Hovnanian Enterprises : Q2 2025 Presentation

Published: 2025-05-20 11:08:06 ET HOV

Published on 05/20/2025 at 11:08

NON-GAAP FINANCIAL MEASURES:

Consolidated earnings before interest expense and income taxes ("EBIT") and before depreciation and amortization ("EBITDA") and before inventory impairments and land option write-offs and loss (gain) on extinguishment of debt, net ("Adjusted EBITDA"), the ratio of Adjusted EBITDA to interest incurred and EBIT before inventory impairments and land option write-offs and loss (gain) on extinguishment of debt, net ("Adjusted EBIT") are not U.S. generally accepted accounting principles ("GAAP") financial measures. The most directly comparable GAAP financial measure is net income. The reconciliation for historical periods of EBIT, EBITDA, Adjusted EBIT and Adjusted EBITDA to net income are presented in tables attached to this presentation.

Homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, are non-GAAP financial measures. The most directly comparable GAAP financial measures are homebuilding gross margin and homebuilding gross margin percentage, respectively. The reconciliation for historical periods of homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, to homebuilding gross margin and homebuilding gross margin percentage, respectively, is presented in a table attached to this presentation.

Adjusted income before income taxes, which is defined as income before income taxes excluding land-related charges and loss (gain) on extinguishment of debt, net is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income before income taxes. The reconciliation for historical periods of adjusted income before income taxes to income before income taxes is presented in a table attached to this presentation.

Adjusted investment, which is defined as total inventories excluding liabilities from inventory not owned, net of debt issuance costs and interest capitalized and including investments in and advances to unconsolidated joint ventures ("Adjusted Investment"), is a non-GAAP financial measure. The most directly comparable GAAP financial measure is total inventories. The reconciliation for historical periods of Adjusted Investment to total inventories is presented in a table attached to this presentation.

The ratio of Adjusted EBIT return on adjusted investment ("Adjusted EBIT ROI"), which is the ratio of Adjusted EBIT for the trailing twelve-months, to the average Adjusted Investment for the prior five fiscal quarters, is a non-GAAP financial measure. The most directly comparable GAAP financial measure is the ratio of net income return to total inventories. The presentation of the ratios of Adjusted EBIT ROI and net income return on inventory are presented in a table attached to this presentation.

Total liquidity is comprised of $74.0 million of cash and cash equivalents, $3.4 million of restricted cash required to collateralize letters of credit and $125.0 million available under a senior secured revolving credit facility as of April 30, 2025.

Second Quarter Results Compared to Guidance

($ in millions)

Guidance

Actuals

Q2 2025(1)

Q2 2025

Total Revenues

$675 - $775

$686

Adjusted Homebuilding Gross Margin(2)

17.5% - 18.5%

17.3%

Total SG&A as Percentage of Total Revenues(3)

11.0% - 12.0%

11.7%

Income from Unconsolidated Joint Ventures

$5 - $10

Adjusted EBITDA(4)

$50 - $60

$61

Adjusted Income Before Income Taxes(5)

$20 - $30

$29

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Second Quarter Results Compared to Last Year

($ in millions)

22.6%

$708

$686

17.3%

Q2 2024 Q2 2025

$70

11.2%

11.7%

$29

Q2 2024 Q2 2025 Q2 2024 Q2 2025

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Contracts, including domestic unconsolidated joint ventures

1,629

1,761

Q2 2024 Q2 2025

Monthly contracts

609

594

590

577

539

481

February 2024

February 2025

March 2024

March 2025

April 2024

April 2025

539

590

Apr 2025

Apr 2024

609 Mar 2025

594 Mar 2024

481

577

Feb 2025

Feb 2024

503

559

Jan 2025

Jan 2024

430 Dec 2024

419 Dec 2023

467

Monthly contracts

301

Nov 2024

Nov 2023

543

299

Oct 2024

Oct 2023

473 Sep 2024

373 Sep 2023

556

393

Aug 2024

Aug 2023

Note:Includesdomesticunconsolidatedjointventurecontracts.

Quarterly Contracts Per Community

18.3

15.0

12.6

13.5

13.0

13.9

10.9

10.6

10.5

11.3

12.0

11.2

11.1

10.3

1997 -

2002

Second Quarter Average

Second Quarter Average Since 2008

Q2 2017 Q2 2018 Q2 2019 Q2 2020 Q2 2021 Q2 2022 Q2 2023 Q2 2024 Q2 2025

Contracts Per Community

4.7

4.3

3.5

4.2

4.0

3.4

4.5

4.4

4.0

3.3

3.2

3.7

3.6

Number Of Sundays

February Monthly Average Since 2008

February 2024

February 2025

March Monthly Average Since 2008

March 2024

March 2025

April Monthly Average Since 2008

April 2024

April 2025

Contracts Per Community - Most Recent Quarter

For the quarter ended March 31, 2025

6.8

7.9

8.1

8.4

8.5

9.8

10.1

10.8

13.3

13.4

Beazer (Mar Q2)

Dream

Finders (Mar Q1)

Pulte (Mar Q1)

TRI Pointe (Mar Q1)

Century

Communities (Mar Q1)

LGI Homes (Mar Q1)

Taylor

Morrison (Mar Q1)

M/I Homes (Mar Q1)

Hovnanian (as if Mar. qtr. end)

NVR (Mar Q1)

Meritage (Mar Q1)

Note:OnlypeerswithMarchquarterendsareshownonthisslide. lictujncloaleBsnicoxsoeta:dlinHioctdnrtuaurdtsrlfmReodatnvN n cu en s d tracts.

Contracts Per Community - Most Recent Quarter Year-Over-Year Change

-6%

-8%

-10%

-12%

-13%

-14%

-24%

-25%

-28%

-36%

For the quarter ended March 31, 2025, compared with the quarter ended March 31, 2024

LGI Homes (Mar Q1)

TRI Pointe (Mar Q1)

Century

Communities (Mar Q1)

Beazer (Mar Q2)

Hovnanian (as if Mar. qtr. end)

M/I Homes (Mar Q1)

Taylor

Morrison (Mar Q1)

Pulte (Mar Q1)

Meritage (Mar Q1)

NVR (Mar Q1)

Dream

Finders (Mar Q1)

Note:OnlypeerswithMarchquarterendsareshownonthisslide. lictujncloaleBsnicoxsoeta:dlinHioctdnrtuaurdtsrlfmReodatnvN n cu en s d tracts.

Percentage of Our Homebuyers That Used Buydowns

73%

71%

72%

74%

75%

79%

Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025

rnaoivAmiMfnKt.ocncRrhtnpaneHo:N sege o a rtgagecustomersthatusedabuydown.

Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Oct-24 Jan-25 Apr-25

3.9

4.2

4.5

Quick Move In Homes (QMIs) Per Community

1,073QMIsat04/30/25,excludingmodels

4.6averageQMIspercommunitysince1997

304finishedQMIsat04/30/25

4.6

4.4

5.3

5.4

5.8

4.7

2.5

2.3

2.0

1.4

1.5

1.6

2.0

3.2

5.6

5.5

4.8

6.7

7.3

6.3

7.2

8.0

7.9

9.3

8.6

Note:Excludingunconsolidatedjointventuresandmodels.

Raising Home Prices in Many of Our Communities

Percentage of communities where we raised net prices

71%

69%

59%

54%

40%

37%

34%

33%

31%

30%

Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025

Lot Vintage

14,902

35%

4,364

8% 8%

10%

19%

20%

3,293

3,627

pre 21

2021

2022

2023

2024

2025

% of Incentives

3.4%

3.0%

7.9%

8.1%

10.1%

7,872

8,382

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Base Construction Costs Per Square Foot

$96.21

$94.93

$91.83 $91.74

$89.19

$88.82

$90.27

$89.78

$91.39

$89.51

Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24 Q4 '24 Q1 '25 Q2 '25

Community Count

Community count expected to grow further in fiscal 2025.

148

125

132

109

Q2 2024 Q2 2025

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Lots Controlled

Including domestic unconsolidated joint ventures, our total lots controlled were 45,582 as of April 30, 2025.

36,841

42,440

7,257

29,584

6,450

35,990

28,657

8,255

20,402

Q2 2023 Q2 2024 Q2 2025

unconsolidated joint

Lots Controlled

Including domestic

ventures, our total lots controlled were 45,582 as of April 30, 2025.

7,180

32,336

39,516

6,632

35,259

6,450

35,990

41,891 43,254 42,440

7,889

21,598

29,123 28,657 29,487

7,337

24,389

31,726

7,709

25,867

33,576

36,841

8,334

20,789

8,255

20,402

7,257

29,584

6,744

36,510

Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025

Quarterly Land and Land Development Spend

$318.4

Q4 Q4 Q4 Q4

20 21 22 23

Q4 24

$219.6

$205.2

$167.1

$229.3

Q3 24

$216.1

Q3 Q3 Q3 Q3

20 21 22 23

$168.8

$204.5

$177.6

$162.6

Q2 Q2

24 25

$219.8

$230.5

Q2 Q2 Q2 Q2

20 21 22 23

$156.5

$154.8

$175.0

$114.4

Q1 Q1

24 25

$247.6

$230.4

Q1 Q1 Q1 Q1

20 21 22 23

$134.4

$194.8

$178.6

$117.9

Percentage of Optioned Lots

45%

49%

51%

53%

60%

63%

69%

71%

80%

85%

Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019 Q2 2020 Q2 2021 Q2 2022 Q2 2023 Q2 2024 Q2 2025

locjoiExtlnasNcntsoue:deeintventures.

% of Lots Optioned

52%

51%

46%

38%

21%

Source:PeerSECfilingsandpressreleasesasof05/20/2025. Note:Excludesunconsolidatedjointventures.

Note:Hovnanian91%excludesQMIsandbacklogfromownedlots.

LGI Homes (Mar Q1) Meritage (Mar Q1) KB Home (Feb Q1) M/I Homes (Mar Q1) TRI Pointe (Mar Q1)

55%

Century Communities (Mar Q1)

56%

Toll (Jan Q1)

59%

58%

Beazer (Mar Q2) Pulte (Mar Q1)

59%

Taylor Morrison (Mar Q1)

91%

98%

85%

75%

DR Horton (Mar Q2) Hovnanian (Apr Q2) Lennar (Feb Q1)

NVR (Mar Q1)

100%

Dream Finders (Mar Q1)

Inventory Turns (COGS), Last Twelve Months

0.5x

0.8x

1.0x

1.1x

1.6x

1.7x

2.8x

LGI Homes (Mar Q1)

Toll (Jan Q1)

Meritage (Mar Q1)

Taylor

Morrison (Mar Q1)

Beazer (Mar Q2)

KB Home (Feb Q1)

TRI Pointe (Mar Q1)

Century

Communities (Mar Q1)

Pulte (Mar Q1)

M/I Homes (Mar Q1)

DR Horton (Mar Q2)

Dream

Finders (Mar Q1)

Hovnanian (Apr Q2)

Lennar (Feb Q1)

NVR (Mar Q1)

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Liquidity Position and Target

($ in millions)

$564

$457

$464

$125

$456

$399

$381

After $27M to redeem debt early and $12M of share repurchases

$353

$357

$125

$366 $125

$125

$338

$306

$125

$308

$313 $311

$271

$282

$125

$439

$125

$251

$125

$222

$125

$332

$339

$125

$331

$125

$202

$274

$241

$125

$181

$228

$256

$188

$183

$146

$232

$213

$157

$186

$126

$97

$77

$245

Target liquidity range

$170

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Debt Maturity Profile

April 30, 2025

($ in millions)

$430 11.75%

In Q2 2025 redeemed

$27M of 13.5% senior notes due February of 2026.

$225 8.00%

$175 10.00%

$125 (1)

$25 5.00%

'25

'26

'27

'28

'29

'40

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Balance Sheet Metrics

($ in millions)

$800 $820

$175

$383

$582

$(490) $(437)

FYE 2019

FYE 2020

FYE 2021

FYE 2022

FYE 2023

FYE 2024

Q2 2025

FYE 2019

FYE 2020

FYE 2021

FYE 2022

FYE 2023

FYE 2024

Q2 2025

Goal: 30%

146.2% 150.4%

86.6%

71.6%

54.9% 49.3%

51.4%

FYE

2019

2020

2021

2022

2023

2024

2025

$1,684

$987

$942

$1,566

$1,373

$1,291

$1,143

Third Quarter Guidance vs. Second Quarter Actuals

($ in millions)

$850

$750

17.3%

17.0%

18.0%

$686

Q2 2025 Q3 2025

Guidance

Q2 2025 Q3 2025

Guidance

12.0%

11.0%

$40

$30

11.7%

$29

Q2 2025 Q3 2025

Guidance

Q2 2025 Q3 2025

Guidance

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Guidance for Fiscal 2025 Third Quarter

($ in millions)

Guidance Q3 2025(1)

Total Revenues

$750 - $850

Adjusted Homebuilding Gross Margin(2)

17.0% - 18.0%

Total SG&A as Percentage of Total Revenues(3)

11.0% - 12.0%

IncomefromUnconsolidatedJointVentures

$15-$25

AdjustedEBITDA(4)

$60-$70

Adjusted Income Before Income Taxes(5)

$30 - $40

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Disclaimer

Hovnanian Enterprises Inc. published this content on May 20, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 20, 2025 at 15:07 UTC.