Hovnanian Enterprises (HOV) investor relations material

Market environment and industry trends

• U.S. housing production is 5.5 million starts below the long-term average, creating a significant supply shortfall and strong demand for new homes.

• Existing home listings remain well below historical averages, pushing more buyers toward new home builders.

• Mortgage rates, while not historically high, rose sharply in 2022, causing market volatility and slowing sales.

• Builders are using mortgage rate buydowns and other incentives to maintain sales pace and affordability.

• Regulatory hurdles and land approval delays are major obstacles to increasing housing supply.

Strategic initiatives and operational changes

• Shifted from a build-to-order model to a higher proportion of spec (quick move-in) homes, now about 80% of sales, to offer rate certainty and meet buyer needs.

• Community count has remained stable at around 146, with plans for growth into 2026 supported by increased lot control.

• Lots controlled have grown from 29,000 to 40,000 in two years, with a strong focus on asset-light, option-based land control (now 86% by option).

• Diversified product mix across first-time, move-up, and active adult buyers provides resilience against market shifts.

• Efficiency gains realized from higher spec home production, allowing more predictable and efficient scheduling.

Financial performance and outlook

• Q3 revenues increased 11% year-over-year, but margins declined by nearly 500 basis points due to higher incentives.

• SG&A expenses decreased slightly, and pre-tax income rose over the prior year.

• Q4 guidance projects flat revenues, further margin compression, and higher pre-tax income due to joint venture consolidation.

• Adjusted EBITDA for Q4 is expected between $77 million and $87 million.

• Joint ventures are used for projects where land-light strategies are not feasible, especially in capital-intensive active adult communities.