Hovnanian reports Q3 EPS $9.75 vs. $7.38 last year

Reports Q3 revenue $722.7M vs. $650M last year. Consolidated contracts in the third quarter of fiscal 2024 decreased to 1,192 homes compared with 1,444 homes in the same quarter last year. Contracts, including domestic unconsolidated joint ventures, for the three months ended July 31, 2024, decreased to 1,396 homes compared with 1,600 homes in the third quarter of fiscal 2023. “We are pleased to report strong adjusted EBITDA and adjusted pretax income for the third quarter of fiscal 2024, both of which were above the high end of our guidance,” stated Ara K. Hovnanian, CEO. “While average weekly foot traffic during the third quarter of fiscal 2024 at our communities was consistent with the same period a year ago, there was some choppiness in our third quarter contracts this year due to economic, mortgage rate and geopolitical uncertainty that is impacting homebuyers’ decisions, as well as disruptions from Hurricane Beryl in Texas, our largest state. When you ignore the impact of build for rent contracts from both the third quarter of fiscal 2024 and the third quarter of fiscal 2023, the primary weakness was in our West segment, which includes Texas. Over the past five weeks, contracts have increased approximately 23% compared to the same weeks a year ago. This improved trend suggests that homebuyers have reacted positively to the recent decreasing mortgage rate environment. Last quarter we spoke about shifting our primary focus to growing our business. Our commitment to this shift is evident in the 34% increase in our lot count, 28% year-over-year increase in land and land development spend and 24% growth in our consolidated community count. We believe these investments will lead to future increases in revenue that will better leverage our fixed costs and lead to higher levels of profitability, which in turn should further improve our credit metrics. Our leverage continues to improve, and our ROE and EBIT ROI remain among the best of the peer group. The housing market continues to be driven by positive fundamentals, and we expect to be able to capitalize on these trends and continue to deliver top-tier industry returns to our shareholders.