HOV - Earnings call transcript Q1 2019 | Hovnanian Enterprises, Inc.

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Operator

Good morning and thank you for joining us today for Hovnanian Enterprises Fiscal 2019 First Quarter Earnings Conference Call. An archive of the webcast will be available after the completion of the call and run for 12 months. This conference is being recorded for rebroadcast and all participants are currently in a listen-only mode. Management will make some opening remarks about the first quarter results, and then open up the line for questions. The company will also be webcasting a slide presentation along with opening comments from management. on page available website the are www.KHOV.com. at slides the of Investor company's The would follow like on who listeners Those to website this to along at time. the log should

the President Investor Jeff, I like would Before ahead. Relations. to we Vice to please begin, turn O'Keefe, Jeff call now go over

Jeffrey O'Keefe

are Thank conference XXXX. for actual of be historical in achievements quarter, our within not the XXXX. Such but achievements morning's forward-looking you, which to and periods. you and expectations call All to limited unknown Such risks, for considered call forward-looking with ended different uncertainties statements statements results materially expressed company's the Securities provisions of participating to, include, goals and statements Reform for and thank financial XX, results, Litigation statements the cause performance company to or of of first this financial results, in review that other Gigi, January performance be Act forward-looking its to statements. any should respect all this the Harbor facts statements may factors Private Safe future from known results involve the as meaning by or the not implied or future are related the that

that quantify. achieved. be statements speak a subsequent they a can uncertainties difficult Form particularly no Risk and in Such risks, these in risks, performance and not could Management's and the will date ended factors entitled are assurance detail Analysis, year are subject results in factors. give the update fiscal whether nature, to MD&A Therefore, as otherwise expectations and Although and our publicly variety reflected plans, as forward-looking to XXXX, forward-looking we reasonable, Harbor differ information, results or any as laws, Commission. for entitled with required that in forward-looking or XX, made, their to uncertainties from of in our we expectations Safe portion Exchange report circumstances only by materially sections the assumptions of a and securities believe future no revise Factors plans, are Statement adversely future actual result of intentions other XX-K on and and the or are guarantees predict or forward-looking are such October that of undertake we result are or Discussion suggested of statements by By obligation intentions statements described of or annual statements, Securities filings other applicable changed as events, any new reason. Except such the

and on turn Sorsby, Finance ahead. today Executive President are I'll President, President me and and Chief CFO; Accounting David Chairman, to O'Connor, Ara, Controller; the Bachstetter, Larry Ara CEO; Vice Joining and call over Brad Hovnanian, Vice and President Vice call Officer now Ara. the Treasurer. go

Ara Hovnanian

going also I'm review Jeff. quarter for the operating our results first to sales environment. talk Thanks, about current the and

will Larry in follow detail. usual, As more me

realized line Our our exceeded the look sales mind estimates top profits. of are this industry year. first last and At community blush, X. contracts begin like with starting X.X by the Slide for to X for talking year about Hovnanian, sales I'd quarter per declining to weak, from our consensus pre-tax met first were we and issue expectations results on for in Because quarter overall are an that with guidance, for

reported our to weak year. same blue with last in and is month year-end We began during XX most months. Slide monthly you that picture. X, a year The quarter very However, different November a you is the per ago past each community month look in the slightly monthly clearly slide shows closer The data into grey. recent for of compared on see as a the The call. contracts

with trend also similar per can you community that contracts January reversed to December Fortunately, see year. that last and

While February first further. slightly the results quarter, month I'm of strengthened ahead our were say most to second February, that strong the results. sales of month of recent happy last year's

energy Our slight contracts year last count. X.X pace the year's especially in contracts February a were improved to well can report compared at have in than We're absolute year. increased XXX last rest contracts I for is as as I per of the February community and the number tell bode toured of D.C. the of to good in February is sales year well the California. and X.X offices. slightly that sense There several excitement results growing to pleased in community a different a optimistic We're sales XXX community This ago. a in contracts this combination pace past in Greater February you the geographies selling contracts that the Florida weeks, that from growth and market, Anecdotally, the better definitely sales also Southern of season. count reinvigorated year-over-year Spring in

in the say to energy like sales the especially points, in price enthusiasm. past is in that not higher I'd similar that in is offices. our the sales I case that reality was that same only felt That the fall. I not say competitor's there California While enthusiasm a did share offices, our will

general California. mix lower On slightly been however, the high-priced in two communities whole, have only price in we've and to our shifting points

mortgage these during backlog liberally has delivered months, momentum rates incentives. observation added offset report margins as our few lumber little levels quarter, that a sales we buyers' prior current our the first returning In to similar use anecdotal helped in the what to prices lower lower to past more is the we Another while general, associates incentives used positive that our outlook. of

contracts. the of indicator highlight our that's leading So

consolidated get X results Slide in begins revenues revenues. back show to the in full We revenues quarter. with and venture the Let joint grey for me blue.

increased declined, consolidated amount. see, by can joint revenues a you As similar venture revenues but

joint If wholly-owned, were as to venture XXXX unconsolidated quarter our revenues compared virtually you if year. first treated revenues flat last

XXXX. was community selling count we ventures that a revenues is achievement. and consolidated some to the not in the because primarily reasonable communities wholly-owned in slower considering The decline it lower we're last certainly happy revenues, we consolidated moved While fall, with had flat joint environment

of when many to was discussed the revenues and JV greater debt. declines quarter where community the market liquidity the a us close this period combined the row has period during a closed to that Again, year. occurred we ago. we count been This in was for level same bond prior consolidated a raise maturing was times, in was the to it As off to third needed pay despite and the or year high-yield than

revenues pre-tax profit. future quarter, did we As count, ultimately this sequentially the should growth store in and our to in increase we fronts as growth lead community to

of In SG&A over essentially to last year. In the dollars to portion slide, year in upper X% in the the of million spite our gross turning were margin some in left slower first of year's flat for quarter. it's portion down incentives can this period, we hand first top XXXX. our see holiday year X, million to extra compared from Now, that hand the XX.X% of $XX spec the year and you Slide you quarter the of last offered the fall can to slide, homes that was sell right total see $XX

from start communities, get first even would no normalized to from leverage communities, new Once as help expect offset able costs. communities and these to our to these to deliveries back range. these costs we SG&A XX% the our extra this ratio our count. costs quarter, there more be As are deliveries we our get community year growing is opening but we're during challenging our are associated There ratio high. initially typical new remains SG&A It's with to

during lower compared our our million in On to was Slide increased interest in we expense XXXX the resulting under bottom XXXX $X fiscal quarter unsecured first of increased, Further, $XX to took a of $XX On of last in first compared refinance we show million year's slide, the our income ventures profit joint inventory. last show was into year's to in quarter. X, at the to to capitalized inventories from million year. our that this first Interest loss the we that debt. development being quarter more $XX primarily due steps interest lower million

Our income three been from past joint for ventures strong has quarters. the

we $XX Turning of first to $XX and a of loss that charges pretax we before show loss year. to here reported compared impairments Slide last a adjusted million, million X, quarter

what expected, we significantly in reported loss year the was than the less we same As quarter ago. a

slowest quarter, full year the and of Our can quarter the as right year still is for last despite the on typically year's profitable the of the loss year. first slide, the we were last see you quarter side in first

year with satisfied the in over improvement performance. the not our year's full last gives us we're loss substantial quarter, the XXXX While confidence in

half. of As year the usual, the the should half first substantially last outperform

continue will first to compared the a last this While expect last to over year of year, we quarter half. first we show anticipate half year's weaker improvement second

then corner we communities. Turning believe respect our sustainable showing declines our profitability. with to count important growing the to the Slide higher and an our ultimately growth in goal That revenues finally toward was step forward XX, achieving and of levels in of turned we community

during community sequentially increased count Our XX% consolidated quarter. first the

this slide, can from grew of XXX XXX you end communities the at January. we end of to As see on the at consolidated October

from first count, community which to end XXX the XXX the includes communities communities at the also increased JVs total sequentially at Our quarter. of yearend

year. in We consistent previous would of guidance half that report with the sequential increase the are occur to the sequential this growth pleased first

quarter community to of our a if Chief lead The housing continue turn to Financial expect will is market sales second XXXX. sluggish. our Sorsby, increased President Larry the grow community future over I'll should now it increased Officer. and in the to in Vice Executive We quarters even count count little

Larry Sorsby

with Thanks, began view Ara. sales. monthly Ara a of granular

per to view If can with another contracts trends. see longer XX, you Slide community you term turn of

annual during nor the was bust average from industry. left per neither XX a time community show contracts a XXXX. for slide, a the We side contracts boom, we the hand housing On community our far per XXXX period to of that

portion see growth can each for years. center the steady the the of community in several you per of past the clearly contracts slide, On

that XXXX ended for per for the the January the months the slide, XX.X far hand XXXX. community were compared XX, XX.X portion ended On XX trailing XX right to net contracts we months trailing show of January

are We back migrating absorption gradually levels. normal to

trends in In quarter, over period venture rate cancellation mortgage the year, trends year. in XX% from On XX, rate when By to back of rate to February XXXX. X% spiked that year XXXX, of increase about the cancellation November can including gray, contract XXXX, in see September the at period. joint rate, February our XX and last year around During stayed first then over X.X%, the monthly months. was XX blue April cancellations our past of steady past until increased the the XX communities XX% same up same from to X.XX%, you in Slide they fallen X.X% level in XXXX. close the had by relatively an rates about peaked mortgage rates and Mortgage lowest to

past During between the our a year, trends we cancellation mortgage is rate there rates. correlation believe monthly and

believe February to but sell their year a caused trended We are increase prices normalized mortgage March some at our our cancellation rates on peaked Mortgage back levels have that the spiked that begin Since were As oil increase mortgage increase mortgage they rising When fell more today to rates February customers about rates September mortgage peak December started monthly level November declined over rose saw to period almost same mortgage as our in just last XX% starting existing cancellation cancellation last November in X%, to again their questions than it downwards homes, lower concerned to in XX%. and of XX% then XX% how more are year, cancellation bit as in unable down respectively. we rates of rates November that our last rates of to as and rate well. operations our Houston time were at to and X.XX%, in and performing. year impact XX payments. getting we're our year. of once rates modestly XX% rate and Recently to rate in the about January up peak, were

Turning to Slide XX.

per homes homes the the quarter, for from our that X.X see to can X.X community sales in You period last Houston pace increased first year. same in

Houston improved concessions. our aggressive we did Although year-over-year, spur slightly pace activities with more

our quarter, Houston first the lower slightly during result, a in was year-over-year. margin gross As

the future cost we achieved believe margins quarter. periods, lower Although from to expect first small a to we benefit similar during remain will in Houston lumber we the margins levels get

continued our going count. to our detail I'm grow Now provide on community more efforts to

Turning total quarter at show to lots controlled year-over-year. consolidated Slide the our XX. end increased the We first XX% of

option The lot Our optioned increased controlled by while lot contracts our actually X%. through decreased lots XX%, our gives us position increase flexibility. by owned in position considerable

cost are sales to of choppiness new disciplined current pace aware market standards home of price, housing using purchasing our months and underwriting construction We sales recent remain the parcels. in and land when

incentives correct market. at look year. reflected sales look and the our our seasonally recent we of we - competitors these them recent pace in in Specifically, at adjust full XX net pricing. current recent of most competitors home well prices Similarly, the determining quarter, In week the for metrics the sales

land have been acquisitions they to to that standards and adjustments we pleased adjust we've have prices are While The land our recent down, minor been we is sellers generally the were that to underwrite result returns. make to slow acquisitions able that terms help find land made. willing with

land us proven holdings also a grow market provides hedge. built-in Our ability to utilize with to our options

both can our controlled, owned you years XX, If of lots see peers. optioned our you to total to and supply compared turn Slide

years just lots ranks above of Our median. supply

a compared on to However, of peers. via clear we Slide lots our our controlled options of becomes XX. higher most This percentage

have Here of see that percent highest you controlled options. third can land via we the

As was I in owned. through pointed all increases rather out land year-over-year our optioned position earlier, growth land than our position in of our

both as to much order and in land risk. reduce inventory use options turns continue high possible achieve We as to

we started We of per our quarter on believe are of really buyers have been community. have to is ranged recently a move a started homes between There lot has end to in On had strategy quarter at our hand X.X third in communities homes. we X.X each it with unsold the quickly. first about getting unsold in started per community been we strategy. the to to no respect change Since XXXX. started XX, of questions Slide unsold looking XXXX, prudent our spec accommodate the of unsold few that homes of X.X homes who have show and We

very per since We homes have XXXX. unsold We averaged with X.X community spec position. started our remain comfortable home

of recent incentives, have trend we started more reality in compared lower incentives slightly on offering homes with We aggressive but more recently or spec lower to use unsold prices we have cost the aggressive margins, typical, homes. As offset homes. the are would benefited lumber to-be-built spec our is homes hoping on the to in were lumber been

not investments our us on recently are generating yet in and this XX the top to compared interest performance the ROI inventory not value trailing Looking has of metric communities We communities peers. challenging months all $XXX remain inventory of our in million operating the us we debt. for that This have is metric. key of peer we at metric the for the EBIT neutralizes aggregate returned $X.X before our show building mothball peers measures impairments. metrics industry of EBIT growth We operating to the This million believe we when for one made owned, our of expense. including revenues. inventory net and metric as half focus and an of impact This consolidated $XXX pure book inventory. home the of XX, On to had new been land to parcels billion in Slide

the profits, housing As we back to we the EBIT ROI not these new this levels we as investments start expect ago. get into bounce or industry will to inventory achieved We and entire we two further higher generating recovery. but normalized levels, improve performance the year believe industry a to are at still our will

this by inventory of ways able are One achieve focus on the is we to turns. high our maintaining

Turning our trailing rate now the you turnover second XX. have over the highest see inventory XX that Slide to months. we to peers, Compared

industry our inventory strategy. a overall below XX% NVR's us. High highest key turnover next turns than of were leading are number, lag we component higher Although, peer turns our the

our discussion asset related tax area valuation to Another allowance. deferred for is

on asset numerous very not take Our deferred protect and steps tax sheet. is it. to currently allowance significant valuation reflected balance our We

in As million. the of was January XX, XXXX, allowance our valuation $XXX aggregate

ended will with deficit total show of that have future $XXX quarter cash billion taxes we pretax We income first on federal not million. XX, $X shareholders' Slide pay we to approximately On earnings. of the a

time $XXX no allowance issuing Over add a can believe slide, million. on time back balance have current any soon. sheet valuation as and be that you we've equity shareholders If this positive will we intensions of our repair our done our then we equity

are ISS you split reverse at XX. Glass our stock be Lewis have of shareholders March on aware, shareholders most the vote the and meeting on As our will shareholders a of voting Both favor recommended reverse split. in

We reverse approved. be expect the split proposal will

Now let our me position. current comment liquidity on

we liquidity targeted and spending land million XX, with first Slide well after and seen quarter development, between our within on the land liquidity which million. $XXX range As $XXX on million of $XXX million, of ended is $XXX

have to profile January ultimately the maturity increases On it continue should occurring XXXX, sources larger Slide years of our of count. first our our which grow drive now. show community three further looked position, in we We to at XX, the land liquidity maturities XX, as about from

confident our We allowing will that for in years in smooth a future. intervening refinancing the are improve performance the

it me remarks. Ara Let to brief back for some turn closing

Ara Hovnanian

call our our efforts offering Thanks, spoke increase communities. time about Aspire I quarter Larry. through last to On our product first

that with glad this better to most geographies. increased be our offering are market in seems priced presence of because low that holding we've the We end up

little bottom-line good focus more broad product well, another. communities on you of strategic are now to of is good with forward more continue more more have pleased after, future. formal throughout SG&A We've the in and getting we improve Right and path We're exposure. are another adult for in active of communities We course, type concludes delivering success soon calls. The leverage We're for open to good positioning times as the a costs confident one discussed look had now. product there I've selling communities place our believe our to Aspire the off our season open, that stages will which cycles prior growth the us, to and offering offering we're happy That up homes. right our spring start. but a our interest is early wish questions to than a performance you are and when had remarks top-line that our and it

Operator

questions. The from Instructions] questions. comes will Thomas this company open And to will first our we the Instructions] [Operator now Maguire from [Operator Zelman. question At time, call answer

now open. line is Your

Thomas Maguire

Hey guys, nice on quarter. job the

and the year-over-year Is the in up Just just more then rates, just touch-base the order that relative improvement and just only activity February. talked view, broadly, about on little quickly to that? is to piece, months bit talk quarter I you mortgage what's absorption trend, environment today's wanted guess the few it your you driving relative through more a ago? a in can sales about

Ara Hovnanian

Sure.

mortgage think a say big Dow, this I in more less coming little driver. trade are in there drop volatility a rates little little there's just a with the that been clearly up, stock about also a wars fear general, is in gives spite confidence, the big I'd of and in morning's less market.

you when so obviously current. ended general, overall think all And, in pretty helpful that's February, of been I we combine environment. those that's So together, just

we X say, into far to good. and so feel March, early, We days continue so are far. the It's I'd but encouraged so with result very

Thomas Maguire

I how seen Okay. understanding you California, That's we think improvement And California activity California? basis, if say higher-end to And maybe would talked any at you in about trends you relative other the being it's markets just of weak. comments hear. high-end a of would then, about hold move really still the just good on there mean, out all more have still you high-end or depressed? outside in for those then,

Ara Hovnanian

really Northern. And communities. Jersey, there aggressive one we California, more bit. have one community little but been because it's In incentives. improved New it's haven't have we California In some well. a community. bit, And Northern the only has Southern that we higher-end held higher-end and say have I'd we improving it's But improved concessions as with been in of higher-end incentives. a Northern But have there interestingly, quite Sure.

incentives. in adjust fact, to been So little in we've doing upward them, able much bit. in And a it's some without prices actually of

performance the than have the definitely communities done it's So general, a our bag. say, better active adults But in lower mixed little higher-priced I'd of priced been a and communities.

Thomas Maguire

day. Got good Thanks. Have it. a

Ara Hovnanian

Okay.

Operator

Thank you.

Our from next Morgan. question is JP Chandar from Arjun

line Your is open. now

Arjun Chandar

I consolidated Southern You Good has and December, morning, February, incentives thank the of versus a about the increase bit from course little evolution evolved on the November in incentive to sense to mentioned the that But wanted quarter? little California a offering get how you more bit a you. four incentives last just during Can that January, of over a quarter. had you concessions basis in talk the months?

Ara Hovnanian

the big really more that. were And aggressive November. hasn't saw sales the I slow in feels what have It you we and lower Yeah, in adjusted in in changed a don't little I'd some more a of There aggressive sales enthusiasm did the And the November. November. anecdotally. I rates is say combination between little just but corresponding really got market market confidence in been spurred January, then, the so incentives many we of say after it hasn't the I'd just adjust and we exact less with numbers, a after think like December dramatically. February and and change combined December,

Larry Sorsby

incentives are it's are associates. community the driven. we I think Yeah, call We that, mean, thinking a market and very would behind where this that that off isn't problem expected we sales presentation It's Arjun, getting and the also market our board specific, specific doing I pace concessions. I have don't across sales anybody just communities fallen want or and add and

add We will incentives.

We on peers homes And also started incentives as been and rather to-be-built. incentives, extra unsold mentioned have the are our the focused monitor than closely I on call, what more doing. the

Arjun Chandar

in improvement the quarter January inventory up Thanks. had nice to October just And from quarter. sheet, the follow balance the a you owned sequential a on

see two, down number deployed land the look we but group? ratio, when the at old to You the secured in quarter, was two some your inventory How secured I to collateral spend ratio of adjust old groups consolidated the on cash for with it reconcile the numbers we adjusted the clearly in what collateral both sequentially. can

Brad O'Connor

are payments. So impact collateral - you our the seeing quarters are the the third is and things a few the ratio quarter, interest for quarters first we that pay in larger

the as you spent So a to opposed inventory. as of cash interest into see result go payments down being

we we and of put spend that predevelopment the deposits quarter The are are is other some inventory lots not. be lots talked property the inventory our and mortgage big there are the down under about when collateral. in item optioned those dollars some That up, is spent going on in take as and will become option. not down we properties, in but can't It collateral numbers that eventually it's the interim

was about at cash accounts the fourth. quarter, So in look increase that from be an spend it first account inventory it about the increase the liabilities, inventory, liabilities was in October have would then and last collateral, that reflected that see typically so million you $XX there payable because the at of accounts And payable been but our created. is are comes will the - out in the time up item already you a spend down accounts we $XX payable the million in without the we payable the that if in on of yet build of in future. don't a In lot corresponding

are the quarter end cash The the paid item are at big other and year accrued see so during annual you first they is go the out there. that bonuses

the decrease in seeing the ratio So in you first those are are quarter. collateral the that items

Arjun Chandar

Thank It's very you. helpful.

Operator

Thank you.

is from from Research. Our Megan Buckingham McGrath next question

now open. line is Your

Megan McGrath

morning. you. Good Great, thank

about looking chart, a months. historical there? follow to couple your but at bit your monthly comments up maybe look March compares next wanted and pretty feeling of over little the some looking on you April tough, that given out and they perspective How are February Just in

Larry Sorsby

heard sure I'm sure. not is I how our margins, what I'm asked, you not so that

Megan McGrath

The April looks March no. pretty the difficult No, year. and order this looks like compare, it in compare

Larry Sorsby

on last perspective all is off tell, are February be point level encouraged, in that time year start will February season comparison, above with were strong this difficult but the of selling and indications we so when results. and around start April hopeful will we - year's recent very same from well based we're the Yeah, a to my March last spring being we at our

Megan McGrath

Okay

Brad O'Connor

is will this the coming last sales is see that March climb March we little X.X great understand in March. typically a I similar was see at than was community, year It better We we where comment year. but seasonal February, from. a February every Megan, so had of per certainly bit year X.X and hopefully a

So it's a number, it's in big and months season. but is usually number, May are April March a big big and the

Megan McGrath

should prices passed Larry, Okay, to all hard thanks. along lumber, to you? your move the lumber, That's do And your think prices fully lumber those lumber on call incorporated volatility little incremental gets follow into up or going you versus Obviously, the down commentary the in incentives. helpful. with on be in a there but margin continued reason that's benefit forward as

Larry Sorsby

that be in cost of just to going reflected margins cost that offset of there. our some we've increase going margins, net incremental is than rather we having to lower there in clearly think lumber mean, up lower that incentives offered is just I a the

that So would margins, perspective. going to benefit it would was to a tweak in think hoped - we accrue are not expecting just what from incentives because but I have push we it's a we margin upward,

Megan McGrath

And you. Got if then I one take more. could

talked In us the on the end give high general market? terms California any of can you commentary Coast, the but in West about Coast, the you West

Brad O'Connor

California. doing Yes, are both Coast, in nicely, very particularly end quite our the Aspire I'd is nicely on say northern and the doing West lines California Southern low

Megan McGrath

been have in Better than they XQ?

Brad O'Connor

just is our guess, gut I pace was say the but California. in because been say I my general feeling to honestly the line, little in bit growing hard it but can't is it's I but Well, XQ the say than now we've would Aspire better looked yes. in I'd XQ, specifically at a

Larry Sorsby

of way February. And end positive Northern some Okay, negative the this their expected would and budget let our California it behind of I pace saw get them to variance that in December. November me a that we communities by answer variance saw Megan. say we call

overall it's it So back feels like just pretty bouncing nicely.

Megan McGrath

Great, thanks so much.

Operator

you. Thank

Gilbert Mary from from next Imperial question Capital. is Our

Your line is now open.

Mary Ross Gilbert

Thank Yes, good morning. you.

with to time two number have with I - of to a targets, the that your take line question following the of achieve collateral there? $XXX on negatively get could group. of Is of coverage kind impacting that regard the so regarding up evening how an example, you seasonality So that in there it is going EBITDA. draw basis, especially an to be it given at time super for first with just million there would can And is kind made the then idea the of et the regard the lower What coverage question can Thank how we old quarter, to horizon accounts purchases look first in helpful. in we're and down payable kind That impact, the average you. since we QX ratio the cetera. forward that seasonality on out

Larry Sorsby

let start. So me

what you're is we that think metric talked key referring I our targets last to about summer.

in said didn't I few point would be uber them. a specific. achieve we get that time, years it We to think at

of to few but is I think With level that just think may on O'Connor the project. we a it still we're assuming back, next for respect the target achieve back those that who I over the us think speaking collateral seeing to we results earlier, Maybe I seem which that achieving difficult indicate market had, metric future. to very I are target was it's as returning, Brad the key targets with is, the in we're to set market few certainly number but years. our to coverage, think we that on months bounce market still to the differ

old more another other by individual a to product it at group look into rates. don't mean, an one the into on determination an to the group from and type make whether We old in this there liquidity. there's we payment don't next them know, or in new perspective, whether rate communities, group just Brad deterioration leverage interest and seasonal more the which there don't group, it product type determined group a over I the but We I put new group has shouldn't of of interest compare put we new depends does that's old excess on have... group. you an impact have do group one think you and As group if the it I quarter have is it's the so time. interest be

Brad O'Connor

best That within try for last that talked marker, and themselves I quarterly payments the recommendation payables. recommendation. should reflect my to that the my type fiscal will at the that XXXX. our occur to about or the to I best the because each would trends recommendation there way be in be seasonality adjust accounts the seasonal debt year about would same thing the impact, quarter, look The be talked

Mary Ross Gilbert

the level coupon And and fairly opportunity debt, helpful. Old at the continuing that to off particularly at any a if you low with in source as the potential kind control very traded into that the you're on capitalizing has return? you. of weighs big Group any just making your Thank in how of you that's of achieving that how also sales weigh looking increase land to your I looking in wondered those weigh then, opportunities and Okay, ROI, investments

Larry Sorsby

we've the when look at that buying certainly historically, mean levels. the purchase, old attractive yields I to to from kinds time debt group of on demonstrated yields we we've buy the back. historically actually and those approaching do back compared as land new getting do Certainly start debt are time some Yeah,

to overheads. by have that absorbs when We land - it new some balance we a with parcel

interesting that's us factor, excuse more that fall, making we into say decision safe to to will to another be our alternative rise, goes yields to will it serious thought a - investment continue - for but if or me give thing it. So

Mary Ross Gilbert

very Great. Thank much. you

Operator

And our Thank Alex Center. from question Research Instructions] is Housing you. next Barron from [Operator

is line open. Your now

Alex Barron

or going comments guidance good Thank margins it the think you provide or the you. on if where the can I I'm any you remainder wondering sure Yes, are of to quarter heard not year? next morning. if go and

Larry Sorsby

the specific give as thing offset lot that kind it's any I run margins But try just there. the I'll anything that way put the of gave put didn't other. comments don't to into don't we expect from in think to I that way. a specific that your going move first cost, we guidance. don't I calculus our incentives, or benefit were lower so one think your similar you But the model. real it a we the lumber quarter, think projection as any

Alex Barron

back SG&A, the this regards had going with is last you of kind end numbers year, closer the what to more… look think do to Got the half quarter to it. so of or a towards And guys lower this you of year be like

Ara Hovnanian

go no. varies our half in of but revenues not it end dramatically, often, much last the typically so spend, we at We it's year. the the No, of almost year always lower the have and up SG&A of the percentages

consistent ratios brings quarters, you higher year. apply later SG&A in of that more parts with the our the when top-line the dollars at revenues down So later

having on intend than absolutely we'd as reported we So SG&A lower a percent. just what

Alex Barron

or this you to think similar will closer dollars in what be I'm But was reported the saying of half closer last Right. quarter back year? the dollars the to

Larry Sorsby

the onetime quarter. or Yeah, there event in was a fourth event unusual an

our had on lowering In we benefit our terms of from reserves the dollars, insurance. a reversing

show that the So I how million. our at $XX exactly slide we're lowering million, look we $XX quarter $XX $XX year that the going that don't don't remember if even benefit a quarter remember; insurance is. benefit construction get you from that you the got million But not was. year, I on fourth every we or it for defects. reserves that it to should next call, exactly for our is it's assume what much million or

Alex Barron

okay. luck. That's so you and helpful. of much Got it, best Thank

Ara Hovnanian

Thank you.

Operator

Ara I further no the you. back showing remarks. call for would I'm to At to this questions. over time, like closing Thank turn

Ara Hovnanian

results uptick year year. positive about the to last very Thanks compared our of things a call, certainly, pretax as performance better very much. first giving to and in We sales foremost, good the and you. number Thank We unfolds. but you look the forward more feel in

Operator

for nice conference today. day. our a for and concludes you have This Thank may call participating all disconnect. now parties All

Hovnanian Enterprises (HOV) 7 Mar 192019 Q1 Earnings call transcript