Hovnanian Enterprises, Inc. · NYSE:HOV
Hovnanian Enterprises — Q4 2024 Earnings Presentation
50 slides from Hovnanian Enterprises's earnings presentation, Dec 5, 2024
Slide 1: Review of Financial Results Fourth Quarter Fiscal 2024
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”) and the ratio of Adj
Slide 4: Recent company performance
Recent company performance
Slide 5: Full Year Results Compared to Guidance
Full Year Results Compared to Guidance gba cS nmin) Guidance Actuals FY 2024) FY 2024 Total Revenues $2,900 - $3,050 $3,005 Adjusted Homebuilding Gross Margin 21.5% - 22.5% 22.0% Total SG&A as Percentage of Total Revenues®) 11.0% - 12.0% 11.4% Income from Unconsolidated Joint Venture $55 - $65 $52 A
Slide 6: Full Year Results Compared to Last Year
Full Year Results Compared to Last Year rrmanien ($ in millions) Total Revenues Adjusted Gross Margin) «ge 22.7% FY 2023 FY 2024 FY 2023 FY 2024 Adjusted EBITDA?) Adjusted Income Before Income Taxes@) FY 2023 FY 2024 FY 2023 FY 2024 (1) Adjusted homebuilding gross margin percentage is before cost of
Slide 7: Fourth Quarter Results Compared to Last Year
Fourth Quarter Results Compared to Last Year g booties ($ in millions) Total Revenues Adjusted Gross Margin) we . - Q4 2023 Q4 2024 Q4 2023 Q4 2024 Adjusted EBITDA?) Adjusted Income Before Income Taxes@) - - Q4 2023 Q4 2024 Q4 2023 Q4 2024 (2) Adjusted homebuilding gross margin percentage is before
Slide 8: Contracts, including domestic unconsolidated joint ventures
Contracts, including domestic unconsolidated Hiegzanign joint ventures oe, gw 4 1,065 301 Q4 2023 Q4 2024 November
Slide 9: Quarterly Contracts Per Community
Slide 10: Mortgage Rate Movements
Mortgage Rate Movements ght i 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 ——Jul 2023 - Nov 2024 + ——Jul 2022 - Nov 2023 10
Slide 11: Contracts Per Community
Contracts Per Community w ing Build for Rent — = Including Build for E ~~ i RCA i! | | ! i
Slide 12: Contracts Per Community - Most Recent Quarter
Vvnanian Enterprises: Inc He — Most Recent Quarter Contracts Per Communi For the quarter ended September 30, 2024 13.4 12.6 10.7 10.5 9.3 8.5 8.4 8.3 7.3 en 6.4 (ed das) YAN (€d das) adequay (pua “43b das }! se) uejueuAoy, (€0 das) sawoH [97 (€D das) sawoH |/W (€0 das) ayuiod INL (€d das) sanjunuwo5
Slide 13: Contracts Per Community - Year-Over-Year Change
an Inc Contracts Per Community — Most Recent Quarter = //o)222" Year-Over-Year Change For the quarter ended September 30, 2024, compared with the quarter ended September 30, 2023 22% 1% 4% | 5% | -2% -1% 9% -~6% -5% -15% -26% 8 3 rs] S 3 o 3 o 3 g 3 a a a a 3 a 3 sh 8H Z a a G a] a 2 & 2a rae 4 as 2
Slide 14: Percentage of Our Homebuyers That Used Buydowns
Percentage of Our Homebuyers That Used Buydowns /7y222!¢" 79% 73% 71% 72% Qi 2024 Q2 2024 Q3 2024 Q4 2024 Note: The percentages represent the usage of buydowns on our deliveries. 14
Slide 15: Quick Move In Homes (QMIs) Per Community
ovnanian Inc Enterprises He Quick Move In Homes (QMIs) Per Communi o 1,021 QMIs at 10/31/24, excluding models o 4,6 average QMIs per community since 1997 0 233 finished QMIs at 10/31/24 08 cl £9 el Z9 sy gg 9°S ce 4 gL sb SL vb 07% e? Ge Lv 8S vs es vv vv ov Sv cv 6e Ayunwiwos / sowopy # Note: Exclu
Slide 16: Raising Home Prices in Many of Our Communities
Raising Home Prices in Many of Our Communities 707227" Percentage of communities where we raised net prices 69% 71% 54% 59% 37% Qi 2023 §=Q22023 «= Q3. 202339 4.2023) 1.2024 «= 2. 2024.-Ss 3.2024 34% Q4 2024 16
Slide 17: looks
Slide 18: Community Count
Community Count Hoynanian 146 147 135 17, 129 132 20 17 16 Pfs} 118 126 113 109 Q4 2023 Qi 2024 Q2 2024 Q3 2024 Q4 2024 = 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 Hoynanian comtyc oO A J 2 eV 41,891 2024 39,516 36,841 33,576 31,726 29,487 21,598 8,334 8,255 7,889 7,337 7,709 7,257 7,180 6,632 Qi 2023 Q22023 = Q3. 2023 3=— 4. 2023.S 1.2024 )«=— 2.2024. Ss Q3.2024-~=— 4.2024 Owned = Optioned Note: Excludes unconsolidated joint ventures. 19
Slide 20: Quarterly Land and Land Development Spend
Hevnanian Enterprises: Inc. Quarterly Land and Land Development Spend S = wn : agaAaaa Vee @ 2 @@ Bg @ ow a 20 21 22 23 24 20 21 22 24 20 21 23 24 20
Slide 21: Percentage of Optioned Lots
Percentage of Optioned Lots Hegnantan 77% 84% ( 71% oy, jx [se fm ” 46% 49% Q4 2015 Q42016 Q42017 Q42018 Q42019 Q42020 Q42021 Q42022 Q42023 Q4 2024 Note: Excludes unconsolidated joint ventures. 21
Slide 22: % of Lots Optioned
vnanian Enterprises: Inc. He % of Lots Optioned OM 84% 76% 57% 58% 56% 55% 42% 36% 21% (ed das) YAN (pO 190) uejueUnoH (gd das) suapury weag (€D Bny) seuuay7 (vio das) uoyoH YG (ED das) uosus0y sojAey (vo das) sazeag (€O das) ayn (€d das) sanjunuwo5 Aunquaa (€d das) sawoH |/W (€0 IMF) OL (€0 das) aq
Slide 23: Inventory Turns (COGS), Last Twelve Months
Vvnanian Enterprises: Inc. He Inventory Turns (COGS), Last Twelve Months 2.8x 16x [Ease 1.6x 1.2x 0.9x 1.0x 1.0x 1.0x 1.0x = 1.0x 1.0x 1.1 0.8x 0.5x (€0 das) YAN (¥O 390) ueJueUAoH (€ das) ss@puly weag (gO Bny) seus (vo das) uovoH ya (€d das) sewoH |/W (€d das) sanjunuwos Aunquaa (€0 das) aquiog yL
Slide 24: Liquidity Position and Target
Liquidity Position and Target ga ($ in millions) $464 $456 $338 $313 $311 Target liquidity $125 $125 range $170 ~~" ees ees ee se fe es) eee en ee eee ye RS RS Vv Vv ~ S wr »\ SY SPP MOO >= Y Homebuilding Cash ® Revolver Availability indudes cash and cash ‘which includes unrestricted cash and restri
Slide 25: Debt Maturity Profile
Debt Maturity Profile Hovnanian October 31, 2024 ($ in millions) Total Debt Outstanding $882 sn Annual Interest Incurred $90.8 ia ask $225 8.00% $175 10.00% $1251) $277; | 13.50% sae _ oo Ql Q2. 3B O24 Ql Q @B 84 QA Qe QB WM Qi Q4 Q4 Q2 25 "25 '25 '25 '26 '26 '26 '26 ‘27 '27. ‘27 '27 '28 '28 '29 '40
Slide 26: Balance Sheet Metrics
Balance Sheet Metrics Hoynanian ($ in millions) Equity value (book) pe Total debt $(490) $(437) FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE 2019 2020 2021 2022 2023. = 2024 2019 20202-2021 2022 2023 2024 Net debt to net capitalization Goal: Mid 30% level 146.2% 150.4% FYE FYE FYE FYE FYE FYE 201
Slide 27: Guidance for Fiscal 2025 First Quarter
Guidance for Fiscal 2025 First Quarter gba ($ in millions) Actuals Guidance Qi 2024 Q1 2025) Total Revenues $594 $650 - $750 Adjusted Homebuilding Gross Margin™ 21.8% 17.5% - 18.5% Total SG&A as Percentage of Total Revenues) 14.5% 13.5% - 14.5% Income from Unconsolidated Joint Ventures $15 $15 - $30
Slide 28: ROE, Last Twelve Months
Enterprises: Inc. Hevnanian ROE, Last Twelve Months (€0 das) YAN (0 390) ueJeUroH (Ed das) suapury weaig (gd das) ayn (€O INF) OL (ed das) sowoy 1/W (v0 das) uoYoH YG (€d das) adeyuaw (ed Bny) ewoH gy (€d Bny) zeuuay (€D das) ayuiog IL (€d das) uosus0y 4ojAey (ED das) sanjunuwos Aunqyuap (vo das) sa
Slide 29: Consolidated EBIT ROI, Last Twelve Months
E ovnanian Enterprises: Inc. Consolidated EBIT ROI, Last Twelve Months 74.3% 30.6% Elyse 32.0% 27.1% 15.7% 17.4% 17.6% 216% 21.9% 22.0% 22.4% 24.8% 12.2% ~* : , 9.2% 3 S 3 o SG S oS o 3 a 3 3 o S o a = o > = ef 3 o o 3 > 3 t Ge 5 = ° TP ees FR eee eg GE Oc 3 s 2@3 Fo ¢ 2 of F £ : 2 S 8 # S E & 52 oa
Slide 30: Price to Book Value
Vvnanian Enterprises: Inc. He Price to Book Value 6.59 2.79 2.08 2:94 2.38 1.25 1.29 1.32 1.37 1.52 1.61 1.70 Ly, 1.11 (€0 das) YAN (€0 das) svapuly weag (€d das) aayng (€0 Mf) [OL (vo das) uoyoH ya (pO 190) UeJUeUAOY, (€O Bny) zeuuay (€ das) sewoH |/W (gd Bny) awoH gy (€O das) aBequay (€D das) uosw
Slide 31: Price to Earnings Ratio
Vvnanian Enterprises: Inc. He Price to Earnings Ratio 18.80 13.06 oes 989 1062 1105 11.21 1153 11.64 862 9.00 9.01 902 % : 7.67 5.98 (€0 das) YAN (€0 das) sewoH [57 (vo das) uoyoH YG (€D Bny) szeuuay (€0 1Mf) OL (€ das) suapuly weag (ed Bny) awoH gy (€d das) ayng (€D das) uosw0oW sojAey (gd das) sew
Slide 32: ROE to Price to Book
ROE Price to Book Heynanian Price to Book Value 6.50 VA NVR 3.00 38.4%, 6.59 » ° Pulte 2.90 DR Horton » Dream Lennar a *~7oll Finders 2.00 Taylor add ies © — Hovnanian Morrison sd - 1.50 « M/I Homes LGI Homes —-e + = *Merioge ° os Beazer ‘ J TRI Pointe Century 0.50 Communities 0.00 0.0% 5.0% 10.0% 1
Slide 33: EBIT ROI to PE
EBIT ROI to PE Hoynanian Price to Earnings Ratio 20.00 NVR TG 74.3%, 18.80 * LGI Homes * — DR Horton KB Home Toll ¢ Lennar * - Taylor bd 10.00 Morrison Dream TRI Pointe Pulte « Century . Fifiders J i Communities > ans Beazer * 5 M/I Homes 6.00 Meritage e Hovnanian 4.00 2.00 0.00 0.0% 5.0% 10.0% 15.0
Slide 34: Appendix
2 A= Pa 7] 2 2. <
Slide 35: Quarterly Contracts Per Community
Quarterly Contract ts Per Community Excluding Build for Rent Including Build for Rent 10.2 Ve Ve Fourth 1997 - Quarter 2002 Average Fourth Since Quarter 1997 Average Note: Excludes unconsolidated joint ventures. MES WD Wy Ws By 5.0 AS 8.3 BN Hoynar 10.4 ADA Q4 2017 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Q4
Slide 36: Annual Contracts Per Community
Jovnanian Enterprises: Inc Lae Annual Contracts Per Community m Including Build for Rent Loe Dy & a & 8 Average Note: Annual Contracts per Community calculated based on a five-quarter average of communities, excluding unconsolidated joint ventures.
Slide 37: Income from Unconsolidated Joint Ventures
Income from Unconsolidated Joint Ventures Hynanian ($ in millions) F¥ FY FY FY FY FY FY 2018 2019 2020 2021 2022 2023 2024
Slide 38: EBIT ROI to Price to Book Value
EBIT ROI to Price to Book Value Eigpaip 6.50 a Dream NVR 3.00 Finders 74.3%, 6.59 ’ e 2.50 Pulte v » 2 s ae F % 2.00 DR Horton 8 KB Home ‘i * e~ Hovnanian £ M/I Homes "3" gy 1.50 > = Taylor * a LGI Homes ¢ Morrison ° ° Meritage 1.00 Beazer * TRI Pointe Century 0.50 Communities 0.00 0.0% 5.0% 10.0% 1
Slide 39: ROE to PE
ROE to PE 20.00 14.00 12.00 10.00 8.00 6.00 Price to Earnings Ratio 4.00 2.00 0.00 0.0% LGI Homes © Lennar DR Horton . © KB Home Toll © Taylor " Mownson * TRI Pointe Pulte * Centul ei o Dream muni | Finders Communities . M/I Homes Beazer Meritage 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Return on Equity (
Slide 40: Profitable financial services business
Profitable financial services business Hoynanian Financial services overview = Complements HOV’s homebuilding operations * Allows ability for interest rate buy- down programs for homebuilder customers = Provides mortgage originations in every state in which Hovnanian operates and title services in m
Slide 41: Credit Quality of Homebuyers
Credit Quality of Homebuyers Hoynanian Fiscal Year 2023 Fiscal Year 2024 > Average LTV: 82% ©» Average LTV: 83% © Average CLTV: 82% © Average CLTV: 83% ©» ARMs: 0.9% > ARMs: 0.0% o FICO Score: 743 o FICO Score: 745 ©» Capture Rate: 70% © Capture Rate: 79% Note: Loans originated by our wholly-owned m
Slide 42: Number of Monthly Contracts Per Community
Inc Vnanian Enterprises He Number of Monthly Contracts Per Community, Excludes Unconsolidated Joint Ventures ey or a : —) r—) ° <4 2 qc > = = “ae » & + one 4 m + wy BR a 4 SN hy 3 i} i} my ™ wi vv In Ge i Note: Excludes unconsolidated joint ventures. 42
Slide 43: Land Positions by Geographic Segment
Land Positions by Geographic Segment Heynanian October 31, 2024 Owned Excluding ‘ Segment Mothballed Lots Mothballed Lots Optioned Lots Total Lots Northeast 1,919 6 17,651 19,576 Southeast 806 0 6,355 7161 West Spey bl 390 11,253 15,154 Consolidated Total 6,236 396 35,259 41,891 Unconsolidated Joint
Slide 44: Phantom Stock Impact
Phantom Stock Impact Hoynanian ($ in millions, except stock prices) Stock Price at Reported Reported Total asian Total SCBA Total SGBA Ratio end of quarter Total SG&A = SGBA Ratio Fler saa Ps aaie ae Pricing ae Qi 2021 $51.16 - - - - - Q2 2021 $132.59 $82.6 11.7% $(17.5) $65.1 9.3% Q3 2021 $104.39 $
Slide 45: Reconciliation of income before income taxes excluding land-related charges
Reconciliation of income before income taxes excluding land- —/ Joynanian related charges and gain on extinguishment of debt, net to income before income taxes Hovnanian Enterprises, Inc. October 31, 2024 Reconciliation of income before income taxes excluding land-related charges and loss (gain) on
Slide 46: Reconciliation of Gross Margin
Reconciliation of Gross Margin Hovnanian Enterprises, Inc. October 31, 2024 Gross margin (In thousands) Sale of homes Cost of sales, excluding interest expense and land charges (1) Homebuilding gross margin, before cost of sales interest expense and land charges (2) Cost of sales interest expense, e
Slide 47: Reconciliation of Adjusted EBITDA to Net Income
Reconciliation of Adjusted EBITDA to Net Income [72777 Hovnanian Enterprises, Inc. October 31, 2024 Reconciliation of adjusted EBITDA to net income (In thousands) Three Months Ended Year Ended October 31, October 31 2024 2023 2024 2023 (Unaudited) (Unaudited) Net income $ 94,349 $ 97,265 $ 242,088 $
Slide 48: Reconciliation of Inventory Turnover
Reconciliation of Inventory Turnover Heynanian Hovnanian Enterprises, Inc. October 31, 2024 Calculation of Inventory Turnover) T™™ For the quarter ended ended (Dollars in thousands) 1/31/2024 4/30/2024 7/31/2024 10/31/2024 _ 10/31/2024 Cost of sales, excluding interest $449,213 $531,502 $547,332 $73
Slide 49: Key credit and balance sheet metrics reconciliations
Key credit and balance sheet metrics Heynanian reconciliations October 31 2019 2020 2021 2022 2023 2024 Nonrecourse mortgages secured by inventory, net of debt issuance costs $203,585 $135,122 $125,089 $144,805 $91,539 $90,675 Senior notes and credit facilities (net of discounts, premiums and debt i
Slide 50: Hovnanian Enterprises, Inc.
ovnanian Enterprises: Inc.
Hovnanian Enterprises — Q4 2024 Earnings Presentation on 6ix