Hovnanian Enterprises (HOV) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues grew 11.2% year-over-year to $723 million, with adjusted EBITDA up 20% to $131 million and adjusted pre-tax profit up 34% to $100 million; net income rose to $72.9 million, and community count increased 24% year-over-year.

• Contracts were volatile, with a 23% year-over-year increase in the most recent five weeks, but Q3 contracts per community declined; Northeast segment outperformed, while Southeast and West faced declines.

• Gross margin before interest and land charges was 22.1%, but after charges declined to 19.1%; SG&A ratio rose to 12.4% of revenues.

• Net debt to net capitalization improved to 42% by Q3 2024, and total liquidity reached $251 million.

• The company remains focused on cost control, land acquisition, and managing construction cycle times amid ongoing market uncertainty.

Financial highlights

• Revenues for Q3 2024 were $723 million, with homebuilding gross margin at 19.1% after charges and 22.1% before charges.

• Adjusted EBITDA was $131 million, and adjusted pre-tax income was $100 million, both above guidance.

• Diluted EPS for Q3 2024 was $9.75, up from $7.38 last year.

• SG&A expenses were $89.5 million (12.4% of revenues), up from $75.1 million (11.6%).

• Total liquidity at quarter-end was $251 million, including $122 million in cash and $125 million in revolver availability.

Outlook and guidance

• Full-year revenue guidance raised to $2.9–$3.05 billion, with adjusted EBITDA expected at $420–$445 million and adjusted pre-tax income at $300–$325 million.

• Adjusted gross margin projected at 21.5%–22.5%, and SG&A as a percent of revenue guided to 11%–12%.

• Diluted EPS expected at $29–$31; book value per share projected to rise to $109.

• Community count is expected to grow further in fiscal 2025.

• Guidance assumes no adverse changes in market, supply chain, mortgage rates, inflation, or cancellation rates.