Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended January 31, 2026 OR ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 1-8551 Hovnanian Enterprises, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware (State or Other Jurisdiction of Incorporation or Organization) 22-18 ...

Question-and-Answer SessionBrad O'ConnorChief Financial Officer Sure. So I mean, our CEO, Ara, has been part of those conversations with some of the other CEOs in the industry. Any regulatory changes that would improve affordability and make the opportunity for people to buy homes better would be -- we would certainly support and would love to see that. Whether there is some -- I don't think, and I don't think Ara thinks there's some silver bullet out there that's going to solve this problem. There's been ...

Summary of Hovnanian Enterprises Conference Call Company Overview - **Company**: Hovnanian Enterprises - **Industry**: Homebuilding Key Points Affordability and Policy Reform - The company supports regulatory changes to improve housing affordability but does not expect a "silver bullet" solution from the government [2][4] - Ideas discussed include limiting investors' ability to buy single-family rentals and the potential reintroduction of a first-time buyer tax credit, which previously had a positive impact [2][3] - Local costs driven by municipalities, such as development fees, can exceed $100,000 per house, complicating affordability [5] Land Acquisition and Pricing - The company underwrites land deals based on current market conditions, with a typical timeline of 2-3 years from land control to first deliveries [6][7] - Average sales incentives increased from 8% in 2024 to approximately 12.5% in the most recent quarter, impacting margins [6] - The company is currently seeing a decline in land spend, averaging $150 million per quarter compared to $250 million previously [47] Market Performance - The Northeast segment (New Jersey, Delaware, Virginia, Maryland) is the strongest market, while Dallas and Southeast Florida are the weakest [22][23] - The active adult segment is performing well due to lower mortgage dependency, while first-time buyer products are facing challenges [24][25] Product Strategy - The company plans to shift focus from first-time buyer products (currently 42% of offerings) to market rate and active adult products [36][37] - The active adult segment currently represents about 20% of the product mix, with plans to increase this share [36] Cost Management - Construction costs have decreased slightly from $98 per square foot to around $96, aided by competitive pricing for materials and labor [18] - The company is actively managing costs through constant rebidding for materials and labor [17] Financial Health and Capital Allocation - The company ended the first quarter with $470 million in liquidity, significantly above the target of $200 million [48] - The debt-to-cap ratio is currently at 42%, with a target of 30%, and the company is cautious about taking on more debt for acquisitions [52][44] Market Outlook - The company is optimistic about the spring selling season, with traffic and contracts showing year-over-year improvement in January and February [28][29] - A psychological shift in buyer sentiment is expected as mortgage rates decrease, potentially increasing market activity [60][61] Impairment Testing - The company conducts quarterly assessments for inventory impairments, with no significant impairments reported recently [14][15] Industry Trends - Consolidation in the homebuilding industry may continue as larger builders seek efficiencies [41][42] - The company is not currently focused on acquisitions but may consider regional builders to enhance market presence [43][44] Conclusion - Hovnanian Enterprises is navigating a challenging market environment with a focus on affordability, strategic land acquisition, and product diversification while maintaining financial discipline and preparing for potential market improvements.

Investor Presentation March 2026 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 results, performance or ach ...

Core Viewpoint - Hovnanian Enterprises reported mixed financial results for the first quarter of fiscal 2026, with revenue declining 6% year-over-year primarily due to a 12% drop in home deliveries, while adjusted profitability fell 24% due to increased incentives [1][7]. Financial Performance - Total revenue for the first quarter was $632 million, near the high end of the company's guidance range [3]. - Adjusted EBITDA was reported at $63 million and adjusted pretax income at $31 million, both significantly exceeding prior guidance [2][7]. - The adjusted gross margin was 13.4%, slightly below expectations, while SG&A expenses were 13.3% of revenue, better than the low end of guidance [3]. Market Conditions and Strategy - The housing market remains challenging, characterized by affordability pressures and low consumer confidence [4]. - Incentives accounted for 12.6% of the average sales price, with a significant portion tied to mortgage rate buydowns, reflecting a 290 basis point increase year-over-year [8]. - The company is prioritizing sales volume over profit margins, maintaining incentives to sell older, lower-margin land [9]. Sales Trends and Buyer Engagement - Contract activity showed signs of improvement, with January contracts up 11% year-over-year and February month-to-date contracts up 13% [12]. - Quick move-in homes (QMIs) represented 71% of total sales, although this was a decrease from previous quarters [15]. - The backlog conversion ratio improved to 88%, the highest since 2023, with 41% of homes delivered sold and closed within the same quarter [16]. Balance Sheet and Capital Management - The company ended the quarter with $471 million in liquidity and a net debt-to-capital ratio of 41.4%, significantly improved from 146.2% in early fiscal 2020 [6][21]. - Hovnanian has a disciplined land-light strategy, controlling 35,560 domestic lots, which represents a 6.7-year supply [22]. - The company recorded a one-time $27 million gain from joint ventures, reflecting a normal part of its operational cycle [18]. Future Outlook - Guidance for the second quarter includes total revenue expectations of $625 million to $725 million and adjusted pretax income ranging from breakeven to $10 million [26]. - Management anticipates improved contract activity and contributions from higher-margin communities in the latter half of fiscal 2026 [23].

Group 1 - Hovnanian Enterprises, Inc. will host a fireside chat at J.P. Morgan's 2026 Global Leveraged Finance Conference on March 2, 2026, at 11:00 am ET [1] - The presentation will be available via live webcast on Hovnanian's Investor Relations website, with an archive accessible later for those unable to attend live [2] - Hovnanian Enterprises, Inc. is one of the largest homebuilders in the U.S., operating in multiple states and marketing homes under the K. Hovnanian Homes brand [3] Group 2 - The company was founded in 1959 and is headquartered in Matawan, New Jersey, with significant operations across various states including Arizona, California, and Texas [3] - Hovnanian is also a major builder of active lifestyle communities through its subsidiaries [3] - Additional investor information can be found on the company's website, and interested parties can join the investor email list [4]

Financial Data and Key Metrics Changes - Total revenues for the first quarter reached $632 million, a decrease of 6% year-over-year, primarily due to a 12% reduction in home deliveries [6][7] - Adjusted gross margin was 13.4%, slightly below expectations, while SG&A expenses were 13.3%, better than the low end of guidance [5][6] - Adjusted EBITDA was $63 million, significantly higher than guidance, and adjusted pre-tax income was $31 million, also above forecast [6][7] Business Line Data and Key Metrics Changes - Income from unconsolidated joint ventures totaled $3 million, slightly below expectations, while income from consolidated joint ventures exceeded expectations with a gain of $27 million recorded as other income [6][21] - The percentage of Quick Move-in homes (QMIs) in total sales decreased from 79% to 71%, while to-be-built sales increased from 21% to 29% [16][19] Market Data and Key Metrics Changes - Monthly traffic per community increased significantly, with January showing a 40% year-over-year increase, indicating improved buyer engagement [11] - Contracts in February 2026 were up 13% compared to the prior year, suggesting a positive trend in sales activity [12] Company Strategy and Development Direction - The company is focused on maintaining a steady sales pace and efficiently turning over existing inventory while preparing for new land opportunities that promise improved margins [10][20] - The strategy includes prioritizing the acquisition of land for move-up homes in prime locations and expanding active adult communities, moving away from lower-margin developments [20][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges in the housing market but expressed confidence in meeting homebuyer demand and improving profitability in the latter half of 2026 [36][39] - The company expects adjusted pre-tax income to improve in the second half of 2026, supported by stronger contract activity and the delivery of higher-margin homes [37][39] Other Important Information - The company ended the quarter with $471 million in liquidity, which is above target, and has significantly reduced net debt while increasing equity [28][30] - The net debt-to-capital ratio improved to 41.4%, a substantial decrease from 146.2% at the start of fiscal 2020 [30] Q&A Session Summary Question: On the topic of incentives and their pressure on margins, is there an opportunity to offer less incentives for higher margins? - Management prefers to focus on sales pace rather than price, maintaining incentives to clear lower-margin land and drive liquidity [43] Question: What is the current percentage of Quick Move-in homes versus built-to-order homes? - The percentage of QMIs has dropped to 71%, while built-to-order sales have increased, reflecting market demand rather than a strategic shift [44]

Financial Data and Key Metrics Changes - Total revenues for the first quarter reached $632 million, a 6% decrease compared to the previous year, primarily due to a 12% reduction in home deliveries [5][6][7] - Adjusted gross margin was 13.4%, slightly below expectations, while SG&A expenses were 13.3%, better than the low end of guidance [5][6] - Adjusted EBITDA was $63 million, significantly higher than guidance, and adjusted pre-tax income was $31 million, also above forecasted ranges [6][7] - Income from unconsolidated joint ventures totaled $3 million, slightly below expectations, while income from consolidated joint ventures exceeded expectations with a gain of $27 million recorded as other income [6][21] Business Line Data and Key Metrics Changes - The company delivered 12% fewer homes year-over-year, impacting total revenues, but a land sale helped offset some of the decline [6][7] - Incentives accounted for 12.6% of the average sales price, with a significant increase in mortgage rate buydowns contributing to affordability challenges [8][15] - The percentage of Quick Move-in homes (QMIs) in total sales decreased from 79% to 71%, while to-be-built sales increased from 21% to 29% [16][17] Market Data and Key Metrics Changes - Monthly traffic per community increased significantly in five of the six months shown, with January showing a 40% increase year-over-year [11] - Contracts in February 2026 were up 13% compared to the prior year, indicating a positive trend in buyer engagement [12] - The company experienced fluctuations in contracts over the past 12 months, with January showing an 11% year-over-year gain [11][12] Company Strategy and Development Direction - The company is focused on efficiently turning over existing inventory and advancing sales of Quick Move-in homes while preparing for new land opportunities that promise improved margins [10][20] - A shift in land acquisition strategy is underway, moving away from lower-margin entry-level homes to more move-up homes in prime locations and active adult communities [20][27] - The company aims to maintain a disciplined approach to land management, walking away from less attractive opportunities and focusing on higher-margin developments [24][26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges in the housing market, including affordability pressures and economic uncertainties, but expressed confidence in meeting homebuyer demand [36][39] - The expectation for adjusted pre-tax income is to improve in the latter half of 2026, supported by stronger contract activity and the delivery of higher-margin homes [37][39] - The company remains committed to sustainable growth and value for shareholders, with a focus on inventory efficiency and land-light operations [39][40] Other Important Information - The company ended the quarter with $471 million in liquidity, above target, and has seen a significant reduction in net debt [28][30] - The net debt-to-capital ratio improved to 41.4%, a substantial decrease from 146.2% at the start of fiscal 2020 [30] - The company is only providing financial guidance for the next quarter due to current market volatility and challenges in predicting margins [31] Q&A Session Summary Question: On the topic of incentives and their pressure on margins, is there an opportunity to offer less incentives for higher margins? - Management prefers to focus on sales pace rather than price, maintaining incentives to clear lower-margin land and drive liquidity [43] Question: What is the current percentage of Quick Move-in homes versus built-to-order homes? - The percentage of QMIs has dropped to 71%, while demand for built-to-order homes has been increasing, which is beneficial due to higher profit margins [44]

Financial Data and Key Metrics Changes - Total revenues for Q1 2026 reached $632 million, a 6% decrease compared to the previous year, primarily due to a 12% reduction in home deliveries [8][10] - Adjusted gross margin was 13.4%, slightly below expectations, while SG&A expenses were 13.3%, better than the low end of guidance [5][6] - Adjusted EBITDA for the quarter was $63 million, significantly higher than guidance, and adjusted pre-tax income was $31 million, also above forecast [6][10] Business Line Data and Key Metrics Changes - Income from unconsolidated joint ventures totaled $3 million, slightly below expectations, while income from consolidated joint ventures exceeded expectations with a gain of $27 million recorded as other income [6][22][23] - The company delivered 12% fewer homes year-over-year, impacting overall revenues, but a land sale helped offset some of the decline [8][10] - Incentives accounted for 12.6% of the average sales price, with a significant increase in mortgage rate buydowns contributing to affordability challenges [9][15] Market Data and Key Metrics Changes - Monthly traffic per community increased significantly in 5 of the 6 months leading up to January 2026, with January showing a 40% increase compared to the same month last year [12] - Contracts per community held steady at about 9.5 for the past 3 years, with February 2026 contracts on track to be higher than the same month last year [13][14] - The company experienced fluctuations in contracts over the past 12 months, with January showing an 11% year-over-year gain [12] Company Strategy and Development Direction - The company is focused on efficiently turning over existing inventory and advancing sales of Quick Move-in homes while preparing for new land opportunities that promise improved margins [11][21] - A shift in land acquisition strategy is noted, moving away from lower-margin entry-level homes to more move-up homes in prime locations and active adult communities [21][29] - The company aims to maintain a disciplined approach to land management, walking away from less attractive opportunities and focusing on higher-margin developments [28][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges in the housing market, including affordability pressures and economic uncertainties, but expressed confidence in meeting homebuyer demand [38][41] - The expectation for adjusted pre-tax income is to improve in the latter half of 2026, supported by stronger contract activity and the delivery of higher-margin homes [40][42] - The company remains committed to sustainable growth and value for shareholders, with a focus on inventory efficiency and land-light operations [42][43] Other Important Information - The company ended Q1 2026 with $471 million in liquidity, above target, despite significant spending on land and stock repurchases [29][30] - The net debt-to-capital ratio improved to 41.4%, a significant reduction from previous years, indicating stronger financial health [32] - The company expects to provide financial guidance for the next quarter only, reflecting the current market volatility [33] Q&A Session Summary Question: On the topic of incentives and their pressure on margins, is there an opportunity to offer less incentives for higher margins? - Management prefers to focus on sales pace rather than price, maintaining incentives to clear lower-margin land and drive liquidity [45][46] Question: What is the current percentage of Quick Move-in homes versus built-to-order homes? - Quick Move-in sales dropped from 79% to 71%, not due to a strategic shift but rather market demand, with built-to-order homes showing higher profit margins [48][49]

Review of Financial Results First Quarter Fiscal 2026 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 exp ...