fiscal 2026 third quarter
Filed Aug 20, 2026HOVNANIAN ENTERPRISES REPORTS FISCAL 2026 THIRD QUARTER RESULTS
Third-quarter revenue, deliveries, adjusted EBITDA and pretax profitability declined sharply from the prior-year quarter, resulting in a net loss available to common stockholders. Sequential gross-margin improvement, higher domestic backlog dollars, liquidity above the target range and fourth-quarter profitability guidance provide offsets.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenuesGAAP | $705.7 million | – | – |
| Total homebuilding revenuesGAAP | $682,074 (in thousands) | – | – |
| Financial services revenuesGAAP | $23,672 (in thousands) | – | – |
| Sale of homesGAAP | $679,042 (in thousands) | – | – |
| Land sales and other revenuesGAAP | $3,032 (in thousands) | – | – |
| Homebuilding gross marginGAAP | $79,878 (in thousands) | – | – |
| Homebuilding gross margin percentageGAAP | 11.8% | – | – |
| Homebuilding gross margin, before cost of sales interest expense and land chargesnon-GAAP | $99,469 (in thousands) | – | – |
| Homebuilding gross margin percentage, before cost of sales interest expense and land chargesnon-GAAP | 14.6% | – | – |
| Total SG&AGAAP | $86.9 million, or 12.3% of total revenues | – | – |
| Total interest expenseGAAP | $30.5 million, or 4.3% of total revenues | – | – |
| Income from unconsolidated joint venturesGAAP | $3,397 (in thousands) | – | – |
| Loss before income taxesGAAP | $2.8 million | – | – |
| Loss before income taxes excluding land-related charges and gain on extinguishment of debt, netnon-GAAP | $2.3 million | – | – |
| Net lossGAAP | $2,215 (in thousands) | – | – |
| Net loss available to common stockholdersGAAP | $4.5 million | – | – |
| Diluted net loss per common shareGAAP | $0.70 per diluted common share | – | – |
| EBITDAnon-GAAP | $31.4 million | – | – |
| Adjusted EBITDAnon-GAAP | $31.9 million | – | – |
| Adjusted EBITDA to interest incurrednon-GAAP | 1.06 | – | – |
| Consolidated domestic contractsother | 1,155 homes ($622.6 million) | – | decreased 4.6% |
| Domestic contracts including domestic unconsolidated joint venturesother | 1,359 homes ($760.2 million) | – | decreased 4.0% |
| Consolidated domestic contracts per communityother | 9.4 | – | decreased 4.1% year-over-year |
| Consolidated domestic contract backlogother | $881.9 million | – | increased 5.1% |
| Domestic contract backlog including domestic unconsolidated joint venturesother | $1.16 billion | – | increased 4.8% |
| Gross domestic contract cancellation rate for consolidated contractsother | 19% | – | unchanged year over year |
| Net income return on inventoryother | 1.0% | – | – |
| Adjusted EBIT ROInon-GAAP | 13.1% | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Northeast (DE, MD, NJ, OH, PA, VA, WV)Deliveries were 423 homes compared with 479 homes, while average delivery price was $549,121 compared with $601,269. | $232,278 (in thousands) | – | (19.4)% |
| Southeast (FL, GA, SC)Deliveries were 178 homes compared with 195 homes, while average delivery price was $522,994 compared with $535,862. | $93,093 (in thousands) | – | (10.9)% |
| West (AZ, CA, TX)Deliveries were 658 homes compared with 757 homes, while average delivery price was $537,494 compared with $497,423. | $353,671 (in thousands) | – | (6.1)% |
| HOV Global (Kingdom of Saudi Arabia)The Company acquired a controlling financial interest in a previously unconsolidated joint venture in the Kingdom of Saudi Arabia in the first quarter of fiscal 2026; third-quarter deliveries were 0 homes. | $0 (in thousands) | – | 0.0% |
| Unconsolidated Joint Ventures (excluding KSA JV)Deliveries were 225 homes compared with 245 homes, while average delivery price was $691,409 compared with $673,351. | $155,567 (in thousands) | – | (5.7)% |
| Financial servicesFinancial services revenues were $23,672 (in thousands) compared with $28,566 (in thousands). | $23,672 (in thousands) | – | – |
fourth quarter of fiscal 2026 outlook
- Revenuebetween $800 million and $900 million
- Gross marginbetween 15.0% and 16.5% adjusted homebuilding gross margin
- Noteadjusted income before income taxes is expected to be between $15 million and $30 million
- Noteadjusted EBITDA is expected to be between $50 million and $65 million
- NoteGuidance assumes no adverse changes in current market conditions, including deterioration in the supply chain or material increases in mortgage rates, inflation or cancellation rates.
- NoteGuidance excludes further impact to SG&A expenses from phantom stock expense related solely to stock price movements from the closing price of $123.90 on July 31, 2026.
What drove it
- Consolidated domestic contract dollars increased 0.5% to $622.6 million despite a 4.6% decline in homes, with average contract price increasing 5.3% to $539,007.
- The dollar value of consolidated domestic contract backlog increased 5.1% to $881.9 million.
- The Company stated that gross margins improved sequentially for the second quarter in a row as margins rebounded from the first-quarter trough.
- The Company put approximately 3,000 lots under option or acquired in 38 domestic consolidated communities during the quarter.
- Management cited newer communities acquired and underwritten under current market assumptions as expected to support improved margins and returns over time.
Concerns
- Total revenues declined to $705.7 million from $800.6 million, and total homebuilding revenues were $682,074 (in thousands) compared with $772,017 (in thousands).
- Net loss available to common stockholders was $4.5 million, or $0.70 per diluted common share, compared with net income available to common stockholders of $13.9 million, or $1.99 per diluted common share.
- Adjusted EBITDA declined to $31.9 million from $77.1 million, while adjusted EBITDA to interest incurred was 1.06 compared with 2.70.
- Homebuilding gross margin percentage before cost of sales interest expense and land charges was 14.6%, compared with 17.3%.
- Income from unconsolidated joint ventures was $3,397 (in thousands), compared with $15,511 (in thousands).
- Management identified affordability concerns, elevated mortgage rates, inconsistent consumer confidence, geopolitical uncertainty and economic uncertainty as housing-market challenges.
What to watch
- Fourth-quarter total revenue guidance of between $800 million and $900 million.
- Fourth-quarter adjusted homebuilding gross margin guidance of between 15.0% and 16.5%.
- Fourth-quarter adjusted income before income taxes guidance of between $15 million and $30 million.
- Fourth-quarter adjusted EBITDA guidance of between $50 million and $65 million.
- Whether consolidated domestic backlog of $881.9 million converts to deliveries and revenue.
- Consolidated domestic contracts per community of 9.4 and the 19% consolidated cancellation rate.
- The contribution from unconsolidated joint ventures after third-quarter income from unconsolidated joint ventures of $3,397 (in thousands).
Balance sheet and cash flow
- Total liquidity as of July 31, 2026 was $379.8 million, significantly above the target liquidity range of $170 million to $245 million.
- Total liquidity comprised $249.1 million of cash and cash equivalents, $5.7 million of restricted cash required to collateralize letters of credit and $125.0 million available under a senior secured revolving credit facility.
- Cash and cash equivalents were $249,090 (in thousands) at July 31, 2026, compared with $272,772 (in thousands) at October 31, 2025.
- Total inventories were $1,794,444 (in thousands) at July 31, 2026, compared with $1,637,470 (in thousands) at October 31, 2025.
- Senior notes and credit facilities, net of discounts, premiums and debt issuance costs, were $902,492 (in thousands) at July 31, 2026, compared with $900,718 (in thousands) at October 31, 2025.
- Domestic land and land development spending was $231.9 million during the third quarter, compared with $192.6 million in the same quarter one year ago.
- Total domestic controlled consolidated lots were 34,373, compared with 40,246 lots at the end of the previous fiscal year’s third quarter; 87% of lots were optioned.
- Total domestic QMIs were 820, a decline of 19.3% compared with 1,016; total domestic finished QMIs were 194, a decline of 39.9% compared with 323.
Analysis
Hovnanian reported third-quarter total revenues of $705.7 million, compared with $800.6 million in the prior-year quarter. Homebuilding revenue was $682,074 (in thousands), compared with $772,017 (in thousands), as consolidated domestic deliveries declined to 1,259 homes from 1,431 homes. Financial services revenue was $23,672 (in thousands), compared with $28,566 (in thousands). Consolidated domestic contracts declined 4.6% to 1,155 homes, but contract dollars increased 0.5% to $622.6 million, supported by a 5.3% increase in average contract price to $539,007.
Profitability weakened materially versus the prior-year quarter. The Company recorded a loss before income taxes of $2.8 million, compared with income of $23.8 million, and net loss available to common stockholders of $4.5 million, or $0.70 per diluted common share, compared with income of $13.9 million, or $1.99 per diluted common share. Adjusted EBITDA was $31.9 million, compared with $77.1 million. Income from unconsolidated joint ventures was $3,397 (in thousands), down from $15,511 (in thousands), and management said that lower-end joint-venture income was the primary reason adjusted pretax income fell slightly below its guided range.
Margins improved sequentially for the second quarter in a row, according to the Company, but remained below the prior-year period on the reported non-GAAP basis. Homebuilding gross margin before cost of sales interest expense and land charges was 14.6%, compared with 17.3%, while GAAP homebuilding gross margin percentage was 11.8%, compared with 11.7%. Total SG&A was $86.9 million, or 12.3% of total revenues, compared with $90.8 million, or 11.3% of total revenues. Total interest expense was $30.5 million, or 4.3% of total revenues, compared with $34.0 million, or 4.2% of total revenues.
Demand indicators were mixed. Consolidated domestic contract backlog increased 5.1% to $881.9 million, and domestic contract backlog including domestic unconsolidated joint ventures increased 4.8% to $1.16 billion. However, consolidated domestic contracts per community declined 4.1% to 9.4, and the consolidated cancellation rate was unchanged at 19%. The company reduced domestic QMIs to 820 from 1,016 and finished QMIs to 194 from 323, which it described as efforts to match starts with sales pace.
Liquidity was $379.8 million, above the stated $170 million to $245 million target range. The Company spent $231.9 million on domestic land and land development during the quarter and reported that 87% of controlled lots were optioned, its highest percentage of option lots in Company history. For the fourth quarter, Hovnanian guides to total revenues of between $800 million and $900 million, adjusted homebuilding gross margin of between 15.0% and 16.5%, adjusted income before income taxes of between $15 million and $30 million, and adjusted EBITDA of between $50 million and $65 million.
Management, verbatim
During the third quarter, we delivered results that were generally in line with the guidance we provided, including revenues, gross margin, SG&A, income from unconsolidated joint ventures and Adjusted EBITDA.
Ara K. Hovnanian, Chairman of the Board and Chief Executive Officer
Adjusted income before income taxes was slightly below our guidance range to a loss, primarily because income from unconsolidated joint ventures came in at the lower end of our guidance range.
Ara K. Hovnanian, Chairman of the Board and Chief Executive Officer
Our inventory position is healthier, our land portfolio is increasingly aligned with today’s market conditions, and our balance sheet remains strong.
Ara K. Hovnanian, Chairman of the Board and Chief Executive Officer
Not in the filing
stated, not guessed- Operating income was not reported as a line item.
- Operating cash flow was not reported.
- Free cash flow was not reported.
- Share repurchase amount was not reported.
- Cash dividend amount was not reported.
- Prior-quarter comparisons for most reported third-quarter metrics were not reported on their own line items.
- Previous-release outlook was not provided, so quantitative comparison of actual results with prior guidance is unavailable.
- Fourth-quarter operating-expense guidance was not reported.
- Fourth-quarter tax-rate guidance was not reported.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.