Hovnanian Q2 2023 Earnings Report
Key Takeaways
Hovnanian Enterprises reported mixed results for its fiscal second quarter ended April 30, 2023. While total revenues slightly increased, sale of homes revenues and homebuilding gross margin percentage decreased compared to the same quarter of the prior year. However, net contracts per community increased significantly versus the first quarter of 2023, and the consolidated community count also increased year over year.
Total revenues increased slightly to $703.7 million compared to $702.5 million in the same quarter of the prior year.
Sale of homes revenues decreased 2.2% to $670.7 million compared to $685.8 million in the previous year’s second quarter.
Homebuilding gross margin percentage, after cost of sales interest expense and land charges, was 17.8% compared to 23.3% during the second quarter a year ago.
Consolidated community count increased 11.8% to 114 communities compared to 102 communities on April 30, 2022.
Hovnanian
Hovnanian
Hovnanian Revenue by Geographic Location
Forward Guidance
For the third quarter of fiscal 2023, total revenues are expected to be between $630 million and $730 million, adjusted homebuilding gross margin, before cost of sales interest expense and land charges, is expected to be between 21.5% and 22.5%, adjusted pretax income is expected to be between $50 million and $60 million, and adjusted EBITDA is expected to be between $85 million and $95 million. For fiscal 2023, total revenues are expected to be between $2.50 billion and $2.65 billion, adjusted homebuilding gross margin, before cost of sales interest expense and land charges, is expected to be between 21.0% and 22.5%, adjusted pretax income is expected to be between $180 million and $200 million, adjusted EBITDA is expected to be between $320 million and $340 million and fully diluted earnings per share is expected to be between $17.00 and $20.00.
Positive Outlook
- Total revenues expected between $630 million and $730 million for Q3 2023.
- Adjusted homebuilding gross margin expected between 21.5% and 22.5% for Q3 2023.
- Adjusted pretax income expected between $50 million and $60 million for Q3 2023.
- Adjusted EBITDA expected between $85 million and $95 million for Q3 2023.
- Fully diluted earnings per share expected between $17.00 and $20.00 for fiscal year 2023.
Challenges Ahead
- Guidance assumes no adverse changes in current market conditions.
- Guidance excludes further deterioration in the supply chain.
- Guidance excludes material increase in mortgage rates.
- Guidance excludes increased inflation.
- Guidance excludes further impact to SG&A expenses from phantom stock expense related solely to stock price movements from the closing price of $73.77 on April 28, 2023.
Revenue & Expenses
Visualization of income flow from segment revenue to net income