GlobeNewswire Inc | Dec 9, 2020 09:15AM EST

December 09, 2020

Fourth Quarter Gross Margin Increased 290 Basis Points$95MillionYear-over-YearImprovement in Fiscal 2020Pretax Income61% Year-over-Year Increase in Consolidated Backlog Dollars at Year End to $1.42 BillionFourth Quarter Consolidated Contracts per Community Improved 74% Year-over-Year

MATAWAN, N.J., Dec. 09, 2020 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal fourth quarter and year ended October 31, 2020.

RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED OCTOBER 31, 2020:

-- Total revenues were $683.4 million in the fourth quarter of fiscal 2020, compared with $713.6 million, a decrease of 4.2%, in the same period of the prior year. For the year ended October 31, 2020, total revenues increased 16.2% to $2.34 billion compared with $2.02 billion in the prior fiscal year. -- Homebuilding gross margin percentage, after cost of sales interest expense and land charges, increased 290 basis points to 17.4% for the three months ended October 31, 2020 compared with 14.5% during the same period a year ago. During fiscal 2020, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 14.7% compared with 14.2% last year. -- Homebuilding gross margin percentage, before cost of sales interest expense and land charges, increased 130 basis points to 20.2% during the fiscal 2020 fourth quarter compared with 18.9% in last years fourth quarter. For the year ended October 31, 2020, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 18.4% compared with 18.1% in the prior year. -- Total SG&A was $65.6 million, or 9.6% of total revenues, in the fiscal 2020 fourth quarter compared with $53.9 million, or 7.6% of total revenues, in the previous years fourth quarter. During fiscal 2020, total SG&A was $241.8 million, or 10.3% of total revenues, compared with $233.1 million, or 11.6% of total revenues, in the prior fiscal year. -- Total interest expense was $40.6 million for the fourth quarter of fiscal 2020 compared with $50.3 million during the fourth quarter of fiscal 2019. For the year ended October 31, 2020, total interest expense was $178.1 million compared with $160.8 million last year. -- Income from unconsolidated joint ventures was $3.1 million for the fourth quarter ended October 31, 2020 compared with $8.4 million in the fiscal 2019 fourth quarter. For fiscal 2020, income from unconsolidated joint ventures was $16.6 million compared with $28.9 million a year ago. -- Income before income taxes for the fourth quarter of fiscal 2020 was $42.4 million compared with a loss of $0.6 million in the fourth quarter of the prior fiscal year. For fiscal 2020, income before income taxes was $55.4 million compared with a loss of $39.7 million during fiscal 2019. -- Adjusted pretax income, which is income before income taxes excluding land-related charges, joint venture write-downs and gain or loss on extinguishment of debt, was $45.1 million in the fourth quarter of fiscal 2020 compared with income before these items of $44.5 million in the fiscal 2019 fourth quarter. For the year ended October 31, 2020, adjusted pretax income was $50.9 million compared with income before these items of $9.9 million during fiscal 2019. -- Net income was $40.6 million, or $5.54 per diluted common share, for the three months ended October 31, 2020 compared with a net loss of $1.8 million, or $0.30 per common share, in the fourth quarter of the previous fiscal year. For fiscal 2020, net income was $50.9 million, or $7.03 per diluted common share, compared with a net loss of $42.1 million, or $7.06 per common share, in fiscal 2019. -- EBITDA increased 65.9% to $84.5 million for the fourth quarter of fiscal 2020 compared with $50.9 million in the same quarter of the prior year. For fiscal 2020, EBITDA increased 90.6% to $238.8 million compared with $125.3 million in fiscal 2019. -- Financial services income before income taxes was $12.1 million for the fourth quarter of fiscal 2020, up 34.1% compared with $9.0 million in the fourth quarter of fiscal 2019. For fiscal 2020, financial services income before income taxes was $32.1 million, up 82.1% compared with $17.6 million one year ago. -- Consolidated contracts per community increased 73.7% to 16.5 contracts per community for the fourth quarter ended October 31, 2020 compared with 9.5 contracts per community in last years fourth quarter. Contracts per community, including domestic unconsolidated joint ventures(1), increased 74.7% to 15.9 for the fourth quarter of fiscal 2020 compared with 9.1 for the fourth quarter of fiscal 2019. -- The number of consolidated contracts increased 42.6% to 1,918 homes during the fiscal 2020 fourth quarter, compared with 1,345 homes in last years fourth quarter. The number of contracts, including domestic unconsolidated joint ventures, for the three months ended October 31, 2020, increased 44.9% to 2,143 homes from 1,479 homes during the same quarter a year ago. -- For fiscal 2020, the number of consolidated contracts increased 30.2% to 6,953 homes compared with 5,340 homes in fiscal 2019. The number of contracts, including domestic unconsolidated joint ventures, for the year ended October 31, 2020, increased 28.7% to 7,692 homes from 5,976 homes a year ago. -- As of the end of the fourth quarter of fiscal 2020, community count, including domestic unconsolidated joint ventures, was 135 communities, compared with 162 communities at October 31, 2019. Consolidated community count was 116 as of October 31, 2020, compared with 141 communities at the end of the previous years fourth quarter. The decline was primarily a result of selling out of communities at a faster than anticipated pace, 15 delayed community openings and contributing four consolidated communities to unconsolidated joint ventures earlier this year. -- For November 2020, consolidated contracts per community increased 48.3% to 4.3 compared with 2.9 for the same month one year ago. During November 2020, the number of consolidated contracts increased 22.0% to 493 homes from 404 homes in November 2019. -- The dollar value of consolidated contract backlog, as of October 31, 2020, increased 61.3% to $1.42 billion compared with $880.1 million as of October 31, 2019. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of October 31, 2020, increased 54.0% to $1.60 billion compared with $1.04 billion as of October 31, 2019. -- Consolidated deliveries were 1,572 homes in the fiscal 2020 fourth quarter compared with 1,709 homes in the previous years fourth quarter. For the fiscal 2020 fourth quarter, deliveries, including domestic unconsolidated joint ventures, were 1,735 homes compared with 1,941 homes during the fourth quarter of fiscal 2019. -- For fiscal 2020, consolidated deliveries increased 15.0% to 5,686 homes compared with 4,946 homes in the previous year. For fiscal 2020, deliveries, including domestic unconsolidated joint ventures, increased 12.3% to 6,414 homes compared with 5,713 homes during fiscal 2019. -- The contract cancellation rate for consolidated contracts was 18% for the fourth quarter ended October 31, 2020 compared with 21% in the fiscal 2019 fourth quarter. The contract cancellation rate for contracts including domestic unconsolidated joint ventures was 17% for the fourth quarter of fiscal 2020 compared with 22% 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, 2020

-- During the fourth quarter of fiscal 2020, land and land development spending was $229.3 million, an increase compared with $162.8 million in last years fourth quarter. For the year ended October 31, 2020, land and land development spending was $624.2 million compared with $562.8 million one year ago. -- Total liquidity at the end of the fourth quarter of fiscal 2020 was $399.1 million, significantly above our targeted liquidity range of $170 million to $245 million. -- In the fourth quarter of fiscal 2020, 2,400 lots were put under option or acquired in 28 consolidated communities. -- As of October 31, 2020, consolidated lots controlled totaled 26,049, which, based on trailing twelve-month deliveries, equaled a 4.6 years supply.

COMMENTS FROM MANAGEMENT:

We are pleased with our results for the fourth quarter of fiscal 2020. Our total revenues, gross margin percentage, adjusted EBITDA and adjusted pretax income exceeded the guidance that we gave on our third quarter conference call, stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. Demand for new homes remains strong due to historically low interest rates, a limited supply of existing homes, favorable demographic trends and strong consumer demand. Starting in June, we pivoted to increasing home prices, consciously trading off a slightly lower sales pace for improved margins, said Mr. Hovnanian.

Looking back on the full year results, the $55 million of pretax income for fiscal 2020 was the highest level of full year profitability we achieved since fiscal 2006. Given our $1.4 billion consolidated contract backlog, more than 60% ahead of last year, we expect that fiscal 2021 will be a year when we can grow our revenues to between $2.5 and $2.7 billion, achieve more operating efficiencies and further improve our profitability, stated Mr. Hovnanian. We currently control all the lots needed to meet our growth expectations in fiscal 2021. Furthermore, we control almost 90% of the lots needed to meet our delivery objectives for fiscal 2022. After ending the year with $399 million of liquidity, significantly above our targeted range, our land acquisition teams remain busy securing additional land parcels to achieve our home delivery goals for fiscal 2022 and beyond, concluded Mr. Hovnanian.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2020 fourth quarter financial results conference call at 11:00 a.m. E.T. on Wednesday, December 9, 2020. 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 (loss). The reconciliation for historical periods of EBIT, EBITDA and Adjusted EBITDA to net income (loss) 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, joint venture write-downs and loss (gain) on extinguishment of debt is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income (loss) before income taxes. The reconciliation for historical periods of adjusted pretax income to income (loss) before income taxes is presented in a table attached to this earnings release.

Total liquidity is comprised of $262.5 million of cash and cash equivalents, $11.6 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, 2020.

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, 2019 and the Companys Quarterly Reports on Form 10-Q for the quarterly periods during fiscal 2020 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, 2020Statements of consolidated operations(In thousands, except per share data) Three Months Ended Year Ended October 31, October 31, 2020 2019 2020 2019 (Unaudited) (Unaudited)Total revenues $683,358 $713,590 $2,343,901 $2,016,916 Costs and 644,060 680,116 2,318,400 2,043,080 expenses (1)(Loss) gain onextinguishment of - (42,436 ) 13,337 (42,436 )debtIncome fromunconsolidated 3,146 8,376 16,565 28,932 joint venturesIncome (loss)before income 42,444 (586 ) 55,403 (39,668 )taxesIncome tax 1,810 1,221 4,475 2,449 provisionNet income (loss) $40,634 $(1,807 ) $50,928 $(42,117 )

Per share data: Basic: Net income (loss) per $5.97 $(0.30 ) $7.48 $(7.06 ) common share Weighted average number of common shares 6,221 5,982 6,189 5,968 outstanding (2)Assuming dilution: Net income (loss) per $5.54 $(0.30 ) $7.03 $(7.06 ) common share Weighted average number of common shares 6,699 5,982 6,584 5,968 outstanding (2) (1) Includes inventory impairment loss and land option write-offs.

(2) For periods with a net (loss), basic shares are used in accordance withGAAP rules.

Hovnanian Enterprises, Inc.October 31, 2020Reconciliation of income before income taxes excluding land-related charges,joint venture write-downs and loss (gain) on extinguishment of debt to income(loss) before income taxes(In thousands) Three Months Ended Year Ended October 31, October 31, 2020 2019 2020 2019 (Unaudited) (Unaudited)Income (loss)before income $42,444 $(586 ) $55,403 $(39,668 )taxesInventoryimpairment loss 2,611 2,687 8,813 6,288 and land optionwrite-offsUnconsolidatedjoint venture - - - 854 investmentwrite-downsLoss (gain) onextinguishment of - 42,436 (13,337 ) 42,436 debtIncome beforeincome taxesexcludingland-relatedcharges, joint $45,055 $44,537 $50,879 $9,910 venturewrite-downs andloss (gain) onextinguishment ofdebt (1)

(1) Income before income taxes excluding land-related charges, joint venturewrite-downs and loss (gain) on extinguishment of debt is a non-GAAP financialmeasure. The most directly comparable GAAP financial measure is income (loss)before income taxes.



Hovnanian Enterprises, Inc. October 31, 2020 Gross margin (In thousands) Homebuilding Gross Margin Homebuilding Gross Margin Three Months Ended Year Ended October 31, October 31, 2020 2019 2020 2019 (Unaudited) (Unaudited)Sale of $643,516 $692,146 $2,252,029 $1,949,682 homesCost ofsales,excludinginterest 513,416 561,284 1,837,332 1,596,237 expense andland charges(1)Homebuildinggrossmargin,before costof sales 130,100 130,862 414,697 353,445 interestexpense andland charges(2)Cost ofsalesinterestexpense, 15,707 27,556 74,174 70,520 excludingland salesinterestexpenseHomebuildinggrossmargin,after costof sales 114,393 103,306 340,523 282,925 interestexpense,before landcharges (2)Land charges 2,611 2,687 8,813 6,288 Homebuilding $111,782 $100,619 $331,710 $276,637 gross margin Homebuildinggross margin 17.4 % 14.5 % 14.7 % 14.2 %percentageHomebuildinggross marginpercentage,before costof sales 20.2 % 18.9 % 18.4 % 18.1 %interestexpense andland charges(2)Homebuildinggross marginpercentage,after costof sales 17.8 % 14.9 % 15.1 % 14.5 %interestexpense,before landcharges (2)

Land Sales Gross Margin Land Sales Gross Margin Three Months Ended Year Ended October 31, October 31, 2020 2019 2020 2019 (Unaudited) (Unaudited)Land and lot $16,805 $1,161 $16,905 $9,211 salesLand and lotsales costof sales,excluding 10,993 1,150 11,154 8,540 interest andland charges(1)Land and lotsales grossmargin, 5,812 11 5,751 671 excludinginterest andland chargesLand and lotsales 84 - 156 205 interestLand and lotsales grossmargin,including $5,728 $11 $5,595 $466 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, 2020Reconciliation of adjusted EBITDA to net income (loss)(Dollars in thousands) Three Months Ended Year Ended October 31, October 31, 2020 2019 2020 2019 (Unaudited) (Unaudited)Net income $40,634 $(1,807 ) $50,928 $(42,117 )(loss)Income tax 1,810 1,221 4,475 2,449 provisionInterest expense 40,648 50,299 178,131 160,781 EBIT (1) 83,092 49,713 233,534 121,113 Depreciation and 1,407 1,230 5,304 4,172 amortizationEBITDA (2) 84,499 50,943 238,838 125,285 Inventoryimpairment loss 2,611 2,687 8,813 6,288 and land optionwrite-offsLoss (gain) onextinguishment - 42,436 (13,337 ) 42,436 of debtAdjusted EBITDA $87,110 $96,066 $234,314 $174,009 (3) Interest $41,660 $43,566 $176,457 $165,906 incurred Adjusted EBITDAto interest 2.09 2.21 1.33 1.05 incurred

(1) EBIT is a non-GAAP financial measure. The most directly comparable GAAPfinancial measure is net income (loss). EBIT represents earnings beforeinterest expense and income taxes.

(2) EBITDA is a non-GAAP financial measure. The most directly comparable GAAPfinancial measure is net income (loss). EBITDA represents earnings beforeinterest expense, income taxes, depreciation and amortization.

(3) Adjusted EBITDA is a non-GAAP financial measure. The most directlycomparable GAAP financial measure is net income (loss). Adjusted EBITDArepresents earnings before interest expense, income taxes, depreciation,amortization, inventory impairment loss and land option write-offs and loss(gain) on extinguishment of debt.

Hovnanian Enterprises, Inc.October 31, 2020Interest incurred, expensed and capitalized(In thousands) Three Months Ended Year Ended October 31, October 31, 2020 2019 2020 2019 (Unaudited) (Unaudited)Interestcapitalized at $63,998 $77,997 $71,264 $68,117 beginning ofperiodPlus interest 41,660 43,566 176,457 165,906 incurredLess interest 40,648 50,299 178,131 160,781 expensedLess interestcontributed tounconsolidated - - 4,580 1,978 joint venture(1)Interestcapitalized at $65,010 $71,264 $65,010 $71,264 end of period(2)

(1) Represents capitalized interest which was included as part of the assetscontributed to the joint ventures the Company entered into in December 2019 andJune 2019 during the years ended October 31, 2020 and 2019, respectively. Therewas no impact to the Consolidated Statement of Operations as a result of thesetransactions.

(2) Capitalized interest amounts are shown gross before allocating any portionof impairments to capitalized interest.

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

October October 31, 31,(In thousands) 2020 2019 ASSETS Homebuilding: Cash and cash equivalents $262,489 $130,976 Restricted cash and cash equivalents 14,731 20,905 Inventories: Sold and unsold homes and lots under development 921,594 993,647 Land and land options held for future development 91,957 108,565 or saleConsolidated inventory not owned 182,224 190,273 Total inventories 1,195,775 1,292,485 Investments in and advances to unconsolidated 103,164 127,038 joint venturesReceivables, deposits and notes, net 33,686 44,914 Property, plant and equipment, net 18,185 20,127 Prepaid expenses and other assets 58,705 45,704 Total homebuilding 1,686,735 1,682,149 Financial services 140,607 199,275 Total assets $1,827,342 $1,881,424 LIABILITIES AND EQUITY Homebuilding: Nonrecourse mortgages secured by inventory, net $135,122 $203,585 of debt issuance costsAccounts payable and other liabilities 359,274 320,193 Customers? deposits 48,286 35,872 Liabilities from inventory not owned, net of debt 131,204 141,033 issuance costsSenior notes and credit facilities (net of 1,431,110 1,479,990 discount, premium and debt issuance costs)Accrued interest 35,563 19,081 Total homebuilding 2,140,559 2,199,754 Financial services 119,045 169,145 Income taxes payable 3,832 2,301 Total liabilities 2,263,436 2,371,200 Equity: Hovnanian Enterprises, Inc. stockholders' equity deficit:Preferred stock, $0.01 par value - authorized100,000 shares; issued and outstanding 5,600 135,299 135,299 shares with a liquidation preference of $140,000at October 31, 2020 and 2019Common stock, Class A, $0.01 par value -authorized 16,000,000 shares; issued 5,990,310 60 60 shares at October 31, 2020 and 5,973,727 sharesat October 31, 2019Common stock, Class B, $0.01 par value(convertible to Class A at time of sale) -authorized 2,400,000 shares; issued 649,886 7 7 shares at October 31, 2020 and 650,363 shares atOctober 31, 2019Paid in capital - common stock 718,110 715,504 Accumulated deficit (1,175,045 ) (1,225,973 )Treasury stock - at cost ? 470,430 shares ofClass A common stock and 27,669 shares of Class B (115,360 ) (115,360 )common stock at October 31, 2020 and 2019Total Hovnanian Enterprises, Inc. stockholders? (436,929 ) (490,463 )equity deficitNoncontrolling interest in consolidated joint 835 687 venturesTotal equity deficit (436,094 ) (489,776 )Total liabilities and equity $1,827,342 $1,881,424

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

Three Months Ended October 31, Year Ended October 31, 2020 2019 2020 2019 Revenues: Homebuilding: Sale of homes $643,516 $692,146 $2,252,029 $1,949,682 Land sales and 17,350 1,971 19,710 13,082 other revenuesTotal 660,866 694,117 2,271,739 1,962,764 homebuildingFinancial 22,492 19,473 72,162 54,152 servicesTotal revenues 683,358 713,590 2,343,901 2,016,916 Expenses: Homebuilding: Cost of sales,excluding 524,409 562,434 1,848,486 1,604,777 interestCost of sales 15,791 27,556 74,330 70,725 interestInventoryimpairment loss 2,611 2,687 8,813 6,288 and land optionwrite-offsTotal cost of 542,811 592,677 1,931,629 1,681,790 salesSelling, generaland 39,374 36,310 161,261 166,784 administrativeTotalhomebuilding 582,185 628,987 2,092,890 1,848,574 expenses Financial 10,383 10,446 40,060 36,525 servicesCorporategeneral and 26,213 17,572 80,553 66,364 administrativeOther interest 24,857 22,743 103,801 90,056 Other operations 422 368 1,096 1,561 Total expenses 644,060 680,116 2,318,400 2,043,080 (Loss) gain onextinguishment - (42,436 ) 13,337 (42,436 )of debtIncome fromunconsolidated 3,146 8,376 16,565 28,932 joint venturesIncome (loss)before income 42,444 (586 ) 55,403 (39,668 )taxesState andfederal income tax provision:State 1,810 1,221 4,475 2,449 Federal - - - - Total income 1,810 1,221 4,475 2,449 taxesNet income $40,634 $(1,807 ) $50,928 $(42,117 )(loss) Per share data: Basic: Net income(loss) per $5.97 $(0.30 ) $7.48 $(7.06 )common shareWeighted-averagenumber of common 6,221 5,982 6,189 5,968 sharesoutstandingAssuming dilution:Net income(loss) per $5.54 $(0.30 ) $7.03 $(7.06 )common shareWeighted-averagenumber of common 6,699 5,982 6,584 5,968 sharesoutstanding



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

Contracts (1) Deliveries Contract Three Months Ended Three Months Ended Backlog October 31, October 31, October 31, 2020 2019 % Change 2020 2019 % Change 2020 2019 % ChangeNortheast (NJ, PA) Home 95 72 31.9% 78 112 (30.4) 130 152 (14.5) % % Dollars $63,326 $37,860 67.3% $42,218 $70,650 (40.2) $82,111 $86,557 (5.1)% % Avg. $666,589 $525,833 26.8% $541,256 $630,804 (14.2) $631,623 $569,454 10.9% Price %Mid-Atlantic (DE, MD, VA, Home 253 181 39.8% 219 240 (8.8)% 557 343 62.4% WV) Dollars $135,364 $86,296 56.9% $114,221 $135,866 (15.9) $291,115 $193,387 50.5% % Avg. $535,036 $476,773 12.2% $521,557 $566,108 (7.9)% $522,648 $563,810 (7.3)% PriceMidwest (IL, OH) Home 249 177 40.7% 187 232 (19.4) 596 450 32.4% % Dollars $79,999 $54,682 46.3% $59,498 $68,714 (13.4) $169,517 $122,681 38.2% % Avg. $321,281 $308,938 4.0% $318,171 $296,181 7.4% $284,424 $272,624 4.3% PriceSoutheast (FL, GA, SC) Home 163 179 (8.9)% 169 193 (12.4) 298 282 5.7% % Dollars $74,765 $69,765 7.2% $73,741 $76,414 (3.5)% $146,971 $121,921 20.5% Avg. $458,681 $389,749 17.7% $436,337 $395,927 10.2% $493,191 $432,344 14.1% PriceSouthwest (AZ, TX) Home 712 496 43.5% 584 621 (6.0)% 1,066 663 60.8% Dollars $245,813 $166,723 47.4% $194,505 $213,089 (8.7)% $360,225 $230,898 56.0% Avg. $345,243 $336,135 2.7% $333,057 $343,138 (2.9)% $337,922 $348,261 (3.0)% PriceWest (CA) Home 446 240 85.8% 335 311 7.7% 755 301 150.8% Dollars $229,656 $102,460 124.1% $159,332 $127,413 25.1% $369,887 $124,700 196.6% Avg. $514,924 $426,917 20.6% $475,618 $409,688 16.1% $489,917 $414,286 18.3% PriceConsolidated Total Home 1,918 1,345 42.6% 1,572 1,709 (8.0)% 3,402 2,191 55.3% Dollars $828,923 $517,786 60.1% $643,515 $692,146 (7.0)% $1,419,826 $880,144 61.3% Avg. $432,181 $384,971 12.3% $409,361 $405,001 1.1% $417,350 $401,709 3.9% PriceUnconsolidatedJoint Ventures (2)(excluding KSA Home 225 134 67.9% 163 232 (29.7) 326 259 25.9% JV) % Dollars $135,906 $80,126 69.6% $102,043 $145,098 (29.7) $184,524 $161,807 14.0% % Avg. $604,027 $597,955 1.0% $626,031 $625,422 0.1% $566,025 $624,737 (9.4)% PriceGrand Total Home 2,143 1,479 44.9% 1,735 1,941 (10.6) 3,728 2,450 52.2% % Dollars $964,829 $597,912 61.4% $745,558 $837,244 (11.0) $1,604,350 $1,041,951 54.0% % Avg. $450,224 $404,268 11.4% $429,716 $431,347 (0.4)% $430,351 $425,286 1.2% Price KSA JV Only Home 326 71 359.2% 0 0 0.0% 1,092 202 440.6% Dollars $51,110 $11,517 343.8% $0 $0 0.0% $171,673 $32,316 431.2% Avg. $156,779 $162,211 (3.3)% $0 $0 0.0% $157,209 $159,982 (1.7)% 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)(UNAUDITED) Contracts (1) Deliveries Contract Year Ended Year Ended Backlog October 31, October 31, October 31, 2020 2019 % Change 2020 2019 % Change 2020 2019 % ChangeNortheast (NJ, PA) Home 326 293 11.3% 348 192 81.3% 130 152 (14.5) % Dollars $171,181 $172,950 (1.0)% $175,627 $116,889 50.3% $82,111 $86,557 (5.1)% Avg. $525,095 $590,273 (11.0) $504,675 $608,797 (17.1)% $631,623 $569,454 10.9% Price %Mid-Atlantic (DE, MD, VA, Home 990 728 36.0% 755 652 15.8% 557 343 62.4% WV) Dollars $510,229 $385,862 32.2% $402,647 $356,674 12.9% $291,115 $193,387 50.5% Avg. $515,383 $530,030 (2.8)% $533,307 $547,046 (2.5)% $522,648 $563,810 (7.3)% PriceMidwest (IL, OH) Home 873 736 18.6% 727 680 6.9% 596 450 32.4% Dollars $272,170 $219,266 24.1% $225,334 $203,734 10.6% $169,517 $122,681 38.2% Avg. $311,764 $297,916 4.6% $309,950 $299,609 3.5% $284,424 $272,624 4.3% PriceSoutheast (FL, GA, SC) Home 599 576 4.0% 548 545 0.6% 298 282 5.7% Dollars $270,277 $233,645 15.7% $232,333 $219,860 5.7% $146,971 $121,921 20.5% Avg. $451,214 $405,634 11.2% $423,965 $403,413 5.1% $493,191 $432,344 14.1% PriceSouthwest (AZ, TX) Home 2,636 2,006 31.4% 2,233 1,866 19.7% 1,066 663 60.8% Dollars $872,630 $677,244 28.9% $743,301 $627,201 18.5% $360,225 $230,898 56.0% Avg. $331,043 $337,609 (1.9)% $332,871 $336,121 (1.0)% $337,922 $348,261 (3.0)% PriceWest (CA) Home 1,529 1,001 52.7% 1,075 1,011 6.3% 755 301 150.8% Dollars $717,973 $411,577 74.4% $472,786 $425,324 11.2% $369,887 $124,700 196.6% Avg. $469,570 $411,166 14.2% $439,801 $420,696 4.5% $489,917 $414,286 18.3% PriceConsolidated Total Home 6,953 5,340 30.2% 5,686 4,946 15.0% 3,402 2,191 55.3% Dollars $2,814,460 $2,100,544 34.0% $2,252,028 $1,949,682 15.5% $1,419,826 $880,144 61.3% Avg. $404,784 $393,360 2.9% $396,065 $394,194 0.5% $417,350 $401,709 3.9% PriceUnconsolidatedJoint Ventures (2)(excluding KSA Home 739 636 16.2% 728 767 (5.1)% 326 259 25.9% JV) Dollars $432,570 $398,476 8.6% $432,602 $483,697 (10.6)% $184,524 $161,807 14.0% Avg. $585,345 $626,535 (6.6)% $594,234 $630,635 (5.8)% $566,025 $624,737 (9.4)% PriceGrand Total Home 7,692 5,976 28.7% 6,414 5,713 12.3% 3,728 2,450 52.2% Dollars $3,247,030 $2,499,020 29.9% $2,684,630 $2,433,379 10.3% $1,604,350 $1,041,951 54.0% Avg. $422,131 $418,176 0.9% $418,558 $425,937 (1.7)% $430,351 $425,286 1.2% Price KSA JV Only Home 890 204 336.3% 0 7 (100.0) 1,092 202 440.6% % Dollars $139,356 $32,943 323.0% $0 $1,627 (100.0) $171,673 $32,316 431.2% % Avg. $156,580 $161,485 (3.0)% $0 $232,429 (100.0) $157,210 $159,982 (1.7)% 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)(UNAUDITED) Contracts (1) Deliveries Contract Three Months Ended Three Months Ended Backlog October 31, October 31, October 31, 2020 2019 % Change 2020 2019 % Change 2020 2019 % ChangeNortheast (unconsolidated Home 16 47 (66.0) 31 82 (62.2) 18 76 (76.3)% joint ventures) % %(excluding KSA Dollars $24,384 $33,054 (26.2) $31,421 $62,284 (49.6) $24,535 $63,680 (61.5)% JV) % %(NJ, PA) Avg. $1,524,000 $703,277 116.7% $1,013,581 $759,561 33.4% $1,363,056 $837,895 62.7% PriceMid-Atlantic (unconsolidated Home 63 11 472.7% 21 26 (19.2) 90 21 328.6% joint ventures) %(DE, MD, VA, Dollars $33,382 $5,862 469.5% $10,378 $15,816 (34.4) $46,821 $11,121 321.0% WV) % Avg. $529,873 $532,909 (0.6)% $494,190 $608,308 (18.8) $520,233 $529,571 (1.8)% Price %Midwest (unconsolidated Home 2 4 (50.0) 2 3 (33.3) 0 3 (100.0) joint ventures) % % %(IL, OH) Dollars $950 $1,800 (47.2) $950 $1,400 (32.1) $0 $1,285 (100.0) % % % Avg. $475,000 $450,000 5.6% $475,000 $466,667 1.8% $0 $428,333 (100.0) Price %Southeast (unconsolidated Home 89 31 187.1% 69 60 15.0% 149 88 69.3% joint ventures)(FL, GA, SC) Dollars $49,970 $16,611 200.8% $36,307 $33,080 9.8% $78,528 $47,678 64.7% Avg. $561,461 $535,839 4.8% $526,188 $551,333 (4.6)% $527,034 $541,795 (2.7)% PriceSouthwest (unconsolidated Home 30 30 0.0% 30 40 (25.0) 46 45 2.2% joint ventures) %(AZ, TX) Dollars $18,553 $18,347 1.1% $19,509 $24,793 (21.3) $26,803 $28,318 (5.3)% % Avg. $618,433 $611,567 1.1% $650,300 $619,825 4.9% $582,674 $629,289 (7.4)% PriceWest (unconsolidated Home 25 11 127.3% 10 21 (52.4) 23 26 (11.5)% joint ventures) %(CA) Dollars $8,667 $4,452 94.7% $3,478 $7,725 (55.0) $7,837 $9,725 (19.4)% % Avg. $346,680 $404,727 (14.3) $347,800 $367,857 (5.5)% $340,739 $374,038 (8.9)% Price %UnconsolidatedJoint Ventures (2)(excluding KSA Home 225 134 67.9% 163 232 (29.7) 326 259 25.9% JV) % Dollars $135,906 $80,126 69.6% $102,043 $145,098 (29.7) $184,524 $161,807 14.0% % Avg. $604,027 $597,955 1.0% $626,031 $625,422 0.1% $566,025 $624,737 (9.4)% Price KSA JV Only Home 326 71 359.2% 0 0 0.0% 1,092 202 440.6% Dollars $51,110 $11,517 343.8% $0 $0 0.0% $171,673 $32,316 431.2% Avg. $156,779 $162,211 (3.3)% $0 $0 0.0% $157,210 $159,982 (1.7)% 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)(UNAUDITED) Contracts (1) Deliveries Contract Year Ended Year Ended Backlog October 31, October 31, October 31, 2020 2019 % Change 2020 2019 % Change 2020 2019 % ChangeNortheast (unconsolidated Home 146 235 (37.9) 204 273 (25.3)% 18 76 (76.3)% joint ventures) %(excluding KSA Dollars $128,526 $183,450 (29.9) $167,671 $213,137 (21.3)% $24,535 $63,680 (61.5)% JV) %(NJ, PA) Avg. $880,315 $780,638 12.8% $821,917 $780,722 5.3% $1,363,056 $837,895 62.7% PriceMid-Atlantic (unconsolidated Home 133 37 259.5% 85 69 23.2% 90 21 328.6% joint ventures)(DE, MD, VA, Dollars $68,605 $25,020 174.2% $42,759 $49,083 (12.9)% $46,821 $11,121 321.0% WV) Avg. $515,827 $676,216 (23.7) $503,047 $711,348 (29.3)% $520,233 $529,571 (1.8)% Price %Midwest (unconsolidated Home 13 16 (18.8) 16 22 (27.3)% 0 3 (100.0) joint ventures) % %(IL, OH) Dollars $6,059 $8,272 (26.8) $7,344 $13,063 (43.8)% $0 $1,285 (100.0) % % Avg. $466,077 $517,000 (9.8)% $459,000 $593,773 (22.7)% $0 $428,333 (100.0) Price %Southeast (unconsolidated Home 274 153 79.1% 248 187 32.6% 149 88 69.3% joint ventures)(FL, GA, SC) Dollars $140,517 $82,141 71.1% $122,562 $97,718 25.4% $78,528 $47,678 64.7% Avg. $512,836 $536,869 (4.5)% $494,202 $522,556 (5.4)% $527,034 $541,795 (2.7)% PriceSouthwest (unconsolidated Home 106 116 (8.6)% 105 138 (23.9)% 46 45 2.2% joint ventures)(AZ, TX) Dollars $65,700 $70,802 (7.2)% $67,215 $82,948 (19.0)% $26,803 $28,318 (5.3)% Avg. $619,811 $610,362 1.5% $640,143 $601,072 6.5% $582,674 $629,289 (7.4)% PriceWest (unconsolidated Home 67 79 (15.2) 70 78 (10.3)% 23 26 (11.5)% joint ventures) %(CA) Dollars $23,163 $28,791 (19.5) $25,051 $27,748 (9.7)% $7,837 $9,725 (19.4)% % Avg. $345,716 $364,443 (5.1)% $357,871 $355,744 0.6% $340,739 $374,038 (8.9)% PriceUnconsolidatedJoint Ventures (2)(excluding KSA Home 739 636 16.2% 728 767 (5.1)% 326 259 25.9% JV) Dollars $432,570 $398,476 8.6% $432,602 $483,697 (10.6)% $184,524 $161,807 14.0% Avg. $585,345 $626,535 (6.6)% $594,234 $630,635 (5.8)% $566,025 $624,737 (9.4)% Price KSA JV Only Home 890 204 336.3% 0 7 (100.0) 1,092 202 440.6% % Dollars $139,356 $32,943 323.0% $0 $1,627 (100.0) $171,673 $32,316 431.2% % Avg. $156,580 $161,485 (3.0)% $0 $232,429 (100.0) $157,210 $159,982 (1.7)% 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