EPS of -$0.51 was reported, missing the expected $0.63.Actual revenue of $818 million surpassed estimates, indicating strong sales performance.The company's gross margin percentage declined to 10.7%, reflecting higher costs and tighter margins.Hovnanian Enterprises, Inc. (NASDAQ:HOVNP) is a leading homebuilding company in the United States, known for designing, constructing, and selling residential homes. The company competes with other major homebuilders like Lennar Corporation and D.R. Horton, operating a ...

Financial 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]. - The net loss for Q4 fiscal 2025 was $0.7 million, or $0.51 per diluted share, compared to net income of $94.3 million, or $12.79 per diluted share, in the same period last year[4]. - Adjusted EBITDA for Q4 fiscal 2025 was $88.6 million, exceeding the high end of guidance, compared to $159.0 million in Q4 fiscal 2024[4]. - Total revenues for the three months ended October 31, 2025, were $817.9 million, a decrease from $979.6 million for the same period in 2024, representing a decline of approximately 16.5%[25]. - 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 for the same period in 2024[25]. - Adjusted EBITDA for the year ended October 31, 2025, was $299,050,000, a decrease from $455,563,000 in 2024, reflecting a decline of approximately 34.4%[30]. - The company experienced 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]. - 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, representing an increase of 10.6%[30]. Home Sales and Deliveries - Domestic unconsolidated joint ventures' home sales revenues increased by 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]. - Consolidated contracts decreased by 10.8% to 1,209 homes in Q4 fiscal 2025, with a dollar value of $629.2 million, compared to 1,355 homes valued at $705.6 million in Q4 fiscal 2024[4]. - 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]. - The Northeast segment saw a 19.6% increase in deliveries to 1,968 units, while revenue decreased by 11.7% to $983,961 thousand[51]. - The Southeast segment experienced a 23.6% increase in contracts to 639 units, with revenue rising by 16.1% to $324,393 thousand[51]. - The West segment reported a 9.5% decrease in contracts to 2,589 units, with revenue declining by 5.6% to $1,290,351 thousand[51]. Margins and Expenses - 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]. - Total SG&A expenses were $91.5 million, or 11.2% of total revenues, in Q4 fiscal 2025, compared to $87.7 million, or 9.0% of total revenues, in Q4 fiscal 2024[3]. - Homebuilding gross margin for the three months ended October 31, 2025, was $83.9 million, down from $167.2 million in 2024, resulting in a gross margin percentage of 10.7%, compared to 18.0% in the prior year[27]. - Homebuilding revenues for Q4 2025 were $789.8 million, a decrease of 17.5% from $956.9 million in Q4 2024[44]. - Cost of sales for homebuilding in Q4 2025 was $702.8 million, down from $769.3 million in Q4 2024, a reduction of 8.7%[44]. Liquidity and Assets - Total liquidity as of October 31, 2025, was $404.1 million, significantly above the target range of $170 million to $245 million[8]. - 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]. - The company reported a total equity of $830.9 million in 2025, up from $800.3 million in 2024, indicating a growth of 3.8%[42]. Inventory and Impairments - Total inventories as of October 31, 2025, were $1,637,470,000, down from $1,692,932,000 as of July 31, 2025, indicating a decrease of approximately 3.3%[37]. - The company recorded inventory impairments and land option write-offs of $39,571,000 for the year ended October 31, 2025, compared to $11,556,000 in 2024, reflecting a significant increase[30]. - The company experienced an inventory impairment loss of $19.4 million in Q4 2025, compared to $7.9 million in Q4 2024[44]. Future Outlook - For Q1 fiscal 2026, the company expects total revenues between $550 million and $650 million, with adjusted homebuilding gross margin between 13.0% and 14.0%[10]. - The company anticipates challenges related to demand for homes, mortgage rates, and inflation, which may impact future financial performance[23]. - The company plans to consolidate remaining assets and liabilities from joint ventures, impacting future financial reporting[56].

Home Sales Performance - Home sales revenue increased to $769.1 million for the three months ended July 31, 2025, up 11.9% from $687.4 million in the same period of 2024[127] - The number of homes delivered increased by 14.0% to 1,431 for the three months ended July 31, 2025, compared to 1,255 in the same period of 2024[134] - Average sales price per home decreased by 1.9% to $537,421 for the three months ended July 31, 2025, down from $547,748 in the same period of 2024[134] - Total revenues for the nine months ended July 31, 2025, increased to $2.16 billion, a 6.7% increase from $2.03 billion in the same period of 2024[133] - The average sales price per home for the nine months ended July 31, 2025, decreased to $520,473, down 3.8% from $540,958 in the same period of 2024[134] Contract and Backlog Information - Net contracts increased by 1.6% for the three months ended July 31, 2025, driven by increased incentives to boost sales pace[130] - Contract backlog decreased to 1,491 homes as of July 31, 2025, representing a 27.6% decrease in dollar value to $838.8 million compared to the prior year[132] - The total number of homes in contract backlog as of July 31, 2025, was 3,814, compared to 3,831 as of July 31, 2024[149] - Contract backlog dollars decreased by 27.6% and the number of homes in backlog decreased by 26.9% as of July 31, 2025, compared to July 31, 2024[150] - Contract cancellation rates for the third quarter of fiscal 2025 were 19%, compared to 17% for the same period in the prior year[147] Financial Performance - Income before income taxes decreased to $23.8 million for the three months ended July 31, 2025, down from $97.3 million in the same period of 2024[129] - Selling, general and administrative expenses increased by $4.8 million to $55.8 million for the three months ended July 31, 2025, and by $14.7 million to $161.1 million for the nine months ended July 31, 2025, compared to the same periods in the prior year[145] - Income before income taxes in the Northeast rose by $1.4 million to $41.4 million for the three months ended July 31, 2025[153] - Income before income taxes in the Southeast fell by $8.8 million to $11.6 million for the three months ended July 31, 2025[157] - Income before income taxes in the West decreased by $27.3 million to a loss of $6.3 million for the three months ended July 31, 2025[161] - Financial services income before income taxes increased to $13.9 million for the three months ended July 31, 2025, compared to $6.5 million for the same period in the prior year[165] Margins and Costs - Gross margin percentage decreased to 11.7% for the three months ended July 31, 2025, down from 19.1% in the same period of 2024, primarily due to increased incentives and concessions[128] - Homebuilding gross margin percentage decreased to 11.7% and 13.5% for the three and nine months ended July 31, 2025, compared to 19.1% and 18.9% for the prior year periods[142] - Total homebuilding gross margin percentage before cost of sales interest expense and land charges decreased to 17.3% and 17.6% for the three and nine months ended July 31, 2025, compared to 22.1% and 22.2% for the same periods in the prior year[142] - Cost of sales, excluding interest expense and land charges, represented 82.7% and 82.4% of consolidated home sales revenues for the three and nine months ended July 31, 2025, respectively[142] - Construction costs represented approximately 50.3% of the homebuilding cost of sales for the nine months ended July 31, 2025[198] Inventory and Land Management - Total inventory decreased by $70.6 million to $1.4 billion at July 31, 2025, primarily due to home deliveries and inventory impairments[188] - Inventory impairments totaled $16.0 million and $20.1 million for the three and nine months ended July 31, 2025, respectively, compared to $3.1 million and $3.6 million for the same periods in the prior year[144] - The company spent $660.0 million on land purchases and development during the nine months ended July 31, 2025, while maintaining total liquidity of $277.9 million[126] - Consolidated inventory not owned increased by $118.7 million to $263.8 million at July 31, 2025, due to land banking transactions[189] Liquidity and Financing - Total liquidity at July 31, 2025 was $277.9 million, including $146.6 million in homebuilding cash and cash equivalents[169] - Cash flow from operations was $19.2 million after spending $660.0 million on land and land development during the first three quarters of fiscal 2025[171] - The company has 400,000 in long-term debt maturing in 2028, with a total long-term debt of $854.968 million as of July 31, 2025[206] - The weighted average interest rate on long-term fixed-rate debt is 8.88%[206] - Nonrecourse mortgage loans totaled $53.5 million at July 31, 2025, with a weighted-average interest rate of 8.1%[181] Strategic Initiatives - The company intends to continue using nonrecourse mortgages and joint ventures as part of its financing strategy[171] - The company’s strategy includes managing unconsolidated joint ventures, which are reported as a supplement to consolidated results[192] - The company repurchased 257,908 shares for a market value of $30.1 million during the nine months ended July 31, 2025[185] Regional Performance - Homebuilding revenue in the Northeast increased by 13.3% to $289,180,000 for the three months ended July 31, 2025, driven by an 18.6% increase in homes delivered[151] - Homebuilding revenue in the Southeast decreased by 9.7% to $104,747,000 for the three months ended July 31, 2025, attributed to a 15.6% decrease in homes delivered[156] - Homebuilding revenue in the West increased by 14.0% to $377,185,000 for the three months ended July 31, 2025, due to a 22.1% increase in homes delivered[160] Market Conditions - The annual inflation rate in the U.S. was 2.7% in July 2025, which is an improvement from its peak of 9.1% in June 2022, impacting home sales prices[197] - Financial services assets decreased by $29.8 million to $173.8 million at July 31, 2025, primarily due to a reduction in the volume of loans originated[195] - Financial services liabilities decreased by $30.8 million to $152.4 million at July 31, 2025, correlating with the decrease in mortgage loans held for sale[196]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Hovnanian Enterprises reported strong Q3 FY2025 performance, exceeding guidance and maintaining high return metrics despite market challenges [Fiscal 2025 Third Quarter Overview](index=1&type=section&id=Fiscal%202025%20Third%20Quarter%20Overview) Hovnanian Enterprises exceeded Q3 FY2025 guidance, reporting increased revenues, 86% optioned lots, and strong TTM ROE - 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) [Consolidated Financial Performance](index=1&type=section&id=Consolidated%20Financial%20Performance) The company reported increased revenues but significant declines in gross margins, net income, and EBITDA for Q3 and nine months of FY2025 [Revenues](index=1&type=section&id=Revenues) Total revenues for Q3 FY2025 increased 10.8% to $800.6 million, with nine-month revenues up 6.7% to $2.16 billion Total Revenues (Consolidated) | Period | FY2025 (Millions) | FY2024 (Millions) | YoY Change | | :----- | :---------------- | :---------------- | :--------- | | Q3 | $800.6 | $722.7 | +10.8% | | 9 Months | $2,160.0 | $2,030.0 | +6.7% | Domestic Unconsolidated Joint Ventures Sale of Homes Revenues | Period | FY2025 (Millions) | FY2024 (Millions) | YoY Change | | :----- | :---------------- | :---------------- | :--------- | | Q3 | $165.0 | $151.0 | +9.3% | | 9 Months | $441.2 | $386.9 | +14.0% | [Gross Margins](index=1&type=section&id=Gross%20Margins) Homebuilding gross margin, after charges, decreased to 11.7% in Q3 FY2025, while 17.3% before charges met guidance Homebuilding Gross Margin Percentage | Metric | Period | FY2025 | FY2024 | Change | | :----- | :----- | :----- | :----- | | After interest & land charges | Q3 | 11.7% | 19.1% | -7.4 pp | | After interest & land charges | 9 Months | 13.5% | 18.9% | -5.4 pp | | Before interest & land charges | Q3 | 17.3% | 22.1% | -4.8 pp | | Before interest & land charges | 9 Months | 17.6% | 22.2% | -4.6 pp | - Homebuilding gross margin percentage, before cost of sales interest expense and land charges, was **17.3%** during the fiscal 2025 third quarter, which was **within the guidance range** we provided[3](index=3&type=chunk) [Operating Expenses (SG&A, Interest)](index=1&type=section&id=Operating%20Expenses%20(SG%26A%2C%20Interest)) SG&A as a percentage of revenues improved to 11.3% in Q3 FY2025, while interest expense slightly increased Total SG&A | Period | FY2025 (Millions) | FY2025 (% of Revenues) | FY2024 (Millions) | FY2024 (% of Revenues) | | :----- | :---------------- | :--------------------- | :---------------- | :--------------------- | | Q3 | $90.8 | 11.3% | $89.5 | 12.4% | | 9 Months | $258.3 | 12.0% | $254.5 | 12.6% | Total Interest Expense as % of Total Revenues | Period | FY2025 | FY2024 | Change | | :----- | :----- | :----- | :----- | | Q3 | 4.2% | 4.0% | +0.2 pp | | 9 Months | 4.3% | 4.4% | -0.1 pp | [Profitability (Income Before Taxes, Net Income, EPS)](index=2&type=section&id=Profitability%20(Income%20Before%20Taxes%2C%20Net%20Income%2C%20EPS)) Income before taxes, net income, and diluted EPS saw significant year-over-year declines in Q3 and nine months of FY2025 Income Before Income Taxes | Period | FY2025 (Millions) | FY2024 (Millions) | YoY Change | | :----- | :---------------- | :---------------- | :--------- | | Q3 | $23.8 | $97.3 | -75.5% | | 9 Months | $90.2 | $199.2 | -54.7% | Net Income and Diluted EPS | Metric | Period | FY2025 | FY2024 | YoY Change | | :----- | :----- | :----- | :----- | | Net Income (Millions) | Q3 | $16.6 | $72.9 | -77.2% | | Net Income (Millions) | 9 Months | $64.5 | $147.7 | -56.3% | | Diluted EPS | Q3 | $1.99 | $9.75 | -79.6% | | Diluted EPS | 9 Months | $7.94 | $19.15 | -58.6% | [EBITDA and Adjusted EBITDA](index=2&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) EBITDA and Adjusted EBITDA decreased substantially in Q3 and nine months of FY2025, but Q3 Adjusted EBITDA exceeded guidance EBITDA and Adjusted EBITDA | Metric | Period | FY2025 (Millions) | FY2024 (Millions) | YoY Change | | :----- | :----- | :---------------- | :---------------- | :--------- | | EBITDA | Q3 | $61.0 | $127.9 | -52.3% | | EBITDA | 9 Months | $190.7 | $294.3 | -35.2% | | Adjusted EBITDA | Q3 | $77.1 | $131.0 | -41.2% | | Adjusted EBITDA | 9 Months | $210.4 | $296.6 | -29.0% | - Adjusted EBITDA was **$77.1 million** for the quarter ended July 31, 2025, which was **above the guidance range** we provided[5](index=5&type=chunk) [Operational Metrics](index=2&type=section&id=Operational%20Metrics) Key operational metrics show mixed performance with increased deliveries but decreased backlog and higher cancellation rates, while return metrics remain strong [Contracts and Deliveries](index=2&type=section&id=Contracts%20and%20Deliveries) Consolidated contracts increased 1.6% in Q3 FY2025, with total contracts including JVs also rising, and deliveries up 14.0% Consolidated Contracts (Homes) | Period | FY2025 | FY2024 | YoY Change | | :----- | :----- | :----- | :--------- | | Q3 | 1,211 | 1,192 | +1.6% | Contracts (Including Domestic Unconsolidated Joint Ventures) (Homes) | Period | FY2025 | FY2024 | YoY Change | | :----- | :----- | :----- | :--------- | | Q3 | 1,416 | 1,396 | +1.4% | Consolidated Deliveries (Homes) | Period | FY2025 | FY2024 | YoY Change | | :----- | :----- | :----- | :--------- | | Q3 | 1,431 | 1,255 | +14.0% | [Community Count](index=2&type=section&id=Community%20Count) Consolidated community count decreased 1.6%, total count including JVs was flat, and contracts per community increased Community Count | Metric | As of July 31, 2025 | As of July 31, 2024 | YoY Change | | :----- | :------------------ | :------------------ | :--------- | | Consolidated | 124 | 126 | -1.6% | | Including JVs | 146 | 146 | 0.0% | Contracts Per Community (Q3 FY2025) | Metric | FY2025 | FY2024 | YoY Change | | :----- | :----- | :----- | :--------- | | Consolidated | 9.8 | 9.5 | +3.2% | | Including JVs | 9.7 | 9.6 | +1.0% | [Backlog and Cancellation Rates](index=2&type=section&id=Backlog%20and%20Cancellation%20Rates) Consolidated contract backlog decreased 27.6% due to QMI sales, and the gross cancellation rate increased to 19% in Q3 FY2025 Contract Backlog (Dollar Value) | Metric | As of July 31, 2025 (Millions) | As of July 31, 2024 (Millions) | YoY Change | | :----- | :----------------------------- | :----------------------------- | :--------- | | Consolidated | $838.8 | $1,160.0 | -27.6% | | Including JVs | $1,100.0 | $1,460.0 | -24.4% | - The year-over-year decrease in backlog dollars is partly due to increased sales of quick move in homes (QMIs), which are typically in backlog for a very short period of time[5](index=5&type=chunk) Gross Contract Cancellation Rate (Q3 FY2025) | Metric | FY2025 | FY2024 | Change | | :----- | :----- | :----- | :----- | | Consolidated | 19% | 17% | +2 pp | | Including JVs | 19% | 17% | +2 pp | [Return Metrics (ROE, ROI)](index=2&type=section&id=Return%20Metrics%20(ROE%2C%20ROI)) The company reported strong TTM ROE of 18.7% and Adjusted EBIT ROI of 22.1%, positioning it favorably among midsized homebuilder peers Trailing Twelve-Month Return Metrics | Metric | Value | | :----- | :---- | | Return on Equity (ROE) | 18.7% | | Net Income Return on Inventory | 9.5% | | Adjusted EBIT ROI | 22.1% | - For the most recently reported trailing twelve-month periods, we had the **second highest ROE**, and we believe the **highest Adjusted EBIT ROI** compared to nine of our publicly traded midsized homebuilder peers[5](index=5&type=chunk) [Liquidity and Inventory](index=3&type=section&id=Liquidity%20and%20Inventory) The company maintained strong liquidity and a land-light strategy with high optioned lots, while managing land spending and QMI inventory [Land and Land Development Spending](index=3&type=section&id=Land%20and%20Land%20Development%20Spending) Land and land development spending decreased in Q3 and the first nine months of FY2025, reflecting a disciplined approach to acquisitions Land and Land Development Spending | Period | FY2025 (Millions) | FY2024 (Millions) | YoY Change | | :----- | :---------------- | :---------------- | :--------- | | Q3 | $192.6 | $216.1 | -10.9% | | 9 Months | $660.0 | $677.0 | -2.5% | [Total Liquidity](index=3&type=section&id=Total%20Liquidity) Total liquidity as of July 31, 2025, was $277.9 million, exceeding the target range of $170 million to $245 million Total Liquidity (As of July 31, 2025) | Component | Amount (Millions) | | :-------- | :---------------- | | Cash and cash equivalents | $146.6 | | Restricted cash | $6.3 | | Available under revolving credit facility | $125.0 | | **Total Liquidity** | **$277.9** | - Total liquidity as of July 31, 2025, was **$277.9 million**, which was **above our target liquidity range** of **$170 million to $245 million**[11](index=11&type=chunk) [Controlled Lots and Land-Light Strategy](index=3&type=section&id=Controlled%20Lots%20and%20Land-Light%20Strategy) Total controlled consolidated lots increased 1.8% with 86% optioned, its highest ever, reflecting a land-light strategy Controlled Consolidated Lots (As of July 31, 2025) | Metric | Value | YoY Change | | :----- | :---- | :--------- | | Total Controlled Consolidated Lots | 40,246 | +1.8% | | Percentage of Lots Optioned | 86% | Highest Ever | | Years' Supply (TTM Deliveries) | 7.0 | | - Continuing our land-light strategic focus, **86%** of our lots were optioned at the end of the third quarter of fiscal 2025, which is our **highest percentage of option lots ever**[11](index=11&type=chunk) [Quick Move-In Homes (QMIs)](index=3&type=section&id=Quick%20Move-In%20Homes%20(QMIs)) Total Quick Move-In Homes (QMIs) decreased 5.3% sequentially, aligning with the goal of matching starts with sales pace Quick Move-In Homes (QMIs) | Metric | As of July 31, 2025 | As of April 30, 2025 | QoQ Change | | :----- | :------------------ | :------------------- | :--------- | | Total QMIs | 1,016 | 1,073 | -5.3% | | QMIs per community | 8.2 | | | - Total QMIs as of July 31, 2025, were **1,016**, a decline of **5.3%** compared with **1,073** as of April 30, 2025, illustrating our efforts to match our starts with our sales pace[11](index=11&type=chunk) [Financial Guidance (Q4 FY2025)](index=3&type=section&id=Financial%20Guidance%20(Q4%20FY2025)) Q4 FY2025 guidance projects total revenues between $750-850 million, adjusted gross margin 15.0-16.5%, and adjusted EBITDA $77-87 million [Fourth Quarter Fiscal 2025 Projections](index=3&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Projections) The company provided guidance for the fourth quarter of fiscal 2025, projecting total revenues between $750 million and $850 million, adjusted homebuilding gross margin between 15.0% and 16.5%, adjusted income before income taxes between $45 million and $55 million, and adjusted EBITDA between $77 million and $87 million Q4 FY2025 Financial Guidance | Metric | Guidance Range (Millions) | | :----- | :------------------------ | | Total Revenues | $750 - $850 | | Adjusted Homebuilding Gross Margin | 15.0% - 16.5% | | Adjusted Income Before Income Taxes | $45 - $55 | | Adjusted EBITDA | $77 - $87 | [Management Commentary and Strategic Outlook](index=3&type=section&id=Management%20Commentary%20and%20Strategic%20Outlook) Management acknowledged market challenges, emphasizing increased incentives, disciplined land acquisition, and confidence in long-term housing demand to sustain strong returns [CEO's Remarks and Market Conditions](index=3&type=section&id=CEO's%20Remarks%20and%20Market%20Conditions) CEO acknowledged challenging market conditions but highlighted exceeding Q3 guidance and addressing affordability with incentives - While the market environment remains challenging, we're encouraged by our performance this quarter. We **met or exceeded the guidance range** for all the metrics provided for the third quarter[10](index=10&type=chunk) - Uncertainty across global, political and economic fronts continued to weigh on homebuyer sentiment resulting in a slower sales pace than we had expected at the beginning of the fiscal year. Additionally, **affordability challenges** are weighing on buyer activity as home prices remain high, and mortgage rates have only seen modest declines from recent highs[10](index=10&type=chunk) - We addressed these affordability headwinds with **increased incentives** that led to the first year-over-over increase in quarterly contracts per community this fiscal year[10](index=10&type=chunk) [Growth Strategy and Future Outlook](index=3&type=section&id=Growth%20Strategy%20and%20Future%20Outlook) The company focuses on growth and capital structure improvement with strict land acquisition discipline, confident in future demand - Our primary focus remains on pursuing growth opportunities, while improving our capital structure. Given the current market conditions, our approach to new land acquisitions relies on **strict adherence to underwriting discipline**[10](index=10&type=chunk) - We believe we are in a period where consumers are adjusting to current home prices and mortgage rates and remain confident that the combination of **pent-up housing demand** and the **positive long-term demographic trends** for housing will drive increased demand for new homes going forward[10](index=10&type=chunk) - Our **second highest ROE** and what we believe to be the **highest adjusted EBIT ROI** among midsized homebuilder peers for the trailing twelve-month period, demonstrate the effectiveness of our strategy, and we remain focused on **sustaining returns that outpace industry benchmarks**[10](index=10&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) This section provides an overview of Hovnanian Enterprises, Inc., its operations, and details for accessing the fiscal 2025 third-quarter financial results webcast [About Hovnanian Enterprises, Inc.](index=4&type=section&id=About%20Hovnanian%20Enterprises%2C%20Inc.) Hovnanian Enterprises, Inc., founded in 1959, is a leading national homebuilder marketing homes as 'K. Hovnanian Homes' and 'Four Seasons communities' - Hovnanian Enterprises, Inc., founded in **1959** by Kevork S. Hovnanian, is headquartered in Matawan, New Jersey and, through its subsidiaries, is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia[13](index=13&type=chunk) - The Company's homes are marketed and sold under the trade name K. Hovnanian Homes. Additionally, the Company's subsidiaries, as developers of K. Hovnanian's Four Seasons communities, make the Company one of the nation's largest builders of active lifestyle communities[13](index=13&type=chunk) [Webcast Information](index=4&type=section&id=Webcast%20Information) Hovnanian Enterprises hosted a webcast for its Q3 FY2025 financial results conference call on August 21, 2025, accessible on its investor relations website - 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**. 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) [Non-GAAP Financial Measures & Reconciliations](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section defines the company's non-GAAP financial measures and provides reconciliation tables to their most directly comparable GAAP counterparts [Definitions of Non-GAAP Measures](index=4&type=section&id=Definitions%20of%20Non-GAAP%20Measures) This section defines key non-GAAP financial measures like EBIT, EBITDA, and Adjusted EBIT ROI, noting their most directly comparable GAAP measures - Consolidated earnings before interest expense and income taxes ('EBIT') and before depreciation and amortization ('EBITDA') and before inventory impairments and land option write-offs and loss (gain) on extinguishment of debt, net ('Adjusted EBITDA'), the ratio of Adjusted EBITDA to interest incurred and EBIT before inventory impairments and land option write-offs and loss (gain) on extinguishment of debt, net ('Adjusted EBIT') are not U.S. generally accepted accounting principles ('GAAP') financial measures. The most directly comparable GAAP financial measure is net income[15](index=15&type=chunk) - 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[16](index=16&type=chunk) - Adjusted income before income taxes, which is defined as income before income taxes excluding land-related charges and loss (gain) on extinguishment of debt, net is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income before income taxes[17](index=17&type=chunk) [Reconciliation Tables](index=6&type=section&id=Reconciliation%20Tables) Detailed tables reconcile various non-GAAP financial measures, including adjusted EBITDA and adjusted EBIT ROI, to their comparable GAAP measures - The reconciliation for historical periods of EBIT, EBITDA, Adjusted EBIT and Adjusted EBITDA to net income are presented in tables attached to this earnings release[15](index=15&type=chunk) - The reconciliation for historical periods of homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, to homebuilding gross margin and homebuilding gross margin percentage, respectively, is presented in a table attached to this earnings release[16](index=16&type=chunk) - The presentation of the ratios of Adjusted EBIT ROI and net income return on inventory are presented in a table attached to this earnings release[19](index=19&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section outlines the disclaimer for forward-looking statements, detailing various risks and uncertainties that could impact future financial results [Disclaimer and Risk Factors](index=5&type=section&id=Disclaimer%20and%20Risk%20Factors) This section disclaims forward-looking statements, highlighting that actual results may differ due to various risks including economic conditions and regulations - All statements in this press release 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**[21](index=21&type=chunk) - 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 achievements expressed or implied by the forward-looking statements[21](index=21&type=chunk) - Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic, industry and business conditions and impacts of a significant homebuilding downturn; (3) fluctuations in interest rates and the availability of mortgage financing, including as a result of instability in the banking sector; (22) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment[21](index=21&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the condensed consolidated statements of operations and balance sheets, detailing financial performance and position for Q3 FY2025 [Statements of Operations](index=6&type=section&id=Statements%20of%20Operations) The condensed consolidated statements of operations detail revenues, expenses, and profitability for Q3 and nine months of FY2025 Condensed Consolidated Statements of Operations (Three Months Ended July 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :----- | :--------------- | :--------------- | | Total revenues | $800,583 | $722,704 | | Total expenses | $792,292 | $636,133 | | Income before income taxes | $23,802 | $97,269 | | Net income | $16,615 | $72,919 | | Net income per common share (Diluted) | $1.99 | $9.75 | Condensed Consolidated Statements of Operations (Nine Months Ended July 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :----- | :--------------- | :--------------- | | Total revenues | $2,160,677 | $2,025,280 | | Total expenses | $2,104,640 | $1,864,241 | | Income before income taxes | $90,195 | $199,224 | | Net income | $64,532 | $147,659 | | Net income per common share (Diluted) | $7.94 | $19.15 | [Balance Sheets](index=11&type=section&id=Balance%20Sheets) The condensed consolidated balance sheets detail the company's financial position, showing changes in inventories, JV investments, and cash Condensed Consolidated Balance Sheets (Selected Items, in thousands) | Metric | July 31, 2025 | October 31, 2024 | | :----- | :------------ | :--------------- | | Cash and cash equivalents | $146,592 | $209,976 | | Total inventories | $1,692,932 | $1,644,804 | | Investments in and advances to unconsolidated joint ventures | $218,356 | $142,910 | | Total assets | $2,629,352 | $2,605,574 | | Total liabilities | $1,793,989 | $1,805,225 | | Total stockholders' equity | $835,363 | $800,349 | [Segment Performance and Operational Data](index=13&type=section&id=Segment%20Performance%20and%20Operational%20Data) This section provides detailed operational and financial data across consolidated segments and unconsolidated joint ventures, highlighting regional performance variations [Consolidated Segment Data (Northeast, Southeast, West)](index=13&type=section&id=Consolidated%20Segment%20Data%20(Northeast%2C%20Southeast%2C%20West)) Consolidated segment data for Q3 FY2025 shows varied regional performance, with increased deliveries despite mixed contract and average price trends Consolidated Contracts (Homes) - Q3 FY2025 | Region | 2025 | 2024 | Change | | :----- | :--- | :--- | :----- | | Northeast | 416 | 414 | +0.5% | | Southeast | 157 | 114 | +37.7% | | West | 638 | 664 | -3.9% | | Total | 1,211 | 1,192 | +1.6% | Consolidated Deliveries (Homes) - Q3 FY2025 | Region | 2025 | 2024 | Change | | :----- | :--- | :--- | :----- | | Northeast | 479 | 404 | +18.6% | | Southeast | 195 | 231 | -15.6% | | West | 757 | 620 | +22.1% | | Total | 1,431 | 1,255 | +14.0% | Consolidated Contract Backlog (Dollars) - As of July 31, 2025 | Region | 2025 (Thousands) | 2024 (Thousands) | Change | | :----- | :--------------- | :--------------- | :----- | | Northeast | $444,862 | $617,520 | -28.0% | | Southeast | $130,678 | $147,268 | -11.3% | | West | $263,272 | $393,980 | -33.2% | | Total | $838,812 | $1,158,768 | -27.6% | [Unconsolidated Joint Ventures Data (Excluding KSA JV)](index=13&type=section&id=Unconsolidated%20Joint%20Ventures%20Data%20(Excluding%20KSA%20JV)) Unconsolidated JVs (excluding KSA JV) saw slight increases in homes contracted and deliveries, but decreased contract dollar value and backlog Unconsolidated JV Contracts (Homes, Excl. KSA) - Q3 FY2025 | Region | 2025 | 2024 | Change | | :----- | :--- | :--- | :----- | | Northeast | 131 | 126 | +4.0% | | Southeast | 58 | 65 | -10.8% | | West | 16 | 13 | +23.1% | | Total | 205 | 204 | +0.5% | Unconsolidated JV Deliveries (Homes, Excl. KSA) - Q3 FY2025 | Region | 2025 | 2024 | Change | | :----- | :--- | :--- | :----- | | Northeast | 144 | 100 | +44.0% | | Southeast | 77 | 96 | -19.8% | | West | 24 | 28 | -14.3% | | Total | 245 | 224 | +9.4% | Unconsolidated JV Contract Backlog (Dollars, Excl. KSA) - As of July 31, 2025 | Region | 2025 (Thousands) | 2024 (Thousands) | Change | | :----- | :--------------- | :--------------- | :----- | | Northeast | $192,171 | $185,942 | +3.3% | | Southeast | $63,462 | $101,312 | -37.4% | | West | $8,607 | $12,256 | -29.8% | | Total | $264,240 | $299,510 | -11.8% | [KSA Joint Venture Data](index=13&type=section&id=KSA%20Joint%20Venture%20Data) The KSA Joint Venture experienced significant declines in Q3 FY2025 contracts and deliveries, but its contract backlog substantially increased by 187.7% KSA JV Contracts (Homes) - Q3 FY2025 | Metric | 2025 | 2024 | Change | | :----- | :--- | :--- | :----- | | Homes | 39 | 109 | -64.2% | | Dollars (Thousands) | $9,193 | $28,069 | -67.2% | KSA JV Deliveries (Homes) - Q3 FY2025 | Metric | 2025 | 2024 | Change | | :----- | :--- | :--- | :----- | | Homes | 1 | 3 | -66.7% | | Dollars (Thousands) | $177 | $475 | -62.7% | KSA JV Contract Backlog (Homes & Dollars) - As of July 31, 2025 | Metric | 2025 | 2024 | Change | | :----- | :--- | :--- | :----- | | Homes | 607 | 211 | +187.7% | | Dollars (Thousands) | $148,308 | $47,447 | +212.6% |

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]. - 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]. - Contract cancellation rate for the first quarter of 2025 was 16%, up from 14% in 2024[139]. 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]. - Homebuilding gross margin decreased to 13.8% and 14.5% for the three and six months ended April 30, 2025, compared to 19.5% and 18.9% for the same periods in 2024[134]. - Selling, general and administrative expenses increased by $4.6 million to $51.1 million for the three months ended April 30, 2025[137]. - Income from unconsolidated joint ventures decreased by $2.1 million to $9.0 million for the three months ended April 30, 2025, primarily due to losses from two joint ventures[160]. - Corporate general and administrative expenses decreased to $29.5 million for the three months ended April 30, 2025, down from $32.5 million for the same period in the prior year, mainly due to lower stock compensation expenses[158]. Operational Metrics - 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]. - Net contracts per active selling community decreased to 11.2 and 20.8 for the three and six months ended April 30, 2025, from 13.9 and 24.2 in the prior year[138]. - Total home sites available increased due to acquiring new land parcels, partially offset by home deliveries[183]. - As of April 30, 2025, the company has a consolidated total of 42,447 homes across 125 active selling communities, with 12,627 homes actively selling and 29,820 homes proposed[184]. - The total unsold homes increased from 1,106 on October 31, 2024, to 1,132 on April 30, 2025, reflecting a decrease in sales pace during the second quarter of fiscal 2025[187]. Regional Performance - Homebuilding revenue in the Northeast increased by 29.2% to $257.3 million for the three months ended April 30, 2025, driven by a 36.0% increase in homes delivered[144]. - Income before income taxes in the Northeast decreased slightly by 1.0% to $31.4 million for the three months ended April 30, 2025, primarily due to a $1.7 million increase in selling, general and administrative expenses[145]. - Homebuilding revenue in the Southeast decreased by 42.0% to $74.7 million for the three months ended April 30, 2025, attributed to a 37.8% decrease in homes delivered[148]. - Income before income taxes in the Southeast dropped significantly by 98.6% to $0.4 million for the three months ended April 30, 2025, due to decreased homebuilding revenue and a significant decrease in gross margin percentage[149]. - Homebuilding revenue in the West decreased by 8.0% to $332.4 million for the three months ended April 30, 2025, impacted by a 3.4% decrease in homes delivered[152]. - Income before income taxes in the West decreased by 46.8% to $18.9 million for the three months ended April 30, 2025, primarily due to decreased homebuilding revenue and increased selling, general and administrative expenses[153]. Liquidity and Investments - 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 as of April 30, 2025, was $202.4 million, including $74.0 million in cash and cash equivalents and $125.0 million of borrowing capacity under the senior secured revolving credit facility[162]. - Cash used in operations was $33.6 million after spending $467.4 million on land and land development in the first half of fiscal 2025[164]. - Investments in unconsolidated joint ventures increased by $40.6 million to $183.5 million as of April 30, 2025, compared to October 31, 2024[180]. - 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]. Debt and Financing - Senior notes and credit facilities, net of discounts, totaled $864.3 million as of April 30, 2025, down from $896.2 million at October 31, 2024[168]. - The company has 400,000 in long-term debt maturing in 2028 and 430,000 maturing in 2029, with a total long-term debt of $854.968 million as of April 30, 2025[198]. - The weighted average interest rate on long-term fixed-rate debt is 10.21% as of April 30, 2025[198]. - Cash used in financing activities was $81.0 million during the first half of fiscal 2025, primarily due to the redemption of 13.5% Senior Notes[164]. Market Conditions - 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, impacting home sales prices[190]. - Construction costs represented approximately 50.2% of the homebuilding cost of sales for the six months ended April 30, 2025[191]. - The company continues to utilize quick move-in homes to address affordability challenges in the current market environment[114].

Financial Performance - Total revenues decreased 3.1% to $686.5 million in Q2 FY2025 compared to $708.4 million in Q2 FY2024[4] - Net income for Q2 FY2025 was $19.7 million, or $2.43 per diluted share, compared to $50.8 million, or $6.66 per diluted share in Q2 FY2024[6] - Adjusted EBITDA for the three months ended April 30, 2025, was $61.3 million, compared to $102.2 million for the same period in 2024, reflecting a decrease of 40.1%[29] - 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 2024[42] - 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] Homebuilding Metrics - Homebuilding gross margin percentage after cost of sales 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 totaled 1,398 units for the three months ended April 30, 2025, 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 backlog of contracts as of April 30, 2025, was 1,711 homes, reflecting a decrease of 15.2% from 2,018 homes in 2024[44] 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 as of April 30, 2025, from $209,976,000 as of October 31, 2024[40] - The company reported a total liabilities figure of $1,732,729,000 as of April 30, 2025, down from $1,805,225,000 in the previous period[40] - The company’s total stockholders' equity increased to $820,370,000 as of April 30, 2025, compared to $800,349,000 as of October 31, 2024[40] Future Outlook - The company expects total revenues for Q3 FY2025 to be between $750 million and $850 million[9] - Adjusted homebuilding gross margin for Q3 FY2025 is expected to be between 17.0% and 18.0%[9] - Forward-looking statements indicate potential risks including economic conditions, interest rate fluctuations, and supply chain issues that may impact future performance[23] Inventory and Assets - Total inventories increased to $1,743,965,000 as of April 30, 2025, compared to $1,644,804,000 as of October 31, 2024, reflecting a growth of approximately 6%[40] - Total assets decreased to $2,553,099,000 as of April 30, 2025, from $2,605,574,000 as of October 31, 2024[40] Segment Performance - The Northeast segment saw a 10.8% decrease in revenue to $513,432 thousand, while home deliveries increased by 35.0% to 895 homes[49] - The Southeast segment experienced a 12.1% increase in revenue to $159,970 thousand, with home deliveries rising by 10.9% to 304 homes[49] - The West segment reported a 2.2% decrease in revenue to $676,484 thousand, with home deliveries declining by 5.0% to 1,362 homes[49] Joint Ventures - Income from unconsolidated joint ventures for the three months ended April 30, 2025, was $9.0 million, down 19.0% from $11.2 million in the same period of 2024[25] - The company reports its proportionate share of income or loss from unconsolidated homebuilding and land development joint ventures as a separate line item in consolidated financial statements[61] - Overall, the unconsolidated joint ventures (excluding KSA JV) reported a 7.2% decrease in home deliveries to 231 units, with contract dollars down by 14.8% to $149.5 million[58]

Financial Performance - Total revenues increased 13.4% to $673.6 million in Q1 fiscal 2025, compared to $594.2 million in the same quarter last year[4] - Income before income taxes rose 22.4% to $39.9 million in Q1 fiscal 2025, compared to $32.6 million in the prior year[6] - Net income was $28.2 million, or $3.58 per diluted share, for Q1 fiscal 2025, compared to $23.9 million, or $2.91 per diluted share, in the same period last year[6] - Adjusted EBITDA for the three months ended January 31, 2025, was $72,074,000, an increase from $63,441,000 in 2024, indicating a growth of 13.0%[30] - Net income for the three months ended January 31, 2025, was $28,191,000, compared to $23,904,000 in 2024, reflecting an increase of 17.6%[25] - The company’s net income available to common stockholders for the three months ended January 31, 2025, was $25,522,000, compared to $21,235,000 in 2024, reflecting an increase of 20.5%[25] Homebuilding Metrics - Homebuilding gross margin percentage was 15.2% for Q1 fiscal 2025, down from 18.3% in the same quarter last year[4] - Consolidated contracts increased 6.9% to 1,205 homes in Q1 fiscal 2025, compared to 1,127 homes in the same quarter last year[6] - Home deliveries totaled 1,205 units, a 6.9% increase from 1,127 units in the same period last year[43] - The backlog of contracts as of January 31, 2025, was 2,001 homes, down 10.9% from 2,245 homes in the prior year[43] - Homebuilding revenues rose to $656.681 million, a 13.4% increase compared to $578.928 million in the prior year[42] Liquidity and Assets - Total liquidity as of January 31, 2025, was $222.4 million, within the targeted liquidity range of $170 million to $245 million[13] - Cash and cash equivalents decreased to $94,258 thousand from $209,976 thousand as of October 31, 2024[40] - Total assets as of January 31, 2025, were $2,533,275 thousand, down from $2,605,574 thousand as of October 31, 2024[40] - Total liabilities decreased to $1,721,849 thousand from $1,805,225 thousand as of October 31, 2024[40] Cost and Expenses - The cost of sales, excluding interest, increased to $533.290 million, up 18.7% from $449.213 million in the same quarter of 2024[42] - The interest incurred for the three months ended January 31, 2025, was $29,855,000, compared to $31,961,000 in 2024, showing a decrease of 6.6%[33] Joint Ventures and Investments - Income from unconsolidated joint ventures decreased to $9,205,000 for the three months ended January 31, 2025, down from $14,952,000 in 2024, a decline of 38.5%[25] - Investments in and advances to unconsolidated joint ventures increased to $172,679 thousand from $142,910 thousand as of October 31, 2024[40] - The company experienced a significant increase in contracts signed, with a 28.3% rise in homes contracted in unconsolidated joint ventures[43] Regional Performance - In the Northeast segment, home contracts increased by 64.8% to 117 homes, with revenues rising 37.3% to $78,729,000 compared to the previous year[47] - The Southeast segment saw home deliveries rise by 21.8% to 67 homes, with revenues increasing 37.9% to $42,990,000[47] - The West segment experienced a significant decline, with home contracts dropping by 57.7% to 11 homes and revenues falling 50.2% to $5,766,000[47] Market Trends - The average price of homes sold decreased by 2.8% to $550,537 compared to $566,425 in the same quarter of 2024[43] - Average home prices in the Northeast decreased by 16.7% to $672,897, while the Southeast saw an increase of 13.2% to $641,642[47] - The average price in the West segment rose by 17.7% to $524,182, despite a significant drop in home deliveries[47] Overall Outlook - The overall performance indicates a mixed outlook, with strong growth in certain regions and segments, while others face challenges[47]

Sales and Revenue Performance - Housing revenues for the year ended October 31, 2024, totaled $2.875 billion with 5,348 homes delivered, resulting in an average sales price of $537,675[57]. - The dollar value of net sales contracts for fiscal 2024 was $2.8 billion, an increase of 10.1% from $2.5 billion in fiscal 2023, with the number of homes contracted rising 11.6% to 5,186[58]. - The company ended fiscal 2024 with 130 active selling communities, up from 113 in the previous year, with an average of 119 active selling communities[59]. - The backlog of signed contracts at October 31, 2024, was 2,052 homes valued at $1.2 billion, a decrease of 6.6% from 2,196 homes valued at $1.3 billion in 2023[62]. - The Northeast region generated $1,007,596,000 in housing revenues from 1,646 homes delivered, with an average sales price of $612,148[57]. - The Southeast region reported housing revenues of $447,804,000 from 878 homes delivered, averaging $510,027 per home[57]. - The West region achieved $1,420,088,000 in housing revenues with 2,824 homes delivered, averaging $502,864[57]. - Unconsolidated joint ventures contributed $539,028,000 in housing revenues from 853 homes delivered, with an average sales price of $631,920[57]. Land and Development Strategy - The company has a risk-averse land acquisition strategy, aiming to limit financial exposure through minimum cash investments and takedown options[41]. - The company increased its lot count, community count, and spending on land and land development during fiscal 2024[37]. - As of October 31, 2024, the company has 240 properties under option, totaling 28,228 developable home sites valued at $2.23 billion[66]. - Controlled land as of October 31, 2024, includes 29,549 total home sites, with a combined book value of $262,105 thousand[66]. - The company has incurred $125 million in option fees and deposits for properties under option as of October 31, 2024[66]. Operational Efficiency - The company has improved construction cycle times by approximately 30 days since the beginning of fiscal 2023, but still experiences increased cycle times of 30-45 days over pre-pandemic averages[49]. - The company maintains efficient operations by utilizing standardized materials and has reduced construction costs by consolidating vendors and executing national purchasing contracts[49]. - Labor and material shortages that arose during the COVID-19 pandemic have improved, with lumber prices decreasing in the second half of fiscal 2022 and into fiscal 2024[67]. - The company has reduced construction and administrative costs by consolidating vendors and executing national purchasing contracts, improving efficiency in operations[67]. Financial Management - The company repurchased $113.5 million, $245.0 million, and $100.0 million in aggregate principal of senior secured notes in fiscal years 2024, 2023, and 2022 respectively[37]. - In fiscal 2024, the company completed a debt exchange resulting in a $75.3 million principal reduction of senior notes and term loans, including a cash payment of $31.5 million[37]. - The company is focused on achieving high returns on invested capital, evaluating new communities based on internal rate of return requirements[40]. Workforce and Diversity - As of October 31, 2024, the company employed 1,878 full-time associates, with 1,211 involved in homebuilding operations[25]. - The company has a diverse associate base, with 27.3% non-white associates and 43.6% of associates being women as of October 31, 2024[28]. - The company is committed to diversity and inclusion, with 27.3% of associates being non-white and 43.6% being women as of October 31, 2024[28]. - The company has a strategy to engage associates through quarterly Town Halls and new communication channels like "Lunch & Learns" and "Coffee Chats"[31]. - The company has a repository of over 500 training modules/courses to facilitate associates' personal and professional growth[34]. Market Trends and Future Outlook - The company anticipates increasingly stringent regulatory requirements that could impact development timelines and costs in the future[73]. - The company anticipates that the majority of its backlog at October 31, 2024, will be completed and closed within the next six to nine months[62]. - The company shifted focus to increasing the availability of quick-move-in homes to provide customers with more certainty on mortgage payments[36]. - The company has increased its inventory of QMI homes as part of its current business strategy since fiscal 2022[48].

Financial Performance - Full year income before income taxes increased 24% year-over-year to $317.1 million[4] - Total revenues for the fourth quarter increased 10.4% to $979.6 million, and for the full year increased 9.0% to $3.00 billion[3] - Net income for the three months ended October 31, 2024, was $94.3 million, a decrease of 2.0% from $97.3 million in the same period of 2023[23] - Income before income taxes for the year ended October 31, 2024, was $317.1 million, an increase of 23.7% from $256.0 million in 2023[23] - Adjusted EBITDA for the three months ended October 31, 2024, was $159.0 million, compared to $181.2 million for the same period in 2023, reflecting a decrease of 12.2%[28] - Consolidated Adjusted EBIT for the quarter ended October 31, 2024, was $156.9 million, representing a 21.7% increase from $128.9 million in the prior quarter[33] Revenue and Sales - Sale of homes revenues in the fourth quarter increased 11.8% to $927.5 million, with 1,747 homes sold[3] - Homebuilding revenues for the year ended October 31, 2024, reached $2.93 billion, a 8.7% increase compared to $2.70 billion in 2023[37] - Total revenues for the three months ended October 31, 2024, increased to $979.6 million, up 10.4% from $887.0 million in the same period of 2023[37] - Consolidated total home contracts increased by 44.5% to 1,355 homes, with revenues rising by 25.1% to $705,564 thousand, despite a decrease in average price by 13.4% to $520,711[38] - The grand total for home contracts increased by 47.5% to 1,571 homes, with revenues rising by 30.4% to $845,654 thousand, while average price decreased by 11.6% to $538,290[38] Margins and Expenses - Homebuilding gross margin percentage for the fourth quarter was 18.0%, down from 21.4% in the prior year[4] - Total SG&A expenses were $87.7 million, or 9.0% of total revenues, in the fourth quarter[4] - Homebuilding gross margin percentage for the three months ended October 31, 2024, was 18.0%, down from 21.4% in the same period of 2023[26] - The company reported a homebuilding gross margin of $167.2 million for the three months ended October 31, 2024, compared to $177.6 million in the same period of 2023[26] Inventory and Liquidity - Total inventories as of October 31, 2024, amounted to $1.64 billion, an increase of 21.9% from $1.35 billion in 2023[35] - Cash and cash equivalents decreased to $210.0 million as of October 31, 2024, down from $434.1 million in the previous year[35] - Total liquidity as of October 31, 2024, was $210.0 million in cash and cash equivalents, plus $125.0 million available under a senior secured revolving credit facility[19] Market and Regional Performance - In the Northeast region, home contracts increased by 30.4% to 463 homes, while deliveries rose by 8.8% to 579 homes, resulting in a revenue increase of 10.9% to $279,076 thousand[38] - The Southeast region saw a decline in home contracts by 5.1% to 129 homes and a significant drop in deliveries by 61.1% to 239 homes, leading to a revenue decrease of 59.9% to $121,974 thousand[38] - The West region experienced a substantial increase in home contracts by 70.7% to 763 homes, with deliveries up by 27.6% to 962 homes, resulting in a revenue increase of 49.0% to $353,779 thousand[38] - The Northeast segment saw a 25.2% increase in contracts, rising to 1,809 in 2024 from 1,445 in 2023[41] - The Southeast segment experienced a significant decline in contracts, dropping 45.5% to 517 in 2024 from 948 in 2023[41] - The West segment reported a 26.9% increase in contracts, reaching 2,860 in 2024 compared to 2,254 in 2023[41] Joint Ventures and Strategic Initiatives - Investments in and advances to unconsolidated joint ventures increased to $142.9 million as of October 31, 2024, from $97.9 million in 2023[35] - The company continues to focus on expanding its market presence and enhancing its product offerings through strategic initiatives and joint ventures[39] - Unconsolidated joint ventures reported a 70.1% increase in home contracts to 216 homes, with revenues up by 66.2% to $140,090 thousand[38] - Overall, unconsolidated joint ventures (excluding KSA JV) delivered 216 homes, a 70.1% increase, with revenues up 66.2% to $140.090 million[46] Risks and Future Outlook - The company anticipates potential risks including fluctuations in interest rates and supply chain issues that may impact future performance[21] - For Q1 fiscal 2025, total revenues are expected to be between $650 million and $750 million[9]

Sales and Revenue - For the year ended October 31, 2023, consolidated housing revenues totaled $2.63 billion, with 4,878 homes delivered and an average sales price of $539,249[61]. - The dollar value of net sales contracts for fiscal 2023 was $2.51 billion, reflecting a 1.6% increase from $2.47 billion in fiscal 2022, with homes contracted increasing by 3.8% to 4,647[62]. - The backlog of signed contracts decreased by 12.1% to 2,196 homes at October 31, 2023, with sales values aggregating $1.3 billion compared to $1.5 billion in 2022[66]. - The average number of active selling communities increased slightly from 113 in fiscal 2022 to 114 in fiscal 2023, ending with 113 active selling communities[63]. - The Northeast region generated $933,156,000 in housing revenues from 1,618 homes delivered, averaging $576,734 per home[61]. - The Southeast region reported housing revenues of $419,656,000 from 776 homes delivered, with an average sales price of $540,794[61]. - The West region achieved housing revenues of $1,277,645,000 from 2,484 homes delivered, averaging $514,350 per home[61]. - Domestic unconsolidated joint ventures contributed $424,335,000 in housing revenues from 595 homes delivered, with an average sales price of $713,168[61]. Homebuilding Operations - The company is currently offering homes for sale in 113 communities across 27 markets in 13 states, with an average sales price of $539,000 in fiscal 2023[12]. - The company executed "Build-For-Rent" agreements in fiscal 2023, which added incremental sales volume and increased inventory turnover[37]. - The company shifted focus to increasing the availability of quick-move-in homes due to rising interest rates, providing customers with more certainty on mortgage payments[37]. - The company aims to achieve economies of scale by becoming a significant builder in each selected market, differentiating itself from competitors[39]. - The company maintains a risk-averse land acquisition strategy, limiting financial exposure through minimum cash investments and takedown options[43]. - The company is committed to customer satisfaction and quality, recognizing that future success relies on delivering quality homes to satisfied customers[41]. - The company has improved its cycle times but still faces challenges due to material and labor shortages, with expectations for alleviation as home sales slow nationally[51]. - The company has increased its inventory of quick-move-in homes in fiscal 2023 to align with its current business strategy[50]. Workforce and Diversity - As of October 31, 2023, the company employed 1,715 full-time associates, with 1,134 involved in homebuilding operations[26]. - The company has a diverse associate base, with 25.6% non-white associates and 44.3% of associates being women as of October 31, 2023[29]. - 19.0% of the company's associates have been with the company for more than 15 years, with an average tenure of approximately 7.5 years[28]. - The company has formed a Diversity & Inclusion Committee to enhance its initiatives in promoting a diverse and inclusive work environment[30]. - The company has a repository of over 500 training modules to facilitate associates' personal and professional growth[35]. Financial Management - The company repurchased $245.0 million, $100.0 million, and $180.9 million in aggregate principal of senior secured notes in fiscal years 2023, 2022, and 2021, respectively[38]. - The company incurred approximately $79.9 million in option fees and deposits for properties under option, along with an additional $32.1 million in nonrefundable predevelopment costs[70]. - The company walked away from 3,838 lots in fiscal 2023, resulting in a pre-tax income charge of $1.5 million, compared to 5,121 lots and a charge of $5.7 million in fiscal 2022[53]. Market Conditions and Challenges - Labor and material shortages have gradually improved since the COVID-19 pandemic, with lumber prices decreasing in the second half of fiscal 2022 and into fiscal 2023[73]. - The company is subject to extensive regulations that may impact its ability to develop communities, including potential building moratoriums due to insufficient infrastructure[76][79]. - The company is subject to extensive regulations that may affect land development and homebuilding operations, potentially leading to increased costs and delays[76]. - The company experienced a decrease in lumber prices during the second half of fiscal 2022 and into fiscal 2023, following previous supply chain issues[73].