Hovnanian Enterprises Announces Credit Rating Upgrade From Moody’s Ratings
Hovnanian Enterprises (NYSE: HOV) announced that Moody’s has upgraded its corporate family rating from B3 to B2. This upgrade reflects improvements in the company's leverage profile, strong operating performance, and growth in net worth, further bolstered by a recent debt exchange transaction. Moody’s maintains a stable outlook for Hovnanian. The company recently received a similar upgrade from S&P Ratings. CFO Brad G. O’Connor emphasized the company's commitment to enhancing its balance sheet, improving credit metrics, and leveraging SG&A expenses through revenue growth. Hovnanian remains optimistic about continuing to deliver strong returns amid positive trends in the for-sale home market.
- Moody’s upgraded Hovnanian's corporate family rating from B3 to B2.
- Improved leverage profile and growth in net worth cited by Moody’s.
- Recent successful debt exchange transaction.
- Stable outlook maintained by Moody’s.
- Recent upgrade from S&P Ratings.
- Commitment to balance sheet enhancement and credit metric improvement.
- Revenue growth expected to leverage SG&A expenses for higher profitability.
- Optimism about continued strong returns amid positive market trends.
- None.
Insights
A credit rating upgrade by Moody’s signifies a positive change in the company’s risk profile. For Hovnanian Enterprises, the move from B3 to B2 reflects improved creditworthiness and a stronger financial footing. Such upgrades usually translate into lower borrowing costs, which can significantly reduce interest expenses and enhance profitability. The financial improvements cited, such as solid operating performance and a successful debt exchange, indicate that Hovnanian is effectively managing its debt and enhancing its balance sheet. This is important for retail investors, as a reduced debt burden often leads to higher net income and potentially better returns on equity.
Short-term, investors might see increased stock price volatility due to the news; long-term, the improved credit rating can signal sustainable growth and stability. The stable outlook by Moody’s further reassures that the company is on a positive trajectory without significant risks on the horizon.
Given the context of the for-sale home market, Hovnanian’s upgrade comes at a time when market trends are favorable. The upgrade's validation by both Moody’s and S&P confirms the company's ability to adapt and succeed within a competitive industry. For retail investors, this is significant as it suggests that Hovnanian is likely to outperform peers facing similar market conditions. Additionally, a higher credit rating can improve the company's market perception, attracting more institutional investors and potentially leading to higher stock liquidity.
The company's focus on revenue growth to leverage SG&A expenses suggests a strategic approach to drive profitability. However, investors should keep an eye on how effectively the company can capitalize on favorable market trends and continue enhancing its financial metrics without taking undue risks.
MATAWAN, N.J., June 25, 2024 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, today announced that Moody’s Ratings (“Moody’s”) has upgraded Hovnanian’s corporate family rating to B2 from B3. In a press release issued on June 24, 2024, Moody’s cited an improvement in the company’s leverage profile through solid operating performance and growth in net worth, as well as through the recently completed debt exchange transaction. Moody’s outlook for Hovnanian remains stable.
“We are thrilled to get a ratings upgrade from Moody’s, which follows an upgrade we received from S&P Ratings just two weeks ago,” stated Brad G. O’Connor, Chief Financial Officer and Treasurer. “The combination of these upgrades by both rating agencies serves as validation of our accomplishments in paying down our debt and repairing our balance sheet over the past several years. We remain committed to further enhancing our balance sheet and improving our credit metrics; however, the primary driver of future improvements will be revenue growth which will allow us to leverage our SG&A expenses and should lead to much higher levels of profitability. Given the positive current trends in the for-sale home market, we are optimistic that we will continue to deliver outstanding returns on our investments.”
ABOUT HOVNANIAN ENTERPRISES, INC.:
Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, is headquartered in Matawan, New Jersey and, through its subsidiaries, is one of the nation’s largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company’s homes are marketed and sold under the trade name K. Hovnanian® Homes. Additionally, the Company’s subsidiaries, as developers of K. Hovnanian’s® Four Seasons communities, make the Company one of the nation’s largest builders of active lifestyle communities.
Additional information on Hovnanian Enterprises, Inc. can be accessed through the “Investor Relations” section of the Hovnanian Enterprises’ website at http://www.khov.com. To be added to Hovnanian's investor e-mail list, please send an e-mail to IR@khov.com or sign up at http://www.khov.com.
FORWARD-LOOKING STATEMENTS
All statements in this press release that are not historical facts should be considered as “Forward-Looking Statements” within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such forward-looking statements include but are not limited to statements related to the Company’s goals and expectations with respect to its financial results for future financial periods and statements regarding demand for homes, mortgage rates, inflation, supply chain issues, customer incentives and underlying factors. Although we believe that our plans, intentions and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are not guarantees of future performance or results and (iii) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic, industry and business conditions and impacts of a significant homebuilding downturn; (2) shortages in, and price fluctuations of, raw materials and labor, including due to geopolitical events, changes in trade policies, including the imposition of tariffs and duties on homebuilding materials and products and related trade disputes with and retaliatory measures taken by other countries; (3) fluctuations in interest rates and the availability of mortgage financing, including as a result of instability in the banking sector; (4) adverse weather and other environmental conditions and natural disasters; (5) the seasonality of the Company’s business; (6) the availability and cost of suitable land and improved lots and sufficient liquidity to invest in such land and lots; (7) reliance on, and the performance of, subcontractors; (8) regional and local economic factors, including dependency on certain sectors of the economy, and employment levels affecting home prices and sales activity in the markets where the Company builds homes; (9) increases in cancellations of agreements of sale; (10) increases in inflation; (11) changes in tax laws affecting the after-tax costs of owning a home; (12) legal claims brought against us and not resolved in our favor, such as product liability litigation, warranty claims and claims made by mortgage investors; (13) levels of competition; (14) utility shortages and outages or rate fluctuations; (15) information technology failures and data security breaches; (16) negative publicity; (17) high leverage and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (18) availability and terms of financing to the Company; (19) the Company’s sources of liquidity; (20) changes in credit ratings; (21) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (22) operations through unconsolidated joint ventures with third parties; (23) significant influence of the Company’s controlling stockholders; (24) availability of net operating loss carryforwards; (25) loss of key management personnel or failure to attract qualified personnel; (26) public health issues such as major epidemic or pandemic; and (27) certain risks, uncertainties and other factors described in detail in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2023 and the Company’s Quarterly Reports on Form 10-Q for the quarterly periods during fiscal 2024 and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
| Contact: | Brad G. O’Connor | Jeffrey T. O’Keefe |
| Chief Financial Officer & Treasurer | Vice President, Investor Relations | |
| 732-747-7800 | 732-747-7800 | |
FAQ
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