Hovnanian Enterprises (HOV) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenues were $668 million, near the midpoint of guidance but down from $686 million year-over-year, with sequential improvement in gross margins after a Q1 trough.

• Adjusted homebuilding gross margin was 14.3%, above guidance but below last year's 17.3%; adjusted EBITDA reached $41 million, exceeding guidance.

• Net loss for the quarter was $0.6 million, compared to net income of $19.7 million last year; six-month net income was $20.3 million, down from $47.9 million.

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

• Management focused on transitioning to newer, higher-margin communities and maintaining strong liquidity amid a volatile demand environment.

Financial highlights

• Total revenues declined 3% year-over-year due to 12% fewer home deliveries, though average sales price per home increased 5.3%.

• SG&A was $84 million (12.6% of revenue), at the lower end of expectations but up from 11.7% last year.

• Land sales revenue increased $20.9 million for the quarter, partially offsetting lower deliveries.

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

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

Outlook and guidance

• Q3 2026 revenue guidance is $650–$750 million; adjusted gross margin expected at 14.0%–15.0%; SG&A projected at 12.5%–13.5% of revenue.

• Adjusted EBITDA guidance for Q3 is $30–$40 million; pre-tax income guidance is breakeven to $10 million.

• Management expects 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.

• Management notes difficulty in providing visibility beyond the next quarter due to market volatility.