Company: HOVVB
Filing Date: 2025-08-29
Form Type: 10-Q
Source: 0001753926-25-001413
Chunk: 10

Company: HOVNANIAN ENTERPRISES INC
Filing Date: 2025-08-29
Form: 10-Q
Item: Part I, Item 2
Chunk 10
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 and cash equivalent accounts during the first three quarters of fiscal 2025, partially offsetting the increase in land sales revenues for the nine months ended July 31, 2025.

Homebuilding: Cost of Sales 

Cost of sales includes expenses for homebuilding and land and lot sales, including inventory impairments and land option write-offs (defined as “land charges” in the tables below). A breakout of such expenses for homebuilding and land and lot sales and the gross margins for each is set forth below.

Homebuilding gross margin, before cost of sales interest expense and land charges, is a non-GAAP financial measure. This measure should not be considered as an alternative to homebuilding gross margin determined in accordance with U.S. GAAP as an indicator of operating performance.

Management believes this non-GAAP measure enables investors to better understand our operating performance. This measure is also useful internally, helping management evaluate our operating results on a consolidated basis and relative to other companies in our industry. In particular, the magnitude and volatility of land charges for the Company, and for other homebuilders, have been significant and, as such, have made comparable financial analysis of our industry more difficult. Homebuilding metrics excluding land charges, as well as interest amortized to cost of sales, and other similar presentations prepared by analysts and other companies are frequently used to assist investors in understanding and comparing the operating characteristics of homebuilding activities by eliminating many of the differences in companies’ respective levels of impairments and debt.

Three Months Ended

Nine Months Ended

July 31,

July 31,

 (Dollars in thousands) 

2025

2024

2025

2024

 Sale of homes 

$
769,050

$
687,424

$
2,066,278

$
1,947,989

 Cost of sales, excluding interest expense and land charges 

636,015

 535,425  

1,702,360

1,515,258

 Homebuilding gross margin, before cost of sales interest expense and land charges 

133,035

151,999

363,918

432,731

 Cost of sales interest expense, excluding land sales interest expense 

26,868

20,351

65,544

61,792

 Homebuilding gross margin, after cost of sales interest expense, before land charges 

106,167

131,648

298,374

370,939

 Land charges 

16,045

446

20,141

985

 Homebuilding gross margin 

$
90,122