Hovnanian FY 1Q17 Earnings Call Notes

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Ara K. Hovnanian – Chairman of the Board, President & CEO

Land and labor are headwinds to gross margin

” Three factors continue to be a headwind for more meaningful gross margin improvements. Rising labor costs, increased use of incentives in certain communities and higher land costs”

Definitely feeling strengthening

“Sure. Just overall the macro perspective, we definitely are feeling a little strengthening in the marketplace and I think our sales per community, our contracts per community are certainly an indication of that. If I look around the country, I’d say we’re feeling some strengthening, certainly in Northern California in the Sacramento area that has been strong. We’re continuing to see a strong Texas market, the Arizona market in Bromley in Phoenix that has been strengthening as well. On the other side, we’re seeing a little more challenge in the Chicago market, which has historically done very well for us and our southeast coastal markets have had more of a headwind in terms of incentives that would include the Hilton, primarily the Hilton Head in Savannah markets in south.”