HOVNANIAN ENTERPRISES INC

Previous wording

During fiscal 2024 and continuing through the first quarter of fiscal 2025, mortgage rates fluctuated, but still remain at a persistently high level. As a result, affordability generally remains challenging for homebuyers. We have stayed aggressive in our pricing, incentives and concessions in order to align with the current market.

Current wording

During fiscal 2024 and continuing through thefirst half of fiscal 2025, mortgage rates fluctuated but still remain at a persistently high level. As a result, affordability generally remains challenging for homebuyers. We have stayed aggressive in our pricing, incentives and concessions in order to align with the current market.

Previous wording

There still remains a great degree of uncertainty due to inflation, tariffs, the continued possibility of an economic recession, employment risk and the potential for further mortgage rate increases. While we continue to experience some supply chain issues, we remain focused on continuing to shorten our construction cycle times and building on our national initiatives to drive down costs with our material providers and trade partners. The changing conditions in the housing market, and in the general economy, makes it difficult to predict how strongly our business will be impacted by these external factors over fiscal 2025 and beyond.

Current wording

There remains a great degree of uncertainty due to inflation, tariffs, the continued possibility of an economic recession, employment risk and the potential for further mortgage rate increases. While we continue to experience some supply chain issues, we remain focused on continuing to shorten our construction cycle times and building on our national initiatives to drive down costs with our material providers and trade partners. The changing conditions in the housing market, and in the general economy, makes it difficult to predict how strongly our business will be impacted by these external factors over the remainder of fiscal 2025 and beyond.

Previous wording

Our cash position allowed us to spend $247.6 million on land purchases and land development for long-term growth during thethree months ended January 31, 2025, and still have total liquidity of $222.4 million, including $94.3 million of homebuilding cash and cash equivalents and $125.0 million of borrowing capacity under our senior secured revolving credit facility as of January 31, 2025.

Current wording

During the six months ended April 30, 2025, our cash position allowed us to spend $467.4 million on land purchases and land development for long-term growth, redeem $26.6 million of senior notes and repurchase $30.1 million of our common stock, and still have total liquidity of $202.4 million, including $74.0 million of homebuilding cash and cash equivalents and $125.0 million of borrowing capacity under our senior secured revolving credit facility as of April 30, 2025.

Previous wording

Information on our operating results for thethree months ended January 31, 2025 are as follows:

Current wording

Information on our operating results for thethree and six months ended April 30, 2025 are as follows:

Previous wording

● Sale of homes revenues increased to $646.9 million for thethree months ended January 31, 2025 from $573.6 million for thethree months ended January 31, 2024. There was an 18.0%increase in the number of home deliveries for thethree months ended January 31, 2025 compared to the prior year period, partially offset by a decrease in average prices of 4.4% for thethree months ended January 31, 2025 compared to the prior year period. The decrease in average price was the result ofthe geographic and community mix of our deliveries.

Current wording

● Sale of homes revenues decreased to $650.3 million for thethree months ended April 30, 2025 from $686.9 million for thethree months ended April 30, 2024, and was flat at$1.3 billionfor the six months ended April 30, 2025 and 2024. There was a 0.2% and 8.2%increase in the number of home deliveries for thethree and six months ended April 30, 2025, compared to the same periods of the prior year, partially offset by a decrease in average price of 5.5% and 4.9% for thethree and six months ended April 30, 2025, compared to the same periods of the prior year. The increase in deliveries was primarily the result of an increase in community count, while the decrease in average price was the result ofthe geographic and community mix of our deliveries.

Previous wording

● Gross margin dollars decreased 6.3% for thethree months ended January 31, 2025 as compared to the same period of the prior year, while gross margin percentage decreased to 15.2% forthe three months ended January 31, 2025 from 18.3% forthe three months ended January 31, 2024. Gross margin percentage, before cost of sales interest expense and land charges, decreased to 18.3%for thethree months ended January 31, 2025 from 21.8% for thethree months ended January 31, 2024. The decrease in gross margin percentagewas primarily due to increased use of incentives and concessions, including additional mortgage interest rate buydowns, to make our homes more affordable. In the current homebuilding environment, we remain focused on driving financial performance by increasing our sales pace versus achieving a higher gross margin.

Current wording

● Gross margin dollars decreased 32.9% and 21.2% for thethree and six months ended April 30, 2025, as compared to the same periods of the prior year, while gross margin percentage decreased to 13.8% and 14.5% forthe three and six months ended April 30, 2025, respectively, from 19.5%and 18.9%for the three and six months ended April 30, 2024, respectively. Gross margin percentage, before cost of sales interest expense and land charges, decreased to 17.3%for thethree months ended April 30, 2025 from 22.6% for thethree months ended April 30, 2024, and decreased to 17.8% for the six months ended April 30, 2025 from 22.3% for the six months ended April 30, 2024. The decrease in gross margin percentagewas primarily due to increased use of incentives and concessions, including additional mortgage interest rate buydowns, to make our homes more affordable. In the current homebuilding environment, we remain focused on driving financial performance by increasing our sales pace versus achieving a higher gross margin.

Previous wording

● Income before taxes increased to $39.9 million for thethree months ended January 31, 2025 from $32.6 million for thethree months ended January 31, 2024. Net income increased to $28.2 million for thethree months ended January 31, 2025 from $23.9 million for thethree months ended January 31, 2024. Included in net income for the three months ended January 31, 2025 was a gain of $22.7 million related to the contribution of assets to a new joint venture. Earnings per share, basic and diluted, increased to $3.88 and $3.58, respectively, for thethree months ended January 31, 2025 compared to $3.11 and $2.91, respectively, for thethree months ended January 31, 2024.

Current wording

● Income before income taxes decreased to $26.5 million for the three months ended April 30, 2025 from $69.4 million for the three months ended April 30, 2024, and decreased to $66.4 million for the six months ended April 30, 2025 from $102.0 million for the six months ended April 30, 2024. Net income decreased to $19.7 million for the three months ended April 30, 2025 from $50.8 million for the three months ended April 30, 2024, and decreased to $47.9 million for the six months ended April 30, 2025 from $74.7 million for the six months ended April 30, 2024. Included in net income for the six months ended April 30, 2025 was a gain of $22.7 million related to the contribution of assets to a new joint venture. Earnings per share, basic and diluted, decreased to $2.64 and $2.43, respectively, for the three months ended April 30, 2025 compared to $7.12 and $6.66, respectively, for the three months ended April 30, 2024. Earnings per share, basic and diluted, decreased to $6.53 and $6.02, respectively, for the six months ended April 30, 2025 compared to $10.22 and $9.57, respectively, for the six months ended April 30, 2024.

Previous wording

● Contract backlog decreased from 1,888 homes at January 31, 2024 to 1,598 homes at January 31, 2025, and the dollar value of contract backlog decreased to $931.9 million, a 16.1% decrease in dollar value compared to the prior year, asour backlog conversion ratio has increased from the prior year period due to our focus on having more QMI homes available to sell and deliver.

Current wording

● Contract backlog decreased from 2,018 homes at April 30, 2024 to 1,711 homes at April 30, 2025, and the dollar value of contract backlog decreased to $988.2 million, a 12.5% decrease in dollar value compared to the prior year, as our backlog conversion ratio has increased from the prior year period due to our focus on having more QMI homes available to sell and deliver.

Previous wording

For thethree months ended January 31, 2025, sale of homes revenues increased 12.8% compared to the same period in the prior year. The sale of homes revenue increased due to a 18.0% increase in homes delivered, partially offset by a 4.4% decrease in the average price per home for thethree months ended January 31, 2025, compared with the prior year period. The average price per home decreased to $515,880 in thethree months ended January 31, 2025 from $539,639 in thethree months ended January 31, 2024. The increase in deliveries was primarily the result of an increase in community count. The decrease in average price was the result of the geographic and community mix of our deliveries. For further detail on changes in segment revenues see “Homebuilding: Operations by Segment” below. For further detail on land sales and other revenues, see “Homebuilding: Land Sales and Other Revenues” below.

Current wording

For the three months ended April 30, 2025, sale of homes revenues decreased 5.3% compared to the same period in the prior year. The sale of homes revenue decreased due to a 5.5% decrease in the average price per home for the three months ended April 30, 2025 as compared to the three months ended April 30, 2024. The average price per home decreased to $506,081 in thethree months ended April 30, 2025 from $535,408 in thethree months ended April 30, 2024. For the six months ended April 30, 2025, sale of homes revenue increased 2.9% compared to the same period in the prior year. The sale of homes revenue increased due to an 8.2% increase in homes delivered, partially offset by a 4.9% decrease in average price per home for the six months ended April 30, 2025 compared to the same period in the prior year. The average price per home decreased to $510,921 in the six months ended April 30, 2025 from $537,325 in the six months ended April 30, 2024. The increase in deliveries was primarily the result of an increase in community count. The decrease in average price was the result of the geographic and community mix of our deliveries. For further detail on changes in segment revenues see “Homebuilding: Operations by Segment” below. For further detail on land sales and other revenues, see “Homebuilding: Land Sales and Other Revenues” below.

Previous wording

Land sales and other revenues increased $4.5 million for thethree months ended January 31, 2025, compared to the same period in the prior year. Revenue associated with land sales can vary significantly due to the mix of land parcels sold. There wasone land sale for each of thethree months ended January 31, 2025 and 2024. Land sales revenues increased $5.5 million during thethree months ended January 31, 2025 compared to the same period in the prior year. Other revenues, which includes interest income, decreased due to lower rates on our cash and cash equivalent accounts during the first quarter of fiscal 2025, partially offsetting the increase in land sales revenues.

Current wording

Land sales and other revenues increased $10.6 and $15.0 million for thethree and six months ended April 30, 2025, compared to the same periods in the prior year. Revenue associated with land sales can vary significantly due to the mix of land parcels sold. There weretwo and three land sales during thethree and six months ended April 30, 2025, respectively, and zero andone land sale in the three and six months ended April 30, 2024, respectively. Land sales revenues increased $12.4 millionand $17.9 million during thethree and six months ended April 30, 2025 compared to the same periods in the prior year. Other revenues, which includes interest income, decreased due to lower rates on our cash and cash equivalent accounts during the first half of fiscal 2025, partially offsetting the increase in land sales revenues.

Previous wording

We sell a variety of home types in various communities, each yielding a different gross margin. As a result, depending on the mix of communities delivering homes, consolidated gross margin may fluctuate up or down. Total homebuilding gross margin percentage decreased to 15.2% for thethree months ended January 31, 2025, compared to 18.3% for the prior year period. Total homebuilding gross margin percentage, before cost of sales interest expense and land charges decreased to 18.3% for thethree months ended January 31, 2025, compared to 21.8% for thethree months ended January 31, 2024. The decrease in gross margin percentage for thethree months ended January 31, 2025 was primarily due to increased use of incentives and concessions, including additional mortgage interest rate buydowns, to make our homes more affordable.

Current wording

We sell a variety of home types in various communities, each yielding a different gross margin. As a result, depending on the mix of communities delivering homes, consolidated gross margin may fluctuate up or down. Total homebuilding gross margin percentage decreased to 13.8%and 14.5% for thethree and six months ended April 30, 2025, compared to 19.5%and 18.9% for the prior year periods. Total homebuilding gross margin percentage, before cost of sales interest expense and land charges decreased to 17.3% and 17.8% for the three and six months ended April 30, 2025, compared to 22.6% and 22.3% for the three and six months ended April 30, 2024. The decrease in gross margin percentage for thethree and six months ended April 30, 2025 was primarily due to increased use of incentives and concessions, including additional mortgage interest rate buydowns, to make our homes more affordable.

Previous wording

Inventory impairments and land option write-offs reflects certain inventories we have either written off or written down to their estimated fair value totaling $1.0 million and $0.3 million in expense for thethree months ended January 31, 2025 and 2024, respectively. There were no inventory impairments during either of thethree months ended January 31, 2025 and 2024. We wrote-off residential land option, approval and engineering costs across each of our segments during the first quarter of fiscal 2025, and in our Northeast and Southeast segments during the first quarter of fiscal 2024.

Current wording

Inventory impairments and land option write-offs reflects certain inventories we have either written off or written down to their estimated fair value totaling $3.1 million and $0.2 million in expense for thethree months ended April 30, 2025 and 2024, respectively, and $4.1 million and $0.5 million during the six months ended April 30, 2025 and 2024, respectively. Inventory impairments amounted to $1.2 million during the three and six months ended April 30, 2025. There were no inventory impairments during the three and six months ended April 30, 2024. The impairment recorded for fiscal 2025 was for one community in the Northeast segment. We wrote-off residential land option, approval and engineering costs across each of our segments during the first half of fiscal 2025 and 2024.

Previous wording

Homebuilding selling, general and administrative (“SGA”) expenses increased $5.3 million to $54.3 million for thethree months ended January 31, 2025 compared to the same period in the prior year. The increase for thethree months ended January 31, 2025 compared to the same period in the prior year was primarily due to an increase in selling overhead from higher advertising costs and an increase in total compensation expense as a result of an increase in headcount and bonuses related to improved overall market conditions and specific company performance.

Current wording

Homebuilding selling, general and administrative (“SGA”) expenses increased $4.6 million to $51.1 million for thethree months ended April 30, 2025 andincreased $9.9 million to $105.3 million for the six months ended April 30, 2025 compared to the same periods in the prior year. The increase for thethree and six months ended April 30, 2025 compared to the same periods in the prior year was primarily due to an increase in selling overhead from higher advertising costs and an increase in total compensation expense as a result of an increase in headcount from opening more communities along with the cost of annual merit increases.

Previous wording

Most cancellations occur within the legal rescission period, which varies by state but is generally less thantwo weeks after the signing of the contract. Cancellations also occur as a result of a buyer’s failure to qualify for a mortgage, which generally occurs during the first few weeks after signing. Due to our solid backlog position, our cancellation rate as a percentage of beginning backlog for thefirst quarter of fiscal 2025 was 14%, which approximates our historical normal rate. When sales pace is increasing, the cancellation rate as a percentage of beginning backlog tends to lag the changes seen in our cancellation rate as a percentage of gross sales. Market conditions, although improving, still remain uncertain and it is difficult to predict what cancellation rates will be in the future.

Current wording

Most cancellations occur within the legal rescission period, which varies by state but is generally less thantwo weeks after the signing of the contract. Cancellations also occur as a result of a buyer’s failure to qualify for a mortgage, which generally occurs during the first few weeks after signing. Due to our solid backlog position, our cancellation rate as a percentage of beginning backlog for the second quarter of fiscal 2025 was 15%, which approximates our historical normal rate. When sales pace is increasing, the cancellation rate as a percentage of beginning backlog tends to lag the changes seen in our cancellation rate as a percentage of gross sales. Market conditions still remain uncertain and it is difficult to predict what cancellation rates will be in the future.

Previous wording

(1)Reflects the reclassification of eight consolidated homes and $5.0 million of contract backlog as of January 31, 2025, from the West segment to an unconsolidated joint venture. This is related to the assets and liabilities contributed to the joint venture we entered into during the three months ended January 31, 2025.

Current wording

(1)Reflects the reclassification ofeight consolidated homes and $5.0 million of contract backlog as of January 31, 2025, from the West segment to an unconsolidated joint venture. This is related to the assets and liabilities contributed to the joint venture we entered into during the three months ended January 31, 2025.

Previous wording

Contract backlog dollars decreased 16.1% as of January 31, 2025 compared to January 31, 2024, and the number of homes in backlog decreased 15.4%for the same period. The decrease in contract backlog dollars and number of homes as of January 31, 2025 compared to January 31, 2024, was primarily driven by an increase in sales of QMI homes and improved contract backlog conversion.

Current wording

Contract backlog dollars decreased 12.5% as of April 30, 2025 compared to April 30, 2024, and the number of homes in backlog decreased 15.2%for the same period. The decrease in contract backlog dollars and number of homes as of April 30, 2025 compared to April 30, 2024, was primarily driven by an increase in sales of QMI homes and improved contract backlog conversion.

Previous wording

Northeast - Homebuilding revenue increased 48.2% for thethree months ended January 31, 2025 compared to the same period in the prior year. The increase for thethree months ended January 31, 2025 was attributed to a 34.0% increase in homes delivered and a 10.6% increase in average sales price. The increase in average sales price was theresult of new communities delivering higher priced, larger single family homes, townhomes and condos in higher-endsubmarkets of the segment for the three months ended January 31, 2025 compared to some communities delivering lower priced, smaller single family homes andtownhomes in lower-endsubmarkets of the segment in the three months ended January 31, 2024, which were no longer delivering in the current year.

Current wording

Northeast - Homebuilding revenue increased 29.2% for thethree months ended April 30, 2025 compared to the same period in the prior year. The increase for thethree months ended April 30, 2025 was attributed to a 36.0% increase in homes delivered, partially offset by a 4.6% decrease in average sales price. The decrease in average sales price was theresult of new communities delivering lower priced, smaller single family homes andtownhomes in lower-endsubmarkets of the segment for thethree months ended April 30, 2025 compared to some communities delivering higher priced, larger single family homes andtownhomes in higher-endsubmarkets of the segment for thethree months ended April 30, 2024, which were no longer delivering in the second quarter of the current year.

Previous wording

Income before income taxes increased $3.9 million to $39.8 million for thethree months ended January 31, 2025 as compared to the same period in the prior year. This was primarily due to the increase in homebuilding revenue discussed above, while gross margin percentage was relatively flat.

Current wording

Income before income taxes increased $3.6 million to $71.2 million for the six months ended April 30, 2025 as compared to the same period in the prior year. This was primarily due to the increase in homebuilding revenues discussed above, while gross margin percentage was relatively flat.

Previous wording

Income before income taxes decreased $5.2 million to $9.7 million for thethree months ended January 31, 2025 compared to the same period in the prior year. This was primarily due to the decrease in homebuilding revenue discussed above and a significant decrease in gross margin percentage.

Current wording

Income before income taxes decreased $26.7 million to $0.4 million for thethree months ended April 30, 2025 compared to the same period in the prior year. This was primarily due to the decrease in homebuilding revenue discussed above and a significant decrease in gross margin percentage. For a discussion of gross margin see“Homebuilding: Cost of Sales” above.

Previous wording

Southeast – Homebuilding revenue decreased 51.3% for thethree months ended January 31, 2025 compared to the same period in the prior year. The decrease was due toa 36.4% decrease in homes delivered and a 23.4% decrease in average sales price. The decrease in average sales price was the result of new communities delivering lower priced, smaller single family homes in lower-end submarkets of the segment for the three months ended January 31, 2025 compared to some communities delivering higher priced, larger single family homes and townhomes in mid to higher-endsubmarkets of the segmentin the three months ended January 31, 2024, which were no longer delivering in the current year.

Current wording

Homebuilding revenue decreased 46.2% for the six months ended April 30, 2025 compared to the same period in the prior year. The decrease was due to a 37.2% decrease in homes delivered and a 14.2% decrease in average sales price. The decrease in average sales price was the result of new communities delivering lower priced, smaller single family homes in lower-end submarkets of the segment for thesix months ended April 30, 2025 compared to some communities delivering higher priced, larger single family homes and townhomes in mid to higher-end submarkets of the segment for the six months ended April 30, 2024, which were no longer delivering in the current year.

Previous wording

West – Homebuilding revenue increased 14.9% for thethree months ended January 31, 2025 compared to the same period in the prior year. The increase was due to a $5.7 million increase in land sales and other revenue and a 27.8% increase in homes delivered, while average sales price decreased by 11.7%. The decrease in average sales price was the result of new communities delivering lower priced, smaller single family homes in lower-end submarkets of the segment for the three months ended January 31, 2025 compared to some communities delivering higher priced, larger single family homes in higher-end submarkets of the segment in the three months ended January 31, 2024, which were no longer delivering in the current year.

Current wording

Homebuilding revenue increased 2.0% for the six months ended April 30, 2025 compared to the same period in the prior year. The increase was due to an $18.4 million increase in land sales and other revenue and a 10.1% increase in homes delivered, partially offset by a 10.0% decrease in average sales price. The decrease in average sales price was the result of new communities delivering lower priced, smaller single family homes in lower-end submarkets of the segment for the six months ended April 30, 2025 compared to some communities delivering higher priced, larger single family homes in higher-end submarkets of the segment for the six months ended April 30, 2024, which were no longer delivering in the current year.

Previous wording

Income before income taxes decreased $18.0 million to $2.6 million for thethree months ended January 31, 2025 compared to the same period in the prior year. This was primarily due to a $4.4 million increase in SGA and a decrease in gross margin percentage.

Current wording

Income before income taxes decreased $34.6 million to $21.6 million for the six months ended April 30, 2025 compared to the same period in the prior year. This is primarily due to a $6.9 million increase in SGA and a decrease in gross margin percentage.

Previous wording

Financial services consists primarily of originating mortgages from our home buyers, selling such mortgages in the secondary market, and title insurance activities. We use mandatory investor commitments and forward sales of mortgage-backed securities (“MBS”) to hedge our mortgage-related interest rate exposure on agency and government loans. For thethree months ended January 31, 2025 and 2024, Federal Housing Administration and Veterans Administration (“FHA/VA”) loans represented 41.1% and 32.5%, respectively, of our total loans. For thethree months ended January 31, 2025 compared to the same period in the prior year, our conforming conventional loan originations as a percentage of our total loans decreased from 67.4% to 58.4%. The origination of loans which exceed conforming conventions increased from 0.1% to 0.5% for thethree months ended January 31, 2025 compared to the same period in the prior year.

Current wording

Financial services consists primarily of originating mortgages from our home buyers, selling such mortgages in the secondary market, and title insurance activities. We use mandatory investor commitments and forward sales of mortgage-backed securities (“MBS”) to hedge our mortgage-related interest rate exposure on agency and government loans. For thesix months ended April 30, 2025 and 2024, Federal Housing Administration and Veterans Administration (“FHA/VA”) loans represented 40.6% and 34.2%, respectively, of our total loans. For thesix months ended April 30, 2025 compared to the same period in the prior year, our conforming conventional loan originations as a percentage of our total loans decreased from 65.5% to 58.5%. The origination of loans which exceed conforming conventions increased from 0.3% to 0.9% for thesix months ended April 30, 2025 compared to the same period in the prior year.

Previous wording

During thethree months ended January 31, 2025 and 2024, financial services provided $3.5 million and $3.8 million of income before income taxes, respectively. The decrease in financial services income before income taxes for thethree months ended January 31, 2025 compared to the same period in the prior year was primarily due to a decrease in the basis point spread between the loans originated and the implied rate from our sale of the loans and an increase in commission and total compensation expenses due to the increase in the volume of loans closed during the period. In the markets served by our wholly owned mortgage banking subsidiaries,80.4% and 78.8% of our non-cash homebuyers obtained mortgages originated by these subsidiaries during thethree months ended January 31, 2025 and 2024, respectively.

Current wording

During thethree and six months ended April 30, 2025 and 2024, financial services provided $8.4 million and $11.9 million of income before income taxes compared to $5.1 million and $8.9 million for the same periods in the prior year. The increase in financial services income before income taxes for thethree and six months ended April 30, 2025 compared to the same periods in the prior year was primarily due to an increase in the amount of loans closed during the period and an increase in the basis point spread between the loans originated and the implied rate from our sale of the loans. In the markets served by our wholly owned mortgage banking subsidiaries,78.1% and 78.6% of our non-cash homebuyers obtained mortgages originated by these subsidiaries during the three months ended April 30, 2025 and 2024, respectively, and 79.2% and 78.7% ofour non-cash homebuyers obtained mortgages originated by these subsidiaries during the six months ended April 30, 2025 and 2024, respectively.

Previous wording

Corporate general and administrative expenses include operations at our headquarters in New Jersey. These expenses include payroll, stock compensation, facility costs and rent and other costs associated with our executive offices, legal expenses, information services, human resources, corporate accounting, training, treasury, process redesign, internal audit, national and digital marketing, construction services and administration of insurance, quality and safety. Corporate general and administrative expenses decreased to $32.7 million for thethree months ended January 31, 2025 compared to $37.1 million for thethree months ended January 31, 2024. The decrease was primarily due to lower stock compensation expense compared to the same period in the prior year. During the first quarter of fiscal 2024, we had additional expense related to finalizing the value of phantom stock awards granted under our 2019 long-term incentive plan as a result of an increase to our stock price.

Current wording

Corporate general and administrative expenses include operations at our headquarters in New Jersey. These expenses include payroll, stock compensation, facility costs and rent and other costs associated with our executive offices, legal expenses, information services, human resources, corporate accounting, training, treasury, process redesign, internal audit, national and digital marketing, construction services and administration of insurance, quality and safety. Corporate general and administrative expenses decreased to $29.5 million for thethree months ended April 30, 2025 compared to $32.5 million for thethree months ended April 30, 2024 and decreased to $62.2 million for the six months ended April 30, 2025 compared to $69.7 million for the six months ended April 30, 2024. The decrease was primarily due to lower stock compensation expense compared to the same periods in the prior year. During the first half of fiscal 2024, we had additional expense related to finalizing the value of phantom stock awards granted under our 2019 long-term incentive plan as a result of an increase to our stock price. In addition, for the first half of fiscal 2025, we recorded a benefit related to our 2024 and 2023 long-term incentive plan phantom stock awards, as a result of a decrease in our stock price during the period.

Previous wording

Income from unconsolidated joint ventures consists of our share of the earnings or losses of our unconsolidated joint ventures. Income from unconsolidated joint ventures decreased $5.7 millionto $9.2 million for thethree months ended January 31, 2025. The decrease for the three months ended January 31, 2025 compared to the same period of the prior year was primarily due to a decrease in joint venture deliveries and the recognition of income in the first quarter of the prior year period from a joint venture that was subsequently consolidated in fiscal 2024.

Current wording

Income from unconsolidated joint ventures consists of our share of the earnings or losses of our unconsolidated joint ventures. Income from unconsolidated joint ventures decreased $2.1 millionto $9.0 million for thethree months ended April 30, 2025 and decreased $7.9 million to $18.2 million for the six months ended April 30, 2025 compared to the same periods in the prior year. The decrease for the three andsix months ended April 30, 2025 compared to the same period of the prior year was primarily due to the recognition of losses from two unconsolidated joint ventures in which one just started delivering homes in the second quarter of fiscal 2025 and the other is not currently delivering any homes. In addition, we recognized income in the first half of the prior year from a joint venture that was subsequently consolidated in fiscal 2024.

Previous wording

For thethree months ended January 31, 2025 and 2024, we recorded income tax expense of $11.7 million and $8.7 million, respectively. In both the current and prior year periods, the expense was primarily driven by federal and state tax expense on income before income taxes and permanent differences, partially offset by the generation of energy home credits. The federal tax expense is not paid in cash as it is offset by the use of our existing NOL carryforwards.

Current wording

For thethree and six months ended April 30, 2025 and 2024, we recorded income tax expense of $6.8 million and $18.5 million, respectively, and $18.6 million and $27.2 million, respectively. In both the current and prior year periods, the expense was primarily driven by federal and state tax expense on income before income taxes and permanent differences, partially offset by the generation of energy home credits. The federal tax expense is not paid in cash as it is offset by the use of our existing NOL carryforwards.

Previous wording

Our total liquidity at January 31, 2025 was $222.4 million, including $94.3 million in homebuilding cash and cash equivalents and $125.0 million of borrowing capacity under our senior secured revolving credit facility. We believe that our cash on hand together with available borrowings on our senior secured revolving credit facility will be sufficient for at least the next 12 months to finance our working capital requirements.

Current wording

Our total liquidity at April 30, 2025 was $202.4 million, including $74.0 million in homebuilding cash and cash equivalents and $125.0 million of borrowing capacity under our senior secured revolving credit facility. We believe that our cash on hand together with available borrowings on our senior secured revolving credit facility will be sufficient for at least the next 12 months to finance our working capital requirements.

Previous wording

We spent $247.6 million on land and land development during the first quarter of fiscal 2025. After land and land development spending and all other operating activities, including revenue received from deliveries, cash used in operations was $55.9 million. During the first quarter of fiscal 2025, cash used in investing activities was $25.0 million, primarily due to a new joint venture entered into during the first quarter of fiscal 2025, along with spending on capitalized software, partially offset by distributions of capital from existing unconsolidated joint ventures. Cash used in financing activities was $41.6 million during the first quarter of fiscal 2025, primarily due to net payments for our mortgage warehouse lines of credit, net payments fornonrecourse mortgage financings, treasury stock purchases and payments of preferred dividends, partially offset bynet proceeds for land banking financings and model sale leaseback financings. We intend to continue to use nonrecourse mortgages, model sale leasebacks, joint ventures, and, subject to covenant restrictions in our debt instruments, land banking programs as our business needs dictate.

Current wording

We spent $467.4 million on land and land development during the first half of fiscal 2025. After land and land development spending and all other operating activities, including revenue received from deliveries, cash used in operations was $33.6 million. During the first half of fiscal 2025, cash used in investing activities was $32.9 million, primarily due to a new joint venture entered into during the first quarter of fiscal 2025, along with spending on capitalized software, partially offset by distributions of capital from existing unconsolidated joint ventures. Cash used in financing activities was $81.0 million during the first half of fiscal 2025, primarily due to the redemption of our 13.5% Senior Notes, along with net payments for our mortgage warehouse lines of credit, net payments fornonrecourse mortgage financings, treasury stock purchases and payments of preferred dividends, partially offset bynet proceeds for land banking financings and model sale leaseback financings. We intend to continue to use nonrecourse mortgages, model sale leasebacks, joint ventures, and, subject to covenant restrictions in our debt instruments, land banking programs as our business needs dictate.

Previous wording

Our cash uses during thethree months ended January 31, 2025 and 2024 were for operating expenses, land purchases, land deposits, land development, construction spending, investments in unconsolidated joint ventures, land banking transactions, state income taxes, debt reductions, interest payments, preferred dividends, treasury stock purchases and litigation matters. During these periods, we provided for our cash requirements from available cash on hand, housing and land sales, nonrecourse mortgage transactions, income from unconsolidated joint ventures, financial service revenues and other revenues.

Current wording

Our cash uses during thesix months ended April 30, 2025 and 2024 were for operating expenses, land purchases, land deposits, land development, construction spending, investments in unconsolidated joint ventures, land banking transactions, state income taxes, debt reductions, interest payments, preferred dividends, treasury stock purchases and litigation matters. During these periods, we provided for our cash requirements from available cash on hand, housing and land sales, nonrecourse mortgage transactions, income from unconsolidated joint ventures, financial service revenues and other revenues.

Previous wording

(1)AtJanuary 31, 2025, provides for up to $125.0 million in aggregate amount of senior securedfirst lien revolving loans.The revolving loans thereunder have a maturity of June 30, 2026 and borrowings bear interest, at K. Hovnanian’s option, at either (i) a term secured overnight financing rate (subject to a floor of 3.00%) plus an applicable margin of 4.50% or (ii) an alternate base rate (subject to a floor of 4.00%) plus an applicable margin of 3.50%. In addition, K. Hovnanian will pay an unused commitment fee on the undrawn revolving commitments at a rate of 1.00% per annum.**

Current wording

(1)AtApril 30, 2025, provides for up to $125.0 million in aggregate amount of senior securedfirst lien revolving loans.The revolving loans thereunder have a maturity of June 30, 2026 and borrowings bear interest, at K. Hovnanian’s option, at either (i) a term secured overnight financing rate (subject to a floor of 3.00%) plus an applicable margin of 4.50% or (ii) an alternate base rate (subject to a floor of 4.00%) plus an applicable margin of 3.50%. In addition, K. Hovnanian will pay an unused commitment fee on the undrawn revolving commitments at a rate of 1.00% per annum.**

Previous wording

We had nonrecourse mortgage loans for certain communities totaling $87.6 million and $90.7 million, net of debt issuance costs, at January 31, 2025 and October 31, 2024, respectively, which are secured by the related real property, including any improvements, with an aggregate book value of $219.4 million and $249.7 million, respectively. The weighted-average interest rate on these obligations was 8.2% and 8.7% at January 31, 2025 and October 31, 2024, respectively, and the mortgage loan payments on each community primarily correspond to home deliveries.

Current wording

We had nonrecourse mortgage loans for certain communities totaling $78.1 million and $90.7 million, net of debt issuance costs, at April 30, 2025 and October 31, 2024, respectively, which are secured by the related real property, including any improvements, with an aggregate book value of $196.3 million and $249.7 million, respectively. The weighted-average interest rate on these obligations was 8.2% and 8.7% at April 30, 2025 and October 31, 2024, respectively, and the mortgage loan payments on each community primarily correspond to home deliveries.

Previous wording

Our wholly owned mortgage banking subsidiary, K. Hovnanian Mortgage, originates mortgage loans primarily from the sale of our homes. Such mortgage loans and related servicing rights are sold in the secondary mortgage market within a short period of time. K. Hovnanian Mortgage finances the origination of mortgage loans through various master repurchase agreements, which are recorded in "Financial services" liabilities on the Condensed Consolidated Balance Sheets. The loans are secured by the mortgages held for sale and are repaid when we sell the underlying mortgage loans to permanent investors. As of January 31, 2025 and October 31, 2024, we had an aggregate of $98.6 million and $131.4 million, respectively, outstanding under several of K. Hovnanian Mortgage’s short-term borrowing facilities.

Current wording

Our wholly owned mortgage banking subsidiary, K. Hovnanian Mortgage, originates mortgage loans primarily from the sale of our homes. Such mortgage loans and related servicing rights are sold in the secondary mortgage market within a short period of time. K. Hovnanian Mortgage finances the origination of mortgage loans through various master repurchase agreements, which are recorded in "Financial services" liabilities on the Condensed Consolidated Balance Sheets. The loans are secured by the mortgages held for sale and are repaid when we sell the underlying mortgage loans to permanent investors. As of April 30, 2025 and October 31, 2024, we had an aggregate of $94.6 million and $131.4 million, respectively, outstanding under several of K. Hovnanian Mortgage’s short-term borrowing facilities.

Previous wording

On September 1, 2022, our Board of Directors (the "Board") authorized a repurchase program for up to $50.0 million of our Class A common stock. Under the program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. As of October 31, 2024, $6.5 million of our Class A common stock was available to be purchased under the stock repurchase program. On December 18, 2024, our Board of Directors authorized an incremental increase to our repurchase program. Under the repurchase program, as increased by the Board of Directors, inclusive of any amounts remaining under the existing repurchase authorization initially authorized by the Board of Directors on September 1, 2022, we are authorized to repurchase up to $26.5 million of our Class A common stock. The timing and the actual dollar amount repurchased will depend on a variety of factors, including legal requirements, price, future tax implications and economic and market conditions. The repurchase program may be changed, suspended or discontinued at any time and does not have a specified expiration date.

Current wording

On December 18, 2024, our Board of Directors (the "Board") authorized an incremental increase to our repurchase program and on April 11, 2025, the Board authorized another increase to our repurchase program, such that, inclusive of any amounts remaining under the existing repurchase authorization, as of April 11, 2025, we were authorized to repurchase up to$30.6 million of our Class A common stock. Under the program, repurchases may be made from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual dollar amount repurchased will depend on a variety of factors, including legal requirements, price, future tax implications and economic and market conditions. The repurchase program may be changed, suspended or discontinued at any time and does not have a specified expiration date.

Previous wording

During thethree months ended January 31, 2025, we repurchased 131,460 shares under the stock repurchase program, with a market value of $17.9 million, or $135.95 per share. There were no shares repurchased during thethree months ended January 31, 2024. As of January 31, 2025, $8.6 million of our Class A common stock is available to be purchased under the stock repurchase program.

Current wording

During thesix months ended April 30, 2025, we repurchased 257,908 shares under the stock repurchase program, with a market value of $30.1 million, or $116.70 per share. During thesix months ended April 30, 2024, we repurchased 106,047 shares under the stock repurchase program, with a market value of $15.0 million, or $141.45 per share. As of April 30, 2025,$26.4 million of our Class A common stock was available to be purchased under the stock repurchase program.

Previous wording

On July 12, 2005, we issued 5,600 shares of 7.625% Series A preferred stock, with a liquidation preference of $25,000 per share. Dividends on the Series A preferred stock are not cumulative and are payable at an annual rate of 7.625%. The Series A preferred stock is not convertible into the Company’s common stock and is redeemable in whole or in part at our option at the liquidation preference of the shares. The Series A preferred stock is traded as depositary shares, with each depositary share representing 1/1000 th of a share of Series A preferred stock. We paid dividends of $2.7 million on the Series A preferred stock for each of thethree months ended January 31, 2025 and 2024, respectively.

Current wording

On July 12, 2005, we issued 5,600 shares of 7.625% Series A preferred stock, with a liquidation preference of $25,000 per share. Dividends on the Series A preferred stock are not cumulative and are payable at an annual rate of 7.625%. The Series A preferred stock is not convertible into the Company’s common stock and is redeemable in whole or in part at our option at the liquidation preference of the shares. The Series A preferred stock is traded as depositary shares, with each depositary share representing 1/1000 th of a share of Series A preferred stock. We paid dividends of $2.7 million and $5.3 million on the Series A preferred stock for the three andsix months ended April 30, 2025 and 2024, respectively.

Previous wording

We have investments in unconsolidated joint ventures in various markets where our homebuilding operations are located. Investments in and advances to unconsolidated joint ventures increased $29.8 million to $172.7 million at January 31, 2025 compared to October 31, 2024. The increase was primarily due a new joint venture entered into during the first quarter of fiscal 2025, along with increases in our share of income recognized fortwo of our existing unconsolidated joint ventures during the period, partially offset by an increase in our share of loss recognized for one of our existing unconsolidated joint ventures, and partner distributions. As of January 31, 2025 and October 31, 2024, we had investments inseven andsix unconsolidated homebuilding joint ventures, respectively. We have no guarantees associated with our unconsolidated joint ventures, other than guarantees limited to performance and completion of development activities, environmental indemnification and standard warranty and representation against fraud, misrepresentation and similar actions, including a voluntary bankruptcy.

Current wording

We have investments in unconsolidated joint ventures in various markets where our homebuilding operations are located. Investments in and advances to unconsolidated joint ventures increased $40.6 million to $183.5 million at April 30, 2025 compared to October 31, 2024. The increase was primarily due a new joint venture entered into during the first quarter of fiscal 2025, along with increases in our share of income recognized fortwo of our existing unconsolidated joint ventures during the period, partially offset by an increase in our share of loss recognized for one of our existing unconsolidated joint ventures, and partner distributions. As of April 30, 2025 and October 31, 2024, we had investments inseven and six unconsolidated homebuilding joint ventures, respectively. We have no guarantees associated with our unconsolidated joint ventures, other than guarantees limited to performance and completion of development activities, environmental indemnification and standard warranty and representation against fraud, misrepresentation and similar actions, including a voluntary bankruptcy.

Previous wording

Total inventory, excluding consolidated inventory not owned, decreased $4.2 million to $1.4 billion at January 31, 2025 compared to October 31, 2024. Total inventory, excluding consolidated inventory not owned, decreased by $14.9 million in the Northeast and $25.6 million in the West, partially offset by an increase of $36.3 million in the Southeast. The net decrease was primarily attributable to home deliveries, along with inventory contributed to a new unconsolidated joint venture, partially offset bynew land purchases and land development during the period. In the last few years, we have been able to acquire new land parcels at prices that we believe will generate reasonable returns under current homebuilding market conditions. This trend may not continue in either the near or the long term. Substantially all homes under construction or completed and included in inventory at January 31, 2025 are expected to be delivered during the nextsix tonine months.

Current wording

Total inventory, excluding consolidated inventory not owned, increased $42.4 million to $1.5 billion at April 30, 2025 compared to October 31, 2024. Total inventory, excluding consolidated inventory not owned, increased by $12.0 million in the Northeast and $61.4 million in the Southeast, partially offset by a decrease of $31.0 million in the West. The net increase was primarily attributable tonew land purchases and land development, partially offset byhome deliveries, along with inventory contributed to a new unconsolidated joint venture during the period. Substantially all homes under construction or completed and included in inventory at April 30, 2025 are expected to be delivered during the nextsix tonine months.

Previous wording

Consolidated inventory not owned, which consists of options related to land banking and model financing, increased $25.9 million from October 31, 2024 to January 31, 2025. The increase was primarily due to increases in land banking transactions, along with an increase in the sale and leaseback of certain model homes during the period. We have land banking arrangements, whereby we sell land parcels to land bankers and they provide us with an option to purchase finished lots on a predetermined schedule. Because of our options to repurchase these parcels, these transactions are considered a financing rather than a sale. Our Condensed Consolidated Balance Sheet, at January 31, 2025, included inventory of $176.7 million recorded to “Consolidated inventory not owned,” with a corresponding amount of $94.9 million (net of debt issuance costs) recorded to “Liabilities from inventory not owned” for the amount of net cash received from the transactions. In addition, we sell and lease back certain of our model homes with the right to participate in the potential profit when each home is sold to a third-party at the end of the respective lease. As a result of our continued involvement and the ability to repurchase model homes with below market options, these sale and leaseback transactions are considered a financing rather than a sale. Therefore, our Condensed Consolidated Balance Sheet, at January 31, 2025, included inventory of $60.2 million recorded to “Consolidated inventory not owned,” with a corresponding amount of $61.4 million (net of debt issuance costs) recorded to “Liabilities from inventory not owned” for the amount of net cash received from sale and leaseback transactions.

Current wording

Consolidated inventory not owned, which consists of options related to land banking and model financing, increased $56.7 million from October 31, 2024 to April 30, 2025. The increase was primarily due to increases in land banking transactions, along with an increase in the sale and leaseback of certain model homes during the period. We have land banking arrangements, whereby we sell land parcels to land bankers and they provide us with an option to purchase finished lots on a predetermined schedule. Because of our options to repurchase these parcels, these transactions are considered a financing rather than a sale. Our Condensed Consolidated Balance Sheet, at April 30, 2025, included inventory of $204.8 million recorded to “Consolidated inventory not owned,” with a corresponding amount of $108.6 million (net of debt issuance costs) recorded to “Liabilities from inventory not owned” for the amount of net cash received from the transactions. In addition, we sell and lease back certain of our model homes with the right to participate in the potential profit when each home is sold to a third-party at the end of the respective lease. As a result of our continued involvement and the ability to repurchase model homes with below market options, these sale and leaseback transactions are considered a financing rather than a sale. Therefore, our Condensed Consolidated Balance Sheet, at April 30, 2025, included inventory of $62.9 million recorded to “Consolidated inventory not owned,” with a corresponding amount of $64.5 million (net of debt issuance costs) recorded to “Liabilities from inventory not owned” for the amount of net cash received from the transactions.

Previous wording

The following table summarizes our started or completed unsold homes and models, excluding unconsolidated joint ventures, in active selling communities and substantially completed communities.

Current wording

The following table summarizes our started or completed unsold homes and models, excluding unconsolidated joint ventures, in active selling communities and substantially completed communities. The increase in started or completed unsold homes from October 31, 2024 to April 30, 2025 is due to the decrease in sales pace during the second quarter of fiscal 2025.