GlobeNewswire Inc | Sep 9, 2021 09:15AM EDT

September 09, 2021

Pretax Profit Increased 281% to $62 MillionGross Margin Percentage Increased 560 Basis Points Year-over-Year42% Year-over-Year Increase in Consolidated Backlog Dollars to $1.75 BillionPaid Off $111 Million of Senior Secured Notes in the Third Quarter and an Additional $70 Million Early in the Fourth Quarter

MATAWAN, N.J., Sept. 09, 2021 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal third quarter and nine-month period ended July 31, 2021.

RESULTS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED JULY 31, 2021:

-- Total revenues increased 10.0% to $690.7 million in the third quarter of fiscal 2021, compared with $628.1 million in the same quarter of the prior year. For the nine months ended July 31, 2021, total revenues increased 18.5% to $1.97 billion compared with $1.66 billion in the same period during the prior fiscal year. -- Homebuilding gross margin percentage, after cost of sales interest expense and land charges, increased 560 basis points to 19.2% for the three months ended July 31, 2021 compared with 13.6% during the same period a year ago. During the first nine months of fiscal 2021, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 18.3%, up 460 basis points, compared with 13.7% during the same period last year. -- Homebuilding gross margin percentage, before cost of sales interest expense and land charges, increased 460 basis points to 22.1% during the fiscal 2021 third quarter compared with 17.5% in last years third quarter. For the nine months ended July 31, 2021, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 21.4%, up 370 basis points, compared with 17.7% in the same period of the previous fiscal year. -- Total SG&A was $60.3 million, or 8.7% of total revenues, in the fiscal 2021 third quarter compared with $59.9 million, or 9.5% of total revenues, in the previous years third quarter. During the first nine months of fiscal 2021, total SG&A was $206.6 million, or 10.5% of total revenues, compared with $176.2 million, or 10.6% of total revenues, in the same period of the prior fiscal year. -- Total interest expense declined 21.5% to $38.4 million for the third quarter of fiscal 2021 compared with $48.9 million during the third quarter of fiscal 2020. For the nine months ended July 31, 2021, total interest expense was $123.3 million compared with $137.5 million during the same period last year. -- Income from unconsolidated joint ventures was $5.0 million for the third quarter ended July 31, 2021 compared with $5.7 million in the fiscal 2020 third quarter. For the first nine months of fiscal 2021, income from unconsolidated joint ventures was $9.6 million compared with $13.4 million in the same period a year ago. -- Income before income taxes for the third quarter of fiscal 2021 was $61.8 million, up 281.1% or $45.6 million, compared with $16.2 million in the third quarter of the prior fiscal year. For the first nine months of fiscal 2021, income before income taxes increased 767.5% to $112.4 million compared with $13.0 million during the same period of fiscal 2020. -- Net income was $47.7 million, or $6.72 per diluted common share, for the three months ended July 31, 2021 compared with net income of $15.4 million, or $2.16 per diluted common share, in the third quarter of the previous fiscal year. For the first nine months of fiscal 2021, net income, including the $468.6 million benefit from the valuation allowance reduction, was $555.3 million, or $78.51 per diluted common share, compared with $10.3 million, or $1.44 per diluted common share, in the same period during fiscal 2020. -- EBITDA increased 52.7% to $101.5 million for the third quarter of fiscal 2021 compared with $66.5 million in the same quarter of the prior year. For the first nine months of fiscal 2021, EBITDA was $239.8 million, a 55.4% increase, compared with $154.3 million in the first nine months of fiscal 2020. -- Financial services income before income taxes was $8.6 million for the third quarter of fiscal 2021 compared with $10.8 million in the third quarter of fiscal 2020. For the first nine months of fiscal 2021, financial services income before income taxes increased 40.6% to $28.1 million compared with $20.0 million in the same period one year ago.

-- Consolidated contracts per community decreased 38.9% to 11.6 contracts per community for the third quarter ended July 31, 2021 compared with the unprecedented COVID-19 surge in home demand of 19.0 contracts per community in last years third quarter. However, consolidated contracts per community for the third quarter of fiscal 2021 were up slightly compared to the more historically average pace of 11.0 contracts per community in the fiscal 2019 third quarter. Contracts per community, including domestic unconsolidated joint ventures(1), decreased 35.4% to 11.5 for the third quarter of fiscal 2021 compared with 17.8 for the third quarter of fiscal 2020, but increased compared to 10.6 for the fiscal 2019 third quarter. -- As a result of metering sales, selling out of communities ahead of schedule, COVID-19 related delays for new community openings and unprecedented demand after the initial COVID-19 shutdown last year, consolidated contract dollars decreased 31.0% in the third quarter of fiscal 2021 to $609.1 million (1,211 homes) compared with $882.3 million (2,226 homes) in the same quarter last year. Contract dollars, including domestic unconsolidated joint ventures, for the three months ended July 31, 2021, decreased 27.6% to $716.2 million (1,376 homes) compared with $989.2 million (2,415 homes) in the third quarter of fiscal 2020. -- For the nine months ended July 31, 2021, consolidated contract dollars increased 12.2% to $2.23 billion (4,760 homes) compared with $1.99 billion (5,035 homes) in the same period of the prior year. Contract dollars, including domestic unconsolidated joint ventures, for the first nine months of fiscal 2021 increased 11.6% to $2.55 billion (5,298 homes) compared with $2.28 billion (5,549 homes) in the same period of fiscal 2020. -- Due to consciously metering sales in many of our communities in recent months and a difficult comparison to a very strong August last year, consolidated contracts per community for August 2021 decreased 43.9% to 3.7 compared with the unprecedented COVID demand surge of 6.6 for the same month one year ago. That said, consolidated contracts per community for August 2021 still represented an increase compared to a more typical 3.2 for August 2019. The dollar value of August 2021 consolidated contracts decreased 36.3% to $203.1 million compared with $318.8 million in August last year. The dollar value of August 2021 consolidated contracts represented an increase compared to $166.7 million in August 2019. -- The dollar value of consolidated contract backlog, as of July 31, 2021, increased 41.8% to $1.75 billion compared with $1.23 billion as of July 31, 2020. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of July 31, 2021, increased 43.8% to $1.99 billion compared with $1.39 billion as of July 31, 2020. -- Consolidated deliveries decreased 3.5% to 1,498 homes in the fiscal 2021 third quarter compared with 1,553 homes in the previous years third quarter. For the fiscal 2021 third quarter, deliveries, including domestic unconsolidated joint ventures, decreased 5.8% to 1,677 homes compared with 1,781 homes during the third quarter of fiscal 2020. -- For the first nine months of fiscal 2021, consolidated deliveries increased 9.4% to 4,501 homes compared with 4,114 homes in the first nine months of the previous year. For the first nine months of fiscal 2021, deliveries, including domestic unconsolidated joint ventures, increased 5.9% to 4,954 homes compared with 4,679 homes during the same period of fiscal 2021. -- The contract cancellation rate for consolidated contracts was 16% for the third quarter ended July 31, 2021 compared with 18% in the fiscal 2020 third quarter. The contract cancellation rate for contracts including domestic unconsolidated joint ventures was 15% for the third quarter of fiscal 2021 compared with 18% in the third quarter of the prior year.

(1)When we refer to Domestic Unconsolidated Joint Ventures, we are excluding results from our single community unconsolidated joint venture in the Kingdom of Saudi Arabia (KSA).

LIQUIDITY AND INVENTORY AS OF JULY 31, 2021:

-- During the third quarter of fiscal 2021, land and land development spending was $177.6 million, an increase of 9.2% compared with $162.6 million in last years third quarter. For the first nine months of fiscal 2021, land and land development spending was $531.2 million, an increase of 34.5% compared with $394.9 million in the same period one year ago. -- After paying off in full with cash on hand the remaining balance of $111 million of our 10.0% senior secured notes due July 2022, the total liquidity at the end of the third quarter of fiscal 2021 was $307.7 million, well above our targeted liquidity range of $170 million to $245 million. -- On August 2, 2021, we paid off in full with cash on hand the remaining $70 million principal amount of our 10.5% senior secured notes due July 2024 at a purchase price of 102.625% of the principal amount thereof plus accrued and unpaid interest to, but excluding, the redemption date. Other than our undrawn senior secured revolving credit facility, we do not have any bond issuances maturing before the first quarter of fiscal 2026. -- In the third quarter of fiscal 2021, approximately 4,900 lots were put under option or acquired in 35 consolidated communities. -- As of July 31, 2021, the total controlled consolidated lots increased 20.4% to 31,002 compared with 25,748 lots at the end of the previous years third quarter. Based on trailing twelve-month deliveries, the current position equaled a 5.1 years supply.

FINANCIAL GUIDANCE(2)

Financial guidance for both the fourth quarter and full year for fiscal 2021 assumes no adverse changes in current market conditions and excludes further impact to SG&A expenses from phantom stock expense related solely to stock price movements from the closing price of $104.39 at July 30, 2021. Every $4 increase or decrease in common stock price from the end of the third quarter, results in an approximate $1 million increase or decrease, respectively, of phantom stock expense.

-- For the fourth quarter of fiscal 2021, total revenues are expected to be between $830 million and $880 million, adjusted pretax income is expected to be between $60 million and $75 million and adjusted EBITDA is expected to be between $100 million and $115 million. -- For all of fiscal 2021, we are increasing our guidance. Total revenues are expected to be between $2.80billion and $2.85 billion, adjusted pretax income to be between $175 million and $190 million and adjusted EBITDA to be between $345 million and $360 million. -- On October 31, 2021, we expect our community count, including domestic unconsolidated joint ventures, to grow from 120 as of the end of our third quarter to roughly the same level of 135 communities open at the end of the fourth quarter last year. Community count is expected to continue to grow in fiscal 2022.

(2)The Company cannot provide a reconciliation between its non-GAAP projections and the most directly comparable GAAP measures without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items required for the reconciliation. These items include, but are not limited to, land-related charges, inventory impairment loss and land option write-offs and loss (gain) on extinguishment of debt. These items are uncertain, depend on various factors and could have a material impact on GAAP reported results.

COMMENTS FROM MANAGEMENT:

Given the significant COVID-19 supply chain disruptions and labor challenges our industry has been experiencing, we are very pleased with our strong performance during the third quarter of fiscal 2021. We exceeded our third quarter guidance on almost every financial metric, stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. As expected, sales have slowed to a more historically typical sales pace following our efforts to meter homes available for sale and through significant home price increases. The average price in our deliveries went from $390,000 in last years third quarter, to $443,000 in this years third quarter. Our third quarter average price for new contracts increased even further to $503,000. Those efforts, combined with a slowdown in demand from the white-hot sales pace we experienced last year, have allowed us to better align starting home construction with our sales pace. Last years COVID-19 sales frenzy has given way to a more rational sales pace, which we believe is more sustainable.

On a positive note, lumber prices have begun to decline substantially. We expect the recent decrease in lumber costs to benefit gross margins on homes we are starting now for future deliveries, including many of the homes that are currently in backlog for 2022 deliveries. Due to a strong economy, positive long-term demographic trends and our strong cash flow, we continue to invest in land and are making strong progress on acquiring additional land parcels which bodes well for future community count growth. We believe that we are well positioned to take advantage of these positive long-term trends. We continue to expect fiscal 2021 to be an outstanding year. As we look forward, we believe that todays more rational, healthy contract pace, which has higher home prices and gross margins, along with an increase in community count, should lead to further growth in both total revenues and adjusted pretax income in fiscal 2022, concluded Mr. Hovnanian.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2021 third quarter financial results conference call at 11:00 a.m. E.T. on Thursday, September 9, 2021. The webcast can be accessed live through the Investor Relations section of Hovnanian Enterprises website at http://www.khov.com. For those who are not available to listen to the live webcast, an archive of the broadcast will be available under the Past Events section of the Investor Relations page on the Hovnanian website at http://www.khov.com. The archive will be available for 12 months.

ABOUT HOVNANIAN ENTERPRISES, INC.:

Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, is headquartered in Matawan, New Jersey and, through its subsidiaries, is one of the nations largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. and West Virginia. The Companys homes are marketed and sold under the trade name K. HovnanianHomes. Additionally, the Companys subsidiaries, as developers of K. HovnaniansFour Seasons communities, make the Company one of the nations largest builders of active lifestyle communities.

Additional information on Hovnanian Enterprises, Inc. can be accessed through the Investor Relations section of the Hovnanian Enterprises website at http://www.khov.com. To be added to Hovnanian's investor e-mail list, please send an e-mail to IR@khov.com or sign up at http://www.khov.com.

NON-GAAP FINANCIAL MEASURES:

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

Homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, are non-GAAP financial measures. The most directly comparable GAAP financial measures are homebuilding gross margin and homebuilding gross margin percentage, respectively. The reconciliation for historical periods of homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, to homebuilding gross margin and homebuilding gross margin percentage, respectively, is presented in a table attached to this earnings release.

Adjusted pretax income, which is defined as income before income taxes excluding land-related charges and loss (gain) on extinguishment of debt is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income before income taxes. The reconciliation for historical periods of adjusted pretax income to income before income taxes is presented in a table attached to this earnings release.

Total liquidity is comprised of $172.7 million of cash and cash equivalents, $10.0 million of restricted cash required to collateralize letters of credit and $125.0 million availability under the senior secured revolving credit facility as of July 31, 2021.

FORWARD-LOOKING STATEMENTS

All statements in this press release that are not historical facts should be considered as Forward-Looking Statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such forward-looking statements include but are not limited to statements related to the Companys goals and expectations with respect to its financial results for future financial periods. Although we believe that our plans, intentions and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are not guarantees of future performance or results and (iii) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors. Such risks, uncertainties and other factors include, but are not limited to, (1) the outbreak and spread of COVID-19 and the measures that governments, agencies, law enforcement and/or health authorities implement to address it; (2) changes in general and local economic, industry and business conditions and impacts of a significant homebuilding downturn; (3) adverse weather and other environmental conditions and natural disasters; (4) the seasonality of the Companys business; (5) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (6) shortages in, and price fluctuations of, raw materials and labor, including due to changes in trade policies and the imposition of tariffs and duties on homebuilding materials and products and related trade disputes with, and retaliatory measures taken by, other countries; (7) reliance on, and the performance of, subcontractors; (8) regional and local economic factors, including dependency on certain sectors of the economy, and employment levels affecting home prices and sales activity in the markets where the Company builds homes; (9) increases in cancellations of agreements of sale; (10) fluctuations in interest rates and the availability of mortgage financing; (11) changes in tax laws affecting the after-tax costs of owning a home; (12) legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors; (13) levels of competition; (14) utility shortages and outages or rate fluctuations; (15) information technology failures and data security breaches; (16) negative publicity; (17) high leverage and restrictions on the Companys operations and activities imposed by the agreements governing the Companys outstanding indebtedness; (18) availability and terms of financing to the Company; (19) the Companys sources of liquidity; (20) changes in credit ratings; (21) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (22) operations through unconsolidated joint ventures with third parties; (23) significant influence of the Companys controlling stockholders; (24) availability of net operating loss carryforwards; (25) loss of key management personnel or failure to attract qualified personnel; and (26) certain risks, uncertainties and other factors described in detail in the Companys Annual Report on Form 10-K for the fiscal year ended October 31, 2020 and the Companys Quarterly Reports on Form 10-Q for the quarterly periods during fiscal 2021 and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

Hovnanian Enterprises, Inc.July 31, 2021Statements of consolidated operations(In thousands, except per share data) Three Months Ended Nine Months Ended July 31, July 31, 2021 2020 2021 2020 (Unaudited) (Unaudited)Total revenues $690,683 $628,136 $1,968,509 $1,660,543 Costs and expenses 633,589 621,633 1,865,355 1,674,340 (1)(Loss) gain onextinguishment of (306 ) 4,055 (306 ) 13,337 debtIncome fromunconsolidated joint 5,011 5,658 9,568 13,419 venturesIncome before income 61,799 16,216 112,416 12,959 taxesIncome tax provision 14,097 853 (442,921 ) 2,665 (benefit)Net income $47,702 $15,363 $555,337 $10,294 Per share data: Basic: Net income per $6.85 $2.27 $80.02 $1.52 common share Weighted average number of common shares 6,315 6,201 6,263 6,178 outstandingAssuming dilution: Net income per $6.72 $2.16 $78.51 $1.44 common share Weighted average number of common shares 6,434 6,518 6,370 6,502 outstanding (1) Includes inventory impairment loss and land option write-offs.

Hovnanian Enterprises, Inc.July 31, 2021Reconciliation of income before income taxes excluding land-related charges andloss (gain) on extinguishment of debt to income before income taxes(In thousands) Three Months Ended Nine Months Ended July 31, July 31, 2021 2020 2021 2020 (Unaudited) (Unaudited)Income before income $61,799 $16,216 $112,416 $12,959 taxesInventory impairmentloss and land option 1,309 2,364 3,267 6,202 write-offsLoss (gain) onextinguishment of 306 (4,055 ) 306 (13,337 )debtIncome before incometaxes excluding land-related charges and loss (gain) on $63,414 $14,525 $115,989 $5,824 extinguishment of debt (1) (1) Income before income taxes excluding land-related charges and loss (gain)on extinguishment of debt is a non-GAAP financial measure. The most directlycomparable GAAP financial measure is income before income taxes.

Hovnanian Enterprises, Inc.July 31, 2021Gross margin(In thousands) Homebuilding Gross Margin Homebuilding Gross Margin Three Months Ended Nine Months Ended July 31, July 31, 2021 2020 2021 2020 (Unaudited) (Unaudited)Sale of $663,279 $605,933 $1,894,159 $1,608,513 homesCost ofsales,excludinginterest 516,530 499,654 1,488,919 1,323,916 expense andland charges(1)Homebuildinggrossmargin,before costof sales 146,749 106,279 405,240 284,597 interestexpense andland charges(2)Cost ofsalesinterestexpense, 17,821 21,794 56,242 58,467 excludingland salesinterestexpenseHomebuildinggrossmargin,after costof sales 128,928 84,485 348,998 226,130 interestexpense,before landcharges (2)Land charges 1,309 2,364 3,267 6,202 Homebuilding $127,619 $82,121 $345,731 $219,928 gross margin HomebuildingGross margin 19.2 % 13.6 % 18.3 % 13.7 %percentageHomebuildingGross marginpercentage,before costof sales 22.1 % 17.5 % 21.4 % 17.7 %interestexpense andland charges(2)HomebuildingGross marginpercentage,after costof sales 19.4 % 13.9 % 18.4 % 14.1 %interestexpense,before landcharges (2)

Land Sales Gross Margin Land Sales Gross Margin Three Months Ended Nine Months Ended July 31, July 31, 2021 2020 2021 2020 (Unaudited) (Unaudited)Land and lot $6,819 $25 $11,730 $100 salesLand and lotsales costof sales,excluding 5,338 41 9,121 161 interest andland charges(1)Land and lotsales grossmargin, 1,481 (16 ) 2,609 (61 )excludinginterest andland chargesLand and lotsales 1,419 20 1,888 72 interestLand and lotsales grossmargin,including $62 $(36 ) $721 $(133 )interest andexcludingland charges

(1) Does not include cost associated with walking away from land options orinventory impairment losses which are recorded as Inventory impairment loss andland option write-offs in the Condensed Consolidated Statements of Operations.(2) Homebuilding gross margin, before cost of sales interest expense and landcharges, and homebuilding gross margin percentage, before cost of salesinterest expense and land charges, are non-GAAP financial measures. The mostdirectly comparable GAAP financial measures are homebuilding gross margin andhomebuilding gross margin percentage, respectively.

Hovnanian Enterprises, Inc.July 31, 2021Reconciliation of adjusted EBITDA to net income(In thousands) Three Months Ended Nine Months Ended July 31, July 31, 2021 2020 2021 2020 (Unaudited) (Unaudited)Net income $47,702 $15,363 $555,337 $10,294 Income taxprovision 14,097 853 (442,921 ) 2,665 (benefit)Interest expense 38,398 48,886 123,296 137,483 EBIT (1) 100,197 65,102 235,712 150,442 Depreciation and 1,269 1,355 4,091 3,897 amortizationEBITDA (2) 101,466 66,457 239,803 154,339 Inventoryimpairment loss 1,309 2,364 3,267 6,202 and land optionwrite-offsLoss (gain) onextinguishment of 306 (4,055 ) 306 (13,337 )debtAdjusted EBITDA $103,081 $64,766 $243,376 $147,204 (3)

Interest incurred $39,181 $45,140 $122,508 $134,797

Adjusted EBITDAto interest 2.63 1.43 1.99 1.09 incurred

(1) EBIT is a non-GAAP financial measure. The most directly comparable GAAPfinancial measure is net income. EBIT represents earnings before interestexpense and income taxes.(2) EBITDA is a non-GAAP financial measure. The most directly comparable GAAPfinancial measure is net income. EBITDA represents earnings before interestexpense, income taxes, depreciation and amortization.(3) Adjusted EBITDA is a non-GAAP financial measure. The most directlycomparable GAAP financial measure is net income. Adjusted EBITDA representsearnings before interest expense, income taxes, depreciation, amortization,inventory impairment loss and land option write-offs and (loss) gain onextinguishment of debt.

Hovnanian Enterprises, Inc.July 31, 2021Interest incurred, expensed and capitalized(In thousands) Three Months Ended Nine Months Ended July 31, July 31, 2021 2020 2021 2020 (Unaudited) (Unaudited)Interestcapitalized at $59,772 $67,744 $65,010 $71,264 beginning ofperiodPlus interest 39,181 45,140 122,508 134,797 incurredLess interest 38,398 48,886 123,296 137,483 expensedLess interestcontributed to - - 3,667 4,580 unconsolidatedjoint venture (1)Plus interestacquired from 3,118 - 3,118 - unconsolidatedjoint venture (2)Interestcapitalized at $63,673 $63,998 $63,673 $63,998 end of period (3)

(1) Represents capitalized interest which was included as part of the assetscontributed to joint ventures the company entered into in April 2021 andDecember 2019 during the nine months ended July 31, 2021 and 2020,respectively. There was no impact to the Condensed Consolidated Statement ofOperations as a result of this transaction.(2) Represents capitalized interest which was included as part of the assetspurchased from a joint venture the company exited out of in June 2021 duringthe nine months ended July 31, 2021. There was no impact to the CondensedConsolidated Statement of Operations as a result of this transaction.(3) Capitalized interest amounts are shown gross before allocating any portionof impairments to capitalized interest.

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In Thousands)

July 31, October 31, 2021 2020 ASSETS (Unaudited) (1) Homebuilding: Cash and cash equivalents $172,748 $262,489 Restricted cash and cash equivalents 15,100 14,731 Inventories: Sold and unsold homes and lots under 1,119,876 921,594 developmentLand and land options held for future 95,416 91,957 development or saleConsolidated inventory not owned 98,053 182,224 Total inventories 1,313,345 1,195,775 Investments in and advances to 68,900 103,164 unconsolidated joint venturesReceivables, deposits and notes, net 37,735 33,686 Property, plant and equipment, net 17,974 18,185 Prepaid expenses and other assets 58,571 58,705 Total homebuilding 1,684,373 1,686,735 Financial services 180,218 140,607 Deferred tax assets, net 447,453 - Total assets $2,312,044 $1,827,342 LIABILITIES AND EQUITY Homebuilding: Nonrecourse mortgages secured by $118,020 $135,122 inventory, net of debt issuance costsAccounts payable and other liabilities 401,283 359,274 Customers? deposits 76,729 48,286 Liabilities from inventory not owned, net 69,627 131,204 of debt issuance costsSenior notes and credit facilities (net ofdiscounts, premiums and debt issuance 1,317,524 1,431,110 costs)Accrued Interest 47,460 35,563 Total homebuilding 2,030,643 2,140,559 Financial services 158,226 119,045 Income taxes payable 2,484 3,832 Total liabilities 2,191,353 2,263,436 Equity: Hovnanian Enterprises, Inc. stockholders' equity deficit:Preferred stock, $0.01 par value -authorized 100,000 shares; issued andoutstanding 5,600 shares with a 135,299 135,299 liquidation preference of $140,000 at July31, 2021 and October 31, 2020Common stock, Class A, $0.01 par value -authorized 16,000,000 shares; issued 61 60 6,064,070 shares at July 31, 2021 and5,990,310 shares at October 31, 2020Common stock, Class B, $0.01 par value(convertible to Class A at time of sale) -authorized 2,400,000 shares; issued 7 7 686,888 shares at July 31, 2021 and649,886 shares at October 31, 2020Paid in capital - common stock 719,770 718,110 Accumulated deficit (619,708 ) (1,175,045 )Treasury stock - at cost ? 470,430 sharesof Class A common stock and 27,669 shares (115,360 ) (115,360 )of Class B common stock at July 31, 2021and October 31, 2020Total Hovnanian Enterprises, Inc. 120,069 (436,929 )stockholders? equity (deficit)Noncontrolling interest in consolidated 622 835 joint venturesTotal equity (deficit) 120,691 (436,094 )Total liabilities and equity $2,312,044 $1,827,342

(1) Derived from the audited balance sheet as of October 31, 2020.

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

Three Months Ended July 31, Nine Months Ended July 31, 2021 2020 2021 2020 Revenues: Homebuilding: Sale of homes $663,279 $605,933 $1,894,159 $1,608,513 Land sales and 7,559 908 13,280 2,360 other revenuesTotal 670,838 606,841 1,907,439 1,610,873 homebuildingFinancial 19,845 21,295 61,070 49,670 servicesTotal revenues 690,683 628,136 1,968,509 1,660,543 Expenses: Homebuilding: Cost of sales,excluding 521,868 499,695 1,498,040 1,324,077 interestCost of sales 19,240 21,814 58,130 58,539 interestInventoryimpairment loss 1,309 2,364 3,267 6,202 and land optionwrite-offsTotal cost of 542,417 523,873 1,559,437 1,388,818 salesSelling, generaland 42,988 40,608 125,417 121,887 administrativeTotalhomebuilding 585,405 564,481 1,684,854 1,510,705 expenses Financial 11,238 10,493 32,953 29,677 servicesCorporategeneral and 17,284 19,321 81,149 54,340 administrativeOther interest 19,158 27,072 65,166 78,944 Other operations 504 266 1,233 674 Total expenses 633,589 621,633 1,865,355 1,674,340 (Loss) gain onextinguishment (306 ) 4,055 (306 ) 13,337 of debtIncome fromunconsolidated 5,011 5,658 9,568 13,419 joint venturesIncome before 61,799 16,216 112,416 12,959 income taxesState andfederal income tax provision(benefit):State 1,476 853 (89,272 ) 2,665 Federal 12,621 - (353,649 ) - Total income 14,097 853 (442,921 ) 2,665 taxesNet income $47,702 $15,363 $555,337 $10,294 Per share data: Basic: Net income per $6.85 $2.27 $80.02 $1.52 common shareWeighted-averagenumber of common 6,315 6,201 6,263 6,178 sharesoutstandingAssuming dilution:Net income per $6.72 $2.16 $78.51 $1.44 common shareWeighted-averagenumber of common 6,434 6,518 6,370 6,502 sharesoutstanding

See notes to condensed consolidated financial statements (unaudited).

HOVNANIAN ENTERPRISES, INC.(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)

Contracts (1) Deliveries Contract Three Months Ended Three Months Ended Backlog July 31, July 31, July 31, 2021 2020 % Change 2021 2020 % Change 2021 2020 % ChangeNortheast (NJ, PA) Home 62 102 (39.2) 44 95 (53.7) 160 113 41.6% % % Dollars $52,066 $51,586 0.9% $35,255 $41,354 (14.7) $122,638 $61,002 101.0% % Avg. $839,774 $505,745 66.0% $801,250 $435,305 84.1% $766,488 $539,841 42.0% PriceMid-Atlantic (DE, MD, VA, Home 176 307 (42.7) 189 213 (11.3) 572 523 9.4% WV) % % Dollars $117,341 $152,511 (23.1) $106,195 $111,160 (4.5)% $361,329 $269,972 33.8% % Avg. $666,710 $496,775 34.2% $561,878 $521,878 7.7% $631,694 $516,199 22.4% PriceMidwest (IL, OH) Home 165 263 (37.3) 190 197 (3.6)% 648 534 21.3% % Dollars $56,848 $79,394 (28.4) $60,588 $62,901 (3.7)% $205,101 $149,016 37.6% % Avg. $344,533 $301,878 14.1% $318,884 $319,294 (0.1)% $316,514 $279,056 13.4% PriceSoutheast (FL, GA, SC) Home 124 172 (27.9) 139 155 (10.3) 440 304 44.7% % % Dollars $58,522 $79,846 (26.7) $61,978 $65,595 (5.5)% $211,859 $145,947 45.2% % Avg. $471,952 $464,221 1.7% $445,885 $423,194 5.4% $481,498 $480,089 0.3% PriceSouthwest (AZ, TX) Home 469 814 (42.4) 593 641 (7.5)% 1,292 938 37.7% % Dollars $196,481 $260,891 (24.7) $212,773 $214,608 (0.9)% $524,029 $308,918 69.6% % Avg. $418,936 $320,506 30.7% $358,808 $334,802 7.2% $405,595 $329,337 23.2% PriceWest (CA) Home 215 568 (62.1) 343 252 36.1% 561 644 (12.9) % % Dollars $127,872 $258,067 (50.5) $186,490 $110,315 69.1% $325,472 $299,564 8.6% % Avg. $594,753 $454,343 30.9% $543,703 $437,758 24.2% $580,164 $465,161 24.7% PriceConsolidated Total Home 1,211 2,226 (45.6) 1,498 1,553 (3.5)% 3,673 3,056 20.2% % Dollars $609,130 $882,295 (31.0) $663,279 $605,933 9.5% $1,750,428 $1,234,419 41.8% % Avg. $502,998 $396,359 26.9% $442,776 $390,169 13.5% $476,566 $403,933 18.0% PriceUnconsolidatedJoint Ventures (2)(excluding KSA Home 165 189 (12.7) 179 228 (21.5) 399 264 51.1% JV) % % Dollars $107,111 $106,857 0.2% $102,262 $132,014 (22.5) $241,346 $150,660 60.2% % Avg. $649,158 $565,381 14.8% $571,296 $579,009 (1.3)% $604,877 $570,682 6.0% PriceGrand Total Home 1,376 2,415 (43.0) 1,677 1,781 (5.8)% 4,072 3,320 22.7% % Dollars $716,241 $989,152 (27.6) $765,541 $737,947 3.7% $1,991,774 $1,385,079 43.8% % Avg. $520,524 $409,587 27.1% $456,494 $414,344 10.2% $489,139 $417,192 17.2% Price

KSA JV Only Home 215 185 16.2% 0 0 0.0% 1,666 766 117.5% Dollars $33,802 $29,012 16.5% $0 $0 0.0% $261,653 $120,562 117.0% Avg. $157,219 $156,821 0.3% $0 $0 0.0% $157,055 $157,392 (0.2)% Price

DELIVERIES INCLUDE EXTRASNotes:(1) Contracts are defined as new contracts signed during the period for thepurchase of homes, less cancellations of prior contracts.(2) Represents home deliveries, home revenues and average prices for ourunconsolidated homebuilding joint ventures for the period. We provide this dataas a supplement to our consolidated results as an indicator of the volumemanaged in our unconsolidated homebuilding joint ventures. Our proportionateshare of the income or loss of unconsolidated homebuilding and land developmentjoint ventures is reflected as a separate line item in our consolidatedfinancial statements under ?Income from unconsolidated joint ventures?.

HOVNANIAN ENTERPRISES, INC.(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES) Contracts (1) Deliveries Contract Nine Months Ended Nine Months Ended Backlog July 31, July 31, July 31, 2021 2020 % Change 2021 2020 % Change 2021 2020 % ChangeNortheast (NJ, PA) Home 169 231 (26.8) 139 270 (48.5) 160 113 41.6% % % Dollars $135,684 $107,855 25.8% $95,157 $133,409 (28.7) $122,638 $61,002 101.0% % Avg. $802,864 $466,905 72.0% $684,583 $494,107 38.5% $766,488 $539,841 42.0% PriceMid-Atlantic (DE, MD, VA, Home 647 737 (12.2) 581 536 8.4% 572 523 9.4% WV) % Dollars $414,059 $374,865 10.5% $311,230 $288,426 7.9% $361,329 $269,972 33.8% Avg. $639,968 $508,636 25.8% $535,680 $538,108 (0.5)% $631,694 $516,199 22.4% PriceMidwest (IL, OH) Home 628 624 0.6% 576 540 6.7% 648 534 21.3% Dollars $216,775 $192,171 12.8% $181,191 $165,836 9.3% $205,101 $149,016 37.6% Avg. $345,183 $307,966 12.1% $314,568 $307,104 2.4% $316,514 $279,056 13.4% PriceSoutheast (FL, GA, SC) Home 487 436 11.7% 408 379 7.7% 440 304 44.7% Dollars $223,201 $195,512 14.2% $188,489 $158,592 18.9% $211,859 $145,947 45.2% Avg. $458,318 $448,422 2.2% $461,983 $418,449 10.4% $481,498 $480,089 0.3% PriceSouthwest (AZ, TX) Home 2,034 1,924 5.7% 1,808 1,649 9.6% 1,292 938 37.7% Dollars $783,924 $626,817 25.1% $620,120 $548,796 13.0% $524,029 $308,918 69.6% Avg. $385,410 $325,788 18.3% $342,987 $332,805 3.1% $405,595 $329,337 23.2% PriceWest (CA) Home 795 1,083 (26.6) 989 740 33.6% 561 644 (12.9) % % Dollars $453,557 $488,317 (7.1)% $497,972 $313,454 58.9% $325,472 $299,564 8.6% Avg. $570,512 $450,893 26.5% $503,511 $423,586 18.9% $580,164 $465,161 24.7% PriceConsolidated Total Home 4,760 5,035 (5.5)% 4,501 4,114 9.4% 3,673 3,056 20.2% Dollars $2,227,200 $1,985,537 12.2% $1,894,159 $1,608,513 17.8% $1,750,428 $1,234,419 41.8% Avg. $467,899 $394,347 18.7% $420,831 $390,985 7.6% $476,566 $403,933 18.0% PriceUnconsolidatedJoint Ventures (2)(excluding KSA Home 538 514 4.7% 453 565 (19.8) 399 264 51.1% JV) % Dollars $318,824 $296,664 7.5% $264,442 $330,559 (20.0) $241,346 $150,660 60.2% % Avg. $592,610 $577,167 2.7% $583,757 $585,060 (0.2)% $604,877 $570,682 6.0% PriceGrand Total Home 5,298 5,549 (4.5)% 4,954 4,679 5.9% 4,072 3,320 22.7% Dollars $2,546,024 $2,282,201 11.6% $2,158,601 $1,939,072 11.3% $1,991,774 $1,385,079 43.8% Avg. $480,563 $411,281 16.8% $435,729 $414,420 5.1% $489,139 $417,192 17.2% Price

KSA JV Only Home 574 564 1.8% 0 0 0.0% 1,666 766 117.5% Dollars $89,980 $88,246 2.0% $0 $0 0.0% $261,653 $120,562 117.0% Avg. $156,760 $156,465 0.2% $0 $0 0.0% $157,055 $157,392 (0.2)% Price

DELIVERIES INCLUDE EXTRASNotes:(1) Contracts are defined as new contracts signed during the period for thepurchase of homes, less cancellations of prior contracts.(2) Represents home deliveries, home revenues and average prices for ourunconsolidated homebuilding joint ventures for the period. We provide this dataas a supplement to our consolidated results as an indicator of the volumemanaged in our unconsolidated homebuilding joint ventures. Our proportionateshare of the income or loss of unconsolidated homebuilding and land developmentjoint ventures is reflected as a separate line item in our consolidatedfinancial statements under ?Income from unconsolidated joint ventures?.

HOVNANIAN ENTERPRISES, INC.(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)(SEGMENT DATA UNCONSOLIDATED JOINT VENTURES ONLY)

Contracts (1) Deliveries Contract Three Months Ended Three Months Ended Backlog July 31, July 31, July 31, 2021 2020 % Change 2021 2020 % Change 2021 2020 % ChangeNortheast (unconsolidated Home 10 39 (74.4)% 16 67 (76.1)% 8 33 (75.8)% joint ventures)(excluding KSA Dollars $14,506 $33,759 (57.0)% $21,845 $50,895 (57.1)% $10,500 $31,571 (66.7)% JV)(NJ. PA) Avg. $1,450,600 $865,615 67.6% $1,365,313 $759,627 79.7% $1,312,500 $956,697 37.2% PriceMid-Atlantic (unconsolidated Home 41 36 13.9% 45 33 36.4% 123 48 156.3% joint ventures)(DE, MD, VA, Dollars $26,890 $17,349 55.0% $24,726 $16,665 48.4% $77,565 $23,817 225.7% WV) Avg. $655,854 $481,917 36.1% $549,467 $505,000 8.8% $630,610 $496,188 27.1% PriceMidwest (unconsolidated Home 0 1 (100.0) 0 4 (100.0) 0 0 0.0% joint ventures) % %(IL, OH) Dollars $0 $461 (100.0) $0 $1,825 (100.0) $0 $0 0.0% % % Avg. $0 $461,000 (100.0) $0 $456,250 (100.0) $0 $0 0.0% Price % %Southeast (unconsolidated Home 92 66 39.4% 70 74 (5.4)% 231 129 79.1% joint ventures)(FL, GA, SC) Dollars $55,830 $31,843 75.3% $32,842 $35,528 (7.6)% $137,907 $64,865 112.6% Avg. $606,848 $482,470 25.8% $469,171 $480,108 (2.3)% $597,000 $502,829 18.7% PriceSouthwest (unconsolidated Home 0 31 (100.0) 21 31 (32.3)% 0 46 (100.0) joint ventures) % %(AZ, TX) Dollars $(8) $17,928 (100.0) $12,750 $20,141 (36.7)% $0 $27,759 (100.0) % % Avg. $0 $578,323 (100.0) $607,143 $649,710 (6.6)% $0 $603,457 (100.0) Price % %West (unconsolidated Home 22 16 37.5% 27 19 42.1% 37 8 362.5% joint ventures)(CA) Dollars $9,893 $5,517 79.3% $10,099 $6,960 45.1% $15,374 $2,648 480.6% Avg. $449,682 $344,813 30.4% $374,037 $366,316 2.1% $415,514 $331,000 25.5% PriceUnconsolidatedJoint Ventures (2)(excluding KSA Home 165 189 (12.7)% 179 228 (21.5)% 399 264 51.1% JV) Dollars $107,111 $106,857 0.2% $102,262 $132,014 (22.5)% $241,346 $150,660 60.2% Avg. $649,158 $565,381 14.8% $571,296 $579,009 (1.3)% $604,877 $570,682 6.0% Price

KSA JV Only Home 215 185 16.2% 0 0 0.0% 1,666 766 117.5% Dollars $33,802 $29,012 16.5% $0 $0 0.0% $261,653 $120,562 117.0% Avg. $157,219 $156,821 0.3% $0 $0 0.0% $157,055 $157,392 (0.2)% Price

DELIVERIES INCLUDE EXTRASNotes:(1) Contracts are defined as new contracts signed during the period for thepurchase of homes, less cancellations of prior contracts.(2) Represents home deliveries, home revenues and average prices for ourunconsolidated homebuilding joint ventures for the period. We provide this dataas a supplement to our consolidated results as an indicator of the volumemanaged in our unconsolidated homebuilding joint ventures. Our proportionateshare of the income or loss of unconsolidated homebuilding and land developmentjoint ventures is reflected as a separate line item in our consolidatedfinancial statements under ?Income from unconsolidated joint ventures?.

HOVNANIAN ENTERPRISES, INC.(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)(SEGMENT DATA UNCONSOLIDATED JOINT VENTURES ONLY)

Contracts (1) Deliveries Contract Nine Months Ended Nine Months Ended Backlog July 31, July 31, July 31, 2021 2020 % Change 2021 2020 % Change 2021 2020 % ChangeNortheast (unconsolidated Home 37 130 (71.5) 47 173 (72.8) 8 33 (75.8)% joint ventures) % %(excluding KSA Dollars $49,318 $104,142 (52.6) $63,353 $136,250 (53.5) $10,500 $31,571 (66.7)% JV) % %(NJ, PA) Avg. $1,332,919 $801,092 66.4% $1,347,936 $787,572 71.2% $1,312,500 $956,697 37.2% PriceMid-Atlantic (unconsolidated Home 90 70 28.6% 108 64 68.8% 123 48 156.3% joint ventures)(DE, MD, VA, Dollars $55,178 $35,223 56.7% $57,050 $32,381 76.2% $77,565 $23,817 225.7% WV) Avg. $613,089 $503,182 21.8% $528,241 $505,953 4.4% $630,610 $496,188 27.1% PriceMidwest (unconsolidated Home 1 11 (90.9) 1 14 (92.9) 0 0 0.0% joint ventures) % %(IL, OH) Dollars $409 $5,109 (92.0) $409 $6,394 (93.6) $0 $0 0.0% % % Avg. $409,000 $464,455 (11.9) $409,000 $456,714 (10.4) $0 $0 0.0% Price % %Southeast (unconsolidated Home 336 185 81.6% 191 179 6.7% 231 129 79.1% joint ventures)(FL, GA, SC) Dollars $182,950 $90,547 102.0% $93,394 $86,255 8.3% $137,907 $64,865 112.6% Avg. $544,494 $489,442 11.2% $488,974 $481,872 1.5% $597,000 $502,829 18.7% PriceSouthwest (unconsolidated Home 4 76 (94.7) 50 75 (33.3) 0 46 (100.0) joint ventures) % % %(AZ, TX) Dollars $3,127 $47,147 (93.4) $29,930 $47,706 (37.3) $0 $27,759 (100.0) % % % Avg. $781,750 $620,355 26.0% $598,600 $636,080 (5.9)% $0 $603,457 (100.0) Price %West (unconsolidated Home 70 42 66.7% 56 60 (6.7)% 37 8 362.5% joint ventures)(CA) Dollars $27,842 $14,496 92.1% $20,306 $21,573 (5.9)% $15,374 $2,648 480.6% Avg. $397,743 $345,143 15.2% $362,607 $359,550 0.9% $415,514 $331,000 25.5% PriceUnconsolidatedJoint Ventures (2)(excluding KSA Home 538 514 4.7% 453 565 (19.8) 399 264 51.1% JV) % Dollars $318,824 $296,663 7.5% $264,442 $330,559 (20.0) $241,346 $150,660 60.2% % Avg. $592,610 $577,167 2.7% $583,757 $585,060 (0.2)% $604,877 $570,682 6.0% Price

KSA JV Only Home 574 564 1.8% 0 0 0.0% 1,666 766 117.5% Dollars $89,980 $88,246 2.0% $0 $0 0.0% $261,653 $120,562 117.0% Avg. $156,760 $156,465 0.2% $0 $0 0.0% $157,055 $157,392 (0.2)% Price

DELIVERIES INCLUDE EXTRASNotes:(1) Contracts are defined as new contracts signed during the period for thepurchase of homes, less cancellations of prior contracts.(2) Represents home deliveries, home revenues and average prices for ourunconsolidated homebuilding joint ventures for the period. We provide this dataas a supplement to our consolidated results as an indicator of the volumemanaged in our unconsolidated homebuilding joint ventures. Our proportionateshare of the income or loss of unconsolidated homebuilding and land developmentjoint ventures is reflected as a separate line item in our consolidatedfinancial statements under ?Income from unconsolidated joint ventures?.

Contact: J. Larry Sorsby Jeffrey T. O?Keefe Executive Vice President & CFO Vice President, Investor Relations 732-747-7800 732-747-7800