Hovnanian Enterprises, Inc. · NYSE:HOV
Hovnanian Enterprises — Q1 2024 Earnings Presentation
49 slides from Hovnanian Enterprises's earnings presentation, Feb 22, 2024
Slide 1: Review of Financial Results First Quarter Fiscal 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements Note: 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 unknow
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 gain on extinguishment of debt, net (“Adjusted EBITDA”) are not U.S. generally acce
Slide 4: Recent company performance
Recent company performance
Slide 5: First Quarter Results Compared to Last Year
First Quarter Results Compared to Last Year aupanies ($ in millions) Total Revenues Adjusted Gross Margin®) Qi 2023 Qi 2024 Qi 2023 Qi 2024 EBITDA?) Income Before Income Taxes $50 $18 Qi 2023 Qi 2024 Qi 2023 Qi 2024 2023 Mf 2024 % 2024 Excluding Incremental Phantom Expense © 2023 @ 2024 Y% 2024 Exdu
Slide 6: Guidance for Fiscal 2024 First Quarter
Guidance for Fiscal 2024 First Quarter yen ($ in millions) Actuals Guidance Actuals 1 2024 1 2024) 1 2024 Excluding Incremental Phantom Expense Total Revenues $525 - $625 $594 $594 yc 22.0% - 23.5% 21.8% 21.8% argin Total SG&A 3s Percentage of Total 47.5% -13.5% 14.5% 13.2% evenues Adjusted EBITDA $
Slide 7: Quarterly Contracts Per Community
Quarterly Contracts Per Community Leas o\o & 16.9 14.0 86 9.7 a = 68 6.5 1997 - 2002 Qi 2017. Qi2018 = Q12019 Q12020 Qi2021 Q12022 Q12023 Qi 2024 First Quarter Average Note: Excludes unconsolidated joint ventures.
Slide 8: Similar Mortgage Rate Movements
Similar Mortgage Rate Movements Heynanian 8.00% 7.50% 7.00% 6.50% 6.00% 7 sii Sales picked up ay ratey dropped last year and the same patterw nme i“ developing thi year. sal July Aug Sep Oct Nov Dec Jan Feb —July 2023 - Feb 2024. =——July 2022 - Feb 2023 Source: Freddie Mac.
Slide 9: Contracts Per Community
: eR r ue | = Contracts Per Community % Excluding Build for Rent = ™ Including Bui
Slide 10: Annual Contracts Per Community
H: VNnanian Enterprises: Inc Annual Contracts Per Community = Including Build for Rent % Excluding Build for Rent 1997- 2002 Average S oa) 35.1 36.0 ae 23.4 |300 314 2023 N 2014 «2015 2016 2017 2018 2019 2020 2021 202 Ve Note: Annual Contracts per Community calculated based on a five-quarter average
Slide 11: Contracts Per Community vs peers
Enterprises’ Inc ovnanian Jat Contracts Per Communi For the three monthy ended December 31, 2023 11.8 10.7 &3 “3s te. 7.0 6.8 6.7 6.1 (vo 220) YAN (po 2aq) adequay (pod 2aq) saniunuWwe> Aunqua (pua “4b "98g }1 se) ue|UeUAOH (vO 28q) sawOH |) (vO 28q) saWoOH |/WW (tO 28q) Uosu0 Wy sojAey (pd 298q) au
Slide 12: Contracts Per Community Year-Over-Year Change
vnanian Enterprises: Inc Contracts Per Community Year-Over-Year Change // For the three monthy ended December 31 , 2023, compared with 32022 694% —— the three months ended December 31 113% 65% 48% 49% 54% i 45% 29% 22% -8% (po 28q) Ja (pO 23q) aod IHL (pus *4ab *9aq }1se) uejueuAOH (vo 28g) adequay
Slide 13: January Website Activity
January Website Activity 920,511 website visits in January Increased 43% MoM and increased 12% YoY January Total Website Visits 920,511 820,117 2023 2024 Note: Includes domestic unconsolidated joint ventures. Hew: 1 unc an 98 leads per community in January Increased 31% MoM and increased 13% YoY Jan
Slide 14: Percentage of Our Homebuyers That Used Buydowns
Percentage of Our Homebuyers That Used Buydowns /10)2224" For first quarter deliveries, 79% of our customers that eel mortgagerto- aii used some form of interest vate buy 87% 82% 72% November 2023 December 2023 January 2023 14
Slide 15: Quick Move In Homes (QMIs) Per Community
Inc vnanian peites Enter eG Quick Move In Homes (QMIs) Per Community o 740 QMIs at 01/31/24, excluding models o 4.5 average QMIs per community since 1997 o 219 finished QMIs at 01/31/24 TT <2 el £9 SP GS 99 ce 4 ob sb Gb vb 07 a4 EA LP 8g vg eg vy vy oF Sv cv 6e Ayunwiwo 9 / sowoH # €7-PO ez-In¢ €z-
Slide 16: Historically Low Supply of Homes for Sale
Historically Low Supply of Homes for Sale Hoynanian Enterprises: Inc. 4.0 i Shs 3.0 ake 2.0 iS 1.0 —— SF Inventory of Existing Homes for Sale 0.9 05 -—- SF Inventory of Existing Homes for Sale Historical Average : ——Started and Completed Unsold New Homes and Existing Homes steeee Started and Complet
Slide 17: Raising Home Prices in Many of Our Communities
Raising Home Prices in Many of Our Communities (1.277 Percentage of communities where we raised prices Many communities hove had multiple price increases. 69% 71% 54% 44% 37% 30% Qi 2023 Q2 2023 Q3 2023 Q4 2023 Qi 2024 February 2024 (month to date) 17
Slide 18: Community Count
Community Count Hoeynanian 135 129 122 20 Q3 2023 Q4 2023 Q1 2024 = Wholly Owned Unconsolidated Joint Ventures Note: Excludes our multi-community unconsolidated joint venture in the Kingdom of Saudi Arabia.
Slide 19: Lots Controlled
Lots Controlled Hfoynanian 33,576 31,726 29,123 28,657 29,487 8,334 8,255 7,889 7,337 7,709 Qi 2023 Q2 2023 Q3 2023 Q4 2023 Qi 2024 Owned = Optioned 19
Slide 20: Percentage of Optioned Lots
Percentage of Optioned Lots Hoynanian 77% 71% 61% 54% 53% 52% 44% 48% Q1 2015 Q12016 Q12017 Qi 2018 Qi 2019 Qi 2020 Qi 2021 Qi 2022 Qi 2023 Qi 2024 Note: Excludes unconsolidated joint ventures.
Slide 21: Percent of Lots Optioned vs peers
Enterprises: Inc. Hovnanian % of Lots Optioned (vo 28a) YAN (ED das) suapury weaig (TO uer) ueUeUAOH (TD 29q) VOLOKH Ya (vo 92q) sanjunuwoy Aunquaa (TO 28q) 48ze8q (v0 28q) a4N¢ (vO 28q) uosH0W, dojAey (vO PO) 1101 FB twa suc Ey (€0 das) ayuiog rt 8 (po 29g) aBeweaw [el (pO AON) PWoH gy —§ (0 das) s
Slide 22: Owned Lots - Years Supply
an ovnani. Enterprises: Inc Hk Owned Lots — Years Supply 8.8. an eS 35 oot fos} bh a Pea] (TO uer) ueJUeUAOH Ss a N N a N fo} m Ss m = m my mo be isa) a & (vd 28q) YAN (€ das) suapury weaig (vd AON) 4euUa7 (TO 29g) UOHOH YG (vO 280) JGW (TO 29q) 4azeag (vO 28q) UOsuOWy sojAey (vO 28q) SaWOH |/W (vO
Slide 23: Inventory Turns (COGS), Last Twelve Months
vnanian Enterprises: Inc Hi Inventory Turns (COGS), Last Twelve Months 2.9x 1.8x 1.7x 13x 13x 09x 10x 10x 10x 10x 10x 10x tix tix 0.8x. 0.6x (pO 280) YAN (gd das) saapuly weag (TD ues) UeJUeUAD}, (vO AON) 4euua7 (TD 98q) YOMOH YG (vO 28q) sewoH 1/1 (pO 28q) SGW (po 28g) eBequayy (pO 28q) uoswuCWy do
Slide 24: Liquidity Position and Target
Liquidity Position and Target Hoeynanian ($ in millions) we $125 $125 $313 omy ~--- fies cog 9125 Target iar | range Al _ on Sees ise s [as eae : Sif ft +t es $181 $188 7/31/2020 10/31/2020 1/31/2021 4/30/2021 7/31/2021 10/31/2021 1/31/2022 4/30/2022 7/31/2022 10/31/2022 1/31/2023 4/30/2023 7/31/202
Slide 25: Debt Maturity Profile
Debt Maturity Profile Hovnar January 31, 2024 ($ in millions) Total Debt Outstanding $957 Annual Interest Incurred $95.4 million $430 11.75% $90 $81 5.00% 10.00% _ I Qi 2 8B BM Qi Q2 BB+ AQ Ql BW BW Qi Qe QO OW Qi 4 4 Q2 24 '24 '24 24 25 "25 '25 ‘25 '26 '26 ‘26 ‘26 ‘27 '27 ‘27 '27 ‘28 28 "29 40 mUns
Slide 26: Balance Sheet Metrics
Balance Sheet Metrics ($ in millions) Equity value (book) $582 $607 $383 $175 $(437) $(490) FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 Qi 2024 Foyt Total debt FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 Qi 2024 26
Slide 27: Guidance for Fiscal 2024 Second Quarter
Guidance for Fiscal 2024 Second Quarter yen ($ in millions) Actuals Guidance 2 2023 2 2024 Total Revenues $704 $675 - $775 Adjusted Homebuilding Gross Margin” 20.9% 21.5% - 23.0% Total SG&A as Percentage of Total Revenues®) 10.7% 11.0% - 12.0% Adjusted EBITDA $87 $80 - $90 Adjusted Income Before Inc
Slide 28: Second Quarter Guidance vs. First Quarter Actuals
Second Quarter Guidance vs. First Quarter Actuals {1 ($ in millions) Total Revenues Qi 2024 Q2 2024 Guidance SG&A as Percentage of Total Revenues 145% Qi 2024 Q2 2024 Guidance Adjusted Gross Margin® 21.8% Qi 2024 Q2 2024 Guidance Adjusted Income Before Income Taxes) Y ec $31 Qt 2024 Q2 2024 Guidance
Slide 29: ROE, Last Twelve Months
ovnanian Enterprises: Inc. Jat ROE, Last Twelve Months 40.1%) 39.7% 32.8% 27.0% 20.2% 21.4% 21.4% 14.6% 14.9% 15.3% 15.6% 15.7% 173% 10.7% 11.5% 12.4% (vO 28q) YAN (€0 das) suapury weaig (vo 22g) 84nd (TO 28q) UOHOH YG (pO PO) |OL (vO 98q) seWOH 1/W (pO 2aq) adequay (vO AON) BWOH gy (po AON) seuUa)
Slide 30: Consolidated EBIT ROI, Last Twelve Months
Consolidated EBIT ROI, Last Twelve Months Hoynanian 78.4% 31.0% Yas 32.8% 28.3% 22.4% 22.9% 23.8% 17.3% 18.3% 19.2% 20.3% 20.8% 9.3% 14.0% 14.4% 3 noms) $66UmGSmUC<“—~CSC“‘ SEUCCHCU o.o606GlCUCGlCUS o o vo > o eo o t oO oe > a oO c oO o 6 ~-8 8 2 58 & 8 8 8 &6 2 §4 8 3 8 8 HH 34 — ae [s) y = wv wn .
Slide 31: Consolidated EBIT ROI Previous Two Years
nanian x Inc Enterpris Hf Consolidated EBIT ROI Previous Two Years Hovnanian Fiscal Year End 2022 81.0% 67.8% 32.4% 32.6% aa 17.2% 22.1% 22.3% 22.5% 23.0% 23.8% 24.1% 25.1% 25.8% 31.7% 32. . (€d das) YAN (ed das) sawoy suapuly weaig (60 das) uo YG (vO 70) uelUeUAD} (EO das) aying (€d das) saniunuwo>
Slide 32: Price to Book Value
ovnanian Enterprises Inc Hk Price to Book Value 5.41 3.70 2.12 ee 2.02 159 1.65 49| lage] fas] feo] fees) fe) fae) |e 0.82 (vO 29d) YAN (£0 das) suapury weaig (TO er) uejUeUACY (vo 22q) ayN¢ (TO 98g) UOHOH YG (vO PO) |1OL (pO AON) szeuua7 (vO 98q) saWwOH 197 (po 28g) Saw (po 28q) seWOH 1/W (vO AON)
Slide 33: Enterprise Value/Last Twelve Months Adjusted EBITDA
« Inc 13.98 ovnanian Enterpris 13.13 9.25 9.67 7.82 7.95 8.08 638 639 639 658 678 710 737 6.32 Enterprise Value/Last Twelve Months Adjusted EBITDA 4.68 (vO 29g) sawoH 197 (vO 28d) YAN (vO 290) JW (vd 22q) sanjunWWwo; Aunqua (ed das) saapury weaig (pO AON) zeuua7 (TO 28g) VOLOKH YG (TO 2aq) 4azeag (v
Slide 34: Price to Earnings Ratio
an ovnani. Enterprises: Inc Hk Price to Earnings Ratio 15.98 fal oon 11.81 10.29 10.38 10.80 11.08 767 7.96 8.71 882 8.84 7.38 5.96 5.79) (vO 28) YAN (pO 29) seWOH [D7 (€0 das) suapuly weag (vO 29d) SGW (vO AON) szeuuaz (pO 28q) saniunuwo5 Aunquaa (TO 28) UOYOH YG (vO 28q) ao WL (vo 28q) 84Nd (vO AO
Slide 35: Appendix
Appendix
Slide 36: 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 37: Credit Quality of Homebuyers
Credit Quality of Homebuyers Fiscal Year 2023 © Average LTV: 82% © Average CLTV: 82% » ARMs: 0.9% o FICO Score: 743 ©» Capture Rate: 70% Note: Loans originated by our wholly-owned mortgage banking subsidiary. Hes nanian Enterprises: Inc First Quarter 2024 © Average LTV: 83% © Average CLTV: 83% » ARM
Slide 38: Number of Monthly Contracts Per Community
ovnanian Enterprises’ Inc Jat Number of Monthly Contracts Per Community, Excludes Unconsolidated Joint Ventures =] ~ 5 wo KS = < bl i 2 x4 wo iq 4 pee} ii aid w g a a 2 fa) Note: Excludes unconsolidated joint ventures. oe +
Slide 39: Land Positions by Geographic Segment
Land Positions by Geographic Segment Hoynaniar January 31, 2024 Owned Excluding t Segment Mothballed Lots Mothballed Lots Optioned Lots Total Lots Northeast 1,743 6 13,223 14,972 Southeast 1,343 # 5,314 6,657 West 4,227 390 7,330 11,947 Consolidated Total 7,313 396 25,867 33,576 Unconsolidated Joint
Slide 40: Phantom Stock Impact
Phantom Stock Impact Hoynanian ($ in millions, except stock prices) Reported Incremental Total SG&A _— Total SG&A Ratio Total SG&A Phantom Stock Adjusted for Adjusted for Ratio Benefit (Expense) Phantom Stock Phantom Stock Stock Price at Reported end of quarter Total SG&A Qt 2021 $51.16 : i: : i: 5
Slide 41: Reconciliation of income before income taxes
Reconciliation of income before income taxes excluding land- Hovnanian related charges and gain on extinguishment of debt, net to income before income taxes Hovnanian Enterprises, Inc. January 31, 2024 Reconciliation of income before income taxes excluding land-related charges and gain on extinguish
Slide 42: Reconciliation of Gross Margin
Reconciliation of Gross Margin Hoynanian Hovnanian Enterprises, Inc. January 31, 2024 Gross margin (In thousands) Homebuilding Gross Margin Three Months Ended January 31, 2024 2023 (Unaudited) Sale of homes $ 573,636 $ 499,645 Cost of sales, excluding interest expense and land charges (1) 448,448 39
Slide 43: Reconciliation of Adjusted EBITDA to Net Income
Reconciliation of Adjusted EBITDA to Net Hoynanian Income Hovnanian Enterprises, Inc. January 31, 2024 Reconciliation of adjusted EBITDA to net income (In thousands) Three Months Ended January 31, 2024 2023 (Unaudited) Net income $ 23,904 $ 18,716 Income tax provision (benefit) 8,659 (669) Interest
Slide 44: Reconciliation of Inventory Turnover
Reconciliation of Inventory Turnover Ht WNE uni an Enterpris Hovnanian Enterprises, Inc. January 31, 2024 Calculation of Inventory Turnover) TM For the quarter ended ended (Dollars in thousands) 4/30/2023 7/31/2023 10/31/2023 1/31/2024 _1/31/2024 Cost of sales, excluding interest $540,622 $483,990 $
Slide 45: Reconciliation of Consolidated EBIT ROI - Current
Reconciliation of Consolidated EBIT ROI - Current Hoynanian in millions, ss ' BZH DHI HOV KBH LEN MDC MHO MTH NVR PHM TOL TMHC TPH LGIH ccs DFH (Dec Qi) (Dec Qt) Gan Qt) (NovQ4) (NovQ4) (DecQ4) (Dec Q4) (DecQ4) (DecQ4) (DecQ4) (OcrQ4) (Dec Q4) (DecQ4) (Dec Q4) (Dec Q4) (Sep Q3) TTM earings before ta
Slide 46: Reconciliation of Consolidated EBIT ROI - FYE 2022
Reconciliation of Consolidated EBIT ROI — FYE 2022) J /yrenen nm —— ‘DHI HOV KBH ‘LEN MDC MHO MTH NVR PHM TOL TMHC TPH LGIH ccs DFH (Sep.Q4) (Sep. Q4) (OctQ4) (Aug Q3) (Aug Q3) (Sep.Q3) (Sep.Q3) (Sep Q3) (Sep.Q3) (SenQ3) (Jul Q3) (SepQ3) (Sep.Q3) (Sep. Q3) (SepQ3) (Sep Q3) TTM earnings before taxes
Slide 47: Reconciliation of Consolidated EBIT ROI - FYE 2021
Reconciliation of Consolidated EBIT ROI— FYE 2021 J /yene Sin mili —- BZH DHT HOV KBH LEN MDC MHO MTH NVR PHM TOL TMHC TPH LGIH CCS DFH (Sep Q4) (Sep Q4) (Oct Q4) (Aug Q3) (Aug Q3) (SepQ3) (SepQ3) (Sep.Q3) (Sep.Q3) (Sep.Q3) (GulQ3) (Sep.Q3) (Sep. Q3) (Sep Q3) (Sep.Q3) (Sep Q3) TTM earings before tax
Slide 48: Key credit and balance sheet metrics reconciliations
Key credit and balance sheet metrics Hoynanian reconciliations October 31, January 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 $99,553 Senior notes and credit facilities (net of discounts, premiu
Slide 49: Hovnanian Enterprises, Inc.
ovnanian Enterprises? Inc.
Hovnanian Enterprises — Q1 2024 Earnings Presentation on 6ix