Investor Presentation

December 2023

Forward-Looking Statements

Note: All statements in this presentation that are not historical facts should be considered as "Forward-Looking Statements" within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such forward-looking statements include but are not limited to statements related to the Company's goals and expectations with respect to its financial results for future financial periods and statements regarding demand for homes, mortgage rates, inflation, supply chain issues, customer incentives and underlying factors. Although we believe that our plans, intentions and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. By their nature, forward- looking statements: (i) speak only as of the date they are made, (ii) are not guarantees of future performance or results and (iii) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors. Such risks, uncertainties and other factors include, but are not limited to,

  1. changes in general and local economic, industry and business conditions and impacts of a significant homebuilding downturn; (2) shortages in, and price fluctuations of, raw materials and labor, including due to geopolitical events, changes in trade policies, including the imposition of tariffs and duties on homebuilding materials and products and related trade disputes with and retaliatory measures taken by other countries; (3) fluctuations in interest rates and the availability of mortgage financing, including as a result of instability in the banking sector; (4) adverse weather and other environmental conditions and natural disasters; (5) the seasonality of the Company's business; (6) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (7) reliance on, and the performance of, subcontractors; (8) regional and local economic factors, including dependency on certain sectors of the economy, and employment levels affecting home prices and sales activity in the markets where the Company builds homes; (9) increases in cancellations of agreements of sale; (10) increases in inflation; (11) changes in tax laws affecting the after-tax costs of owning a home; (12) legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors;
  1. levels of competition; (14) utility shortages and outages or rate fluctuations; (15) information technology failures and data security
    breaches; (16) negative publicity; (17) high leverage and restrictions on the Company's operations and activities imposed by the agreements governing the Company's outstanding indebtedness; (18) availability and terms of financing to the Company; (19) the Company's sources of liquidity; (20) changes in credit ratings; (21) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (22) operations through unconsolidated joint ventures with third parties; (23) significant influence of the Company's controlling stockholders; (24) availability of net operating loss carryforwards; (25) loss of key management personnel or failure to attract qualified personnel; (26) public health issues such as major epidemic or pandemic; and (27) certain risks, uncertainties and other factors described in detail in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2022 and the Company's Quarterly Reports on Form 10-Q for the quarterly periods during fiscal 2023 and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

2

NON-GAAP FINANCIAL MEASURES:

Consolidated earnings before interest expense and income taxes ("EBIT") and before depreciation and amortization ("EBITDA") and before inventory impairments and land option write-offs and loss on extinguishment of debt, net ("Adjusted EBITDA") are not U.S. generally accepted accounting principles ("GAAP") financial measures. The most directly comparable GAAP financial measure is net income. The reconciliation for historical periods of EBIT, EBITDA and Adjusted EBITDA to net income is presented in a table attached to this earnings release.

Homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, are non-GAAP financial measures. The most directly comparable GAAP financial measures are homebuilding gross margin and homebuilding gross margin percentage, respectively. The reconciliation for historical periods of homebuilding gross margin, before cost of sales interest expense and land charges, and homebuilding gross margin percentage, before cost of sales interest expense and land charges, to homebuilding gross margin and homebuilding gross margin percentage, respectively, is presented in a table attached to this earnings release.

Adjusted income before income taxes, which is defined as income before income taxes excluding land-related charges and loss on extinguishment of debt, net is a non-GAAP financial measure. The most directly comparable GAAP financial measure is income before income taxes. The reconciliation for historical periods of adjusted income before income taxes to income before income taxes is presented in a table attached to this earnings release.

Net homebuilding debt to net capitalization ratio is a non-GAAP financial measure we calculate by dividing (i) nonrecourse mortgages secured by inventory, net of debt issuance costs and senior notes and credit facilities (net of discounts, premiums and debt issuance costs), net of cash and cash equivalents ("net homebuilding debt"), by (ii) the sum of net homebuilding debt and total equity ("net capitalization"). Because we use the ratio of net homebuilding debt to net capitalization to evaluate our performance against other companies in the homebuilding industry, we believe this measure is also relevant and useful to investors for that reason. The calculation of net homebuilding debt to net capitalization ratio is presented in a table attached to this presentation.

Total liquidity is comprised of $434.1 million of cash and cash equivalents, $5.1 million of restricted cash required to collateralize letters of credit and $125.0 million availability under the senior secured revolving credit facility as of October 31, 2023.

3

Recent operating and financial performance

Hovnanian Enterprises at a Glance

Among the top 20 homebuilders in the

United States in both homebuilding

revenues and home deliveries(2)

Home deliveries by product(1)

(Year ended October 31, 2022)

Markets and builds homes across the

product and buyer spectrum, with a first-

time and move-up focus

Homebuilding revenues by region

(TTM ended October 31, 2023)

First time

38% Homes:

6,090

Luxury

13%

Lots controlled by region (3)

(As of October 31, 2023)

Move up

33%

Active lifestyle

16%

35%

16%

49%

  1. Includes unconsolidated joint ventures deliveries.
  2. Company SEC filings and press release of 12/05/2023.
  3. Excludes unconsolidated joint ventures.

West

Northeast

44%

37%

Total lots:

31,726

Southeast 19%

5

Guidance Compared with Actuals for Fiscal 2023

($ in millions, except EPS)

Guidance

Actual

FY 2023(1)

FY 2023

Total Revenues

$2,600

- $2,700

$2,760

Adjusted Homebuilding Gross Margin(2)

22.0%

- 23.0%

22.7%

Total SG&A as Percentage of Total Revenues(3)

11.0%

- 12.0%

11.1%

Adjusted EBITDA(4)

$350

- $370

$427

Adjusted Income Before Income Taxes(5)

$215

- $235

$283

Diluted EPS

$21

- $24

$26.88

Book Value Per Share

$66

- $68

$73

  1. The Company cannot provide a reconciliation between its non-GAAP projections and the most directly comparable GAAP measures without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items required for the reconciliation. These items include, but are not limited to, land-related charges, inventory impairments and land option write-offs and loss (gain) on extinguishment of debt, net. These items are uncertain, depend on various factors and could have a material impact on GAAP reported results.
  2. Adjusted homebuilding gross margin percentage is before cost of sales interest expense and land charges and is a non-GAAP financial measure. See appendix for a reconciliation of the historic measure to the most directly comparable GAAP measure.
  3. Total SG&A includes homebuilding selling, general and administrative costs and corporate general and administrative costs. Ratio calculated as a percentage of total revenues. The SG&A guidance assumes that the stock remains at $69.48, which was the price at the end of the fourth quarter of fiscal year 2023.
  4. Adjusted EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income. Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation, amortization, land-related charges and loss (gain) on extinguishment of debt, net. See appendix for a reconciliation of the historic measure to the most directly comparable GAAP measure.
  5. Adjusted Income Before Income Taxes excludes land-related charges, joint venture write-downs and loss (gain) on extinguishment of debt, net and is a non-GAAP financial measure. See appendix for a reconciliation of the historic measure to the most directly comparable GAAP measure.

6

Land Sale Profit and Income from Unconsolidated Joint Ventures

($ in millions)

Land Sale Profit

Income from Unconsolidated Joint Ventures

$43

$27

$24

$29

$29

$10

$10

$17

$6

$4

$9

$0.5

FY

FY

FY

FY

FY

FY

FY

FY

FY

FY

FY

FY

2018

2019

2020

2021

2022

2023

2018

2019

2020

2021

2022

2023

7

Fourth Quarter Profitability

($ in millions)

Adjusted EBITDA

Adjusted Income Before Income Taxes

$144

$181

$144

$104

Q4 2022

Q4 2023

Q4 2022

Q4 2023

Net Income

$97

$56

Q4 2022

Q4 2023

  1. Adjusted EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income. Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation, amortization, land-related charges and loss (gain) on extinguishment of debt, net. See appendix for a reconciliation of the historic measure to the most directly comparable GAAP measure.
  2. Adjusted Income Before Income Taxes excludes land-related charges, joint venture write-downs and loss (gain) on extinguishment of debt, net and is a non-GAAP financial measure. See appendix for a reconciliation of the historic measure to the most directly comparable GAAP measure.

8

Quarterly Contracts Per Community

16.5

8.8

8.6

9.5

10.2

8.2

8.3

5.0

1997 - 2023 Q4 2017 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Q4 2022 Q4 2023

Fourth

Quarter

Average

Note: Excludes unconsolidated joint ventures.

9

Contracts Per Community

Excluding Build for Rent

Including Build for Rent

3.5

2.0

1.7

3.23.2

1.81.6

August

August

September September

2022

2023

2022

2023

Number

4

4

4

4

Of

Sundays

Note: Excludes unconsolidated joint ventures.

1.6

2.3

1.4

October October

2022 2023

5 5

2.3

1.5

2.3

1.2

November November

2022 2023

4 4

10

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Disclaimer

Hovnanian Enterprises Inc. published this content on 19 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 December 2023 15:47:07 UTC.