Hovnanian Enterprises(HOV) - 2023 Q4 - Annual Report

Company Performance - Hovnanian Enterprises, Inc. delivered 7,649 homes in fiscal 2023, contributing to a total of over 369,000 homes since its inception[12] - For the year ended October 31, 2023, consolidated housing revenues totaled $2.63 billion, with 4,878 homes delivered, resulting in an average sales price of$539,249[62] - The dollar value of net sales contracts for fiscal 2023 was $2.5 billion, with a 3.8$1.3 billion as of October 31, 2023[67] - The average number of active selling communities increased slightly from 113 in fiscal 2022 to 114 in fiscal 2023, ending with 113 active selling communities[64] Sales and Pricing - The average sales price of homes sold in fiscal 2023 was $539,000, with base prices ranging from$135,000 to $1,770,000[13] - The average sales price of homes, including options, was$539,000 nationwide in fiscal 2023[13] - Current base prices for homes in contract backlog range from $135,000 to$1,770,000 in the Northeast, $294,000 to$1,140,000 in the Southeast, and $269,000 to$884,000 in the West[68] Workforce and Employment - The company employed 1,715 full-time associates as of October 31, 2023, with an average tenure of approximately 7.5 years[27] - As of October 31, 2023, 19% of associates had been with the company for over 15 years, highlighting employee retention efforts[29] - The company has a diverse workforce, with 25.6% non-white associates and 44.3% of associates being women[30] - The company has a repository of over 500 training modules/courses to facilitate associates' personal and professional growth[36] - The company introduced a hybrid work schedule allowing most office associates to work two days a week from home, promoting work-life balance[35] - The company is committed to diversity and inclusion, with approximately 21.9% of associates in leadership positions required to participate in extensive training sessions[34] Strategic Initiatives - In fiscal 2023, Hovnanian executed "Build-For-Rent" agreements, which added incremental sales volume and increased inventory turnover[38] - The company has 182 proposed communities, with 19,861 developable home sites and a combined book value of $153.291 million[71] - The company aims to achieve economies of scale by becoming a significant builder in each of its selected markets[40] - The company has a land banking arrangement valued at$27.7 million included in its consolidated inventory not owned[72] Financial Management - The company repurchased $245 million in aggregate principal of senior secured notes in fiscal 2023, reflecting a focus on maintaining adequate liquidity[39] - The company walked away from 3,838 lots in fiscal 2023, resulting in a pre-tax income charge of$1.5 million, as part of its strategy to minimize risks in underperforming communities[54] - The company has incurred approximately $79.9 million in option fees and deposits for properties under option as of October 31, 2023[71] Market Conditions - The company experienced construction delays due to material and labor shortages, with current construction cycle times 45-60 days longer than pre-pandemic averages[52] - Labor and material shortages have gradually improved since the COVID-19 pandemic, with lumber prices decreasing in the second half of fiscal 2022 and into fiscal 2023[74] - The company experienced a significant rise in lumber prices due to supply chain issues, but prices began to decrease during the second half of fiscal 2022 and into fiscal 2023[74] - The company is subject to extensive regulations that may impact its ability to develop communities, including potential building moratoriums[79] - The company is subject to extensive regulations that could affect the availability of land and building opportunities, potentially impacting future revenues and earnings[78] Customer Financing - In fiscal 2023, 19.8% of home buyers paid in cash, while 70.1% of noncash buyers obtained mortgages from the company's mortgage banking subsidiary[59] - The loans originated in fiscal 2023 included 69.8% conforming conventional loans and 29.5% FHA/VA loans[59]