Beazer Homes USA, Inc. (NYSE:BZH) Q3 2021 Results Conference Call July 29, 2021 5:00 PM ET Company Participants David Goldberg - Senior Vice President and Chief Financial Officer Allan Merrill - Chairman and Chief Executive Officer Conference Call Participants Alan Ratner - Zelman & Associates. Alex Barron - Housing Research Center Julio Romero - Sidoti & Company Operator Good afternoon, and welcome to the Beazer Earnings Conference Call for the Quarter Ended June 30, 2021. Today's call is being recorded a ...

Table of Contents Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.001 par value BZH New York Stock Exchange _____________________________________________________________ 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 1 ...

Beazer Homes USA, Inc. Q2 2021 Earnings Presentation Sienna Missouri City, Tx 1 Forward Looking Statements This presentation contains forward-looking statements. These forward-looking statements represent our expectations or beliefs concerning future events, and it is possible that the results described in this press release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results t ...

Financial Data and Key Metrics Changes - New home orders increased approximately 12% to 1,854, with sales pace up more than 40% to 4.7 sales per community per month [18] - Homebuilding revenue rose about 12% to $547 million on 9% higher closings [18] - Gross margin, excluding amortized interest, impairment, and abandonment, was 22.2%, up approximately 140 basis points [18] - Adjusted EBITDA was $64.2 million, up over 45%, with an EBITDA margin of 11.7%, the highest second quarter level in the past 10 years [19] - Net income from continuing operations was $24.6 million, yielding earnings per share of $0.81, more than double the same period last year [19] - Full-year earnings per share is now expected to be above $3, up from previous guidance of at least $2.50 [20] Business Line Data and Key Metrics Changes - The company successfully adapted to increased construction costs by raising prices, limiting sales paces, and extending delivery dates on sold homes [7] - The backlog of sold and already started homes is up more than 50%, indicating strong future performance [12] Market Data and Key Metrics Changes - The housing shortage is estimated to be closer to 4 million homes, significantly higher than previous estimates [10] - Strong demographic demand and limited supply are expected to sustain housing market strength [9] Company Strategy and Development Direction - The company aims to create value for stakeholders by delivering homes on time and at intended margins [7] - A balanced growth strategy is emphasized, focusing on generating shareholder value while managing risk [13] - The company is committed to having every home built Net Zero Energy Ready by 2025, with recent recognition as ENERGY STAR Partner of the Year for the sixth consecutive year [8][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of housing market strength due to demographic demand and a recovering economy [9][11] - The company anticipates a multimillion dollar reduction in GAAP interest expense based on actions already taken [17] - Management acknowledged challenges in production capacity but expects improvements over time [35] Other Important Information - The company ended the second quarter with over $600 million in liquidity, more than double the amount from the previous year [22] - Approximately $100 million was spent on land acquisition and development during the quarter, with expectations for total land spend to exceed $600 million for the year [23] Q&A Session Summary Question: How does the company approach the market with differing sales strategies? - The company is navigating between "to be built" and "started" sales strategies based on cost certainty and market conditions [31] Question: What is the current production pace and capacity? - Production capacity is expected to improve over time, but there are no immediate increases in throughput [34] Question: How much more pricing power exists in the current environment? - There is a breaking point related to affordability, and while there is current pricing power, it may not be sustainable long-term [39][40] Question: Are there changes in consumer preferences affecting product mix? - There is increased demand for home office and homeschooling spaces, influencing architectural designs [42][45] Question: What is the progress on the Net Zero Energy Ready commitment? - The commitment remains strong, with recognition as ENERGY STAR Partner of the Year, but changes in existing communities are limited [46][47] Question: What are the uses of cash and capital allocation strategy? - The focus is on investing in the business and reducing debt below $1 billion by the end of fiscal '22 [58][59]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, and specific financial line items for the periods ended March 31, 2021, and September 30, 2020 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows an increase in total assets from $2,007,480 thousand as of September 30, 2020, to $2,055,571 thousand as of March 31, 2021, primarily driven by an increase in owned inventory and cash. Total liabilities also increased slightly, while total stockholders' equity improved Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2021 | September 30, 2020 | | :----------------- | :------------- | :----------------- | | Total Assets | $2,055,571 | $2,007,480 | | Cash & Equivalents | $355,533 | $327,693 | | Owned Inventory | $1,383,616 | $1,350,738 | | Total Liabilities | $1,421,804 | $1,414,309 | | Total Equity | $633,767 | $593,171 | - Total assets increased by **$48,091 thousand (2.4%)** from September 30, 2020, to March 31, 2021[8](index=8&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported significant increases in revenue and net income for both the three and six months ended March 31, 2021, compared to the same periods in 2020, indicating improved operational performance Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Total Revenue | $549,889 | $489,413 | $978,428 | $907,217 | | Net Income | $24,528 | $10,614 | $36,525 | $13,360 | | Basic Income Per Share (Continuing Ops) | $0.82 | $0.36 | $1.23 | $0.45 | | Diluted Income Per Share (Continuing Ops) | $0.81 | $0.35 | $1.22 | $0.45 | - Net income for the three months ended March 31, 2021, increased by **131.1%** year-over-year[11](index=11&type=chunk) - Diluted EPS from continuing operations for the six months ended March 31, 2021, increased by **171.1%** year-over-year[11](index=11&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased from $593,171 thousand as of September 30, 2020, to $633,767 thousand as of March 31, 2021, primarily due to net income and stock-based compensation expense, partially offset by common stock redemptions for tax liability Stockholders' Equity Changes (in thousands) | Metric | Six Months Ended March 31, 2021 | | :------------------------------------ | :------------------------------ | | Balance as of September 30, 2020 | $593,171 | | Net income and comprehensive income | $36,525 | | Stock-based compensation expense | $6,060 | | Common stock redeemed for tax liability | $(2,620) | | Balance as of March 31, 2021 | $633,767 | - Total stockholders' equity increased by **$40,596 thousand** from September 30, 2020, to March 31, 2021[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended March 31, 2021, the company generated significant cash from operating activities, a substantial improvement from cash used in the prior year, with cash used in investing activities remaining stable and financing activities increasing due to debt repurchases Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | | Net cash provided by (used in) operating activities | $50,139 | $(45,913) | | Net cash used in investing activities | $(6,344) | $(5,342) | | Net cash (used in) provided by financing activities | $(12,628) | $241,008 | | Net increase in cash, equivalents, and restricted cash | $31,167 | $189,753 | - Net cash provided by operating activities improved by **$96,052 thousand** year-over-year for the six months ended March 31, 2021[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the condensed consolidated financial statements, covering business description, accounting policies, specific balance sheet and income statement items, and other financial information [(1) Description of Business](index=9&type=section&id=(1)%20Description%20of%20Business) Beazer Homes USA, Inc. is a geographically diversified homebuilder operating in 13 states across three regions in the United States, focusing on providing value and quality homes at various price points - Beazer Homes USA, Inc. is a geographically diversified homebuilder with active operations in **13 states** within **three geographic regions**: the West, East, and Southeast[20](index=20&type=chunk) - The company's objective is to provide customers with homes that incorporate exceptional value and quality, while seeking to maximize return on invested capital[21](index=21&type=chunk) [(2) Basis of Presentation and Summary of Significant Accounting Policies](index=9&type=section&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, and management's estimates are used. The company's fiscal year ends September 30, and results are not necessarily indicative of full-year performance due to seasonality and COVID-19 impacts - The unaudited condensed consolidated financial statements are prepared in accordance with **GAAP** for interim financial information and instructions to Form 10-Q[23](index=23&type=chunk) - The results for the three and six months ended March 31, 2021, are not necessarily indicative of full fiscal year results due to seasonal variations and the effects of the **COVID-19 pandemic**[23](index=23&type=chunk) Total Revenue Disaggregated by Revenue Stream (in thousands) | Revenue Stream | March 31, 2021 (3 Months) | March 31, 2020 (3 Months) | March 31, 2021 (6 Months) | March 31, 2020 (6 Months) | | :--------------------- | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Homebuilding revenue | $547,417 | $487,986 | $971,646 | $905,385 | | Land sales and other | $2,472 | $1,427 | $6,782 | $1,832 | | **Total Revenue** | **$549,889** | **$489,413** | **$978,428** | **$907,217** | [(3) Supplemental Cash Flow Information](index=11&type=section&id=(3)%20Supplemental%20Cash%20Flow%20Information) This section provides supplemental non-cash and cash activity details, including interest and income tax payments, and a reconciliation of cash, cash equivalents, and restricted cash Supplemental Cash Flow Information (in thousands) | Metric | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :------------------------------------------------------------------- | :------------------------------ | :------------------------------ | | Interest payments | $37,412 | $28,731 | | Income tax payments | $143 | $2 | | Cash, cash equivalents, and restricted cash at end of period (reconciled) | $373,695 | $312,547 | - Interest payments increased by **$8,681 thousand (30.2%)** for the six months ended March 31, 2021, compared to the prior year[36](index=36&type=chunk) [(4) Investments in Unconsolidated Entities](index=12&type=section&id=(4)%20Investments%20in%20Unconsolidated%20Entities) The company holds investments in unconsolidated entities, primarily joint ventures, but had no outstanding guarantees or debt-related obligations for these entities as of March 31, 2021, and September 30, 2020 Investments in Unconsolidated Entities (in thousands) | Metric | March 31, 2021 | September 30, 2020 | | :-------------------------------------- | :------------- | :----------------- | | Investment in unconsolidated entities | $4,114 | $4,003 | | Total equity of unconsolidated entities | $7,009 | $7,079 | | Total outstanding borrowings | $13,497 | $8,807 | - The company had **no outstanding guarantees** or other debt-related obligations related to its investments in unconsolidated entities as of March 31, 2021, and September 30, 2020[38](index=38&type=chunk) [(5) Inventory](index=13&type=section&id=(5)%20Inventory) Total owned inventory increased to $1,383,616 thousand as of March 31, 2021, from $1,350,738 thousand as of September 30, 2020, with homes under construction seeing a significant rise. No inventory impairment charges were recognized during the three and six months ended March 31, 2021 or 2020 Components of Owned Inventory (in thousands) | Component | March 31, 2021 | September 30, 2020 | | :----------------------------- | :------------- | :----------------- | | Homes under construction | $653,137 | $525,021 | | Development projects in progress | $517,037 | $589,763 | | Land held for future development | $23,068 | $28,531 | | Land held for sale | $8,851 | $12,622 | | Capitalized interest | $113,414 | $119,659 | | Model homes | $68,109 | $75,142 | | **Total owned inventory** | **$1,383,616** | **$1,350,738** | - Homes under construction increased by **$128,116 thousand (24.4%)** from September 30, 2020, to March 31, 2021[42](index=42&type=chunk) - **No project in progress or land held for sale impairment charges** were recognized during the three and six months ended March 31, 2021 and 2020[50](index=50&type=chunk)[51](index=51&type=chunk) [(6) Interest](index=15&type=section&id=(6)%20Interest) Capitalized interest decreased from $119,659 thousand at September 30, 2020, to $113,414 thousand at March 31, 2021. Interest amortized to home construction and land sales expenses increased for both the three and six months ended March 31, 2021, compared to the prior year Interest Information (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Capitalized interest at beginning of period | $119,148 | $137,010 | $119,659 | $136,565 | | Interest incurred and capitalized | $19,345 | $22,271 | $39,247 | $43,827 | | Interest amortized to COS | $(24,110) | $(22,660) | $(42,923) | $(42,329) | | Capitalized interest at end of period | $113,414 | $134,693 | $113,414 | $134,693 | - Interest amortized to home construction and land sales expenses increased by **$1,450 thousand (6.4%)** for the three months ended March 31, 2021, compared to the prior year[56](index=56&type=chunk) [(7) Borrowings](index=16&type=section&id=(7)%20Borrowings) Total debt, net, decreased slightly to $1,123,001 thousand as of March 31, 2021, from $1,130,801 thousand as of September 30, 2020. The company repurchased a portion of its 2027 Senior Notes, resulting in a loss on extinguishment of debt, and its Secured Revolving Credit Facility has $250.0 million remaining capacity with no outstanding borrowings Company's Debt, Net (in thousands) | Debt Type | March 31, 2021 | September 30, 2020 | | :------------------------------ | :------------- | :----------------- | | Senior Unsecured Term Loan | $100,000 | $100,000 | | 6 3/4% Senior Notes (2025) | $229,555 | $229,555 | | 5 7/8% Senior Notes (2027) | $384,255 | $394,000 | | 7 1/4% Senior Notes (2029) | $350,000 | $350,000 | | Junior Subordinated Notes | $69,170 | $68,137 | | **Total debt, net** | **$1,123,001** | **$1,130,801** | - During the three months ended March 31, 2021, the company repurchased **$9.7 million** of its outstanding 2027 Notes, resulting in a loss on extinguishment of debt of **$0.6 million**[69](index=69&type=chunk) - As of March 31, 2021, the Secured Revolving Credit Facility had **$250.0 million** remaining capacity with **no outstanding borrowings** or letters of credit[61](index=61&type=chunk) [(8) Operating Leases](index=19&type=section&id=(8)%20Operating%20Leases) The company leases office space and equipment, recognizing operating lease expense on a straight-line basis. Operating lease expense for the three and six months ended March 31, 2021, was $1.1 million and $2.2 million, respectively - Operating lease expense for the three months ended March 31, 2021, was **$1.1 million**, and for the six months ended March 31, 2021, was **$2.2 million**[78](index=78&type=chunk) Operating Lease Liabilities (in thousands) | Metric | March 31, 2021 | | :------------------------------------ | :------------- | | Total lease payments | $16,477 | | Less: Imputed interest | $1,874 | | **Total operating lease liabilities** | **$14,603** | - As of March 31, 2021, the weighted-average remaining lease term was **5.0 years**, and the weighted-average discount rate was **4.76%**[82](index=82&type=chunk) [(9) Contingencies](index=21&type=section&id=(9)%20Contingencies) The company is involved in various construction defect claims and legal actions. Warranty reserves decreased slightly to $12.4 million as of March 31, 2021, and litigation accruals decreased to $4.2 million. Management believes the ultimate resolution of these matters will not have a material adverse effect Warranty Reserve Activity (in thousands) | Metric | March 31, 2021 (3 Months) | March 31, 2020 (3 Months) | March 31, 2021 (6 Months) | March 31, 2020 (6 Months) | | :---------------------------------------------- | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Balance at beginning of period | $12,616 | $12,646 | $13,052 | $13,388 | | Accruals for warranties issued | $2,783 | $2,707 | $5,037 | $4,372 | | Changes in liability related to prior periods | $(57) | $(1,151) | $320 | $(1,084) | | Payments made | $(2,921) | $(2,144) | $(5,988) | $(4,618) | | **Balance at end of period** | **$12,421** | **$12,058** | **$12,421** | **$12,058** | - Litigation accruals were **$4.2 million** as of March 31, 2021, down from **$5.0 million** as of September 30, 2020[95](index=95&type=chunk)[120](index=120&type=chunk) - Outstanding letters of credit and surety bonds totaled approximately **$37.1 million** and **$249.9 million**, respectively, as of March 31, 2021[95](index=95&type=chunk) [(10) Fair Value Measurements](index=22&type=section&id=(10)%20Fair%20Value%20Measurements) The company uses a fair value hierarchy (Level 1, 2, 3) for asset and liability measurements. Deferred compensation plan assets are measured at Level 2, while impaired inventory and investments in unconsolidated entities are classified as Level 3 due to unobservable inputs. No impairments were recognized on projects in process or land held for sale during the reported periods Assets Measured at Fair Value (in thousands) | Asset | March 31, 2021 (Level 2) | September 30, 2020 (Level 2) | | :---------------------------------- | :----------------------- | :--------------------------- | | Deferred compensation plan assets | $2,610 | $2,339 | - **No impairments** were recognized on projects in process or land held for sale during the three and six months ended March 31, 2021 and 2020[100](index=100&type=chunk) Financial Liabilities Fair Value (in thousands) | Liability | March 31, 2021 Carrying Amount | March 31, 2021 Fair Value | September 30, 2020 Carrying Amount | September 30, 2020 Fair Value | | :------------------------------ | :----------------------------- | :------------------------ | :--------------------------------- | :---------------------------- | | Senior Notes and Term Loan | $1,053,831 | $1,127,303 | $1,062,664 | $1,098,117 | | Junior Subordinated Notes | $69,170 | $69,170 | $68,137 | $68,137 | [(11) Income Taxes](index=24&type=section&id=(11)%20Income%20Taxes) Income tax expense from continuing operations significantly increased for the three and six months ended March 31, 2021, primarily due to higher income and the discrete impact of stock-based compensation. The company continues to evaluate its deferred tax assets and believes a substantial portion will be realized Income Tax Expense from Continuing Operations (in thousands) | Period | March 31, 2021 (3 Months) | March 31, 2020 (3 Months) | March 31, 2021 (6 Months) | March 31, 2020 (6 Months) | | :------------------------------------ | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Expense from income taxes | $7,704 | $4,170 | $11,829 | $3,959 | - Income tax expense for the six months ended March 31, 2021, was substantially driven by income from continuing operations and the discrete impact related to **stock-based compensation expense**[106](index=106&type=chunk) - Management concluded that it is more likely than not that a **substantial portion** of the company's deferred tax assets will be realized as of March 31, 2021[107](index=107&type=chunk) [(12) Stock-based Compensation](index=25&type=section&id=(12)%20Stock-based%20Compensation) Stock-based compensation expense increased for both the three and six months ended March 31, 2021. Unrecognized compensation costs for restricted stock awards increased to $10.4 million, expected to be recognized over 1.70 years Stock-based Compensation Expense (in thousands) | Period | March 31, 2021 (3 Months) | March 31, 2020 (3 Months) | March 31, 2021 (6 Months) | March 31, 2020 (6 Months) | | :------------------------------------ | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Stock-based compensation expense | $2,549 | $899 | $6,060 | $3,210 | - Total unrecognized compensation costs related to unvested restricted stock awards was **$10.4 million** as of March 31, 2021, up from **$9.0 million** as of September 30, 2020[114](index=114&type=chunk) - The remaining costs for restricted stock awards are expected to be recognized over a weighted-average period of **1.70 years**[114](index=114&type=chunk) [(13) Earnings Per Share](index=26&type=section&id=(13)%20Earnings%20Per%20Share) Basic and diluted EPS from continuing operations significantly increased for both the three and six months ended March 31, 2021, reflecting higher net income Earnings Per Share (except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Basic Income Per Share (Continuing Ops) | $0.82 | $0.36 | $1.23 | $0.45 | | Diluted Income Per Share (Continuing Ops) | $0.81 | $0.35 | $1.22 | $0.45 | - Diluted weighted-average shares increased to **30,215 thousand** for the three months ended March 31, 2021, from **29,975 thousand** in the prior year[118](index=118&type=chunk) [(14) Other Liabilities](index=27&type=section&id=(14)%20Other%20Liabilities) Total other liabilities decreased slightly to $133,568 thousand as of March 31, 2021, from $135,983 thousand as of September 30, 2020. Accrued compensations and benefits saw a notable decrease, while customer deposits increased Other Liabilities (in thousands) | Liability | March 31, 2021 | September 30, 2020 | | :------------------------------ | :------------- | :----------------- | | Accrued compensations and benefits | $35,775 | $50,246 | | Customer deposits | $27,316 | $18,937 | | Accrued interest | $23,539 | $23,870 | | Warranty reserve | $12,421 | $13,052 | | Litigation accruals | $4,169 | $4,981 | | Income tax liabilities | $717 | $584 | | Other | $29,631 | $24,313 | | **Total** | **$133,568** | **$135,983** | - Accrued compensations and benefits decreased by **$14,471 thousand (28.8%)** from September 30, 2020, to March 31, 2021[120](index=120&type=chunk) - Customer deposits increased by **$8,379 thousand (44.2%)** from September 30, 2020, to March 31, 2021[120](index=120&type=chunk) [(15) Segment Information](index=27&type=section&id=(15)%20Segment%20Information) The company operates in three homebuilding segments: West, East, and Southeast. All segments reported increased revenue and operating income for the three and six months ended March 31, 2021, compared to the prior year, with the East segment showing the most significant revenue growth Revenue by Reportable Segment (in thousands) | Segment | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :-------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | West | $278,720 | $267,731 | $515,600 | $522,129 | | East | $153,571 | $110,941 | $251,535 | $188,981 | | Southeast | $117,598 | $110,741 | $211,293 | $196,107 | | **Total** | **$549,889** | **$489,413** | **$978,428** | **$907,217** | Operating Income by Reportable Segment (in thousands) | Segment | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :-------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | West | $42,488 | $33,223 | $75,791 | $63,554 | | East | $22,449 | $11,513 | $33,817 | $16,834 | | Southeast | $15,074 | $8,814 | $25,382 | $11,970 | | **Total** | **$33,618** | **$16,424** | **$51,306** | **$20,370** | - East segment revenue increased by **38.4%** for the three months ended March 31, 2021, compared to the prior year[123](index=123&type=chunk) [(16) Discontinued Operations](index=29&type=section&id=(16)%20Discontinued%20Operations) The company has classified results from certain exited markets as discontinued operations. For the three and six months ended March 31, 2021, discontinued operations reported losses of $115 thousand and $154 thousand, respectively Loss from Discontinued Operations, Net of Tax (in thousands) | Period | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Loss from discontinued operations, net of tax | $(115) | $(1) | $(154) | $(59) | - There were **no material assets or liabilities** related to discontinued operations as of March 31, 2021, or September 30, 2020[129](index=129&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting market conditions, operational performance, profitability drivers, liquidity, and capital resources for the periods presented [Executive Overview and Outlook](index=30&type=section&id=Executive%20Overview%20and%20Outlook) Demand for new homes remains strong due to low interest rates and short supply, despite COVID-19 volatility. The company improved net new orders, sales pace, backlog, gross margin, and net income in Q2 fiscal 2021. It continues to execute a balanced growth strategy, expanding earnings faster than revenue and growing its total lot position - Net income from continuing operations for Q2 fiscal 2021 was **$24.6 million**, or diluted EPS of **$0.81**, compared to **$10.6 million**, or diluted EPS of **$0.35**, in Q2 fiscal 2020[135](index=135&type=chunk) - Sales per community per month increased to **4.7** for Q2 fiscal 2021, up from **3.3** in the prior year quarter[136](index=136&type=chunk) - The company committed to ensuring each home built is **Net Zero Energy Ready** (HERS index score of **45 or less**) by the end of **2025**[143](index=143&type=chunk) [Homebuilding Operations Data](index=34&type=section&id=Homebuilding%20Operations%20Data) Net new orders increased significantly for both the three and six months ended March 31, 2021, driven by higher absorption rates and lower cancellation rates across all segments, despite a decrease in average active community count. Backlog units and aggregate dollar value also saw substantial increases Net New Orders and Cancellation Rates | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Net New Orders, net | 1,854 | 1,661 | 3,296 | 2,912 | | Cancellation Rates | 10.0% | 15.8% | 11.0% | 15.4% | Backlog Data (as of March 31) | Metric | 2021 | 2020 | Change (%) | | :------------------------------------ | :------------ | :------------ | :--------- | | Backlog Units | 3,303 | 2,231 | 48.1% | | Aggregate dollar value of homes in backlog (in millions) | $1,386.4 | $895.0 | 54.9% | | ASP in backlog (in thousands) | $419.7 | $401.2 | 4.6% | - The increase in net new orders was driven primarily by an increase in absorption rate from **3.3 sales per community per month** in the prior year quarter to **4.7**, and a decrease in cancellation rates[152](index=152&type=chunk) [Homebuilding Revenue, Average Selling Price, and Closings](index=35&type=section&id=Homebuilding%20Revenue,%20Average%20Selling%20Price,%20and%20Closings) Homebuilding revenue increased for both the three and six months ended March 31, 2021, primarily due to higher average selling prices (ASP) and increased closings. The East segment showed the most significant growth in closings Homebuilding Revenue, ASP, and Closings | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Homebuilding Revenue (in thousands) | $547,417 | $487,986 | $971,646 | $905,385 | | Average Selling Price (in thousands) | $394.4 | $382.1 | $388.3 | $379.0 | | Closings | 1,388 | 1,277 | 2,502 | 2,389 | - Homebuilding revenue increased by **12.2%** for the three months ended March 31, 2021, compared to the prior year[155](index=155&type=chunk) - Closings in the East segment increased by **36.6%** for the three months ended March 31, 2021, compared to the prior year[155](index=155&type=chunk) [Homebuilding Gross Profit and Gross Margin](index=36&type=section&id=Homebuilding%20Gross%20Profit%20and%20Gross%20Margin) Homebuilding gross profit and gross margin significantly improved for both the three and six months ended March 31, 2021, driven by increased revenue, lower sales incentives, and pricing increases. Excluding impairments and interest, gross margin also saw substantial growth Homebuilding Gross Profit and Gross Margin (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Homebuilding Gross Profit | $97,456 | $78,744 | $172,293 | $141,852 | | Homebuilding Gross Margin | 17.8% | 16.1% | 17.7% | 15.7% | | HB Gross Profit w/o I&A and Interest | $121,566 | $101,404 | $215,428 | $184,181 | | HB Gross Margin w/o I&A and Interest | 22.2% | 20.8% | 22.2% | 20.3% | - Homebuilding gross margin increased by **170 basis points** to **17.8%** for the three months ended March 31, 2021, primarily due to lower sales incentives and pricing increases[163](index=163&type=chunk)[165](index=165&type=chunk) - Homebuilding gross margin, excluding impairments and abandonments and interest, increased by **190 basis points** to **22.2%** for the six months ended March 31, 2021[164](index=164&type=chunk) [Land Sales and Other Revenue and Gross Profit](index=38&type=section&id=Land%20Sales%20and%20Other%20Revenue%20and%20Gross%20Profit) Land sales and other revenue and gross profit increased substantially for both the three and six months ended March 31, 2021, as the company focused on selling land positions that did not align with its strategic plans to reduce leverage Land Sales and Other Revenue and Gross Profit (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Land Sales and Other Revenue | $2,472 | $1,427 | $6,782 | $1,832 | | Land Sales and Other Gross Profit | $470 | $101 | $926 | $130 | - Land sales and other revenue increased by **$4,950 thousand (270.2%)** for the six months ended March 31, 2021, compared to the prior year[171](index=171&type=chunk) - The company focused on closing land sales for land positions that did not fit within its strategic plans to **reduce leverage**[172](index=172&type=chunk) [Operating Income](index=39&type=section&id=Operating%20Income) Operating income significantly increased for both the three and six months ended March 31, 2021, primarily driven by higher gross profit and improved SG&A leverage Operating Income (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Operating Income | $33,618 | $16,424 | $51,306 | $20,370 | | SG&A as a percentage of total revenue | 11.0% | 12.0% | 11.8% | 12.6% | - Operating income increased by **$17.2 million (104.7%)** for the three months ended March 31, 2021, compared to the prior year[175](index=175&type=chunk) - SG&A as a percentage of total revenue decreased by **100 basis points** year-over-year for the three months ended March 31, 2021[175](index=175&type=chunk) [Income Taxes](index=40&type=section&id=Income%20Taxes) Income tax expense for the six months ended March 31, 2021, was primarily driven by income from continuing operations and the discrete impact of stock-based compensation. The company uses an annualized effective tax rate for interim periods - Current fiscal year-to-date income tax expense was primarily driven by income tax expense on earnings from **continuing operations**[188](index=188&type=chunk) - The company began using an **annualized effective tax rate** in interim periods starting fiscal 2016[187](index=187&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity position as of March 31, 2021, included $355.5 million in cash and cash equivalents and $250.0 million in available capacity under its Secured Revolving Credit Facility. Net cash provided by operating activities significantly improved, while financing activities used cash due to debt repurchases - As of March 31, 2021, liquidity consisted of **$355.5 million** in cash and cash equivalents and **$250.0 million** of remaining capacity under the Secured Revolving Credit Facility[197](index=197&type=chunk) - Net cash provided by operating activities was **$50.1 million** for the six months ended March 31, 2021, a significant improvement from cash used in the prior year[192](index=192&type=chunk) - Net cash used in financing activities was **$12.6 million** for the six months ended March 31, 2021, primarily due to the repurchase of 2027 Senior Notes and tax payments for stock-based compensation awards[195](index=195&type=chunk) [Supplemental Guarantor Information](index=43&type=section&id=Supplemental%20Guarantor%20Information) Substantially all of the company's subsidiaries jointly and severally guarantee its obligations under certain debt agreements, including Senior Notes - The company's obligations to pay principal and interest under certain debt agreements are guaranteed on a **joint and several basis** by substantially all of its subsidiaries[206](index=206&type=chunk) Guarantor Subsidiaries Financial Information (in thousands) | Metric | March 31, 2021 | September 30, 2020 | | :------------------------------------ | :------------- | :----------------- | | Total assets | $2,053,259 | $2,006,611 | | Total liabilities | $1,415,446 | $1,414,105 | [Credit Ratings](index=43&type=section&id=Credit%20Ratings) Moody's reaffirmed the company's B3 rating and revised its outlook to positive in March 2021. S&P also revised its outlook to positive and reaffirmed its B- rating in October 2020, indicating improved credit perception - Moody's reaffirmed the company's issuer corporate family rating of **B3** and revised the outlook to **positive** in March 2021[208](index=208&type=chunk) - S&P revised the company's outlook to **positive** and reaffirmed its corporate credit rating of **B-** in October 2020[208](index=208&type=chunk) [Stock Repurchases and Dividends Paid](index=43&type=section&id=Stock%20Repurchases%20and%20Dividends%20Paid) No share repurchases were made during the three and six months ended March 31, 2021, with $12.0 million remaining under the repurchase program. No dividends were paid during these periods - **No share repurchases** were made during the three and six months ended March 31, 2021[209](index=209&type=chunk) - As of March 31, 2021, the remaining availability of the share repurchase program was **$12.0 million**[209](index=209&type=chunk) - **No dividends** were paid during the three and six months ended March 31, 2021 or 2020[210](index=210&type=chunk) [Off-Balance Sheet Arrangements and Aggregate Contractual Commitments](index=44&type=section&id=Off-Balance%20Sheet%20Arrangements%20and%20Aggregate%20Contractual%20Commitments) The company controls a significant portion of its land supply through lot option contracts, with $93.3 million in non-refundable deposits and $567.4 million in remaining purchase price obligations as of March 31, 2021. It also has outstanding letters of credit and surety bonds totaling $37.1 million and $249.9 million, respectively, related to development obligations - As of March 31, 2021, the company controlled **18,851 lots**, with **8,381 lots (46.0% of total active lots)** under option contracts[212](index=212&type=chunk) - Non-refundable deposits and other non-refundable amounts incurred under lot option contracts totaled approximately **$93.3 million** as of March 31, 2021[212](index=212&type=chunk) - Outstanding letters of credit and surety bonds were approximately **$37.1 million** and **$249.9 million**, respectively, as of March 31, 2021, primarily for obligations to local governments for development improvements[217](index=217&type=chunk) [Critical Accounting Policies and Estimates](index=45&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies, including inventory valuation, revenue recognition, warranty reserves, and income tax valuation allowances, remain consistent with those described in its 2020 Annual Report - There have been **no significant changes** to the company's critical accounting policies and estimates during the six months ended March 31, 2021, compared to those described in its 2020 Annual Report on Form 10-K[220](index=220&type=chunk) - Critical accounting policies relate to **inventory valuation** (projects in progress, land held for future development, and land held for sale), **revenue recognition**, **warranty reserves**, and **income tax valuation allowances** and ownership changes[220](index=220&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is to interest rate fluctuations. As of March 31, 2021, it had $69.2 million in variable rate debt, and a one percent increase in interest rates would increase interest expense by approximately $1.0 million over the next twelve months - The company's primary market risk exposure relates to fluctuations in **interest rates**[227](index=227&type=chunk) - As of March 31, 2021, the company had approximately **$69.2 million** in variable rate debt outstanding[227](index=227&type=chunk) - A **one percent increase** in the interest rate for variable notes would result in an increase of interest expense by approximately **$1.0 million** over the next twelve-month period[227](index=227&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2021. There have been no material changes in internal control over financial reporting during the quarter, despite most employees working remotely due to COVID-19 - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2021, at a reasonable assurance level[228](index=228&type=chunk) - There have been **no material changes** in the company's internal control over financial reporting during the quarter ended March 31, 2021[230](index=230&type=chunk) - The company has not experienced any material impact to its internal control over financial reporting despite most employees working remotely due to the **COVID-19 pandemic**[230](index=230&type=chunk) PART II. OTHER INFORMATION [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - **No other information** is reported in this section[234](index=234&type=chunk) [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 9 of the condensed consolidated financial statements for a discussion of the company's legal proceedings - For a discussion of legal proceedings, refer to **Note 9** of the notes to the condensed consolidated financial statements[235](index=235&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended September 30, 2020 - There have been **no material changes** to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended September 30, 2020[236](index=236&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including Inline XBRL documents and certifications from the CEO and CFO - The exhibits include various **Inline XBRL documents** (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents)[233](index=233&type=chunk) - Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to **Sections 302 and 906 of the Sarbanes-Oxley Act of 2002** are included[237](index=237&type=chunk) [SIGNATURES](index=49&type=section&id=SIGNATURES) The report was signed on behalf of Beazer Homes USA, Inc. by David I. Goldberg, Senior Vice President and Chief Financial Officer, on April 29, 2021 - The report was signed by **David I. Goldberg, Senior Vice President and Chief Financial Officer**[240](index=240&type=chunk) - The signing date of the report was **April 29, 2021**[243](index=243&type=chunk)

Beazer Homes USA, Inc. Q1 2021 Earnings Presentation Acacia Ranch North Las Vegas, NV Forward Looking Statements This presentation contains forward-looking statements. These forward-looking statements represent our expectations or beliefs concerning future events, and it is possible that the results described in this press release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual res ...

Beazer Homes USA, Inc. (NYSE:BZH) Q1 2021 Results Earnings Conference Call January 28, 2021 5:00 PM ET Company Participants David Goldberg - Senior Vice President and CFO Allan Merrill - Chairman and CEO Conference Call Participants Jay McCanless - Wedbush Alan Ratner - Zelman & Associates Julio Romero - Sidoti & Company Alex Barron - Housing Research Center Operator Good afternoon. And welcome to the Beazer Homes Earnings Conference Call for the Quarter Ended December 31, 2020. Today’s call is being record ...

Table of Contents Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.001 par value BZH New York Stock Exchange _____________________________________________________________ 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 1 ...

Beazer Homes USA, Inc. Q4 2020 Earnings Presentation The Cove Sacramento, CA HOMES Forward Looking Statements This presentation contains forward-looking statements. These forward-looking statements represent our expectations or beliefs concerning future events, and it is possible that the results described in this press release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual result ...

Beazer Homes USA, Inc. (NYSE:BZH) Q4 2020 Earnings Conference Call November 12, 2020 5:00 PM ET Company Participants David Goldberg - Vice President and Treasurer Allan Merrill - Chairman & CEO Robert Salomon - EVP & CFO Conference Call Participants Alan Ratner - Zelman & Associates Jay McCanless - Wedbush Securities Alex Barron - Housing Research Center Julio Romero - Sidoti & Company, LLC Operator Good afternoon, and welcome to the Beazer Homes Earnings Conference Call for the Quarter and Fiscal Year End ...