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Hovnanian Enterprises, Inc. (HOV - Free Report) reported solid results for third-quarter fiscal 2024 ended Jul 31, 2024, despite facing headwinds from economic uncertainties and elevated mortgage rates. The company demonstrated resilience with notable improvements in key financial metrics, driven by strategic investments and a focus on expanding its community footprint.
Hovnanian Enterprises Inc Price, Consensus and EPS Surprise
Hovnanian’s earnings per share (EPS) rose 32% to $9.75 in third-quarter fiscal 2024 from $7.38 in the prior-year quarter.
Robust earnings growth was primarily fueled by a significant 11.2% increase in total revenues to $722.7 million from $650 million in third-quarter fiscal 2023.
Strong quarterly earnings were driven by an increase in home sales revenues. The number of homes delivered also increased 4.8% year over year, underscoring the company's ability to scale its operations effectively.
Gross Margin
HOV's gross margin for homebuilding, excluding interest expenses and land charges, slightly contracted to 22.1% from 23.2% in the prior-year quarter, indicating some pressure on profitability. After including the cost of sales, interest expenses and land charges, the gross margin contracted to 19.1% from 20.1% in third-quarter fiscal 2023. This decline reflects increased costs related to land development and interest expenses, which outpaced revenue growth.
Income before taxes saw 38.2% year-over-year growth to $97.3 million, supported by higher revenues and disciplined expense management.
EBITDA Growth
EBITDA rose 22.4% to $127.9 million in third-quarter fiscal 2024 from $104.5 million in the prior-year quarter, reflecting the company’s ability to generate higher earnings before interest, taxes, depreciation and amortization. This increase in EBITDA is largely attributable to higher sales volume and improved efficiency in managing costs.
Operating Costs
Hovnanian reported an increase in operating costs for third-quarter fiscal 2024. Total costs and expenses rose 8.9% year over year to $636.1 million from $583.9 million. This increase was driven primarily by a 13.7% rise in the cost of sales to $572.7 million from $503.6 million in third-quarter fiscal 2023.
Selling, general, and administrative (SG&A) expenses also saw an uptick to $89.5 million (or 12.4% of total revenues) from $75.1 million (or 11.6% of total revenues) in the prior-year quarter. This 19.1% increase in SG&A expenses reflects the company’s continued investments in its operational infrastructure and sales efforts.
Overall, while operating costs increased in absolute terms, Hovnanian managed to maintain a relatively stable operating cost structure as a percentage of revenues, demonstrating effective cost management amid growth.
Cash & Debt
As of Jul 31, 2024, HOV reported cash and cash equivalents of $122 million, a sharp decline from $434.1 million at the end of the previous fiscal year. This reduction is largely attributed to the company’s aggressive land acquisition and development activities.
Hovnanian’s total debt, including senior notes and credit facilities, stood at $898.7 million, down from $1.05 billion as of Oct 31, 2023.
Despite the decrease in cash reserves, the company maintains a solid liquidity position with $251.3 million, exceeding its targeted liquidity range of $170-$245 million.
The company’s leverage has improved, and its ability to manage debt is reflected in the decreased interest expense as a percentage of revenues, which fell year over year to 4% in third-quarter fiscal 2024 from 5%. This prudent financial management positions Hovnanian favorably as it continues to invest in growth opportunities.
Management Guidance
For the fiscal year 2024, Hovnanian has raised its guidance, expecting total revenues between $2.90 billion and $3.05 billion. Adjusted income before income taxes is projected between $300 million and $325 million, with the adjusted EBITDA expected between $420 million and $445 million. The company anticipates fully diluted earnings per share between $29 and $31, with an anticipated 50% increase in common book value per share to $109 per share by Oct 31, 2024.
Other Developments
In third-quarter fiscal 2024, the company significantly increased its land and land development spending by 28% year over year to $216.1 million, reflecting its commitment to growth and expansion. Additionally, Hovnanian repurchased 82,753 shares of common stock for $11.5 million at an average price of $139 per share, signaling confidence in its valuation.
As of Jul 31, 2024, the company controlled 39,516 consolidated lots, a 34% increase from 29,487 lots a year ago, positioning it well for growth. HOV also reported a 12.6% year-over-year decrease in the dollar value of contract backlog to $1.16 billion, reflecting the impacts of the current economic environment on new contracts.
Overall, Hovnanian delivered a strong quarter, supported by revenue growth and disciplined financial management despite facing challenges in certain market segments. The company's proactive land acquisition strategy and share repurchase program demonstrate its focus on long-term shareholder value creation.
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Hovnanian (HOV) Q3 Earnings Rise Y/Y, '24 Revenue View Hikes
Hovnanian Enterprises, Inc. (HOV - Free Report) reported solid results for third-quarter fiscal 2024 ended Jul 31, 2024, despite facing headwinds from economic uncertainties and elevated mortgage rates. The company demonstrated resilience with notable improvements in key financial metrics, driven by strategic investments and a focus on expanding its community footprint.
Hovnanian Enterprises Inc Price, Consensus and EPS Surprise
Hovnanian Enterprises Inc price-consensus-eps-surprise-chart | Hovnanian Enterprises Inc Quote
Q3 Results
Hovnanian’s earnings per share (EPS) rose 32% to $9.75 in third-quarter fiscal 2024 from $7.38 in the prior-year quarter.
Robust earnings growth was primarily fueled by a significant 11.2% increase in total revenues to $722.7 million from $650 million in third-quarter fiscal 2023.
Strong quarterly earnings were driven by an increase in home sales revenues. The number of homes delivered also increased 4.8% year over year, underscoring the company's ability to scale its operations effectively.
Gross Margin
HOV's gross margin for homebuilding, excluding interest expenses and land charges, slightly contracted to 22.1% from 23.2% in the prior-year quarter, indicating some pressure on profitability. After including the cost of sales, interest expenses and land charges, the gross margin contracted to 19.1% from 20.1% in third-quarter fiscal 2023. This decline reflects increased costs related to land development and interest expenses, which outpaced revenue growth.
Income before taxes saw 38.2% year-over-year growth to $97.3 million, supported by higher revenues and disciplined expense management.
EBITDA Growth
EBITDA rose 22.4% to $127.9 million in third-quarter fiscal 2024 from $104.5 million in the prior-year quarter, reflecting the company’s ability to generate higher earnings before interest, taxes, depreciation and amortization. This increase in EBITDA is largely attributable to higher sales volume and improved efficiency in managing costs.
Operating Costs
Hovnanian reported an increase in operating costs for third-quarter fiscal 2024. Total costs and expenses rose 8.9% year over year to $636.1 million from $583.9 million. This increase was driven primarily by a 13.7% rise in the cost of sales to $572.7 million from $503.6 million in third-quarter fiscal 2023.
Selling, general, and administrative (SG&A) expenses also saw an uptick to $89.5 million (or 12.4% of total revenues) from $75.1 million (or 11.6% of total revenues) in the prior-year quarter. This 19.1% increase in SG&A expenses reflects the company’s continued investments in its operational infrastructure and sales efforts.
Overall, while operating costs increased in absolute terms, Hovnanian managed to maintain a relatively stable operating cost structure as a percentage of revenues, demonstrating effective cost management amid growth.
Cash & Debt
As of Jul 31, 2024, HOV reported cash and cash equivalents of $122 million, a sharp decline from $434.1 million at the end of the previous fiscal year. This reduction is largely attributed to the company’s aggressive land acquisition and development activities.
Hovnanian’s total debt, including senior notes and credit facilities, stood at $898.7 million, down from $1.05 billion as of Oct 31, 2023.
Despite the decrease in cash reserves, the company maintains a solid liquidity position with $251.3 million, exceeding its targeted liquidity range of $170-$245 million.
The company’s leverage has improved, and its ability to manage debt is reflected in the decreased interest expense as a percentage of revenues, which fell year over year to 4% in third-quarter fiscal 2024 from 5%. This prudent financial management positions Hovnanian favorably as it continues to invest in growth opportunities.
Management Guidance
For the fiscal year 2024, Hovnanian has raised its guidance, expecting total revenues between $2.90 billion and $3.05 billion. Adjusted income before income taxes is projected between $300 million and $325 million, with the adjusted EBITDA expected between $420 million and $445 million. The company anticipates fully diluted earnings per share between $29 and $31, with an anticipated 50% increase in common book value per share to $109 per share by Oct 31, 2024.
Other Developments
In third-quarter fiscal 2024, the company significantly increased its land and land development spending by 28% year over year to $216.1 million, reflecting its commitment to growth and expansion. Additionally, Hovnanian repurchased 82,753 shares of common stock for $11.5 million at an average price of $139 per share, signaling confidence in its valuation.
As of Jul 31, 2024, the company controlled 39,516 consolidated lots, a 34% increase from 29,487 lots a year ago, positioning it well for growth. HOV also reported a 12.6% year-over-year decrease in the dollar value of contract backlog to $1.16 billion, reflecting the impacts of the current economic environment on new contracts.
Overall, Hovnanian delivered a strong quarter, supported by revenue growth and disciplined financial management despite facing challenges in certain market segments. The company's proactive land acquisition strategy and share repurchase program demonstrate its focus on long-term shareholder value creation.