Hovnanian Enterprises Reports Fiscal 2021 First Quarter Results

$27 Million Year-over-Year Improvement in Pretax Income
First Quarter Gross Margin Percentage Increased 440 Basis Points Year-over-Year
85% Year-over-Year Increase in Consolidated Backlog Dollars to $1.67 Billion
51% Year-over-Year Increase in Land and Land Development SpendMATAWAN, N.J., March 02, 2021 (GLOBE NEWSWIRE) — Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal first quarter ended January 31, 2021.Total revenues increased 16.3% to $574.7 million in the first quarter of fiscal 2021, compared with $494.1 million in the same quarter of the prior year.Homebuilding gross margin percentage, after cost of sales interest expense and land charges, increased 440 basis points to 17.3% for the three months ended January 31, 2021 compared with 12.9% during the same period a year ago.Homebuilding gross margin percentage, before cost of sales interest expense and land charges, increased 340 basis points to 20.7% during the fiscal 2021 first quarter compared with 17.3% in last year’s first quarter.Total SG&A was $63.7 million, or 11.1% of total revenues, in the fiscal 2021 first quarter compared with $60.4 million, or 12.2% of total revenues, in the previous year’s first quarter.Total interest expense was $41.1 million for the first quarter of fiscal 2021 compared with $43.1 million during the first quarter of fiscal 2020.Income from unconsolidated joint ventures was $1.9 million for the first quarter ended January 31, 2021 compared with $1.5 million in the fiscal 2020 first quarter.Income before income taxes for the first quarter of fiscal 2021 was $19.6 million compared with a loss of $7.4 million in the first quarter of the prior fiscal year.Adjusted pretax income, which is income before income taxes excluding land-related charges and gain on extinguishment of debt, was $21.5 million in the first quarter of fiscal 2021 compared with a loss before these items of $14.1 million in the fiscal 2020 first quarter.Net income was $19.0 million, or $2.75 per diluted common share, for the three months ended January 31, 2021 compared with a net loss of $9.1 million, or $1.49 per common share, in the first quarter of the previous fiscal year.EBITDA increased 67.8% to $62.1 million for the first quarter of fiscal 2021 compared with $37.0 million in the same quarter of the prior year.For the first quarter of fiscal 2021, Adjusted EBITDA increased 110.6% to $63.9 million compared with $30.4 million in the first quarter of fiscal 2020.Financial services income before income taxes was $9.1 million for the first quarter of fiscal 2021, up 105.0% compared with $4.5 million in the first quarter of fiscal 2020.Consolidated contracts per community increased 74.2% to 16.9 contracts per community for the first quarter ended January 31, 2021 compared with 9.7 contracts per community in last year’s first quarter. Contracts per community, including domestic unconsolidated joint ventures⁽¹⁾, increased 69.9% to 15.8 for the first quarter of fiscal 2021 compared with 9.3 for the first quarter of fiscal 2020.The number of consolidated contracts increased 34.5% to 1,778 homes during the fiscal 2021 first quarter, compared with 1,322 homes in last year’s first quarter. The number of contracts, including domestic unconsolidated joint ventures, for the three months ended January 31, 2021 increased 31.5% to 1,962 homes from 1,492 homes during the same quarter a year ago.As of the end of the first quarter of fiscal 2021, community count, including domestic unconsolidated joint ventures, was 124 communities, compared with 160 communities at January 31, 2020. Consolidated community count was 105 as of January 31, 2021, compared with 136 communities at the end of the previous year’s first quarter. The decline was primarily a result of selling out of communities at a faster than anticipated pace and delayed community openings.Despite 1,385 first quarter consolidated deliveries, consolidated lots controlled increased by 733 lots sequentially to 26,782 at January 31, 2021 from 26,049 lots at October 31, 2020, which illustrated our ability to control more lots than we delivered.Plan to reactivate approximately half of the lots representing multiple products in a large 1,400 home masterplan community in Northern California.During February 2021, we raised home prices more aggressively to further increase margins and attempt to slow down our sales pace. After experiencing a 100.0% year-over-year increase in contracts per community in the month of January 2021, the contracts per community for February 2021 only increased 27.1% to 6.1 compared with 4.8 for the same month one year ago.The dollar value of February 2021 consolidated contracts increased 8.6% to $283.0 million compared with $260.7 million in February last year; however, the number of consolidated contracts declined to 613 homes compared to 647 homes in February 2020.The dollar value of consolidated contract backlog, as of January 31, 2021, increased 85.2% to $1.67 billion compared with $899.6 million as of January 31, 2020. The dollar value of contract backlog, including domestic unconsolidated joint ventures, as of January 31, 2021, increased 70.3% to $1.88 billion compared with $1.10 billion as of January 31, 2020.Consolidated deliveries increased 12.1% to 1,385 homes in the fiscal 2021 first quarter compared with 1,236 homes in the previous year’s first quarter. For the fiscal 2021 first quarter, deliveries, including domestic unconsolidated joint ventures, increased 8.6% to 1,504 homes compared with 1,385 homes during the first quarter of fiscal 2020.The contract cancellation rate for consolidated contracts was 17% for the first quarter ended January 31, 2021 compared with 19% in the fiscal 2020 first quarter. The contract cancellation rate for contracts including domestic unconsolidated joint ventures was 16% for the first quarter of fiscal 2021 compared with 19% in the first 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).