Hovnanian Enterprises (HOV) investor relations material

Executive summary

• Third quarter fiscal 2026 revenues were $706 million, down from $801 million in Q3 2025, with adjusted homebuilding gross margin at 14.6% versus 17.3% last year, and sequential improvement in gross margins for the second consecutive quarter.

• Adjusted EBITDA was $32 million, within guidance, but adjusted pre-tax income was a $2 million loss, slightly below guidance due to joint venture delivery delays and lower JV income.

• Sales pace remained resilient, with contracts per community above historical averages, though total contracts and consolidated contracts per community declined year-over-year.

• Management remains focused on transitioning to newer communities underwritten for current market conditions, maintaining inventory discipline, and executing amid affordability challenges and high mortgage rates.

• Dollar value of consolidated domestic backlog increased 5% year-over-year, reflecting resilient demand.

Financial highlights

• Q3 2026 total revenues were $705.7M, slightly above guidance midpoint, but down from $800.6M in Q3 2025.

• Homebuilding gross margin before interest and land charges was 14.6%, above guidance midpoint but down from 17.3% last year.

• SG&A ratio was 12.3%, better than guidance, though up from 11.3% last year.

• Adjusted EBITDA was $32 million, within guidance, but down from $77.1 million year-over-year.

• Total liquidity at quarter-end was $379.8M, well above the target range.

Outlook and guidance

• Q4 2026 revenue expected between $800 million and $900 million, with adjusted homebuilding gross margin guidance of 15.0%–16.5%.

• SG&A expected at 10.5%–11.5% of revenue.

• Adjusted EBITDA guidance for Q4 2026 is $50–$65 million; adjusted pre-tax income projected at $15–$30 million.

• Joint venture income forecasted at $10–$20 million.

• Community count expected to rise in Q4 and into 2027 as new communities come online.