Hovnanian Enterprises (HOV) Q1 2026 earnings summary

Executive summary

• Fiscal Q1 2026 revenues were $632 million, above guidance midpoint but down from $674 million year-over-year, driven by a 12.4% decrease in home deliveries, partially offset by a 1.6% increase in average sales price.

• Net income was $20.9 million ($2.62 per diluted share), down from $28.2 million ($3.58 per share) in Q1 2025.

• Adjusted EBITDA reached $63 million, above guidance but down from $72 million last year.

• All guidance metrics for the quarter were met or exceeded despite a challenging housing market and global uncertainties.

• Prioritized steady sales pace and efficient inventory turnover, using incentives and a shift to higher-margin, to-be-built homes and new land acquisitions in prime locations.

Financial highlights

• Homebuilding gross margin after interest and land charges was 10.1%, down from 15.2% year-over-year; adjusted gross margin before interest and land charges was 13.4%.

• Adjusted pre-tax income was $31 million, down from $41 million year-over-year.

• SG&A was $84 million (13.3% of revenues), up as a percentage due to lower sales.

• Total liquidity at quarter-end was $471.4 million, including $339.9 million in cash and $125 million in borrowing capacity.

• Net income return on inventory (TTM) was 3.4%; adjusted EBIT ROI at 17.2%.

Outlook and guidance

• Q2 2026 revenue guidance: $625–$725 million; adjusted gross margin: 13–14%; SG&A: 12.5–13.5% of revenue.

• Adjusted EBITDA expected between $30–$40 million; adjusted pre-tax income between breakeven and $10 million.

• Management anticipates improved profitability in the second half of 2026, especially Q4, as higher-margin, to-be-built homes increase.

• Management remains cautious due to ongoing affordability challenges, high mortgage rates, and economic uncertainty.

• Guidance assumes stable market conditions with no major increases in rates, tariffs, or inflation.