GlobeNewswire Inc | Dec 9, 2021 09:15AM EST

December 09, 2021

$190 Million Pretax Profit in Fiscal 2021 a 243% Increase Over the Prior Year82% Year-over-Year Increase in Fourth Quarter Pretax ProfitGross Margin Percentage Increased 390 Basis Points Year-over-Year for Full YearConsolidated Backlog Dollars Increased to $1.64 BillionCommunity Count Increased to 140 up 17% Sequentially From the Third Quarter

MATAWAN, N.J., Dec. 09, 2021 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal fourth quarter and year ended October 31, 2021.

RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED OCTOBER 31, 2021:

-- Total revenues increased 19.2% to $814.3 million in the fourth quarter of fiscal 2021, compared with $683.4 million in the same quarter of the prior year. For the year ended October 31, 2021, total revenues increased 18.7% to $2.78 billion compared with $2.34 billion in the prior fiscal year. -- Homebuilding gross margin percentage, after cost of sales interest expense and land charges, increased 200 basis points to 19.4% for the three months ended October 31, 2021 compared with 17.4% during the same period a year ago. During fiscal 2021, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 18.6%, up 390 basis points, compared with 14.7% in the prior fiscal year. -- Homebuilding gross margin percentage, before cost of sales interest expense and land charges, increased 260 basis points to 22.8% during the fiscal 2021 fourth quarter compared with 20.2% in last years fourth quarter. For the year ended October 31, 2021, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 21.8%, up 340 basis points, compared with 18.4% in the previous fiscal year. -- Total SG&A was $70.0 million, or 8.6% of total revenues, in the fiscal 2021 fourth quarter compared with $65.6 million, or 9.6% of total revenues, in the previous years fourth quarter. During fiscal 2021, total SG&A was $276.6 million, or 9.9% of total revenues, compared with $241.8 million, or 10.3% of total revenues, in the prior fiscal year. -- Total interest expense as a percent of total revenues improved by 120 basis points to 4.7% for the fourth quarter of fiscal 2021 compared with 5.9% during the fourth quarter of fiscal 2020. For the year ended October 31, 2021, total interest expense as a percent of total revenues improved by 180 basis points to 5.8% compared with 7.6% during the same period last year. -- Income before income taxes for the fourth quarter of fiscal 2021 was $77.4 million, up 82.5%, compared with $42.4 million in the fourth quarter of the prior fiscal year. For fiscal 2021, income before income taxes increased 242.7% to $189.9 million compared with $55.4 million during fiscal 2020. -- Net income was $52.5 million, or $7.41 per diluted common share, for the three months ended October 31, 2021 compared with net income of $40.6 million, or $5.54 per diluted common share, in the fourth quarter of the previous fiscal year. For fiscal 2021, net income, including the $468.6 million benefit from the valuation allowance reduction, was $607.8 million, or $85.86 per diluted common share, compared with $50.9 million, or $7.03 per diluted common share, in fiscal 2020. -- EBITDA increased 38.6% to $117.2 million for the fourth quarter of fiscal 2021 compared with $84.5 million in the same quarter of the prior year. For fiscal 2021, EBITDA was $357.0 million, a 49.5% increase, compared with $238.8 million in fiscal 2020.

-- After the unprecedented and unsustainable COVID-19 surge in home demand during last years fourth quarter, contracts per community returned to a more normalized sales pace in the fourth quarter of 2021. Consolidated contracts per community decreased to 10.2 contracts per community for the fourth quarter ended October 31, 2021 compared to 16.5 contracts per community in last years fourth quarter but increased compared with 9.5 contracts per community in the fourth quarter of 2019. Contracts per community, including domestic unconsolidated joint ventures(1), decreased to 9.9 contracts per community for the fourth quarter of fiscal 2021 compared with 15.9 contracts per community for the fourth quarter of fiscal 2020, but increased compared to 9.1 contracts per community for the fiscal 2019 fourth quarter. -- As of the end of fiscal 2021, community count, including domestic unconsolidated joint ventures, increased to 140 communities, compared with 135 communities at October 31, 2020. Consolidated community count was 124 as of October 31, 2021, compared with 116 communities at the end of the previous years fourth quarter. -- Consolidated contract dollars decreased in the fourth quarter of fiscal 2021 to $660.4 million (1,263 homes) compared with $828.9 million (1,918 homes) in the same quarter last year but increased 27.5% compared to $517.8 million (1,345 homes) in the fourth quarter of fiscal 2019. Contract dollars, including domestic unconsolidated joint ventures, for the three months ended October 31, 2021 decreased 22.3% to $749.5 million (1,389 homes) compared with $964.8 million (2,143 homes) in the fourth quarter of fiscal 2020 but increased 25.3% compared to $597.9 million (1,479 homes) in the fourth quarter of fiscal 2019. -- For the year ended October 31, 2021, consolidated contract dollars increased 2.6% to $2.89 billion (6,023 homes) compared with $2.81 billion (6,953 homes) in the prior year. Contract dollars, including domestic unconsolidated joint ventures, for fiscal 2021 increased 1.5% to $3.30 billion (6,687 homes) compared with $3.25 billion (7,692 homes) in fiscal 2020. -- The dollar value of November 2021 consolidated contracts increased 10.5% to $239.7million (467 homes) compared with $217.0 million (493 homes) in November last year and increased 50.2% compared to $159.6 million (404 homes) in November 2019. -- The dollar value of consolidated contract backlog, as of October 31, 2021, increased 15.4% to $1.64 billion compared with $1.42 billion as of October 31, 2020. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of October 31, 2021, increased 17.2% to $1.88 billion compared with $1.60 billion as of October 31, 2020. -- Consolidated deliveries increased 8.3% to 1,703 homes in the fiscal 2021 fourth quarter compared with 1,572 homes in the previous years fourth quarter. For the fiscal 2021 fourth quarter, deliveries, including domestic unconsolidated joint ventures, increased 6.0% to 1,839 homes compared with 1,735 homes during the fourth quarter of fiscal 2020. -- For fiscal 2021, consolidated deliveries increased 9.1% to 6,204 homes compared with 5,686 homes in the previous year. For fiscal 2021, deliveries, including domestic unconsolidated joint ventures, increased 5.9% to 6,793 homes compared with 6,414 homes during fiscal 2020. -- The contract cancellation rate for consolidated contracts was 15% for the fourth quarter ended October 31, 2021 compared with 18% in the fiscal 2020 fourth quarter. The contract cancellation rate for contracts including domestic unconsolidated joint ventures was 14% for the fourth quarter of fiscal 2021 compared with 17% in the fourth 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 OCTOBER 31, 2021:

-- During the fourth quarter of fiscal 2021, land and land development spending was $167.1 million. For fiscal 2021, land and land development spending was $698.3 million, an increase of 11.9% compared with $624.2 million one year ago. -- Total liquidity at October 31, 2021 was $380.9 million, after early retirement of $181 million of senior secured notes in fiscal 2021, well above our targeted liquidity range of $170 million to $245 million. -- In the fourth quarter of fiscal 2021, approximately 3,400 lots were put under option or acquired in 29 consolidated communities. -- As of October 31, 2021, the total controlled consolidated lots increased 18.5% to 30,874 compared with 26,049 lots at the end of the previous year. Based on trailing twelve-month deliveries, the current position equaled a 5.0 years supply.

FINANCIAL GUIDANCE(2)

Financial guidance below assumes no adverse changes in current market conditions, including further deterioration in the supply chain, and excludes further impact to SG&A expenses from phantom stock expense related solely to stock price movements from the closing price of $84.26 at October 29, 2021.

-- For the first quarter of fiscal 2022, total revenues are expected to be between $640 million and $670 million, gross margin, before cost of sales interest expense and land charges, is expected to be between 20.5% and 22.0% and adjusted pretax income is expected to be between $30 million and $35 million. -- For the second quarter of fiscal 2022, total revenues are expected to be between $700 million and $750 million, gross margin, before cost of sales interest expense and land charges, is expected to be between 23.0% and 25.0% and adjusted pretax income is expected to be between $60 million and $75 million. -- For all of fiscal 2022, total revenues are expected to be between $2.80 billion and $3.00 billion, gross margin, before cost of sales interest expense and land charges, is expected to be between 23.5% and 25.5%, adjusted pretax income is expected to be between $260 million and $310 million, adjusted EBITDA is expected to be between $410 million and $460 million and fully diluted earnings per share is expected to be between $26.50 and $32.00. At the midpoint of our guidance, we anticipate our shareholders equity to increase by approximately 105% by October 31, 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:

Supply chain issues have plagued the housing industry, which caused us to conservatively revise our year end guidance down during the fourth quarter, stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. However, our associates rose to the occasion and worked diligently to mitigate supply chain obstacles and deliver quality homes without some of the excess costs we thought might be necessary to complete the homes. Those extraordinary efforts allowed us to achieve operating results for the fourth quarter exceeding the upper end of our original guidance for adjusted gross margin, adjusted pretax income and adjusted EBITDA. Given the solid level of sales per community, an increase in our community count and higher gross margin on current sales and homes in backlog, we are anticipating significant growth in profitability in fiscal 2022 beginning with a strong first quarter.

Our strong results during fiscal 2021 resulted in our key credit metrics improving substantially. We lowered our total debt to adjusted EBITDA ratio to 3.8 times at the end of fiscal 2021 compared with 6.7 times at the end of the previous year. Additionally, our adjusted EBITDA to interest incurred ratio increased to 2.3 times for fiscal 2021 compared with 1.3 times for fiscal 2020. We expect to continue our trend of improving our key credit metrics in future periods and are pleased to announce our Board of Directors approved reinstating a $2.7 million dividend payment on our preferred stock payable in January 2022, said J. Larry Sorsby, Executive Vice President and Chief Financial Officer.

Mr. Hovnanian continued, Our pretax income increased substantially to almost $200 million in fiscal 2021. Additionally, we generated significant amounts of cash in fiscal 2021, allowing us to payoff $181 million of our secured bonds ahead of maturity and we still ended the year with $381 million of liquidity, well above the upper end of our liquidity target of $245 million. After increasing equity substantially in fiscal 2021, we expect to achieve diluted earnings per share of between $26.50 and $32.00 for the full fiscal 2022 year and expect to more than double our shareholders equity by fiscal year end. Given that we are entering fiscal 2022 with over half of our revenue guidance in backlog, combined with our strong sales pace and gross margins, we look forward to an extraordinarily strong new year, concluded Mr. Hovnanian.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2021 fourth quarter financial results conference call at 11:00 a.m. E.T. on Thursday, December 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 $246.0 million of cash and cash equivalents, $9.9 million of restricted cash required to collateralize letters of credit and $125.0 million availability under the senior secured revolving credit facility as of October 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) changes in general and local economic, industry and business conditions and impacts of a significant homebuilding downturn; (2) shortages in, and price fluctuations of, raw materials and labor, including due to changes in trade policies, including the imposition of tariffs and duties on homebuilding materials and products and related trade disputes with and retaliatory measures taken by other countries; (3) the outbreak and spread of COVID-19 and the measures that governments, agencies, law enforcement and/or health authorities implement to address it; (4) adverse weather and other environmental conditions and natural disasters; (5) the seasonality of the Companys business; (6) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (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.October 31, 2021Statements of consolidated operations(In thousands, except per share data) Three Months Ended Year Ended October 31, October 31, 2021 2020 2021 2020 (Unaudited) (Unaudited)Total revenues $814,348 $683,358 $2,782,857 $2,343,901 Costs and 732,742 644,060 2,598,097 2,318,400 expenses (1)(Loss) gain onextinguishment of (3,442 ) - (3,748 ) 13,337 debt(Loss) incomefrom (719 ) 3,146 8,849 16,565 unconsolidatedjoint venturesIncome before 77,445 42,444 189,861 55,403 income taxesIncome taxprovision 24,965 1,810 (417,956 ) 4,475 (benefit)Net income $52,480 $40,634 $607,817 $50,928

Per share data: Basic: Net income per $7.53 $5.97 $87.50 $7.48 common share Weighted average number of common shares 6,360 6,221 6,287 6,189 outstandingAssuming dilution: Net income per $7.41 $5.54 $85.86 $7.03 common share Weighted average number of common shares 6,467 6,699 6,395 6,584 outstanding

(1) Includesinventoryimpairment loss and land optionwrite-offs.

Hovnanian Enterprises, Inc.October 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 Year Ended October 31, October 31, 2021 2020 2021 2020 (Unaudited) (Unaudited)Income before $77,445 $42,444 $189,861 $55,403 income taxesInventoryimpairment loss 363 2,611 3,630 8,813 and land optionwrite-offsLoss (gain) onextinguishment of 3,442 - 3,748 (13,337 )debtIncome beforeincome taxesexcludingland-related $81,250 $45,055 $197,239 $50,879 charges and loss(gain) onextinguishment ofdebt (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.October 31, 2021Gross margin(In thousands) Homebuilding Gross Margin Homebuilding Gross Margin Three Months Ended Year Ended October 31, October 31, 2021 2020 2021 2020 (Unaudited) (Unaudited)Sale of $779,551 $643,516 $2,673,710 $2,252,029 homesCost ofsales,excludinginterest 602,097 513,416 2,091,016 1,837,332 expense andland charges(1)Homebuildinggrossmargin,before costof sales 177,454 130,100 582,694 414,697 interestexpense andland charges(2)Cost ofsalesinterestexpense, 25,939 15,707 82,181 74,174 excludingland salesinterestexpenseHomebuildinggrossmargin,after costof sales 151,515 114,393 500,513 340,523 interestexpense,before landcharges (2)Land charges 363 2,611 3,630 8,813 Homebuilding $151,152 $111,782 $496,883 $331,710 gross margin HomebuildingGross margin 19.4 % 17.4 % 18.6 % 14.7 %percentageHomebuildingGross marginpercentage,before costof sales 22.8 % 20.2 % 21.8 % 18.4 %interestexpense andland charges(2)HomebuildingGross marginpercentage,after costof sales 19.4 % 17.8 % 18.7 % 15.1 %interestexpense,before landcharges (2)

Land Sales Gross Margin Land Sales Gross Margin Three Months Ended Year Ended October 31, October 31, 2021 2020 2021 2020 (Unaudited) (Unaudited)Land and lot $13,634 $16,805 $25,364 $16,905 salesLand and lotsales costof sales,excluding 10,059 10,993 19,180 11,154 interest andland charges(1)Land and lotsales grossmargin, 3,575 5,812 6,184 5,751 excludinginterest andland chargesLand and lotsales 31 84 1,919 156 interestLand and lotsales grossmargin,including $3,544 $5,728 $4,265 $5,595 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 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.October 31, 2021Reconciliation of adjusted EBITDA to net income(In thousands) Three Months Ended Year Ended October 31, October 31, 2021 2020 2021 2020 (Unaudited) (Unaudited)Net income $52,480 $40,634 $607,817 $50,928 Income taxprovision 24,965 1,810 (417,956 ) 4,475 (benefit)Interest expense 38,520 40,648 161,816 178,131 EBIT (1) 115,965 83,092 351,677 233,534 Depreciation and 1,189 1,407 5,280 5,304 amortizationEBITDA (2) 117,154 84,499 356,957 238,838 Inventoryimpairment loss 363 2,611 3,630 8,813 and land optionwrite-offsLoss (gain) onextinguishment of 3,442 - 3,748 (13,337 )debtAdjusted EBITDA $120,959 $87,110 $364,335 $234,314 (3) Interest incurred $33,006 $41,660 $155,514 $176,457 Adjusted EBITDAto interest 3.66 2.09 2.34 1.33 incurred Nonrecourse mortgages secured by $125,089 $135,122 inventory, net of debt issuance costsSenior notes and credit facilities (netof discounts, premiums and debt issuance 1,248,373 1,431,110 costs)Total debt $1,373,462 $1,566,232 Total debt to 3.8 6.7 adjusted EBITDA

(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.October 31, 2021Interest incurred, expensed and capitalized(In thousands) Three Months Ended Year Ended October 31, October 31, 2021 2020 2021 2020 (Unaudited) (Unaudited)Interestcapitalized at $63,673 $63,998 $65,010 $71,264 beginning ofperiodPlus interest 33,006 41,660 155,514 176,457 incurredLess interest 38,520 40,648 161,816 178,131 expensedLess interestcontributed to - - 3,667 4,580 unconsolidatedjoint venture (1)Plus interestacquired from - - 3,118 - unconsolidatedjoint venture (2)Interestcapitalized at $58,159 $65,010 $58,159 $65,010 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 years ended October 31, 2021 and 2020, respectively.There was no impact to the Consolidated Statement of Operations as a result ofthis 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 year ended October 31, 2021. There was no impact to the ConsolidatedStatement 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)(Unaudited)

October 31, October 31, 2021 2020 ASSETS Homebuilding: Cash and cash equivalents $245,970 $262,489 Restricted cash and cash equivalents 16,089 14,731 Inventories: Sold and unsold homes and lots under 1,019,541 921,594 developmentLand and land options held for future 135,992 91,957 development or saleConsolidated inventory not owned 98,727 182,224 Total inventories 1,254,260 1,195,775 Investments in and advances to 60,897 103,164 unconsolidated joint venturesReceivables, deposits and notes, net 39,934 33,686 Property, plant and equipment, net 18,736 18,185 Prepaid expenses and other assets 56,186 58,705 Total homebuilding 1,692,072 1,686,735 Financial services 202,758 140,607 Deferred tax assets, net 425,678 - Total assets $2,320,508 $1,827,342 LIABILITIES AND EQUITY Homebuilding: Nonrecourse mortgages secured by $125,089 $135,122 inventory, net of debt issuance costsAccounts payable and other liabilities 426,381 359,274 Customers? deposits 68,295 48,286 Liabilities from inventory not owned, net 62,762 131,204 of debt issuance costsSenior notes and credit facilities (net ofdiscounts, premiums and debt issuance 1,248,373 1,431,110 costs)Accrued Interest 28,154 35,563 Total homebuilding 1,959,054 2,140,559 Financial services 182,219 119,045 Income taxes payable 3,851 3,832 Total liabilities 2,145,124 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 atOctober 31, 2021 and October 31, 2020Common stock, Class A, $0.01 par value -authorized 16,000,000 shares; issued 61 60 6,066,152 shares at October 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 October 31, 2021 and649,886 shares at October 31, 2020Paid in capital - common stock 722,118 718,110 Accumulated deficit (567,228 ) (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 October 31,2021 and October 31, 2020Total Hovnanian Enterprises, Inc. 174,897 (436,929 )stockholders? equity (deficit)Noncontrolling interest in consolidated 487 835 joint venturesTotal equity (deficit) 175,384 (436,094 )Total liabilities and equity $2,320,508 $1,827,342

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

Three Months Ended October 31, Years Ended October 31, 2021 2020 2021 2020 Revenues: Homebuilding: Sale of homes $779,551 $643,516 $2,673,710 $2,252,029 Land sales and 14,175 17,350 27,455 19,710 other revenuesTotal 793,726 660,866 2,701,165 2,271,739 homebuildingFinancial 20,622 22,492 81,692 72,162 servicesTotal revenues 814,348 683,358 2,782,857 2,343,901 Expenses: Homebuilding: Cost of sales,excluding 612,156 524,409 2,110,196 1,848,486 interestCost of sales 25,970 15,791 84,100 74,330 interestInventoryimpairment loss 363 2,611 3,630 8,813 and land optionwrite-offsTotal cost of 638,489 542,811 2,197,926 1,931,629 salesSelling, generaland 44,475 39,374 169,892 161,261 administrativeTotalhomebuilding 682,964 582,185 2,367,818 2,092,890 expenses Financial 11,176 10,383 44,129 40,060 servicesCorporategeneral and 25,545 26,213 106,694 80,553 administrativeOther interest 12,550 24,857 77,716 103,801 Other operations 507 422 1,740 1,096 Total expenses 732,742 644,060 2,598,097 2,318,400 (Loss) gain onextinguishment (3,442 ) - (3,748 ) 13,337 of debt(Loss) incomefrom (719 ) 3,146 8,849 16,565 unconsolidatedjoint venturesIncome before 77,445 42,444 189,861 55,403 income taxesState andfederal income tax provision(benefit):State 6,924 1,810 (82,348 ) 4,475 Federal 18,041 - (335,608 ) - Total income 24,965 1,810 (417,956 ) 4,475 taxesNet income $52,480 $40,634 $607,817 $50,928 Per share data: Basic: Net income per $7.53 $5.97 $87.50 $7.48 common shareWeighted-averagenumber of common 6,360 6,221 6,287 6,189 sharesoutstandingAssuming dilution:Net income per $7.41 $5.54 $85.86 $7.03 common shareWeighted-averagenumber of common 6,467 6,699 6,395 6,584 sharesoutstanding

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 October 31, October 31, October 31, 2021 2020 % Change 2021 2020 % Change 2021 2020 % ChangeNortheast (NJ, PA) Home 74 95 (22.1) 62 78 (20.5) 172 130 32.3% % % Dollars $60,812 $63,326 (4.0)% $45,055 $42,218 6.7% $138,396 $82,111 68.5% Avg. $821,784 $666,589 23.3% $726,694 $541,256 34.3% $804,628 $631,623 27.4% PriceMid-Atlantic (2)(DE, MD, VA, Home 190 253 (24.9) 268 219 22.4% 508 557 (8.8)% WV) % Dollars $127,625 $135,364 (5.7)% $154,202 $114,221 35.0% $342,189 $291,115 17.5% Avg. $671,711 $535,036 25.5% $575,381 $521,557 10.3% $673,600 $522,648 28.9% PriceMidwest (IL, OH) Home 154 249 (38.2) 197 187 5.3% 605 596 1.5% % Dollars $56,684 $79,999 (29.1) $67,340 $59,498 13.2% $194,446 $169,517 14.7% % Avg. $368,078 $321,281 14.6% $341,827 $318,171 7.4% $321,398 $284,424 13.0% PriceSoutheast (FL, GA, SC) Home 175 163 7.4% 194 169 14.8% 421 298 41.3% Dollars $97,285 $74,765 30.1% $87,718 $73,741 19.0% $221,425 $146,971 50.7% Avg. $555,914 $458,681 21.2% $452,155 $436,337 3.6% $525,950 $493,191 6.6% PriceSouthwest (AZ, TX) Home 507 712 (28.8) 723 584 23.8% 1,076 1,066 0.9% % Dollars $217,919 $245,813 (11.3) $282,128 $194,505 45.0% $459,820 $360,225 27.6% % Avg. $429,821 $345,243 24.5% $390,219 $333,057 17.2% $427,342 $337,922 26.5% PriceWest (CA) Home 163 446 (63.5) 259 335 (22.7) 465 755 (38.4) % % % Dollars $100,067 $229,656 (56.4) $143,108 $159,332 (10.2) $282,430 $369,887 (23.6) % % % Avg. $613,908 $514,924 19.2% $552,541 $475,618 16.2% $607,376 $489,917 24.0% PriceConsolidated Total Home 1,263 1,918 (34.2) 1,703 1,572 8.3% 3,247 3,402 (4.6)% % Dollars $660,392 $828,923 (20.3) $779,551 $643,515 21.1% $1,638,706 $1,419,826 15.4% % Avg. $522,876 $432,181 21.0% $457,752 $409,361 11.8% $504,683 $417,350 20.9% PriceUnconsolidatedJoint Ventures (2, 3)(excluding KSA Home 126 225 (44.0) 136 163 (16.6) 375 326 15.0% JV) % % Dollars $89,062 $135,906 (34.5) $81,351 $102,043 (20.3) $241,619 $184,524 30.9% % % Avg. $706,841 $604,027 17.0% $598,169 $626,031 (4.5)% $644,317 $566,025 13.8% PriceGrand Total Home 1,389 2,143 (35.2) 1,839 1,735 6.0% 3,622 3,728 (2.8)% % Dollars $749,454 $964,829 (22.3) $860,902 $745,558 15.5% $1,880,325 $1,604,350 17.2% % Avg. $539,564 $450,224 19.8% $468,136 $429,716 8.9% $519,140 $430,351 20.6% Price

KSA JV Only Home 247 326 (24.2) 0 0 0.0% 1,913 1,092 75.2% % Dollars $38,731 $51,110 (24.2) $0 $0 0.0% $300,384 $171,673 75.0% % Avg. $156,806 $156,779 0.0% $0 $0 0.0% $157,022 $157,210 (0.1)% 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) Reflects the reclassification of 14 homes and $7.4 million of contractbacklog as of October 31, 2021 from unconsolidated joint ventures to theconsolidated Mid-Atlantic segment. This is related to our acquisition of theremaining assets and liabilities from one of our unconsolidated joint ventureswhich was dissolved during the fourth quarter of fiscal 2021.(3) 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 Year Ended Year Ended Backlog October 31, October 31, October 31, 2021 2020 % Change 2021 2020 % Change 2021 2020 % ChangeNortheast (NJ, PA) Home 243 326 (25.5) 201 348 (42.2) 172 130 32.3% % % Dollars $196,496 $171,181 14.8% $140,212 $175,627 (20.2) $138,396 $82,111 68.5% % Avg. $808,626 $525,095 54.0% $697,572 $504,675 38.2% $804,628 $631,623 27.4% PriceMid-Atlantic (2)(DE, MD, VA, Home 837 990 (15.5) 849 755 12.5% 508 557 (8.8)% WV) % Dollars $541,684 $510,229 6.2% $465,432 $402,647 15.6% $342,189 $291,115 17.5% Avg. $647,173 $515,383 25.6% $548,212 $533,307 2.8% $673,600 $522,648 28.9% PriceMidwest (IL, OH) Home 782 873 (10.4) 773 727 6.3% 605 596 1.5% % Dollars $273,459 $272,170 0.5% $248,531 $225,334 10.3% $194,446 $169,517 14.7% Avg. $349,692 $311,764 12.2% $321,515 $309,950 3.7% $321,398 $284,424 13.0% PriceSoutheast (FL, GA, SC) Home 662 599 10.5% 602 548 9.9% 421 298 41.3% Dollars $320,485 $270,277 18.6% $276,207 $232,333 18.9% $221,425 $146,971 50.7% Avg. $484,118 $451,214 7.3% $458,816 $423,965 8.2% $525,950 $493,191 6.6% PriceSouthwest (AZ, TX) Home 2,541 2,636 (3.6)% 2,531 2,233 13.3% 1,076 1,066 0.9% Dollars $1,001,844 $872,630 14.8% $902,248 $743,301 21.4% $459,820 $360,225 27.6% Avg. $394,271 $331,043 19.1% $356,479 $332,871 7.1% $427,342 $337,922 26.5% PriceWest (CA) Home 958 1,529 (37.3) 1,248 1,075 16.1% 465 755 (38.4) % % Dollars $553,624 $717,973 (22.9) $641,080 $472,786 35.6% $282,430 $369,887 (23.6) % % Avg. $577,896 $469,570 23.1% $513,686 $439,801 16.8% $607,376 $489,917 24.0% PriceConsolidated Total Home 6,023 6,953 (13.4) 6,204 5,686 9.1% 3,247 3,402 (4.6)% % Dollars $2,887,592 $2,814,460 2.6% $2,673,710 $2,252,028 18.7% $1,638,706 $1,419,826 15.4% Avg. $479,428 $404,784 18.4% $430,966 $396,065 8.8% $504,683 $417,350 20.9% PriceUnconsolidatedJoint Ventures (2, 3)(excluding KSA Home 664 739 (10.1) 589 728 (19.1) 375 326 15.0% JV) % % Dollars $407,886 $432,570 (5.7)% $345,793 $432,602 (20.1) $241,619 $184,524 30.9% % Avg. $614,286 $585,345 4.9% $587,085 $594,234 (1.2)% $644,317 $566,025 13.8% PriceGrand Total Home 6,687 7,692 (13.1) 6,793 6,414 5.9% 3,622 3,728 (2.8)% % Dollars $3,295,478 $3,247,030 1.5% $3,019,503 $2,684,630 12.5% $1,880,325 $1,604,350 17.2% Avg. $492,819 $422,131 16.7% $444,502 $418,558 6.2% $519,140 $430,351 20.6% Price

KSA JV Only Home 821 890 (7.8)% 0 0 0.0% 1,913 1,092 75.2% Dollars $128,711 $139,356 (7.6)% $0 $0 0.0% $300,384 $171,673 75.0% Avg. $156,773 $156,580 0.1% $0 $0 0.0% $157,022 $157,210 (0.1)% 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) Reflects the reclassification of 14 homes and $7.4 million of contractbacklog as of October 31, 2021 from unconsolidated joint ventures to theconsolidated Mid-Atlantic segment. This is related to our acquisition of theremaining assets and liabilities from one of our unconsolidated joint ventureswhich was dissolved during the fourth quarter of fiscal 2021.(3) 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 October 31, October 31, October 31, 2021 2020 % Change 2021 2020 % Change 2021 2020 % ChangeNortheast (unconsolidated Home 14 16 (12.5)% 12 31 (61.3)% 10 18 (44.4)% joint ventures)(excluding KSA Dollars $15,193 $24,384 (37.7)% $15,503 $31,421 (50.7)% $10,190 $24,535 (58.5)% JV)(NJ, PA) Avg. $1,085,214 $1,524,000 (28.8)% $1,291,917 $1,013,581 27.5% $1,019,000 $1,363,056 (25.2)% PriceMid-Atlantic (2)(unconsolidated Home 50 63 (20.6)% 43 21 104.8% 116 90 28.9% joint ventures)(DE, MD, VA, Dollars $32,304 $33,382 (3.2)% $25,825 $10,378 148.8% $76,607 $46,821 63.6% WV) Avg. $646,080 $529,873 21.9% $600,581 $494,190 21.5% $660,405 $520,233 26.9% PriceMidwest (unconsolidated Home 0 2 (100.0) 0 2 (100.0) 0 0 0.0% joint ventures) % %(IL, OH) Dollars $0 $950 (100.0) $0 $950 (100.0) $0 $0 0.0% % % Avg. $0 $475,000 (100.0) $0 $475,000 (100.0) $0 $0 0.0% Price % %Southeast (unconsolidated Home 45 89 (49.4)% 65 69 (5.8)% 211 149 41.6% joint ventures)(FL, GA, SC) Dollars $33,563 $49,970 (32.8)% $33,699 $36,307 (7.2)% $137,771 $78,528 75.4% Avg. $745,844 $561,461 32.8% $518,446 $526,188 (1.5)% $652,943 $527,034 23.9% PriceSouthwest (unconsolidated Home 0 30 (100.0) 0 30 (100.0) 0 46 (100.0) joint ventures) % % %(AZ, TX) Dollars $0 $18,553 (100.0) $0 $19,509 (100.0) $0 $26,803 (100.0) % % % Avg. $0 $618,433 (100.0) $0 $650,300 (100.0) $0 $582,674 (100.0) Price % % %West (unconsolidated Home 17 25 (32.0)% 16 10 60.0% 38 23 65.2% joint ventures)(CA) Dollars $8,001 $8,667 (7.7)% $6,324 $3,478 81.8% $17,051 $7,837 117.6% Avg. $470,647 $346,680 35.8% $395,250 $347,800 13.6% $448,711 $340,739 31.7% PriceUnconsolidated Joint Ventures (2,3)(excluding KSA Home 126 225 (44.0)% 136 163 (16.6)% 375 326 15.0% JV) Dollars $89,061 $135,906 (34.5)% $81,351 $102,043 (20.3)% $241,619 $184,524 30.9% Avg. $706,833 $604,027 17.0% $598,169 $626,031 (4.5)% $644,317 $566,025 13.8% Price

KSA JV Only Home 247 326 (24.2)% 0 0 0.0% 1,913 1,092 75.2% Dollars $38,731 $51,110 (24.2)% $0 $0 0.0% $300,384 $171,673 75.0% Avg. $156,806 $156,779 0.0% $0 $0 0.0% $157,022 $157,210 (0.1)% 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) Reflects the reclassification of 14 homes and $7.4 million of contractbacklog as of October 31, 2021 from unconsolidated joint ventures to theconsolidated Mid-Atlantic segment. This is related to our acquisition of theremaining assets and liabilities from one of our unconsolidated joint ventureswhich was dissolved during the fourth quarter of fiscal 2021.(3) 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 Year Ended Year Ended Backlog October 31, October 31, October 31, 2021 2020 % Change 2021 2020 % Change 2021 2020 % ChangeNortheast (unconsolidated Home 51 146 (65.1) 59 204 (71.1) 10 18 (44.4)% joint ventures) % %(excluding KSA Dollars $64,511 $128,526 (49.8) $78,856 $167,671 (53.0) $10,190 $24,535 (58.5)% JV) % %(NJ, PA) Avg. $1,264,922 $880,315 43.7% $1,336,542 $821,917 62.6% $1,019,000 $1,363,056 (25.2)% PriceMid-Atlantic (2)(unconsolidated Home 140 133 5.3% 151 85 77.6% 116 90 28.9% joint ventures)(DE, MD, VA, Dollars $87,482 $68,605 27.5% $82,875 $42,759 93.8% $76,607 $46,821 63.6% WV) Avg. $624,871 $515,827 21.1% $548,841 $503,047 9.1% $660,405 $520,233 26.9% PriceMidwest (unconsolidated Home 1 13 (92.3) 1 16 (93.8) 0 0 0.0% joint ventures) % %(IL, OH) Dollars $409 $6,059 (93.2) $409 $7,344 (94.4) $0 $0 0.0% % % Avg. $409,000 $466,077 (12.2) $409,000 $459,000 (10.9) $0 $0 0.0% Price % %Southeast (unconsolidated Home 381 274 39.1% 256 248 3.2% 211 149 41.6% joint ventures)(FL, GA, SC) Dollars $216,513 $140,517 54.1% $127,093 $122,562 3.7% $137,771 $78,528 75.4% Avg. $568,276 $512,836 10.8% $496,457 $494,202 0.5% $652,943 $527,034 23.9% PriceSouthwest (unconsolidated Home 4 106 (96.2) 50 105 (52.4) 0 46 (100.0) joint ventures) % % %(AZ, TX) Dollars $3,127 $65,700 (95.2) $29,930 $67,215 (55.5) $0 $26,803 (100.0) % % % Avg. $781,750 $619,811 26.1% $598,600 $640,143 (6.5)% $0 $582,674 (100.0) Price %West (unconsolidated Home 87 67 29.9% 72 70 2.9% 38 23 65.2% joint ventures)(CA) Dollars $35,844 $23,163 54.7% $26,630 $25,051 6.3% $17,051 $7,837 117.6% Avg. $412,000 $345,716 19.2% $369,861 $357,871 3.4% $448,711 $340,739 31.7% PriceUnconsolidated Joint Ventures (2,3)(excluding KSA Home 664 739 (10.1) 589 728 (19.1) 375 326 15.0% JV) % % Dollars $407,886 $432,570 (5.7)% $345,793 $432,602 (20.1) $241,619 $184,524 30.9% % Avg. $614,286 $585,345 4.9% $587,085 $594,234 (1.2)% $644,317 $566,025 13.8% Price

KSA JV Only Home 821 890 (7.8)% 0 0 0.0% 1,913 1,092 75.2% Dollars $128,711 $139,356 (7.6)% $0 $0 0.0% $300,384 $171,673 75.0% Avg. $156,773 $156,580 0.1% $0 $0 0.0% $157,022 $157,210 (0.1)% 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) Reflects the reclassification of 14 homes and $7.4 million of contractbacklog as of October 31, 2021 from unconsolidated joint ventures to theconsolidated Mid-Atlantic segment. This is related to our acquisition of theremaining assets and liabilities from one of our unconsolidated joint ventureswhich was dissolved during the fourth quarter of fiscal 2021.(3) 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