Consistently High Returns Profitable Growth From More Communities 30 80% © Beazer Homes – Confidential and Proprietary – Distribution Prohibited 24 (a) Segment gross margin excludes impairments, abandonments, and interest amortized to cost of sales. Details are included on the "Homebuilding Gross Margin Reconciliation" slide in the appendix | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |-------------------------------|-------|----------------------------|------- ...

Beazer Homes USA, Inc. (NYSE:BZH) Q3 2023 Earnings Conference Call July 27, 2023 5:00 PM ET Company Participants David Goldberg - Senior Vice President and CFO Allan Merrill - Chairman and CEO Conference Call Participants Alan Ratner - Zelman & Associates Alex Rygiel - B. Riley Securities Jay McCanless - Wedbush Julio Romero - Sidoti Alex Barron - Housing Research Center Operator Good afternoon. And welcome to the Beazer Homes Earnings Conference Call for the Fiscal Third Quarter Ended June 30, 2023. Today’ ...

Cancellation Rate and Community Performance - Cancellation rate for the quarter ended June 30, 2023 was 16.1%, down from 17.0% in the prior year quarter and 18.6% in the prior fiscal quarter[157] - Average active community count for the quarter ended June 30, 2023 was 124, up 1.1% from 123 in the prior year quarter, ending the quarter with 125 active communities[158] - Sales per community per month for the quarter ended June 30, 2023 was 3.2, compared to 2.5 in the prior year quarter, with net new orders of 1,200, up 29.7% from 925 in the prior year quarter[176] Homebuilding Gross Margin and Profit - Homebuilding gross margin for the quarter ended June 30, 2023 was 20.2%, down from 25.1% in the prior year quarter, while excluding impairments, abandonments, and interest, it was 23.4%, down from 28.1%[177] - Homebuilding gross margin decreased to 20.2% for the three months ended June 30, 2023, down from 25.1% in the prior year period[180] - Homebuilding gross margin excluding impairments and abandonments decreased to 20.3% in Q2 2023 from 25.1% in Q2 2022[191] - Homebuilding gross profit decreased by $16.1 million to $115.5 million for Q2 2023, with gross margin declining by 490 basis points to 20.2%[221] - Homebuilding gross profit decreased by $42.1 million to $302.2 million for the nine months ended June 30, 2023, compared to $344.3 million in the prior year period, with a gross margin decrease of 390 basis points to 19.4%[251] - Total homebuilding gross profit was $344.3 million with a gross margin of 23.3%, and excluding impairments and abandonments, gross profit was $344.8 million with a gross margin of 26.5%[248] Revenue and Orders - Total revenue for the three months ended June 30, 2023 increased to $572.544 million, up 8.7% compared to $526.666 million in the same period of 2022[180] - Total homebuilding revenue for the quarter ended June 30, 2023 increased by 9.0% to $570.5 million compared to $523.2 million in the prior year quarter[189] - Net new orders for the nine months ended June 30, 2023 decreased by 14.7% to 2,863 units compared to 3,357 units in the same period of 2022[182] - Net new orders for Q2 2023 increased by 29.7% to 1,200 units, driven by a 28.3% increase in sales pace to 3.2 sales per community per month[211] Backlog and ASP - The aggregate dollar value of homes in backlog as of June 30, 2023 decreased 36.4% compared to June 30, 2022 due to a 35.4% decrease in backlog units and a 1.6% decrease in ASP[183] - Total backlog units decreased by 35.4% to 1,941 units as of June 30, 2023 compared to 3,003 units in the prior year period[212] - Average selling price (ASP) for homes closed increased by 1.8% to $510.8 thousand in Q2 2023 compared to $501.7 thousand in Q2 2022[200] Segment Performance - Southeast segment homebuilding revenue increased 27.5% for the three months ended June 30, 2023 compared to the prior year quarter, driven by a 39.4% increase in closings[186] - West segment homebuilding revenue increased 5.3% for the nine months ended June 30, 2023 compared to the prior year period, driven by a 14.7% increase in ASP[187] - The Southeast region saw the highest revenue growth at 27.5%, reaching $110.8 million in Q2 2023 compared to $86.9 million in Q2 2022[189] - East Segment homebuilding revenue increased by 18.4% for Q2 2023 compared to Q2 2022, driven by a 19.3% increase in closings, partially offset by a 0.8% decrease in ASP[215] - East Segment homebuilding revenue decreased by 4.6% for the nine months ended June 30, 2023, due to a 9.2% decrease in closings, partially offset by a 5.1% increase in ASP[216] - Southeast Segment homebuilding gross profit increased by $3.6 million in Q2 2023, driven by a 39.4% increase in closings, despite a decrease in gross margin to 23.5%[222] - East Segment homebuilding gross profit decreased by $20.2 million for the nine months ended June 30, 2023, with gross margin declining to 20.3% from 25.0%[224] - Southeast Segment homebuilding gross profit increased by $8.6 million due to a 19.5% increase in closings, but gross margin excluding impairments and abandonments decreased to 22.4% from 23.6%[252] - East Segment homebuilding gross profit decreased by $3.6 million compared to the prior year quarter, with gross margin excluding impairments and abandonments decreasing to 19.6% from 26.4%[250] Operating Income and Expenses - Operating income for the West segment for the nine months ended June 30, 2023 was $138.5 million, compared to $165.9 million in the prior year period[171] - Operating income as a percentage of total revenue decreased to 8.4% for the three months ended June 30, 2023, down from 12.8% in the prior year period[180] - Operating income decreased by $19.3 million to $47.9 million for Q2 2023, primarily due to lower gross profit and higher commissions and marketing costs[231] - West Segment operating income decreased by $27.4 million for the nine months ended June 30, 2023, driven by lower gross profit and higher expenses[234] - Southeast Segment operating income increased by $6.4 million for the nine months ended June 30, 2023, primarily due to higher gross profit[236] - Operating income decreased by $47.6 million to $115.2 million for the nine months ended June 30, 2023, primarily due to the decrease in gross profit[260] - West Segment operating income decreased by $9.5 million compared to the prior year quarter, primarily due to lower gross profit and higher commissions and marketing costs[261] - Southeast Segment operating income increased by $2.5 million compared to the prior year quarter, primarily due to higher gross profit[262] Financial Position and Cash Flow - Total assets as of June 30, 2023 were $2.32 billion, compared to $2.25 billion as of September 30, 2022[174] - Total depreciation and amortization for the nine months ended June 30, 2023 was $8.44 million, compared to $9.10 million in the prior year period[173] - Deferred compensation plan assets as of June 30, 2023 were $6.64 million, compared to $3.18 million as of September 30, 2022[161] - Net cash provided by operating activities was $95.8 million for Q2 2023, compared to a net cash used of $164.5 million in Q2 2022[241] - Net cash used in operating activities was $164.5 million for the nine months ended June 30, 2022, driven by a $351.4 million increase in inventory[266] - The company has an Unsecured Facility with a remaining capacity of $265.0 million as of June 30, 2023, with no borrowings or letters of credit outstanding[270] - Non-refundable deposits and other amounts related to property options totaled approximately $144.7 million as of June 30, 2023[276] - The total remaining purchase price under all options, net of cash deposits, was $747.9 million as of June 30, 2023[276] - Outstanding letters of credit and surety bonds amounted to $32.1 million and $283.6 million, respectively, as of June 30, 2023[278] - Variable rate debt outstanding totaled approximately $73.8 million as of June 30, 2023[283] - A 1% increase in interest rates would increase interest expense by approximately $1.0 million over the next 12 months[283] - The estimated fair value of fixed-rate debt was $887.2 million, compared to a carrying amount of $907.3 million as of June 30, 2023[283] - A hypothetical 1% decrease in discount rates would increase the estimated fair value of fixed-rate debt to $920.9 million as of June 30, 2023[283] - The company plans to expand the use of option agreements to supplement owned inventory supply, subject to market conditions and liquidity[276] - The company expects operating cash flows to be adequate to fund future option exercises without materially affecting liquidity[277] Taxes and Compensation - Income tax expense for the three and nine months ended June 30, 2023 was $6.2 million and $15.5 million, compared to $13.2 million and $29.7 million for the same periods in 2022[162] - Total unrecognized compensation costs related to unvested restricted stock awards as of June 30, 2023 was $8.4 million, expected to be recognized over a weighted average period of 1.79 years[166] - The effective tax rate decreased to 12.5% for the three months ended June 30, 2023, down from 19.5% in the prior year period[180] - Income tax expense for the nine months ended June 30, 2023, was $15.5 million, compared to $29.7 million in the prior year period[265] SG&A and Other Expenses - Total SG&A expenses as a percentage of revenue decreased to 11.5% for the three months ended June 30, 2023, down from 11.8% in the prior year period[180] - SG&A as a percentage of total revenue improved to 11.5% in Q2 2023 from 11.8% in Q2 2022, primarily due to higher revenues[201] - Land sales and other revenue decreased by $1.4 million to $2.0 million for Q2 2023, while gross profit increased by $0.3 million to $1.3 million[230] Adjusted EBITDA and Capital Expenditures - Adjusted EBITDA for the nine months ended June 30, 2023 decreased to $182.062 million, down 19.7% from $226.735 million in the same period of 2022[181] - Capital expenditures increased by 26.2% to $14.1 million for the nine months ended June 30, 2023 compared to $11.2 million in the prior year period[197] Market Outlook and Accounting Policies - The company remains positive on the long-term housing market outlook, citing demographic shifts and a multi-million unit housing deficit[199] - No significant changes to critical accounting policies were reported during the nine months ended June 30, 2023[279]

© Beazer Homes – Confidential and Proprietary – Distribution Prohibited 1 Allan P. Merrill © Beazer Homes – Confidential and Proprietary – Distribution Prohibited 3 Shareholders' equity exceeds outstanding debt for the first time since 2005 Book value in excess of $32 per share | --- | --- | |-----------------------|------------------------------------------| | | Sustained | | | Excellence | | 8th Consecutive Year! | AWARD WINNER | | | | | | ENERGY STAR AWARD 2023 | | | PARTNER OF THE YEAR Sustained Excelle ...

Beazer Homes USA, Inc. (NYSE:BZH) Q2 2023 Earnings Conference Call April 27, 2023 5:00 PM ET Company Participants David Goldberg - Senior Vice President and Chief Financial Officer Allan Merrill - Chairman, President and Chief Executive Officer Conference Call Participants Julio Romero - Sidoti & Company Alan Ratner - Zelman & Associates Alex Barron - Housing Research Center Operator Good afternoon, and welcome to the Beazer Homes Earnings Conference Call for the Second Quarter Ended March 31, 2023. Today's ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________________________________________________________ FORM 10-Q _____________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-12822 _______________________ ...

Q1 2023 Performance - New home orders decreased by 57.8% to 482[11] - Sales pace decreased by 60.1% to 1.3[11] - Homebuilding revenue decreased slightly by 0.6% to $444.1 million[11] - Closings decreased by 18.3% to 833[11] - Average selling price increased by 21.6% to $533.1 thousand[11] - Adjusted EBITDA decreased by 22.9% to $47.1 million[11] - Net income from continuing operations decreased by 30.1% to $24.4 million[11] - Diluted EPS from continuing operations decreased by 29.8% to $0.80[11] Financial Position - Total liquidity is approximately $386 million[39] - Net Debt / Net Cap is 47.3%[39] - Net Debt / Adjusted EBITDA is 2.4x[39] Land and Lots - Total controlled lots are 24,735[35] - Active controlled lots are 23,962[35]

Beazer Homes USA, Inc. (NYSE:BZH) Q1 2023 Earnings Conference Call February 2, 2023 5:00 PM ET Company Participants David Goldberg - SVP & CFO Allan Merrill - Chairman & CEO Conference Call Participants Julio Romero - Sidoti & Company Alan Ratner - Zelman & Associates Alex Barron - Housing Research Center Jay McCanless - Wedbush Securities Operator Good afternoon, and welcome to the Beazer Homes Earnings Conference Call for the First Quarter Ended December 31, 2022. Today's call is being recorded, and a rep ...

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements and notes on accounting policies [Condensed Consolidated Balance Sheets](index=3&type=page&id=Condensed%20Consolidated%20Balance%20Sheets) | in thousands (except share and per share data) | December 31, 2022 | September 30, 2022 | |:-----------------------------------------------|:------------------|:-------------------| | **ASSETS** | | | | Cash and cash equivalents | $ 120,746 | $ 214,594 | | Restricted cash | 35,899 | 37,234 | | Accounts receivable | 24,866 | 35,890 | | Income tax receivable | 9,597 | 9,606 | | Owned inventory | 1,779,223 | 1,737,865 | | Deferred tax assets, net | 152,769 | 156,358 | | Property and equipment, net | 23,990 | 24,566 | | Operating lease right-of-use assets | 8,914 | 9,795 | | Goodwill | 11,376 | 11,376 | | Other assets | 19,005 | 14,679 | | **Total assets** | **$ 2,186,385** | **$ 2,251,963** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Trade accounts payable | $ 106,824 | $ 143,641 | | Operating lease liabilities | 10,187 | 11,208 | | Other liabilities | 122,444 | 174,388 | | Total debt | 984,330 | 983,440 | | **Total liabilities** | **1,223,785** | **1,312,677** | | **Stockholders' equity** | | | | Common stock | 31 | 31 | | **Total stockholders' equity** | **962,600** | **939,286** | | **Total liabilities and stockholders' equity** | **$ 2,186,385** | **$ 2,251,963** | [Condensed Consolidated Statements of Operations](index=4&type=page&id=Condensed%20Consolidated%20Statements%20of%20Operations) | in thousands (except per share data) | December 31, 2022 | December 31, 2021 | |:-------------------------------------|:------------------|:------------------| | Total revenue | $ 444,928 | $ 454,149 | | Gross profit | 85,768 | 97,400 | | Operating income | 28,502 | 40,939 | | Income from continuing operations | 24,408 | 34,895 | | Net income | $ 24,331 | $ 34,885 | | Basic income per share | $ 0.81 | $ 1.15 | | Diluted income per share | $ 0.80 | $ 1.14 | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=page&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) | in thousands | Common Shares | Common Stock Amount | Paid-in Capital | Accumulated Deficit | Total | |:-------------|:--------------|:--------------------|:----------------|:--------------------|:------| | **Balance as of September 30, 2022** | **30,880** | **$ 31** | **$ 859,856** | **$ 79,399** | **$ 939,286** | | Net income and comprehensive income | — | — | — | 24,331 | 24,331 | | Stock-based compensation expense | — | — | 1,580 | — | 1,580 | | Shares issued under employee stock plans, net | 672 | — | — | — | — | | Common stock redeemed for tax liability | (205) | — | (2,597) | — | (2,597) | | **Balance as of December 31, 2022** | **31,347** | **$ 31** | **$ 858,839** | **$ 103,730** | **$ 962,600** | | in thousands | Common Shares | Stock Amount | Paid-in Capital | Accumulated Deficit | Total | |:-------------|:--------------|:-------------|:----------------|:--------------------|:------| | **Balance as of September 30, 2021** | **31,294** | **$ 31** | **$ 866,158** | **$ (141,305)** | **$ 724,884** | | Net income and comprehensive income | — | — | — | 34,885 | 34,885 | | Stock-based compensation expense | — | — | 2,108 | — | 2,108 | | Shares issued under employee stock plans, net | 517 | — | — | — | — | | Forfeiture and other settlements of restricted stock | (44) | — | — | — | — | | Common stock redeemed for tax liability | (307) | — | (6,618) | — | (6,618) | | **Balance as of December 31, 2021** | **31,460** | **$ 31** | **$ 861,648** | **$ (106,420)** | **$ 755,259** | [Condensed Consolidated Statements of Cash Flows](index=6&type=page&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | in thousands | Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | |:-------------|:-------------------------------------|:-------------------------------------| | **Cash flows from operating activities:** | | | | Net income | $ 24,331 | $ 34,885 | | Net cash used in operating activities | (86,780) | (77,817) | | **Cash flows from investing activities:** | | | | Net cash used in investing activities | (3,231) | (2,811) | | **Cash flows from financing activities:** | | | | Net cash used in financing activities | (5,172) | (6,618) | | **Net decrease in cash, cash equivalents, and restricted cash** | **(95,183)** | **(87,246)** | | Cash, cash equivalents, and restricted cash at beginning of period | 251,828 | 274,143 | | Cash, cash equivalents, and restricted cash at end of period | $ 156,645 | $ 186,897 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [(1) Description of Business](index=7&type=page&id=(1)%20Description%20of%20Business) - **Beazer Homes USA, Inc.** is a **geographically diversified homebuilder operating in** 13 states **across three regions**: West, East, and Southeast. The **company's objective is to provide** homes with extraordinary value at an affordable price through its **strategic pillars** of Mortgage Choice, Choice Plans, and Surprising Performance[14](index=14&type=chunk)[309](index=309&type=chunk) - The **company's fiscal year** 2023 **began on** October 1, 2022, and **ends on** September 30, 2023[15](index=15&type=chunk) [(2) Basis of Presentation and Summary of Significant Accounting Policies](index=7&type=page&id=(2)%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) - The **unaudited condensed consolidated financial statements are prepared in accordance with GAAP** for interim financial information, with **all intercompany transactions and balances eliminated in consolidation**[14](index=14&type=chunk)[33](index=33&type=chunk) - **Revenue is recognized upon the transfer of promised goods to customers**. **Homebuilding revenue is recognized when title and possession of the home are transferred at the closing date**, while **land sales revenue is recognized when performance obligations are satisfied, typically at closing**[35](index=35&type=chunk)[288](index=288&type=chunk)[289](index=289&type=chunk) - The company is **evaluating the impact of ASU 2020-04 and ASU 2022-06 related to Reference Rate Reform but does not expect a material impact** on its consolidated financial statements[290](index=290&type=chunk) [(3) Supplemental Cash Flow Information](index=9&type=page&id=(3)%20Supplemental%20Cash%20Flow%20Information) | in thousands | Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | |:-------------|:-------------------------------------|:-------------------------------------| | **Supplemental disclosure of non-cash activity:** | | | | Increase in operating lease right-of-use assets | $ — | $ 626 | | Increase in operating lease liabilities | — | 626 | | **Supplemental disclosure of cash activity:** | | | | Interest payments | $ 24,524 | $ 25,081 | | Income tax payments | — | 53 | | Tax refunds received | 59 | — | | **Reconciliation of cash, cash equivalents, and restricted cash:** | | | | Cash and cash equivalents | $ 120,746 | $ 157,701 | | Restricted cash | 35,899 | 29,196 | | Total cash, cash equivalents, and restricted cash | $ 156,645 | $ 186,897 | [(4) Owned Inventory](index=10&type=page&id=(4)%20Owned%20Inventory) | in thousands | December 31, 2022 | September 30, 2022 | |:-------------|:------------------|:-------------------| | Homes under construction | $ 759,545 | $ 785,742 | | Land under development | 782,628 | 731,190 | | Land held for future development | 19,879 | 19,879 | | Land held for sale | 18,583 | 15,674 | | Capitalized interest | 113,143 | 109,088 | | Model homes | 85,445 | 76,292 | | **Total owned inventory** | **$ 1,779,223** | **$ 1,737,865** | - As of **December 31, 2022**, the company had **2,383** homes under construction, including **840** spec homes **totaling $268.5 million** (**701** in-process spec homes at **$211.6 million** and **139** finished spec homes at **$56.9 million**)[318](index=318&type=chunk) - **No project in progress impairments were recognized** during the three months ended December 31, 2022, and 2021[277](index=277&type=chunk) | in thousands | Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | |:-------------|:-------------------------------------|:-------------------------------------| | West | $ 36 | $ — | | East | 154 | — | | **Total abandonments charges** | **$ 190** | **$ —** | | **Total impairments and abandonment charges** | **$ 190** | **$ —** | [(5) Interest](index=13&type=page&id=(5)%20Interest) | in thousands | Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | |:-------------|:-------------------------------------|:-------------------------------------| | Capitalized interest in inventory, beginning of period | $ 109,088 | $ 106,985 | | Interest incurred | 17,830 | 18,311 | | Capitalized interest amortized to home construction and land sales expenses | (13,775) | (14,780) | | Capitalized interest in inventory, end of period | $ 113,143 | $ 110,516 | [(6) Borrowings](index=13&type=page&id=(6)%20Borrowings) | in thousands | December 31, 2022 | September 30, 2022 | |:-------------|:------------------|:-------------------| | 6.750% Senior Notes (2025 Notes) | $ 211,195 | $ 211,195 | | 5.875% Senior Notes (2027 Notes) | 357,255 | 357,255 | | 7.250% Senior Notes (2029 Notes) | 350,000 | 350,000 | | Unamortized debt issuance costs | (6,907) | (7,280) | | **Total Senior Notes, net** | **911,543** | **911,170** | | Junior Subordinated Notes | 72,787 | 72,270 | | **Total debt, net** | **$ 984,330** | **$ 983,440** | - The company entered into a **new Senior Unsecured Revolving Credit Facility with $265.0 million capacity** on October 13, 2022, replacing the previous Secured Revolving Credit Facility. As of **December 31, 2022**, **no borrowings or letters of credit were outstanding** under the Unsecured Facility[98](index=98&type=chunk)[100](index=100&type=chunk) - The company had **$30.4 million in outstanding letters of credit** under stand-alone, cash-secured facilities as of **December 31, 2022**, secured by **$31.5 million** in restricted cash[101](index=101&type=chunk) - The company **believes it was in compliance with all covenants** under its Senior Notes and Junior Subordinated Notes as of **December 31, 2022**[78](index=78&type=chunk)[105](index=105&type=chunk) [(7) Operating Leases](index=16&type=page&id=(7)%20Operating%20Leases) | in thousands | Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | |:-------------|:-------------------------------------|:-------------------------------------| | Operating lease expense | $ 1,001 | $ 999 | | Cash payments on lease liabilities | $ 1,141 | $ 1,086 | | Weighted-average remaining lease term | 4.3 years | 4.7 years | | Weighted-average discount rate | 4.41% | 4.43% | | Fiscal Years Ending September 30, | in thousands | |:----------------------------------|:-------------| | 2023 | 2,658 | | 2024 | 2,688 | | 2025 | 2,299 | | 2026 | 1,643 | | 2027 | 702 | | Thereafter | 1,226 | | **Total lease payments** | **11,216** | | Less: imputed interest | 1,029 | | **Total operating lease liabilities** | **10,187** | [(8) Contingencies](index=17&type=page&id=(8)%20Contingencies) | in thousands | Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | |:-------------|:-------------------------------------|:-------------------------------------| | Balance at beginning of period | $ 13,926 | $ 12,931 | | Accruals for warranties issued | 2,413 | 2,372 | | Changes in liability related to warranties existing in prior periods | (810) | 534 | | Payments made | (2,370) | (3,094) | | **Balance at end of period** | **$ 13,159** | **$ 12,743** | - The company had an **accrual of $8.0 million** in other liabilities related to litigation matters as of **December 31, 2022**[36](index=36&type=chunk) - **Outstanding letters of credit and surety bonds totaled $30.4 million and $277.5 million**, respectively, as of **December 31, 2022**, primarily for obligations to local governments for development improvements[37](index=37&type=chunk) [(9) Fair Value Measurements](index=18&type=page&id=(9)%20Fair%20Value%20Measurements) | in thousands | Level 1 | Level 2 | Level 3 | Total | |:-------------|:--------|:--------|:--------|:------| | **As of December 31, 2022** | | | | | | Deferred compensation plan assets | $ — | $ 3,489 | $ — | $ 3,489 | | **As of September 30, 2022** | | | | | | Deferred compensation plan assets | $ — | $ 3,179 | $ — | $ 3,179 | | Land held for sale | $ — | $ — | $ 902 | $ 902 | | in thousands | As of December 31, 2022 Carrying Amount | As of December 31, 2022 Fair Value | As of September 30, 2022 Carrying Amount | As of September 30, 2022 Fair Value | |:-------------|:----------------------------------------|:-----------------------------------|:-----------------------------------------|:------------------------------------| | Senior Notes | $ 911,543 | $ 836,552 | $ 911,170 | $ 753,338 | | Junior Subordinated Notes | 72,787 | 72,787 | 72,270 | 72,270 | | **Total** | **$ 984,330** | **$ 909,339** | **$ 983,440** | **$ 825,608** | [(10) Income Taxes](index=20&type=page&id=(10)%20Income%20Taxes) - **Income tax expense from continuing operations decreased to $4.2 million** for the three months ended December 31, 2022, compared to **$6.5 million** for the prior year period[20](index=20&type=chunk) - The **income tax expense for Q1 FY23 was primarily driven by** income from continuing operations and discrete impact related to stock-based compensation, **partially offset by $3.0 million** in energy efficiency tax credits[20](index=20&type=chunk) - **Management concluded that it is more likely than not that all federal and certain state deferred tax assets will be realized** as of **December 31, 2022**[21](index=21&type=chunk) [(11) Stock-based Compensation](index=21&type=page&id=(11)%20Stock-based%20Compensation) | in thousands | Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | |:-------------|:-------------------------------------|:-------------------------------------| | Stock-based compensation expense | $ 1,580 | $ 2,108 | | Three Months Ended December 31, 2022 | Shares | Weighted Average Exercise Price | |:-------------------------------------|:-------|:--------------------------------| | Outstanding at beginning of period | 27,507 | $ 14.31 | | Outstanding at end of period | 27,507 | 14.31 | | Exercisable at end of period | 27,271 | $ 14.29 | | Three Months Ended December 31, 2022 | Performance-Based Restricted Shares | Time-Based Restricted Shares | Total Restricted Shares | |:-------------------------------------|:------------------------------------|:-----------------------------|:------------------------| | Beginning of period | 436,146 | 412,042 | 848,188 | | Granted | 249,534 | 422,998 | 672,532 | | Vested | (334,736) | (232,071) | (566,807) | | End of period | 350,944 | 602,969 | 953,913 | - **Total unrecognized compensation costs related to unvested restricted stock awards were $11.8 million** as of **December 31, 2022**, **expected to be recognized over a weighted-average period of 2.14 years**[58](index=58&type=chunk) [(12) Earnings Per Share](index=22&type=page&id=(12)%20Earnings%20Per%20Share) | in thousands (except per share data) | Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | |:-------------------------------------|:-------------------------------------|:-------------------------------------| | **Numerator:** | | | | Income from continuing operations | $ 24,408 | $ 34,895 | | Loss from discontinued operations, net of tax | (77) | (10) | | **Net income** | **$ 24,331** | **$ 34,885** | | **Denominator:** | | | | Basic weighted-average shares | 30,219 | 30,336 | | Dilutive effect of restricted stock awards | 257 | 379 | | Dilutive effect of stock options | 4 | 9 | | **Diluted weighted-average shares** | **30,480** | **30,724** | | **Basic income per share:** | | | | Continuing operations | $ 0.81 | $ 1.15 | | Discontinued operations | — | — | | **Total** | **$ 0.81** | **$ 1.15** | | **Diluted income per share:** | | | | Continuing operations | $ 0.80 | $ 1.14 | | Discontinued operations | — | — | | **Total** | **$ 0.80** | **$ 1.14** | [(13) Other Liabilities](index=22&type=page&id=(13)%20Other%20Liabilities) | in thousands | December 31, 2022 | September 30, 2022 | |:-------------|:------------------|:-------------------| | Customer deposits | $ 29,615 | $ 34,270 | | Accrued compensations and benefits | 22,500 | 57,781 | | Accrued interest | 14,970 | 22,723 | | Warranty reserve | 13,159 | 13,926 | | Litigation accruals | 8,010 | 9,832 | | Income tax liabilities | 914 | 320 | | Other | 33,276 | 35,536 | | **Total** | **$ 122,444** | **$ 174,388** | [(14) Segment Information](index=23&type=page&id=(14)%20Segment%20Information) - The company **operates in** 13 states, **grouped into three homebuilding segments**: West (Arizona, California, Nevada, Texas), East (Delaware, Indiana, Maryland, New Jersey, Tennessee, Virginia), and Southeast (Florida, Georgia, North Carolina, South Carolina)[97](index=97&type=chunk)[124](index=124&type=chunk)[147](index=147&type=chunk) | in thousands | 2022 | 2021 | |:-------------|:----------|:----------| | West | $ 274,815 | $ 257,666 | | East | 86,190 | 118,169 | | Southeast | 83,923 | 78,314 | | **Total revenue** | **$ 444,928** | **$ 454,149** | | in thousands | 2022 | 2021 | |:-------------|:-----------|:-----------| | West | $ 37,357 | $ 42,724 | | East | 9,262 | 19,859 | | Southeast | 10,679 | 8,200 | | Corporate and unallocated | (28,796) | (29,844) | | **Total operating income** | **$ 28,502** | **$ 40,939** | | in thousands | Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | |:-------------|:-------------------------------------|:-------------------------------------| | West | $ 1,510 | $ 1,333 | | East | 533 | 69 | | Southeast | 717 | 355 | | Corporate and unallocated | 485 | 1,137 | | **Total capital expenditures** | **$ 3,245** | **$ 2,894** | | in thousands | December 31, 2022 | September 30, 2022 | |:-------------|:------------------|:-------------------| | West | $ 996,357 | $ 995,339 | | East | 360,367 | 334,323 | | Southeast | 310,918 | 305,443 | | Corporate and unallocated | 518,743 | 616,858 | | **Total assets** | **$ 2,186,385** | **$ 2,251,963** | | in thousands | Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | |:-------------|:-------------------------------------|:-------------------------------------| | West | $ 1,605 | $ 1,599 | | East | 273 | 435 | | Southeast | 330 | 399 | | Corporate and unallocated | 305 | 448 | | **Total depreciation and amortization** | **$ 2,513** | **$ 2,881** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 FY23 financial performance, market conditions, operations, liquidity, and strategy [Executive Overview and Outlook](index=25&type=page&id=Executive%20Overview%20and%20Outlook) - **Conditions in the housing market worsened** during Q1 FY23 **due to elevated mortgage rates, inflation, and an uncertain economic outlook, negatively impacting** housing affordability and buyer sentiment[152](index=152&type=chunk) - Despite current challenges, the **long-term housing market outlook remains positive**, **supported by** demographic shifts towards homeownership and a multi-million unit housing deficit[153](index=153&type=chunk) - The company **plans to strategically invest in land, gradually increase active communities, and expand the use of lot option agreements to position for long-term growth, while maintaining a strong liquidity position and controlling risk**[153](index=153&type=chunk) [Overview of Results for Our Fiscal First Quarter](index=25&type=page&id=Overview%20of%20Results%20for%20Our%20Fiscal%20First%20Quarter) - **Sales per community per month decreased to 1.3** (from **3.3** in prior year quarter), and **net new orders were down 57.8% to 482**, **reflecting a challenging sales environment**[131](index=131&type=chunk) - **Average Selling Price (ASP) for homes closed increased 21.6%** year-over-year to **$533.1 thousand**, but **backlog ASP was sequentially down slightly, indicating potential future lower closing ASP**[132](index=132&type=chunk) - The **cancellation rate for the quarter increased to 37.1%** from **11.8%** in the prior year quarter, **driven by higher cancellation volume and lower gross sales**[154](index=154&type=chunk) - **Homebuilding gross margin decreased to 19.2%** (from **20.9%** YoY). **Excluding impairments, abandonments, and interest, it decreased to 22.3%** (from **24.2%** YoY)[155](index=155&type=chunk) - **SG&A as a percentage of total revenue increased to 12.3%** (from **11.8%** YoY), **primarily due to decreased closings and revenue**[156](index=156&type=chunk) [Seasonal and Quarterly Variability](index=26&type=page&id=Seasonal%20and%20Quarterly%20Variability) - The **company's homebuilding operating cycle historically shows escalating new order activity in the second and third fiscal quarters and increased closings in the third and fourth fiscal quarters**[135](index=135&type=chunk) - These seasonal patterns may be impacted or reduced by factors such as economic downturns, leading to decreased revenues and closings[135](index=135&type=chunk) [Results of Continuing Operations](index=27&type=page&id=Results%20of%20Continuing%20Operations) | $ in thousands | Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | |:---------------|:-------------------------------------|:-------------------------------------| | Total Revenue | $ 444,928 | $ 454,149 | | Gross Profit | $ 85,768 | $ 97,400 | | Homebuilding Gross Margin | 19.2 % | 20.9 % | | SG&A as a percentage of total revenue | 12.3 % | 11.8 % | | Operating Income | $ 28,502 | $ 40,939 | | Operating Income as a percentage of total revenue | 6.4 % | 9.0 % | | Effective Tax Rate | 14.5 % | 15.6 % | [EBITDA: Reconciliation of Net Income to Adjusted EBITDA](index=28&type=page&id=EBITDA:%20Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) | in thousands | Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | 22 vs 21 Change | |:-------------|:-------------------------------------|:-------------------------------------|:----------------| | Net income | $ 24,331 | $ 34,885 | $ (10,554) | | EBIT | 42,239 | 56,125 | (13,886) | | EBITDA | 44,752 | 59,006 | (14,254) | | Adjusted EBITDA | $ 47,148 | $ 61,114 | $ (13,966) | [Homebuilding Operations Data](index=29&type=page&id=Homebuilding%20Operations%20Data) | | Three Months Ended December 31, 2022 New Orders, net | Three Months Ended December 31, 2021 New Orders, net | 22 vs 21 Change | 2022 Cancellation Rates | 2021 Cancellation Rates | |:----------|:---------------------------------------|:---------------------------------------|:----------------|:------------------------|:------------------------| | West | 248 | 655 | (62.1)% | 43.6 % | 12.8 % | | East | 120 | 236 | (49.2)% | 24.5 % | 13.9 % | | Southeast | 114 | 250 | (54.4)% | 31.7 % | 7.1 % | | **Total** | **482** | **1,141** | **(57.8)%** | **37.1 %** | **11.8 %** | - **Net new orders decreased by 57.8%** year-over-year, **driven by a 60.1% decrease in sales pace and increased cancellation rates across all segments**[140](index=140&type=chunk) | | As of December 31, 2022 | As of December 31, 2021 | 22 vs 21 Change | |:-----------------------------------------|:------------------------|:------------------------|:----------------| | Backlog Units: | | | | | West | 995 | 1,705 | (41.6)% | | East | 375 | 602 | (37.7)% | | Southeast | 370 | 601 | (38.4)% | | **Total** | **1,740** | **2,908** | **(40.2)%** | | Aggregate dollar value of homes in backlog (in millions) | $ 940.9 | $ 1,405.2 | (33.0)% | | ASP in backlog (in thousands) | $ 540.8 | $ 483.2 | 11.9 % | [Homebuilding Revenue, Average Selling Price, and Closings](index=30&type=page&id=Homebuilding%20Revenue,%20Average%20Selling%20Price,%20and%20Closings) | $ in thousands | Homebuilding Revenue 2022 | Homebuilding Revenue 2021 | Homebuilding Revenue 22 vs 21 | Average Selling Price 2022 | Average Selling Price 2021 | Average Selling Price 22 vs 21 | Closings 2022 | Closings 2021 | Closings 22 vs 21 | |:---------------|:--------------------------|:--------------------------|:------------------------------|:---------------------------|:---------------------------|:-------------------------------|:--------------|:--------------|:------------------| | West | $ 274,322 | $ 256,492 | 7.0 % | $ 537.9 | $ 425.4 | 26.4 % | 510 | 603 | (15.4)% | | East | 86,031 | 114,287 | (24.7)% | 555.0 | 466.5 | 19.0 % | 155 | 245 | (36.7)% | | Southeast | 83,731 | 75,950 | 10.2 % | 498.4 | 444.2 | 12.2 % | 168 | 171 | (1.8)% | | **Total** | **$ 444,084** | **$ 446,729** | **(0.6)%** | **$ 533.1** | **$ 438.4** | **21.6 %** | **833** | **1,019** | **(18.3)%** | - **Current fiscal quarter closings were affected by longer construction cycle times due to lingering impacts of supply chain disruptions and labor shortages**[162](index=162&type=chunk) [Homebuilding Gross Profit and Gross Margin](index=31&type=page&id=Homebuilding%20Gross%20Profit%20and%20Gross%20Margin) - **Total homebuilding gross profit decreased by $8.2 million to $85.1 million**, and **gross margin decreased by 170 basis points to 19.2%** year-over-year[166](index=166&type=chunk) - **Excluding impairment and abandonment charges and interest amortized to cost of sales, homebuilding gross profit decreased by $9.0 million**, and **gross margin decreased by 190 basis points to 22.3%**. This deterioration was **primarily driven by** increased price concessions as demand weakened[166](index=166&type=chunk) | $ in thousands | HB Gross Profit | HB Gross Margin | Impairments & Abandonments (I&A) | HB Gross Profit excluding I&A | HB Gross Margin excluding I&A | Interest Amortized to COS (Interest) | HB Gross Profit excluding I&A and Interest | HB Gross Margin excluding I&A and Interest | |:---------------|:----------------|:----------------|:---------------------------------|:------------------------------|:------------------------------|:-------------------------------------|:-------------------------------------------|:-------------------------------------------| | West | $ 59,362 | 21.6 % | $ 36 | $ 59,398 | 21.7 % | $ — | $ 59,398 | 21.7 % | | East | 16,521 | 19.2 % | 154 | 16,675 | 19.4 % | — | 16,675 | 19.4 % | | Southeast | 18,501 | 22.1 % | — | 18,501 | 22.1 % | — | 18,501 | 22.1 % | | Corporate & unallocated | (9,270) | | — | (9,270) | | 13,775 | 4,505 | | | **Total homebuilding** | **$ 85,114** | **19.2 %** | **$ 190** | **$ 85,304** | **19.2 %** | **$ 13,775** | **$ 99,079** | **22.3 %** | | | Pre-imp

Beazer Homes USA, Inc. (NYSE:BZH) Q4 2022 Earnings Conference Call November 10, 2022 5:00 PM ET Company Participants David Goldberg - Senior Vice President & Chief Financial Officer Allan Merrill - Chairman & Chief Executive Officer Conference Call Participants Alan Ratner - Zelman & Associates Alex Rygiel - B. Riley Alex Barron - Housing Research Center Operator Good afternoon, and welcome to the Beazer Homes Earnings Conference Call for the Quarter and Fiscal Year Ended September 30, 2022. Today's call is ...