Hovnanian Enterprises(US:HOV)2021-06-03 16:00Financial Performance - Net earnings attributable to Hovnanian for the three months ended April 30, 2021, were $488.7 million, compared to $4.1 million for the same period in 2020[105]. - Basic earnings per share for the three months ended April 30, 2021, were $71.11, up from $0.63 in the same period of 2020[105]. - The total income tax benefit for the three months ended April 30, 2021, was $457.6 million, primarily due to the reversal of a substantial portion of the valuation allowance against deferred tax assets[111]. - The company incurred a pre-tax income of $31.0 million for the three months ended April 30, 2021, compared to a pre-tax income of $4.2 million for the same period in 2020[130]. - Total revenues for the three months ended April 30, 2021, increased by $164.8 million, or 30.6%, to $703.2 million compared to the same period in 2020[215]. - Homebuilding sale of homes revenue rose by $156.2 million, or 29.8%, for the three months ended April 30, 2021, driven by a 22.1% increase in home deliveries[216]. - The average price per home increased to $419,972 for the three months ended April 30, 2021, up from $394,979 in the same period of 2020, reflecting a 6.3% rise[216]. - Home sales for the three months ended April 30, 2021, reached $679.5 million, up from $523.3 million in the same period last year, representing a 29.8% increase[227]. Revenue Growth - The company generated $681.4 million in homebuilding revenues for the three months ended April 30, 2021, compared to $523.8 million for the same period in 2020, representing a 30% increase[130]. - The total revenues for the six months ended April 30, 2021, were $1.28 billion, up from $1.03 billion in the same period of 2020, reflecting a 24% growth[130]. - The financial services segment generated $21.7 million in revenues for the three months ended April 30, 2021, compared to $14.4 million in the same period of 2020, marking a 51% increase[130]. - Consolidated housing revenues increased by 29.8% to $679,515,000 for the three months ended April 30, 2021, compared to $523,347,000 in the same period of 2020[217]. Cash and Liquidity - Total liquidity at April 30, 2021, was $352.8 million, including $218.3 million in homebuilding cash and cash equivalents[175]. - As of April 30, 2021, the company had $218.8 million in cash and cash equivalents, including $9.5 million of restricted cash[98]. - Cash payments on lease liabilities increased to $2,390,000 for the three months ended April 30, 2021, up 3.6% from $2,308,000 in the prior year[63]. - Cash collateral for letters of credit was $9.5 million at April 30, 2021, down from $11.6 million at October 31, 2020[187]. Debt and Financing - The total debt to capitalization ratio was 27% as of April 30, 2021, compared to 35% as of October 31, 2020, indicating a reduction in leverage[135]. - The company is currently restricted from paying dividends on its 7.625% Series A Preferred Stock due to financial covenants, which also limits additional indebtedness[184]. - The aggregate principal amount of borrowings under the Chase Master Repurchase Agreement was $37.9 million as of April 30, 2021, up from $23.5 million at October 31, 2020, an increase of 60.6%[69]. - The company has a credit agreement providing for up to $125.0 million in aggregate amount of Secured Revolving Loans, with an interest rate of 7.75% per annum[90]. Inventory and Land - Total inventory increased by $117.9 million from October 31, 2020, to April 30, 2021, with significant increases in the Southwest ($79.9 million) and Northeast ($27.6 million) regions[192]. - The company recorded inventory impairments of $800,000 for the six months ended April 30, 2021, with no impairments recorded for the three months ended April 30, 2021 or for the same periods in 2020[151]. - Total home sites available increased to 28,427 as of April 30, 2021, compared to the previous period, driven by new land acquisitions[198]. - The company spent $353.6 million on land purchases and land development during the first half of fiscal 2021[176]. Operational Metrics - The average net contracts per active selling community increased to 17.5 for the three months ended April 30, 2021, compared to 11.1 in the same period of the prior year[222]. - Total homes delivered increased by 22.1% to 1,618 for the three months ended April 30, 2021, compared to 1,325 in the same period of 2020[217]. - Cancellation rates for the first quarter of 2021 were 17%, down from 19% in the first quarter of 2020, reflecting improved market conditions[223]. - The company opened 31 new communities while closing 47, resulting in a decrease in open for sale community count to 97[222]. Tax and Valuation - The company reported a deferred tax asset of $459.2 million at April 30, 2021, compared to zero at October 31, 2020, due to the reversal of valuation allowances[210]. - The company has a valuation allowance of $102.9 million for state deferred tax assets as of April 30, 2021, reflecting ongoing caution regarding state NOL utilization[117]. - The company reversed a valuation allowance of $396.5 million for federal deferred tax assets related to NOLs as of April 30, 2021[118]. Impairments and Write-offs - The company recorded an impairment loss of $0.8 million for one community with a carrying value of $2.3 million during the six months ended April 30, 2021[35]. - The company recorded inventory impairment losses of $0.1 million and $2.0 million for the three and six months ended April 30, 2021, respectively[228]. - The company wrote off residential land options and related costs totaling $0.1 million during the three months ended April 30, 2021, compared to $1.0 million in the same period last year[228].