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 December 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-12822 ____________________ ...

Financial Performance - Net loss for the first quarter of fiscal 2026 was $32.6 million, resulting in a diluted loss per share of $1.13, which included a litigation-related charge that reduced EPS by $0.23 [4] - Adjusted EBITDA for the quarter was a loss of $11.2 million, compared to a profit of $23.0 million in the same quarter last year [3] - Total revenue for the three months ended December 31, 2025, was $363.491 million, a decrease of 22.5% from $468.953 million in the same period of 2024 [21] - Gross profit for the same period was $37.204 million, down 48.3% from $72.078 million year-over-year [21] - The company reported a net loss of $32.597 million for Q1 2025, compared to a net income of $3.130 million in Q1 2024 [21] Homebuilding Metrics - Homebuilding revenue decreased by 21.9% year-over-year to $359.7 million, driven by a 22.8% decline in home closings to 700 homes, partially offset by a 1.2% increase in average selling price (ASP) to $513.9 thousand [4] - Total closings decreased to 700 units in Q1 2025 from 907 units in Q1 2024, representing a decline of 22.8% [25] - New orders, net of cancellations, fell to 763 units in Q1 2025 from 932 units in Q1 2024, a decrease of 18.1% [25] - Net new orders fell to 763, an 18.1% decrease from 932 in the prior year quarter, with a cancellation rate of 18.3%, up from 16.5% [5] - The backlog dollar value was $573.3 million, down 29.7% from $816.0 million a year ago, with backlog units decreasing by 33.1% to 1,008 homes [6] - The aggregate dollar value of homes in backlog was $573.3 million as of December 31, 2025, down 29.8% from $816.0 million in 2024 [25] Margins and Costs - The gross margin for homebuilding was 10.4%, down 480 basis points from the previous year, with a margin of 14.0% when excluding impairments and amortized interest [8] - Homebuilding gross profit margin (GAAP) for Q1 2025 was 10.4%, compared to 15.2% in Q1 2024 [27] - The company aims to improve margins through construction cost reductions and selective asset sales, while also focusing on community count and deleveraging goals for 2027 [2] Debt and Capitalization - Total debt to total capitalization ratio increased to 48.4% from 46.5% a year ago, while net debt to net capitalization ratio rose to 45.6% from 44.5% [13] - Total debt increased to $1.125 billion as of December 31, 2025, from $1.029 billion at the end of September 2025 [23] - Total debt (GAAP) increased to $1,125,055 thousand in 2025 from $1,071,290 thousand in 2024, representing a growth of approximately 5.0% [30] - Stockholders' equity (GAAP) decreased to $1,200,248 thousand in 2025 from $1,234,048 thousand in 2024, a decline of about 2.7% [30] - Total capitalization (GAAP) rose to $2,325,303 thousand in 2025, up from $2,305,338 thousand in 2024, indicating an increase of around 0.9% [30] - Net debt (Non-GAAP) increased to $1,004,298 thousand in 2025 compared to $990,911 thousand in 2024, reflecting a rise of approximately 1.3% [30] - Net capitalization (Non-GAAP) decreased to $2,204,546 thousand in 2025 from $2,224,959 thousand in 2024, a decrease of about 0.9% [30] Cash and Inventory - Cash and cash equivalents decreased to $120.757 million from $214.705 million in the previous quarter [23] - Inventory increased to $2.141 billion as of December 31, 2025, compared to $2.029 billion at the end of September 2025 [23] - Land acquisition and development spending was $180.7 million, a decrease of 14.5% from $211.3 million in the prior year [10] Stock Repurchase - The company repurchased $15.1 million of its outstanding common stock at an average price of $21.72 per share during the quarter [11]

Core Viewpoint - Beazer Homes is set to release its financial results for the quarter ending December 31, 2025, on January 29, 2026, after market close, followed by a conference call to discuss the results [1]. Company Information - Beazer Homes, headquartered in Atlanta, Georgia, is a prominent national homebuilder specializing in energy-efficient construction, with a legacy spanning nine generations [3]. - The company offers a unique Mortgage Choice program that provides homebuyers access to competitive loan offers from various lenders, allowing them to select the best financing options for their needs [3]. - Beazer Homes operates in multiple states, including Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, North Carolina, South Carolina, Tennessee, Texas, and Virginia [4].

Core Viewpoint - Beazer Homes USA, Inc. has appointed Howard Heckes as a new independent member of its Board of Directors, bringing significant experience from the building materials and services industry [1] Company Summary - Howard Heckes previously served as Chief Executive Officer of Masonite International, a leading global designer, manufacturer, marketer, and distributor of doors and door solutions [1] - Before his role at Masonite, Heckes was the Chief Executive Officer of Energy Manage, indicating a strong background in leadership within relevant industries [1]

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Market Performance - Major indexes experienced a pullback, with the Dow down 797 points (-1.65%), S&P 500 down 113 points (-1.66%), Nasdaq down 536 points (-2.29%), and Russell 2000 down 67 points (-2.77%) [1][7] - Despite the pullback, indexes remain up over the past five trading days and the past month, although the gains are narrowing [1] Federal Reserve Insights - Federal Reserve members are reconsidering further interest rate cuts due to a lack of new data on jobs and inflation, exacerbated by the government shutdown [2] - Minneapolis Fed President Neel Kashkari expressed opposition to the recent rate cut and emphasized the need for new economic data before supporting further cuts [3] - St. Louis Fed President Alberto Musalem called for caution in proceeding with rate cuts, indicating potential market volatility [3] Sector Rotation - There has been a rotation out of speculative AI stocks and some established tech firms, with Palantir (PLTR) dropping 6.5% and AngloGold Ashanti (AU) down 5.2% [4] - Traders are shifting towards value stocks that have been underperforming, such as Merck (MRK) which rose 1.6% and Berkshire Hathaway (BRK.B) which increased by 2% [4] Earnings Reports - Applied Materials (AMAT) reported fiscal Q4 earnings of $2.17 per share, exceeding estimates, with revenues of $6.80 billion also surpassing expectations, although the stock fell 2.5% in late trading due to lower revenue guidance for the next quarter [5] - Beazer Homes (BZH) reported fiscal Q4 earnings of $1.02 per share, significantly above the anticipated 80 cents, with revenues of $791.9 million exceeding expectations, though both figures showed a decline compared to the previous year [6]

Core Insights - Beazer Homes (BZH) reported quarterly earnings of $1.07 per share, exceeding the Zacks Consensus Estimate of $0.80 per share, but down from $1.69 per share a year ago, indicating an earnings surprise of +33.75% [1] - The company generated revenues of $791.9 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 17.35%, although this represents a decline from year-ago revenues of $806.16 million [2] - Beazer shares have underperformed the market, losing about 20.7% year-to-date compared to the S&P 500's gain of 16.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.01 on revenues of $468.28 million, while for the current fiscal year, the estimate is $1.82 on revenues of $2.36 billion [7] - The estimate revisions trend for Beazer was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Building Products - Home Builders industry, to which Beazer belongs, is currently ranked in the bottom 18% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Beazer's stock performance [5]

Financial Data and Key Metrics Changes - Fiscal 2025 ended with an average active community count of 164, up 14% from the previous year [4] - Net debt to net capitalization was reduced below 40%, and book value per share grew to nearly $43 [4][10] - Fourth quarter adjusted EBITDA was approximately $64 million, with diluted earnings per share at $1.02 [11] Business Line Data and Key Metrics Changes - In the fourth quarter, 1,400 homes were closed, exceeding expectations, with a gross margin of 17.2% [11] - The Texas sales pace improved to 1.8 in the quarter, up from 1.3 in the previous quarter [7] - The company executed 83 model home sale leasebacks, contributing to balance sheet efficiency [11] Market Data and Key Metrics Changes - The macro environment remains challenging, with consumer confidence and affordability issues persisting [5] - Recent decreases in months supply of new homes and improvements in affordability due to wage growth and lower mortgage rates were noted [5][6] Company Strategy and Development Direction - The company is focused on enhancing returns and capitalizing on a differentiated strategy, including cost savings of about $10,000 per home [6][8] - A campaign named "Enjoy the Great Indoors" was launched to increase brand awareness and highlight the benefits of owning a Beazer home [9] - The goal is to achieve a community count of over 200 within the next two years [9] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the future, expecting better selling conditions if current trends persist [6] - The company anticipates a decrease in net leverage in fiscal 2026, aiming for a net debt to net capitalization ratio in the low 30% range by the end of fiscal 2027 [10] - Management acknowledged the challenges in the current market but emphasized operational agility and strategic discipline [20] Other Important Information - The company repurchased about 1.5 million shares, representing approximately 5% of the company [17] - A new rights agreement was authorized to protect deferred tax assets, totaling over $140 million [18][19] Q&A Session Summary Question: Regarding gross margin guidance - Management acknowledged the expected decline in gross margin to 16% in Q1 due to higher incentives and a greater percentage of spec sales [23] Question: Orders and sales pace expectations - Management indicated that October was sluggish but expected improvement in November and December, aligning with seasonal patterns [26] Question: Land costs impact on margins - Management noted that newer communities have better margins, despite potentially higher land costs, and emphasized the importance of product mix [31][32] Question: Spec home strategy - Management expressed a desire to reduce the spec ratio but acknowledged the current market dynamics necessitating a higher percentage of spec sales [48] Question: Land sales strategy - Management discussed the strategy of selling off larger communities and reinvesting in higher return locations, expecting aggregate land sales to exceed $100 million [44][46] Question: Energy efficiency tax credits - Management highlighted the growth potential of energy efficiency tax credits and the importance of the rights plan for shareholders [75][76]

Fiscal Year 2025 Highlights - The company's average active community count increased by 14% to 164 in FY25[11] - The company's net debt to net capitalization finished below 40%[11] - The company's book value per share grew by 6% through profitability and $33 million in share buybacks[11] Operational Response - The company rebid labor and material costs, resulting in approximately $10,000 savings per home[16] - The company reduced headcount, achieving $12 million in run-rate savings[16] - The company sold land for strategic alignment, generating $63 million in FY25 proceeds and expecting over $100 million in FY26[16] - The company increased the lot option percentage by 4 points to 62%[16] Q4 2025 Results - The company's new home orders were 999, a decrease of 2.9% year-over-year[29] - The company's homebuilding revenue was $750.8 million, a decrease of 4.2% year-over-year[29] - The company's closings were 1,406, a decrease of 6.0% year-over-year[29] - The company's adjusted EBITDA was $63.8 million, a decrease of 31.5% year-over-year[29] - The company's homebuilding gross margin was 17.2%, a decrease of 320 bps year-over-year[29] Liquidity and Capitalization - The company's net debt to net capitalization was 39.5%[35] - The company's total liquidity was approximately $540 million, up approximately $35 million versus September 30, 2024[35]