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Press release from GlobeNewswire (a Nasdaq OMX company)

Hovnanian Enterprises Reports Third Quarter Fiscal 2012 Results

Thursday, September 06, 2012

Hovnanian Enterprises Reports Third Quarter Fiscal 2012 Results06:21 EDT Thursday, September 06, 2012RED BANK, N.J., Sept. 6, 2012 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE:HOV), a leading national homebuilder, reported results for its third quarter and nine months ended July 31, 2012.RESULTS FOR THREE AND NINE MONTH PERIODS ENDED JULY 31, 2012: Net income was $34.7 million during the fiscal 2012 third quarter, or $0.25 per common share, compared with a net loss of $50.9 million, or $0.47 per common share, in last year's third quarter. This represents an increase of $85.6 million over last year's net income during the quarter. Net income in the fiscal 2012 third quarter benefitted from the reversal of $37.0 million of state tax reserves.   In the first nine months of fiscal 2012, net income was $18.2 million, or $0.15 per common share, compared with a net loss of $187.7 million, or $1.92 per common share, in the prior year's first nine months.   Total revenues were $387.0 million during the fiscal 2012 third quarter up 35.5% compared with $285.6 million in last year's third quarter. In the first nine months of fiscal 2012, total revenues were $998.3 million up 25.8% compared with $793.3 million in the prior year's first nine months.   The dollar value of net contracts, including unconsolidated joint ventures, for the third quarter ended July 31, 2012 increased 31.8% to $507.0 million compared with $384.6 million in the same quarter last year. The number of net contracts increased 18.8% to 1,541 homes from 1,297 homes in the same quarter last year.   For the nine months ended July 31, 2012, the dollar value of net contracts, including unconsolidated joint ventures, increased 43.0% to $1.4 billion compared with $980.7 million in the same period a year ago and the number of net contracts increased 32.7% to 4,395 homes compared with 3,313 homes in the first nine months last year.   Homebuilding gross margin percentage, before interest expense included in cost of sales, was 18.2% for the fiscal 2012 third quarter, compared to 15.3% during the third quarter of 2011 and 17.4% in the second quarter of 2012. For the nine month period ended July 31, 2012, homebuilding gross margin percentage, before interest expense included in cost of sales, was 17.5% compared with 15.6% in the first nine months of 2011.   Total SG&A was $48.1 million or 12.4% of total revenues for the three months ended July 31, 2012 compared to $46.5 million or 16.3% of total revenues in the third quarter of the prior year and 13.9% in the second quarter of 2012. In the first nine months of 2012, total SG&A was $141.6 million or 14.2% of total revenues compared with $153.6 million or 19.4% of total revenues in the same period last year.   Consolidated pre-tax land-related charges for the third quarter of fiscal 2012 were $0.7 million compared with $11.4 million in the third quarter of the prior year. For the nine months ended July 31, 2012, the consolidated pre-tax land-related charges were $7.2 million compared with $41.9 million in last year's first nine months.   Repurchased $2.0 million of unsecured senior notes for $1.5 million in cash and issued approximately 5.4 million shares of Class A common stock in exchange for $21.0 million of unsecured senior notes during the three months ended July 31, 2012, resulting in a $6.2 million gain on extinguishment of debt.   Pre-tax loss during the third quarter of 2012 was $1.8 million compared with $55.6 million in the same period of the prior year. For the nine months ended July 31, 2012, the pre-tax loss was $17.0 million compared with $193.8 million during the first nine months a year ago.   The contract cancellation rate, including unconsolidated joint ventures, in the third quarter of 2012 was 21%, compared with 19% during the 2011 third quarter.   Contract backlog, as of July 31, 2012, including unconsolidated joint ventures, was 2,452 homes with a sales value of $813.9 million, which was an increase of 41.2% and 42.6%, respectively, compared to July 31, 2011.   Deliveries, including unconsolidated joint ventures, were 1,387 homes for the third quarter of fiscal 2012, up 24.7% compared with 1,112 homes in the third quarter of the prior year. During the nine months ended July 31, 2012, deliveries, including unconsolidated joint ventures, were 3,606 homes compared with 2,971 homes in the first nine months of last year, an increase of 21.4%.   The dollar value of net contracts and the number of net contracts, including unconsolidated joint ventures, for the month of August increased 48.7% and 26.0% respectively to $166.8 million compared with $112.2 million and to 484 homes from 384 homes in the same month last year.   The valuation allowance was $909.1 million as of July 31, 2012. The valuation allowance is a non-cash reserve against the tax assets for GAAP purposes. For tax purposes, the tax deductions associated with the tax assets may be carried forward for 20 years from the date the deductions were incurred.CASH AND INVENTORY AS OF JULY 31, 2012: During the third quarter of 2012, we entered into a land banking arrangement with GSO Capital Partners LP ("GSO"), the credit arm of The Blackstone Group, for total acquisition and committed future development costs of up to $125 million. Under this arrangement, we sold 620 of our previously owned lots to GSO for $37.1 million in net cash proceeds with GSO agreeing to fund the remaining development costs, and we have the option to purchase back these finished lots on a quarterly takedown basis.  To complete the $125 million land banking arrangement with GSO, we have already identified and GSO is currently evaluating additional land parcels totaling approximately $60 million in acquisition and development costs. After spending $117.6 million during the third quarter of 2012 on land and land development and $1.5 million to repurchase debt, homebuilding cash increased $23.1 million from the second quarter to $252.1 million, as of July 31, 2012, including $32.8 million of restricted cash required to collateralize letters of credit.   As of July 31, 2012, the land position, including unconsolidated joint ventures, was 29,089 lots, consisting of 10,597 lots under option and 18,492 owned lots.COMMENTS FROM MANAGEMENT: "Despite a continuing weak United States economy, the dollar amount of our net contracts reflected strong year-over-year increases of 43% and 32% for our first nine months and the third quarter of fiscal 2012, respectively, as compared to the same periods in fiscal 2011. Unlike the past few years, the market for new homes has been resilient through both the spring selling season and throughout the summer months this year. We believe the housing market's recent overall strength and our significantly improved sales pace this year indicates that the market for new homes has bounced off the bottom and is already in a period of gradual recovery. Additionally, we are encouraged with the progress we made in our operating metrics, particularly with the 290 basis point year-over-year improvement in our gross margin and the 390 basis point reduction in total SG&A as a percentage of total revenues during the third quarter," commented Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. "Since the end of fiscal 2008, we have reduced our total indebtedness by $1.1 billion, including a $23 million reduction during our third quarter of fiscal 2012 and a $169 million reduction year to date. Increasing our third quarter homebuilding cash balance to $252 million while investing $118 million in land and land development, demonstrated that we can maintain our liquidity while simultaneously buying land for future growth. As our operating results improve further, we will continue to opportunistically take steps to better position our balance sheet," concluded Mr. Hovnanian.WEBCAST INFORMATION: Hovnanian Enterprises will webcast its fiscal 2012 third quarter financial results conference call at 11:00 a.m. E.T. on Thursday, September 6, 2012. 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 "Audio Archives" 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 Red Bank, New Jersey. The Company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian®Homes®, Matzel & Mumford, Brighton Homes, Parkwood Builders, Town & Country Homes and Oster Homes. As the developer of K. Hovnanian's® Four Seasons communities, the Company is also one of the nation's largest builders of active adult homes. Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company's 2011 annual report, 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 or fax lists, please send an e-mail to IR@khov.com or sign up at http://www.khov.com. The Hovnanian Enterprises, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7499NON-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, expenses associated with debt exchange offer and (gain) loss 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 of EBIT, EBITDA and Adjusted EBITDA to net income (loss) is presented in a table attached to this earnings release.Loss Before Income Taxes Excluding Land-Related Charges, Expenses Associated with Debt Exchange Offer and (Gain) Loss on Extinguishment of Debt is a non-GAAP financial measure. The most directly comparable GAAP financial measure is Loss Before Income Taxes. The reconciliation of Loss Before Income Taxes Excluding Land-Related Charges, Expenses Associated with Debt Exchange Offer and (Gain) Loss on Extinguishment of Debt to Loss Before Income Taxes is presented in a table attached to this earnings release.FORWARD-LOOKING STATEMENTSAll statements in this press release that are not historical facts should be considered as "forward-looking statements." 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. 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. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic and industry and business conditions and impacts of the sustained homebuilding downturn, (2) adverse weather and other environmental conditions and natural disasters, (3) changes in market conditions and seasonality of the Company's business, (4) changes in home prices and sales activity in the markets where the Company builds homes, (5) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws, and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in, and price fluctuations of, raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to the Company, (11) utility shortages and outages or rate fluctuations, (12) levels of indebtedness and restrictions on the Company's operations and activities imposed by the agreements governing the Company's outstanding indebtedness, (13) the Company's sources of liquidity, (14) changes in credit ratings, (15) availability of net operating loss carryforwards, (16) operations through joint ventures with third parties, (17) product liability litigation, warranty claims and claims by mortgage investors, (18) successful identification and integration of acquisitions, (19) significant influence of the Company's controlling stockholders, (20) changes in tax laws affecting the after-tax costs of owning a home, (21) geopolitical risks, terrorist acts and other acts of war, and (22) other factors described in detail in the Company's Annual Report on Form 10-K for the year ended October 31, 2011 and the Company's Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2012. 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.  (Financial Tables Follow)          Hovnanian Enterprises, Inc.    July 31, 2012     Statements of Consolidated Operations         (Dollars in Thousands, Except Per Share Data)           Three Months Ended Nine Months Ended   July 31, July 31,   2012 2011 2012 2011   (Unaudited) (Unaudited) Total Revenues $387,011 $285,618 $998,309 $793,282 Costs and Expenses (a)  395,910 337,547  1,075,640  977,588 Gain (Loss) on Extinguishment of Debt  6,230 (1,391) 57,966 (3,035) Gain (Loss) from Unconsolidated Joint Ventures 852 (2,255) 2,324 (6,479) Loss Before Income Taxes  (1,817) (55,575)  (17,041) (193,820) Income Tax Benefit  (36,493) (4,645)  (35,254) (6,081) Net Income (Loss) $34,676 $(50,930) $18,213 $(187,739)           Per Share Data:         Basic:         Income (Loss) Per Common Share $0.25 $(0.47) $0.15 $(1.92) Weighted Average Number of         Common Shares Outstanding (b)  138,472 108,721 121,357  97,648 Assuming Dilution:         Income (Loss) Per Common Share $0.25 $(0.47) $0.15 $(1.92) Weighted Average Number of         Common Shares Outstanding (b)  138,552 108,721 121,380  97,648           (a) Includes inventory impairment loss and land option write-offs.       (b) For periods with a net loss, basic shares are used in accordance with GAAP rules.                        Hovnanian Enterprises, Inc.      July 31, 2012       Reconciliation of Loss Before Income Taxes Excluding Land-Related       Charges, Expenses Associated with the Debt Exchange Offer and       (Gain) Loss on Extinguishment of Debt to Loss Before Income Taxes       (Dollars in Thousands)           Three Months Ended Nine Months Ended   July 31, July 31,   2012 2011 2012 2011   (Unaudited) (Unaudited) Loss Before Income Taxes $(1,817) $(55,575) $(17,041) $(193,820) Inventory Impairment Loss and Land Option Write-Offs 689 11,426 7,230  41,876 Expenses Associated with the Debt Exchange Offer  --  -- 4,683  -- (Gain) Loss on Extinguishment of Debt  (6,230) 1,391  (57,966)  3,035 Loss Before Income Taxes Excluding         Land-Related Charges, Expenses Associated with the Debt Exchange Offer and (Gain) Loss on Extinguishment of Debt (a) $(7,358) $(42,758) $(63,094) $(148,909)           (a) Loss Before Income Taxes Excluding Land-Related Charges, Expenses Associated with the Debt Exchange Offer, and (Gain) Loss on Extinguishment of Debt is a non-GAAP Financial measure. The most directly comparable GAAP financial measure is Loss Before Income Taxes.                    Hovnanian Enterprises, Inc.        July 31, 2012         Gross Margin         (Dollars in Thousands)           Homebuilding Gross Margin Homebuilding Gross Margin   Three Months Ended Nine Months Ended   July 31, July 31,   2012 2011 2012 2011   (Unaudited) (Unaudited) Sale of Homes $371,481 $276,479 $936,305 $759,338 Cost of Sales, Excluding Interest (a) 303,760 234,129 772,368 640,507 Homebuilding Gross Margin, Excluding Interest 67,721 42,350 163,937 118,831 Homebuilding Cost of Sales Interest  14,178 14,222  34,829 41,671 Homebuilding Gross Margin, Including Interest $53,543 $28,128 $129,108 $77,160           Gross Margin Percentage, Excluding Interest 18.2% 15.3% 17.5% 15.6% Gross Margin Percentage, Including Interest 14.4% 10.2% 13.8% 10.2%             Land Sales Gross Margin Land Sales Gross Margin   Three Months Ended Nine Months Ended   July 31, July 31,   2012 2011 2012 2011   (Unaudited) (Unaudited) Land Sales $1,823 $174 $28,737 $8,217 Cost of Sales, Excluding Interest (a)  1,418 127  21,800 5,642 Land Sales Gross Margin, Excluding Interest 405 47 6,937 2,575 Land Sales Interest 120 --  5,262 2,133 Land Sales Gross Margin, Including Interest $285 $47 $1,675 $442           (a) Does not include cost associated with walking away from land options or inventory impairment losses which are recorded as Inventory impairment loss and land option write-offs in the Condensed Consolidated Statements of Operations.    Hovnanian Enterprises, Inc. July 31, 2012 Reconciliation of Adjusted EBITDA to Net Income (Loss) (Dollars in Thousands)   Three Months Ended Nine Months Ended   July 31, July 31,   2012 2011 2012 2011   (Unaudited) (Unaudited)  Net Income (Loss) $34,676 $(50,930) $18,213 $(187,739)  Income Tax Benefit (36,493) (4,645) (35,254) (6,081)  Interest Expense 38,888 39,429 112,732 117,883  EBIT (a) 37,071 (16,146) 95,691 (75,937)  Depreciation 1,494 2,602 4,711 7,167  Amortization of Debt Costs 912 1,080 2,808 2,937  EBITDA (b) 39,477 (12,464) 103,210 (65,833)  Inventory Impairment Loss and Land Option Write-offs 689 11,426 7,230 41,876  Expenses Associated with Debt Exchange Offer  --  -- 4,683  --  (Gain) Loss on Extinguishment of Debt (6,230) 1,391  (57,966) 3,035  Adjusted EBITDA (c) $33,936 $353 $57,157 $(20,922)            Interest Incurred $39,477 $40,051 $110,315 $117,773            Adjusted EBITDA to Interest Incurred 0.86 0.01 0.52 (0.18)                     (a) EBIT is a non-GAAP financial measure.  The most directly comparable GAAP financial measure is net income (loss). EBIT represents earnings before interest expense and income taxes. (b) EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income (loss). EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. (c) Adjusted EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income (loss). Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation, amortization, inventory impairment loss and land option write-offs, expenses associated with debt exchange offer, and (gain) loss on extinguishment of debt.    Hovnanian Enterprises, Inc.July 31, 2012 Interest Incurred, Expensed and Capitalized (Dollars in Thousands)   Three Months Ended Nine Months Ended   July 31, July 31,   2012 2011 2012 2011   (Unaudited) (Unaudited) Interest Capitalized at Beginning of Period $118,435 $135,556 $121,441 $136,288 Plus Interest Incurred 39,477 40,051 110,315  117,773 Less Interest Expensed 38,888 39,429  112,732  117,883 Interest Capitalized at End of Period (a) $119,024 $136,178 $119,024 $136,178           (a) The Company incurred significant inventory impairments in recent years, which are determined based on total inventory including capitalized interest. However, the capitalized interest amounts are shown on a gross basis before allocating any portion of impairments to capitalized interest.     HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands)     July 31, 2012 October 31, 2011   (Unaudited) (1) ASSETS           Homebuilding:     Cash and cash equivalents $ 219,326 $ 244,356       Restricted cash 48,143 73,539       Inventories:     Sold and unsold homes and lots under development 708,343 720,149       Land and land options held for future development or sale 213,482 245,529       Consolidated inventory not owned:     Specific performance options -- 2,434 Other options 82,203 --       Total consolidated inventory not owned 82,203 2,434       Total inventories 1,004,028 968,112       Investments in and advances to unconsolidated joint ventures 59,680 57,826       Receivables, deposits, and notes 61,142 52,277       Property, plant, and equipment – net 49,674 53,266       Prepaid expenses and other assets 65,222 67,698       Total homebuilding 1,507,215 1,517,074       Financial services:     Cash and cash equivalents 14,644 6,384 Restricted cash 9,020 4,079 Mortgage loans held for sale 91,353 72,172 Other assets 2,611 2,471       Total financial services 117,628 85,106       Total assets $ 1,624,843 $ 1,602,180   (1) Derived from the audited balance sheet as of October 31, 2011.     HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands Except Share Amounts)     July 31, 2012 October 31, 2011   (Unaudited) (1) LIABILITIES AND EQUITY           Homebuilding:     Nonrecourse land mortgages $ 44,586 $ 26,121 Accounts payable and other liabilities 299,011 303,633 Customers' deposits 25,143 16,670 Nonrecourse mortgages secured by operating properties 19,024 19,748 Liabilities from inventory not owned 69,797 2,434       Total homebuilding 457,561 368,606       Financial services:     Accounts payable and other liabilities 21,696 14,517 Mortgage warehouse line of credit 78,208 49,729       Total financial services 99,904 64,246       Notes payable:     Senior secured notes 967,871 786,585 Senior notes 458,607 802,862 TEU senior subordinated amortizing notes 7,004 13,323 Accrued interest 31,405 21,331       Total notes payable 1,464,887 1,624,101       Income taxes payable 6,692 41,829       Total liabilities 2,029,044 2,098,782       Equity:     Hovnanian Enterprises, Inc. stockholders' equity deficit:     Preferred stock, $.01 par value - authorized 100,000 shares; issued 5,600 shares with a liquidation preference of $140,000 at July 31, 2012 and at October 31, 2011 135,299 135,299 Common stock, Class A, $.01 par value – authorized 200,000,000 shares; issued 129,385,707 shares at July 31, 2012 and 92,141,492 shares at October 31, 2011 (including 11,760,763 and 11,694,720 shares at July 31, 2012 and October 31, 2011, respectively, held in Treasury) 1,294 921 Common stock, Class B, $.01 par value (convertible to Class A at time of sale) authorized 30,000,000 shares; issued 15,351,601 shares at July 31, 2012 and 15,252,212 shares at October 31, 2011 (including 691,748 shares at July 31, 2012 and October 31, 2011 held in Treasury) 154 153 Paid in capital - common stock 665,443 591,696 Accumulated deficit (1,091,293) (1,109,506) Treasury stock - at cost (115,360) (115,257)       Total Hovnanian Enterprises, Inc. stockholders' equity deficit (404,463) (496,694)       Noncontrolling interest in consolidated joint ventures 262 92       Total equity deficit (404,201) (496,602)       Total liabilities and equity $ 1,624,843 $ 1,602,180   (1) Derived from the audited balance sheet as of October 31, 2011.     HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands Except Per Share Data) (Unaudited)      Three Months Ended July 31, Nine Months Ended July 31,   2012 2011 2012 2011 Revenues:         Homebuilding:         Sale of homes $ 371,481  $ 276,479  $ 936,305  $ 759,338  Land sales and other revenues 4,743  1,289  36,014  13,695  Total homebuilding 376,224  277,768  972,319  773,033  Financial services 10,787  7,850  25,990  20,249  Total revenues 387,011  285,618  998,309  793,282            Expenses:         Homebuilding:         Cost of sales, excluding interest 305,178  234,256  794,168  646,149  Cost of sales interest 14,298  14,222  40,091  43,804  Inventory impairment loss and land option write-offs 689  11,426  7,230  41,876  Total cost of sales 320,165  259,904  841,489  731,829  Selling, general and administrative 36,230  34,900  104,609  114,944  Total homebuilding expenses 356,395  294,804  946,098  846,773  Financial services 6,111  5,547  16,651  16,194  Corporate general and administrative 11,913  11,648  36,961  38,609  Other interest 24,590  25,207  72,641  74,079  Other operations (income) expense (3,099) 341  3,289  1,933  Total expenses 395,910  337,547  1,075,640  977,588  Gain (loss) on extinguishment of debt 6,230  (1,391) 57,966  (3,035) Income (loss) from unconsolidated joint ventures 852  (2,255) 2,324  (6,479) (Loss) before income taxes (1,817) (55,575) (17,041) (193,820) State and federal income tax (benefit) provision:         State (36,563) (4,642) (35,461) (4,349) Federal 70  (3) 207  (1,732) Total income taxes (36,493) (4,645) (35,254) (6,081) Net income (loss) $ 34,676  $ (50,930) $ 18,213  $ (187,739)           Per share data:         Basic:         Income (loss) per common share $ 0.25 $ (0.47) $ 0.15 $ (1.92) Weighted-average number of common shares outstanding 138,472 108,721  121,357 97,648  Assuming dilution:         Income (loss) per common share $ 0.25 $ (0.47) $ 0.15 $ (1.92) Weighted-average number of common shares outstanding 138,552 108,721  121,380 97,648                                 HOVNANIAN ENTERPRISES, INC.              (DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)              (UNAUDITED)  Communities Under Development        Three Months - July 31, 2012 Net ContractsDeliveriesContract Three Months EndingThree Months EndingBacklog Jul 31,Jul 31,Jul 31, 20122011% Change20122011% Change20122011% ChangeNortheast                      (includes unconsolidated Home 160 182 (12.1)% 206 157 31.2% 322 380 (15.3)% joint ventures) Dollars $82,295 $81,525 0.9% $104,403 $74,598 40.0% $155,056 $173,073 (10.4)%   Avg. Price $514,341 $447,940 14.8% $506,811 $475,146 6.7% $481,540 $455,455 5.7%Mid-Atlantic                      (includes unconsolidated Home 189 190 (0.5)% 223 157 42.0% 438 336 30.4% joint ventures) Dollars $82,805 $76,603 8.1% $92,484 $60,205 53.6% $189,875 $138,187 37.4%   Avg. Price $438,124 $403,174 8.7% $414,726 $383,471 8.2% $433,505 $411,271 5.4%Midwest                      (includes unconsolidated Home 208 136 52.9% 160 110 45.5% 538 322 67.1% joint ventures) Dollars $53,425 $29,953 78.4% $36,688 $24,169 51.8% $123,274 $65,938 87.0%   Avg. Price $256,853 $220,243 16.6% $229,294 $219,718 4.4% $229,133 $204,776 11.9%Southeast                      (includes unconsolidated Home 175 148 18.2% 121 83 45.8% 310 191 62.3% joint ventures) Dollars $45,783 $36,360 25.9% $30,305 $20,751 46.0% $80,384 $49,489 62.4%   Avg. Price $261,615 $245,676 6.5% $250,455 $250,012 0.2% $259,304 $259,105 0.1%Southwest                       (includes unconsolidated Home 614 482 27.4% 529 461 14.8% 635 396 60.4% joint ventures) Dollars $166,120 $113,370 46.5% $139,407 $107,861 29.2% $180,660 $107,686 67.8%   Avg. Price $270,553 $235,207 15.0% $263,529 $233,972 12.6% $284,505 $271,934 4.6%West                      (includes unconsolidated Home 195 159 22.6% 148 144 2.8% 209 111 88.3% joint ventures) Dollars $76,522 $46,761 63.6% $57,498 $46,504 23.6% $84,677 $36,436 132.4%   Avg. Price $392,421 $294,093 33.4% $388,500 $322,944 20.3% $405,150 $328,252 23.4%Grand Total                       (includes unconsolidated Home 1,541 1,297 18.8% 1,387 1,112 24.7% 2,452 1,736 41.2% joint ventures) Dollars $506,950 $384,572 31.8% $460,785 $334,088 37.9% $813,926 $570,809 42.6%   Avg. Price $328,974 $296,509 10.9% $332,217 $300,439 10.6% $331,944 $328,807 1.0%Consolidated Total                       (excludes unconsolidated Home 1,382 1,169 18.2% 1,212 993 22.1% 2,132 1,469 45.1% joint ventures) Dollars $423,396 $332,307 27.4% $371,481 $276,479 34.4% $674,159 $467,571 44.2%  Avg. Price $306,365 $284,266 7.8% $306,502 $278,428 10.1% $316,210 $318,292 (0.7)%Unconsolidated                      Joint Ventures Home 159 128 24.2% 175 119 47.1% 320 267 19.9%  Dollars $83,554 $52,265 59.9% $89,304 $57,609 55.0% $139,767 $103,238 35.4%  Avg. Price $525,494 $408,320 28.7% $510,309 $484,109 5.4% $436,770 $386,659 13.0%                      DELIVERIES INCLUDE EXTRAS Notes:     (1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.                                    HOVNANIAN ENTERPRISES, INC.                (DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)                (UNAUDITED)    Communities Under Development        Nine Months - July 31, 2012 Net ContractsDeliveriesContract Nine Months EndingNine Months EndingBacklog Jul 31,Jul 31,Jul 31, 20122011% Change20122011% Change20122011% ChangeNortheast                      (includes unconsolidated Home 472 468 0.9% 516 399 29.3% 322 380 (15.3)% joint ventures) Dollars $239,378 $211,597 13.1% $255,705 $188,270 35.8% $155,056 $173,073 (10.4)%   Avg. Price $507,157 $452,130 12.2% $495,552 $471,855 5.0% $481,540 $455,455 5.7%Mid-Atlantic                      (includes unconsolidated Home 625 479 30.5% 557 405 37.5% 438 336 30.4% joint ventures) Dollars $263,575 $184,491 42.9% $227,540 $153,112 48.6% $189,875 $138,187 37.4%   Avg. Price $421,720 $385,159 9.5% $408,508 $378,054 8.1% $433,505 $411,271 5.4%Midwest                      (includes unconsolidated Home 638 361 76.7% 400 325 23.1% 538 322 67.1% joint ventures) Dollars $148,245 $78,832 88.1% $92,140 $67,617 36.3% $123,274 $65,938 87.0%   Avg. Price $232,360 $218,371 6.4% $230,350 $208,052 10.7% $229,133 $204,776 11.9%Southeast                      (includes unconsolidated Home 484 334 44.9% 342 231 48.1% 310 191 62.3% joint ventures) Dollars $122,269 $81,812 49.5% $85,326 $55,544 53.6% $80,384 $49,489 62.4%   Avg. Price $252,622 $244,946 3.1% $249,491 $240,450 3.8% $259,304 $259,105 0.1%Southwest                      (includes unconsolidated Home 1,667 1,283 29.9% 1,363 1,224 11.4% 635 396 60.4% joint ventures) Dollars $436,508 $303,166 44.0% $344,844 $292,427 17.9% $180,660 $107,686 67.8%   Avg. Price $261,852 $236,295 10.8% $253,004 $238,911 5.9% $284,505 $271,934 4.6%West                      (includes unconsolidated Home 509 388 31.2% 428 387 10.6% 209 111 88.3% joint ventures) Dollars $192,723 $120,845 59.5% $149,520 $111,802 33.7% $84,677 $36,436 132.4%   Avg. Price $378,630 $311,456 21.6% $349,346 $288,894 20.9% $405,150 $328,252 23.4%Grand Total                     (includes unconsolidated Home 4,395 3,313 32.7% 3,606 2,971 21.4% 2,452 1,736 41.2% joint ventures) Dollars $1,402,698 $980,743 43.0% $1,155,075 $868,772 33.0% $813,926 $570,809 42.6%   Avg. Price $319,158 $296,029 7.8% $320,320 $292,417 9.5% $331,944 $328,807 1.0%Consolidated Total                     (excludes unconsolidated Home 3,848 3,007 28.0% 3,144 2,737 14.9% 2,132 1,469 45.1% joint ventures) Dollars $1,138,104 $851,361 33.7% $936,305 $759,338 23.3% $674,159 $467,571 44.2%   Avg. Price $295,765 $283,126 4.5% $297,807 $277,434 7.3% $316,210 $318,292 (0.7)%Unconsolidated                    Joint Ventures Home 547 306 78.8% 462 234 97.4% 320 267 19.9%  Dollars $264,594 $129,382 104.5% $218,770 $109,434 99.9% $139,767 $103,238 35.4%   Avg. Price $483,718 $422,817 14.4% $473,528 $467,667 1.3% $436,770 $386,659 13.0%                      DELIVERIES INCLUDE EXTRAS Notes:   (1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.CONTACT: J. Larry Sorsby Executive Vice President & CFO 732-747-7800 Jeffrey T. O'Keefe Vice President, Investor Relations 732-747-7800