Hovnanian Enterprises Posts Strong Q3 Growth in Revenues and Income
Hovnanian Enterprises Reports Fiscal 2024 Third Quarter Results
Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, has announced its financial results for the fiscal third quarter and nine months ending July 31, 2024. The company demonstrated strong performance across key metrics, including significant year-over-year growth in revenues, income, and community count.
Key Highlights
Year-Over-Year Growth in Revenues and Income
- Total Revenues: Increased by 11.2% to $722.7 million in Q3 FY 2024, compared to $650.0 million in Q3 FY 2023. For the nine months ended July 31, 2024, total revenues reached $2.03 billion, up from $1.87 billion in the same period of FY 2023.
- Income Before Income Taxes: Rose by 38.2% year-over-year to $97.3 million in Q3 FY 2024. For the first nine months, income before taxes increased by 48.1% to $199.2 million.
Strong Growth in Home Sales
- Sale of Homes Revenues: In Q3 FY 2024, sale of homes revenues climbed to $687.4 million (1,255 homes), up from $630.4 million (1,198 homes) in the previous year’s quarter. Over the nine-month period, revenues reached $1.95 billion (3,601 homes), compared to $1.80 billion (3,361 homes) in the same period last year.
- Domestic Unconsolidated Joint Ventures: Revenues from these ventures increased by 24.8% to $151.0 million in Q3 FY 2024, with a 38.0% increase over the first nine months, reaching $386.9 million.
Financial Performance
Homebuilding Gross Margin
- Gross Margin Percentage: The homebuilding gross margin after cost of sales interest expense and land charges was 19.1% for Q3 FY 2024, compared to 20.1% in the same quarter last year. The nine-month period showed a slight increase to 18.9%, up from 18.8% in FY 2023.
Operating Expenses
- SG&A Expenses: Total selling, general, and administrative expenses were $89.5 million in Q3 FY 2024, representing 12.4% of total revenues, up from $75.1 million (11.6% of revenues) in Q3 FY 2023.
Interest Expenses
- Interest Expense: Interest as a percentage of total revenues decreased to 4.0% in Q3 FY 2024 from 5.0% in Q3 FY 2023.
Net Income and Earnings Per Share
- Net Income: Increased by 30.8% to $72.9 million, or $9.75 per diluted share, in Q3 FY 2024, compared to $55.8 million, or $7.38 per diluted share, in the same quarter of the previous year.
EBITDA Performance
- EBITDA: Q3 FY 2024 EBITDA rose to $127.9 million, compared to $104.5 million in Q3 FY 2023. For the first nine months, EBITDA was $294.3 million, up from $240.6 million in the same period last year.
Community and Lot Growth
Consolidated Community Count
- Community Growth: The number of consolidated communities increased by 23.5% to 126 as of July 31, 2024, compared to 102 communities in the same period last year. Including domestic unconsolidated joint ventures, the community count rose by 19.7% to 146.
Lot Inventory
- Total Controlled Lots: As of July 31, 2024, total controlled consolidated lots increased by 34.0% to 39,516, compared to 29,487 lots at the end of Q3 FY 2023. This increase was also sequential, up from 36,841 lots as of April 30, 2024.
Management Commentary
Ara K. Hovnanian, Chairman, President, and CEO, expressed satisfaction with the company’s performance, noting the strong EBITDA and adjusted pretax income that exceeded the high end of the company's guidance. He acknowledged the challenges posed by economic uncertainty, mortgage rates, and geopolitical factors but highlighted the company's strategic focus on growth, evidenced by the significant increase in lot count and community growth.
Liquidity and Stock Repurchases
- Liquidity: As of July 31, 2024, Hovnanian maintained total liquidity of $251.3 million, above the targeted range of $170 million to $245 million.
- Stock Repurchase: The company repurchased 82,753 shares of common stock for $11.5 million during the third quarter, at an average price of $139 per share.
Conclusion
Hovnanian Enterprises continues to show robust growth across its operations, with strong financial results and a strategic focus on expanding its community and lot inventory. The company remains well-positioned to capitalize on favorable housing market trends and deliver top-tier returns to shareholders.
Webcast Information
Hovnanian Enterprises will hold a webcast on its fiscal 2024 third-quarter financial results at 11:00 a.m. E.T. on Thursday, August 22, 2024. The webcast can be accessed via the Investor Relations section of the Hovnanian website.
About Hovnanian Enterprises, Inc.
Founded in 1959, Hovnanian Enterprises, Inc. is one of the nation’s largest homebuilders with operations across 13 states. The company is headquartered in Matawan, New Jersey, and markets its homes under the trade name K. Hovnanian® Homes.
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