Review of Financial Results Second Quarter Fiscal 2025 Forward-Looking Statements All statements in this presentation that are not historical facts should be considered as "Forward-Looking Statements" within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. 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 resul ...

Financial Data and Key Metrics Changes - Total revenues for the second quarter were $686 million, which was closer to the low end of guidance due to a mix of deliveries with higher-priced home deliveries slipping into future quarters [7] - Adjusted gross margin was 17.3%, just below the low end of guidance, primarily due to increased incentives which rose to 10.5% from 9.7% in the first quarter [8][10] - Adjusted EBITDA was $61 million, slightly above the high end of guidance, while adjusted pretax income was $29 million, near the high end of the range provided [9] Business Line Data and Key Metrics Changes - Contracts for the second quarter, including domestic unconsolidated joint ventures, decreased by 7% year over year, with significant monthly sales volatility observed [12] - The average contracts per community were 11.2, which is higher than the quarterly average since 2008, indicating a strong performance relative to peers despite a year-over-year decline [13] Market Data and Key Metrics Changes - The percentage of home buyers utilizing mortgage rate buy downs was 75%, indicating a continued reliance on these strategies to combat affordability issues in a high mortgage rate environment [17] - The company ended the quarter with 42,440 controlled lots, equating to a 7.7-year supply, which increased by 15% year over year [30] Company Strategy and Development Direction - The company is focusing on pace over price, successfully raising net prices in 31% of communities despite a challenging sales environment [22] - A strategic decision was made to burn through less profitable land parcels to clear the way for new acquisitions that meet return metrics [26] Management's Comments on Operating Environment and Future Outlook - Management expressed satisfaction with the quarter's performance given the difficult economic environment, emphasizing a focus on community-level adjustments and monitoring sales [48] - The company expects to return to more favorable performance metrics as it replaces older land positions with newer, more profitable ones [26] Other Important Information - The company has made significant progress in reducing base construction costs by 7% since the first quarter of fiscal 2023 [28] - The liquidity at the end of the second quarter was $2 billion, within the targeted range, indicating a strong financial position [37] Q&A Session Summary Question: Have you seen lower land prices on recent acquisitions? - Management noted that land sellers are slow to adjust prices, but they are finding opportunities to replenish land supply at better returns [54] Question: What markets are yielding better results for land acquisitions? - Better results are being seen in Delaware, Virginia, Southeast Coastal Charleston areas, New Jersey, and Maryland [55] Question: What is the current incentive structure? - The company is using a mix of closing costs, rate buy downs, and price adjustments as incentives [61] Question: Is the focus still on spec building? - The strategy remains focused on quick move-in homes (QMIs), which allows for affordable mortgage rate buy downs [62] Question: How long will it take to clear older vintage land? - The timeline varies by community, with some areas already cleared out while others may take two to three years [68] Question: What is the outlook for construction costs in the back half of the year? - Management is optimistic about controlling costs, except for potential increases in lumber prices [76]

Financial Data and Key Metrics Changes - Total revenues for the second quarter were $686 million, closer to the low end of guidance, primarily due to a mix of deliveries with higher-priced home deliveries slipping into future quarters [7] - Adjusted gross margin was 17.3%, just below the low end of guidance, impacted by increased incentives which rose to 10.5% [7][8] - Adjusted EBITDA was $61 million, slightly above the high end of guidance, while adjusted pretax income was $29 million, near the high end of guidance [10] - Year-over-year total revenues declined despite flat deliveries, primarily due to lower average sales prices [11] Business Line Data and Key Metrics Changes - Contracts for the second quarter, including domestic unconsolidated joint ventures, decreased by 7% year-over-year, with significant monthly sales volatility observed [13] - The company reported 11.2 contracts per community, which is higher than the quarterly average since 2008, despite a year-over-year decline in contracts per community [14][15] - The percentage of home buyers utilizing mortgage rate buy downs was 75%, indicating continued reliance on these incentives to combat affordability [17] Market Data and Key Metrics Changes - The company experienced a 12% increase in the total number of open for sale communities year-over-year, ending the quarter with 148 communities [29] - Controlled lots increased by 15% year-over-year, equating to a 7.7-year supply of controlled lots [30] - The company noted that 60.3% of communities with price increases were in better-performing markets such as Delaware, Maryland, and Virginia [22] Company Strategy and Development Direction - The company is focusing on pace over price, resulting in an above-average number of contracts per community compared to peers, despite a challenging sales environment [16] - A strategic decision was made to burn through less profitable land parcels at lower gross margins to clear the way for recent land acquisitions that meet target return metrics [26] - The company is actively engaging with land sellers to find mutually beneficial solutions in a slow market [26] Management's Comments on Operating Environment and Future Outlook - Management expressed satisfaction with the quarter's performance given the difficult environment, while remaining vigilant about economic uncertainties [49] - The company expects to return to more favorable performance metrics as it replaces certain land positions with newer acquisitions that meet return targets [26] - Guidance for the next quarter assumes no adverse changes in current market conditions, with total revenues expected between $750 million and $850 million [42] Other Important Information - The company ended the quarter with $2 billion in liquidity, within its targeted range, and has made significant progress in reducing debt and improving its balance sheet [38][40] - The company signed a memorandum of understanding with the Ministry of Housing in Saudi Arabia to expand activities and partnerships in the region [27] Q&A Session Summary Question: Have you seen lower land prices on recent acquisitions? - Management indicated that land sellers are slow to adjust prices, but they are finding opportunities to replenish land supply at better returns [56] Question: What markets are yielding better results with land sellers? - Management mentioned markets such as Delaware, Virginia, Southeast Coastal Charleston, New Jersey, and Maryland as currently yielding better results [57] Question: What is the current incentive structure? - The company utilizes a mix of mortgage rate buy downs, price reductions, and other incentives depending on the delivery timeline of homes [63] Question: Is the focus still on spec building? - Management confirmed that the strategy remains focused on quick move-in homes, which allows for affordable mortgage rate buy downs [64] Question: How long will it take to clear older vintage land? - Management noted that the timeline varies by geography, with some areas already cleared out while others may take two to three years [70] Question: What are the expectations for construction costs in the back half of the year? - Management expressed optimism about maintaining or slightly reducing construction costs, barring any significant increases in lumber prices [77]

Financial Performance - Total revenues decreased 3.1% to $686.5 million in Q2 FY2025 compared to $708.4 million in Q2 FY2024, while total revenues for the first half increased 4.4% to $1.36 billion[4]. - Net income for Q2 FY2025 was $19.7 million, or $2.43 per diluted common share, compared to $50.8 million, or $6.66 per diluted common share in Q2 FY2024[6]. - Adjusted EBITDA for the three months ended April 30, 2025, was $61.3 million, a decrease from $102.2 million in the same period of 2024[29]. - Income before income taxes for the three months ended April 30, 2025, was $26,530,000, a significant decrease of 61.8% compared to $69,392,000 in 2024[42]. - The net income available to common stockholders for the three months ended April 30, 2025, was $17,057,000, a decline of 64.6% from $48,167,000 in the same period of 2024[42]. Homebuilding Metrics - Homebuilding gross margin percentage after cost of sales interest expense and land charges was 13.8% in Q2 FY2025, down from 19.5% in Q2 FY2024[4]. - Consolidated contracts decreased 7.5% to 1,398 homes valued at $706.6 million in Q2 FY2025 compared to 1,512 homes valued at $785.8 million in Q2 FY2024[6]. - Home deliveries for the three months ended April 30, 2025, totaled 1,398 units, a decrease of 7.5% from 1,512 units in 2024[44]. - Total home deliveries decreased by 1.4% to 2,603 homes compared to 2,639 homes in the previous year[49]. - The company’s backlog as of April 30, 2025, was 1,711 homes, reflecting a decrease of 15.2% from 2,018 homes in 2024[44]. Revenue and Sales Trends - Home sales revenue decreased to $650,314,000 for the three months ended April 30, 2025, down 5.3% from $686,929,000 in 2024[42]. - Consolidated total revenue from home sales was $1,349,886 thousand, a decline of 4.3% from $1,410,162 thousand[49]. - The average price of homes sold decreased by 3.7% to $525,535 for the three months ended April 30, 2025, compared to $545,825 in 2024[44]. - The average price of homes in the West region increased by 2.3% to $492,431 for the three months ended April 30, 2025, compared to $481,569 in 2024[44]. - The average home price decreased by 3.0% to $518,589 thousand from $534,355 thousand[49]. Liquidity and Financial Position - Total liquidity as of April 30, 2025, was $202.4 million, within the targeted range of $170 million to $245 million[13]. - Cash and cash equivalents decreased to $73,980,000 from $209,976,000 as of October 31, 2024, a decline of approximately 64.7%[40]. - Total assets decreased to $2,553,099,000 as of April 30, 2025, from $2,605,574,000 as of October 31, 2024, a reduction of approximately 2.0%[40]. - The total liabilities decreased to $1,732,729,000 as of April 30, 2025, from $1,805,225,000 as of October 31, 2024, reflecting a decrease of about 4.0%[40]. Future Outlook and Strategic Initiatives - The company expects total revenues for Q3 FY2025 to be between $750 million and $850 million, with adjusted homebuilding gross margin between 17.0% and 18.0%[9]. - The company anticipates challenges due to economic conditions, including inflation and supply chain issues, which may impact future performance[23]. - Future outlook includes continued focus on joint ventures and market expansion strategies to enhance revenue growth[49]. Joint Ventures and Segment Performance - Income from unconsolidated joint ventures for the three months ended April 30, 2025, was $9.0 million, down from $11.2 million in the same period of 2024[25]. - The KSA joint venture reported a significant increase in home deliveries to 293 homes, up 196.0%, with revenue rising to $74,932 thousand, a 252.8% increase[49]. - Overall, the unconsolidated joint ventures (excluding KSA JV) reported a 7.2% decrease in home deliveries to 231 homes, with contract dollars down 14.8% to $149.5 million[58]. - The company reclassified 86 homes and $70.1 million of contract backlog from the Northeast segment to unconsolidated joint ventures, indicating strategic adjustments in asset management[56].

Core Insights - Hovnanian Enterprises, Inc. reported a 3.1% decrease in total revenues for the second quarter of fiscal 2025, totaling $686.5 million, compared to $708.4 million in the same quarter of the previous year [2] - The company achieved a 15% year-over-year increase in consolidated community count and controlled lots [1] - The return on equity (ROE) for the trailing twelve months was 27.0%, marking the second highest among midsized homebuilders [3] Financial Performance - Total revenues for the first half of fiscal 2025 increased by 4.4% to $1.36 billion compared to $1.30 billion in the first half of fiscal 2024 [2] - Domestic unconsolidated joint ventures' home sales revenues rose by 21.4% to $144.5 million in the second quarter, with 207 homes sold [2] - Homebuilding gross margin percentage decreased to 13.8% in the second quarter from 19.5% in the prior year [2][24] Income and Expenses - Income before income taxes for the second quarter was $26.5 million, down from $69.4 million in the same quarter last year [2] - Net income for the second quarter was $19.7 million, or $2.43 per diluted share, compared to $50.8 million, or $6.66 per diluted share, in the prior year [2][21] - Total SG&A expenses were $80.6 million, or 11.7% of total revenues, compared to $79.0 million, or 11.2% of total revenues, in the same quarter of the previous year [2] Contracts and Backlog - Consolidated contracts decreased by 7.5% year-over-year to 1,398 homes in the second quarter [2] - The dollar value of consolidated contract backlog decreased by 12.5% to $988.2 million as of April 30, 2025, compared to $1.13 billion a year earlier [2] - The gross contract cancellation rate for consolidated contracts was 15% in the second quarter, up from 14% in the previous year [3] Liquidity and Capital Management - Total liquidity as of April 30, 2025, was $202.4 million, within the targeted range of $170 million to $245 million [9] - The company redeemed $26.6 million of senior notes due in 2026 and repurchased 126,448 shares of common stock for $12.2 million [9][8] - Land and land development spending was $219.8 million in the second quarter, down from $230.5 million in the same quarter last year [9] Guidance - For the third quarter of fiscal 2025, total revenues are expected to be between $750 million and $850 million, with adjusted homebuilding gross margin projected between 17.0% and 18.0% [6]

Core Points - Hovnanian Enterprises, Inc. signed a strategic Memorandum of Understanding (MOU) with Saudi Arabia's NHC to enhance collaboration in real estate development [1][3] - The MOU aims to support Saudi Arabia's Vision 2030 by forming joint working groups and pursuing opportunities within NHC projects [3][4] - Hovnanian has a history of delivering over 376,000 homes in the U.S. and has been active in Saudi Arabia since 2013, delivering over 2,450 homes [4] Company Overview - Hovnanian Enterprises, Inc. is one of the largest homebuilders in the U.S., founded in 1959 and headquartered in Matawan, New Jersey [6] - The company operates in multiple states including Arizona, California, and Texas, and markets homes under the K. Hovnanian® Homes brand [6] Strategic Importance - The signing of the MOU coincided with President Trump's visit to Saudi Arabia, highlighting the importance of U.S.-Saudi commercial ties [1][2] - The partnership is expected to contribute to the ambitious housing initiatives under Vision 2030, aiming to create vibrant communities in Saudi Arabia [3][6]

Core Points - Hovnanian Enterprises, Inc. will release its financial results for the second quarter ended April 30, 2025, on May 20, 2025 [1] - The earnings conference call will be webcast live at 11:00 a.m. (ET) on the same day [1] - An archive of the webcast will be available for 12 months on the company's Investor Relations page [2] Company Overview - Hovnanian Enterprises, Inc. is one of the largest homebuilders in the United States, founded in 1959 and headquartered in Matawan, New Jersey [3] - The company operates in multiple states including Arizona, California, Florida, and Texas, and markets homes under the K. Hovnanian Homes brand [3] - It is also a significant builder of active lifestyle communities through its subsidiaries [3] Investor Relations - Additional information can be accessed through the Investor Relations section of the company's website [4] - Interested parties can join Hovnanian's investor email list by contacting the company via email or signing up on their website [4]

Company Overview - Hovnanian Enterprises, Inc. is a homebuilder with a market capitalization of $568.8 million, indicating it is a small player in the industry [1]. Industry Insights - Crude Value Insights provides an investing service focused on oil and natural gas, emphasizing cash flow and companies that generate it, which leads to value and growth prospects [1].

Company Overview - Hovnanian Enterprises, Inc. (NYSE: HOV) has experienced a significant decline in its stock price, down over 35% in 2025 [2]. Industry Context - The home building industry is currently facing multiple challenges, which have contributed to the downturn in stock prices for companies like Hovnanian [2].

Company Overview - Hovnanian (HOV) shares increased by 10.6% to close at $104.37, following a notable trading volume that exceeded typical levels, contrasting with a 10.2% loss over the previous four weeks [1] - The company is expected to report quarterly earnings of $2.45 per share, reflecting a year-over-year decline of 63.2%, with revenues projected at $733.2 million, a 3.5% increase from the same quarter last year [2] Industry Insights - Homebuilding stocks, including Hovnanian, experienced a surge due to favorable policy outcomes, specifically tariff exceptions for Canada and Mexico, which the National Association of Home Builders described as a significant win for the industry [2] - The consensus EPS estimate for Hovnanian has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] - Hovnanian is part of the Zacks Building Products - Home Builders industry, which also includes Beazer Homes (BZH), whose stock rose by 7.1% to $20.37, despite a 18% decline over the past month [4]