Hovnanian Enterprises (HOV) 16th Annual Midwest Ideas Conference summary

Market environment and industry trends

• U.S. housing production has been underbuilt by 5.5 million starts over the last decade, creating strong demand for new homes.

• Existing home supply remains well below historical averages, pushing more buyers toward new home builders.

• Higher mortgage rates have slowed the market, but builders are offsetting this with mortgage rate buydowns and other incentives.

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

• Local government resistance to new housing developments further limits supply.

Strategic initiatives and operational changes

• Shifted from a build-to-order model to a focus on quick move-in (spec) homes, now representing 80% of sales.

• Increased controlled lots from 29,000 to 40,000 in two years, with a strong emphasis on optioned (asset-light) lots.

• Asset-light strategy reduces risk and improves inventory turn, with 86% of lots now controlled by option.

• Diversified product mix across first-time, move-up, and active adult buyers to maintain resilience.

• Community count stable at 146, with plans for growth into 2026.

Financial performance and guidance

• Q3 revenues up 11% year-over-year, but margins down nearly 500 basis points due to incentives.

• SG&A decreased slightly, pre-tax income increased, and sales pace maintained despite market volatility.

• Guidance for Q4 projects flat revenues, lower gross margins, and higher pre-tax income due to joint venture consolidation.

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

• Joint ventures used for projects where asset-light model is not feasible, especially in active adult communities.