HOV - Hovnanian Enterprises cuts FY earnings outlook on macro headwinds

Hovnanian Enterprises ( NYSE: HOV ) on Wednesday lowered its FY22 EPS guidance as a result of deliveries expected later in the year, impact from Hurricane Ian and macroeconomic headwinds.

The homebuilder now expects FY22 EPS of $28.50-$30 vs. prior outlook of $32-$33.50.

Hovnanian ( HOV ) maintained its guidance for FY22 revenue, gross margin, EBITDA and pretax profit.

But it said meeting the high end of its guidance will be "very challenging" as many deliveries are expected to occur in the last two weeks of the year.

Also, results may be impacted by Hurricane Ian, including potential disruption of utility services for upcoming deliveries.

The firm said its FY22 results may be further hit by supply chain challenges, increase in mortgage rates, or increased inflation.

Hovnanian ( HOV ) also decided not to proceed with the early retirement of $100M of its senior secured notes for now.

"Stubbornly high levels of inflation, including higher than expected CPI and PPI results, fears of a recession and increasing likelihood that the Federal Reserve will continue to raise rates caused homebuyers to delay their home purchase decision. As a result, we plan to increase focus on preserving liquidity," said CEO Ara Hovnanian.

"We expect to end FY22 with liquidity significantly above the high end of our target of $245M," he added.

Hovnanian ( HOV ) said most buyers in contract backlog are continuing to move forward with their home purchase.

For the three months ended Sept. 30, beginning backlog cancellation rate was 11% vs. 6% in the year-ago period.

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