Hovnanian Enterprises, Inc. · NYSE:HOV
Hovnanian Enterprises — Q1 2025 Earnings Presentation
53 slides from Hovnanian Enterprises's earnings presentation, Feb 24, 2025
Slide 1: Review of Financial Results First Quarter Fiscal 2025
Review of Financial Results First Quarter Fiscal 2025
Slide 2: Forward-Looking Statements
Forward-Looking Statements All statements in this presentation 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 risk
Slide 3: Non-GAAP Financial Measures
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 loss (gain) on extinguishment of debt, net (“Adjusted EBITDA”), the ratio of Adjust
Slide 4: Recent company performance
Recent company performance
Slide 5: First Quarter Results Compared to Guidance
First Quarter Results Compared to Guidance ($ in millions) Guidance Actuals Q1 2025(1) Q1 2025 Total Revenues $650 - $750 $674 Adjusted Homebuilding Gross Margin(2) 17.5% - 18.5% 18.3% Total SG&A as Percentage of Total Revenues(3) 13.5% - 14.5% 12.9% Income from Unconsolidated Joint Ventures $15 - $
Slide 6: First Quarter Results Compared to Last Year
First Quarter Results Compared to Last Year ($ in millions) Total Revenues Adjusted Gross Margin(1) $674 21.8% $594 18.3% Q1 2024 Q1 2025 Q1 2024 Q1 2025 Total SG&A as a Percentage of Total Revenues(2) Adjusted Income Before Income Taxes(3) 14.5% 12.9% $41 $31 Q1 2024 Q1 2025 Q1 2024 Q1 2025 (1) Adj
Slide 7: Contracts, including domestic unconsolidated joint ventures
Contracts, including domestic unconsolidated joint ventures 1,400 1,279 Q1 2024 Q1 2025 Note: Includes domestic unconsolidated joint venture contracts. 7
Slide 8: Monthly contracts
Monthly contracts 559 503 467 419 430 301 November November December December January January 2023 2024 2023 2024 2024 2025 Note: Includes domestic unconsolidated joint venture contracts. 8
Slide 9: Monthly contracts
9 503 Jan 2025 559 Jan 2024 430 Dec 2024 419 Dec 2023 467 Nov 2024 301 Nov 2023 543 Oct 2024 299 Oct 2023 473 Sep 2024 373 Sep 2023 556 Aug 2024 393 Aug 2023 Note: Includes domestic unconsolidated joint venture contracts. Monthly contracts 466 Jul 2024 442 Jul 2023 459 Jun 2024 654 Jun 2023 471 May
Slide 10: Quarterly Contracts Per Community
Quarterly Contracts Per Community Excluding Build for Rent Including Build for Rent 9.6 9.2 9.6 8.0 First Quarter Q1 2024 Q1 2025 Average Since 1997 Note: Excludes unconsolidated joint ventures. 10
Slide 11: Contracts Per Community
Contracts Per Community Excluding Build for Rent Including Build for Rent 4.2 3.5 4.1 3.3 3.5 3.1 2.9 3.0 2.3 2.3 2.4 November November November December December December January January January Monthly 2023 2024 Monthly 2023 2024 Monthly 2024 2025 Average Average Average Number Since 2008 Since 20
Slide 12: Contracts Per Community – Most Recent Quarter
Contracts Per Community – Most Recent Quarter For the quarter ended December 31, 2024 11.3 11.3 9.7 7.7 7.7 8.0 6.4 6.5 5.7 Beazer (Dec Q1) Morrison (Dec Q4) M/I Homes (Dec Q4) Hovnanian (as if Dec. NVR (Dec Q4) TRI Pointe (Dec Q4) Meritage (Dec Q4) Pulte (Dec Q4) Communities (Dec Q4) qtr. end) Tayl
Slide 13: Contracts Per Community – Year-Over-Year Change
Contracts Per Community – Most Recent Quarter Year-Over-Year Change For the quarter ended December 31, 2024, compared with the quarter ended December 31, 2023 18% 6% 7% 7% -7% -6% -4% -7% -17% Beazer (Dec Q1) NVR (Dec Q4) Morrison (Dec Q4) Communities (Dec Q4) M/I Homes (Dec Q4) TRI Pointe (Dec Q4)
Slide 14: Percentage of Our Homebuyers That Used Buydowns
Percentage of Our Homebuyers That Used Buydowns 79% 73% 74% 71% 72% Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Note: Represents the percentage of K. Hovnanian American Mortgage customers that used a buydown. 14
Slide 15: Quick Move In Homes Per Community
# Homes / Community Jan-18 3.9 Apr-18 4.2 Jul-18 4.5 Oct-18 4.6 Jan-19 4.4 Apr-19 4.4 Jul-19 5.3 Oct-19 5.4 Note: Excluding unconsolidated joint ventures and models. Jan-20 5.8 Apr-20 4.7 Jul-20 2.5 Oct-20 2.3 Jan-21 2.0 Apr-21 1.4 o 319 finished QMIs at 01/31/25 Jul-21 1.5 Oct-21 1.5 Jan-22 1.6 Apr
Slide 16: Raising Home Prices in Many of Our Communities
Raising Home Prices in Many of Our Communities Percentage of communities where we raised net prices 69% 71% 59% 54% 37% 40% 33% 34% 30% Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 16
Slide 17: Hypothetical EBIT ROI Scenarios
Hypothetical EBIT ROI Scenarios Hypothetical Hypothetical Historical Land Light ($ in millions) Normal Gross Gross Margin Margin Scenario Scenario Total Revenues $3,000 $3,420 Gross Margin % 20.0% 18.5% SG&A Ratio (% of total rev) 11.5% 10.8% Financial Services Income and UJV Income $ $76 $87 EBIT M
Slide 18: Community Count
Community Count Community count expected to grow further in fiscal 2025. 148 135 23 17 125 118 Q1 2024 Q1 2025 Wholly Owned Unconsolidated Joint Ventures Note: Excludes our multi-community unconsolidated joint venture in the Kingdom of Saudi Arabia. 18
Slide 19: Lots Controlled
Lots Controlled Including domestic unconsolidated joint ventures, our total lots controlled were 43,254 46,603 as of January 31, 2025. 41,891 39,516 36,841 33,576 31,726 29,123 28,657 29,487 35,259 36,510 32,336 29,584 25,867 20,789 21,598 24,389 20,402 8,334 8,255 7,889 7,337 7,709 7,257 7,180 6,63
Slide 20: Quarterly Land and Land Development Spend
Quarterly Land and Land Development Spend $318.4 $247.6 $230.5 $230.4 $229.3 $219.6 $216.1 $205.2 $204.5 $194.8 $178.6 $177.6 $175.0 $168.8 $167.1 $162.6 $156.5 $154.8 $134.4 $117.9 $114.4 Q1 Q1 Q1 Q1 Q1 Q1 Q2 Q2 Q2 Q2 Q2 Q3 Q3 Q3 Q3 Q3 Q4 Q4 Q4 Q4 Q4 20 21 22 23 24 25 20 21 22 23 24 20 21 22 23 24
Slide 21: Percentage of Optioned Lots
Percentage of Optioned Lots 84% 77% 71% 61% 61% 64% 58% 53% 52% 48% 44% Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 Q1 2025 Note: Excludes unconsolidated joint ventures. 21
Slide 22: Percentage of Lots Optioned vs Peers
LGI Homes (Sep Q3) 21% Meritage (Dec Q4) 38% KB Home (Nov Q4) 49% Note: Excludes unconsolidated joint ventures. M/I Homes (Dec Q4) 54% TRI Pointe (Dec Q4) 54% Source: Peer SEC filings and press releases as of 02/24/2024. % of Lots Optioned Century 56% Communities (Dec Q4) Toll (Jan Q1) 56% Pulte (De
Slide 23: Inventory Turns, Last Twelve Months
Inventory Turns (COGS), Last Twelve Months 2.8x 1.6x 1.6x 1.7x 1.1x 1.2x 0.9x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 0.8x 0.5x Toll (Jan Q1) DR Horton (Dec Q1) Beazer (Dec Q1) Morrison (Dec Q4) Hovnanian (Jan Q1) NVR (Dec Q4) KB Home (Nov Q4) Communities (Dec Q4) M/I Homes (Dec Q4) TRI Pointe (Dec Q4) Finder
Slide 24: Liquidity Position and Target
Liquidity Position and Target ($ in millions) $564 $125 $457 $464 $456 $399 $381 $125 $366 $125 $125 $353 $357 $125 $338 $125 $306 $308 $125 $313 $311 $125 $282 $125 $271 $125 $125 $439 $125 $251 $222 $245 Target $125 $125 $125 liquidity $339 $125 $331 $125 range $332 $170 $241 $274 $188 $125 $256 $
Slide 25: Debt Maturity Profile
Debt Maturity Profile January 31, 2025 ($ in millions) Total Debt Outstanding $882 $430 Annual Interest Incurred $90.8 11.75% $225 8.00% $175 10.00% $125(1) $27 $25 13.50% 5.00% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q4 Q4 Q2 '25 '25 '25 '25 '26 '26 '26 '26 '27 '27 '27 '27 '28 '28 '29 '40 Unsecured
Slide 26: Balance Sheet Metrics
Balance Sheet Metrics ($ in millions) Equity value (book) Total debt $800 $811 $582 $1,684 $1,566 $383 $1,373 $1,291 $175 $1,143 $987 $981 $(437) $(490) FYE FYE FYE FYE FYE FYE Q1 FYE FYE FYE FYE FYE FYE Q1 2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025 Net debt to net capital
Slide 27: Second Quarter Guidance vs. First Quarter Actuals
Second Quarter Guidance vs. First Quarter Actuals ($ in millions) Total Revenues Adjusted Gross Margin(1) 18.5% $775 18.3% 17.5% $674 $675 Q1 2025 Q2 2025 Q1 2025 Q2 2025 Guidance Guidance Total SG&A as Percentage of Total Revenues(2) Adjusted Income Before Income Taxes(3) 12.0% 12.9% $30 11.0% $41
Slide 28: Guidance for Fiscal 2025 Second Quarter
Guidance for Fiscal 2025 Second Quarter ($ in millions) Guidance Q2 2025(1) Total Revenues $675 - $775 Adjusted Homebuilding Gross Margin(2) 17.5% - 18.5% Total SG&A as Percentage of Total Revenues(3) 11.0% - 12.0% Income from Unconsolidated Joint Ventures $5 - $10 Adjusted EBITDA(4) $50 - $60 Adjus
Slide 29: ROE, Last Twelve Months
Beazer (Dec Q1) 10.3% LGI Homes (Sep Q3) 10.4% Century Communities (Dec Q4) 13.4% Lennar (Nov Q4) 14.5% TRI Pointe (Dec Q4) 14.5% Source: Peer SEC filings and press releases as of 02/24/2024. Taylor Morrison (Dec Q4) Meritage (Dec Q4) 15.8% ROE, Last Twelve Months 16.1% KB Home (Nov Q4) 16.6% DR Hor
Slide 30: Adjusted EBIT ROI, Last Twelve Months
Adjusted EBIT ROI, Last Twelve Months 76.5% 29.8% 33.2% 25.2% 26.2% 29.0% 19.7% 20.3% 21.9% 22.4% 15.9% 18.3% 18.5% 9.2% 10.8% DR Horton (Dec Q1) Beazer (Dec Q1) Toll (Jan Q1) Morrison (Dec Q4) M/I Homes (Dec Q4) Hovnanian (Jan Q1) NVR (Dec Q4) TRI Pointe (Dec Q4) KB Home (Nov Q4) Meritage (Dec Q4)
Slide 31: Price to Book Value
Price to Book Value 4.97 1.63 1.77 1.85 1.48 0.95 1.04 1.07 1.10 1.10 1.12 1.16 0.62 0.87 0.87 Beazer (Dec Q1) Toll (Jan Q1) DR Horton (Dec Q1) Morrison (Dec Q4) Hovnanian (Jan Q1) KB Home (Nov Q4) M/I Homes (Dec Q4) NVR (Dec Q4) TRI Pointe (Dec Q4) LGI Homes (Sep Q3) Meritage (Dec Q4) Finders (Sep
Slide 32: Price to Earnings Ratio
Price to Earnings Ratio 14.32 9.11 9.63 7.94 8.57 6.92 7.05 7.20 7.29 7.44 7.49 6.05 6.23 6.47 3.75 Beazer (Dec Q1) Toll (Jan Q1) DR Horton (Dec Q1) Hovnanian (Jan Q1) Morrison (Dec Q4) KB Home (Nov Q4) M/I Homes (Dec Q4) NVR (Dec Q4) TRI Pointe (Dec Q4) Meritage (Dec Q4) Finders (Sep Q3) LGI Homes
Slide 33: ROE to Price to Book
ROE Price to Book 6.50 3.50 NVR 3.00 39.4%, 4.97 2.50 Price to Book Value 2.00 DR Horton Pulte Taylor Morrison Toll 1.50 Dream Lennar KB Home Finders Hovnanian 1.00 LGI Homes M/I Homes Meritage Beazer 0.50 TRI Pointe Century Communities 0.00 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%
Slide 34: EBIT ROI to PE
EBIT ROI to PE 20.00 16.00 NVR 14.00 76.5%, 14.32 12.00 Price to Earnings Ratio Taylor 10.00 Morrison DR Horton LGI Homes Toll KB Home Lennar 8.00 Century TRI Pointe Pulte Communities 6.00 Beazer Meritage Dream M/I Homes Finders 4.00 Hovnanian 2.00 0.00 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
Slide 35: Appendix
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Slide 36: Community Count
Community Count Community count expected to grow further in fiscal 2025. 146 147 148 135 132 17 129 20 23 17 16 23 126 130 125 118 113 109 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Wholly Owned Unconsolidated Joint Ventures Note: Excludes our multi-community unconsolidated joint venture in the
Slide 37: Mortgage Rate Movements
Mortgage Rate Movements 8.00% 7.50% 7.00% 6.50% 6.00% 5.50% 5.00% 4.50% July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb Jul 2023 - Feb 2025 Jul 2022 - Feb 2024 Source: Freddie Mac. 37
Slide 38: Quarterly Contracts Per Community
Quarterly Contracts Per Community Excluding Build for Rent Including Build for Rent 9.6 16.9 14.0 6.5 9.7 9.2 9.6 8.0 8.6 7.5 7.3 6.8 6.1 First 1997 - Q1 2017 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 Q1 2025 Quarter 2002 Average First Since Quarter 1997 Average Note: Excludes unconsol
Slide 39: Annual Contracts Per Community
Annual Contracts Per Community Excluding Build for Rent Including Build for Rent 39.5 43.5 43.3 40.7 54.2 55.2 44.0 38.9 38.9 41.2 41.3 35.1 36.0 36.9 30.0 31.4 28.4 avg. 1997- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 TTM ended 01/31/2025 2002 Average Note: Annual Contracts per Communi
Slide 40: EBIT ROI to Price to Book Value
EBIT ROI to Price to Book Value 6.50 3.50 3.00 NVR 76.5%, 4.97 2.50 Price to Book Value Dream 2.00 Finders Pulte DR Horton 1.50 Toll KB Home Lennar Taylor Hovnanian 1.00 LGI Homes Morrison Meritage M/I Homes Beazer 0.50 Century TRI Pointe Communities 0.00 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0
Slide 41: ROE to PE
ROE to PE 16.00 20.00 NVR 14.00 39.4%, 14.32 12.00 Price to Earnings Ratio Lennar DR Horton 10.00 LGI Homes KB Home Taylor 8.00 Toll Morrison Century Pulte 6.00 Communities Dream TRI Pointe Meritage Finders Beazer M/I Homes 4.00 Hovnanian 2.00 0.00 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
Slide 42: Profitable financial services business
Profitable financial services business Financial services overview Origination portfolio for the three months ended January 31, 2025 Complements HOV’s homebuilding operations 0.5% Prime Allows ability for interest rate buy- VHA / FHA down programs for homebuilder customers Nonconforming 41.1%
Slide 43: Credit Quality of Homebuyers
Credit Quality of Homebuyers Fiscal Year 2024 First Quarter 2025 o Average LTV: 83% o Average LTV: 84% o Average CLTV: 83% o Average CLTV: 84% o ARMs: 0.0% o ARMs: 0.2% o FICO Score: 745 o FICO Score: 745 o Capture Rate: 79% o Capture Rate: 80% Note: Loans originated by our wholly-owned mortgage ban
Slide 44: Monthly contracts excluding unconsolidated joint ventures
Monthly Number of contracts Sundays 613 Feb-21 4 Feb-21 6.1 548 Feb-22 4 Feb-22 5.0 504 Feb-23 4 Feb-23 4.1 504 Feb-24 4 Feb-24 4.4 620 Mar-21 4 Mar-21 6.1 519 Mar-22 4 Mar-22 4.9 442 Mar-23 4 Mar-23 3.7 513 Mar-24 5 Mar-24 4.7 538 Apr-21 4 Apr-21 5.5 Note: Excludes unconsolidated joint ventures. 45
Slide 45: Land Positions by Geographic Segment
Land Positions by Geographic Segment January 31, 2025 Owned Excluding Segment Mothballed Lots Optioned Lots Total Lots Mothballed Lots Northeast 2,087 6 17,665 19,758 Southeast 885 - 7,158 8,043 West 3,376 390 11,687 15,453 Consolidated Total 6,348 396 36,510 43,254 Unconsolidated Joint Ventures 2,7
Slide 46: Phantom Stock Impact
Phantom Stock Impact ($ in millions, except stock prices) Incremental Total SG&A Total SG&A Ratio Stock Price at Reported Reported Total Phantom Stock Adjusted for Adjusted for Phantom end of quarter Total SG&A SG&A Ratio Benefit (Expense) Phantom Stock Stock Q1 2021 $51.16 - - - - - Q2 2021 $132.59
Slide 47: Reconciliation of income before income taxes excluding land-related charges
Reconciliation of income before income taxes excluding land- related charges and gain on extinguishment of debt, net to income before income taxes Hovnanian Enterprises, Inc. January 31, 2025 Reconciliation of income before income taxes excluding land-related charges and gain on extinguishment of de
Slide 48: Reconciliation of Gross Margin
Reconciliation of Gross Margin Hovnanian Enterprises, Inc. January 31, 2025 Gross margin (In thousands) Homebuilding Gross Margin Three Months Ended January 31, 2025 2024 (Unaudited) Sale of homes $ 646,914 $ 573,636 Cost of sales, excluding interest expense and land charges (1) 528,745 448,448 Home
Slide 49: Reconciliation of Adjusted EBITDA to Net Income
Reconciliation of Adjusted EBITDA to Net Income Hovnanian Enterprises, Inc. January 31, 2025 Reconciliation of adjusted EBITDA to net income (In thousands) Three Months Ended January 31, 2025 2024 (Unaudited) Net income $ 28,191 $ 23,904 Income tax provision 11,672 8,659 Interest expense 28,873 30,3
Slide 50: Reconciliation of Inventory Turnover
Reconciliation of Inventory Turnover Hovnanian Enterprises, Inc. January 31, 2025 Calculation of Inventory Turnover(1) LTM For the quarter ended ended (Dollars in thousands) 4/30/2024 7/31/2024 10/31/2024 1/31/2025 1/31/2025 Cost of sales, excluding interest $531,502 $547,332 $735,337 $533,290 $2,34
Slide 51: Reconciliation of Adjusted EBIT Return on Adjusted Investment
Reconciliation of Adjusted EBIT Return on Adjusted Investment Hovnanian Enterprises, Inc. January 31, 2025 Reconciliation of Adjusted EBIT Return on Adjusted Investment (In thousands) LTM For the quarter ended ended 4/30/2024 7/31/2024 10/31/2024 1/31/2025 1/31/2025 Net income $ 50,836 $ 72,919 $ 94
Slide 52: Key credit and balance sheet metrics reconciliations
Key credit and balance sheet metrics reconciliations October 31, LTM January 31, 2019 2020 2021 2022 2023 2024 2025 Nonrecourse mortgages secured by inventory, net of debt issuance costs $203,585 $135,122 $125,089 $144,805 $91,539 $90,675 $87,633 Senior notes and credit facilities (net of discounts,
Slide 53: Hovnanian Enterprises, Inc.
ovnanian Enterprises: Inc.
Hovnanian Enterprises — Q1 2025 Earnings Presentation on 6ix