HOV - Earnings call transcript Q1 2021 | Hovnanian Enterprises, Inc.

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Operator

Good morning and thank you for joining us today for Hovnanian Enterprises Fiscal 2021 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 the line for questions. The company will also be webcasting a slide presentation along with the opening comments from management. on page available website the are www.khov.com. at slides the of Investors company's The would follow like log who listeners Those to the on along website. to now should Vice call I to turn like Relations. the would Jeff to O'Keefe, President, Investor over Jeff, please go ahead.

Jeffrey O'Keefe

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

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

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

Ara Hovnanian

COVID-XX more continues to the challenges with and of conference Thanks quarter in details. families both certainly will to guidance your going the to I follow our few On results results comments we we'll usual closing Jeff. I gave and a X, I'm as and CFO remain fourth me current hope all then from you environment first Q&A. our our make Sorsby, slide follow our compare we then quarter Larry will a with call. and healthy. business present safe quarter market and address personal first review perspective and

revenues total the gave. we range that within Our were

the unconsolidated good to homes first to XX% adjusted all at X, gross pre-tax the S&A increased adjusted adjusted XX is the joint we income show start. the quarter our better ratio, end off end and a of margins, EBITDA excluding that X,XXX slide On range. Fiscal than backlog However, high the ventures. were of

this again the fiscal see You excluding of sets backlog to up billion increased us remainder backlog year. over strong the strength $X.XX the of of results this that XX% for nicely The value dollar also joint can ventures.

quarter the We on begin year-over-year for show the with performance slide. metrics. comparisons total portion we slide to upper X, left-hand the Moving of first revenues in

the million for in increased this quarter revenues to total quarter. $XXX million to compared $XXX XX% year first first last Our year's

Moving upper in you to year adjusted increased the was year's right our quarter. Adjusted can last basis gross see to that the of XX.X% margin hand this portion XXX margin year-over-year. points first compared slide gross XX.X%

intensified As our of previous pivoted to the prices month June. in increasing calls we we on February. focus said have home back in We've

quarter. first quarter and more by up cement headwinds home on increases creeping headwinds some evidenced than costs costs the price strong see likely housing offset well as remaining costs will the those we cycle material times. lumber that first During additional and labor the believe but labor increased margins as it's industry had as some well demand we very as our in as With that longer

to basis prices offset slide increase to as We quadrant as home labor potentially higher slow left-hand can XXX improve SG&A points that to lower last the margins. growth improved of year. our to year continue XX.X% our this XX.X% pace ratio to In to well material see our sales the by you and costs total compared

million first of In last lower $X grow SG&A our from the slide this that quarter million first to million see $XX our the first pre-tax me right in show $XX see income last adjusted in slide are XXX% portion hand loss excuse from revenues there profit are left-hand to year we a X, this quarter. a fixed in increased the year's XX can increased leveraging year. lower, to SG&A in you million our expense million the quarter ratio As lower. year's In we quadrant XX trend expect and EBITDA the of

of million the million debt charges the a or loss from from of pre-tax improved you the $XX extinguishment year loss and the If gain the this land profit $XX first a ignore in previous $XX million adjusted income quarter to year.

the pattern. for Having will very a that said strong first this year. full that profitable our is improvement quarter follow quarter expect typically this we first that in The weakest and the stage sets year year's

left-hand of year's picture last on on X,XXX per XX.X the year's first The quarter. portion first across On contracts types that community X,XXX has X, even community for increase slide. per quarterly to The year XX% better the of first last We portion and to contracts of homes which hand of the market right to the show we homes the a product basis for by achieved slide we quarter. XX% in our this show quarter been widespread increased a contract from compared X.X geography. is strength

of contracts more per California, year-over-year posted geography the rock is Having than divisions said in community had Fort During Dallas that Northern solid and the largest increases XXX%. Florida, quarter of first Worth California Southern increases. Southeast now. Each year-over-year every right these

trends demand indicate year's remains our traffic very spring into season. this far, and early website strong So sales selling that visits

have since monthly year XXXX which We for shows increases, hold I slide full States. the pandemic each give a steps a To basis substantial before moment. number to taken to the the is same took impact of on just month X in describe month price the compared the in further contracts before. a of of January United slow Each with much month the will pace more transparency consolidated

slide before the on the the extremely housing pandemic. see can you market As was strong

before up of the year were the XXXX shutdown. prior XX% to compared month this February pandemic and the in contracts was Our again

of March purchases mindset including the quarter, a the nine increases months and significant even April for As housing past same of Through in per U.S. home for per regarding Then contracts The the January. more the in significantly very Demand momentum in in only contracts we've in the dropped contracts unfolded terms gained fiscal each dramatically. in Americans end increases first with of year-over-year shifted further followed our June. pandemic May. January XXX%. community XX rising reported increase XX% strong community were pattern

continued During approach. X%. of we our price pivot our and our volume. then of by Analyst average the we margin to instead From our middle Call prices Since we in to X increased June November described home January that increases

pace increases level. in our to XXX% enough However, as per higher to by January’s manageable sales more a June sales several were The issues. causes community evidenced slow not increase pace price our since

our construct both times was it not production pace and was longer First, and aligned to with homes. cycle pace a our start that caused

high we to week to increases. additional in as XX% X% some February, prices that was and increases of potential sales to aggressive out further much of our consciously potentially too our designed margins cost started. homes as price and that on margins Second, sold our January finally yet at Starting middle put a would sell quickly it risk our were costs third communities This not approach improve to increased existing increases. further communities reduce and base, slow could more pace average it on construction the the in our if was with exposure construction raised an

results XX, February have efforts for which As month been the pace on see sales you the can slow slide of our our show successful. to

We still were for X% increases affected bad was primarily sales a among very February winter home contracts the had our the Texas sales February not year-over-year increases closed were February compared the prices recent over were the February. sales. for February due believe the X% were but of a to per Houston month contracts weeks impacted Most January. were The will very While to issue slowed up this were down we've a higher last one to during prices. sales prove to up negatively absolute the even decade. our number that XXX% sold by margins of be period our certainly amount will of contracts community and in which offices that the in XX% our to contracts of increases dollar two I markets our year, Both best in from year-over-year February month of unusually strong compared in Dallas only storms add margins only results. month in strong

initial benefit easy when sales in forward the impacted adversely COVID March and demand rebounded comparisons of May last have Looking Housing home the months last year. April we'll in were by year. of of shutdown two

a and of before demand home housing COVID-XX the after elaborate upgrade existing low all imbalance a demographic enlarge lots has these their a demographic there's May than homes. in online these trends COVID-XX combination first comparisons many a that a the rates home buying surge will extremely low are same. little be So mortgage more significantly challenging. One, a millennials market and later. starting And this I home resulted shopping that accelerated remain normal of to buying sales but Similar in industry. a accelerated supply factors the little that after more will lower construction. of including their or and COVID-XX. fundamentals year The to The construct of new for in trends driving of Two, housing to trends existed Three, desire groups homes. supply four, on supply strong by

I to buying entered January think and very our contract that result again demonstrated a February strong the before the in COVID see season We've throughout we with continue spring we've and year last of strong trends very traffic and markets. now shutdown.

the Additionally to this gray. year slide XX year in per same visits compared website day blue last our day shows in

As us visits in lead for we February. requested the compared visits number January continues last that information per you In leads An has email can that strong or website to internet gives of show million The to we customer surpassed first phone shows significant through contact a month Further, extremely internet time it potential to indicators history. increases Larry traffic, particular website strong. website We continue of year. be internet the them our one and leads, is website Those see expected backlog traffic for now remain all indicator a last leads website year. day slide it's both trend believe visits monthly Sorsby, XX our and year. remain compared CFO. turn financial to and results these will leads demand indicate our that homes the leading high. better to pace internet I a very than both our of also Whether about community. sales are margin dramatically XXXX or to last are their over

Larry Sorsby

Ara. Thanks

are investors meet strong that the homes that sufficient count and to new recognize demand. we having Given about community some land builders concerned supply and for demand analysts

further We growth revenues. homes increase and communities fewer focused control XXXX we grow in deliveries growing beyond. per report and contract. to and land our XXXX in are are fiscal under position. profits land to to focused and our are acquisition are We Virtually revenues. obtaining land all of is fiscal teams of community for to during achieve Today XXXX a primarily communities that and pleased community already we and strong remain on scenario the count home therefore necessary fiscal on One need sell

so Another remarkable through scenario pace our smaller our year-end where community revenue down thought Ironically, recently this our levels. count we community believe year. anticipated pace we the community On quarter. sales end faster from pace added about and communities we our at is count increase count fueling Even our than Previously, grow is even More community despite X,XXX newly rather our growth. and total community quarter be to have that primary since would per the more we way our we sell adverse if consolidated pace fiscal when we achieve per would we physical higher growth sales community increases lots COVID-XX, we both of efficiencies during revenue of community sales projected at pace. will count count. from been increase current impact in this the X% faster controlled a we toward our scale count not growth out XX, growth achieve slow achieve a slide at first revenue think we were showed current Again, would growth can of achieving would sales we sales even quickly. first in pace sell community

lot During new lots. acquisitions controlled this of COVID, a increase deliveries temporarily teams same are acquisition consolidated After we quarter due slowing our of and the had back X,XXX land resulting to sales for we in quarters. XXX onset the land year of properties. onset net Slide sourcing market three paused the due contracting shows deals. lots the spring the last of Keep controlled past that COVID-XX end in new each the the temporarily in XX we new mind to at earlier of

end which our we've of high each expected quarter last XXXX is in repeating, all than past we can X,XXX XX. XX we of As lots in first you XXXX we of homes more quarters quarter more in we've of control the been and control the XX,XXX virtually level with at achieve than bears end both the to now we the slide see At the It lots the on lots to third new controlled gradually this even of year. able growth fiscal controlled deliveries delivered. need profits our three

acquisition land primarily focused controlling deliveries. are Our now on and fiscal XXXX for beyond lots teams

dated XXXX. re-entitlements we only of the we believe quite a plan housing of continued the is in the period we to are during active status a be home pleased this well. market master and not last today $X control that has redesign community took positioned unmothballing to While the the it total significant on lines bringing a and affecting product this number cycle our was of We improvement long during fiscal this impairments million. along we perform XXXX, California value housing back plans community site with book large After in multiple bottom Northern and of lots representing into plan and site we X,XXX entitlements half delayed in lots will modified Reopening as approximately master Northern California. that

XX, If XXX you consolidated you end community at was our see year. slide turn that January can of to the this count

As the on you count XXXX. by the October to community see the sequentially slide end decreased of XX can from communities of XXXX end January the

the replenish As plan fiscal to Throughout we our more quarter-to-quarter. of last with out and XXXX we count fluctuate year sell communities. remainder communities to community our from this call, the close likely said is new on we

first X% community end level. current at roughly material fiscal from no to of end in conditions the Given expect we changes market XXXX our quarter our grow count

slide a a ago. over year was first the any development years. million most $XXX This first the during XXXX, quarter XX, in XX% past land land spent we quarter the during fiscal the of our same is to spend increase Turning quarter and several

first Turning to significant targets. quarter of with end our million land the liquidity slide $XXX that spin the in above XX, increase even high with we ended of liquidity

country the land We have we're contracting excess and parcels additional busy to capital invest across today.

continue and sales prices that at pace We make land construction opportunities cost. find home sense today's to

our was million. financial home Driven historically pre-tax services slide rates for XXX% to $X year-over-year by to This services first strong demand another strong Turning XX. a financial low earnings and quarter division. increased quarter

still to XX. options. to percent highest can third Turning the peers we of you have slide Compared via land our see controlled that

options to in high our reduce and on possible returns capital land We to inventory continue use achieve enhance whenever order turns, risk.

are We of our control options. pleased to XX% land through

$XXX Looking communities value of book in the $X.X inventory consolidated at have of an we billion not aggregate our net $XXX owned inventory the including million impairments. of million of

XX we trailing Turning to XX. inventory for can period. highest now turnover the that slide second our you the month to Compared peers see rate have

are peer is one High are turns a XX% of highest inventory slide pure strategy. peers. our to XX, trailing industry next us. for home interest We than show turns overall Our and the peers month operating we metric. key building on higher inventory the XX to when pure above inventory. key compared expense. EBIT our On inventory metric component metrics the operating of returns our before below median We the to performance EBIT remain this This us ROI measures believe for

the increase us believe to new entire home for recent continue demand, and improve returns in Given we will the industry. ROI

right hard related continue of slide this deferred to further XX, tax discussion our chart. to on is work another We to to area the On get asset.

is currently asset. numerous reflected taken sheet. asset fully tax is is on reserved this deferred very it Our and evaluation to We've balance significant our allowance for steps it because by protect not

the were January our XX, million. aggregate $XXX deferred of estimates XXXX, tax in As

We $XXX of have pre-tax the with not of We taxes a quarter first earnings. shareholders’ that ended to approximately billion $X.X future we on will deficit million. pay federal show income

our slide positive this be on shareholders done we've as allowance valuation million. the equity $XXX back add a you would If

see may some value and not this we beginning book values a the given all strong Given expect likely as smaller year. grow understand analysts grow we more significantly percentage much have housing will their year. will this than investors book grow faster is public market much value and peers our the builders What book our

As continues valuation XXXX. and some DTA allowance improve, will fiscal our the reverse profitability to of may at we point in much evaluate

left DTA the consists of state valuation deferrals Due $XXX long will it to allowance to we reversed. of XXX% Our total million to million confident utilize tax related of related tax time DTA deferrals. period the federal federal $XXX are and be ultimately to

that DTAs. determine an to to complete will we However, period there how of time our is At much a allowance analysis state federal reverse appropriate state shorter valuation we of the is utilize DTA at time estimate to valuation taxes the it the be the from future federal which income book value discussed reversing been allowance reversed increased would be can time. benefit are deferred tax asset If recently, greater. corporate even has in certainly

pay On XXXX. slide this slide maturity the our expect maturity now to Turning our to $XXX of in show July at prior first XX% secured senior debt full through we to the In one end off quarter. XX. year notes of million the XXXX ladder we July

a Additionally our pay their XX.X% intend refinance we maturity. our XXXX and senior XXXX. through revolver the Considering in secured $XX be of top maturity secured on fiscal of our we also capital its that will balance million believe to of structure advance sits over to off able to the remaining notes in extend July we very prior revolver early at

second our slide On will capital guidance we strengthen further always for structure analyze to and As explore fiscal to quarter XXXX. sheet financial evaluate we balance XX, and continue our performance. transactions the and our provide

recent the by I review claw the winter extreme are final just while guidance, back divisions our regarding ability to quarter at optimistic second we our known I that time. conditions their Texas will remain this caused weather impacts delays not Before state

no report million that, current the period quarter for same market For in second we the of high to up the $XXX range $XXX in assuming million year. between last second quarter million changes assuming total and XX% the expect almost $XXX the end revenues from we adverse conditions at are

XX.X% to quarter in second last substantially up last compared year's between percentage range be gross and XX.X% XX.X% SG&A be of XX.X% total We revenues also XX.X% X.X% with as to expect compared the the and to to year. margins in

quarter or EBITDA gains between the million Excluding land-related the $XX adjusted expect XX% to we losses to during charges XX% extinguishing of last to a debt year. top $XX EBITDA year. we XX% compared be EBITDA This increase second adjusted increase same between on up a achieved comes last and quarter million and XXX% on in and XX% adjusted

Finally, pre-tax $X fiscal adjusted million of the $XX profit for and grow we the profit period a same expect in quarter XXXX year. million our between second $XX to to last compared million

Turning the our quarter metric of guidance slide. time end couple time slide said time frame. set about to slide. we XX-month we the key XX. the are a now On That on our targets the last on expected you our June said by targets. side in were conference now quarter on portion metric talked three The that call Back in metric we first now of of achieve opportunity of a second ahead key our them multi-year we targets we financial an our this on fiscal the Based the targets are December basis XXXX. giving had to end that multi-year that expect we're key the we years. targets right at we left-hand XXXX, of results for hit we could second XXXX, XX-month earlier by far our trailing within shown Those achieve these we trailing achieving the to

how column would achieved both key metric our earnings adjusted adjusted our we second targets. the midpoint and performance Assuming exceed of trailing the indicates this EBITDA guidance on slide middle XX-month quarter pre-tax our

XX. Turning XXXX for show fiscal the year. to slide We full guidance

up billion full in year. total X.XX adverse year billion no and market expect changes assuming to between conditions current the last we billion from revenues $X.XX report $X.X For

with as gross the compared in XX.X% compared and revenues between year to of XX.X% XX.X% be X.X% also to range and year. to We percent to prior of last margins be total expect SG&A in XX.X% XX.X% the

to million XX% adjusted between top XX% adjusted year and up on last EBITDA be between and and extinguishing gains debt we and be on Excluding in XX% last $XXX that $XXX compared EBITDA of would expect a and land-related to the increase achieving an losses again charges million the year.

XXXX our this expect last earnings for adjusted The expected pre-tax between of year. improved to XXX% to up $XX XXX% we million pre-tax grow potential book increase allowance sheet. to the per our Those balance our will and reversal improve on valuation this year-end book would Finally, value and to with meaningfully our combination million year DTA year $XXX executing share. performance reduction increases compared combined fiscal million $XXX financial debt significantly profit our strategy value

Now brief back for to I'll it turn Ara some closing remarks.

Ara Hovnanian

face here again, I Larry. to step XX, prior to a the what brief many in term contracts see present were that on by COVID-XX time of a that increases point already gaining COVID-XX, macro already market. slide annual XX, making Thanks improving the and I we momentum. year. market. before to only accelerated time in long want commentary by X%. take everyone and growth strong housing slide in was sales is in we already The you the every on like each close I'd to the going was last remind On market the can back steady and XXXX per through On trends in an compounded increase community had market XXXX, rate housing was that turning that The dramatic seen show a want over over month. period from year COVID-XX. of emphasize

community, it show XX II. to average On dating through several steadily past housing but we the housing recently, line trends per overall back housing horizontal the starts the XXXX important the to entering starts experienced assume growing that Much decade. from to War starts I be annual shows we've the end our talked put like about black of slide, XXXX. easy the it's were through that per bubble, regarding years market improvements housing significant into would with we're the World for XXXXs this the perspective. a decade Slide going contracts Given

a If per where per most out only term year. million long the the recent decades, and throw over the averaged the average lows XXXXs the highs starts of million X.X housing been stars has we you year, of

show While the steadily recent months, significant grown decade housing starts can recent month can lowest XX, far averages. level the it On during most World start average see jump. for were a production last since It's but you XXXX below one decade, the incredible month with was of we most slide you has Even War month the by II. annualized XX historical the only see decade January. pace

it's developable However, one the that just shortage most will keep markets housing note important in Further, moderated. to historical of somewhat only start housing with seen even we've above time, averages. decade is now, long the robust a lots production likely the the pace of

are weeks. homes not prior the recent seen users, note homebuyers that we've be in comment today's also I'd seen speculators can You our decade. year. pace starts It's It's XXXX when starts normal important in X.XX over starts. per would historically remiss about peaks. were million you of the housing January to decades, we've that almost which produced increase to on plus production impactful of housing the annualizing mortgage that of see or than homes starts not increase decade. especially the The Fed last last for X rates the consider the This expected X that over foreseeable near in rates the level and minus intends past total million indicate two sudden low is it given not especially said rates low true future. the nowhere million to the level housing levels keep that fewer The past in was decade generally peak

still However, incredibly rates are low.

decision options further their or change a to they a going you mean home mean necessarily that XX that years more not. XX, If our don't at does buy comparing current smaller buy it slide buy or home fewer as over It someone's and importantly, look or whether interest the higher puts rates to last mortgage into them perspective by a rates might out. home

in built the homebuyers their United recent current much the States homes A teens last to As I in long have year. were than increase reset XXXX rates, don't built a impact. will of with rates more the term rates reminder, expectations mortgage foresee the in

prepared housing land all-time likelihood our generation for shortage While that in baby trend existing prime for also turn remain it interest that increase of lows home the believe the we're concludes That now near-term a remarks buying developable I'll an and of regarding cautious post-COVID. further rates and we housing for a over demographics the that and to that's stock new to shortage the second Q&A. age; housing. of their outlook well outlook be likely bode happy I'd our boom for all is mention stimulus near economic

Operator

will now opportunity everyone of Alan Associates. has the to ask comes answer Instructions] line & Zelman company questions [Operator Our The from Ratner that first question from an questions. so

please. question Your

Alan Ratner

Guys three performance good built. results. at volume bound since interesting price that might bit the I the I'm of equation and great actually that over of me I'm you be and that commentary selling in and somewhere it's think month a that on little per quarters dynamic when hitting range last it your from could COVID you've terms a look and an especially wrong right quickly and been the sounds homes I get morning. perhaps If now. those you really around upper the really if X.X that in correct hearing Congrats how I absorption appreciate pace

what trying you push if end? actually cross willing low you is you're question price line with roll are ideal you and price low increases my that solve take that before to on pace guess some back hard I these you too the increases? what If these to on that sales happens of So is the how have for today to

Ara Hovnanian

gap do see counts depending we on want to don't down. out speak our new Alan it's so community is we how online. our let to balance really a varies go and that coming communities soon What

So margin we're is what of and affected and to by online that about the new online. of a feeling pretty pace right talked good communities trying part communities communities see coming we're about. we well we lot We're as balance coming and unmothballing that our as

varies. shortages. we're getting in our times with adjusting new flows production it on So have we feel online. a that on a what can we're show we but it really adjusting based some like margins pace adjusting and it don't based we pretty on and adjusting we some can on capabilities material see We're still communities based good what based target. seeing and ebbs We're it specific replacement up on cycle fabulous and some when We're keep and

So month month. really we're varying to it

Alan Ratner

Got helpful. it. That's

number sounds might it's based like there's moment whether fluctuate is etc. whatever the the there hard not materials, labor, So land bottleneck a and or at it on

like on second news of down the certainly accelerating debt just you're that pay the balance your The good there. question sounds some sheet

to book the the now Just that? do the stock the opportunity because if DTA. curious to were any there close down about you adjust accelerate times to interest markets tapping there's if an thought full reduction that three bring even for equity Is with you trading clearly further to expense

Ara Hovnanian

equity our on to ours by expect out lot reduce significantly. really we very start Further, of to our to what debt to small a stock want in really stock. based early have opportunity great debt reduce of that also we debt. law all our didn't any opportunity mention to at expect a it's a the we our going is rates we results. on high seeing reminding at got operating there part year-end. I on home really of focused We lower since a increase of improve of even Alan We and huge we interest think our rates Yes earnings horizon. our think opportunity performance sell we by it's we've that to think refinance we we're one it's think numbers call increases the now. very as We would point you think be other grow at keep but dramatically builders that significantly I the boost and and our increase without selling is book early as to value mean mind debt our that refinance there's are will Most little in and to we're some thing our right an

add we're later wait and cycle. going want anything to options Larry to consider that? I So do our the a you in little to think

Larry Sorsby

it I add to nailed I don't think perfectly. need You anything.

Alan Ratner

you you it's actual something I might to this it XXXX that very signaling the said one did was going early I are you happen that to notes down but you before checking That you maturity helpful. do or intend sneak have just fact in just expect give is pay the just date? question. missed to Can year

Larry Sorsby

did going date. said the just We of reducing to was it when advance maturity in projection precisely We to committed happen a specific not like we but are debt.

Alan Ratner

it. Got

lot Thanks very Okay. guys. That's a helpful.

Operator

Thank you.

from Alex Our question of Barrón next Research. Housing from the comes line

Your question please.

Alex Barrón

and around to quarter job Great just want you gentlemen. the congratulate all morning you. in Good

Ara Hovnanian

you. Thank

Alex Barrón

if and and question the you many are I'm is do shift point at units XXX% things would have curious about stuff. how on think impact I your into next comments Texas up and I snowstorm a back regarding just quarter? all this that roughly any deliveries mean the there

Ara Hovnanian

month of the much in repair construction The think getting quarter. course carriers things in communities affected to and now we the of really is Right down outages utilities giving in long a XXX% the base all card one pretty slow I how wild and slip and we our of much in terms the are sales away to can gets but of start back back some first that preparing we norm. and when into the believe deliveries sucked trade reimbursements only insurance they might I up believe of few are is moment of actually think the how how at or up that make would addition

everything So good, just feeling all yet. thus don't we're know we but far pretty

Alex Barrón

in at I gross more sure are Got you guys but missed did give revenue margins like sounds if then, it. guys towards the terms guidance this of the for And it I'm raising a point -- shifting prices. not you

given margins the gross further the the year? have of like feel for back upside you the quarter us range than So in half next you've

Ara Hovnanian

dry even not it. we It's upside on to the guide. you're if gave us and there's If just asking

anything's range out. but going put to to stick possible we're we the I guess So just

Alex Barrón

Okay.

wrong not your statement on correct will income that Now show if up later but sheet? reverse DTA I'm year you this the if me just on balance your

Ara Hovnanian

you Larry, let I'll it. handle

Larry Sorsby

reversal on through tax expense That's the line statement. correct. The comes item income the

Alex Barrón

Tax expense.

Okay. Got it.

Ara Hovnanian

it talk the more a of great while there home and add would a reversal will actually an in one not builders and have increase for large that Washington opportunity increase income that know. it most deferred we I a is raising asset in that's thing because this to don't federal that our of we NOL the Alex income have comment mentioned, lot mention large we taxes tax future. I'll time And We

our the see it credit, uniquely do effect we on but because and used what happens tax have us our will up we're opposite to haven't will compared positioned We peers.

Alex Barrón

Correct.

this rate year the Now as to like I but assume next probably I'm looking that reverse it's the up credit assumption something or know a going far the kind as XX% that's we If tax case should you for year. for will of on tax next year what modeling that purposes?

Larry Sorsby

rate to current that's given a effective rate that's, good estimate, yes. Yes

Alex Barrón

Okay. And there? on if noticed happened ask diluted to X.X quarter Did more was stock share it I from count went down could buyback you one that? What for reason the guys last million what I X.X. or the

Larry Sorsby

shares. to unvested compensation It related was

changed. they So

compensation shares all the had So if the outstanding nothing shares. with with non-vested do to

Alex Barrón

for forward So what? or should we or the modeling X.X going X.X reasons assume

Larry Sorsby

X.X.

Alex Barrón

track like good it to are be All debt is to pay I pretty guys you Okay. sounds on great. going which down guess right and

if debt? with do eventually the you guys replace lower you amount or the trying to outstanding guys are In lower pay point other stay replace that expecting at other are are debt just cost eventually you the you some that of or you'll cost down debt? and overall leverage So some let you just words are XXXX to XXXX lower with thinking to expecting

Larry Sorsby

of amount outstanding. We are lower trying to the debt

We debt XXs not focus to on really additional the the repairing sheet. intending them or refinancing with replacing later the debt. want or and we're by So it XXs replace balance by to lower

Alex Barrón

let luck I'll you. else for good Great. year. Thank ask the somebody and Okay.

Larry Sorsby

Thank you.

Operator

you. Instructions] Jordan Philadelphia from comes question Thank Our line Financial. [Operator of Hymowitz next the to

Your question please.

Jordan Hymowitz

Thanks guys.

checking to XX it I share guidance outstanding question something almost the $XX and Just XX the half for little year. you a per debt math next that provided first is is the my of with guess assumes comes the out less year

much following have you would loaded half back of at a but about debt. run be a point? it a company earnings year it's because the cause number a this higher the think Is lower Now to way that would rate

Ara Hovnanian

Yes.

think, your actually I interest think and certainly there it's didn't state argue on math as that but math to subsequent debt off I I EPS do will be I accurate accurate pay is your the can't in math. less years. with we

Jordan Hymowitz

earnings. we three question who fine the at asked maybe use And should three this advantage book the so under and I'll of take that year's gentleman of times times before

this he'd point. think at share I equity to his crazy issue be of

Larry Sorsby

agree I with you.

Jordan Hymowitz

Thank Okay. you.

Ara Hovnanian

agree. fully Yes. I

Jordan Hymowitz

you. Thank Okay.

Operator

to does program. today's Thank for back program hand you. remarks. This conclude session like of I'd to Ara the further our any question-and-answer Hovnanian the

Ara Hovnanian

great Great. news Well much. off to better going start you. be quarters. subsequent thank you very to we're reporting We're Thank and a certainly in even

Operator

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

Jeffrey O'Keefe	VP, IR
Ara Hovnanian	Chairman, President and CEO
Larry Sorsby	EVP and CFO
Brad O'Connor	SVP, CAO and Treasurer.
Alan Ratner	Zelman & Associates
Alex Barrón	Housing Research
Jordan Hymowitz	Philadelphia Financial

Hovnanian Enterprises (HOV) 2 Mar 212021 Q1 Earnings call transcript