Hovnanian Enterprises Reports Revenue Decline and Lower Profitability in Q2 Fiscal 2025

Hovnanian Enterprises, Inc. reported its financial results for the second quarter of fiscal 2025, revealing a decline in both revenue and profitability compared to the same period last year. For the three months ended April 30, 2025, the company generated total revenues of $686.5 million, a decrease of 3.1% from $708.4 million in the prior year. The sale of homes accounted for $650.3 million, down 5.3% from $686.9 million, while financial services revenue increased by 24.2% to $21.3 million. Net income for the quarter was $19.7 million, significantly lower than $50.8 million reported in the same quarter of 2024, resulting in earnings per share of $2.64, down from $7.12.

In the first half of fiscal 2025, total revenues increased by 4.4% to $1.36 billion, driven by a 2.9% rise in home sales revenue, which reached $1.3 billion. The company reported a gain of $22.7 million from the contribution of assets to a new joint venture, which positively impacted net income for the six-month period, totaling $47.9 million compared to $74.7 million in the previous year. However, the overall performance was affected by a challenging market environment characterized by high mortgage rates and affordability issues, leading to a 7.5% decline in net contracts for the quarter.

Operationally, Hovnanian's inventory levels increased, with total inventories rising to $1.74 billion as of April 30, 2025, compared to $1.64 billion at the end of the previous fiscal year. The company reported 482 communities under development, with a focus on quick move-in homes to meet buyer demand amid rising interest rates. The number of active selling communities decreased to 125 from 130, reflecting a strategic adjustment in response to market conditions. The company also noted a decrease in contract backlog, which fell to 1,711 homes valued at $988.2 million, a 12.5% decline from the previous year.

Hovnanian's financial position remains stable, with total liquidity of $202.4 million, including $74 million in cash and cash equivalents and $125 million available under its senior secured revolving credit facility. The company has been actively managing its capital structure, redeeming $26.6 million of senior notes and repurchasing $30.1 million of its common stock during the first half of fiscal 2025. Looking ahead, Hovnanian anticipates continued challenges in the housing market due to economic uncertainties, but remains focused on leveraging its inventory and operational efficiencies to drive sales and profitability.