Breaking Down Hovnanian Enterprises, Inc. PFD DEP1/1000A Financial Health: Key Insights for Investors

Founded in 1959, Hovnanian Enterprises, Inc. has grown into a major American homebuilder operating in 13 states - from Arizona and California to Florida - designing, constructing and marketing single-family homes, townhouses and active adult communities under the K. Hovnanian® Homes brand while also providing mortgage and title services to enhance the buyer experience; as of October 31, 2024 the company delivered 6,151 homes and generated total revenues of $3.00 billion, guided by a mission to build quality homes, exceptional customer service and community development (including a $2 million charitable contribution in 2023), a vision "to become the Best homebuilder and provider of related financial services in the nation" centered on customers, associates and shareholders, and core values of honesty, integrity, accurate stakeholder communications, diversity and inclusion (with a Diversity & Inclusion Committee launched in 2020, 28% non‑white and 44% women associates as of October 31, 2021), participation in the Building Talent Foundation, and comprehensive benefits and financial programs that support long‑term associate and community success.

Hovnanian Enterprises, Inc. PFD DEP1/1000A (HOVNP) - Intro

• To create quality, affordable homes and communities that enhance families' lives by delivering value through design, construction excellence, and customer-focused services under the K. Hovnanian® Homes brand.
• To support homebuyers end-to-end by integrating mortgage and title services that streamline purchase and ownership.

• To be a leading, regionally dominant homebuilder in each market we serve, achieving scale and concentration that enable consistent returns, resilient operations, and superior customer satisfaction.
• To grow sustainably while adapting product mixes (single-family, townhouses, active adult) to demographic trends and local demand across 13 states.

• Quality: Rigorous standards for materials, construction processes, and delivery to maintain brand trust across thousands of homes.
• Customer-first: Simplified purchase experience through integrated mortgage and title offerings and attentive post-close service.
• Accountability: Measurable performance targets for communities, closed homes, and financial results to ensure discipline.
• Local market focus: Concentrated geographic presence to maximize brand recognition, land sourcing efficiency, and operational scale.
• Innovation: Product and process improvements that respond to buyer preferences, cost pressures, and regulatory requirements.

• Founded in 1959; operates in 13 states including Arizona, California, and Florida.
• Markets and sells homes under K. Hovnanian® Homes across single-family, townhouse, and active adult segments.
• Delivers a vertically integrated buyer experience by providing mortgage and title services alongside home sales.

• Scale & concentration - Targeting significant market share in each operating region to lower per-unit overhead and strengthen bargaining power for land and subcontractors.
• Vertical integration - Mortgage and title services increase conversion rates, reduce friction in closings, and capture ancillary revenue.
• Product diversification - Offering single-family, townhomes, and active adult communities to match shifting demographics and manage cycle risk.
• Operational metrics - Use delivery volume (6,151 homes YTD) and revenue ($3.00B YTD) as primary KPIs tied to incentives and capital allocation.

• Investors evaluate Hovnanian's ability to convert land inventory to homes delivered, maintain gross margins amid input cost variability, and expand market concentration to enhance returns.

Hovnanian Enterprises, Inc. PFD DEP1/1000A (HOVNP) - Overview

• Quality construction: rigorous building standards, third-party inspections, and warranty programs to ensure durability and long-term value.
• Customer-centricity: streamlined sales processes, responsive warranty service, and homeowner education to improve the purchase and ownership experience.
• Community development: master-planned neighborhoods, amenity-driven design, and local infrastructure partnerships to elevate resident quality of life.
• Social responsibility: targeted philanthropy and community investment to support neighborhoods where HOVNP operates.

• Elevating build quality through standardized materials and third-party quality audits to reduce warranty claims and improve resale value.
• Enhancing the customer journey with digital tools for purchase tracking, virtual tours, and faster post-closing service response times.
• Expanding community-focused amenities and partner programs that increase resident engagement and long-term community appeal.
• Maintaining disciplined land and capital management to preserve margins while supporting growth in target markets.

Hovnanian Enterprises, Inc. PFD DEP1/1000A (HOVNP): Mission Statement

• Customer-centric product development and warranty/aftercare to improve Net Promoter Scores and reduce service-related liabilities.
• Integrated financial services (mortgage, title, insurance facilitation) to increase closing conversion rates and capture ancillary revenue.
• Operational excellence in land acquisition, construction productivity, and supply-chain management to protect gross margins.
• Governance and ethical engagement with investors, lenders, and community stakeholders to sustain access to capital and reputation.

• Quality and craftsmanship - translates to lower rework costs and higher resale values for communities.
• Integrity in financial dealings - reduces financing friction and preserves investor trust.
• Associate engagement and safety - correlates with productivity and lower incident-related downtime.
• Community stewardship - supports long-term demand and municipal relationships for entitlements and infrastructure.

• Prioritize productive capital for communities with target IRRs consistent with shareholder return expectations.
• Maintain liquidity and conservative leverage to weather housing cycles and support preferred dividend obligations.
• Transparent disclosures and ethical engagement to sustain access to debt and equity markets.

• Customer satisfaction: target improvement in post-close satisfaction scores and warranty claim reduction.
• Associate metrics: retention, safety incident rate, and productivity per field crew.
• Business partners: percentage of supplier spend under long-term agreements to stabilize input costs.
• Shareholder outcomes: total shareholder return plus reliable servicing of preferred dividends such as those on HOVNP.

Hovnanian Enterprises, Inc. PFD DEP1/1000A (HOVNP) - Vision Statement

• Ethical leadership as a differentiator: prioritize honesty, integrity, and transparent disclosure in every transaction and stakeholder interaction.
• Stakeholder-focused information: commit to delivering information that is accurate, complete, objective, relevant, timely, and understandable to investors, associates, customers, and partners.
• Inclusive talent and opportunity: embed diversity, equity, and inclusion across recruiting, training, promotion, and supplier selection to reflect the communities served.

• Talent development: training programs and partnerships (including Building Talent Foundation) designed to increase access to skilled trades and managerial roles for underrepresented populations.
• Governance and transparency: board- and management-level accountability for ethical conduct, disclosure quality, and timely stakeholder communications.
• Compensation and well‑being: benefit designs that aim to reduce financial insecurity for employees and align long‑term employee retention with corporate performance.