[Hovnanian Enterprises Fiscal 2025 Third Quarter Results](index=1&type=section&id=HOVNANIAN%20ENTERPRISES%20REPORTS%20FISCAL%202025%20THIRD%20QUARTER%20RESULTS) [Executive Summary](index=1&type=section&id=Executive%20Summary) The company reported an 11% revenue increase, met all guidance, and achieved a record 86% of optioned lots - Total Revenues **Increased 11%** Year-Over-Year[1](index=1&type=chunk) - Met or **Exceeded All Guidance Metrics** Provided[1](index=1&type=chunk) - **86% of Total Lots Are Optioned**, Highest Percentage Ever[1](index=1&type=chunk) - **Second Highest TTM ROE** Amongst Midsized Homebuilders[1](index=1&type=chunk) [Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) Total revenues grew for the quarter and nine-month period, but net income and profitability metrics declined [Consolidated Financial Results](index=1&type=section&id=Consolidated%20Financial%20Results) **Total Revenues** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | $800.6M | $722.7M | 10.8% | | 9 Months | $2.16B | $2.03B | 6.7% | **Net Income** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | $16.6M | $72.9M | (77.2%) | | 9 Months | $64.5M | $147.7M | (56.3%) | **Diluted EPS** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | $1.99 | $9.75 | (79.6%) | | 9 Months | $7.94 | $19.15 | (58.5%) | **EBITDA** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | $61.0M | $127.9M | (52.3%) | | 9 Months | $190.7M | $294.3M | (35.2%) | **Adjusted EBITDA** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | $77.1M | $131.0M | (41.2%) | | 9 Months | $210.4M | $296.6M | (29.1%) | [Profitability Metrics](index=1&type=section&id=Profitability%20Metrics) **Homebuilding Gross Margin Percentage (after cost of sales interest expense and land charges)** | Period | FY2025 | FY2024 | Change (pp) | | :----- | :----- | :----- | :---------- | | Q3 | 11.7% | 19.1% | (7.4) | | 9 Months | 13.5% | 18.9% | (5.4) | **Homebuilding Gross Margin Percentage (before cost of sales interest expense and land charges)** | Period | FY2025 | FY2024 | Change (pp) | | :----- | :----- | :----- | :---------- | | Q3 | 17.3% | 22.1% | (4.8) | | 9 Months | 17.6% | 22.2% | (4.6) | **Total SG&A as % of Total Revenues** | Period | FY2025 | FY2024 | Change (pp) | | :----- | :----- | :----- | :---------- | | Q3 | 11.3% | 12.4% | (1.1) | | 9 Months | 12.0% | 12.6% | (0.6) | **Total Interest Expense as % of Total Revenues** | Period | FY2025 | FY2024 | Change (pp) | | :----- | :----- | :----- | :---------- | | Q3 | 4.2% | 4.0% | 0.2 | | 9 Months | 4.3% | 4.4% | (0.1) | [Income Before Taxes (GAAP & Adjusted)](index=2&type=section&id=Income%20Before%20Taxes%20(GAAP%20%26%20Adjusted)) **Income Before Income Taxes** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | $23.8M | $97.3M | (75.5%) | | 9 Months | $90.2M | $199.2M | (54.7%) | **Income Before Income Taxes (excluding land-related charges and gain on extinguishment of debt, net)** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | $39.8M | $100.4M | (60.3%) | | 9 Months | $109.9M | $201.5M | (45.5%) | - Q3 FY2025 adjusted income before income taxes was at the **high end of guidance**[5](index=5&type=chunk) [Operational Performance and Key Metrics](index=2&type=section&id=Operational%20Performance%20and%20Key%20Metrics) Deliveries increased significantly while contract backlog decreased, reflecting a strategic shift to quick move-in homes [Sales and Deliveries](index=2&type=section&id=Sales%20and%20Deliveries) **Consolidated Contracts (Homes)** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | 1,211 | 1,192 | 1.6% | **Consolidated Deliveries (Homes)** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | 1,431 | 1,255 | 14.0% | **Contracts (including domestic unconsolidated joint ventures) (Homes)** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | 1,416 | 1,396 | 1.4% | **Deliveries (including domestic unconsolidated joint ventures) (Homes)** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | 1,676 | 1,479 | 13.3% | **Average Price of Consolidated Contracts** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | $511,673 | $541,773 | (5.6%) | **Average Price of Consolidated Deliveries** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | $537,421 | $547,748 | (1.9%) | [Community Count and Backlog](index=2&type=section&id=Community%20Count%20and%20Backlog) **Consolidated Community Count** | Date | FY2025 | FY2024 | Change (%) | | :--- | :----- | :----- | :--------- | | Jul 31 | 124 | 126 | (1.6%) | **Community Count (including domestic unconsolidated joint ventures)** | Date | FY2025 | FY2024 | Change (%) | | :--- | :----- | :----- | :--------- | | Jul 31 | 146 | 146 | 0.0% | - Consolidated contracts per community **increased 3.2%** year-over-year to 9.8 in Q3 fiscal 2025[5](index=5&type=chunk) **Dollar Value of Consolidated Contract Backlog** | Date | FY2025 | FY2024 | Change (%) | | :--- | :----- | :----- | :--------- | | Jul 31 | $838.8M | $1.16B | (27.6%) | **Dollar Value of Contract Backlog (including domestic unconsolidated joint ventures)** | Date | FY2025 | FY2024 | Change (%) | | :--- | :----- | :----- | :--------- | | Jul 31 | $1.10B | $1.46B | (24.4%) | - The year-over-year decrease in backlog dollars is partly due to **increased sales of quick move-in homes (QMIs)**[5](index=5&type=chunk) [Cancellation Rates](index=2&type=section&id=Cancellation%20Rates) **Gross Contract Cancellation Rate (Consolidated)** | Period | FY2025 | FY2024 | Change (pp) | | :----- | :----- | :----- | :---------- | | Q3 | 19% | 17% | 2 | **Gross Contract Cancellation Rate (including domestic unconsolidated joint ventures)** | Period | FY2025 | FY2024 | Change (pp) | | :----- | :----- | :----- | :---------- | | Q3 | 19% | 17% | 2 | [Land and Inventory Management](index=3&type=section&id=Land%20and%20Inventory%20Management) **Land and Land Development Spending** | Period | FY2025 | FY2024 | Change (%) | | :----- | :----- | :----- | :--------- | | Q3 | $192.6M | $216.1M | (10.9%) | | 9 Months | $660.0M | $677.0M | (2.5%) | - Total controlled consolidated lots **increased 1.8% to 40,246** as of July 31, 2025[11](index=11&type=chunk) - **86% of lots were optioned** at the end of Q3 fiscal 2025, the highest percentage ever, consistent with a land-light strategic focus[11](index=11&type=chunk) - Current land position equaled **7.0 years' supply** based on trailing twelve-month deliveries[11](index=11&type=chunk) - Total Quick Move-In Homes (QMIs) **decreased 5.3% sequentially to 1,016**, approaching the goal of 8 QMIs per community, illustrating efforts to match starts with sales pace[11](index=11&type=chunk) [Liquidity and Capital Structure](index=3&type=section&id=Liquidity%20and%20Capital%20Structure) Total liquidity exceeded targets, and the company ranked highly among peers in capital efficiency metrics like ROE [Liquidity Position](index=3&type=section&id=Liquidity%20Position) - Total liquidity as of July 31, 2025, was **$277.9 million**, which was above the target liquidity range of $170 million to $245 million[11](index=11&type=chunk) - Total liquidity is comprised of **$146.6 million of cash and cash equivalents**, $6.3 million of restricted cash, and $125.0 million available under a senior secured revolving credit facility[20](index=20&type=chunk) [Return on Equity and Investment](index=2&type=section&id=Return%20on%20Equity%20and%20Investment) - For the trailing twelve-month period, the **return on equity (ROE) was 18.7%**[5](index=5&type=chunk) - For the trailing twelve-month period, the **net income return on inventory was 9.5%**[5](index=5&type=chunk) - For the trailing twelve-month period, the **adjusted earnings before interest and income taxes return on investment (Adjusted EBIT ROI) was 22.1%**[5](index=5&type=chunk) - The company had the **second highest ROE** and believed the highest Adjusted EBIT ROI compared to nine of its publicly traded midsized homebuilder peers[5](index=5&type=chunk) [Financial Guidance](index=3&type=section&id=FINANCIAL%20GUIDANCE) The company provided its financial outlook for the fourth quarter of fiscal 2025, assuming stable market conditions [Fourth Quarter Fiscal 2025 Outlook](index=3&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Outlook) **Q4 FY2025 Financial Guidance** | Metric | Range | | :-------------------------------- | :-------------------- | | Total Revenues | $750M - $850M | | Adjusted Homebuilding Gross Margin | 15.0% - 16.5% | | Adjusted Income Before Income Taxes | $45M - $55M | | Adjusted EBITDA | $77M - $87M | - Financial guidance assumes **no adverse changes in current market conditions**, including deterioration in the supply chain or material increases in mortgage rates, inflation, or cancellation rates[7](index=7&type=chunk) [Management Commentary and Strategic Focus](index=3&type=section&id=COMMENTS%20FROM%20MANAGEMENT%3A) Management remains focused on growth, capital structure improvement, and disciplined land acquisition amid market challenges - Management is encouraged by Q3 performance, having **met or exceeded all guidance metrics** provided[10](index=10&type=chunk) - The market environment remains challenging due to **uncertainty across global, political, and economic fronts**, weighing on homebuyer sentiment, and affordability challenges from high home prices and modest mortgage rate declines[10](index=10&type=chunk) - **Increased incentives** led to the first year-over-year increase in quarterly contracts per community this fiscal year[10](index=10&type=chunk) - The company is **selling through lower margin homes and land** to make room for newer land purchases with better margins, consistent with its short-term strategy[10](index=10&type=chunk) - Primary focus remains on pursuing growth opportunities while **improving the capital structure**, with strict adherence to underwriting discipline for new land acquisitions[10](index=10&type=chunk) - Management is confident that **pent-up housing demand** and positive long-term demographic trends will drive increased demand for new homes[10](index=10&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) Hovnanian Enterprises is a national homebuilder founded in 1959, operating across multiple states [About the Company](index=4&type=section&id=ABOUT%20HOVNANIAN%20ENTERPRISES%2C%20INC.%3A) - Hovnanian Enterprises, Inc. was **founded in 1959** by Kevork S. Hovnanian and is headquartered in Matawan, New Jersey[13](index=13&type=chunk) - The company operates as a leading national homebuilder in **Arizona, California, Delaware, Florida, Georgia, Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and West Virginia**[13](index=13&type=chunk) - Homes are marketed and sold under the trade name **K. Hovnanian Homes**, and the company is one of the largest builders of active lifestyle communities through **K. Hovnanian's Four Seasons communities**[13](index=13&type=chunk) [Webcast Details](index=4&type=section&id=WEBCAST%20INFORMATION%3A) - Hovnanian Enterprises will webcast its fiscal 2025 third quarter financial results conference call at **11:00 a.m. E.T. on Thursday, August 21, 2025**[12](index=12&type=chunk) - The webcast can be accessed live through the **'Investor Relations' section** of Hovnanian Enterprises' website at http://www.khov.com[12](index=12&type=chunk) - An archive of the broadcast will be available for **12 months** under the 'Past Events' section of the Investor Relations page[12](index=12&type=chunk) [Non-GAAP Financial Measures Explanation](index=4&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES%3A) This section defines non-GAAP financial measures used in the report and notes that reconciliations are provided - Defines **EBIT, EBITDA, Adjusted EBITDA, and Adjusted EBIT** as non-GAAP measures, with net income as the most directly comparable GAAP measure[15](index=15&type=chunk) - Defines **Homebuilding gross margin, before cost of sales interest expense and land charges**, and its percentage as non-GAAP measures, with homebuilding gross margin and percentage as comparable GAAP measures[16](index=16&type=chunk) - Defines **Adjusted income before income taxes** as a non-GAAP measure, with income before income taxes as the most directly comparable GAAP measure[17](index=17&type=chunk) - Defines **Adjusted Investment** as a non-GAAP measure, with total inventories as the most directly comparable GAAP measure[18](index=18&type=chunk) - Defines the ratio of **Adjusted EBIT return on adjusted investment (Adjusted EBIT ROI)** as a non-GAAP measure, with the ratio of net income return to total inventories as the most directly comparable GAAP measure[19](index=19&type=chunk) - **Reconciliations for historical periods** of these non-GAAP measures to their GAAP counterparts are presented in tables attached to the earnings release[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk) [Forward-Looking Statements](index=5&type=section&id=FORWARD-LOOKING%20STATEMENTS) The report contains forward-looking statements that are subject to numerous risks and uncertainties - All statements not historical facts are considered **'Forward-Looking Statements'** under the 'Safe Harbor' provisions of the Private Securities Litigation Reform Act of 1995[21](index=21&type=chunk) - Such statements involve known and unknown risks, uncertainties, and other factors that may cause **actual results, performance, or achievements to be materially different** from those expressed or implied[21](index=21&type=chunk) - Risks include changes in economic conditions, shortages/price fluctuations of raw materials and labor, fluctuations in interest rates, increases in inflation, adverse weather, land availability/cost, reliance on subcontractors, cancellation rates, tax laws, legal claims, competition, utility issues, IT failures, global instability, high leverage, financing availability, credit ratings, government regulation, hazardous materials, unconsolidated joint ventures, controlling stockholders, availability of net operating loss carryforwards, and loss of key personnel[21](index=21&type=chunk) - The company **undertakes no obligation** to publicly update or revise any forward-looking statements[21](index=21&type=chunk) [Condensed Consolidated Financial Statements](index=11&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's condensed consolidated statements of operations and balance sheets [Statements of Operations](index=12&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) - Detailed breakdown of **revenues** from homebuilding (sale of homes, land sales and other) and financial services[40](index=40&type=chunk) - Comprehensive listing of **expenses** including cost of sales (excluding interest, interest, inventory impairments, land option write-offs), selling, general and administrative, financial services, corporate general and administrative, and other interest[40](index=40&type=chunk) - Includes **gain on extinguishment of debt, net**, and income from unconsolidated joint ventures[40](index=40&type=chunk) - Presents income before income taxes, state and federal income tax provision, net income, less preferred stock dividends, and **net income available to common stockholders**[40](index=40&type=chunk) - Provides **basic and diluted net income per common share** and weighted-average number of common shares outstanding[40](index=40&type=chunk) [Balance Sheets](index=11&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) - **Assets** include cash and cash equivalents, restricted cash, inventories (sold and unsold homes/lots, land/land options, consolidated inventory not owned), investments in unconsolidated joint ventures, receivables, property and equipment, and prepaid expenses[38](index=38&type=chunk) - **Liabilities** include nonrecourse mortgages, accounts payable and other liabilities, customers' deposits, liabilities from inventory not owned, senior notes and credit facilities, and accrued interest[38](index=38&type=chunk) - **Stockholders' equity** details preferred stock, common stock (Class A and B), paid-in capital, retained earnings, and treasury stock[38](index=38&type=chunk) [Non-GAAP Reconciliations](index=6&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations of non-GAAP financial measures to their comparable GAAP measures [Income Before Taxes Reconciliation](index=6&type=section&id=Reconciliation%20of%20income%20before%20income%20taxes%20excluding%20land-related%20charges%20and%20gain%20on%20extinguishment%20of%20debt%2C%20net%20to%20income%20before%20income%20taxes) - Reconciles Income before income taxes to **Income before income taxes excluding land-related charges and gain on extinguishment of debt, net**[24](index=24&type=chunk) - Adjustments include **inventory impairments and land option write-offs**, and gain on extinguishment of debt, net[24](index=24&type=chunk) [Homebuilding Gross Margin Reconciliation](index=7&type=section&id=Homebuilding%20Gross%20Margin) - Reconciles Homebuilding gross margin to **Homebuilding gross margin, before cost of sales interest expense and land charges**, and Homebuilding gross margin, after cost of sales interest expense, before land charges[25](index=25&type=chunk) - Details cost of sales, excluding interest expense and land charges, and **cost of sales interest expense**[25](index=25&type=chunk) - Includes **Land charges** and their impact on gross margin[25](index=25&type=chunk) - Presents **Land Sales Gross Margin** data, including land and lot sales, cost of sales, and interest[25](index=25&type=chunk) [Adjusted EBITDA Reconciliation](index=8&type=section&id=Reconciliation%20of%20adjusted%20EBITDA%20to%20net%20income) - Reconciles Net income to **EBIT, EBITDA, and Adjusted EBITDA**[27](index=27&type=chunk) - Adjustments include income tax provision, interest expense, depreciation and amortization, inventory impairments and land option write-offs, and **gain on extinguishment of debt, net**[27](index=27&type=chunk) - Includes the ratio of **Adjusted EBITDA to interest incurred**[27](index=27&type=chunk) [Interest Incurred, Expensed and Capitalized](index=8&type=section&id=Interest%20incurred%2C%20expensed%20and%20capitalized) - Details **interest capitalized** at the beginning and end of the period[30](index=30&type=chunk) - Shows **interest incurred, interest expensed**, interest contributed to unconsolidated joint ventures, and interest acquired from unconsolidated joint ventures[30](index=30&type=chunk) [Adjusted EBIT Return on Adjusted Investment Reconciliation](index=9&type=section&id=Reconciliation%20of%20Adjusted%20EBIT%20Return%20on%20Adjusted%20Investment) - Reconciles Net income to **Adjusted EBIT** for the trailing twelve-month period, including adjustments for income tax provision, interest expense, inventory impairments, land option write-offs, and gain on extinguishment of debt, net[32](index=32&type=chunk) - Reconciles Total inventories to **Adjusted Investment**, including adjustments for liabilities from inventory not owned, interest capitalized, and investments in and advances to unconsolidated joint ventures[32](index=32&type=chunk) - Calculates **Net income Return on Inventory** and **Adjusted EBIT Return on Adjusted Investment** for the trailing twelve-month period[32](index=32&type=chunk) [Segment Data](index=13&type=section&id=Segment%20Data) This section provides detailed operational data broken down by geographic region for consolidated and unconsolidated operations [Consolidated Segment Data (Contracts, Deliveries, Backlog)](index=13&type=section&id=SEGMENT%20DATA%20EXCLUDES%20UNCONSOLIDATED%20JOINT%20VENTURES) - Provides detailed consolidated segment data for the **Northeast, Southeast, and West regions**[41](index=41&type=chunk)[44](index=44&type=chunk) - Includes **contracts, deliveries, and contract backlog** in terms of homes, dollar values, and average prices[41](index=41&type=chunk)[44](index=44&type=chunk) - Data is presented for both the **three months and nine months** ended July 31, 2025, and 2024[41](index=41&type=chunk)[44](index=44&type=chunk) [Unconsolidated Joint Ventures Segment Data (Contracts, Deliveries, Backlog)](index=15&type=section&id=SEGMENT%20DATA%20UNCONSOLIDATED%20JOINT%20VENTURES%20ONLY) - Presents segment data specifically for **unconsolidated joint ventures** (excluding KSA JV) by Northeast, Southeast, and West regions[50](index=50&type=chunk)[54](index=54&type=chunk) - Details **contracts, deliveries, and contract backlog** in terms of homes, dollar values, and average prices[50](index=50&type=chunk)[54](index=54&type=chunk) - Separate data is provided for the **KSA JV**[50](index=50&type=chunk)[54](index=54&type=chunk) - Data is presented for both the **three months and nine months** ended July 31, 2025, and 2024[50](index=50&type=chunk)[54](index=54&type=chunk)

Core Insights - Hovnanian Enterprises, Inc. reported a total revenue increase of 10.8% year-over-year to $800.6 million for the third quarter of fiscal 2025, and a 6.7% increase to $2.16 billion for the nine months ended July 31, 2025 [3][23] - The company met or exceeded all guidance metrics provided for the quarter, with 86% of total lots optioned, the highest percentage ever [1][10] - The company achieved the second highest trailing twelve-month return on equity (ROE) among midsized homebuilders at 18.7% [4][10] Financial Performance - Total revenues for the third quarter increased to $800.6 million from $722.7 million in the same quarter last year, while revenues for the first nine months rose to $2.16 billion from $2.03 billion [3][23] - Homebuilding gross margin percentage after cost of sales interest expense and land charges was 11.7% for the third quarter, down from 19.1% in the prior year [3][25] - Net income for the third quarter was $16.6 million, or $1.99 per diluted share, compared to $72.9 million, or $9.75 per diluted share, in the same period last year [3][23] Sales and Contracts - Consolidated contracts in the third quarter increased by 1.6% to 1,211 homes, valued at $619.6 million, compared to 1,192 homes valued at $645.8 million in the same quarter last year [7] - The gross contract cancellation rate for consolidated contracts was 19% for the third quarter, up from 17% in the prior year [7][10] - The dollar value of consolidated contract backlog decreased by 27.6% to $838.8 million compared to $1.16 billion a year ago [7] Liquidity and Inventory - Total liquidity as of July 31, 2025, was $277.9 million, exceeding the target range of $170 million to $245 million [5][10] - The company controlled 40,246 lots as of July 31, 2025, an increase of 1.8% from the previous year, with 86% of these lots optioned [5][10] Guidance and Market Outlook - For the fourth quarter of fiscal 2025, total revenues are expected to be between $750 million and $850 million, with adjusted homebuilding gross margin projected between 15.0% and 16.5% [6][8] - The company remains focused on pursuing growth opportunities while improving its capital structure, despite challenges in the market environment [10]

Core Viewpoint - Hovnanian Enterprises, Inc. is set to release its financial results for the third quarter ending July 31, 2025, on August 21, 2025, with a conference call scheduled for the same day [1]. Company Overview - Hovnanian Enterprises, Inc. was founded in 1959 and is headquartered in Matawan, New Jersey. It is one of the largest homebuilders in the United States, operating in multiple states including Arizona, California, Florida, and Texas [3]. - The company markets its homes under the trade name K. Hovnanian Homes and is also a significant builder of active lifestyle communities through its subsidiaries [3]. Investor Relations - The third quarter earnings conference call will be available via live webcast on the company's Investor Relations website, with an archive accessible for 12 months [2]. - Interested parties can join Hovnanian's investor email list by contacting the company directly or signing up on their website [4].

Designed for elevated living, the new premium residential communities will offer buyers high-end villas on the Red Sea coast KING ABDULLAH ECONOMIC CITY (KAEC), Saudia Arabia, July 30, 2025 (GLOBE NEWSWIRE) -- Emaar, The Economic City (EEC), the master developer of King Abdullah Economic City (KAEC), has signed an agreement with Al Tahaluf, a Saudi-American joint venture comprised of a K. Hovnanian subsidiary and the Hamad bin Saedan Real Estate Company, to develop two premium residential communities in the ...

Group 1 - The company operates a hyper-concentrated investment portfolio, typically holding between five and ten investments to balance diversification and focus on cash flow generation [1] - Crude Value Insights provides an investing service centered on oil and natural gas, emphasizing cash flow and identifying companies with strong value and growth potential [1] - Subscribers benefit from access to a model account with over 50 stocks, detailed cash flow analyses of exploration and production firms, and live discussions about the sector [2] Group 2 - The company offers a two-week free trial for new subscribers, promoting engagement in the oil and gas sector [3]

Home Sales Performance - Home sales revenue decreased by 5.3% to $650.3 million for the three months ended April 30, 2025, compared to $686.9 million for the same period in 2024[118]. - The average price per home decreased by 5.5% to $506,081 for the three months ended April 30, 2025, down from $535,408 in the same period of 2024[126]. - Net contracts decreased by 7.5% for the three months ended April 30, 2025, primarily due to macroeconomic uncertainty affecting consumer confidence[122]. - Contract backlog decreased to 1,711 homes as of April 30, 2025, down from 2,018 homes a year earlier, representing a 12.5% decrease in dollar value to $988.2 million[124]. - The number of homes delivered increased by 0.2% to 1,285 for the three months ended April 30, 2025, compared to 1,283 in the same period of 2024[127]. - Sale of homes for the three months ended April 30, 2025, was $650.3 million, a decrease from $686.9 million in the same period of 2024[133]. Financial Performance - Income before income taxes decreased to $26.5 million for the three months ended April 30, 2025, compared to $69.4 million for the same period in 2024[121]. - Gross margin percentage decreased to 13.8% for the three months ended April 30, 2025, down from 19.5% in the same period of 2024[119]. - Selling, general and administrative expenses increased by $4.6 million to $51.1 million for the three months ended April 30, 2025[137]. - Income before income taxes in the Northeast for the three months ended April 30, 2025 was $31.4 million, a decrease of $0.3 million compared to the prior year[145]. - Income before income taxes in the Southeast decreased by $26.7 million to $0.4 million for the three months ended April 30, 2025[149]. - Income before income taxes in the West decreased by $16.7 million to $18.9 million for the three months ended April 30, 2025[153]. - Financial services income before income taxes increased to $8.4 million for the three months ended April 30, 2025, compared to $5.1 million in the prior year[157]. Inventory and Costs - Total inventory increased by $42.4 million to $1.5 billion at April 30, 2025, driven by new land purchases and development[181]. - Cost of sales, excluding interest expense and land charges, was $537.6 million for the three months ended April 30, 2025, compared to $531.4 million in 2024[133]. - The total cost of sales, excluding interest expense and land charges, was 82.7% for the three months ended April 30, 2025, compared to 77.4% in 2024[134]. - Construction costs represented approximately 50.2% of the homebuilding cost of sales for the six months ended April 30, 2025[191]. Market Conditions and Risks - The company continues to utilize quick move-in homes to address affordability challenges in the current market environment[114]. - The company continues to face risks related to rising construction costs and potential impacts on gross margins due to inflation and economic conditions[190]. - The annual inflation rate in the U.S. was 2.3% in April 2025, significantly lower than its peak of 9.1% in June 2022, which may impact home sale prices[190]. Liquidity and Financing - The company spent $467.4 million on land purchases and development during the six months ended April 30, 2025, while maintaining total liquidity of $202.4 million[117]. - Total liquidity at April 30, 2025 was $202.4 million, including $74.0 million in cash and $125.0 million of borrowing capacity[162]. - The company’s long-term debt as of April 30, 2025, totals $854.968 million, with a weighted average interest rate of 10.21%[198]. - Nonrecourse mortgage loans totaled $78.1 million at April 30, 2025, with a weighted-average interest rate of 8.2%[174]. - Senior notes and credit facilities net of discounts were $864.3 million as of April 30, 2025[168]. Joint Ventures and Share Repurchases - The company has 27 unconsolidated joint ventures with a total of 5,002 homes, indicating ongoing collaboration in homebuilding[184]. - The company repurchased 257,908 shares for a market value of $30.1 million at an average price of $116.70 per share during the six months ended April 30, 2025[178]. - The company had $30.6 million authorized for stock repurchases as of April 11, 2025[177]. Community and Sales Dynamics - As of April 30, 2025, the company has a total of 42,447 homes across 125 active selling communities, with 12,627 homes actively selling and 29,820 homes proposed[184]. - The number of active selling communities decreased from 130 on October 31, 2024, to 125 on April 30, 2025, reflecting a slight contraction in market presence[187]. - The total number of unsold homes increased from 1,106 on October 31, 2024, to 1,132 on April 30, 2025, indicating a decrease in sales pace during the second quarter of fiscal 2025[187]. Financial Services Performance - Financial services revenue increased by 24.2% to $21.3 million for the three months ended April 30, 2025, compared to $17.2 million for the same period in 2024[125]. - Financial services assets decreased by $42.0 million to $161.6 million as of April 30, 2025, primarily due to a reduction in the volume of loans originated[188]. - Financial services liabilities also decreased by $42.6 million to $140.6 million at April 30, 2025, correlating with the decrease in mortgage loans held for sale[189]. Impairments and Cancellations - Inventory impairments totaled $3.1 million for the three months ended April 30, 2025, compared to $0.2 million in the same period of 2024[136]. - Contract cancellation rate for the first quarter of 2025 was 16%, up from 14% in 2024[139].

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].