Hovnanian Enterprises Reports 11.2% Revenue Growth, 30.7% Net Income Increase in Q3 2024

Hovnanian Enterprises, Inc. reported significant financial performance improvements for the three and nine months ended July 31, 2024, compared to the same periods in 2023. Total revenues for the three months reached $722.7 million, an increase of 11.2% from $650.0 million, while revenues for the nine months rose to $2.03 billion, up 8.4% from $1.87 billion. Homebuilding revenues specifically increased to $703.8 million for the three months and $1.97 billion for the nine months, reflecting growth of 10.8% and 8.0%, respectively.

Net income for the three months ended July 31, 2024, was $72.9 million, compared to $55.8 million in the prior year, marking a 30.7% increase. For the nine-month period, net income rose to $147.7 million from $108.6 million, a 36% increase. Earnings per share also saw substantial growth, with basic earnings per share for the three months at $10.61, up from $7.92, and for the nine months at $20.85, compared to $14.97.

The company’s total assets increased to $2.54 billion as of July 31, 2024, from $2.49 billion at the end of October 2023. Total inventories rose significantly to $1.65 billion, driven by an increase in homes and lots under development, which grew to $1.27 billion from $998.8 million. Cash and cash equivalents, however, decreased sharply from $434.1 million to $122.0 million, reflecting higher expenditures on land purchases and development, which totaled $677.0 million for the nine months.

Hovnanian's total liabilities decreased to $1.65 billion, down from $1.76 billion, while stockholders' equity increased to $703.4 million from $581.7 million. The company also reported a decrease in interest expenses, which fell to $6.3 million for the three months and $25.7 million for the nine months, down from $13.5 million and $43.1 million, respectively.

Strategically, Hovnanian consolidated assets from a joint venture, resulting in a $33.1 million reduction in investment and increases in inventory and liabilities. The company also engaged in debt restructuring, exchanging senior notes for additional loans under a secured term loan facility. The number of active selling communities increased to 126 from 113, indicating a positive outlook for future sales.

Overall, Hovnanian Enterprises demonstrated robust growth in revenues and profitability, alongside strategic asset management and operational expansion, despite challenges in cash flow and inventory management.