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The home builder posted a net loss of $667,000 as it offered more incentives to try to maintain a strong sales pace. ...

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Financial Data and Key Metrics Changes - Total revenues for the fourth quarter reached $818 million, a 17% decline year-over-year, primarily due to a 13% reduction in deliveries and the absence of a significant land sale from the previous year [5][6] - Adjusted gross margin was 16.3%, showing a year-over-year decline driven by higher incentives to support affordability, with incentives accounting for 12.2% of the average sales price [5][7] - Adjusted EBITDA for the quarter was $89 million, exceeding guidance, while adjusted pre-tax income was $49 million, close to the midpoint of guidance [5][6] Business Line Data and Key Metrics Changes - The number of contracts in the fourth quarter fell by 8% compared to last year, reflecting overall market conditions [9] - Sales pace for each month in the fourth quarter was lower than the same months last year, with contracts per community declining 16% compared to the 1997-2002 period [10][12] - Quick-moving homes (QMIs) comprised 73% of total sales, down from 79% in prior quarters, indicating a focus on aligning starts with sales pace [15] Market Data and Key Metrics Changes - Traffic per community increased significantly in three of the four months of the fourth quarter compared to last year, indicating a positive trend in buyer interest [9] - Despite higher mortgage rates and a slower sales pace nationwide, net prices increased in 36% of communities during the fourth quarter, particularly in stronger markets [16] Company Strategy and Development Direction - The company is focusing on sales pace over price, prioritizing the clearance of older vintage lots to make way for new land acquisitions with better margins [8][21] - The strategy includes maintaining a robust inventory of QMIs to enable quick sales and optimize inventory levels [14][15] - The company plans to continue using mortgage rate buy-downs and similar incentives to support sales while managing costs through negotiations with suppliers [39][40] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging market conditions but expressed optimism about performance bottoming out in the upcoming quarter and gradually improving thereafter [45] - The company expects gross margins to bottom in the first quarter of fiscal 2026 and to improve in subsequent quarters if market conditions remain stable [25][36] Other Important Information - The company ended the fourth quarter with $404 million in liquidity, well above the targeted range, and completed a significant refinancing, marking a milestone in reducing debt risk [22][23] - The lot count decreased 14% year-over-year, reflecting disciplined land acquisition strategies [19][20] Q&A Session Summary Question: Are you doing anything to offset some of the pressure from gross margins? - The company has successfully controlled costs and reduced expenses in some areas, maintaining flat costs despite increases from tariffs [39] Question: When do you expect gross margin to take higher next year? - The improvement in gross margins is expected to be a mix of working through older properties and bringing on newer land deals identified in 2024 and 2025 [41]

Financial Data and Key Metrics Changes - Total revenues for Q4 2025 reached $818 million, a 17% decline year-over-year, primarily due to a 13% reduction in deliveries and the absence of a significant land sale from the previous year [6][18] - Adjusted gross margin was 16.3%, showing a year-over-year decline driven by higher incentives to support affordability, with incentives accounting for 12.2% of the average sales price [7][12] - Adjusted EBITDA for the quarter was $89 million, exceeding guidance, while adjusted pre-tax income was $49 million, close to the midpoint of guidance [5][6] - The company reported a total interest expense ratio increase compared to last year, mainly due to interest expensed immediately for large communities in planning [8] Business Line Data and Key Metrics Changes - The number of contracts in Q4 fell by 8% compared to last year, reflecting overall market conditions, with traffic per community increasing significantly in three of the four months [9][10] - Sales pace for each month in Q4 was lower than the same months last year, with contracts per community in Q4 2025 being 16% below levels seen during the 1997-2002 period [10][11] - Quick-moving homes (QMIs) comprised 73% of total sales in Q4, down from 79% in prior quarters, indicating a focus on aligning starts with sales pace [15] Market Data and Key Metrics Changes - The company ended Q4 with 156 communities open for sale, reflecting steady growth despite a challenging market [18] - The lot count decreased 14% year-over-year, with a disciplined land acquisition strategy leading to a reduction in controlled lots [19][20] - The company managed to increase net prices in 36% of communities during Q4, particularly in stronger markets like Delaware and New Jersey [16] Company Strategy and Development Direction - The company is focusing on sales pace over price, moving through lower margin lots to clear the balance sheet for new land acquisitions projected to carry higher margins [8][21] - A strategic decision was made to sell through lower margin lots to make room for new land acquisitions that meet internal return targets [21] - The company is actively working with land sellers to find mutually beneficial solutions in the current market [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about performance bottoming out in the upcoming quarter, with expectations for gradual improvement in margins [35] - The company anticipates that gross margin percentage will bottom in Q1 of fiscal 2026 and gradually improve in subsequent quarters [25][34] - Management highlighted the importance of maintaining a robust inventory of QMIs to meet buyer needs while optimizing operational efficiency [15][22] Other Important Information - The company ended Q4 with $404 million in liquidity, well above targeted ranges, and completed significant refinancing, marking a milestone with nearly all debt now being unsecured [22][23] - Equity has grown by $1.3 billion, and debt has been reduced by $754 million, improving the net debt to capital ratio to 44.2% [24] Q&A Session Summary Question: Are there any actions being taken to offset pressure on gross margins? - The company has been re-bidding with suppliers and trade partners, achieving some cost reductions, and managing costs flat despite increases from tariffs [38] Question: When is an expected increase in gross margin anticipated? - The expected increase in gross margin is driven by a mix of working through older properties and bringing on newer deals identified in 2024 and 2025 [40]

Hovnanian (HOV) came out with quarterly earnings of $5.96 per share, beating the Zacks Consensus Estimate of $0.63 per share. This compares to earnings of $12.79 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +846.03%. A quarter ago, it was expected that this homebuilder would post earnings of $3.51 per share when it actually produced earnings of $1.99, delivering a surprise of -43.3%.Over the last four quarters, the company ...

Review of Financial Results Fourth 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 ...

The home builder reports home-building gross margin percentage, after cost of sales interest expense and land charges, was 10.7% compared with 18% a year earlier. ...

Revenue Performance - Total revenues for Q4 fiscal 2025 were $817.9 million, down from $979.6 million in Q4 fiscal 2024, while total revenues for the year were $2.98 billion compared to $3.00 billion in fiscal 2024[3] - Total revenues for the three months ended October 31, 2025, were $817.9 million, a decrease from $979.6 million in the same period of 2024, representing a decline of approximately 16.5%[25] - Total revenues for the year ended October 31, 2025, were $2.98 billion, down 0.9% from $3.00 billion in 2024[44] - Financial services revenues for the year ended October 31, 2025, were $95.0 million, an increase of 28.2% from $74.1 million in 2024[44] Home Sales and Deliveries - Domestic unconsolidated joint ventures home sales revenues increased 27.3% to $180.4 million in Q4 fiscal 2025, with 285 homes sold, compared to $141.7 million from 235 homes in Q4 fiscal 2024[3] - Total home deliveries decreased by 10.8% to 1,209 homes in the three months ended October 31, 2025, compared to 1,355 homes in the same period of 2024[46] - Total home deliveries decreased by 3.1% to 5,023 units compared to 5,186 units in the previous year[51] - Overall, unconsolidated joint ventures reported a 12.7% increase in home contracts to 241 homes, with revenues increasing 12.7% to $157.9 million[59] Profitability and Margins - Homebuilding gross margin percentage for Q4 fiscal 2025 was 10.7%, down from 18.0% in Q4 fiscal 2024, with 2.5% attributable to land charges[3] - Homebuilding gross margin for the three months ended October 31, 2025, was $83.9 million, down from $167.2 million in the same period of 2024, reflecting a decrease of about 49.9%[27] - Adjusted income before income taxes for the three months ended October 31, 2025, was $48.8 million, compared to $125.8 million in the same period of 2024, a decrease of approximately 61.2%[26] - The company reported a net loss of $0.7 million for the three months ended October 31, 2025, compared to a net income of $94.3 million in the same period of 2024[25] Financial Position and Liquidity - Total liquidity as of October 31, 2025, was $404.1 million, significantly above the target range of $170 million to $245 million[8] - Cash and cash equivalents rose to $272.8 million in 2025, up 29.9% from $210.0 million in 2024[42] - Total assets increased to $2.63 billion in 2025 from $2.61 billion in 2024, reflecting a growth of 1.3%[42] - Total liabilities decreased slightly to $1.80 billion in 2025 from $1.81 billion in 2024[42] Debt and Interest Expenses - The company successfully completed a $900 million unsecured debt refinancing, extending maturities to 2031 and 2033, resulting in a $12 million decrease in annual interest incurred[8] - Interest expense for the three months ended October 31, 2025, increased to $34,443,000 from $31,120,000 in the same period of 2024, marking an increase of 10.6%[30] - The company incurred a loss on extinguishment of debt of $33.5 million for the three months ended October 31, 2025, compared to no such loss in the same period of 2024[25] Market Outlook and Challenges - The company anticipates challenges in the homebuilding market due to factors such as inflation, mortgage rates, and supply chain issues, which may impact future performance[23] - The backlog of contracts as of October 31, 2025, was $163.2 million, reflecting a 23.1% decrease compared to the previous year[59] Segment Performance - In the Northeast segment, home deliveries decreased by 4.5% to 442 homes, with revenue dropping by 12.4% to $244.5 million[46] - The Southeast segment saw a significant increase in home deliveries, up 38.0% to 178 homes, with revenue rising by 17.1% to $85.2 million[46] - The West segment experienced a decline in home deliveries by 22.8% to 589 homes, with revenue decreasing by 15.3% to $299.5 million[46]

Core Insights - Hovnanian Enterprises, Inc. met or exceeded all guidance metrics for the fiscal fourth quarter and year ended October 31, 2025, despite a challenging housing market [1][10] - The company successfully completed a $900 million unsecured debt refinancing, extending maturities until 2031 and 2033, which strengthens its capital structure and financial flexibility [1][11] Financial Performance - Total revenues for the fourth quarter of fiscal 2025 were $817.9 million, down from $979.6 million in the same quarter of the previous year. For the full year, total revenues were $2.98 billion compared to $3.00 billion in fiscal 2024 [2] - Domestic unconsolidated joint ventures' home sales revenues increased by 27.3% to $180.4 million in Q4 2025, and by 17.6% to $621.6 million for the full year [2] - Homebuilding gross margin percentage was 10.7% for Q4 2025, down from 18.0% in Q4 2024, and 12.7% for the full year compared to 18.7% in the prior year [2][26] - Total SG&A expenses were $91.5 million in Q4 2025, or 11.2% of total revenues, compared to $87.7 million, or 9.0% of total revenues, in Q4 2024 [2] - The company reported a net loss of $0.7 million, or $0.51 per diluted share, for Q4 2025, compared to net income of $94.3 million, or $12.79 per diluted share, in the same period of the previous year [2][23] Debt Refinancing - The company issued $450 million of 8.0% Senior Notes due 2031 and $450 million of 8.375% Senior Notes due 2033, using the proceeds to redeem outstanding secured notes and repay loans [11] - The refinancing resulted in a $12 million decrease in annual interest incurred, simplifying the capital structure by replacing multiple tiers of secured debt with unsecured notes [11] Liquidity and Inventory - Total liquidity as of October 31, 2025, was $404.1 million, significantly above the target range of $170 million to $245 million [4] - Consolidated contracts decreased by 10.8% to 1,209 homes in Q4 2025, with a dollar value of consolidated contract backlog down 22.4% to $726.5 million compared to the previous year [5][20] - The gross contract cancellation rate for Q4 2025 was 17%, slightly down from 18% in the same quarter of the prior year [5] Management Commentary - The CEO highlighted the company's performance in a tough housing market, emphasizing reliance on incentives to maintain sales pace, which impacted gross profit margins [10] - The management expects gross margin percentage to be lowest in Q1 of fiscal 2026 but to gradually increase in subsequent quarters, indicating a focus on long-term value creation [10]