BEAZER HOMES USA INC Q4 FY2024 earnings call

• 2024 was productive with over $750 million invested in land and land development, up nearly 36% y-o-y, ending with 162 active communities (+20% y-o-y). • Generated $243 million in adjusted EBITDA and $4.53 earnings per share, with double-digit returns on capital employed and equity. • Dramatically accelerated adoption of Zero Energy Ready, becoming leader in DOE's national single family program. • Ranked top for customer experience on TrustBuilder and recognized as employer of choice. • Addressed challenging new home sales environment by modifying sales approach in some markets, lowering prices and using incentives, leading to better sales in October with orders up over 30% on community count. • Progress on multi-year goals: aim to end fiscal '26 with >200 communities, net debt to net capitalization below 30% by end of '26, and 100% of homes Zero Energy Ready by next year.

No specific product segment breakdown with revenue contribution % provided in the transcript.

• First quarter 2025: Period end community count up ~20% y-o-y, sales pace up ~10%, sales growth ~30%, closing >925 homes, avg ASP ~$515,000, adjusted gross margin ~19%, SG&A ~13%, adjusted EBITDA ~$30M, diluted EPS ~$0.30. • Full year 2025: Expect 18-22 net new communities (12.5%-15% growth), sales pace 2.5-3 sales per community per month, gross margin 19.5%-20.5%, net debt to net cap in low-mid 30s by end of 2025, aiming for below 30% by end of 2026, land spend ~$850M in 2025 with owned and option lot position exceeding 30,000.

• Macro risks: Stretched affordability, stubbornly high mortgage rates, uncertain election impact, potential for continued elevated mortgage rates. • Land-related risks: Potential need to renegotiate land deals due to changing macro-environment, land prices elevated relative to ASPs. • Regulatory/immigration risks: Uncertainty around immigration policy and its potential impact on labor dynamics, and potential effects of regulatory changes on business operations.

Q: Talk about community count ramp and confidence in the growth path.

A: Dave Goldberg said they feel confident about the ramp due to growth in land position and visibility on communities coming online, expecting 18-22 net new communities and ending the year around 180.

Q: Discuss sales pacing improvement, especially in October, and confidence in 2025 sales pace vs 2024.

A: Allan Merrill noted things got better in September, October looked like September, with improvement from dialing in sales mix and not being in an 8% mortgage rate environment, expecting sales pace up in 2025.

Q: Talk about 1Q margin guide and land deal renegotiation.

A: Allan Merrill discussed re-underwriting deals, walking away from some, renegotiating pricing on some, with '25 and '26 land deals largely in place.

Q: Unpack Zero Energy Ready Homes margin benefit and low-hanging fruit for improvement.

A: Allan Merrill said they are confident in reducing cost and improving sales resonance for Zero Energy Ready, with better margin profile than current, and energy cost savings vs similarly sized homes showing value.

Q: Discuss incentives in markets, which markets leaned in, and confidence in lower incentives in 2025.

A: Allan Merrill mentioned diagnosing and fixing issues in certain markets, like Houston where sales doubled by adjusting specs and pricing, expecting specs to be 60% of closings in 2025 with potential for better margins if spring selling is strong or rates drop.

Q: Talk about community count growth, product mix, and flexibility to change product.

A: Jay McCanless was told community count growth is locked in with year-over-year growth, product mix is mix within communities, not different communities, and specs are not entry-level product.

Q: Reconcile spec vs to-be-built mix shift.

A: Allan Merrill said the trend is towards more to-be-builts but still majority specs, with 60% reflecting higher than normal but better than August/September levels.

Q: Elaborate on Houston sales increase and confidence in 2025 sales pace.

A: Allan Merrill discussed fixing spec levels, reallocating incentives to price reductions, and dialing in pricing strategy in Houston, leading to sales increase and confidence in sustained activity.

Q: Thoughts on share buybacks and post-election impact.

A: Dave Goldberg said focus is on land spend and growth, and Allan Merrill discussed impacts of post-election policies like potential rate elevation, regulatory clarity, and immigration policy uncertainties.