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].
Hovnanian Enterprises Inc(HOVNP) - 2025 Q2 - Quarterly Report