HOV

Image source: The Motley Fool. Thursday, Aug. 20, 2026 at 11 a.m. ET Vice President Investor Relations - Jeffrey T. O'Keefe Chairman and Chief Executive Officer - Ara K. Hovnanian Chief Financial Officer - Brad G. O'Connor Vice President, Corporate Controller - David Mitrisin Vice President, Finance and Treasurer - Paul Eberly Operator: Good morning, and thank you for joining us. Today for the Hovnanian Enterprises fiscal two thousand twenty six third quarter Earnings Conference Call. An archive of the webcast will be available after the completion of the call and run for 12 months. This conference is being recorded for rebroadcast and all are currently in a listen-only mode. Management will make some opening remarks about the third quarter results and then open the lines for questions. The company will be broadcast-- excuse me, webcasting a slide presentation along with the opening comments from management. The slides are available on the Investors page of the company's website at www.khov.com. Those listeners who would like to follow along, should now log in to the website. I would now like to turn the call over to Jeffrey O'Keefe, vice president Investor Relations. Jeffrey, please go ahead. Jeffrey T. O'Keefe: Thank you, Lisa, and thank you all for participating in this morning's call to review the results for our third quarter. All statements on this conference call that are not historical facts should be considered as forward looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 2000. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance or achievements of the company to be materially different from any future results, performance, or achievements expressed or implied by the forward looking statements. Such forward looking statements include, but are not limited to statements related to the company's goals and expectations with respect to its financial results for future financial periods. Although we believe that our plans, intentions, and expectations reflected in suggested by such forward looking statements are reasonable, we can give no assurance that such plans, intentions, or expectations will be achieved. By their nature, forward looking statements speak only as of the date they are made, are not guarantees of future performance or results, and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward looking statements as a result of a variety of factors. Such risks, uncertainties and other factors are described in detail in the sections entitled Risk Factors and Management's Discussion and Analysis, particularly the portion of MD&A entitled Safe Harbor Statement in our Annual Report on Form 10-K the fiscal year ended October 31, 2025, and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable security laws, we undertake no obligation to publicly update or revise any forward looking statements whether as a result of new information, future events, changed circumstances or any other reason. Joining me today are Ara K. Hovnanian, chairman and CEO, Brad O'Connor, CFO, David Mitrisin, Vice President, Corporate Controller, and Paul Eberly, vice president, finance and treasurer. I will now turn the call over to Ara. Ara K. Hovnanian: Thanks, Jeffrey. I will begin with a review of our third quarter results and discuss how we continue to execute our strategy in a housing market that remains challenging. Brad will then review the quarter in more detail and discuss our guidance for next quarter before we open the call for questions. To begin, it is clear that the macro environment has been challenged World events as well as high mortgage rates, high gas prices, inflation, and other factors have caused potential homebuyers to hesitate. While website traffic has remained strong, indicating long term homebuying interest buyers remain slow to make the final decision to move forward. If you turn to slide 5, you can see that total revenues were $706 million slightly above the midpoint of our guidance range that we provided for the quarter. Honestly, we are hoping for a little more, but with almost a third of our deliveries for the quarter coming from new sales in the quarter, it is harder to predict. Gross margin was 14.6%, also above the midpoint of our guidance range. We believe gross margin troughed in the first quarter and we have now seen improvement in the second and third quarters and are guided to continued and more-- excuse me, guiding to continued and more significant improvement in the fourth quarter, and we will describe that more in a moment. Our SG and A ratio was 12.3% which was better than our guidance range. Income from unconsolidated joint ventures was $3 million, which was within the guidance range but below the midpoint and certainly below our expectations. Adjusted EBITDA was $32 million, also within our guidance range. And finally, adjusted pretax was a loss of $2 million slightly below the bottom of our guidance range of $0. The short the shortfall was primarily driven by income from unconsolidated joint ventures, which was the 1 area that came in below the midpoint of our guidance. This was substantially driven by delays at our newest joint venture deliveries. If JV income had been at the midpoint or if new QMI sales were just a little bit stronger, we certainly would have been within the guidance range. We are disappointed that our adjusted pretax income came in slightly below the guidance. Since the fourth quarter of 2020, we have consistently provided guidance 1 quarter in advance and this was the first time in 23 quarters that adjusted pretax income finished below the guidance range. As we discussed for the past several quarters, our strategy has been to maintain sales pace while carefully working through older land inventory that was acquired before today's higher incentive environment became the norm. At the same time, we are bringing on newer communities where the underwriting economics already reflect today's market conditions. Despite the weaker than anticipated level of profitability for the third quarter, the transition from old inventory to new continues to make progress. Now, turning to slide 6. Compared with last year's third quarter, our results continue to reflect the reality of a housing market operating under substantially higher mortgage rates elevated incentives, and concern about global instability which has affected our top line as well. Although the metrics on this slide are below last year's level, we are continuing to manage through the cycle to position ourselves for long term returns. Our inventory position is healthier today, Our land portfolio is significantly better aligned with the market conditions, and our balance sheet remains substantially stronger than it was a few years ago. Slide 7 shows our quarterly contracts declined slightly by 57 homes to 1.36 thousand. The decline reflected the impact of political and financial volatility during the quarter, which contributed to more cautious buyer behavior, as I mentioned just a moment ago. We continue to believe that there is meaningful underlying demand for housing Consumers are visiting communities and shopping for new homes. The challenge remains converting that interest into contracts in an environment where buyers continue to react to the latest news they read. Even with that modest decline, we believe our sales pace remained resilient relative to the broader market backdrop. Looking at our monthly contracts on Slide 8, the choppiness we experienced early in the year continued throughout the third quarter. Since hostilities began with Iran, in March, heightened periods of heightened geopolitical uncertainty. The presence of or absence of a ceasefire, and concerns about access to 2 different straits have generally appeared to move in the same direction as our sales pace. As of yesterday, interestingly, month-to-date contracts in August were up 3% from last year. Consumers are still researching communities as evidenced by the strong website traffic in July 2026, website visits were higher than in all but 1 year since 2019. And the last 2 weeks were higher than any year since 2019. However, the homebuyer decision making process remains uneven as we have been discussing with consumers highly sensitive to changes in affordability and overall news and confidence. When affordability improves or confidence strengthens, we believe this greater website traffic should lead to increased foot traffic. In turn, a larger portion of that foot traffic should convert to sales, but monthly recent monthly sales clearly show buyers are remaining cautious at the moment. Turning to slide 9. Our sales pace remained healthy by historical standards despite the difficult market backdrop. with 9.4 contracts per community, were just above the historical averages. When you look at contracts per community on a monthly basis, as we do on slide 10, you can see that same uneven pattern we have been discussing. We started the quarter with a stronger year over year comparison in May but the pace softened as the quarter progressed with June roughly in line with last year and July below last year's level, So far, as we mentioned, August is just a little stronger than last year. This pattern of ups and downs is consistent with what we said earlier. Our strategy remains relatively straightforward, maintain a healthy sales pace, keep moving inventory, burning through older vintage land, and make certain standing inventory does not build unnecessarily. We believe that approach supports stronger long term returns than attempting to maximize near term pricing at the expense of absorption. 1 area we continue to monitor is incentive activity. As you can see on slide 11, incentives remain elevated relative to historic levels. However, after increasing for several years, incentive levels have decreased from the first quarter to the second quarter to the third quarter. And this happened even though mortgage rates increased during the quarter. Importantly, today's incentive environment is already incorporated into our new underwriting assumptions for the more recent land acquisitions. That distinction definitely matters. When we are delivering homes, from land purchased several years ago, the higher incentives greatly compress margins. When we are delivering homes from communities that were acquired or underwritten with high incentives already assumed, those communities should generate better gross margins. That transition remains 1 of the most important drivers of our future margin recovery. As incentives have come down over the past couple of quarters, our gross margin has improved. On Slide 12, you can see that gross margins have increased sequentially since reaching a low point in the first quarter. This is now 2 quarters of sequential improvement And at the midpoint of our guidance, we expect a larger sequential increase in the fourth quarter to 15.8%. Another indicator that we continue to monitor closely is the percentage of communities where we are able to raise prices or reduce incentives. As you can see on slide 13, we were able to do so in 31% of our communities during the third quarter. We view this as a balanced signal It shows that affordability and confidence continue to limit broad based pricing power, but it also demonstrates that meaning that a meaningful portion of our communities can still support improved net pricing where inventory is well controlled and the local competitive environment is more balanced. If you turn to slide 14, 1 of our objectives over the last 18 months has been to bring QMI inventory to a more balanced level given sales, and we are making substantial progress. Although QMI inventory increased slightly to 6.7 QMIs per community, We are very comfortable with our position today. And we believe our inventory is well aligned with current demand. On slide 15, you can see total QMI inventory has fallen meaningfully by 29% from the levels we experienced in early 2025. This improvement gives us greater flexibility allows us to be more selective with incentives, better manage pricing, and increase the percentage of sales that are generated from to-be-built homes, which generally carry stronger margins. Our teams have done an outstanding job matching starts to demand and maintaining inventory across the portfolio. In the third quarter of 2020 6, 33% of our homes that were delivered, of the homes we delivered, were both sold and closed within the same quarter. It makes it difficult to predict next quarter's results, as we said, Overall, our backlog conversion ratio was 74% and it is still much higher than our historical average of 57% since the third quarter of 2000. So to summarize, while the housing market remains challenging, and affordability continues to weigh on customers, we delivered results that were generally within guidance and maintained sales momentum during the quarter. We are making meaningful progress as newer communities underwritten for today's market become a larger part of our business. With that, I will turn the call over to Brad to discuss our liquidity, land position, and outlook in more detail. Brad G. O'Connor: Thank you, Ara. Turning to slide 16. We finished the third quarter with liquidity well above our target range. The strength of our liquidity continues to provide significant flexibility as we evaluate new land opportunities, support community count growth, and maintain a disciplined approach to capital allocation. While we certainly like to deploy additional capital into attractive opportunities, we remain committed to maintaining our underwriting discipline and will not pursue growth at returns that fail to meet our standards. Turning to slide 17, our debt maturity profile remains well laddered. With no significant near term maturities. This provides us with continued flexibility as we manage through the current market environment the refinancing transaction we completed last fall was an important step in extending our maturity runway and further strengthening the balance sheet. On Slide 18, we show that over the last several years, we have meaningfully reduced debt while simultaneously increasing book equity, As a result, our net debt to cap ratio has improved from where it stood just a few years ago. Today, we remain firmly focused on further strengthening the balance sheet while maintaining the flexibility necessary to capitalize on future growth opportunities. Turning to Slide 19. We ended the quarter with 147 communities, relatively unchanged from 146 communities at the same time last year. Although our total community count was essentially flat year over year, there was meaningful movement within the portfolio. We opened 62 new communities and closed 61 others underscoring the continued refresh of our community base. We continue to expect our community count to increase sequentially in the fourth quarter as newer communities come online. While we have talked about growing community count in the past, it is not grown as quickly as we had anticipated, due in part to our decision to walk away from certain land contracts during due diligence when they did not meet our underwriting standards. At the same time, we remain committed to our land light approach. As you can see on slide 20, our own lot position continues to decrease. While our option lot position grew sequentially for the first time in 6 quarters as we replaced delivered lots with higher margin new lot positions. Turning to Slide 21, option lots represent the vast majority of our control lot portfolio, allowing us to maintain flexibility while limiting invested capital. Here you can see that the percentage of option lots has grown from 46% the third quarter of 2015 to 87% in the third quarter of 2020 6, which is our highest percentage of option lots ever. Slide 22 shows the age of our lot position both owned and optioned. Broken down by the year each lot was controlled. The number in each bar represents the total lot controlled in that year, and the number below each bar indicates the percentage of incentives used on homes delivered during that year. Our controlled opposition remains substantial, but more importantly, the quality of that lot position continues to improve. At the end of the third quarter, 82% of our lots were controlled in fiscal year 23 or later. After incentives had moved substantially above historical levels. That is a significant shift in the portfolio. It means the vast majority of our current lot position was underwritten with today's incentive environment already reflected in the economics rather than based on assumptions from the time when incentives were much lower. An increasing percentage of our deliveries are expected to come from lots acquired under today's market assumptions. As those communities become a larger part of our mix, we believe they will provide stronger margins and stronger returns than many of the communities they are replacing. The land market continues to present select opportunities that meet our underwriting hurdles, and we remain patient and disciplined our land evaluation. Given the continued variability in the sales environment, and the timing effects associated with QMI deliveries, we are providing financial guidance for the next quarter only. Our outlook assumes market conditions remain broadly stable with no major increases in mortgage rates tariffs, inflation, cancellation rates, or construction cycle times. As a greater portion of our deliveries come from QMIs, quarterly results can be more sensitive to closing timing and mix. Our forecast includes ongoing use of mortgage rate buy downs and similar incentives and it does not include any changes to SG&A from phantom stock expense tied to stock price movement from the $123.90 closing price at the end of the third quarter of fiscal 2026. On Slide 23, we show our guidance for the fourth quarter. We expect continued progress as more homes are delivered from our newer communities. We expect total revenues between $800 million and $900 million Adjusted gross margin is expected to be in the range of 15% to 16.5%. We expect SG&A as a percentage of total revenues to be between 10.5% to 11.5%. Which remains above our long term objective. We expect income from joint ventures to be between $10 million and $20 million and our guidance for adjusted EBITDA is between $50 million and $65 million Our expectation for adjusted pretax income for the fourth quarter is between $15 million and $30 million We remain focused on execution and believe our positioning today supports continued improvement moving forward. I will now turn it back over to Ara for some closing remarks. Ara K. Hovnanian: Thanks, Brad. When we look at this housing cycle, we are focused less on the results of a single quarter and more on how we are positioned for the years ahead. Turning to slide 24, these 5 priorities on the slide, which I will describe more in detail in a moment, reflect the strategic framework that we are using to guide our operating decisions. Slide 25. Sales pace leadership. Here, we show that we are maintaining 1 of the stronger sales pace in the industry. it is not happening by accident. We are keeping communities actively selling, aligning prices, incentives, and production with local demand, and staying focused on converting consistent sales velocity. In a market where affordability remains challenging, and buyer confidence can shift quickly sustaining this level of absorption is an important part of our strategy. We want to burn through the older land, as we have said many times, and perform for our land sellers as well. You can see on this slide how our contracts per community would stack up against our peers who report on a June quarterly basis. Our contracts per community of 10.2 ranks us third out of these peers. On slide 26, we show that our sales pace increased year over year while many builders were flat or down. Again, ranking us third if we had a June quarter end. In our view, that demonstrates we are getting more than our fair share of the market, even in a difficult selling environment. By staying disciplined on pricing incentives and production, we are keeping buyers engaged in converting demand into contracts at a rate that compares favorably with the industry even as it is going through a difficult time. On slide 27, we show another important element of our strategy, capital efficiency. At 87%, option lots. We control more of our lots through options than the majority of our peers. That allows us to secure future community growth while limiting the amount of capital tied up in land. By using options with sellers and strategic land partners, we can minimize the investment in long duration communities and maintain the flexibility to align our land pipeline with actual market demand. On slide 28, we show that we have the second highest inventory turn rate in the industry and this is a relative position that we have maintained over time. This reflects disciplined execution across the business, keeping our build cycles efficient, converting starts into deliveries quickly, and limiting standing inventory. Faster inventory turns help preserve our pricing power reduce carrying costs, and allows us to recycle capital more efficiently into new communities and other growth opportunities. On slide 29, you can see how our higher percentage of option lots combined with higher inventory turns translates into 1 of the highest EBIT ROIs among our small to midsized peers. This is the result of evaluating decisions through the lens of inventory efficiency and return on capital, allocating capital to communities and opportunities where we see the best returns, balancing growth, margins, and cash flows, to maximize long term value creation. On slide 30, we highlight the continued shift in our portfolio toward higher price points and higher value buyer segments. As we make this shift, we are reducing our exposure to the most competitive entry level price points and placing a greater emphasis on move up buyers and active adult housing. To support that strategy, we recently hired Deborah Blake a veteran active adult lifestyle expert to bring additional focus to our 4 Seasons brand and communities where we can differentiate through elevated design, quality, and included features. We believe this portfolio shift can help broaden our appeal to buyers who have greater financial flexibility while supporting stronger margins and returns over time. Taken together, these slides show how a strategy focused on generating sales pace capital efficiencies, and returns can be better for the long term than just simply growing for growth's sake or chasing margin. We are maintaining 1 of the strongest sales paces in the industry capturing more than our fair share of demand and using our land light model and faster inventory turns to drive 1 of the strongest EBIT ROI return profiles among our small and midsized peers. As we shift more of our portfolio to higher value buyer segments including move up and active adult communities, we believe we are positioning the company for stronger margins better capital returns, and long term shareholder value creation. The housing market undoubtedly remains challenging, and we do not pretend otherwise. But we like where we are positioned, We have great people, strong liquidity, a disciplined land strategy, and a clear focus on returns. We believe those advantages position us well to create value for our shareholders over the longer term. With that, operator, we will be glad to open it up for questions. Operator: Thank you. If you would like to ask a question, please press 1-1 on your telephone. You will hear an automated message advising your hand is raised. If you would like to remove yourself from the queue, press 1-1 again. We also ask that you wait for your name and company to be announced before proceeding with your question. 1 moment while we compile the Q and A roster. Our first question is coming from the line of Natalie Kulasekere of Zelman & Associates. Please go ahead. Natalie Kulasekere: Hey, good morning. Thank you for taking my question. So I see here on your presentation that construction cost per square foot ticked higher this quarter. So I know it is a fractional increase, but could you talk a little bit about what drove that And if it is fuel or lumber related, what sort of success have you had in negotiating this cost lower for the coming quarters? Brad G. O'Connor: The primary-- let me-- there, yeah. there is I mean, it is not a very large increase. there is been minor increases in a few areas, and we are seeing lumber start to increase as you point out. We do continue to look for ways and push back on both material and labor supply you know, in all of our communities. Looking for opportunities to drive those costs down. As you will see on that same slide, we brought cost down quite a bit since the beginning of 2025. It troughed in the last quarter, and now it is just gone back up slightly. So it is not a significant change, and we do continue to look for ways to bring down our costs. Natalie Kulasekere: Okay. Thank you. And we have been hearing more chatter about ICE raids over the past month. So have you experienced any disruptions to your operations in any of the markets because of this? Brad G. O'Connor: I have not heard of any ICE raids lately. it is been a while actually since I have heard about that in any of our communities. Of note, I think the last 1 I have heard about was probably 3 or 4 months ago. Ara K. Hovnanian: Yes. it is been relatively quiet. I mean, the overwhelming majority of our trades obviously use all legal workers. So do not expect problems. And, frankly, with demand a little on the low side, labor has not been an issue right now. Got it. Thank you. Operator: Thank you. 1 moment for the next question. Our next question is coming from the line of Alex Barron of Housing Research Center. Please go ahead. Alex Barron: Yes. Good morning, I guess. Morning. I just wanted to see if you guys could discuss a bit about your outlook on what incentives you believe are likely to do at the moment or how your strategy has been shifting And, also, can you discuss a bit more, bringing the Saudi Arabia stuff on balance sheet? Ara K. Hovnanian: So I will tackle it, and Brad, you can fill in a little bit more. You know, as we mentioned, even though mortgage rates increased during this quarter, more or less I mean, we were not anticipating any increase that it did increase quite a bit. But incentives managed to go down. Obviously, you know, today, mortgage rates crept up again So you know, it is difficult to try to project. what is going to happen with incentives or crystal ball on what is going to happen with long-term rates is just not super clear. But what is clear is that we are getting a greater percentage of our deliveries from newer properties where we have already anticipated higher incentives during underwriting that will help. Even if they creep up just a little bit. I forgot the second part of your question. Brad G. O'Connor: The second question was KSA. That was HOV Global area. So the I do not know exactly, Alexander, what you are asking, but in the first quarter, we brought we consolidated what was a joint venture, and you can see if you look at the balance sheet, the change from year end to July, a lot of the changes in inventory, customer deposits, receivables deposits, notes are a result of that consolidation. We talk about that some in the queue, so you could certainly take a look there. Even the last Q would talk about it. That we really have not seen any that business is kind of in between communities at the moment. We are not really seeing we do not really have any deliveries coming, in this year so far. But we are expecting some deliveries to begin to happen in the fourth quarter and then in 2027. So we will start to talk about it a little bit more when that starts to happen. At the moment, it is really a non event in our income statement. Because there is really no delivery or active delivery activity yet. Ara K. Hovnanian: And I think the same is true for the balance sheet. We have very little invested there. it is just not a so far, it has not been a capital intensive market. Especially as most of our buyers are doing stage payments, which really reduces the amount of capital we need to invest. there. Alex Barron: So how should we think about you know, the backlog and when that is likely to start to get delivered or what the first year deliveries is likely to look like. Brad G. O'Connor: Well, I think as I mentioned, you will start to see some deliveries in the fourth quarter. And then once that starts to happen as we are giving next year's projections, we will we will probably start to be able to give you more guidance about that. Alex Barron: Okay. Thank you. Yep. Ara K. Hovnanian: Yeah. Overall, I would not be overly focused on Saudi. it is a minor investment and minor activity. Relatively speaking. We are hoping over the long term to make it a greater and more meaningful part of our business. But at the moment, we are really keeping it on the lower side. Operator: As a reminder, if you would like to ask a question, please press 1-1 on your telephone. 1 moment for the next question. Our next question is coming from the line of Jay McCanless of Citizens. Please go ahead. Jay McCanless: Hey, good morning, everyone. When I look at the total revenue guide of 800 million to 900 million is there any land sales contemplated in that number? Or is that all increase in housing sales? Brad G. O'Connor: No land sales are assumed in that in that number. Jay McCanless: Okay. Could you talk about what you guys are expecting for an ASP this quarter? Brad G. O'Connor: I would say if you if you looked at our most recent quarter actuals, It should not be that significantly different than that. You are going to just gradually see our ASP go up quarter over quarter as we are bringing in new communities. And moving away from the first time aspire products we have talked about. But it is going to take time for that to happen. So you will just see a very gradual increase in ASP Quarter to quarter. Jay McCanless: That was actually going to be my next question, Brad, is what are you guys thinking for next year? So just mix of more move-up buyers is going to bring that ASP up, you think? Brad G. O'Connor: Yes. Just it is gonna take time, but, yeah, that is right. You are going to see that over the coming years. I think our ASP will continue to move up as we move away from Aspire. Jay McCanless: Yeah. Gotcha. And then the next question on community count, any idea as to when that is going to inflect and start to move higher? This is the third quarter in a row where community count's been down sequentially. Brad G. O'Connor: Yeah. We did mention that the fourth quarter, we do expect it to be up. And then we do expect growth in 2027. As I mentioned, we have unfortunately, we have been saying that. It has not been coming to fruition. And it is because we have had a number of communities that we have walked away from at various stages primarily during due diligence or before the land is purchased. But that is hurt our ability to get growth we have talked about. We have a lot of new communities that we have done, 62 in the last 12 months, but not getting growth yet. But we do anticipate you know, barring any significant changes to the market that you know, force us to consider walking away from additional deals. We expect growth to happen in the fourth quarter and then into 2027. Jay McCanless: Gotcha. And then really good news on the gross margin front. I guess, how sustainable is that from going from 4Q to 1Q? Think you are going to lose some volume sequentially. But do you think without giving guidance, you think there is a possibility you could be close to that gross margin number? Or if not, what has been the historical degradation from April to January just, you know, given the lack of volume? Or the or the lower volume between January versus April? Brad G. O'Connor: I think you are basically stating it correctly. I mean, the we should continue to see a trend of improvement from where we are today. There was likely be maybe a little degradation from the fourth quarter to the first as we typically see from the volume as you point out. But you know, that is probably typically 30 to 50 basis points, something in that range. So Okay. I think you would still see improvement from the third quarter to the first quarter you know, if the market does not change, if that helps answer your question. Jay McCanless: Yeah. that is great. Thank you. And then the last 1 I had, with all the M&A this year, and I know a lot of these deals are recently closed or soon to be closed. I guess, are you seeing any opportunities on the land side either from, like, full packages or 1 off communities, anything that is coming to market that might help you guys grow the community count a little faster? Ara K. Hovnanian: We definitely are. Looking at oh, go ahead, Ara. Yeah. No, I was just gonna say we are obviously are seeing land opportunities from a variety of sources. This quarter, as we mentioned during the call, we had positive progress in our lots controlled. We optioned and controlled more lots during the quarter than we delivered homes. Some of it you know, can be coming from the, M&A activity. Some of it is coming from other of our peers that are walking that are walk from communities just like we are doing. That do not make economic sense for them. And then sometimes that same land seller can keep the previous deposit and reduce prices to make it enticing to resell it. So we are definitely seeing that, including some that are finished lots, which is particularly helpful. So, we are optimistic, and we are actually really gearing up in our land acquisition teams across the country. We know we need scale. We really need scale, we are trying to make a concerted effort If not through M&A opportunities and by being more aggressive in searching for land that meets our underwriting criteria. Okay. that is great. Thank you, guys. I appreciate Thank you. Operator: Thank you. And that concludes the Q and A session. I would like to turn the call back over to Ara for closing remarks. Please go ahead. Ara K. Hovnanian: Great. Thank you very much. You know, considering the environment, we are not overly surprised by the results, but we very much look forward to producing better results and reporting better results the next quarter and certainly next year as well. Thanks so much. Operator: Thank you for participating in today's program. You may now disconnect. Before you buy stock in Hovnanian Enterprises, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Hovnanian Enterprises wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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This article first appeared on GuruFocus. Total Revenues: $706 million, slightly above the midpoint of the guidance range. Gross Margin: 14.6%, above the midpoint of the guidance range. SG&A Ratio: 12.3%, better than the guidance range. Income from Unconsolidated Joint Ventures: $3 million, within the guidance range but below the midpoint. Adjusted EBITDA: $32 million, within the guidance range. Adjusted Pre-Tax Income: Loss of $2 million, slightly below the bottom of the guidance range. Quarterly Contracts: 1,359 homes, a decline of 57 homes year-over-year. Sales Pace: 9.4 contracts per community, above historical averages. QMI Inventory: 6.7 QMIs per community, with total QMI inventory down 29% from early 2025 levels. Community Count: 147 communities, relatively unchanged from 146 in the same period last year. Fourth Quarter Guidance: Total revenues between $800 million and $900 million; adjusted gross margin between 15% and 16.5%; SG&A as a percentage of total revenues between 10.5% and 11.5%; income from joint ventures between $10 million and $20 million; adjusted EBITDA between $50 million and $65 million; adjusted pre-tax income between $15 million and $30 million. Warning! GuruFocus has detected 7 Warning Signs with HOVNP.PFD. Is HOVNP.PFD fairly valued? Test your thesis with our free DCF calculator. Release Date: August 20, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Gross margins improved sequentially for the second consecutive quarter, with guidance indicating a larger increase in Q4 to 15.8%. Incentives have decreased from Q1 to Q3, even as mortgage rates rose, and 31% of communities saw improved net pricing. QMI inventory has been reduced by 29% from early 2025 levels, providing greater flexibility and better alignment with demand. The company maintains a strong sales pace, ranking third among peers with 10.2 contracts per community, and August contracts are up 3% year-over-year. Liquidity remains well above target, with a strong balance sheet and no significant near-term debt maturities, supporting future growth opportunities. Adjusted pre-tax income fell slightly below the guidance range, marking the first miss in 23 quarters, driven by lower-than-expected JV income. Quarterly contracts declined by 57 homes year-over-year due to geopolitical volatility and cautious buyer behavior. The macro environment remains challenging, with high mortgage rates, inflation, and global instability causing buyers to hesitate. Community count remained flat year-over-year and declined sequentially for the third consecutive quarter, with growth delayed by walking away from land deals. Construction costs per square foot ticked higher in the quarter, driven by minor increases in materials like lumber. Q: Can you discuss your outlook on incentives and the strategy for bringing the Saudi Arabia (HOV Global) business onto the balance sheet?A: Ara Hovnanian (Chairman & CEO) noted that despite mortgage rates increasing during the quarter, incentives managed to decline, though projecting future rates is difficult. The key driver for margin recovery is the increasing percentage of deliveries from newer communities underwritten with higher incentives already assumed. Regarding Saudi Arabia, Brad O'Connor (CFO) explained that the consolidation of the joint venture occurred in the first quarter, but it is currently a "non-event" on the income statement with no deliveries yet. They expect initial deliveries to begin in the fourth quarter and into 2027, with minimal capital invested due to stage payments from buyers. Q: What drove the slight increase in construction cost per square foot this quarter, and what success have you had negotiating costs lower?A: Brad O'Connor (CFO) stated the increase was not significant, with minor increases in a few areas, including lumber. He emphasized that the company continues to push back on material and labor supply costs across all communities. He highlighted that costs have been brought down considerably since the beginning of 2025, and the current uptick is a slight reversal from the trough seen last quarter. Q: Is there any land sales contemplated in the fourth-quarter revenue guidance of $800 million to $900 million, and what is the expected ASP for the quarter?A: Brad O'Connor (CFO) confirmed that no land sales are assumed in the revenue guidance. Regarding ASP, he stated it should not be significantly different from the third-quarter actuals. He reiterated that ASP will gradually increase quarter-over-quarter as the company brings in new communities and shifts away from the first-time buyer Aspire product, though this transition will take time. Q: When do you expect community count to inflect and start moving higher, given it has been down sequentially for three quarters?A: Brad O'Connor (CFO) reiterated that they expect community count to be up in the fourth quarter and to grow in 2027. He acknowledged that previous growth expectations have not come to fruition due to walking away from deals during due diligence that did not meet underwriting standards. However, barring significant market changes, they anticipate growth in the fourth quarter and into 2027. Q: How sustainable is the gross margin improvement from the fourth quarter to the first quarter, and what is the historical degradation?A: Brad O'Connor (CFO) stated that the trend of improvement should continue, though there could be a slight degradation from the fourth quarter to the first quarter due to lower volume, typically around 30 to 50 basis points. He noted that even with this seasonal dip, there should still be improvement from the third quarter to the first quarter if market conditions remain stable. Q: Are you seeing any opportunities on the land side, either from full packages or one-off communities, that might help grow community count faster?A: Ara Hovnanian (Chairman & CEO) confirmed they are seeing land opportunities from various sources, including M&A activity and peers walking away from communities. He noted that land sellers may keep previous deposits and reduce prices to make reselling enticing, including finished lots. The company is gearing up its land acquisition teams across the country to be more aggressive in searching for land that meets underwriting criteria, as they recognize the need for scale. Q: Have you experienced any disruptions to operations due to ICE raids in your markets?A: Brad O'Connor (CFO) stated he has not heard of any recent ICE raids in their communities, with the last one being three or four months ago. Ara Hovnanian (Chairman & CEO) added that the overwhelming majority of their trades use legal workers, so they do not expect problems, and labor has not been an issue given the current lower demand. Q: How should we think about the backlog for the Saudi Arabia business and when deliveries are likely to start?A: Brad O'Connor (CFO) explained that some deliveries will begin in the fourth quarter, and once that starts, they will be able to provide more guidance on next year's projections. Ara Hovnanian (Chairman & CEO) added that investors should not be overly focused on Saudi Arabia as it is a minor investment and activity, though they hope to make it a more meaningful part of the business over the long term. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was impacted by a challenging macro environment where high mortgage rates, inflation, and geopolitical uncertainty caused potential buyers to hesitate despite strong underlying interest. Management is executing a transition from older land inventory acquired before the current high-incentive environment to newer communities underwritten with today's market conditions in mind. Gross margin was 14.6% for the quarter. reflects a sequential recovery from a first-quarter trough, driven by the gradual burn-through of older, lower-margin vintage land. Sales pace remained resilient at 9.4 contracts per community, as the company prioritized maintaining absorption and moving inventory over maximizing near-term pricing. The company is strategically shifting its portfolio toward higher value segments, including move-up and active adult housing, to reduce exposure to highly competitive entry-level price points. Operational efficiency remains a core focus, evidenced by maintaining the second-highest inventory turn rate among peers and utilizing a land-light model with 87% optioned lots. Fourth-quarter guidance assumes stable market conditions with no major increases in mortgage rates, inflation, or construction cycle times. Management expects significant sequential gross margin improvement to 15.8% at the midpoint for Q4 as newer communities represent a larger share of deliveries. Community count is projected to increase sequentially in the fourth quarter and continue growing into fiscal 2027 as new projects come online. The company anticipates a gradual increase in Average Selling Price (ASP) over the coming years as the product mix shifts away from the entry-level 'Aspire' brand. Financial forecasts include the ongoing use of mortgage rate buy-downs and assume no changes to SG&A from phantom stock expense tied to the current stock price. Adjusted pretax income finished slightly below guidance for the first time in 23 quarters, primarily due to delivery delays at a new unconsolidated joint venture. The company consolidated its Saudi Arabia joint venture (HOV Global) onto the balance sheet, though it remains a minor investment with deliveries not expected until Q4 and 2027. Management has walked away from certain land contracts during due diligence that failed to meet strict underwriting standards, which has slowed anticipated community count growth. Incentive levels have decreased for two consecutive quarters despite rising mortgage rates, though they remain elevated relative to historical norms. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted minor increases in lumber and materials but emphasized that costs remain significantly lower than early 2025 levels. The company continues to push back on material and labor suppliers to drive costs down, noting that labor availability is currently not an issue due to lower demand. Management expects a typical seasonal degradation of 30 to 50 basis points from Q4 to Q1 due to lower volume. Despite seasonal dips, the underlying trend is expected to show year-over-year improvement as the portfolio mix shifts toward newer, higher-margin land. Hovnanian is seeing increased land opportunities from peers walking away from deals and from sellers reducing prices on previously deposited land. The company is actively gearing up land acquisition teams to gain scale, focusing on finished lots that meet current underwriting criteria.

Interested in Hovnanian Enterprises Inc? Here are five stocks we like better. Q3 results were mixed: Revenue reached $706 million and adjusted gross margin was 14.6%, both around the midpoint of guidance, but adjusted pre-tax income was a $2 million loss due mainly to delayed deliveries and weaker income from unconsolidated joint ventures. Buyer caution weighed on sales: Contracts fell to 1,359 homes, down 57 from the prior year, as affordability concerns and market volatility kept buyers hesitant despite strong website traffic and a modest improvement in August sales. Management expects a stronger Q4: Hovnanian forecasts $800 million–$900 million in revenue, adjusted EBITDA of $50 million–$65 million and adjusted pre-tax income of $15 million–$30 million, assuming broadly stable mortgage rates, costs and cancellation rates. PulteGroup Wins and Wins More on Interest Rate Cuts Hovnanian Enterprises (NYSE:HOV) reported fiscal 2026 third-quarter revenue of $706 million, slightly above the midpoint of its prior guidance range, as the homebuilder navigated a housing market marked by elevated mortgage rates, incentives and cautious consumer behavior. Adjusted gross margin was 14.6%, also above the midpoint of guidance, while adjusted EBITDA totaled $32 million. The company posted an adjusted pre-tax loss of $2 million, below its guidance range, which had called for break-even results or better. Chairman and Chief Executive Officer Ara Hovnanian said the shortfall primarily reflected lower-than-expected income from unconsolidated joint ventures, driven substantially by delivery delays at its newest joint ventures. → Datavault AI Locks Down CyberCatch in $94M Security Rollup It’s Time to Ring the Register on Hovnanian Stock “This was the first time in 23 quarters that adjusted pre-tax income finished below the guidance range,” Hovnanian said. He added that results would have fallen within the range if joint-venture income had reached the midpoint of guidance or if quarterly quick move-in sales had been modestly stronger. Third-quarter contracts declined by 57 homes from the prior-year period to 1,359 homes. The company generated 9.4 contracts per community during the quarter, a level Hovnanian characterized as slightly above its historical average. Management said website traffic remained strong, though potential buyers have been hesitant to finalize purchases amid affordability concerns and geopolitical and financial volatility. → Michael Burry Is Betting Against Palantir Again—Should Investors Care? Homebuilder Hovnanian Increases Revenue, Raises Full-Year Guidance Hovnanian said August month-to-date contracts were up 3% from a year earlier. Website visits in July were higher than in all but one year since 2019, while traffic during the final two weeks of the month exceeded levels from any year since 2019, according to the company. However, sales patterns remained uneven. Management said May showed a stronger year-over-year comparison, June was roughly in line with the prior year, and July trailed the prior-year level before August improved modestly. → Home Depot Analysts See a Path to $375 and Beyond The company’s strategy has centered on maintaining sales pace, working through older land inventory acquired before incentives became more prevalent, and avoiding excessive quick move-in, or QMI, inventory. During the quarter, 33% of delivered homes were both sold and closed within the same quarter. Hovnanian’s backlog conversion ratio was 74%, above its historical average of 57% since the third quarter of fiscal 1998. Management said gross margin has improved sequentially for two quarters after reaching what it views as a low point in the first quarter. Incentives remained elevated compared with historical levels but declined from the first quarter through the third quarter, even as mortgage rates increased during the latest period. Hovnanian said 31% of its communities were able to either raise prices or reduce incentives during the third quarter. Management said newer communities are expected to support improved margins because they were underwritten with higher incentive levels already incorporated into projected returns. The company’s QMI inventory rose slightly to 6.7 homes per community, but total QMI inventory has fallen 29% from early fiscal 2025 levels. Management said the lower inventory position provides greater flexibility in managing incentives and pricing and could increase the portion of sales generated from to-be-built homes, which generally carry higher margins. Chief Financial Officer Brad O’Connor said construction costs per square foot increased slightly during the quarter, with minor increases in several areas and lumber beginning to rise. He said the company continues to seek reductions in material and labor costs, noting that costs remain below levels seen at the beginning of fiscal 2025. Hovnanian ended the quarter with 147 communities, compared with 146 communities a year earlier. The company opened 62 new communities and closed 61 over the past 12 months. O’Connor said the company expects community count to increase sequentially in the fiscal fourth quarter and to grow in fiscal 2027, barring market developments that cause it to abandon additional land deals. Management said community-count growth has been slower than anticipated because the company has walked away from certain land contracts during due diligence when they did not meet underwriting standards. Hovnanian said it is increasing its focus on land acquisition opportunities, including potential opportunities arising from industry merger-and-acquisition activity and from competitors exiting projects. The company continued to emphasize its land-light strategy. Option lots represented 87% of its controlled lot portfolio at the end of the third quarter, the highest percentage in company history. In addition, 82% of controlled lots were acquired or controlled in fiscal 2023 or later, when elevated incentive levels had already become part of underwriting assumptions. Management said the company is also shifting its portfolio toward higher-priced move-up buyers and active-adult communities, while reducing exposure to highly competitive entry-level price points. Hovnanian recently hired Deborah Blake, described as an active-adult lifestyle expert, to support its Four Seasons brand and related communities. For the fiscal fourth quarter, Hovnanian forecast revenue of $800 million to $900 million, with no land sales assumed in that outlook. The company expects adjusted gross margin of 15% to 16.5%, SG&A expense equal to 10.5% to 11.5% of revenue, and joint-venture income of $10 million to $20 million. Adjusted EBITDA is projected at $50 million to $65 million. Adjusted pre-tax income is projected at $15 million to $30 million. The outlook assumes broadly stable market conditions, including no major increases in mortgage rates, tariffs, inflation, cancellation rates or construction cycle times. O’Connor said the company’s fourth-quarter results could be sensitive to delivery timing and product mix because a larger portion of deliveries is coming from QMIs. He also said average selling prices should rise gradually over time as the company brings on newer communities and moves away from its first-time-buyer Aspire product line. Regarding Hovnanian’s Saudi Arabia-related business, management said the recently consolidated operation is between communities and has had limited income-statement impact to date. The company expects some deliveries to begin in the fourth quarter, with additional activity expected in 2027, while emphasizing that the business remains a minor investment and activity level for now. Hovnanian Enterprises, Inc is a publicly traded homebuilding company primarily engaged in the acquisition, development and construction of residential properties. Headquartered in Red Bank, New Jersey, the company operates through a network of regional homebuilding divisions that design and deliver a range of housing solutions, including single-family detached homes, townhomes and condominiums. Hovnanian combines land development, architectural design and construction services with in-house mortgage and insurance offerings to provide a comprehensive homebuying experience. The company markets its communities under several branded product lines tailored to different buyer segments and price points. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Hovnanian Enterprises Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Met or Exceeded Guidance on Nearly All Metrics ProvidedGross Margins Improved Sequentially for Second Quarter in a RowThe Dollar Value of Consolidated Domestic Backlog Increased 5% Year Over Year MATAWAN, N.J., Aug. 20, 2026 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its fiscal third quarter and nine months ended July 31, 2026. RESULTS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED JULY 31, 2026: Total revenues were $705.7 million in the third quarter of fiscal 2026, which was within the guidance range we provided, compared with $800.6 million in the same quarter of the prior year. For the nine months ended July 31, 2026, total revenues were $2.01 billion compared with $2.16 billion in the first nine months of fiscal 2025. Domestic unconsolidated joint ventures sale of homes revenues for the third quarter of fiscal 2026 was $155.6 million (225 homes) compared with $165.0 million (245 homes) for the three months ended July 31, 2025. For the first nine months of fiscal 2026, domestic unconsolidated joint ventures sale of homes revenues was $353.9 million (524 homes) compared with $441.2 million (649 homes) in the nine months ended July 31, 2025. Homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 11.8% for the three months ended July 31, 2026, compared with 11.7% during the third quarter a year ago. In the first nine months of fiscal 2026, homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 10.8% compared with 13.5% in the same period of the prior fiscal year. Homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 14.6% during the fiscal 2026 third quarter, which was within the guidance range we provided, compared with 17.3% in last year’s third quarter. For the second quarter in a row, gross margins, on both a GAAP and non-GAAP basis, improved sequentially in the third quarter as margins rebounded from the first-quarter trough. For the nine months ended July 31, 2026, homebuilding gross margin percentage, before cost of sales interest expense and land charges, was 14.2% compared with 17.6% in the first nine months of the previous fiscal year. Total SG&A was $86.9 million, or 12.3% of total revenues, in the third quarter of fiscal 2026, which was better than the guidance range we provided, compared with $90.8 million, or 11.3% of total revenues, in the third quarter of fiscal 2025. Total SG&A was $254.9 million, or 12.7% of total revenues, in the first nine months of fiscal 2026 compared with $258.3 million, or 12.0% of total revenues, in the first nine months of the previous fiscal year. Total interest expense was $30.5 million, or 4.3% of total revenues, for the third quarter of fiscal 2026, compared with $34.0 million, or 4.2% of total revenues, for the third quarter of fiscal 2025. For the nine months ended July 31, 2026, total interest expense was $87.7 million, or 4.4% of total revenues, compared with $92.0 million, or 4.3% of total revenues, in the first nine months of the previous fiscal year. Loss before income taxes for the third quarter of fiscal 2026 was $2.8 million compared with income of $23.8 million in the third quarter of the prior fiscal year. For the first nine months of fiscal 2026, income before income taxes was $26.3 million compared with $90.2 million during the first nine months of the prior fiscal year. Loss before income taxes, excluding land-related charges, was $2.3 million in the third quarter of fiscal 2026, compared with income before these items of $39.8 million in the third quarter of fiscal 2025. For the nine months ended July 31, 2026, income before income taxes excluding land-related charges and gain on extinguishment of debt, net was $37.9 million compared with income before these items of $109.9 million in the same period of fiscal 2025. Net loss available to common stockholders was $4.5 million, or $0.70 per diluted common share, for the three months ended July 31, 2026, compared with net income available to common stockholders of $13.9 million, or $1.99 per diluted common share, in the same period of the previous fiscal year. For the first nine months of fiscal 2026, net income available to common stockholders was $10.8 million, or $1.55 per diluted common share, compared with net income available to common stockholders of $56.5 million, or $7.94 per diluted common share, during the first nine months of fiscal 2025. EBITDA was $31.4 million for the third quarter of fiscal 2026 compared with $61.0 million for the third quarter of the prior year. For the first nine months of fiscal 2026, EBITDA was $124.5 million compared with $190.7 million in the same period of the prior year. Adjusted EBITDA was $31.9 million for the quarter ended July 31, 2026, which was within the guidance range we provided, compared with $77.1 million in the third quarter of the prior fiscal year. For the first nine months of fiscal 2026, adjusted EBITDA was $136.1 million compared with $210.4 million in the same period of the prior year. Consolidated domestic contracts(1) in the third quarter of fiscal 2026 decreased 4.6% to 1,155 homes ($622.6 million) compared with 1,211 homes ($619.6 million) in the same quarter last year. Domestic contracts, including domestic unconsolidated joint ventures, for the three months ended July 31, 2026, decreased 4.0% to 1,359 homes ($760.2 million) compared with 1,416 homes ($749.0 million) in the third quarter of fiscal 2025. As of July 31, 2026, the number of consolidated domestic communities was 123, compared with 124 as of July 31, 2025. Including domestic unconsolidated joint ventures, domestic community count was 147 as of July 31, 2026 compared with 146 as of July 31, 2025. Consolidated domestic contracts per community decreased 4.1% year-over-year to 9.4 in the third quarter of fiscal 2026, compared to 9.8 in the same quarter of fiscal 2025. When including domestic unconsolidated joint ventures, domestic contracts per community decreased 5.2% to 9.2 for the three months ended July 31, 2026, compared with 9.7 in the prior-year period. The dollar value of consolidated domestic contract backlog, as of July 31, 2026, increased 5.1% to $881.9 million compared with $838.8 million as of July 31, 2025. The dollar value of domestic contract backlog, including domestic unconsolidated joint ventures, as of July 31, 2026, increased 4.8% to $1.16 billion compared with $1.10 billion as of July 31, 2025. The gross domestic contract cancellation rate for consolidated contracts was unchanged year over year at 19% for the quarter ended July 31, 2026. The gross domestic contract cancellation rate for contracts, including domestic unconsolidated joint ventures, was 18% for the third quarter of fiscal 2026 compared with 19% in the third quarter of the prior year. For the trailing twelve-month period our net income return on inventory was 1.0% and our adjusted earnings before interest and income taxes return on investment (Adjusted EBIT ROI) was 13.1%. For the most recently reported trailing twelve-month periods, we believe we had the second highest Adjusted EBIT ROI compared to eight of our publicly traded midsized homebuilder peers. (1) When we refer to “domestic” deliveries, contracts, communities or backlog, we are excluding results from our HOV Global (Kingdom of Saudi Arabia) operations. LIQUIDITY AND INVENTORY AS OF JULY 31, 2026: During the third quarter of fiscal 2026, domestic land and land development spending was $231.9 million compared with $192.6 million in the same quarter one year ago. For the first nine months of fiscal 2026, domestic land and land development spending was $644.9 million compared with $660.0 million in the same period one year ago. Total liquidity as of July 31, 2026, was $379.8 million, which was significantly above our target liquidity range of $170 million to $245 million. In the third quarter of fiscal 2026, approximately 3,000 lots were put under option or acquired in 38 domestic consolidated communities. As of July 31, 2026, our total domestic controlled consolidated lots were 34,373 compared with 40,246 lots at the end of the previous fiscal year’s third quarter. Continuing our land-light strategic focus, 87% of our lots were optioned at the end of the third quarter of fiscal 2026, which is the highest percentage of option lots in our Company’s history. Based on trailing twelve-month deliveries, the current controlled lots position equaled 6.8 years’ supply. Total domestic QMIs as of July 31, 2026, were 820, a decline of 19.3% compared with 1,016 as of July 31, 2025, illustrating our efforts to match our starts with our sales pace. This equates to 6.7 QMIs per community as of July 31, 2026. Total domestic finished QMIs as of July 31, 2026, were 194, a decline of 39.9% compared with 323 as of July 31, 2025. FINANCIAL GUIDANCE(2): The Company is providing guidance for total revenues, adjusted homebuilding gross margin, adjusted income before income taxes and adjusted EBITDA for the fourth quarter of fiscal 2026. Financial guidance below assumes no adverse changes in current market conditions, including deterioration in our supply chain or material increases in mortgage rates, inflation or cancellation rates, and excludes further impact to SG&A expenses from phantom stock expense related solely to stock price movements from the closing price of $123.90 on July 31, 2026. For the fourth quarter of fiscal 2026, total revenues are expected to be between $800 million and $900 million, adjusted homebuilding gross margin is expected to be between 15.0% and 16.5%, adjusted income before income taxes is expected to be between $15 million and $30 million and adjusted EBITDA is expected to be between $50 million and $65 million. (2)The Company cannot provide a reconciliation between its non-GAAP projections and the most directly comparable GAAP measures without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items required for the reconciliation. These items include, but are not limited to, land-related charges, inventory impairments and land option write-offs and loss (gain) on extinguishment of debt, net. These items are uncertain, depend on various factors and could have a material impact on GAAP reported results. COMMENTS FROM MANAGEMENT: “During the third quarter, we delivered results that were generally in line with the guidance we provided, including revenues, gross margin, SG&A, income from unconsolidated joint ventures and Adjusted EBITDA,” said Ara K. Hovnanian, Chairman of the Board and Chief Executive Officer. “Adjusted income before income taxes was slightly below our guidance range to a loss, primarily because income from unconsolidated joint ventures came in at the lower end of our guidance range. While we are disappointed to have fallen short of our profitability target, this marks the first time in more than five years that we reported adjusted pretax income below our guided range, and we remain focused on improving execution while continuing to navigate a housing market challenged by affordability concerns, elevated mortgage rates and inconsistent consumer confidence due to geopolitical and economic uncertainty.” “As we look ahead, we believe the Company is well positioned for future success. Our inventory position is healthier, our land portfolio is increasingly aligned with today’s market conditions, and our balance sheet remains strong. At the same time, a growing percentage of our deliveries are expected to come from newer communities acquired and underwritten under current market assumptions, which we believe will support improved margins and returns over time. Our disciplined land-light strategy and focus on maintaining an appropriate sales pace should support continued capital efficiency and position us to create meaningful long-term value for our shareholders,” Mr. Hovnanian concluded. WEBCAST INFORMATION: Hovnanian Enterprises will webcast its fiscal 2026 third quarter results conference call at 11:00 a.m. E.T. on Thursday, August 20, 2026. The webcast can be accessed live through the “Investor Relations” section of Hovnanian Enterprises’ website at http://www.khov.com. For those who are not available to listen to the live webcast, an archive of the broadcast will be available under the “Past Events” section of the Investor Relations page on the Hovnanian website at http://www.khov.com. The archive will be available for 12 months. ABOUT HOVNANIAN ENTERPRISES, INC.: Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, is headquartered in Matawan, New Jersey and, through its subsidiaries, is one of the nation’s largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company’s homes are marketed and sold under the trade name K. Hovnanian® Homes. Additionally, the Company’s subsidiaries, as developers of K. Hovnanian’s® Four Seasons communities, make the Company one of the nation’s largest builders of active lifestyle communities. Additional information on Hovnanian Enterprises, Inc. can be accessed through the “Investor Relations” section of the Hovnanian Enterprises’ website at http://www.khov.com. To be added to Hovnanian's investor e-mail list, please send an e-mail to [email protected] or sign up at http://www.khov.com. NON-GAAP FINANCIAL MEASURES: Consolidated earnings before interest expense and income taxes (“EBIT”) and before depreciation and amortization (“EBITDA”) and before inventory impairments and land option write-offs and gain on extinguishment of debt, net (“Adjusted EBITDA”), the ratio of Adjusted EBITDA to interest incurred and EBIT before inventory impairments and land option write-offs and gain on extinguishment of debt, net (“Adjusted EBIT”) are not U.S. generally accepted accounting principles (“GAAP”) financial measures. The most directly comparable GAAP financial measure is net (loss) income. The reconciliation for historical periods of EBIT, EBITDA, Adjusted EBIT and Adjusted EBITDA to net (loss) income are presented in tables attached to this earnings release. Homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, are non-GAAP financial measures. The most directly comparable GAAP financial measures are homebuilding gross margin and homebuilding gross margin percentage, respectively. The reconciliation for historical periods of homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, to homebuilding gross margin and homebuilding gross margin percentage, respectively, is presented in a table attached to this earnings release. Adjusted (loss) income before income taxes, which is defined as (loss) income before income taxes excluding land-related charges and gain on extinguishment of debt, net is a non-GAAP financial measure. The most directly comparable GAAP financial measure is (loss) income before income taxes. The reconciliation for historical periods of adjusted (loss) income before income taxes to (loss) income before income taxes is presented in a table attached to this earnings release. Adjusted investment, which is defined as total inventories excluding liabilities from inventory not owned, net of debt issuance costs and interest capitalized and including investments in and advances to unconsolidated joint ventures (“Adjusted Investment”), is a non-GAAP financial measure. The most directly comparable GAAP financial measure is total inventories. The reconciliation for historical periods of Adjusted Investment to total inventories is presented in a table attached to this earnings release. The ratio of Adjusted EBIT return on adjusted investment (“Adjusted EBIT ROI”), which is the ratio of Adjusted EBIT for the trailing twelve-months, to the average Adjusted Investment for the prior five fiscal quarters, is a non-GAAP financial measure. The most directly comparable GAAP financial measure is the ratio of net (loss) income return to total inventories. The presentation of the ratios of Adjusted EBIT ROI and net (loss) income return on inventory are presented in a table attached to this earnings release. Total liquidity is comprised of $249.1 million of cash and cash equivalents, $5.7 million of restricted cash required to collateralize letters of credit and $125.0 million available under a senior secured revolving credit facility as of July 31, 2026. FORWARD-LOOKING STATEMENTS All statements in this press release that are not historical facts should be considered as “Forward-Looking Statements” within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such forward-looking statements include but are not limited to statements related to the Company’s goals and expectations with respect to its financial results for future financial periods and statements regarding demand for homes, mortgage rates, inflation, supply chain issues, customer incentives and underlying factors. Although we believe that our plans, intentions and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are not guarantees of future performance or results and (iii) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic, industry and business conditions and impacts of a significant homebuilding downturn; (2) shortages in, and price fluctuations of, raw materials and labor, including due to geopolitical events, changes in trade policies, including the imposition of tariffs and duties on homebuilding materials and products and related trade disputes with and retaliatory measures taken by other countries and changes in immigration laws or the enforcement thereof and trends in labor migration; (3) fluctuations in interest rates and the availability of mortgage financing, including as a result of instability in the banking sector; (4) increases in inflation; (5) adverse weather and other environmental conditions and natural or man-made disasters; (6) the seasonality of the Company’s business; (7) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (8) reliance on, and the performance of, subcontractors; (9) regional and local economic factors, including dependency on certain sectors of the economy, and employment levels affecting home prices and sales activity in the markets where the Company builds homes; (10) increases in cancellations of agreements of sale; (11) changes in tax laws affecting the after-tax costs of owning a home; (12) legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors; (13) levels of competition; (14) utility shortages and outages or rate fluctuations; (15) information technology failures and data security breaches; (16) negative publicity; (17) global economic and political instability; (18) high leverage and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (19) availability and terms of financing to the Company; (20) the Company’s sources of liquidity; (21) changes in credit ratings; (22) government regulation, including regulations concerning the development of land, the home building, sales and customer financing processes, tax laws and environmental, health and safety matters; (23) potential liability as a result of the past or present use of hazardous materials; (24) operations through unconsolidated joint ventures with third parties; (25) significant influence of the Company’s controlling stockholders; (26) availability of net operating loss carryforwards; (27) loss of key management personnel or failure to attract qualified personnel; and (28) certain risks, uncertainties and other factors described in detail in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2025 and the Company’s Quarterly Reports on Form 10-Q for the quarterly periods during fiscal 2026 and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

Interested in Hovnanian Enterprises Inc? Here are five stocks we like better. Q2 results beat several internal targets: Hovnanian posted $668 million in revenue, with adjusted gross margin at 14.3% and adjusted EBITDA of $41 million, both ahead of guidance. Management said this reflected solid execution despite a choppy housing market. Margins may improve as newer communities ramp: Incentives remained elevated at 11.9% of average sales price, but they fell sequentially for the first time in nearly two years. The company expects stronger margins ahead as newer communities replace older, lower-margin inventory and QMI sales mix shifts toward to-be-built homes. Liquidity and balance sheet remain strong: Hovnanian ended the quarter with $442 million in liquidity, above target, and has reduced net debt to capital to 43.1% from much higher levels in prior years. Management also guided for sequential improvement in Q4, especially in volume and gross margins. PulteGroup Wins and Wins More on Interest Rate Cuts Hovnanian Enterprises (NYSE:HOV) reported second-quarter fiscal 2026 results that management said reflected “solid execution” in a volatile housing market, with profitability coming in at the high end or above several internal targets despite weaker year-over-year delivery volume and elevated incentives. Chairman and CEO Ara Hovnanian said total revenue for the quarter was $668 million, near the midpoint of the company’s guidance range. Adjusted gross margin was 14.3%, above the company’s forecast and up sequentially from 13.4% in the first quarter, which management said it believes marked the trough for margins. Selling, general and administrative expenses were 12.6% of revenue, at the favorable end of guidance. Adjusted EBITDA was $41 million, above the projected range, while adjusted pre-tax income was $9 million, at the top end of the company’s forecast. → CAVA Group’s Stock Looks Delicious After Strong Earnings It’s Time to Ring the Register on Hovnanian Stock “Despite a continued choppy demand environment, we delivered solid execution coming in at or above nearly all of our targeted metrics,” Ara Hovnanian said. Compared with the prior-year quarter, Hovnanian said total revenue declined 3%, primarily because the company delivered 12% fewer homes. A land sale in the second quarter partially offset the impact of lower deliveries. → SpaceX IPO: Opportunity? Or the Ultimate Hype Trade? Homebuilder Hovnanian Increases Revenue, Raises Full-Year Guidance Management said adjusted gross margin was lower than a year earlier, largely due to higher incentives used to support affordability and maintain sales pace. Incentives represented 11.9% of average sales price in the quarter, with most of that tied to mortgage rate buydowns. While that level was up 140 basis points from the prior year, it was down 70 basis points from the first quarter, marking the first sequential decline in incentives in nearly two years, according to the company. Ara Hovnanian said the company has been using incentives deliberately as it works through older, lower-margin lots and quick move-in inventory. He said newer communities should support improved margins because today’s incentive environment has been built into recent land underwriting. → 2 Software Stocks Turning AI Fears Into Fundamental Gains “As our new communities come online, again, I will keep repeating this, we do expect to see stronger margins going forward,” he said. The company also cited some cost and operating improvements. Construction costs decreased 2% year-over-year in the second quarter, and cycle times for single-family homes improved by six days to 138 calendar days. Hovnanian said second-quarter contracts increased slightly year-over-year, rising by 38 contracts, even as management described the selling environment as pressured by lower consumer confidence. Ara Hovnanian said the company believes contracts would have declined sharply without the incentives it offered. Monthly results varied significantly. February showed the strongest year-over-year increase in contracts highlighted in management’s presentation, March declined 8% year-over-year, and April increased 3%. Ara Hovnanian attributed some March weakness to macro uncertainty related to the Iran war. As of the day before the call, he said May month-to-date contracts were up 12% from the prior year, if that pace held through month-end. “Summing up the slide in one word, the environment is choppy,” Ara Hovnanian said. The company reported 11.3 contracts per community in the second quarter, slightly above the prior year and close to its average second-quarter absorption pace since 1997. Management also said its adjusted calendar-quarter contracts per community ranked second among the public builders it tracks. Management emphasized progress reducing quick move-in, or QMI, homes. The company ended the second quarter with 5.8 QMIs per community, roughly flat with the prior quarter but down significantly from prior levels. Total QMIs fell to 731 at the end of April 2026 from 1,163 at the end of January 2025, a 37% reduction. Finished QMIs declined 55% year-over-year, from 304 at the end of the prior-year second quarter to 137 at the end of the latest quarter. Ara Hovnanian said the company now has less than one finished QMI per community. QMIs accounted for 68% of total sales in the second quarter, down from a previous high of 79% but still well above the company’s historical average of about 40%. Sales of to-be-built homes increased to 32% from 21%. Management said to-be-built homes typically carry higher margins than QMIs. CFO Brad O’Connor said that historically, before the rise in mortgage rates, about 60% of the company’s sales were to-be-built homes, though he said it remains unclear how quickly the company could return to that mix. O’Connor said Hovnanian ended the quarter with $442 million in liquidity, above its target range, after spending $232 million on land and land development and $10 million on stock repurchases. He said the company’s liquidity has remained above $400 million for three consecutive quarters. The CFO said Hovnanian has reduced debt by $749 million over the past few years while increasing equity by $1.3 billion. Net debt to capital was 43.1%, down from 146.2% at the start of fiscal 2020. The company remains focused on a 30% net debt-to-capital target. O’Connor also said Hovnanian has $222 million in deferred tax assets and does not expect to pay federal income taxes on about $700 million of future pre-tax earnings. The company ended the second quarter with 33,632 domestic controlled lots, equal to a 6.5-year supply, or 36,621 lots including joint ventures. Domestic controlled lots declined 21% year-over-year, which management attributed to disciplined underwriting and a willingness to walk away from deals that do not meet return thresholds. O’Connor said 86% of the company’s lots are controlled through options, reflecting its land-light strategy. For the third quarter of fiscal 2026, Hovnanian guided for total revenue of $650 million to $750 million, adjusted gross margin of 14% to 15%, SG&A of 12.5% to 13.5% of revenue, joint venture income between breakeven and $10 million, adjusted EBITDA of $30 million to $40 million, and adjusted pre-tax income between breakeven and $10 million. O’Connor said the guidance assumes broadly stable market conditions, with no major increases in mortgage rates, tariffs, inflation, cancellation rates or construction cycle times. Management said it expects sequential improvement in the fourth quarter, particularly in volume and gross margins, as deliveries from newer communities increase. In response to an analyst question, O’Connor clarified that the company was referring to sequential improvement, not year-over-year improvement. “We believe we are well-positioned for meaningful improvement in the fourth quarter, particularly in volume and gross margins as newer communities begin to deliver,” Ara Hovnanian said. He added that demand remains present, but buyers are hesitant amid economic and geopolitical uncertainty. “Customers are engaged,” he said in closing. “They’re just hesitant to pull the trigger at volumes that we’d consider normal and at margins that we’d consider normal.” Hovnanian Enterprises, Inc is a publicly traded homebuilding company primarily engaged in the acquisition, development and construction of residential properties. Headquartered in Red Bank, New Jersey, the company operates through a network of regional homebuilding divisions that design and deliver a range of housing solutions, including single-family detached homes, townhomes and condominiums. Hovnanian combines land development, architectural design and construction services with in-house mortgage and insurance offerings to provide a comprehensive homebuying experience. The company markets its communities under several branded product lines tailored to different buyer segments and price points. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Hovnanian Enterprises Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.

Image source: The Motley Fool. Wednesday, Feb. 25, 2026 at 11:30 a.m. ET Chairman and Chief Executive Officer — Ara Hovnanian Chief Financial Officer — Brad O'Connor Vice President, Corporate Controller — David Mitrisin Vice President, Finance and Treasurer — Paul Eberly Investor Relations — Jeffrey O'Keefe Jeffrey O'Keefe: Thank you, Michelle, and thank you all for participating in this morning's call to review the results for our first quarter. All statements on this conference call that are not historical facts should be considered as forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such forward-looking statements include, but are not limited to, statements related to the company's goals and expectations related to its financial results for future financial periods. Although we believe that our plans, intentions and expectations reflected and are suggested by such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. By their nature, forward-looking statements speak only as of the date they are made are not guarantees of future performance or results and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors. Such risks, uncertainties and other factors are described in detail in the sections entitled Risk Factors and Management's Discussion and Analysis, particularly the portion of MD&A entitled Safe Harbor Statement in our annual report on Form 10-K for the fiscal year ended October 31, 2025, and subsequent filings with the Securities and Exchange Commission. Except as required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason. Joining me today are Ara Hovnanian, Chairman and CEO; Brad O'Connor, CFO; David Mitrisin, Vice President, Corporate Controller; and Paul Eberly, Vice President, Finance and Treasurer. I'll now turn the call over to Ara. Ara, go ahead. Ara Hovnanian: Thanks, Jeff. I'll start by highlighting our first quarter performance and sharing insights into how we're navigating the current housing market. Brad will then dive deeper into our results and our strategy and followed by an opportunity for your questions. Let me begin with Slide 5. Here, we share our first quarter results alongside the guidance we provided earlier. Even with ongoing challenges both in the U.S. and around the world, our team consistently delivered, meeting or exceeding guidance across all the metrics for the quarter. Beginning at the top of the slide, total revenues reached $632 million, approaching the high end of our guidance range. Adjusted gross margin came in at 13.4% in the quarter, which was just shy of the midpoint of our expectations. Our SG&A came in at 13.3% better than the low end of our guidance. Income from unconsolidated joint ventures totaled $3 million, this was slightly below the midpoint of our expectations, although income from consolidation of certain joint ventures exceeded our expectations as we'll discuss in a moment. We're satisfied to report that both of the profit figures we guided to beat expectations. Adjusted EBITDA for the quarter was $63 million, which was significantly higher than our guidance range. Adjusted pretax income was $31 million, also significantly above the range we forecasted. We'll discuss this more later in our presentation. On Slide 6, we show the first quarter results compared to last year's first quarter. The comparison is difficult mainly because we've offered even greater incentives this year to maintain sales pace which has driven much of the year-over-year decline in profit. In addition, deliveries were lower due to slower market conditions. In the upper left-hand section of the slide, you can see that our total revenues fell by 6% compared to last year. We delivered 12% fewer homes, which was the main reason for the decrease but the land sale in the first quarter helped offset some of that decline. Turning to adjusted gross margin, we saw a year-over-year decline, primarily due to the additional incentives provided to help buyers manage affordability and challenges, a theme you'll hear throughout our presentation. Our current approach emphasizes maintaining steady sales and clearing older lower-margin lots and older QMIs. Looking ahead, as we open new communities where these incentive costs are already factored in during land acquisition, we anticipate stronger gross margins provided the market doesn't require further increases in incentives. But based on our recent sales, which we'll share in a moment, we don't anticipate that to happen. In this year's first quarter, incentives accounted for 12.6% of the average sales price. The majority of this cost was attributed to mortgage rate buydowns and essential tool for unlocking affordability and driving demand. This represents an increase of 40 basis points from the fourth quarter of '25. The quarter-to-quarter increases are beginning to level off, although it's still up 290 basis points compared to the same quarter a year ago and higher by 960 basis points versus the full fiscal year in '22, which was before the mortgage rates spiked began affecting margins on our deliveries. Offsetting the year-over-year increases in incentives, our base construction and option costs per square foot on delivered homes decreased 2% year-over-year in the first quarter. Additionally, our cycle times for single-family detached homes decreased 17 days to 133 calendar days in the first quarter of '26 compared to the same quarter a year ago. Looking at the bottom left section you'll see that our total SG&A expenses as a percentage of total revenue went up a bit in the first quarter. This was due to our revenue decreasing more than our SG&A costs even though we managed to reduce absolute SG&A expenses compared to last year. At the corporate level, we're investing more heavily in technology and processes for the future. While this should yield savings in the future, it is adding to SG&A in the current periods. Moving to the bottom right-hand section of the slide, while our profit exceeded our guidance, it declined 24% year-over-year primarily due to higher levels of incentives used this year. Our approach remains focused on efficiently turning over existing inventory advancing sales of quick moving homes and emphasizing a steady sales pace. At the same time, we're positioning ourselves to capitalize on new land opportunities that are expected to deliver improved margins and returns. Now looking at the sales environment on Slide 7. We're still using mortgage rate incentives to help boost sales, we had a reduction of only 35 contracts in a significantly slower delivery home environment. We think the drop would have been larger without the incentives we're offering. The decline mainly reflects ongoing market challenges and low consumer confidence by offering incentives, we're able to ease some of these difficulties and especially affordability and keep sales activity steady. On the encouraging side, if you turn to Slide 8, you'll see monthly traffic per community from August through January. Compared to last year, traffic increased significantly in 5 of the 6 months shown. The percentage increases grew steadily over the last 4 months with January showing the largest jump on the slide, an impressive 40% increase compared to the same month last year. The trend of increased traffic has continued in February. We're seeing encouraging sign of increased buyer engagement compared to last year. That said, continued economic and global uncertainties are causing some prospective buyers to remain cautious about committing to a purchase. As shown on Slide 9, a contracts over the past 12 months have fluctuated from month to month, reflecting ongoing shifts in a volatile housing market and consumer confidence and sentiment. January's 11% gain stands out as the highest year-over-year increase on the slide. And while 1 month does not make a trend, it's a promising sign. As of yesterday, our month-to-date contracts in February of '26, which is almost over, are up 13% over the prior year, gaining a little momentum. On Slide 10, you can see that the first quarter contracts per community have held fairly steady at about 9.5 contracts per community for the past 3 years. Notably, this year's first quarter was higher than the '97 through '02 levels that we consider a normal sales environment. On Slide 11, a we provide a closer look at monthly contracts per community comparing each month in the first quarter to the same month last year. For the first 2 months of the quarter, the sales pace was lower than the same month last year. But the January '26 sales pace was better than a year ago, so we're off to a better start than a year ago. This was the third metric for the month of January that showed significant improvements year-over-year, giving us hope that the spring selling season this year could be better than last year. Further, our contracts per community for February of '26 are on track to be higher than the same month a year ago. As shown on Slide 12, the value of incentives and mortgage rate buydowns has increased significantly over the past 4 years. The most notable surge occurred in early '23 when incentives rose sharply from 3.9% in the fourth quarter of '22 to 7.4% in the very next quarter, the first quarter of '23. Since then, incentives have continued to climb almost every quarter to the current level of 12.6% in this year's first quarter. While these higher incentives have put short-term pressure on our margins, they've been essential for maintaining steady sales and moving inventory. As I said earlier, happily, the amount of incentives seems to be reducing from quarter-to-quarter in the recent months. To further support buyers, we continue to offer a strong selection of quick move in homes or QMIs, as we call them. This approach allows buyers to take advantage of available incentives and purchase homes quickly and affordably. It's important to note that our new land acquisitions build in these levels of incentives and still meet our return requirements. This should lead to much better margins in the future as these new communities begin delivering. On Slide 13, we show that at the end of the first quarter, we had 5.7 QMIs per quarter. This marks the fourth quarter in a row where the number of QMIs per community has gone down, reflecting our ability to align starts with sales pace and optimize inventory levels. QMIs are homes that we've started framing but have not yet sold. As shown on Slide 14, the number of QMIs fell from 1,163 at the end of January '25 and to 742 at the end of January '26, that represents a 30% decrease in 1 year. In the first quarter, QMI sales comprised 71% of our total sales down from a record 79% in prior quarters, but still well above our historical norms of above 40%. The corollary is that our to-be-built home sales homes that are built to customers orders increased from 21% to 29%. Assuming these trends continue, our percentage of to-be-built deliveries will be higher in the second half of '26. To-be-built margins in communities that had both to-be-built and QMI deliveries in the first quarter were 780 basis points higher than QMI margins. Having more to-be-built deliveries in the second half of the year will be beneficial to our gross margins and overall profitability. We feel we can meet the current level of demand with the 742 QMIs that we have. We'll make appropriate adjustments up or down to our starts to ensure that we have enough QMIs to satisfy demand and not get ahead of ourselves at the same time. By focusing on QMIs, we sign and deliver more contracts within the same quarter. This approach means that we have fewer homes in backlog at the end of each quarter but a higher rate of converting backlog to deliveries. In the first quarter of '26, 41% of the homes we delivered were both sold and closed within the same quarter, the highest percentage we've recorded since we began tracking this metric in '23. While this makes it a bit harder to predict next quarter's results, it led to a backlog conversion ratio of 88%, much higher than our historical average of 56% for the first quarter since '98. We continue to closely manage our QMIs for each community, making sure the rate at which we start these homes matches the rate at which we sell them. Try to sell the QMIs before they are finished. Over the past year, our finished QMIs decreased 22% from 319 at the end of last year's first quarter to 248 finished QMIs at the end of the first quarter of '26. If you look at Slide 15, you'll see that despite higher mortgage rates and a slower sales pace nationwide, we managed to increase net prices in 32% of our communities during the first quarter. More than half of these price increases happened in Delaware, Maryland, New Jersey, South Carolina, Virginia and West Virginia, some of our stronger markets. In summary, our strategy continues to prioritize the swift turnover of inventory, maintaining robust sales of quick move-in homes ensuring a consistent sales pace and burning through our lower-margin land. At the same time, we're preparing to take advantage of emerging land opportunities that should result in stronger margins and returns. In addition, we've shifted our focus on new land acquisitions away from lower-margin entry-level homes on the periphery to more move-up homes in the A and B locations as well as focusing on more active adult communities. By staying disciplined in these areas, we're well positioned to adapt to market shifts and drive substantial growth in the future. I'll now turn it over to Brad O’Connor, our Chief Financial Officer. Brad O'Connor: Thank you, Ara. Before I get to the next slide, I want to comment on the other income line on our income statement. In the first quarter of fiscal '26, we took full control of 2 joint ventures that were previously not consolidated. For one of these joint ventures, this happened after our partners received their final cash distributions, which met their preferred return goals slightly earlier than anticipated because of the solid performance of the communities. For the other, it happened when we acquired a controlling interest in a previously unconsolidated joint venture in the Kingdom of Saudi Arabia. We then added the remaining assets and liabilities of both of these joint ventures to our balance sheet at fair value resulting in a gain of $27 million recorded as other income. Importantly, the individual communities from these joint ventures continue to meet our standard return metrics even after the step-up to fair value and after current incentives. As a reminder, this has become a normal part of the life cycle of our joint ventures as we have had other income from JV-related transactions 5x in the past 11 quarters. Before commenting further on our U.S. results, I want to briefly touch on our international operations. Although our operations in the kingdom of Saudi Arabia are not expected to contribute materially in the near term, the country's growing need for housing and the scale of the opportunity reinforces our confidence in the long-term prospects of this market. For fiscal '26, we only expect about 300 deliveries from the Kingdom of Saudi Arabia demonstrating the minor impact it will have on operations this year. Turning to Slide 16. We finished the quarter with 151 communities open for sale, up slightly compared to a year ago. We continue to see steady progress in increasing our community count as we focus on growing revenue. While challenging market conditions remain a hurdle, our expanding number of communities is helping us maintain overall home delivery levels. Looking ahead, we believe our newer communities are well positioned to deliver stronger results than older ones, supporting our ongoing growth plans. Slide 17 details our land position. We ended the first quarter with 35,560 domestic controlled lots, equivalent to a 6.7-year supply. Including joint ventures, we now control 38,764 lots. Our consolidated domestic lot count decreased 18% year-over-year, reflecting disciplined land acquisition and a willingness to walk away from or postpone less attractive opportunities. You can see our land control position has begun to stop the steep decline and flatten as land sellers are getting more realistic on values in many markets, and we were able to replace our deliveries and walkaways with new acquisitions that meet our return criteria, even with today's incentives. Also of note on this slide is the steady decline in owned lots. It has decreased sequentially in almost all of the quarters shown in alignment with our land-light strategy. Slide 18 shows the age of our lot position, both owned and optioned, broken down by the year each lot was controlled. The number in each bar represents the total lots that were controlled in that year, the number below each bar indicates the percentage of incentives used on homes delivered during that year. This slide illustrates that by the first quarter of '26 almost 23,000 of our owned or option lots were initially controlled in either fiscal '24, '25 or '26, by which time we are assuming more significant incentives in our underwriting of land acquisitions. In the first quarter, a majority of our home deliveries came from lots acquired in 2023 or earlier. These older lots present more margin challenges since they were originally purchased with much lower incentives than we're currently offering. As we move forward, we're steadily transitioning away from these less profitable lots to newer land that aligns better with the day's incentive environment, though the shift is gradual. At the same time, we're collaborating with some land sellers under option agreements to find solutions that help us share the market challenges and ease the impact. Our strategy remains clear. We're intentionally selling through lower-margin lots to free up capacity for new acquisitions that support our margin and IRR goals. The good news is we're still finding new land opportunities that meet our underwriting criteria even with current high incentives and the current sales pace. On Slide 19, we show our land and land development spend for each of the past 5 quarters and the quarterly average for all of 2024. Land and development spend has decreased in response to market conditions reflecting disciplined capital allocation and rigorous evaluation of every acquisition, factoring in current prices, incentive levels, construction cost and sales pace. We continue to identify compelling opportunities in our markets and remain laser-focused on revenue and profit growth for the long term. Our commitment to disciplined underwriting and strategic investment will drive continued success. In line with our evolving strategy, we're prioritizing the acquisition of land for move-up homes and prime A and B locations and expanding our focus on active adult communities, moving away from lower-margin entry-level developments on the outskirts. Turning to Slide 20. We ended the first quarter with $471 million in liquidity, well above our target range even after spending $181 million on land and land development and $9 million on stock repurchases. Usually, our liquidity decreases sequentially during the first quarter. However, thanks to our disciplined approach to land management, we saw the opposite, liquidity actually increased in the first quarter of '26 compared to the fourth quarter of '25, as a matter of fact, it is the second highest liquidity for any quarter on the slide. Slide 21 shows our current maturity ladder as of January 31, 2026. This reflects the refinancing we completed last fall. For the first time since 2008, all of our debt, aside from our revolving credit facility is now unsecured. This shift enhances our overall financial strength by increasing our flexibility, lowering our risk profile and positioning us well for long-term expansion. This refinancing is the most recent step in a decade-long process that illustrates our disciplined financial management and reinforces our ongoing commitment to a robust stable capital structure. On Slide 22, we highlight how we've successfully increased our equity and reduced our debt over the past few years. Over that time, equity has grown by $1.3 billion and the debt has been reduced by $754 million. Net debt to capital is now 41.4%, a substantial improvement from 146.2% at the start of fiscal 2020. While we still have work to do, we remain on track toward our 30% net debt to cap target. With $223 million in deferred tax assets, we will not pay federal income taxes on approximately $700 million of future pretax earnings, enhancing cash flow and supporting growth. Given the current volatility and challenges with predicting margins, we are only providing financial guidance for the next quarter. Our outlook assumes that marketing conditions remain stable with no major increases in mortgage rates, tariffs, inflation, cancellation rates or construction cycle times. As we rely more on QMI sales forecasting profit is tougher, while we performed at the top of our guidance for many quarters. Our goal is to provide realistic guidance that we can meet or beat if conditions are favorable. Our forecast includes ongoing use of mortgage rate buydowns and similar incentives but it does not include any changes to SG&A expense from phantom stock cost tied to stock price changes from the $112.65 closing price at the end of the first quarter of fiscal '26. Slide 23 shows our guidance for the second quarter of fiscal '26. Our expectation for total revenues for the second quarter is between $625 million and $725 million. Adjusted gross margin is expected to be in the range of 13% to 14%. We expect the range of our SG&A as a percentage of total revenues to be between 12.5% and 13.5%, which is still higher than usual. One of the reasons the SG&A ratio is running a little high is that we are making significant investments to improve processes and technology in many areas to significantly increase our efficiency in future years. We expect income from joint ventures to be between breakeven and $10 million, and our guidance for adjusted EBITDA is between $30 million and $40 million. Our expectation for adjusted pretax income for the second quarter is between breakeven and $10 million. Our second quarter guidance includes proceeds from a land sale that has already closed in the second quarter. While our second quarter profit outlook remains modest, we anticipate a rebound in adjusted pretax income during the latter half of fiscal 2026. Historically, our earnings have shown a tendency to strengthen as the year progresses and recent trends, including improved contract activity in January and February support this expectation. Additionally, the upcoming delivery of homes from our newer, higher-margin communities should further enhance results primarily in the fourth quarter. On Slide 24, we show 86% of our lots controlled via option up from 44% in fiscal 2015, reflecting our strategic focus on land light. Looking at Slide 25. we remain strong compared to our peers in controlling land through options. In fact, we have the fourth highest percentage of option lots, placing us well above the industry median of 57%. On Slide 26, we have the second highest inventory turnover rate among our peers. This is an important part of our strategy because it means we sell and replace our inventory more quickly than most competitors, demonstrating a more efficient use of our capital. This reflects many other factors in addition to land light. We see more opportunities to use land options as well as reduced lot purchase to construction start and construction start to completion cycle times, which would further help us improve our inventory turnover. On Slide 27, we show that compared to our midsize peers, we have the second highest adjusted EBIT return on investment at 17.2%. On Slide 28, we show our price to book value compared to our peers. We are trading slightly above book value and right at the median for all the peers shown on this slide. Given our high return on investment, combined with our rapidly improving balance sheet, we believe our stock continues to be undervalued. I'll now turn it back to Ara for some brief closing comments. Ara Hovnanian: Thanks, Brad. Despite a challenging housing environment, marked by affordability pressures and continued economic uncertainty, we delivered a first quarter that met or exceeded our guidance. While profitability declined year-over-year primarily due to higher incentives to support our sales in a very tough market, our focus on steady sales pace and efficient inventory turnover is paying off. We continue to prioritize sales pace over price, utilizing mortgage rate buydowns and other incentives to help drive demand and help more buyers overcome affordability challenges. Although, our recently -- our recent to-be-built contracts are yielding higher margins and they've begun to increase as a percentage of our total sales. On the topic of affordability, we appreciate any support from the federal government that could make homes more affordable and encourage more buyers to enter the market. Our strategy, while pressuring near-term margins enables us to clear older lower margin loss and position us for improved profitability as newer margin -- newer communities come online, communities that were already underwritten with today's higher incentive environment in mind. As we look ahead, we expect adjusted pretax income to improve in the latter half of '26 supported by stronger contract activity in the early months of the year, more higher-margin to-be-built homes and the anticipated contribution from our newer communities. While second quarter profits may be muted, we remain confident in our trajectory. We believe the delivery of higher-margin homes will bolster results as we transition to the back half of the year and grow our home deliveries and revenues. Operationally, we've made significant progress in aligning our inventory with current demand. The number of quick move in homes per community has declined for 4 straight quarters demonstrating our ability and agility and strong execution. Our backlog conversion ratio hit 88%, well above historical averages for the first quarter and we remain confident in our ability to meet homebuyer demand going forward. We feel like we're making great progress in burning through some of our lower-margin land and older QMIs, setting us up for a solid future. On the land side, we exercised discipline by walking away from less attractive properties, primarily during the entitlement process and reducing our lot count by 18% year-over-year. We continue to secure new opportunities that meet our margin and return targets. Our land light strategy with 86% of our lots controlled via options combined with one of the highest inventory turnover rates in the industry ensures that we remain nimble and capital efficient. We remain confident that we have sufficient land control to produce solid growth as the housing market returns to normal. Financially, our balance sheet and liquidity are strong, we ended the quarter with $471 million in liquidity, increased equity and further reduced net debt. With a net debt-to-capital ratio that has improved dramatically over the past few years, we're well positioned for long-term growth. Our recent refinancing moves have enhanced our flexibility and lowered our risk profile. Looking ahead, we expect that gross margins in the second half of '26 will gradually improve as we transition to newer, higher-margin communities. Our guidance for the second quarter assumes a steady market and continued focus on sales pace with prudent expense management and ongoing investment in process and technology improvements. Finally, as we've seen in the past, we expect significant volume in the latter half of the year. In summary, we're navigating a tough market with discipline and agility and a strategic focus on sales pace, inventory efficiency and land-light operations that should deliver tangible results. We remain committed to sustainable growth and value for our shareholders as the market conditions evolve. That concludes our formal comments, and I'll be happy to turn it over to any questions. Operator: [Operator Instructions] Our first question is going to come from Alex Barron with Housing Research Center. Alex Barrón: Yes, I guess on the topic of incentives and their pressure on margins. I'm kind of wondering if you guys feel there's going to be an opportunity this year to -- or is it worth the trade-off to maybe offer less incentives and maybe get slightly high -- lower sales pace but higher margins. How are you guys thinking or navigating through that right now? Ara Hovnanian: Well, Alex, that's a good question, and it's certainly one that all homebuilders are looking at. Some of our peers have clearly made the decision to offer less incentives, seek higher gross margins even with the slower volume that it usually translates to. In our case, we'd rather focus on pace versus price, so we'll keep up the incentives. We really want to burn through some of our lower-margin land. And you can't do that if you're trying to squeeze every last dollar of profit. The market has shifted since we contracted for some of the land parcels years ago. So we just want to burn through those, clear our balance sheet as we've been doing drive liquidity. We're at the second highest we've been in many, many years, most of it just sitting in cash and prepare ourselves for the land opportunities that are clearly showing up now as land sellers are becoming a little more realistic given the incentives that most are offering. Alex Barrón: Got it. And in terms of your percentage of specs QMI versus built-to-order, I know in the last few years, you guys have shifted more towards specs. What percentage are you doing of each? And are you thinking of doing something more balanced? Ara Hovnanian: Well, as we mentioned in the call, QMI sales actually dropped from 79% to 71% and that wasn't actually part of a conscious strategy to do that. It just so happens that some of our offerings really drove -- we often offer both QMIs and to-be-built, and it just so happens that the demand for to-be-built in our markets has been growing recently, again, not through a specific strategy, but it's just the markets of the reality. And the good news is they have significantly higher profit margins and less incentives. Customers that want what they want are willing to pay for what they want. So that's been a beneficial trend. Operator: [Operator Instructions] I am showing no further questions at this time. I would now like to turn the call back to Ara for closing remarks. Ara Hovnanian: Thanks so much. We're satisfied with our results exceeding. Meeting and exceeding our guidance is not easy in this environment. So we look forward to giving better results yet in the following quarters in the remainder of the year. Thank you so much. Operator: This concludes our conference call for today. Thank you all for participating, and have a nice day. All parties may now disconnect. Before you buy stock in Hovnanian Enterprises, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Hovnanian Enterprises wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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