,758 65,474 64,838 65,549
(a) Includes inventory impairment loss and land option write-offs.
Hovnanian Enterprises, Inc.
October 31, 2006
Gross Margin
(Dollars in Thousands)
Homebuilding Gross Margin Homebuilding Gross Margin
Three Months Ended Twelve Months Ended
October 31, October 31,
------------------------ ------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Sale of Homes $1,677,816 $1,682,641 $5,903,387 $5,177,655
Cost of Sales,
excluding interest
(a) 1,334,913 1,241,006 4,538,795 3,812,922
---------- ---------- ---------- ----------
Homebuilding Gross
Margin, excluding
interest $342,903 $441,635 $1,364,592 $1,364,733
Homebuilding Cost of
Sales interest 45,369 26,780 106,892 85,104
---------- ---------- ---------- ----------
Homebuilding Gross
Margin, including
interest $297,534 $414,855 $1,257,700 $1,279,629
========== ========== ========== ==========
Gross Margin
Percentage, excluding
interest 20.4% 26.2% 23.1% 26.4%
Gross Margin
Percentage, including
interest 17.7% 24.7% 21.3% 24.7%
Land Sales Gross Margin Land Sales Gross Margin
Three Months Ended Twelve Months Ended
October 31, October 31,
------------------------ ------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Land Sales $36,551 $63,641 $140,389 $88,259
Cost of Sales,
excluding interest
(a) 12,910 35,834 94,286 52,203
---------- ---------- ---------- ----------
Land Sales Gross
Margin, excluding
interest $23,641 $27,807 $46,103 $36,056
Land Sales interest 507 1,476 1,437 1,715
---------- ---------- ---------- ----------
Land Sales Gross
Margin, including
interest $23,134 $26,331 $44,666 $34,341
========== ========== ========== ==========
(a) Does not include inventory impairment loss and land option write-offs.
Hovnanian Enterprises, Inc.
October 31, 2006
Reconciliation of Adjusted EBITDA to Net (Loss) Income
(Dollars in Thousands)
Three Months Ended Twelve Months Ended
October 31, October 31,
------------------- ------------------
2006 2005 2006 2005
--------- -------- -------- --------
(Unaudited) (Unaudited)
Net (Loss) Income $(115,259) $168,135 $149,533 $471,847
Income Tax (Benefit) Provision (70,286) 111,126 83,573 308,738
Interest expense 47,322 29,315 111,944 89,721
--------- -------- -------- --------
EBIT (1) $(138,223) $308,576 $345,050 $870,306
Depreciation 4,296 3,163 14,884 9,076
Amortization of Debt Costs 640 926 2,293 2,012
Amortization of Intangibles 16,430 13,829 54,821 46,084
Other Amortization - - - 528
EBITDA (2) (116,857) 326,494 417,048 928,006
Inventory Impairment Loss and
Land Option Write-offs 315,226 2,008 336,204 5,360
--------- -------- -------- --------
Adjusted EBITDA (3) $198,369 $328,502 $753,252 $933,366
========= ======== ======== ========
INTEREST INCURRED $57,858 $30,991 $166,427 $102,930
ADJUSTED EBITDA TO
INTEREST INCURRED 3.43 10.60 4.53 9.07
(1) EBIT is a non-GAAP financial measure. The comparable GAAP financial
measure is net income. EBIT represents earnings before interest expense
and income taxes.
(2) EBITDA is a non-GAAP financial measure. The comparable GAAP financial
measure is net income. EBITDA represents earnings before interest
expense, income taxes, depreciation and amortization.
(3) Adjusted EBITDA is a non-GAAP financial measure. The comparable GAAP
financial measure is net income. Adjusted EBITDA represents earnings
before interest expense, income taxes, depreciation, amortization and
inventory impairment loss and land option write-offs.
Hovnanian Enterprises, Inc.
October 31, 2006
Interest Incurred, Expensed and Capitalized
(Dollars in Thousands)
Three Months Ended Twelve Months Ended
October 31, October 31,
------------------ -------------------
2006 2005 2006 2005
--------- -------- -------- ---------
(Unaudited)
Interest Capitalized at Beginning of
Period $92,313 $48,998 $48,366 $37,465
Plus Interest Incurred 57,858 30,991 166,427 102,930
Less Interest Expensed 47,322 29,315 111,944 89,721
--------- -------- -------- ---------
Interest Capitalized at End of
Period $102,849 $50,674 $102,849 $50,674
========= ======== ======== =========
Summary Financial Projection
(Dollars in Millions, except per share or where noted)
(Unaudited)
Projection
Fiscal Fiscal Fiscal Fiscal Fiscal
Year Year Year Year Year
10/31/03 10/31/04 10/31/05(1) 10/31/06(1) 10/31/07*(1)
-------- -------- ---------- ---------- -----------
Total Revenues
($ Billion) $3.20 $4.15 $5.35 $6.15 $5.2 - $5.9
Income Before
Income Taxes $411.5 $549.8 $780.6 $233.1 $173 - $225
Pre-tax Margin 12.9% 13.2% 14.6% 3.8% 3.2% - 3.9%
Net Income
Available to
Common
Stockholders $257.4 $348.7 $469.1 $138.9 $97 - $129
Earnings Per
Common Share
(fully diluted) $3.93 $5.35 $7.16 $2.14 $1.50 - $2.00
--------------------------------------------------------------------------
* Fiscal 2007 Projection is based on four quarters of projected results.
(1) Net Income less preferred dividends paid.
CONSOLIDATED BALANCE SHEETS
(In Thousands) October 31, October 31,
2006 2005
----------- -----------
ASSETS
Homebuilding:
Cash and cash equivalents $43,635 $201,641
----------- -----------
Restricted cash 9,479 17,189
----------- -----------
Inventories - at the lower of cost or
fair value :
Sold and unsold homes and lots under
development 3,297,766 2,459,431
----------- -----------
Land and land options held for future
development or sale 362,760 595,806
----------- -----------
Consolidated inventory not owned:
Specific performance options 20,340 9,289
Variable interest entities 208,167 242,825
Other options 181,808 129,269
----------- -----------
Total consolidated inventory not owned 410,315 381,383
----------- -----------
Total inventories 4,070,841 3,436,620
----------- -----------
Investments in and advances to
unconsolidated joint ventures 212,581 187,205
----------- -----------
Receivables, deposits, and notes 94,750 125,388
----------- -----------
Property, plant, and equipment - net 110,704 96,891
----------- -----------
Prepaid expenses and other assets 175,603 125,662
----------- -----------
Goodwill and indefinite life intangibles 32,658 32,658
----------- -----------
Definite life intangibles 146,303 249,506
----------- -----------
Total homebuilding 4,896,554 4,472,760
----------- -----------
Financial services:
Cash and cash equivalents 10,688 9,632
Restricted cash 1,585 1,037
Mortgage loans held for sale 281,958 211,248
Other assets 10,686 15,375
----------- -----------
Total financial services 304,917 237,292
----------- -----------
Income taxes receivable - including deferred
tax benefits 259,814 9,903
----------- -----------
Total assets $5,461,285 $4,719,955
=========== ===========
CONSOLIDATED BALANCE SHEETS
October 31, October 31,
(In Thousands, Except Share Amounts) 2006 2005
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Homebuilding:
Nonrecourse land mortgages $26,088 $48,673
Accounts payable and other liabilities 563,643 510,529
Customers' deposits 184,943 259,930
Nonrecourse mortgages secured by
operating properties 23,684 24,339
Liabilities from inventory not owned 205,067 177,014
----------- -----------
Total homebuilding 1,003,425 1,020,485
----------- -----------
Financial services:
Accounts payable and other liabilities 12,158 8,461
Mortgage warehouse line of credit 270,171 198,856
----------- -----------
Total financial services 282,329 207,317
----------- -----------
Notes payable:
Revolving and term credit agreements
Senior notes 1,649,778 1,098,739
Senior subordinated notes 400,000 400,000
Accrued interest 51,105 20,808
----------- -----------
Total notes payable 2,100,883 1,519,547
----------- -----------
Total liabilities 3,386,637 2,747,349
----------- -----------
Minority interest from inventory not owned 130,221 180,170
----------- -----------
Minority interest from consolidated joint
ventures 2,264 1,079
----------- -----------
Stockholders' equity:
Preferred stock, $.01 par value -
authorized 100,000 shares; issued 5,600
shares with a liquidation preference of
$140,000 at October 31, 2006 and
October 31, 2005 135,299 135,389
Common stock, Class A, $.01 par value -
authorized 200,000,000 shares; issued
58,653,723 shares at October 31, 2006;
and 57,976,455 shares at October 31, 2005
(including 11,494,720 shares at
October 31, 2006 and 10,995,656 shares at
October 31, 2005 held in Treasury) 587 580
Common stock, Class B, $.01 par value
(convertible to Class A at time of sale)
- authorized 30,000,000 shares; issued
15,343,410 shares at October 31, 2006;
and issued 15,370,250 shares at
October 31, 2005 (including 691,748 shares
at October 31, 2006 and October 31, 2005
held in Treasury) 153 154
Paid in capital - common stock 253,262 236,001
Retained earnings 1,661,810 1,522,952
Deferred compensation (19,648)
Treasury stock - at cost (108,948) (84,071)
----------- -----------
Total stockholders' equity 1,942,163 1,791,357
----------- -----------
Total liabilities and stockholders' equity $5,461,285 $4,719,955
=========== ===========
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Twelve Months Ended
----------------------- -----------------------
(In Thousands Except October 31, October 31, October 31, October 31,
Per Share Data) 2006 2005 2006 2005
----------- ----------- ----------- -----------
Revenues:
Homebuilding:
Sale of homes $1,677,816 $1,682,641 $5,903,387 $5,177,655
Land sales and other
revenues 41,303 65,644 155,250 98,391
----------- ----------- ----------- -----------
Total homebuilding 1,719,119 1,748,285 6,058,637 5,276,046
Financial services 26,484 23,376 89,598 72,371
----------- ----------- ----------- -----------
Total revenues 1,745,603 1,771,661 6,148,235 5,348,417
----------- ----------- ----------- -----------
Expenses:
Homebuilding:
Cost of sales, excluding
interest 1,347,823 1,276,840 4,633,081 3,865,125
Cost of sales interest 45,876 28,256 108,329 86,819
----------- ----------- ----------- -----------
Total cost of sales 1,393,699 1,305,096 4,741,410 3,951,944
Selling, general and
administrative 152,723 122,263 593,860 441,943
Inventory impairment
loss and land option
write-offs 315,226 2,008 336,204 5,360
----------- ----------- ----------- -----------
Total homebuilding 1,861,648 1,429,367 5,671,474 4,399,247
Financial services 15,412 14,664 58,586 48,347
Corporate general and
administrative 16,404 40,950 96,781 90,628
Other interest 1,446 1,059 3,615 2,902
Other operations 21,360 5,088 45,237 15,663
Intangible amortization 16,430 13,829 54,821 46,084
----------- ----------- ----------- -----------
Total expenses 1,932,700 1,504,957 5,930,514 4,602,871
----------- ----------- ----------- -----------
Income from unconsolidated
joint ventures 1,552 12,557 15,385 35,039
----------- ----------- ----------- -----------
(Loss) income before
income taxes (185,545) 279,261 233,106 780,585
----------- ----------- ----------- -----------
State and federal income
tax (benefit) provision:
State (5,846) 18,507 1,366 44,806
Federal (64,440) 92,619 82,207 263,932
----------- ----------- ----------- -----------
Total taxes (70,286) 111,126 83,573 308,738
----------- ----------- ----------- -----------
Net (loss) income (115,259) 168,135 149,533 471,847
Less: preferred stock
dividends 2,669 2,758 10,675 2,758
----------- ----------- ----------- -----------
Net (loss) income available
to common stockholders $(117,928) $165,377 $138,858 $469,089
----------- ----------- ----------- -----------
Per share data:
Basic:
(Loss) income per
common share $(1.88) $2.64 $2.21 $7.51
----------- ----------- ----------- -----------
Weighted average number
of common shares
outstanding 62,758 62,721 62,822 62,490
----------- ----------- ----------- -----------
Assuming dilution:
(Loss) income per
common share $(1.88) $2.53 $2.14 $7.16
----------- ----------- ----------- -----------
Weighted average number
of common shares
outstanding 62,758 65,474 64,838 65,549
----------- ----------- ----------- -----------
HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(UNAUDITED)
Communities Under Development
Three Months - 10/31/06
Net Contracts (1)
Three Months Ended
October 31,
-------------------------------
2006 2005 % Change
-------------------------------
Northeast
Homes 410 621 (34.0%)
Dollars 178,882 257,950 (30.7%)
Avg. Price 436,299 415,378 5.0%
Mid-Atlantic
Homes 362 544 (33.5%)
Dollars 149,168 284,692 (47.6%)
Avg. Price 412,066 523,330 (21.3%)
Southeast (2)
Homes 508 1,597 (77.3%)
Dollars 142,701 450,257 (68.3%)
Avg. Price 394,203 281,940 39.8%
Southwest
Homes 974 935 4.2%
Dollars 212,366 191,365 11.0%
Avg. Price 218,035 204,669 6.5%
Midwest (3)
Homes 291 252 15.5%
Dollars 61,748 47,064 31.2%
Avg. Price 212,194 186,764 13.6%
West
Homes 555 875 (36.6%)
Dollars 235,475 389,589 (39.6%)
Avg. Price 424,279 445,244 (4.7%)
Consolidated Total
Homes 3,100 4,824 (35.7%)
Dollars 980,340 1,620,917 (39.5%)
Avg. Price 316,239 336,011 (5.9%)
Unconsolidated Joint
Ventures
Homes 148 481 (69.2%)
Dollars 31,833 183,078 (82.6%)
Avg. Price 215,086 380,619 (43.5%)
Total
Homes 3,248 5,305 (38.8%)
Dollars 1,012,173 1,803,995 (43.9%)
Avg. Price 311,629 340,056 (8.4%)
DELIVERIES INCLUDE EXTRAS
Deliveries
Three Months Ended
October 31,
-------------------------------
2006 2005 % Change
-------------------------------
Northeast
Homes 783 648 20.8%
Dollars 358,355 283,494 26.4%
Avg. Price 457,669 437,491 4.6%
Mid-Atlantic
Homes 684 674 1.5%
Dollars 309,148 331,022 (6.6%)
Avg. Price 451,971 491,130 (8.0%)
Southeast (2)
Homes 1,010 1,442 (30.0%)
Dollars 267,762 319,045 (16.1%)
Avg. Price 265,111 221,252 19.8%
Southwest
Homes 1,304 1,247 4.6%
Dollars 290,159 248,607 16.7%
Avg. Price 222,515 199,364 11.6%
Midwest (3)
Homes 281 224 25.4%
Dollars 63,353 39,384 60.9%
Avg. Price 225,456 175,821 28.2%
West
Homes 855 1,058 (19.2%)
Dollars 389,039 461,089 (15.6%)
Avg. Price 455,016 435,812 4.4%
Consolidated Total
Homes 4,917 5,293 (7.1%)
Dollars 1,677,816 1,682,641 (0.3%)
Avg. Price 341,228 317,899 7.3%
Unconsolidated Joint
Ventures
Homes 566 565 0.2%
Dollars 219,921 198,911 10.6%
Avg. Price 388,553 352,056 10.4%
Total
Homes 5,483 5,858 (6.4%)
Dollars 1,897,737 1,881,552 0.9%
Avg. Price 346,113 321,194 7.8%
DELIVERIES INCLUDE EXTRAS
Contract Backlog
October 31,
-------------------------------
2006 2005 % Change
-------------------------------
Northeast
Homes 1,218 1,583 (23.1%)
Dollars 591,849 693,535 (14.7%)
Avg. Price 485,919 438,114 10.9%
Mid-Atlantic
Homes 1,134 1,381 (17.9%)
Dollars 562,670 713,021 (21.1%)
Avg. Price 496,182 516,308 (3.9%)
Southeast (2)
Homes 3,813 5,997 (36.4%)
Dollars 1,093,299 1,493,084 (26.8%)
Avg. Price 286,729 248,972 15.2%
Southwest
Homes 999 1,296 (22.9%)
Dollars 224,482 283,739 (20.9%)
Avg. Price 224,707 218,934 2.6%
Midwest (3)
Homes 668 581 15.0%
Dollars 117,148 90,348 29.7%
Avg. Price 175,371 155,504 12.8%
West
Homes 664 1,753 (62.1%)
Dollars 334,102 784,495 (57.4%)
Avg. Price 503,166 447,516 12.4%
Consolidated Total
Homes 8,496 12,591 (32.5%)
Dollars 2,923,550 4,058,222 (28.0%)
Avg. Price 344,109 322,311 6.8%
Unconsolidated Joint
Ventures
Homes 1,130 2,340 (51.7%)
Dollars 517,970 1,030,801 (49.8%)
Avg. Price 458,380 440,513 4.1%
Total
Homes 9,626 14,931 (35.5%)
Dollars 3,441,520 5,089,023 (32.4%)
Avg. Price 357,523 340,836 4.9%
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 Southeast in
the 2006 fourth quarter include the effects of the First Home Builders of
Florida and CraftBuilt Homes acquisitions, which closed in August 2005 and
April 2006, respectively.
(3) The number and the dollar amount of net contracts in the Midwest in
the 2006 fourth quarter include the effect of the Oster Homes acquisition,
which closed in August 2005.
HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(UNAUDITED)
Communities Under Development
Twelve Months - 10/31/06
Net Contracts (1)
Twelve Months Ended
October 31,
-------------------------------
2006 2005 % Change
-------------------------------
Northeast
Homes 1,823 2,276 (19.9%)
Dollars 808,736 946,932 (14.6%)
Avg. Price 443,629 416,051 6.6%
Mid-Atlantic
Homes 1,737 2,109 (17.6%)
Dollars 837,170 1,079,347 (22.4%)
Avg. Price 481,963 511,781 (5.8%)
Southeast (2)
Homes 2,806 3,662 (23.4%)
Dollars 826,387 964,554 (14.3%)
Avg. Price 294,507 263,395 11.8%
Southwest
Homes 3,955 4,255 (7.1%)
Dollars 848,352 839,341 1.1%
Avg. Price 214,501 197,260 8.7%
Midwest (3)
Homes 942 578 63.0%
Dollars 186,750 87,720 112.9%
Avg. Price 198,249 151,765 30.6%
West
Homes 2,498 3,951 (36.8%)
Dollars 1,107,833 1,662,052 (33.3%)
Avg. Price 443,488 420,666 5.4%
Consolidated Total
Homes 13,761 16,831 (18.2%)
Dollars 4,615,228 5,579,946 (17.3%)
Avg. Price 335,385 331,528 1.2%
Unconsolidated Joint
Ventures (4)
Homes 1,051 1,907 (44.9%)
Dollars 355,390 854,355 (58.4%)
Avg. Price 338,145 448,010 (24.5%)
Total
Homes 14,812 18,738 (21.0%)
Dollars 4,970,618 6,434,301 (22.7%)
Avg. Price 335,580 343,382 (2.3%)
DELIVERIES INCLUDE EXTRAS
Deliveries
Twelve Months Ended
October 31,
-------------------------------
2006 2005 % Change
-------------------------------
Northeast
Homes 2,188 2,329 (6.1%)
Dollars 992,713 983,426 0.9%
Avg. Price 453,708 422,252 7.4%
Mid-Atlantic
Homes 1,984 1,915 3.6%
Dollars 980,691 909,458 7.8%
Avg. Price 494,300 474,913 4.1%
Southeast (2)
Homes 5,074 3,433 47.8%
Dollars 1,243,501 744,810 67.0%
Avg. Price 245,073 216,956 13.0%
Southwest
Homes 4,252 3,883 9.5%
Dollars 925,918 738,417 25.4%
Avg. Price 217,761 190,167 14.5%
Midwest (3)
Homes 855 599 42.7%
Dollars 173,699 90,131 92.7%
Avg. Price 203,157 150,469 35.0%
West
Homes 3,587 4,115 (12.8%)
Dollars 1,586,865 1,711,413 (7.3%)
Avg. Price 442,393 415,896 6.4%
Consolidated Total
Homes 17,940 16,274 10.2%
Dollars 5,903,387 5,177,655 14.0%
Avg. Price 329,063 318,155 3.4%
Unconsolidated Joint
Ventures (4)
Homes 2,261 1,509 49.8%
Dollars 868,222 529,944 63.8%
Avg. Price 383,999 351,189 9.3%
Total
Homes 20,201 17,783 13.6%
Dollars 6,771,609 5,707,599 18.6%
Avg. Price 335,212 320,958 4.4%
DELIVERIES INCLUDE EXTRAS
Contract Backlog
October 31,
-------------------------------
2006 2005 % Change
-------------------------------
Northeast
Homes 1,218 1,583 (23.1%)
Dollars 591,849 693,535 (14.7%)
Avg. Price 485,919 438,114 10.9%
Mid-Atlantic
Homes 1,134 1,381 (17.9%)
Dollars 562,670 713,021 (21.1%)
Avg. Price 496,182 516,308 (3.9%)
Southeast (2)
Homes 3,813 5,997 (36.4%)
Dollars 1,093,299 1,493,084 (26.8%)
Avg. Price 286,729 248,972 15.2%
Southwest
Homes 999 1,296 (22.9%)
Dollars 224,482 283,739 (20.9%)
Avg. Price 224,707 218,934 2.6%
Midwest (3)
Homes 668 581 15.0%
Dollars 117,148 90,348 29.7%
Avg. Price 175,371 155,504 12.8%
West
Homes 664 1,753 (62.1%)
Dollars 334,102 784,495 (57.4%)
Avg. Price 503,166 447,516 12.4%
Consolidated Total
Homes 8,496 12,591 (32.5%)
Dollars 2,923,550 4,058,222 (28.0%)
Avg. Price 344,109 322,311 6.8%
Unconsolidated Joint
Ventures (4)
Homes 1,130 2,340 (51.7%)
Dollars 517,970 1,030,801 (49.8%)
Avg. Price 458,380 440,513 4.1%
Total
Homes 9,626 14,931 (35.5%)
Dollars 3,441,520 5,089,023 (32.4%)
Avg. Price 357,523 340,836 4.9%
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 Southeast in
fiscal 2006 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.
(3) The number and the dollar amount of net contracts in the Midwest in
fiscal 2006 include the effect of the Oster Homes acquisition, which
closed in August 2005.
(4) The number and the dollar amount of net contracts in Unconsolidated
Joint Ventures in fiscal 2006 include the effect of the Town & Country
Homes acquisition, which closed in March 2005.
