Hovnanian Enterprises Inc 10-Q for FY2020 Q2

Hovnanian Enterprises Inc (HOV)

10-Q 2020-06-05 For: 2020-04-30

Added on April 10, 2026

About this 10-Q

Hovnanian Enterprises Inc filed this 10-Q on June 5, 2020, covering the quarter ended April 30, 2020 (FY2020 Q2).

Headline figures

Quarter ended April 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $538.35M; up 22.2% from $440.69M a year earlier
Net income: $4.08M; compared with a net loss of $15.26M a year earlier
Diluted EPS: $0.60; compared with -$2.56 a year earlier

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Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A Common Stock $0.01 par value per share	HOV	New York Stock Exchange
Preferred Stock Purchase Rights(1)	N/A	New York Stock Exchange
Depositary Shares each representing 1/1,000th of a share of 7.625% Series A Preferred Stock	HOVNP	Nasdaq Global Market

INDEX	PAGE NUMBER

PART I. Financial Information
Item l. Financial Statements:

Condensed Consolidated Balance Sheets (unaudited) as of April 30, 2020 and October 31, 2019	3

Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended April 30, 2020 and 2019	4

Condensed Consolidated Statement of Changes in Equity Deficit (unaudited) for the six months ended April 30, 2020 and 2019	5

Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended April 30, 2020 and 2019	7


Notes to Condensed Consolidated Financial Statements (unaudited)	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3. Quantitative and Qualitative Disclosures About Market Risk	57

Item 4. Controls and Procedures	57


PART II. Other Information
Item 1. Legal Proceedings	58
Item 1A. Risk Factors	58
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	59

Item 6. Exhibits	60

Signatures	62

	April 30,		October 31,
	2020		2019
	(Unaudited)
ASSETS
Homebuilding:
Cash and cash equivalents	$232,801		$130,976
Restricted cash and cash equivalents	16,052		20,905
Inventories:
Sold and unsold homes and lots under development	1,009,313		993,647
Land and land options held for future development or sale	80,955		108,565
Consolidated inventory not owned	198,229		190,273
Total inventories	1,288,497		1,292,485
Investments in and advances to unconsolidated joint ventures	139,347		127,038
Receivables, deposits and notes, net	32,728		44,914
Property, plant and equipment, net	19,453		20,127
Prepaid expenses and other assets	65,391		45,704
Total homebuilding	1,794,269		1,682,149

Financial services	111,302		199,275
Total assets	$1,905,571		$1,881,424

LIABILITIES AND EQUITY
Homebuilding:
Nonrecourse mortgages secured by inventory, net of debt issuance costs	$211,761		$203,585
Accounts payable and other liabilities	295,927		320,193
Customers’ deposits	35,127		35,872
Liabilities from inventory not owned, net of debt issuance costs	144,536		141,033
Senior notes and credit facilities (net of discount, premium and debt issuance costs)	1,583,507		1,479,990
Accrued interest	36,452		19,081
Total homebuilding	2,307,310		2,199,754

Financial services	90,417		169,145
Income taxes payable	2,917		2,301
Total liabilities	2,400,644		2,371,200

Equity:
Hovnanian Enterprises, Inc. stockholders’ equity deficit:
Preferred stock, $0.01 par value - authorized 100,000 shares; issued and outstanding 5,600 shares with a liquidation preference of $140,000 at April 30, 2020 and October 31, 2019	135,299		135,299
Common stock, Class A, $0.01 par value – authorized 16,000,000 shares; issued 5,977,601 shares at April 30, 2020 and 5,973,727 shares at October 31, 2019	60		60
Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) – authorized 2,400,000 shares; issued 652,154 shares at April 30, 2020 and 650,363 shares at October 31, 2019	7		7
Paid in capital – common stock	715,243		715,504
Accumulated deficit	(1,231,042	)	(1,225,973	)
Treasury stock – at cost – 470,430 shares of Class A common stock and 27,669 shares of Class B common stock at April 30, 2020 and October 31, 2019	(115,360	)	(115,360	)
Total Hovnanian Enterprises, Inc. stockholders' equity deficit	(495,793	)	(490,463	)
Noncontrolling interest in consolidated joint ventures	720		687
Total equity deficit	(495,073	)	(489,776	)
Total liabilities and equity	$1,905,571		$1,881,424

	Three Months Ended April 30,				Six Months Ended April 30,
	2020		2019		2020		2019
Revenues:
Homebuilding:
Sale of homes	$523,347		$427,552		$1,002,580		$789,687
Land sales and other revenues	643		832		1,452		9,683
Total homebuilding	523,990		428,384		1,004,032		799,370
Financial services	14,361		12,307		28,375		21,915
Total revenues	538,351		440,691		1,032,407		821,285

Expenses:
Homebuilding:
Cost of sales, excluding interest	428,027		355,477		824,382		660,404
Cost of sales interest	18,589		13,898		36,725		24,140
Inventory impairment loss and land option write-offs	1,010		1,462		3,838		2,166
Total cost of sales	447,626		370,837		864,945		686,710
Selling, general and administrative	40,605		44,179		81,279		86,915
Total homebuilding expenses	488,231		415,016		946,224		773,625

Financial services	9,630		8,678		19,184		17,152
Corporate general and administrative	15,275		16,169		35,019		33,833
Other interest	26,869		22,663		51,872		44,936
Other operations	214		329		408		571
Total expenses	540,219		462,855		1,052,707		870,117
(Loss) gain on extinguishment of debt	(174	)	-		9,282		-
Income from unconsolidated joint ventures	6,221		7,252		7,761		16,814
Income (loss) before income taxes	4,179		(14,912	)	(3,257	)	(32,018	)
State and federal income tax provision:
State	100		345		1,812		691
Federal	-		-		-		-
Total income taxes	100		345		1,812		691
Net income (loss)	$4,079		$(15,257	)	$(5,069	)	$(32,709	)

Per share data:
Basic:
Net income (loss) per common share	$0.63		$(2.56	)	$(0.82	)	$(5.49	)
Weighted-average number of common shares outstanding	6,172		5,962		6,166		5,960

Assuming dilution:
Net income (loss) per common share	$0.60		$(2.56	)	$(0.82	)	$(5.49	)
Weighted-average number of common shares outstanding	6,432		5,962		6,166		5,960

	A Common Stock		B Common Stock			Preferred Stock
	Shares		Shares			Shares								Non
	Issued and		Issued and			Issued and		Paid-In		Accumulated		Treasury		controlling
	Outstanding	Amount	Outstanding		Amount	Outstanding	Amount	Capital		Deficit		Stock		Interest	Total

Balance, October 31, 2019	5,503,297	$60	622,694		$7	5,600	$135,299	$715,504		$(1,225,973	)	$(115,360	)	$687	$(489,776	)

Stock options, amortization and issuances								162							162

Restricted stock amortization, issuances and forfeitures	3,000		1,796					(330	)						(330	)

Conversion of Class B to Class A common stock	4		(4	)											-

Changes in noncontrolling interest in consolidated joint ventures														13	13

Net (loss)										(9,148	)				(9,148	)

Balance January 31, 2020	5,506,301	$60	624,486		$7	5,600	$135,299	$715,336		$(1,235,121	)	$(115,360	)	$700	$(499,079	)

Stock options, amortization and issuances								96							96

Restricted stock amortization, issuances and forfeitures	869							(189	)						(189	)

Conversion of Class B to Class A common stock	1		(1	)											-

Changes in noncontrolling interest in consolidated joint ventures														20	20

Net income										4,079					4,079

Balance, April 30, 2020	5,507,171	$60	624,485		$7	5,600	$135,299	$715,243		$(1,231,042	)	$(115,360	)	$720	$(495,073	)

	Six Months Ended
	April 30,
	2020		2019
Cash flows from operating activities:
Net (loss)	$(5,069	)	$(32,709	)
Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities:
Depreciation	2,542		1,938
Compensation from stock options and awards	(204	)	1,191
Amortization of bond discounts, premiums and deferred financing costs	1,442		3,880
Gain on sale and retirement of property and assets	(24	)	(12	)
Income from unconsolidated joint ventures	(7,761	)	(16,814	)
Distributions of earnings from unconsolidated joint ventures	14,935		6,917
Gain on extinguishment of debt	(9,282	)	-
Noncontrolling interest in consolidated joint venture	33		(28	)
Inventory impairment and land option write-offs	3,838		2,166
(Increase) decrease in assets:
Origination of mortgage loans	(562,842	)	(435,012	)
Sale of mortgage loans	653,979		474,457
Receivables, prepaids, deposits and other assets	17,345		4,712
Inventories	150		(192,059	)
Increase (decrease) in liabilities:
State income tax payable	616		(1,244	)
Customers’ deposits	(745	)	7,867
Accounts payable, accrued interest and other accrued liabilities	(29,234	)	(24,119	)
Net cash provided by (used in) operating activities	79,719		(198,869	)
Cash flows from investing activities:
Proceeds from sale of property and assets	31		16
Purchase of property, equipment and other fixed assets and acquisitions	(1,867	)	(1,956	)
Investments in and advances to unconsolidated joint ventures	(19,924	)	(7,727	)
Distributions of capital from unconsolidated joint ventures	441		5,756
Net cash used in investing activities	(21,319	)	(3,911	)
Cash flows from financing activities:
Proceeds from mortgages and notes	139,861		171,045
Payments related to mortgages and notes	(132,352	)	(74,696	)
Proceeds from model sale leaseback financing programs	3,307		14,905
Payments related to model sale leaseback financing programs	(11,606	)	(6,627	)
Proceeds from land bank financing programs	48,260		61,155
Payments related to land bank financing programs	(36,839	)	(8,765	)
Proceeds from partner contribution to consolidated joint ventures	-		594
Net payments related to mortgage warehouse lines of credit	(80,813	)	(36,606	)
Net borrowings from senior secured revolving credit facility	125,000		-
Proceeds from senior secured notes, net of discount	-		21,348
Deferred financing costs from land bank financing program and note issuances	(12,117	)	(3,962	)
Net cash provided by financing activities	42,701		138,391
Net increase (decrease) in cash and cash equivalents, and restricted cash and cash equivalents	101,101		(64,389	)
Cash, cash equivalents, and restricted cash and cash equivalents balance, beginning of period	182,266		232,992
Cash, cash equivalents, and restricted cash and cash equivalents balance, end of period	$283,367		$168,603

	Three Months Ended		Six Months Ended
	April 30,		April 30,
(In thousands)	2020	2019	2020	2019
Interest capitalized at beginning of period	$67,879	$74,455	$71,264	$68,117
Plus interest incurred(1)	45,323	41,383	89,657	80,236
Less cost of sales interest expensed	18,589	13,898	36,725	24,140
Less other interest expensed(2)(3)	26,869	22,663	51,872	44,936
Less interest contributed to unconsolidated joint venture(4)	-	-	4,580	-
Interest capitalized at end of period(5)	$67,744	$79,277	$67,744	$79,277

(4)	Represents capitalized interest which was included as part of the assets contributed to the joint venture the Company entered into in December 2019, as discussed in Note 18. There was no impact to the Condensed Consolidated Statement of Operations as a result of this transaction.
(5)	Capitalized interest amounts are shown gross before allocating any portion of impairments, if any, to capitalized interest.

		Three Months Ended
(In thousands)		April 30, 2020
Operating lease cost		$2,625
Cash payments on lease liabilities		$2,308

(In thousands)	At April 30, 2020
ROU assets	$21,144
Lease liabilities	$22,165
Weighted-average remaining lease term (in years)	3.7
Weighted-average discount rate (incremental borrowing rate)	9.5	%

Year ended October 31,	(In thousands)
2020 (excluding the six months ended April 30, 2020)	$4,462
2021	8,069
2022	6,860
2023	3,584
2024	1,315
Thereafter	2,103
Total payments	26,393
Less: imputed interest	(4,228	)
Present value of lease liabilities	$22,165

	April 30,		October 31,
(In thousands)	2020		2019
Senior Secured Notes:
10.0% Senior Secured Notes due July 15, 2022	$136,714		$218,994
10.5% Senior Secured Notes due July 15, 2024	69,683		211,391
10.0% Senior Secured 1.75 Lien Notes due November 15, 2025	158,502		-
7.75% Senior Secured 1.125 Lien Notes due February 15, 2026	350,000		350,000
10.5% Senior Secured 1.25 Lien Notes due February 15, 2026	282,322		282,322
11.25% Senior Secured 1.5 Lien Notes due February 15, 2026	162,269		103,141
Total Senior Secured Notes	$1,159,490		$1,165,848
Senior Notes:
8.0% Senior Notes due November 1, 2027 (1)	$-		$-
13.5% Senior Notes due February 1, 2026	90,590		90,590
5.0% Senior Notes due February 1, 2040	90,120		90,120
Total Senior Notes	$180,710		$180,710
Senior Unsecured Term Loan Credit Facility due February 1, 2027	$39,551		$202,547
Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028	$81,498		$-
Senior Secured Revolving Credit Facility (2)	$125,000		$-
Net discounts and premiums	$21,461		$(49,145	)
Net debt issuance costs	$(24,203	)	$(19,970	)
Total Senior Notes and Credit Facilities, net of discount, premium and debt issuance costs	$1,583,507		$1,479,990

	(1)	Northeast (New Jersey and Pennsylvania)
	(2)	Mid-Atlantic (Delaware, Maryland, Virginia, Washington D.C. and West Virginia)
	(3)	Midwest (Illinois and Ohio)
	(4)	Southeast (Florida, Georgia and South Carolina)
	(5)	Southwest (Arizona and Texas)
	(6)	West (California)

(Dollars in thousands)	April 30, 2020
			Land
	Homebuilding		Development		Total
Assets:
Cash and cash equivalents	$86,565		$4,299		$90,864
Inventories	438,323		202		438,525
Other assets	27,782		399		28,181
Total assets	$552,670		$4,900		$557,570

Liabilities and equity:
Accounts payable and accrued liabilities	$121,018		$156		$121,174
Notes payable	126,090		-		126,090
Total liabilities	247,108		156		247,264
Equity of:
Hovnanian Enterprises, Inc.	132,877		4,323		137,200
Others	172,685		421		173,106
Total equity	305,562		4,744		310,306
Total liabilities and equity	$552,670		$4,900		$557,570
Debt to capitalization ratio	29	%	0	%	29	%

(Dollars in thousands)	October 31, 2019
			Land
	Homebuilding		Development		Total
Assets:
Cash and cash equivalents	$108,520		$2,203		$110,723
Inventories	397,804		6,038		403,842
Other assets	24,896		233		25,129
Total assets	$531,220		$8,474		$539,694

Liabilities and equity:
Accounts payable and accrued liabilities	$71,297		$592		$71,889
Notes payable	186,882		-		186,882
Total liabilities	258,179		592		258,771
Equity of:
Hovnanian Enterprises, Inc.	120,891		4,747		125,638
Others	152,150		3,135		155,285
Total equity	273,041		7,882		280,923
Total liabilities and equity	$531,220		$8,474		$539,694
Debt to capitalization ratio	41	%	0	%	40	%

	Three Months Ended April 30, 2020
(In thousands)			Land
	Homebuilding		Development		Total

Revenues	$112,812		$3,812		$116,624
Cost of sales and expenses	(107,453	)	(3,448	)	(110,901	)
Joint venture net income	$5,359		$364		$5,723
Our share of net income	$6,146		$181		$6,327

	Three Months Ended April 30, 2019
(In thousands)			Land
	Homebuilding		Development		Total

Revenues	$125,739		$2,591		$128,330
Cost of sales and expenses	(118,019	)	(2,146	)	(120,165	)
Joint venture net income	$7,720		$445		$8,165
Our share of net income	$7,083		$223		$7,306

	Six Months Ended April 30, 2020
(In thousands)			Land
	Homebuilding		Development		Total

Revenues	$199,776		$7,552		$207,328
Cost of sales and expenses	(196,004	)	(8,401	)	(204,405	)
Joint venture net income (loss)	$3,772		$(849	)	$2,923
Our share of net income (loss)	$7,616		$(425	)	$7,191

	Six Months Ended April 30, 2019
(In thousands)			Land
	Homebuilding		Development		Total

Revenues	$221,513		$3,596		$225,109
Cost of sales and expenses	(207,331	)	(3,117	)	(210,448	)
Joint venture net income	$14,182		$479		$14,661
Our share of net income	$16,624		$240		$16,864

		Fair Value at		Fair Value at
	Fair Value	April 30,		October 31,
(In thousands)	Hierarchy	2020		2019

Mortgage loans held for sale (1)	Level 2	$74,959		$166,007
Forward contracts	Level 2	(454	)	(64	)
Total		$74,505		$165,943
Interest rate lock commitments	Level 3	$342		$42
Total		$74,847		$165,985

	Three Months Ended April 30, 2020
	Mortgage		Interest Rate
	Loans Held		Lock	Forward
(In thousands)	For Sale		Commitments	Contracts


Fair value included in net income all reflected in financial services revenues	$(709	)	$224	$(271	)

		Three Months Ended
		April 30, 2019
		Pre-
	Fair Value	Impairment
(In thousands)	Hierarchy	Amount	Total Losses		Fair Value

Sold and unsold homes and lots under development	Level 3	$3,906	$(968	)	$2,938
Land and land options held for future development or sale	Level 3	$-	$-		$-

(In thousands)	Level 1	Level 2	Level 3	Total
Senior Secured Notes:
10.0% Senior Secured Notes due July 15, 2022	$-	$88,522	$-	$88,522
10.5% Senior Secured Notes due July 15, 2024	-	-	35,203	35,203
10.0% Senior Secured 1.75 Lien Notes due November 15, 2025	-	-	85,697	85,697
7.75% Senior Secured 1.125 Lien Notes due February 15, 2026	-	-	331,625	331,625
10.5% Senior Secured 1.25 Lien Notes due February 15, 2026	-	-	245,620	245,620
11.25% Senior Secured 1.5 Lien Notes due February 15, 2026	-	-	162,290	162,290
Senior Notes:
13.5% Senior Notes due February 1, 2026	-	46,080	-	46,080
5.0% Senior Notes due February 1, 2040	-	26,941	-	26,941
Senior Unsecured Term Loan Credit Facility due February 1, 2027	-	-	24,613	24,613
Secured Credit Facilities:
Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028	-	-	66,910	66,910
Senior Secured Revolving Credit Facility	-	-	125,000	125,000
Total fair value	$-	$161,543	$1,076,958	$1,238,501

		Active	Proposed
	Active	Communities	Developable	Total
	Communities(1)	Homes	Homes	Homes
April 30, 2020:

Northeast	4	537	2,883	3,420
Mid-Atlantic	20	2,146	3,262	5,408
Midwest	15	1,515	1,319	2,834
Southeast	12	1,837	1,717	3,554
Southwest	56	4,486	2,673	7,159
West	25	2,381	2,241	4,622

Consolidated total	132	12,902	14,095	26,997

Unconsolidated joint ventures (2)	24	5,116	-	5,116

Owned		6,903	3,794	10,697
Optioned		5,736	10,301	16,037

Controlled lots		12,639	14,095	26,734

Construction to permanent financing lots		263	-	263

Consolidated total		12,902	14,095	26,997

	(1)	Active communities are open for sale communities with ten or more home sites available. We identify communities based on product type. Therefore, at times there are multiple communities at one land site.

	(2)	Represents active communities and home sites for our unconsolidated homebuilding joint ventures for the period. We provide this data as a supplement to our consolidated results as an indicator of the volume managed in our unconsolidated joint ventures. See Note 18 to the Condensed Consolidated Financial Statements for a further discussion of our unconsolidated joint ventures.

	April 30, 2020			October 31, 2019

	Unsold			Unsold
	Homes	Models	Total	Homes	Models	Total

Northeast	47	8	55	58	12	70
Mid-Atlantic	48	17	65	63	12	75
Midwest	34	9	43	31	10	41
Southeast	86	18	104	78	15	93
Southwest	267	19	286	320	12	332
West	132	31	163	213	19	232

Total	614	102	716	763	80	843


Started or completed unsold homes and models per active selling communities (1)	4.6	0.8	5.4	5.4	0.6	6.0

	April 30,	October 31,	Dollar
(In thousands)	2020	2019	Change

Prepaid insurance	$1,621	$2,061	$(440	)
Prepaid project costs	31,684	32,015	(331	)
Other prepaids	10,264	10,808	(544	)
Other assets	678	820	(142	)
Lease right of use asset	21,144	-	21,144
Total	$65,391	$45,704	$19,687

	Net Contracts (1) for the		Net Contracts (1) for the
	Three Months Ended		Six Months Ended		Contract Backlog as of
	April 30,		April 30,		April 30,
(Dollars in thousands)	2020	2019	2020	2019	2020	2019

Northeast:
Dollars	$23,266	$62,580	$56,269	$97,530	$50,771	$102,481
Homes	66	104	129	156	106	162

Mid-Atlantic:
Dollars	$128,652	$118,245	$222,354	$199,759	$228,622	$246,307
Homes	247	199	430	350	429	393

Midwest:
Dollars	$54,501	$68,744	$112,777	$105,790	$132,523	$125,181
Homes	174	235	361	362	468	466

Southeast:
Dollars	$48,508	$64,772	$115,666	$105,232	$131,695	$120,140
Homes	109	155	264	250	287	270

Southwest:
Dollars	$187,493	$192,630	$365,926	$307,968	$262,634	$227,325
Homes	582	559	1,110	921	765	648

West:
Dollars	$139,418	$120,616	$230,250	$177,634	$151,812	$128,422
Homes	309	294	515	441	328	315

Consolidated total:
Dollars	$581,838	$627,587	$1,103,242	$993,913	$958,057	$949,856
Homes	1,487	1,546	2,809	2,480	2,383	2,254

Unconsolidated joint ventures:(2)
Dollars	$127,283	$131,282	$249,041	$216,851	$267,368	$228,730
Homes	439	229	704	363	884	382

Quarter	2020		2019		2018		2017		2016

First	19	%	24	%	18	%	19	%	20	%
Second	23	%	19	%	17	%	18	%	19	%
Third			19	%	19	%	19	%	21	%
Fourth			21	%	23	%	22	%	20	%

	Three Months Ended April 30,

(Dollars in thousands, except average sales price)	2020		2019		Variance		Variance %

Northeast
Homebuilding revenue	$46,798		$13,059		$33,739		258.4	%
Income before income taxes	$6,722		$125		$6,597		5277.6	%
Homes delivered	94		23		71		308.7	%
Average sales price	$497,777		$566,957		$(69,180	)	(12.2	)%

Mid-Atlantic
Homebuilding revenue	$89,738		$80,847		$8,891		11.0	%
Income before income taxes	$5,466		$393		$5,073		1290.8	%
Homes delivered	168		142		26		18.3	%
Average sales price	$533,792		$569,141		$(35,349	)	(6.2	)%

Midwest
Homebuilding revenue	$56,673		$42,937		$13,736		32.0	%
Loss before income taxes	$(385	)	$(594	)	$209		35.2	%
Homes delivered	184		141		43		30.5	%
Average sales price	$307,299		$304,035		$3,264		1.1	%

Southeast
Homebuilding revenue	$56,369		$49,382		$6,987		14.1	%
Income (loss) before income taxes	$50		$(4,132	)	$4,182		101.2	%
Homes delivered	127		123		4		3.3	%
Average sales price	$443,441		$401,187		$42,254		10.5	%

Southwest
Homebuilding revenue	$170,654		$143,850		$26,804		18.6	%
Income before income taxes	$13,052		$4,286		$8,766		204.5	%
Homes delivered	515		431		84		19.5	%
Average sales price	$331,039		$333,258		$(2,219	)	(0.7	)%

West
Homebuilding revenue	$103,603		$97,883		$5,720		5.8	%
Income before income taxes	$2,723		$10,310		$(7,587	)	(73.6	)%
Homes delivered	237		225		12		5.3	%
Average sales price	$436,852		$434,862		$1,990		0.5	%

	●	The material and adverse disruption, and the expected continued disruption, to our business caused by the present outbreak and worldwide spread of COVID-19 and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it;
	●	Changes in general and local economic, industry and business conditions and impacts of a significant homebuilding downturn;
	●	Adverse weather and other environmental conditions and natural disasters;
	●	High leverage and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness;
	●	Availability and terms of financing to the Company;
	●	The Company’s sources of liquidity;
	●	Changes in credit ratings;
	●	The seasonality of the Company’s business;
	●	The availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots;
	●	Shortages in, and price fluctuations of, raw materials and labor, including due to changes in trade policies, including the imposition of tariffs and duties on homebuilding materials and products and related trade disputes with and retaliatory measures taken by other countries;
	●	Reliance on, and the performance of, subcontractors;
	●	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;
	●	Increases in cancellations of agreements of sale;
	●	Fluctuations in interest rates and the availability of mortgage financing;
	●	Changes in tax laws affecting the after-tax costs of owning a home;
	●	Operations through unconsolidated joint ventures with third parties;
	●	Government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment;
	●	Legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors;
	●	Levels of competition;
	●	Successful identification and integration of acquisitions;
	●	Significant influence of the Company’s controlling stockholders;
	●	Availability of net operating loss carryforwards;
	●	Utility shortages and outages or rate fluctuations;
	●	Geopolitical risks, terrorist acts and other acts of war;
	●	Diseases, pandemics or other severe public health events;
	●	Loss of key management personnel or failure to attract qualified personnel;
	●	Information technology failures and data security breaches; and
	●	Negative publicity.

	Long Term Debt as of April 30, 2020 by Fiscal Year of Expected Maturity Date
																						FV at
(Dollars in thousands)	2020			2021			2022			2023			2024			Thereafter			Total			4/30/20

Long term debt(1)(2):
Fixed rate		$-			$-			$136,714			$125,000			$69,683			$1,254,852			$1,586,249			$1,238,501
Weighted average interest rate		-	%		-	%		10.00	%		7.75	%		10.50	%		8.12	%		9.36	%

(1)	Does not include the mortgage warehouse lines of credit made under our Master Repurchase Agreements.
(2)	Does not include $211.8 million of nonrecourse mortgages secured by inventory. These mortgages have various maturities spread over the next two to three years and are paid off as homes are delivered.

Item 6.	EXHIBITS

3(a)	Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed on March 29, 2019).

3(b)	Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed on December 3, 2018).

4(a)	Specimen Class A Common Stock Certificate. (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed on March 29, 2019).

4(b)	Specimen Class B Common Stock Certificate (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed on March 29, 2019).

4(c)	Certificate of Designations, Powers, Preferences and Rights of the 7.625% Series A Preferred Stock of Hovnanian Enterprises, Inc., dated July 12, 2005.(Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed on July 13, 2005).

4(d)	Certificate of Designations of the Series B Junior Preferred Stock of Hovnanian Enterprises, Inc., dated August 14, 2008 (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2008).

4(e)	Rights Agreement, dated as of August 14, 2008, between Hovnanian Enterprises, Inc. and National City Bank, as Rights Agent, which includes the Form of Certificate of Designation as Exhibit A, Form of Right Certificate as Exhibit B and the Summary of Rights as Exhibit C (Incorporated by reference to Exhibits to the Registration Statement on Form 8-A of the Registrant filed on August 14, 2008).

4(f)	Amendment No. 1 to Rights Agreement, dated as of January 11, 2018, between Hovnanian Enterprises, Inc. and Computershare Trust Company, N.A. (as successor to National City Bank), as Rights Agent, which includes the amended and restated Form of Rights Certificate as Exhibit 1 and the amended and restated Summary of Rights as Exhibit 2 (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed on January 11, 2018).

4(g)	Fourth Supplemental Indenture, dated as of March 25, 2020, relating to the additional 11.25% Senior Secured 1.5 Lien Notes due 2026, among K. Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc., the subsidiary guarantors named therein and Wilmington Trust, National Association, as Trustee and Collateral Agent, including the form of the additional 11.25% Senior Secured 1.5 Lien Notes due 2026 (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed March 26, 2020).

10(a)*	2020 Hovnanian Enterprises, Inc. Stock Incentive Plan (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed March 25, 2020).

10(b)*	Retirement Agreement, dated as of May 18, 2020, between Hovnanian Enterprises, Inc. and Lucian T. Smith III.


31(a)	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31(b)	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

32(a)	Section 1350 Certification of Chief Executive Officer.

32(b)	Section 1350 Certification of Chief Financial Officer.

101	The following financial information from our Quarterly Report on Form 10-Q for the quarter ended April 30, 2020, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets at April 30, 2020 and October 31, 2019, (ii) the Condensed Consolidated Statements of Operations for the three and six months ended April 30, 2020 and 2019, (iii) the Condensed Consolidated Statements of Changes in Equity Deficit for the six months ended April 30, 2020 and 2019, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended April 30, 2020 and 2019, and (v) the Notes to Condensed Consolidated Financial Statements.

	* Management compensatory plan or agreement