RED BANK, N.J., Sept. 3 /PRNewswire-FirstCall/ -- Hovnanian Enterprises, Inc. , a leading national homebuilder, reported results for its third quarter and nine months ended July 31, 2008.
Results for the Three and Nine Month Periods ended July 31, 2008:
-- Total revenues were $716.5 million for the three months ended July 31, 2008 compared with total revenues of $1.1 billion in the third quarter of the prior year. For the first nine months of fiscal 2008, total revenues were $2.6 billion compared to $3.4 billion for the same period last year.
-- Deliveries, excluding unconsolidated joint ventures, were 2,185 homes in the third quarter of the current year, a decrease of 31% from 3,179 home deliveries in the fiscal 2007 third quarter. For the first three quarters of fiscal 2008, deliveries were 8,283 homes, excluding unconsolidated joint ventures, a 14% decline from 9,595 home deliveries in the first nine months of last year.
-- The number of net contracts for the third quarter of fiscal 2008, excluding unconsolidated joint ventures, declined 38% to 1,584 homes compared with last year's third quarter. For the first nine months of fiscal 2008, the number of net contracts, excluding unconsolidated joint ventures, decreased 35% to 5,321 homes compared with the same period in the prior year.
-- The cancellation rate, excluding unconsolidated joint ventures, for the third quarter of fiscal 2008 was 32%, compared with the rate of 35% in last year's third quarter.
-- Pre-tax land-related charges during the third quarter of fiscal 2008 were $111.7 million, including land impairments of $80.2 million and write- offs of predevelopment costs and land deposits of $30.8 million, as well as $0.7 million representing the equity portion of write-offs and impairment charges in unconsolidated joint ventures.
-- Excluding land-related charges, the pre-tax loss was $87.7 million and $254.7 million, respectively, for the three month and nine month periods ended July 31, 2008. Including all land-related charges, the pre-tax loss was $199.4 million for the third quarter of fiscal 2008 and $711.6 million for the first nine months of fiscal 2008.
-- The FAS 109 current and deferred tax valuation allowance charge to earnings during the third quarter of the current year was $98.4 million and $240.2 million year to date. The FAS 109 charge was for GAAP purposes only and is a non-cash valuation allowance against the current and deferred tax asset. For tax purposes, the tax deductions associated with the tax assets may be carried forward for 20 years.
-- For the three months ended July 31, 2008, the after tax loss available to common stockholders was $202.5 million, or $2.67 per common share, compared with a net loss of $80.5 million, or $1.27 per common share, in the third quarter of fiscal 2007. For the nine month period, the net loss available to common stockholders was $674.1 million, or $9.98 per common share, compared to a $168.5 million net loss, or $2.67 per common share, in the same period a year ago.
Cash and Inventory as of July 31, 2008:
-- Cash flow during the third quarter of fiscal 2008 was positive $192.2 million, with $94.7 million from a previously anticipated federal tax refund received in July 2008. At July 31, 2008, homebuilding cash was $677.2 million and the balance on the revolving credit facility was zero.
-- The total land position, as of July 31, 2008, decreased by 5,773 lots compared to April 30, 2008, reflecting owned and optioned position decreases of 1,700 lots and 4,073 lots, respectively. As of July 31, 2008, lots controlled under option contracts totaled 23,118 and owned lots totaled 23,564. The total land position of 46,682 lots represents a 62% decline from the peak total land position at April 30, 2006.
-- Started unsold homes and models declined 48%, from 3,242 at July 31, 2007 to 1,677 at July 31, 2008. Excluding model homes, started unsold homes as of the end of the third quarter of fiscal 2008 were 1,365.
Other Key Operating Data:
-- Contract backlog, as of July 31, 2008, excluding unconsolidated joint ventures, was 2,976 homes with a sales value of $1.0 billion.
-- At July 31, 2008, there were 354 active selling communities, excluding unconsolidated joint ventures, a decline of 95 active communities, or 21%, from July 31, 2007.
-- Homebuilding gross margin, before interest expense included in cost of sales, was 8.5% in the third quarter of 2008, compared with 15.9% in the fiscal 2007 third quarter and 6.8% in the second quarter of 2008.
-- Pretax income from Financial Services in the third quarter was $5.9 million and $13.1 million for the first three quarters of fiscal 2008.
-- During the third quarter of fiscal 2008, home deliveries through unconsolidated joint ventures were 168 homes, compared with 329 homes in the third quarter of fiscal 2007. For the first nine months of fiscal 2008, deliveries through unconsolidated joint ventures were 519 homes, compared with 893 homes during the same period in 2007.
Projection:
-- Positive cash flow is expected for the remainder of fiscal 2008, such that the homebuilding cash balance at October 31, 2008 is estimated to be approximately $800 million.
Comments From Management:
"As we continue to compete against record foreclosures, higher than normal levels of resale listings and poor consumer confidence, the housing market remains challenging," commented Ara K. Hovnanian, President and Chief Executive Officer of the Company. "Despite disappointing operating losses, we successfully generated cash during the third quarter and remain on track to end our fiscal year with approximately $800 million of homebuilding cash. We remain focused on generating sufficient liquidity to both weather this housing downturn and to take advantage of opportunities at the bottom of this housing cycle. The recently enacted $7,500 federal tax credit for first-time homebuyers should help spur some short-term demand, but more importantly, the fundamentals that drive long-term homebuilding demand, particularly expectations for household formation, are stronger than ever," concluded Mr. Hovnanian.
Webcast Information:
Hovnanian Enterprises will webcast its fiscal 2008 third quarter financial results conference call at 11:00 a.m. E.T. on Thursday, September 4, 2008. 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.
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 2007 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") and before inventory impairment loss and land option write-offs ("Adjusted EBITDA") are not U.S. generally accepted accounting principle (GAAP) financial measures. The most directly comparable GAAP financial measure is net income (loss). The reconciliation of EBITDA and Adjusted EBITDA to net income (loss) is presented in a table attached to this earnings release.
Cash flow is a non-GAAP financial measure. The most directly comparable GAAP financial measure is Net Cash provided by (or used in) Operating Activities. The Company uses cash flow to mean the amount of Net Cash provided by (or used in) Operating Activities for the period, as reported on the Consolidated Statement of Cash Flows, excluding changes in mortgage notes receivable at the mortgage company, plus (or minus) the amount of Net Cash provided (or used in) Investing Activities. For the third quarter of 2008, cash flow was $192.1 million of net cash from operating activities excluding the change in mortgage notes receivable ($237.3 million from cash flow from operating activities less the change in mortgage notes receivable of $45.2 million) plus $0.1 million of net cash from investing activities. For the first nine months of 2008, cash flow was $195.8 million of net cash from operating activities excluding the change in mortgage notes receivable ($287.4 million from cash flow from operating activities less the change in mortgage notes receivable of $91.6 million) less $2.5 million of net cash used in investing activities.
(Loss) Income Before Income Taxes Excluding Land Related Charges and Intangible Impairments is a non-GAAP financial measure. The most directly comparable GAAP financial measure is Loss Before Income Taxes. The reconciliation of (Loss) Income Before Income Taxes Excluding Land Related Charges and Intangible Impairments to Loss Before Income Taxes 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 industry and business conditions, (2) adverse weather conditions and natural disasters, (3) changes in market conditions and seasonality of the Company's business, (4) changes in home prices and sales activity in the markets where the Company builds homes, (5) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in, and price fluctuations of, raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to the Company, (11) utility shortages and outages or rate fluctuations, (12) levels of indebtedness and restrictions on the Company's operations and activities imposed by the agreements governing the Company's outstanding indebtedness, (13) operations through joint ventures with third parties, (14) product liability litigation and warranty claims, (15) successful identification and integration of acquisitions, (16) significant influence of the Company's controlling stockholders, (17) geopolitical risks, terrorist acts and other acts of war and (18) other factors described in detail in the Company's Form 10-K for the year ended October 31, 2007.
Hovnanian Enterprises, Inc. July 31, 2008 Statements of Consolidated Operations (Dollars in Thousands, Except Per Share) Three Months Ended, Nine Months Ended, July 31, July 31, -------------------- ---------------------- 2008 2007 2008 2007 -------- ---------- ---------- ---------- (Unaudited) (Unaudited) Total Revenues $716,541 $1,130,593 $2,586,681 $3,407,052 Costs and Expenses (a) 914,974 1,253,987 3,288,910 3,638,313 Loss from Unconsolidated Joint Ventures (920) (2,739) (9,356) (2,934) --------- ---------- ---------- ---------- Loss Before Income Taxes (199,353) (126,133) (711,585) (234,195) Income Tax Provision (Benefit) 3,124 (48,274) (37,454) (73,669) --------- ---------- ---------- ---------- Net Loss (202,477) (77,859) (674,131) (160,526) --------- ---------- ---------- ---------- Less: Preferred Stock Dividends - 2,668 - 8,006 --------- ---------- ---------- ---------- Net Loss Available to Common Stockholders $(202,477) $(80,527) $(674,131) $(168,532) ========= ========== ========== ========== Per Share Data: Basic: Loss Per Common Share $(2.67) $(1.27) $(9.98) $(2.67) Weighted Average Number of Common Shares Outstanding 75,723 63,199 67,574 63,036 Assuming Dilution: Loss Per Common Share $(2.67) $(1.27) $(9.98) $(2.67) Weighted Average Number of Common Shares Outstanding (b) 75,723 63,199 67,574 63,036 (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. July 31, 2008 Reconciliation of (Loss) Income Before Income Taxes Excluding Land-Related Charges and Intangible Impairments to Loss Before Income Taxes (Dollars in Thousands) Three Months Nine Months Ended, Ended, July 31, July 31, -------------------- --------------------- 2008 2007 2008 2007 --------- --------- --------- ---------- (Unaudited) (Unaudited) Loss Before Income Taxes $(199,353) $(126,133) $(711,585) $(234,195) Inventory Impairment Loss and Land Option Write-Offs 110,933 108,593 446,961 184,420 Intangible Impairments - 3,210 - 54,707 Unconsolidated Joint Venture Intangible and Land-Related Charges 725 1,060 9,877 1,317 --------- --------- --------- --------- (Loss) Income Before Income Taxes Excluding Land Related Charges and Intangible Impairments $(87,695) $(13,270) $(254,747) $6,249 ========= ========= ========= ========= Hovnanian Enterprises, Inc. July 31, 2008 Gross Margin (Dollars in Thousands) Homebuilding Gross Homebuilding Gross Margin Margin Three Months Ended Nine Months Ended July 31, July 31, -------------------- ---------------------- 2008 2007 2008 2007 -------- ---------- ---------- ---------- (Unaudited) (Unaudited) Sale of Homes $692,690 $1,079,226 $2,500,192 $3,273,156 Cost of Sales, Excluding Interest (a) 634,013 907,699 2,320,195 2,724,965 -------- ---------- ---------- ---------- Homebuilding Gross Margin, Excluding Interest 58,677 171,527 179,997 548,191 Homebuilding Cost of Sales Interest 34,182 29,833 95,248 85,227 -------- ---------- ---------- ---------- Homebuilding Gross Margin, Including Interest $24,495 $141,694 $84,749 $462,964 ======== ========== ========== ========== Gross Margin Percentage, Excluding Interest 8.5% 15.9% 7.2% 16.7% Gross Margin Percentage, Including Interest 3.5% 13.1% 3.4% 14.1% Land Sales Gross Land Sales Gross Margin Margin Three Months Ended Nine Months Ended July 31, July 31, ------------------ ------------------- 2008 2007 2008 2007 ------- --------- -------- --------- (Unaudited) (Unaudited) Land Sales $4,950 $30,554 $31,443 $65,848 Cost of Sales, Excluding Interest (a) 1,520 30,566 25,747 51,085 ------- --------- -------- --------- Land Sales Gross Margin, Excluding Interest 3,430 (12) 5,696 14,763 Land Sales Interest 1,291 24 3,385 258 ------- --------- -------- --------- Land Sales Gross Margin, Including Interest $2,139 $(36) $2,311 $14,505 ======= ========= ======== ========= (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. July 31, 2008 Reconciliation of Adjusted EBITDA to Net Loss (Dollars in Thousands) Three Months Nine Months Ended Ended July 31, July 31, --------------------- ---------------------- 2008 2007 2008 2007 ---------- --------- ---------- ---------- (Unaudited) (Unaudited) Net Loss $(202,477) $(77,859) $(674,131) $(160,526) Income Tax Provision (Benefit) 3,124 (48,274) (37,454) (73,669) Interest Expense 46,128 31,017 110,290 94,531 ---------- --------- ---------- ---------- EBIT (a) (153,225) (95,116) (601,295) (139,664) Depreciation 4,498 4,557 13,603 13,529 Amortization of Debt Costs 1,224 701 2,320 2,073 Amortization of Intangibles 293 10,150 1,520 78,424 ---------- --------- ---------- ---------- EBITDA (b) (147,210) (79,708) (583,852) (45,638) Inventory Impairment Loss and Land Option Write-offs 110,933 108,593 446,961 184,420 ---------- --------- ---------- ---------- Adjusted EBITDA (c) $(36,277) $28,885 $(136,891) $138,782 ========== ========= ========== ========== Interest Incurred $51,268 $49,487 $137,390 $148,285 Adjusted EBITDA to Interest Incurred (0.71) 0.58 (1.00) 0.94 (a) EBIT is a non-GAAP financial measure. The comparable GAAP financial measure is net income (loss). EBIT represents earnings before interest expense and income taxes. (b) EBITDA is a non-GAAP financial measure. The comparable GAAP financial measure is net income (loss). EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. (c) Adjusted EBITDA is a non-GAAP financial measure. The comparable GAAP financial measure is net income (loss). Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation, amortization and inventory impairment loss and land option write-offs. Hovnanian Enterprises, Inc. July 31, 2008 Interest Incurred, Expensed and Capitalized (Dollars in Thousands) Three Months Ended Nine Months Ended July 31, July 31, ------------------ ------------------ 2008 2007 2008 2007 -------- -------- -------- -------- (Unaudited) (Unaudited) Interest Capitalized at Beginning of Period $177,602 $138,133 $155,642 $102,849 Plus Interest Incurred 51,268 49,487 137,390 148,285 Less Interest Expensed 46,128 31,017 110,290 94,531 -------- -------- -------- -------- Interest Capitalized at End of Period (a) $182,742 $156,603 $182,742 $156,603 ======== ======== ======== ======== (a) The Company incurred significant inventory impairments in recent quarters, which are determined based on total inventory including capitalized interest. HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands Except Share Amounts) July 31, October 31, 2008 2007 ----------- ---------- ASSETS (unaudited) Homebuilding: Cash and cash equivalents $677,213 $12,275 ----------- ---------- Restricted cash 5,649 6,594 ----------- ---------- Inventories - at the lower of cost or fair value: Sold and unsold homes and lots under development 1,825,233 2,792,436 ----------- ---------- Land and land options held for future development or sale 584,733 446,135 ----------- ---------- Consolidated inventory not owned: Specific performance options 6,895 12,123 Variable interest entities 95,594 139,914 Other options 112,222 127,726 ----------- ---------- Total consolidated inventory not owned 214,711 279,763 ----------- ---------- Total inventories 2,624,677 3,518,334 ----------- ---------- Investments in and advances to unconsolidated joint ventures 164,146 176,365 ----------- ---------- Receivables, deposits, and notes 89,898 109,856 ----------- ---------- Property, plant, and equipment - net 96,857 106,792 ----------- ---------- Prepaid expenses and other assets 172,838 174,032 ----------- ---------- Goodwill 32,658 32,658 ----------- ---------- Definite life intangibles 2,704 4,224 ----------- ---------- Total homebuilding 3,866,640 4,141,130 ----------- ---------- Financial services: Cash and cash equivalents 8,452 3,958 Restricted cash 5,318 11,572 Mortgage loans held for sale 91,123 182,627 Other assets 3,145 6,851 ----------- ---------- Total financial services 108,038 205,008 ----------- ---------- Income taxes receivable - including net deferred tax benefits 127,030 194,410 ----------- ---------- Total assets $4,101,708 $4,540,548 =========== ========== HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands Except Share Amounts) July 31, October 31, 2008 2007 ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited) Homebuilding: Nonrecourse land mortgages $4,824 $9,430 Accounts payable and other liabilities 427,061 515,422 Customers' deposits 43,348 65,221 Nonrecourse mortgages secured by operating properties 22,492 22,985 Liabilities from inventory not owned 150,216 189,935 ----------- ---------- Total homebuilding 647,941 802,993 ----------- ---------- Financial services: Accounts payable and other liabilities 12,053 19,597 Mortgage warehouse line of credit 83,142 171,133 ----------- ---------- Total financial services 95,195 190,730 ----------- ---------- Notes payable: Revolving credit agreement 206,750 Senior secured notes 594,524 Senior notes 1,510,950 1,510,600 Senior subordinated notes 400,000 400,000 Accrued interest 31,714 43,944 ----------- ---------- Total notes payable 2,537,188 2,161,294 ----------- ---------- Total liabilities 3,280,324 3,155,017 ----------- ---------- Minority interest from inventory not owned 42,155 62,238 ----------- ---------- Minority interest from consolidated joint ventures 1,335 1,490 ----------- ---------- Stockholders' equity: Preferred stock, $.01 par value-authorized 100,000 shares; issued 5,600 shares at July 31, 2008 and at October 31, 2007 with a liquidation preference of $140,000 135,299 135,299 Common stock, Class A, $.01 par value-authorized 200,000,000 shares; issued 73,796,543 shares at July 31, 2008 and 59,263,887 shares at October 31, 2007 (including 11,694,720 shares at July 31, 2008 and October 31, 2007 held in Treasury) 738 593 Common stock, Class B, $.01 par value (convertible to Class A at time of sale) authorized 30,000,000 shares; issued 15,335,394 shares at July 31, 2008 and 15,338,840 shares at October 31, 2007 (including 691,748 shares at July 31, 2008 and October 31, 2007 held in Treasury) 153 153 Paid in capital - common stock 415,797 276,998 Retained earnings 341,164 1,024,017 Treasury stock - at cost (115,257) (115,257) ----------- ---------- Total stockholders' equity 777,894 1,321,803 ----------- ---------- Total liabilities and stockholders' equity $4,101,708 $4,540,548 =========== ========== HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands Except Per Share Data) (Unaudited) Three Months Ended Nine Months Ended July 31, July 31, 2008 2007 2008 2007 -------- ---------- ---------- ---------- Revenues: Homebuilding: Sale of homes $692,690 $1,079,226 $2,500,192 $3,273,156 Land sales and other revenues 9,750 34,107 45,863 77,205 -------- ---------- ---------- ---------- Total homebuilding 702,440 1,113,333 2,546,055 3,350,361 Financial services 14,101 17,260 40,626 56,691 -------- ---------- ---------- ---------- Total revenues 716,541 1,130,593 2,586,681 3,407,052 -------- ---------- ---------- ---------- Expenses: Homebuilding: Cost of sales, excluding interest 635,533 938,265 2,345,942 2,776,050 Cost of sales interest 35,473 29,857 98,633 85,485 Inventory impairment loss and land option write-offs 110,933 108,593 446,961 184,420 -------- ---------- ---------- ---------- Total cost of sales 781,939 1,076,715 2,891,536 3,045,955 Selling, general and administrative 90,004 132,025 287,819 401,804 -------- ---------- ---------- ---------- Total homebuilding 871,943 1,208,740 3,179,355 3,447,759 Financial services 8,234 11,179 27,554 35,877 Corporate general and administrative 21,483 22,128 64,595 64,319 Other interest 10,655 1,160 11,657 9,046 Other operations 2,366 630 4,229 2,888 Intangible amortization 293 10,150 1,520 78,424 -------- ---------- ---------- ---------- Total expenses 914,974 1,253,987 3,288,910 3,638,313 -------- ---------- ---------- ---------- Loss from unconsolidated joint ventures (920) (2,739) (9,356) (2,934) -------- ---------- ---------- ---------- Loss before income taxes (199,353) (126,133) (711,585) (234,195) -------- ---------- ---------- ---------- State and federal income tax provision (benefit): State 1,476 1,370 15,700 118 Federal 1,648 (49,644) (53,154) (73,787) -------- ---------- ---------- ---------- Total taxes 3,124 (48,274) (37,454) (73,669) -------- ---------- ---------- ---------- Net loss (202,477) (77,859) (674,131) (160,526) Less: preferred stock dividends - 2,668 - 8,006 -------- ---------- ---------- ---------- Net loss available to common stockholders $(202,477) $(80,527) $(674,131) $(168,532) ======== ========== ========== ========== Per share data: Basic: Loss per common share $(2.67) $(1.27) $(9.98) $(2.67) Weighted average number of common shares outstanding 75,723 63,199 67,574 63,036 Assuming dilution: Loss per common share $(2.67) $(1.27) $(9.98) $(2.67) Weighted average number of common shares outstanding 75,723 63,199 67,574 63,036 HOVNANIAN ENTERPRISES, INC. (DOLLARS IN THOUSANDS EXCEPT AVG. PRICE) (UNAUDITED) Communities Under Development Three Months - 7/31/2008 Net Contracts (1) Three Months Ended July 31, --------------------------------- 2008 2007 % Change --------------------------------- Northeast Homes 234 408 (42.6%) Dollars 90,953 206,103 (55.9%) Avg. Price 388,689 505,154 (23.1%) Mid-Atlantic Homes 235 268 (12.3%) Dollars 82,437 126,269 (34.7%) Avg. Price 350,795 471,153 (25.5%) Southeast Homes 141 307 (54.1%) Dollars 32,364 88,253 (63.3%) Avg. Price 229,534 287,469 (20.2%) Southwest Homes 533 924 (42.3%) Dollars 121,223 201,579 (39.9%) Avg. Price 227,435 218,159 4.3% Midwest Homes 115 239 (51.9%) Dollars 26,261 52,386 (49.9%) Avg. Price 228,352 219,188 4.2% West Homes 326 393 (17.0%) Dollars 97,294 145,295 (33.0%) Avg. Price 298,448 369,707 (19.3%) Consolidated Total Homes 1,584 2,539 (37.6%) Dollars 450,532 819,885 (45.0%) Avg. Price 284,427 322,917 (11.9%) Unconsolidated Joint Ventures Homes 105 255 (58.8%) Dollars 43,227 96,435 (55.2%) Avg. Price 411,686 378,176 8.9% Total Homes 1,689 2,794 (39.5%) Dollars 493,759 916,320 (46.1%) Avg. Price 292,338 327,960 (10.9%) Deliveries Three Months Ended July 31, --------------------------------- 2008 2007 % Change --------------------------------- Northeast Homes 347 485 (28.5%) Dollars 169,394 238,299 (28.9%) Avg. Price 488,167 491,338 (0.6%) Mid-Atlantic Homes 272 459 (40.7%) Dollars 115,836 215,363 (46.2%) Avg. Price 425,868 469,200 (9.2%) Southeast Homes 271 597 (54.6%) Dollars 69,763 164,111 (57.5%) Avg. Price 257,428 274,893 (6.4%) Southwest Homes 596 861 (30.8%) Dollars 141,970 196,681 (27.8%) Avg. Price 238,205 228,433 4.3% Midwest Homes 230 290 (20.7%) Dollars 51,003 65,563 (22.2%) Avg. Price 221,752 226,079 (1.9%) West Homes 469 487 (3.7%) Dollars 144,724 199,209 (27.4%) Avg. Price 308,580 409,053 (24.6%) Consolidated Total Homes 2,185 3,179 (31.3%) Dollars 692,690 1,079,226 (35.8%) Avg. Price 317,021 339,486 (6.6%) Unconsolidated Joint Ventures Homes 168 329 (48.9%) Dollars 59,807 117,898 (49.3%) Avg. Price 355,994 358,353 (0.7%) Total Homes 2,353 3,508 (32.9%) Dollars 752,497 1,197,124 (37.1%) Avg. Price 319,803 341,255 (6.3%) Contract Backlog July 31, --------------------------------- 2008 2007 % Change --------------------------------- Northeast Homes 733 1,066 (31.2%) Dollars 329,914 571,495 (42.3%) Avg. Price 450,088 536,112 (16.0%) Mid-Atlantic Homes 570 1,015 (43.8%) Dollars 247,309 497,697 (50.3%) Avg. Price 433,876 490,342 (11.5%) Southeast Homes 300 2,437 (87.7%) Dollars 84,899 702,385 (87.9%) Avg. Price 282,996 288,217 (1.8%) Southwest Homes 636 1,129 (43.7%) Dollars 146,282 255,498 (42.7%) Avg. Price 230,003 226,305 1.6% Midwest Homes 474 762 (37.8%) Dollars 95,418 157,594 (39.5%) Avg. Price 201,303 206,816 (2.7%) West Homes 263 717 (63.3%) Dollars 91,666 299,153 (69.4%) Avg. Price 348,540 417,229 (16.5%) Consolidated Total Homes 2,976 7,126 (58.2%) Dollars 995,488 2,483,822 (59.9%) Avg. Price 334,505 348,558 (4.0%) Unconsolidated Joint Ventures Homes 326 737 (55.8%) Dollars 179,937 352,265 (48.9%) Avg. Price 551,953 477,972 15.5% Total Homes 3,302 7,863 (58.0%) Dollars 1,175,425 2,836,087 (58.6%) Avg. Price 355,974 360,688 (1.3%) DELIVERIES INCLUDE EXTRAS Notes: (1) Net contracts are defined as a new contracts signed during the period for the purchase of homes, less cancellations of prior contracts. HOVNANIAN ENTERPRISES, INC. (DOLLARS IN THOUSANDS EXCEPT AVG. PRICE) (UNAUDITED) Communities Under Development Nine Months - 7/31/2008 Net Contracts (1) Nine Months Ended July 31, --------------------------------- 2008 2007 % Change --------------------------------- Northeast Homes 766 1,202 (36.3%) Dollars 315,020 584,035 (46.1%) Avg. Price 411,253 485,886 (15.4%) Mid-Atlantic Homes 723 1,212 (40.3%) Dollars 262,928 558,393 (52.9%) Avg. Price 363,662 460,720 (21.1%) Southeast Homes 493 801 (38.5%) Dollars 118,931 235,619 (49.5%) Avg. Price 241,240 294,156 (18.0%) Southwest Homes 1,817 2,644 (31.3%) Dollars 414,939 589,900 (29.7%) Avg. Price 228,365 223,109 2.4% Midwest Homes 413 779 (47.0%) Dollars 88,021 177,066 (50.3%) Avg. Price 213,127 227,299 (6.2%) West Homes 1,109 1,587 (30.1%) Dollars 355,260 668,963 (46.9%) Avg. Price 320,342 421,527 (24.0%) Consolidated Total Homes 5,321 8,225 (35.3%) Dollars 1,555,099 2,813,976 (44.7%) Avg. Price 292,257 342,125 (14.6%) Unconsolidated Joint Ventures Homes 418 500 (16.4%) Dollars 177,088 156,047 13.5% Avg. Price 423,656 312,094 35.7% Total Homes 5,739 8,725 (34.2%) Dollars 1,732,187 2,970,023 (41.7%) Avg. Price 301,827 340,404 (11.3%) Deliveries Nine Months Ended July 31, --------------------------------- 2008 2007 % Change --------------------------------- Northeast Homes 1,008 1,354 (25.6%) Dollars 498,330 637,437 (21.8%) Avg. Price 494,375 470,781 5.0% Mid-Atlantic Homes 906 1,331 (31.9%) Dollars 375,888 627,421 (40.1%) Avg. Price 414,887 471,391 (12.0%) Southeast Homes 2,344 2,177 7.7% Dollars 572,127 589,680 (3.0%) Avg. Price 244,081 270,868 (9.9%) Southwest Homes 1,932 2,514 (23.2%) Dollars 449,803 572,904 (21.5%) Avg. Price 232,817 227,885 2.2% Midwest Homes 698 685 1.9% Dollars 152,675 145,666 4.8% Avg. Price 218,732 212,651 2.9% West Homes 1,395 1,534 (9.1%) Dollars 451,369 700,048 (35.5%) Avg. Price 323,562 456,355 (29.1%) Consolidated Total Homes 8,283 9,595 (13.7%) Dollars 2,500,192 3,273,156 (23.6%) Avg. Price 301,846 341,131 (11.5%) Unconsolidated Joint Ventures Homes 519 893 (41.9%) Dollars 196,388 329,635 (40.4%) Avg. Price 378,396 369,132 2.5% Total Homes 8,802 10,488 (16.1%) Dollars 2,696,580 3,602,791 (25.2%) Avg. Price 306,360 343,516 (10.8%) Contract Backlog July 31, --------------------------------- 2008 2007 % Change --------------------------------- Northeast Homes 733 1,066 (31.2%) Dollars 329,914 571,495 (42.3%) Avg. Price 450,088 536,112 (16.0%) Mid-Atlantic Homes 570 1,015 (43.8%) Dollars 247,309 497,697 (50.3%) Avg. Price 433,876 490,342 (11.5%) Southeast Homes 300 2,437 (87.7%) Dollars 84,899 702,385 (87.9%) Avg. Price 282,996 288,217 (1.8%) Southwest Homes 636 1,129 (43.7%) Dollars 146,282 255,498 (42.7%) Avg. Price 230,003 226,305 1.6% Midwest Homes 474 762 (37.8%) Dollars 95,418 157,594 (39.5%) Avg. Price 201,303 206,816 (2.7%) West Homes 263 717 (63.3%) Dollars 91,666 299,153 (69.4%) Avg. Price 348,540 417,229 (16.5%) Consolidated Total Homes 2,976 7,126 (58.2%) Dollars 995,488 2,483,822 (59.9%) Avg. Price 334,505 348,558 (4.0%) Unconsolidated Joint Ventures Homes 326 737 (55.8%) Dollars 179,937 352,265 (48.9%) Avg. Price 551,953 477,972 15.5% Total Homes 3,302 7,863 (58.0%) Dollars 1,175,425 2,836,087 (58.6%) Avg. Price 355,974 360,688 (1.3%) DELIVERIES INCLUDE EXTRAS Notes: (1) Net contracts are defined as a new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.
