Hovnanian Enterprises (HOV) 8 Dec 222022 Q4 Earnings call transcript

Good morning and thank you for joining us today for Hovnanian Enterprises Fiscal 2022 Fourth 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 fourth quarter results and then open the lines for questions. The company will also be webcasting a slide presentation along with the opening comments from management. on www.khov.com. page available Web the are at site slides the of Investors company's The who like listeners to Those would the log should Web on now site. to follow along Jeff to call turn I President, would over like to Relations. Investor O’Keefe, the Vice please Jeff, ahead. go

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

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

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

but guidance. all of our $XX a at results this billion, within Total very strong to our to details comment margin adjusted Similar On up discuss the full range. going our are I'm revenues our contracts. $X.X housing we environment. SG&A of levels in more and XX%, gross then current it X, guidance and I'll EPS and of with quarter, review CFO discussions. year fourth reporting quarter XX.X% our on we profitability, weaker Slide new were full to per Sorsby, third follow Jeff. to me year results, will compare all open of the Q&A. Thanks, number of I'll my we'll and share of also Larry

for have portion, year-over-year X the we last fourth the strong, single in were hand Starting income quarter over the performance the our pre-tax and of an X% EBITDA total left in high guidance our end year. upper revenues adjusted best any great increase since 'XX Our quarter. housing shows both adjusted fourth had we million, the fiscal in $XXX our range. comparisons financial for All-in-all, Slide year show recession. of was that exceeded our

that the portion SG&A year-over-year Moving basis show of XX.X% you can upper our year slide, gross right year. increased to points XX% adjusted adjusted slide, see to our of lower hand X.X% slide, right see last portion this the we compared In to margin to the lower compared million. the that year you that was increased XXX can this hand year. to portion the last EBITDA In hand XX.X% X.X% left $XXX the of

pre-tax compared hand quarter On portion XX% the $XX income X, $XXX the left last Slide in of adjusted million million that to to improved our see can you year.

of hand that in was the slide, last can $XX 'XX to environment sales fourth sharp to quarter. in fourth portion Profitability $XX quarter that compared stands current certainly million quarter I'll net On the now. for of fourth was in you the our contrast see right solid, million the income discuss which the year’s

community to per Contracts period compared X. are year Slide significantly down a ago. the current to for Turning

no and we per Here community comparisons that period to start Last decreased sales fourth makes to of 'XX, of to saw the which year. that quarter that XX.X. also were 'XX doubt The There's compared strong very for X contracts show very strong 'XX in sales. difficult. 'XX

to sharp more rates you're might recession. respect including demand factors created the this waiting sense own result and and where quick have familiar 'XX, a a their clarity are that and that mortgage stabilize. job consumers continued rates home through U.S. temporarily inflation, many a of in end of toward about May all increase and concerns the stability in is There that mortgage is in headed further with overwhelming end have beginning inflation, to home are slow slowed November. their falloff of number However, it an with demand decisions paused The for purchase

our that the X.X to the the pace had back is quarter sales fourth crisis in Turning 'XX. X. great that in close trough getting Slide show contracts We we to of financial

not this anywhere be long. will near duration similar is pace do current industry's the believe the we recession, to as sales great downturn of housing the that Although

based new much overbuild a a plus prior homebuilders subprime construction Our existing belief housing the low they great factors of as did levels cycle, spree is of sale, fact there buying speculative not the did to this that discuss. homes recession, other few of current was nearly for not listings on homes the that as I'll

On reported, the right contracts by peers Slide of quarter years. it's community West break the for than we clear Similar contracts are contracts geographic annual significantly many segments. Southeast XX, show several to Northeast per community what we and XX, in segment out per our hand Slide portion our segments. per for On lower that homebuilding of fourth have past our the our community three

almost that the full that doesn't same per bar story. to 'XX had last can the tell unfolded later for worsened. year year the of the You see the whole for quarters, Because sales contract full as retreated of to right, pandemic, community level we the the XXXX 'XX, in before but progressively grey the pace

seasonally Slide financial in in quarter If the of 'XX. you XX sales fourth to same grey. up crisis year a adjust month last green, from recent same show and get through XXXX sales the slow seen grey, same that in recent community month community, pace, are dark On monthly you of month annualize darker contracts light in are year XX, per pace since we great light per 'XX sales we ago one The our December haven't the and November. month a months a the in showing is the blue, most in and

and are Because XXXX that a more sales are On surge pre-COVID pre-COVID sales the benchmark. XXXX comparison to in fiscal we of difficult. course, 'XX Of by of the Slide year XX, COVID only housing representative month. compare

see cumulative definitely pivot XX, became effect that we Slide pre-COVID of clear. our of is can as with the percentage than the that the homes on, sales tracking per as average. cancellation been ahead until fourth which of month selling backlog. fiscal our XX%, of cancellations a You month in rising 'XX entire of mortgage the the was historical for right That were From we show line point pace. point rate May. was The quarter fewer On we've the XXXX rates

However, if XX low of the has in in high has in The across issue XX% per XXs. the us, much. years. single led month The quarter half cancellation is is cancellations fiscal contracts that to housing Slide being rate normal as XXX changed month. spike only to our not per past it's number but you which fourth family gross 'XX, a look and back was show cancellations percentage fiscal to fiscal number the contracts a at unusually not a teens 'XX, XX This we that or period, the In in starts XX, been you of our cancellations On unique as know, cancellations seen phenomenon for absolute have to during 'XX, the industry. of rates. cancellation we compared averaged gross the low rose

If the upswing you overbuilding you one start up impacted most is middle green. average. home the the below stayed and recession graph under downturn for market, for industry built housing which lengthy substantially look the XX-year That in of see the the circled great average long-term the which a chart, homes straight on long-term red, the that in the by more on the was average of year at great cycle The years. new followed many, can XX the to created the years, where factors many levels, was recession. housing circled and housing supply industry that construction per leading than was produced an long-term This excess period in many recent

three average those last the that full we average less year recently for of comparison certainly be 'XXs looks the long-term previous in one the the exclude were cycles 'XXs, severe starts and 'XX brief recently, were were like we disclosed. you chart below cycle, it If 'XXs is but Most painful, when and shown only this Recession the the Great in saw. the and to on downturns 'XX in we'll year above

this at since than existing levels recovery duration XX that million significantly X.X shorter historical from normally not be million recent began, this last at of but homes overbuild it housing is On it's stands the cycle. Even lot put the that small headlines, months did gives we shorter for data than this sale slide, another which point perspective, the X.X Xx still the To average. Yes, of X.X the in about lowest in million for Slide has existing of time the there boom. at homes, recession the of homes this beginning last housing now. level number after into makes sale the the risen the the a for the that existing down sale history. cycle homes prior compared down of in prior decades. produced indicator to six half are then, that and existing makes cycle near recession that million for increase, housing show now. us currently homes risen lowest homes sale four the the industry should for a supply of of was around and great bit comfortable Another be the X.X this in anywhere some duration homes sale of will great on that is levels fewer we

as Given new to supply homes will great the the hard be believe for or sale, of recession. as as long low painful housing current the it's existing and both downturn that

site strong. that We brief is future indicator site we XX, Web may and on believe is be Another of show positive activity leading duration of this be a demand. Web continue the visits this our our sign to downturn Slide

Here is The see graph the were the visits. both of dark XXXX blue visits elevated near XX, demand line the pre-COVID new representing of the site site per line is yellow Slide community. during site per It's 'XX XXXX COVID during of with visits line the line. these we Web extremely and can daily daily surge. time Web bright in the grey for years the bottom show homes shown green On high community the Web you 'XX,

normalized very activity experienced the months, more yet levels site in certainly This high better the been several 'XX high fewer continuation into high visits of they're pre-COVID than and levels. encouraging. But For Web traffic definitely translated past that not site has XXXX there 'XX. Web Web than The is we normalized site sales. levels have the of

interest buy fact come This Web more believe mortgage of that pent-up and building. and healthy on the be many to enough Web economy to increased site hopeful downturn a yet spending there's see possibly time become and the of the indicates level stabilize, levels to the visits convert people home the taking duration it comfortable We're site contracts. that the are However, to that home of time and reason is should our people so that another will demand sure. we quite as will rates we

new the no the not overall have that or good. illusion bad. We is market indeed current is housing It home state of sales

The for cited, last will steps close However, that current pain talk this they we time. I'll news have seasoned that navigate rising mortgage areas consumers we've good rate has period team relatively In can market. other are that of of necessary a through think homes to in the uncertain taking short that to the might reasons deep a just but and that several management are is experience environment, we very seeking this successfully be address about quickly. downturn. the now we

pivoting quick homes with more provide their be closing. shift QMI mortgage the of result what We will certainty payment day temporarily in to on QMI consider a customers be As to or more order homes we're construction. we to consumer in demand, home move begin a our a in at that home

turn you consciously the on that can you XX, community rise. Slide are If our per QMIs to see

of We the right historical surge the at community the level but per we X.X have third to had QMIs to before gone end fourth similar quarter. in of our quarter X.X levels than QMIs demand. the average, is in COVID higher from This

QMIs this sales focused with targeting the midway environment, per and through weeks, As our rate versus seven construction, a recent beginning a few are historically. XX% about community, for certainly result, XX% few construction temporarily sales of weekly in and that will unsold an those approximately of we match we on start just focus construction. we're not QMI account we'll a In selling XXXX the we before near rising homes. Once completion. level is that homes our schedules will with approach are ensure selling This selling of end that our level season start spring these achieved, excessive do Furthermore, pace. on

Second, as incentives, our of concessions sales a market and we community-by-community, state-by-state on base of monitoring pace, reductions closely terms price try in home use to we are basis. find and the competitors' price

disruptions strong our aggressive contracts be margins new to fourth minimize backlog, with our the to decided concessions quarter in fourth too on not we potential Given quarter to any deliveries.

prices offer cases, such as customers There get them closing fourth temporary that choices, or mortgage Now increased homes. In behind paying for discounting customers of been closing need consumers. even all options us, for incentives backlog that our on below a market or to quarter incentive We've paying upgrades permanent the concessions. we is in is we've the some QMI table. size select rates, use home costs, offering fits our not one incentives to discounts to and offering on or to

the we incentives typically So consumer a what choice offer needs on their meet best. a

of thing below for fixed our higher For QMI levels completion, we market homes general, for are market incentives and a that to-be-built wants communities is would are homebuyers. can backlog a to homes. across sites. prices below lower lock typically The interest challenging nearing home last both This interest their is and in homebuilder customers prohibitively expensive rate. upset in rate challenging our In fixed the The that more reserved board. base existing only do more

gross contracts However, averaged had rather X% with By new November, using of in our historical of in our low margin our lower when X.X%, than homes of use margin the first generally prices today the historical new 'XX XX% incentive level incentives roughly average increased homebuilders selling incentives, we're than large starting half after the incentives higher is on of that communities, rate. XX%. slightly in Even new market-driven they range, the open and from average we above concessions. which to fiscal are remain our base that the most increasing

more and because and are homes high sales sales margin the is that. increasing Southeast stronger weaker. the new low our we're as margins in range. in and repeat average are selling the of Even margins selling West me after new fewer homes reason that today on use Let our margins Northeast incentive, and contracts XX% remains One remained homes we're on where in our where

Another reason our be use is higher lower margins that and of incentives to high costs. despite increased concessions continue lumber

believe housing of the we home market the trade decline, partners given addition, share burden declining need and to our In prices. suppliers

costs, impact with begun the future have soften incentives. discussions to of We them should declines reduce which in the their increased to margin due

improvements our basis if stabilizes, other sure further our debt far all in option that a obviously community-by-community staffing situation Some our a the contracts that will with too until taken the where slowing we're Sorsby, steps even Officer. they evolving uncertainty temporarily basis. we sense market from Chief needs, we reassess development taking that of steps suspending includes own to reviewing the Larry Financial is make don't land on light current already a the to make want and to division-by-division of conditions. we've our they're over conditions, land housing deal get ahead make land in further sure an to land market to market market existing postponing this slower of This to it turn needs on we general now little changing the acquisitions, on our and deteriorates spend market re-underwriting of still I'll reductions appropriate new and continue and most

Ara. Thanks, XX. to going Slide I'm start with

new that up we chain XXXX. our that for higher. fiscal XXX that our delays schedules, grow several long will see to land and opening processes enduring supply finally After pre-COVID communities, project even have count entitlement levels during for to and ended catching production would been We've for be years. community not we we trying development slowed open sale. can number with the If year communities You in the been

pace communities expected our recent per of lengthening. community, the lifespan is given slower sales the Additionally,

While community come pre-COVID believe Southeast fiscal and About that segments count there and from to we return 'XX. are XX% will we many by place growth able end XXX the in will community expected Northeast factors the count count, our XX% be of affect approximately community our our of will to take West. of

it and and fortuitous trends Northeast a the ratio. Southeast As given margin segments, in sales is turns out, that recent better our

XX. fiscal Slide peaked to of quarter our now Turning XX,XXX slide, that count we show have to seems On in second the lots. at lot 'XX this

with important of and XXXX XX.X% owned decreased of to strategy, lot During our the in underwriting total declined X,XXX land by to previously the with approved acquisitions out our that Northeast all adverse highlight that land continues to XX,XXX I stronger of point fiscal lots it's that our land segments certain located are ended to West. rates Southeast each XX% position want our deterioration. been and meet we've land count To our also versus control risk we our subsequent market the lots. over quarters, Reflecting just sequentially we by further re-underwriting XX% make in option lots. assumption hurdle

sales point fourth required to During from X,XXX to deposits self adjust construction in walked to of market changes the costs. prices, option $X.X conditions. home period our quarter, walked of were lot By down we standards and current lots automatically fourth current away The away plus and a that land. internal rate XX% lots return, current us take in quarter using option agreement to our this underwriting underwrite pace and costs we due at or diligence the million were from X,XXX year's during about predevelopment their either

impairment want recession. on community In addition, phase, I one that we market. that Southern community California, underwriting an reasonable also home potential some the on price deterioration. had first a community housing an in weak absorb building returns are success. We particularly built of extra consisted our million $X originally in the future un-mothballed before We buffer to comment primarily that was which took in to lots and the a we great finished took impairment through bought with to single

I of And one an on the few later want community, BFR moved in little in a to which our picking our resulted formally of build-for-rent phases We the rise. land market contract was a raw sales update on now combination build-for-rent to helpful space. factors matters to are in to the homes development triggering However, XXX up slack brief costs of The negative currently weaken. mothballed worse, have a began business. these companies. impairment. closed efforts will to as under land, give traditional we build-for-sale community this began the with in make be the

are this not of Although market today's helpful a portion is environment. significant our sales all business, in

We and October of lots risk land On in October XXXX market today's to our mitigates prices contract market, us show and quarter many increase XX% XX, 'XX. were controlled and 'XX XX,XXX flexibility to of use and the increasing gives the to our have we those progress. and strongly shifting 'XX in increase of and our underwritten specific returns. well to percentage and while strong a land on as return been and fiscal been from our reduce has we by our our quarter risk A XX, percentage land. our investment at put margins controlled of the renegotiate by Slide delivering fourth associated with fiscal than before the options On XX% were vast quarter of we prior of years, fiscal increased us The XXXX. lower of land total still position. a flexibility strategy XX, vintage lots of concessions price were fourth provides XX% under XX% This make owned to inventory controlled which with option the as land deliberately XX% to majority fourth turnover lots Slide for housing home show part of low XX, to of lots to incentives terms. continue in owned

fiscal that under 'XX. resulted today's survived very land our and or parcel. renegotiating re-underwriting with lots process put at the We with Many lots sellers away then option from are looking have option those of turns in assumptions and carefully rigorous were walking price not that pace during

notes of fourth the spend million of After liquidity the quarter Slide to million land during end ended our $XXX we XX. targeted well the of paying of liquidity, high off the Turning quarter, in million with senior range. year second in $XXX above $XXX

Our in quarter from fourth land increased year. the spend the prior

discussed moving fewer only for owned we entitled the year's they end still our shrinking fourth slightly of optioned lots and returns. community our during shrinking before surge quarter earlier, COVID than properties XX% new to forward fiscal sale count are the some communities land for importantly, we community fourth the return even community had been continued and and have As on. environment. finally we at underwrite we development ready declining lots or and XXXX. which been open strong we were to quarter, still are counter lot to and our home Most of sales the sales of net fewer hurdles slower generate count to yields Most older hurdle our moved at still with in if pace slower today's say, current communities at acquisitions the above today's IRR developments these Despite price takedowns rates higher Needless openings vintage home net forward last meet compared our land-to-land pace today's prices.

to still have we Turning Slide now highest our percentage see via land of controlled peers, you third option. XX. that to the Compared

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

reduce of and a housing we is both land, have Slide With owned a peers. Slide risk Having are of year own lots. lots. show shorter can supply the XX, years supply you of good lots lowest and lots we tied XX, market. us a controlled X.X to declining also On that supply, to of owned option X.X we year years Turning second supply see way in for our owned for supply

focus long on land controlling mitigates values. to cycle land our by at and the be overly in declining risk choosing this from not Our option land owned point

to second years. opportunities Compared and we are highest of inventory our to further inventory we We XX. returns our turnover continue improve have on a component and peers, to believe our in of strategy. overall have continue inventory increase now Turning turns future the use Slide inventory turns rate. key land options to to High our to

at that, over On fourth date past this of debt senior Slide two credit end Turning years. we our debt Due until fiscal current early amended XXXX. XXXX. of to preserving sheet ladder temporarily of to retirement our maturity We first shifted improve. June quarter. the retired now to maturing quarter, the maturity our debt liquidity million any intend revisit Early XX, and we our XX. and facility to the strengthening remain have once conditions show our After the have conditions, extend plans. to committed quarter to focus near-term $XXX balance notes to our we fourth market don't in slide, We the reduction revolving the we pause debt initiatives market

future significantly market pay in will and come sheet pre-tax the cash accelerate federal Given years deferred balance of our to approximately will benefit earnings. enhance our flows on progress $XXX billion once of to This income taxes improving have $X.X rapidly million tax asset, not we our will our stabilizes.

further first material conditions, deterioration assumes rates, the or current in chain no inflation cancellation increases supply or no quarter Our financial guidance fiscal for adverse including market mortgage changes our our in rates. in of 'XX

fiscal expense months continued the solely of of construction Further, of price extended expenses assumes months. construction guidance cycle to quarter SG&A cycle averaging times, Our from four our to stock any our fourth compared six end stock stock it price $XX.XX excludes approximately the the seven from phantom at to times 'XX. impact to pre-COVID movement for related

and potential of is an inflation, company utility current have met the environment of economic exceeded our there most mortgage over in we recession, delays given uncertainty guidance or a many metrics While quarters, rate employment increases. risk, of greater degree

caveats uncertainty those the full XXXX the housing first show given economic will not mind, for difficult backdrop With our guidance this XX, the we at of market, time. fiscal in be the in the company Slide resulting guidance year on Additionally, providing and 'XX. quarter fiscal

We first million. be revenues million between the $XXX for and expect to $XXX quarter total

of and percent of margins revenue in to adjusted be also XX% the total XX.X%. between gross to be expect range We a as XX% XX%. to is expected SG&A

Our $XX million guidance between adjusted million. EBITDA $XX and for is

is the and adjusted between $X Our quarter 'XX income of for million first pre-tax million. be $XX fiscal expected to

levels conditions, year is Our increase increasing to pressures. higher for market increase spend of over a SG&A opening also than slow expected inflationary a result are Despite debt, expected of the over prior expense interest fiscal as increase to we lower our to during anticipate as normal prior Due communities wages homebuilding we reasons. advertising as is XXXX in two our the year. ratio well additional as anticipating

sales lifespan First, extends sales interest home are fiscal cost expensed costs and higher sales basis. 'XX interest average of delivery expense per of results the higher the Therefore, than costs. and on fiscal per cost a pace in 'XX. in be will a interest slower community These total

not our costs. year has inventory has which ago, interest a in increased from corresponding increase a Second, owned

customers Lastly, to will order coverage increased from X.Xx in in Adjusted our Xx in one years. significantly declined X.Xx in to fiscal can metrics for Xx to and lower from has EBITDA fiscal to service be fiscal interest mortgage our Net adjusted fiscal few more incurred lenders 'XX. response debt you XX, to financial fiscal fiscal to expect X.Xx past to Total the declined in less to competitive has coverage has improved pressure 'XX significantly rates also business and 'XX. from has 'XX. we credit in significantly adjusted XXXX. qualify profitable fiscal over EBITDA EBITDA our from can Slide 'XX debt how offer X.Xx so during 'XX of outside that our purchase homes, On of see in

Turning to Slide XX.

increased XXX million end at 'XX. has fiscal from the of to fiscal a XXX Our in 'XX of shareholders' equity million deficit

decreased of in 'XX. the This million the equity $XXX fiscal $XXX at fiscal from continuing to at debt million 'XX $X.XX capital fiscal 'XX end year net at debt end end end net of the XXX% Our position to debt and billion in of fiscal net to XX.X% from to improvement our at our decline ratio resulted 'XX.

continue we debt our term, by expect sheet the Over long growing and reducing equity. improving to balance

credits these made the sheet XX% we've achieve is a Our balance net over improving ratio. happy and to the with to We goal capital years. several mid were past progress metrics debt in

to near housing achieve term, will similar difficult current improvements. environment the it and Given be

higher third to trailing However, to show we Slide investment EBIT peers. is that to will consolidated On our XX, stocks is measure as homebuilding if at the valued XX-month the scenario homebuilding us entire been another a the that earnings performance The price without this return recognize of recession. long the like discount group. pure that We industry regard show We improvement our our very there On believe balance to our sheet most leverage. downturn we of accurate We we should XX, remain ratio compared duration housing the because to great leverage. peer goals. committed our occur. believe for at group XX.X%, Slide long-term have be unlikely highest a to on has and we trade

our back believe universe industry some our Moody's balance However, sheet, yesterday's balance to stock we've the peer upgraded at further on given a discount our average. next point, for to stock a fiscal return sheet. our discount and XX% our homebuilders. closing as We Based give credit how price for credit during and Standard the our stock ratings on focused the public it the improving well. some & undervalued remarks. now, rapidly returns Poor's most strengthening our entire will of market X.XXx EBIT superior performance earnings brief trading favorably 'XX. I'll to we $XX.XX, And XX% At of and on the us closing price our Ara both remain at lowest and turn our been of compare to we're of inventory multiple on equity is peers given

growth was profits. of year phenomenal Thanks, 'XX Larry. and Fiscal a

year the we've contracts market that current discussed, shifted good last three new we over we've the of dramatically news May this in remains worse sales home pleasantly although address we've and market surprised The in pickup and by to weeks. a been taken environment. slight As through is challenging, been the steps

our times. 'XX any early timed this doubt debt and these a We by challenging no began. footing us debt the recession. than the down Our more billion solid were initiatives put great housing today are pandemic pay much that time net of with $X.X position There in about as just end well fiscal reduced to is outstanding at described Larry before since a financial since

We all year highest on homebuilders. have an for we returns experienced we're return absolute a all of Nonetheless, that of was management EBIT third team homebuilders the in highest peers. for fact great proud place. are the the 'XX and among investment our among mid-sized

record That necessary to and our current and a it will we steps difficult comments, return formal to leading the to market. proven we'll this over turn through navigate on concludes be happy Q&A. have We investment of take industry

The company answer now will questions.

opportunity limited to ask the to to participants everyone queue one So and question after they up, will ask questions, follow have back one question. to another has in that get which will an be

the [Operator up open Instructions]. will questions. to call We

question of Associates. Ratner the comes Alan line first of Zelman Our & from

Your please. question,

in dig for little you guys. on I to to love price question, great order Hi, kind down as first numbers the was levels Thanks November. incentives still My low in and see overall. Good If pretty morning. a disclosure October for little of and more that always November, November detail. just X% a to your at up bit bit information of I gave I'd compare the from

of much glance, have is the terms not I'm of that first of in that more impact that. at sure it there incentives really to So elasticity, point higher an finding takeaway there's price had but my than

shift very to can market? color would types these be Is you're you just kind you find into do of of maybe seeing offer a people order around around when point give Do little Any of feel So you like bit if incentives. helpful. you could you what in helping need that to curious the the elasticity? Thank better talk pull to you. that incentives it about

I’ll few Alan. a Sure, address points.

contracts are forced in report closing in cancellations lot a were nervous. came highest the get close focusing those of cancellations when of we First, to month our processed because certainly net That's you’re was consumers lot through many ones our and A were deliveries. and of November. October obviously November.

You deposits if have to to process we're it properly in order entitled it. to customers' keep

for So our are I'd like QMIs. making feel difference, incentives say, we a overall, particularly

are homes As today one incentives fixed attractive. rate we and closing mortgage of offer downs buy is you soon the mentioned, are that can nice that for

wrote I you is consider, you expect noted The obviously, the will Coast think November been seasonal slower you be is speaking a month we your have even that as in on report. surprisingly were that to a December might yesterday, of other piece out thing better came slower. Alan, and West sales. It

sales. felt few our kind of again, the weeks, over mostly focused And Just same last thing. on gross the we've

this that's in is know slow well So But you encouraging. time little the as a that's general. very

of starting So sales going we now. excited don't critical right middle is what or overly happens get What's January. by overly depressed the to be

That's really I there. additional appreciate helpful it. color

vintage, disclosure or Second, land and Larry helpful. the of Ara, for your this very you maybe is on that's

think kind those walked of probably from likely you. thought price XX% to is currently? we up how the deals Are walkways or tied we whether 'XX, any on I about just of to majority the XX% are many terms you're of timing under be lot that. lots about takedown little land And be? a schedules, I So the tied count, the capital your guess of contracts those the in how given appreciate were what know those, on vast, those assumption of working acquisition you ultimately up away or in that are those option is would on how Thank should those imagine renegotiate held I of bit much or vast it's to underwritten the but talk able strategy. could

Yes.

First the land options? deposit we have average on

million I deposits, Al. $XXX know have we in

Let me at right fingertips. average you. have I the for my get don't that

that percent, specifically a I anything don't broke just As up, But out on yes. Al, he's 'XX. looking as have the

we've as of obviously historically on gives during due actually some But of our were even value. those I the diligence the losing percent we average deposit. deposit it So can you a that so early so land average stages walk invested the without you lots just in give perspective can of what away

and lots So deposit do walk forward clearly, deals understand in the at that we'll buy have. going if it to that entire 'XX even rather we doesn't not have to away, it the home you prices, 'XX risk. are bring it sales money the that riskiest to really market But that. and we I'd in are of renegotiate We're and controlled that not risk mentioned, land But do the amount to move those we pace. market that all today's continue to to to develop Even costs, as if and than invest sellers it, changed. construction doesn't, try pencil what if it most

are aren’t. term, alter Some willing to some

finish ultimately make not. of So to or will we know don't how those the many 'XX it line

good ownership vintage, options longer in And try because entitlement that point. are our up 'XX it options. the lot our question ownership. by by land is vintage what yesterday. of term The actually land yours number will our new is get a going ask to option, We'll bit guess option generally a contracts of But the We I newer. is to did were we own add segments. that or actually and of vintage that broken you like interesting Alan, calculated next were about older that decent follow when versus fairly certainly Southeast those our out, an we a about call. what is we we're chatting Northeast by in

last controlled through it's land of several the that -- while we likely it least very will at difficult actual entitlement not is months So multiple in actually on ones purchase go for that we be as approved six the the years 'XX, processes. of some in

up to what question, follow And the is the on are. X.X% deposits

average The deposits?

deposits. the Yes, average

supply October maybe order November up, you hang do have versus If given gross you be if have on earlier, don’t just owned with it. And Got before Ara, at the hang it's and I'll I option. know it, or since of you're I follow the up, following up. then would possible to your maybe trends split but there to and for that could And that I question up not, response great. if that fingertips my guess your

So thank you.

and have we we that report at typically in our it just next don't But our as report consideration fingertips we'll take quarter. Yes, we net.

Great. Thanks a lot, guys.

Thanks.

Instructions]. [Operator you. Thank

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

please. Your question,

do My are work? that many just and are that? guys get frontend how But getting you'll builders give the phone to getting several trades. question in few, thing. a you. kind ask so you of I you same stand, Or morning. start is, Thank have from I would concessions queue. first, houses? guys we've any about willing If Good on are not, expecting things wanted incoming allow. back color the so assuming experiencing incentive building same to to to give can paid significant calls have Where talking Yes. you are they you those to thing I’ll the new I'm calls heard an get that yes,

to correct. the are correct. not inbound trades. I are have I our Most inbound know We, our also say been And housing of any you're far And wouldn't before. their working the are they're price and reduce pricing are new and national they we of going of are pricing. receiving been calls. They're like enjoyed typically appreciation on of have frontend believe to price to during in communities trades all on light forward. lower on downturns fully you builders, And through other First, the and subcontractors our expecting not, vendors this rodeo pricing with thus a They have whether particularly the environment to appreciation shocked. of new Regardless rediscuss upturn. definitely or most our effort suppliers

that something homebuilders are I seeing well. it all with as other they're expecting, it's think and

Got it.

But how you homes those be split those to many the does many many under the of spec along and guess how curious have side, can are build I specs? backlog. fronts, specs guess that to you I I'm about close guess? build Well, order completed how to your construction just would guys on I how homes have talk between Now you guys and order and

Brad?

we think slide that. have I on a

specs. Jeff XXX The of you completed October as XX. is total, don't have I spec The know your if

community. the have you per where But you don't know I it's know average I if total. have

Yes, On we total at did it's slide, that XXX the give slide. October XX.

Alex put one over QMIs finished across the it's perspective, average. So and community specs on them little a into the per to country call

Got it.

makes that sense. Okay,

you the willing year guys do and more on think seems been you heard were fiscal it I until less that to say are up like desperately on maybe backlog ground. willing price are willing seeing that end some communities end, now get that were the pricing upset in I incentives, more to your trying to and the have more or cuts new sales you're coming other new year of But you're guys competitors. kind before and I'm fiscal of sure from out year to

are season those are and kind backlog? to for waiting maybe you guys get you So protect Just selling a sense more of still the trying -- engaging trying in spring ways similar or still the to

time prices, of good in always rising competitors what are There backlog -- in the times, got our we've are good lowering our in of But it. communities. few disrupt and where bad majority phase very we're general, say I'd not a aware prices, doing. in the exceptions of backlog of times, we want a we're lot protecting don't to

than that I the better sales at not housing this have dialed might the just offering, XX% and end, on up have the that's the what we we but cycle. them one margins as and, currently are time think our since delivered, current above again, incentives expect in to fiscal we thing as year good is certainly focus with

the has were specs. builder in One quick And didn't in been I'd that order move or comment other last make than build homes kind the much. is to of increased, ready have quarter we of that for or move really or rather having we repeat a build demand historically have a homes bunch after

demand seeing kind So competitors on of ready. are our in as we doing, monitor move are are that the homes more we what

mortgage We that get quickly that in as help they meet are of continuing will so demand wanting sales that an move produce from we lock kind can more we that can rate. a to more. also So affordable to think homes consumer

Correct.

Okay, great. the queue. Thanks. Appreciate in I'll back get it.

or two, if Alex, time. to question you'd think Okay. like I we've another got ask

from they at do Sure. they consumers, deposit you the much words, to just get What money I built In you mostly from typical if cancel? customers since risk other is how are guys build? mentioned order. you to guess typically have

think region. The of geographic and XX% a base question. good a about a deposit we have be upgrades, higher a On those by The on options price. options of It to tends purchase varies deposit. It’s bit price if higher I and top higher doing quite lot Coast that on East take upgrades. a they're divisions

the have deposits. tend On lower Coast, we West to

I close think on somewhere to Coast. West typical very X% is the

when than X%, X%. it's Sometimes negotiation higher a around there's

goalposts. those kind of two So are the

the decent kind cancellation think level between rates, of correlation was and I why It's -- I there's interesting, so because deposits that's a of pretty

it. with Yes, we agree. We agree

guess But more building towards guess at you get shifting were time, about competitive same of to that try people it type seems are thing. moving -- certainty people talking I I just payment and spec what to pressures the

out? but to Now demand normal normal the at you in interest low or the going strong What guess the to this terms is rates largely rates by think and super down, or acceleration was anything or of guess for past the see driven year, play be opposite end year? see of this beginning could do it's in still start stabilize your with come do to I more we're your how you'll going an then of or seasonality backend, at the year. think Do rates if interest ball you things think seasonality, the you I year crystal expectation that

Brad?

If will you'd have of heighten I season. seasonality. will if interest the seasonality or end acceleration big spring think the excuse you'd dampen at the will the rates I go bring guess normal -- off a see spring that when rise If toward impact selling normally see that on down might the sales rates the me, considerably season, down in time. was rates even level selling that And to year the it jumped of in effect have sales,

So think rates that what you're expecting seasonality. impact I with will I normal do agree

Got in it. Appreciate get I'll Larry. the Thanks, Ara. queue. it. Thanks, back

our Ara At I'd Hovnanian, the CEO, to Sir? Chairman call back turn and remarks. time, like for this Thank you. over to closing

Thanks much. very

road before, we've foundation been situation far said But regarding many, things difficult great steered before. that this not so things we've about As through we're particularly the best our more in down many we've financial contracts. and there and we're happy had years. new are We've in about, quarter

So forward first reporting we results forward quarter you. too distant Thank and good environment look look we in to to producing our the the not considering future.

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