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]
Hovnanian Enterprises Inc(HOVNP) - 2025 Q3 - Quarterly Report