Hovnanian Enterprises Reports Fourth Quarter and Fiscal Year 2025 Results

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