Hovnanian Enterprises (HOV) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue was $668 million, near guidance midpoint but down from $686 million year-over-year, with sequential gross margin improvement to 14.3% after a Q1 trough.

• Adjusted EBITDA reached $41 million, above guidance; adjusted pre-tax income was $9 million, at the top end of guidance but down from $29 million year-over-year.

• Incentives, mainly mortgage rate buydowns, declined sequentially for the first time in nearly two years, supporting sales pace.

• Quick move-in inventory (QMI) reduced by 37% year-over-year, with 41% of homes delivered both sold and closed in the same quarter, boosting backlog conversion.

• Management focused on transitioning to newer, higher-margin communities and prudent capital deployment, including share repurchases.

Financial highlights

• Total revenues declined 3% year-over-year due to 12% fewer home deliveries amid a competitive market.

• Adjusted EBITDA to interest incurred ratio was 1.29x for the quarter.

• SG&A was 12.6% of revenue, at the lower end of expectations but up from 11.7% last year.

• Construction costs decreased 2% year-over-year; cycle times for single-family homes improved by six days to 138 days.

• Inventory turnover for the trailing twelve months was 1.7x, among the highest in peer group.

Outlook and guidance

• Q3 2026 revenue expected between $650 million and $750 million; adjusted gross margin 14%-15%; SG&A projected at 12.5%-13.5% of revenue.

• Adjusted EBITDA guidance for Q3 is $30-$40 million; pre-tax income between break even and $10 million.

• Management anticipates sequential improvement in volume and margins in Q4 2026 as deliveries shift to newer, higher-margin communities.

• Guidance assumes stable market conditions with no major increases in mortgage rates or construction cycle times.