Hovnanian Enterprises Reports Fiscal 2026 Second Quarter Results

Met or Exceeded Guidance on Nearly All Metrics Provided
Gross Margins Improved Sequentially Following First Quarter Trough
2% Year-Over-Year Increase in Total Domestic Contracts
$442 Million of Total Liquidity Well in Excess of Our Target Range

MATAWAN, N.J., May 21, 2026 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal second quarter and six months ended April 30, 2026.

The Company is saddened by the passing of Edward A. Kangas, whose leadership and dedication to Hovnanian spanned many years. As our longest-serving independent director, Chair of the Audit Committee, and Lead Independent Director, Ed provided valued judgment, integrity, and steady guidance to our Board and management team. Beyond his many professional contributions, he was also a trusted friend who will be deeply missed by all who knew him. The Board of Directors and everyone at the Company extend their heartfelt condolences to his family.

RESULTS FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED APRIL 30, 2026:

• Total revenues were $667.6 million in the second quarter of fiscal 2026, which was within the guidance range we provided, compared with $686.5 million in the same quarter of the prior year. For the six months ended April 30, 2026, total revenues were $1.30 billion compared with $1.36 billion in the first half of fiscal 2025.
  
• Domestic unconsolidated joint ventures sale of homes revenues for the second quarter of fiscal 2026 was $125.9 million (181 homes) compared with $144.5 million (207 homes) for the three months ended April 30, 2025. For the first half of fiscal 2026, domestic unconsolidated joint ventures sale of homes revenues was $198.3 million (299 homes) compared with $276.3 million (404 homes) in the six months ended April 30, 2025.
  
• Homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 10.2% for the three months ended April 30, 2026, compared with 13.8% during the second quarter a year ago. In the first six months of fiscal 2026, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 10.2% compared with 14.5% in the same period of the prior fiscal year.
  
• Homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 14.3% during the fiscal 2026 second quarter, which was above the high end of the guidance range we provided, compared with 17.3% in last year’s second quarter. Gross margins on both a GAAP and non-GAAP basis improved sequentially in the second quarter as margins rebounded from the first-quarter trough. For the six months ended April 30, 2026, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 13.9% compared with 17.8% in the first six months of the previous fiscal year.
  
• Total SG&A was $84.0 million, or 12.6% of total revenues, in the second quarter of fiscal 2026, which was at the better end of the guidance range we provided, compared with $80.6 million, or 11.7% of total revenues, in the second quarter of fiscal 2025. Total SG&A was $168.0 million, or 12.9% of total revenues, in the first six months of fiscal 2026 compared with $167.5 million, or 12.3% of total revenues, in the first half of the previous fiscal year.
  
• Total interest expense was $28.5 million, or 4.3% of total revenues, for the second quarter of fiscal 2026, compared with $29.1 million, or 4.2% of total revenues, for the second quarter of fiscal 2025. For the six months ended April 30, 2026, total interest expense as a percent of total revenues was 4.4% compared with 4.3% in the first half of the previous fiscal year.
  
• Income before income taxes for the second quarter of fiscal 2026 was $0.3 million compared with $26.5 million in the second quarter of the prior fiscal year. For the first half of fiscal 2026, income before income taxes was $29.0 million compared with $66.4 million during the first six months of the prior fiscal year.
  
• Income before income taxes, excluding land-related charges, was $9.1 million in the second quarter of fiscal 2026, which was near the high end of the guidance range we provided, compared with income before these items of $29.2 million in the second quarter of fiscal 2025. For the six months ended April 30, 2026, income before income taxes excluding land-related charges and gain on extinguishment of debt, net was $40.2 million compared with income before these items of $70.1 million in the same period of fiscal 2025.
  
• Net loss was $0.6 million, or $0.46 per diluted common share, for the three months ended April 30, 2026, compared with net income of $19.7 million, or $2.43 per diluted common share, in the same period of the previous fiscal year. For the first six months of fiscal 2026, net income was $20.3 million, or $2.20 per diluted common share, compared with net income of $47.9 million, or $6.02 per diluted common share, during the first half of fiscal 2025.
  
• EBITDA was $32.3 million for the second quarter of fiscal 2026 compared with $58.6 million for the second quarter of the prior year. For the first half of fiscal 2026, EBITDA was $93.1 million compared with $129.7 million in the same period of the prior year.
  
• Adjusted EBITDA was $41.1 million for the quarter ended April 30, 2026, which was above the guidance range we provided, compared with $61.3 million in the second quarter of the prior fiscal year. For the first half of fiscal 2026, adjusted EBITDA was $104.2 million compared with $133.4 million in the same period of the prior year.
  
• Consolidated domestic contracts⁽¹⁾ in the second quarter of fiscal 2026 increased 1.0% to 1,412 homes ($759.9 million) compared with 1,398 homes ($706.6 million) in the same quarter last year. Domestic contracts, including domestic unconsolidated joint ventures, for the three months ended April 30, 2026, increased 2.3% to 1,667 homes ($938.2 million) compared with 1,629 homes ($856.1 million) in the second quarter of fiscal 2025.
  
• As of April 30, 2026, the number of consolidated domestic communities was 125, unchanged from April 30, 2025. Including domestic unconsolidated joint ventures, domestic community count was also unchanged year over year at 148 as of April 30, 2026.
  
• Consolidated domestic contracts per community increased 0.9% year-over-year to 11.3 in the second quarter of fiscal 2026, compared to 11.2 in the same quarter of fiscal 2025. When including domestic unconsolidated joint ventures, domestic contracts per community increased 2.7% to 11.3 for the three months ended April 30, 2026, compared with 11.0 in the prior-year period.
  
• The dollar value of consolidated domestic contract backlog, as of April 30, 2026, decreased 5.0% to $938.4 million compared with $988.2 million as of April 30, 2025. The dollar value of domestic contract backlog, including domestic unconsolidated joint ventures, as of April 30, 2026, decreased 4.5% to $1.23 billion compared with $1.29 billion as of April 30, 2025. The year-over-year decrease in domestic 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.
  
• The gross domestic contract cancellation rate for consolidated contracts was 17% for the quarter ended April 30, 2026, compared with 15% in the fiscal 2025 second quarter. The gross domestic contract cancellation rate for contracts, including domestic unconsolidated joint ventures, was 15% for the second quarter of fiscal 2026 compared with 14% in the second quarter of the prior year.
  
• For the trailing twelve-month period our net income return on inventory was 2.1% and our adjusted earnings before interest and income taxes return on investment (Adjusted EBIT ROI) was 15.9%. For the most recently reported trailing twelve-month periods, we believe we had the highest Adjusted EBIT ROI compared to nine of our publicly traded midsized homebuilder peers.
  

⁽¹⁾ When we refer to “domestic” deliveries, contracts, communities or backlog, we are excluding results from our multi-community KSA operations.

LIQUIDITY AND INVENTORY AS OF APRIL 30, 2026:

• During the second quarter of fiscal 2026, domestic land and land development spending was $232.3 million compared with $219.8 million in the same quarter one year ago. For the first half of fiscal 2026, domestic land and land development spending was $413.0 million compared with $467.4 million in the same period one year ago. We are gaining momentum in new land opportunities that meet our financial thresholds in this difficult environment.
  
• Total liquidity as of April 30, 2026, was $442.0 million, which was significantly above our target liquidity range of $170 million to $245 million.
  
• During the second quarter of fiscal 2026, we repurchased 90,507 shares of common stock, or 1.8% of Class A common stock as of January 31, 2026, for $9.5 million or an average price of $104.60 per share.
  
• In the second quarter of fiscal 2026, approximately 1,400 lots were put under option or acquired in 25 domestic consolidated communities.
  
• As of April 30, 2026, our total domestic controlled consolidated lots were 33,632 compared with 42,440 lots at the end of the previous fiscal year’s second quarter. Continuing our land-light strategic focus, 86% of our lots were optioned at the end of the second quarter of fiscal 2026. Based on trailing twelve-month deliveries, the current position equaled 6.5 years’ supply.
  
• Total domestic QMIs as of April 30, 2026, were 731, a decline of 31.9% compared with 1,073 as of April 30, 2025, illustrating our efforts to match our starts with our sales pace. This equates to 5.8 QMIs per community as of April 30, 2026. Total domestic finished QMIs as of April 30, 2026, were 137, a decline of 54.9% compared with 304 as of April 30, 2025.
  

FINANCIAL GUIDANCE⁽²⁾:

The Company is providing guidance for total revenues, adjusted homebuilding gross margin, adjusted income before income taxes and adjusted EBITDA for the third quarter of fiscal 2026. Financial guidance below assumes no adverse changes in current market conditions, including deterioration in our supply chain or material increases in mortgage rates, inflation or cancellation rates, and excludes further impact to SG&A expenses from phantom stock expense related solely to stock price movements from the closing price of $112.44 on April 30, 2026.

For the third quarter of fiscal 2026, total revenues are expected to be between $650 million and $750 million, adjusted homebuilding gross margin is expected to be between 14.0% and 15.0%, adjusted income before income taxes is expected to be between breakeven and $10 million and adjusted EBITDA is expected to be between $30 million and $40 million.

⁽²⁾ The Company cannot provide a reconciliation between its non-GAAP projections and the most directly comparable GAAP measures without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items required for the reconciliation. These items include, but are not limited to, land-related charges, inventory impairments and land option write-offs and loss (gain) on extinguishment of debt, net. These items are uncertain, depend on various factors and could have a material impact on GAAP reported results.

COMMENTS FROM MANAGEMENT:

“Despite a choppy month-to-month sales environment during the quarter, we delivered results that were above or within our guidance ranges for total revenues, gross margin, SG&A ratio, adjusted EBITDA and adjusted income before income taxes,” said Ara K. Hovnanian, Chairman of the Board and Chief Executive Officer. “Overall, our performance reflects the resilience of our operating model and our team’s ability to execute in an unsettled market. Furthermore, our gross margins improved sequentially in the second quarter, marking early progress toward normalization after bottoming in the first quarter.”

Mr. Hovnanian continued, “We began our second quarter with encouraging sales momentum, but escalating geopolitical tensions, particularly the war in Iran, reignited inflation concerns and caused many homebuyers to hesitate. While demand remained uneven, we stayed focused on managing pace, pricing, and costs. Our priority continues to be the prudent deployment of capital – deliberately maintaining ample liquidity, working through older, lower-margin lots, selectively investing in new land opportunities that underwrite in today’s environment, and opportunistically returning capital to shareholders through share repurchases.”

“In today’s environment, it’s difficult to provide meaningful visibility beyond the next quarter. However, if current housing conditions continue, we expect a significant step-up in our fourth quarter performance, particularly in volume and gross margins, driven by deliveries from newer communities. While week-to-week demand can be volatile, we are encouraged by current trends and believe the Company is well positioned to close out the year with strong momentum,” Mr. Hovnanian concluded.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2026 second quarter results conference call at 11:00 a.m. E.T. on Thursday, May 21, 2026. The webcast can be accessed live through the “Investor Relations” section of Hovnanian Enterprises’ website at http://www.khov.com. For those who are not available to listen to the live webcast, an archive of the broadcast will be available under the “Past Events” section of the Investor Relations page on the Hovnanian website at http://www.khov.com. The archive will be available for 12 months.

ABOUT HOVNANIAN ENTERPRISES, INC.:

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. 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.

Additional information on Hovnanian Enterprises, Inc. can be accessed through the “Investor Relations” section of the Hovnanian Enterprises’ website at http://www.khov.com. To be added to Hovnanian's investor e-mail list, please send an e-mail to IR@khov.com or sign up at http://www.khov.com.

NON-GAAP FINANCIAL 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 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 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 (loss) income. The reconciliation for historical periods of EBIT, EBITDA, Adjusted EBIT and Adjusted EBITDA to net (loss) income are presented in tables attached to this earnings release.

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. 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.

Adjusted income before income taxes, which is defined as income before income taxes excluding land-related charges and gain on extinguishment of debt, net is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income before income taxes. The reconciliation for historical periods of adjusted income before income taxes to income before income taxes is presented in a table attached to this earnings release.

Adjusted investment, which is defined as total inventories excluding liabilities from inventory not owned, net of debt issuance costs and interest capitalized and including investments in and advances to unconsolidated joint ventures (“Adjusted Investment”), is a non-GAAP financial measure. The most directly comparable GAAP financial measure is total inventories. The reconciliation for historical periods of Adjusted Investment to total inventories is presented in a table attached to this earnings release.

The ratio of Adjusted EBIT return on adjusted investment (“Adjusted EBIT ROI”), which is the ratio of Adjusted EBIT for the trailing twelve-months, to the average Adjusted Investment for the prior five fiscal quarters, is a non-GAAP financial measure. The most directly comparable GAAP financial measure is the ratio of net income (loss) return to total inventories. The presentation of the ratios of Adjusted EBIT ROI and net income (loss) return on inventory are presented in a table attached to this earnings release.

Total liquidity is comprised of $310.9 million of cash and cash equivalents, $6.1 million of restricted cash required to collateralize letters of credit and $125.0 million available under a senior secured revolving credit facility as of April 30, 2026.

FORWARD-LOOKING STATEMENTS

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. 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. Such forward-looking statements include but are not limited to statements related to the Company’s goals and expectations with respect to its financial results for future financial periods and statements regarding demand for homes, mortgage rates, inflation, supply chain issues, customer incentives and underlying factors. Although we believe that our plans, intentions and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are not guarantees of future performance or results and (iii) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors. 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; (2) shortages in, and price fluctuations of, raw materials and labor, including due to geopolitical events, changes in trade policies, including the imposition of tariffs and duties on homebuilding materials and products and related trade disputes with and retaliatory measures taken by other countries and changes in immigration laws or the enforcement thereof and trends in labor migration; (3) fluctuations in interest rates and the availability of mortgage financing, including as a result of instability in the banking sector; (4) increases in inflation; (5) adverse weather and other environmental conditions and natural or man-made disasters; (6) the seasonality of the Company’s business; (7) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (8) reliance on, and the performance of, subcontractors; (9) regional and local economic factors, including dependency on certain sectors of the economy, and employment levels affecting home prices and sales activity in the markets where the Company builds homes; (10) increases in cancellations of agreements of sale; (11) changes in tax laws affecting the after-tax costs of owning a home; (12) legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors; (13) levels of competition; (14) utility shortages and outages or rate fluctuations; (15) information technology failures and data security breaches; (16) negative publicity; (17) global economic and political instability; (18) high leverage and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (19) availability and terms of financing to the Company; (20) the Company’s sources of liquidity; (21) changes in credit ratings; (22) government regulation, including regulations concerning the development of land, the home building, sales and customer financing processes, tax laws and environmental, health and safety matters; (23) potential liability as a result of the past or present use of hazardous materials; (24) operations through unconsolidated joint ventures with third parties; (25) significant influence of the Company’s controlling stockholders; (26) availability of net operating loss carryforwards; (27) loss of key management personnel or failure to attract qualified personnel; and (28) certain risks, uncertainties and other factors described in detail in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2025 and the Company’s Quarterly Reports on Form 10-Q for the quarterly periods during fiscal 2026 and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

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