BZH - Earnings call 4 2023 | Beazer Homes USA, Inc.

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Operator

Good afternoon, and welcome to the Beazer Homes Earnings Conference Call for the Fourth Quarter and Fiscal Year Ended September 30, 2023. Today's call is being recorded, and a replay will be available on the company's website later today.

In addition, presentation slides intended to accompany this call are available within the Investor Relations section of the company's website at www.beazer.com. At this point, I will turn the call over to David Goldberg, Senior Vice President and Chief Financial Officer.

David Goldberg

Thank you. to and Homes XXXX. full welcome our call and quarter fourth year afternoon, the conference Beazer for Good of fiscal

we SEC forward-looking materially be we should uncertainties to and known begin, differ during described risks, may Before call, in cause factors this results our and aware unknown projections. will which Such from statements. that making our other statements filings involve be you actual

undertake is speaks as statement the as obligation made. revise We or only not new a information, whether statement forward-looking Any future otherwise. date any do events of any of statements, update to or the forward-looking result

New factors not factors. simply all emerge is such from time and it to predict time, possible to

will on fiscal discuss an for from XXXX is results, multiyear affordability navigating growth fiscal our expectations highlights Merrill, for XXXX. Joining and me Chief Alan Allan our update how Chairman and our challenges the our we goals homebuyers are Executive Today, Officer.

year on our updates I'll expectations details on look full then first and our for details sheet cycle year results on the provide balance with book quarter and our reduction additional at a end time value. and XXXX cost initiatives, and fiscal our full

a will conclude remaining wrap-up After will remarks, Allan. we with We prepared take our the during questions by time.

now the I Alan. will turn call to over

Allan Merrill

joining our in goals. environment year. significant progress Dave, for sales make fiscal results quarter and and on balanced you, overcame extremely you our exceptionally allowed growth multiyear our first for difficult Which and efforts team's proud to of us 'XX. Thank thank call against of us today. I'm the an last We

or our operational we quarter, results expectations. the With that a finish in delivered both strong financial and exceeded met fourth

$XXX stockholders' above of resulting sheet we we the in XX% our on and than million now same at with $XXX healthy $X net almost time, land equity equity. and a financial returns generated We land and leverage and more invested below From development income, perspective, both assets strengthened in billion. million balance

position. more From community we X our reclaimed and of We energy months growth ourselves increasing efficiency. expanded controlled positioned perspective, time, operational for by than we our in leadership cycle an lot count and construction

were engagement. good level very top rate FY a a shape. our difficult an employee and came We in very of as we workplace, 'XX efforts to Against exceptional housing many interest sustain us recognized also through ways, and challenged in backdrop, reflecting

In priorities around growth long-standing timelines we middle and our strength laid goals community X centered homes. to of as targets energy 'XX, of fiscal growth, and out strategy. are multiyear balance the count balanced intended specific define of part highest our sheet These the represent our targets efficiency and

As 'XX, to the community year-over-year growth, excellent it year active active expect versus communities, ended than year each In count prior FY fiscal with we up as of our visibility end we our new Further to X% XX communities the communities. relates by we XXX have quarter. XXXX. in growth we XXX activated active successfully the out, more

representing a balance to year XX%, the decline capitalization we X-point our with our the to net relates ratio debt it As versus net year. sheet, prior at finished

end allow our putting for cap this of debt XX%, to multiyear end the goal that ratio net low fiscal fiscal net us by of within should 'XX. the the Our well profitability expectations into 'XX year, by reach to of XXs reduce below

XXXX, X expect fiscal have starts with quarter. standard will By we energy the homes homes we of to Finally, XX% over XXXX. expanded to we built, XXX% builder of remain the end the production of Energy's commitment us the the Ready ready we jumping to of from standard. only we of a public to 'XX, Zero by these DOE In meet X positioning starts homes as start the greatly Energy in building it relates our energy-ready with QX to our well fourth the of share X% end half in our Department every the home

our remain and underpin We to and the industry. is affordability has But confident and demand new that central likely sales. is been in the supply dynamics strategy remain home our challenge longer-term for

Part of afford to direct the To income and have closing combat between desire. than to. choices. challenge prospects this, payments home different with or dollars the structured price allows larger the is the the they're monthly by which is allow have different help payments incentives -- buyers daunted accustomed costs, simply often consumer to don't they psychology. structure But location Many make we part other to home buy-downs. for the buyers math. This our discounts customers to include

at In builder least increase, this. and financing initially, environment, rate confirms experience a typically incentives our rising

the As moved the rate from mortgage over about end of at to just October. X% June, XX-year X% in

contribution sales. new costs Our closing about towards point increased on X

mortgage contributions. our of buy-downs, costs choice program, contribute leverages which our part As also to rate and our lenders closing

downs. mortgage than about choice. buy our course, is It's about more strategy just Of

We loan lenders have multiple estimates our levels programs, costs, and every compete loan buyer buy-downs incentivizes available which in choice provide to closing service to addition lenders on to to rates.

on elements differentiators We buyers. enables at concerns. plans no their buyers to homes homebuyers, target bills both have which of Surprising directly cost. performance to of energy for quality efforts encompasses lifestyle plan our measurable floor monthly construction match affordability with to-be-built two for efficiency utility additional and Choice select savings our other

and We to we it. are have a strategy address laser focused on differentiated created believe affordability

challenges, continue ahead opportunities many year the holds undoubtedly on both expect we fronts. and growth to While

community provides we in the to our expectations pursue Our leading for goals. and multiyear closings as profitability basis larger revenue aggressively count for our more XXXX higher

remain what about in 'XX and and to very accomplish fiscal 'XX able we with beyond. I'm where were excited fiscal going we're in pleased Overall,

back the turn With that, call Dave. I'll to

David Goldberg

our results. Thanks, this Allan. comments I'm my to going focus afternoon on annual

performance You can find detailed in our release. quarter press fourth our

about higher offset $X.X decline as generated For the month revenue largely pace down X% rate in an sales benefit Homebuilding we community closings. X.X billion, per from cancellation with of average XX%. a per full year, the a of was ASPs

of impairments was as EBITDA interest, XX of over amortized XX.X%. was margin This invest was XX.X% excluding in percentage a SG&A total last revenue This margin, second $XXX million. abandonments, led adjusted and continued growth. all to annual the as highest gross our Gross to years. we the

amortized to flat Interest the prior was a X.X%, revenue percentage compared year. as of homebuilding

effective tax led XX.X% was GAAP income $X.XX Our efficiency This or of of million we as energy share. net rate to credits. benefited earnings from $XXX per tax

the lot also quarter percentage and spending both of option. controlled us land to our of while development grow in increasing Land fourth controlled and position sequentially year-over-year, under lot accelerated allowing our

set happy I'm to and COVID. gains targeted year. both report on happy lost we I'm report beginning time ground made we during fronts the of as to cost we -- XXXX, fiscal forth cycle In the reduction regaining significant during objectives

closings cycle more to than levels. on In prior versus we times were fiscal In prepandemic the quarter, fourth as year. X year 'XX, we closer the improvements cycle drive down months expect times further

reductions. Turning to cost

with changes the contributed pleased significant and sales increasing savings gross an ability sequentially to from to product QX affordability. through the margins declining on are to We was lumber QX of feature costs. through back our implemented primarily address recognize This half primarily to in lower due price that year average

more fiscal quarter Quarter-to-date year-over-year, sluggish first forward sales reach were the X%. Looking when but up mortgage rates to are

meaningful in move into this our by improvement the quarter. guidance sales not are this pace will does today rates, in assume down recent we encouraged a Although translate

XXX than at of up least expecting are low year's base. sales, last XX% which very We will more be currently

Our count year-over-year. XX% flat should sequentially ending and active be community up

we end. at likely On homes quarter statement, about improved having are impact cycle a awaiting conversion year-over-year as power growth. finished the from conversion income rate issues our transformer as backlog ratio times, expect We XX% in benefit revenue XX to resulting adversely anticipate above we still

Our $XXX,XXX. ASP should be around

homebuilding We margin adjusted or gross higher. be expect XX% to

million the SG&A same quarter dollars approximately up $X absolute Our last versus be on spent should year.

to should Xs, to a diluted per EBITDA of Interest in to We energy $XX credits. around should result our this continue as lead efficiency earnings rate benefit low tax amortized million. be be we expect approximately effective This revenue share and in percentage tax from homebuilding $X.XX. and XX% adjusted to around as the

our full Turning year. to

mortgage development relatively we rates In for remain million economy, Our spend acquisition $XXX expectations this as least future stable. environment, growth. assume conditions at on land expect we and the housing to position and

double-digit by targeting count in are community We year-end. growth

higher result year-over-year should Revenue average our conversions. $XXX,XXX the for a count year. community decline more growth anticipate be and This than in gains will full in backlog offset of ASP, to a which we

We with and expect in generate adjusted to a large the communities in XX% margins new gross XX% homebuilding range to of our mix. share of

we of XX% the be Our range XX% during call. rate to effective the last quarter's provided tax near midpoint to

returns book to we continue to significantly. and together, Taken generate value expect double-digit grow

made the fiscal we've decline. our more this of year. value far our the our of improved, percentage end the has target per of nearly and at doubled will on of X book equity, Slide shows progress XX having year for end gone over the end from our lead ago stockholders' double-digit share XX% the growing the a book 'XX. in has same by $XX since as continue of XX% quality about as fiscal our book Achieving year years value DTA time, chart to At The will to the returns book our than thus

LTM cap Total million our million to fully EBITDA of adjusted $XXX over revolver. net sheet. comprised Reducing X.Xx. liquidity available end unrestricted $XXX debt million our balance the to into cash on translated the debt $XXX to On was and the at year net of of undrawn of net

Our nearest and repayment maturity, address XXXX refinancing senior it. represent of and to we anticipate combination a notes our using

of Subsequent three to the developments. end were the noteworthy quarter, there

our equipments we million. First, revolver to expanded $XXX

repurchased of principal our million. rating Investor we notes, Moody's $XXX from And total increased BX. our the million Services XXXX $X below BX Second, finally, senior to outstanding bringing

back I'll over that, With the call Allan. to turn

Allan Merrill

challenges results. and company. Dave. Thank a and expectations differentiated geographic and FY higher and important, financial delivered for most year a for was much 'XX growth Equally associated highly overcame excellent with you, metrics. strategy with financial operational We successful the across rates we . mortgage the footprint entered attractive XXXX

we count, have that year, our goals have team we to and growing beyond track our X to for strengthening community in with our in sheet energy-efficient I'm growing and value provided extending resources progress, this durable balance and homes. create the the ahead. Looking our years specific our building leadership investors the multiyear confident stakeholders

turn take to with to into that over the call operator will the us I And Q&A.

Operator

Sidoti first Our question Julio & from Instructions] comes Company. Romero [Operator from

Julio Romero

David. Alan Good Thanks. and afternoon,

XX% that investment see So to fourth jump it the year-over-year impressive in in quarter. was land

You about talked expectation, the believe, I $XXX million. about full year

construction cadence throughout that the you And to much from Just how to expect for free that perspective reduced achieved up flow land trend increased how some does spend? do a cash you've the cycle times year? free

David Goldberg

full this the we've Obviously, early. the I you the and flow, for talked year. about of got help, does Julio, talking our cadence at frankly, would the avoid on spend point year. I of we in we think on kind the little us, what liquidity It's about the bit cash land have pipeline expect to but balance a increase probably front we'll in in spend tell of plenty we still sheet.

see with can million ended of You we more than year $XXX the liquidity.

spend of Julio, calls. kind better We time deals in I in we into the of So had of XXXX. was the and too of don't also now, you better in think And be frankly look the into and should we that impact backloaded to evenly spend details shouldn't have renegotiating at in the far that can about it can and thing, fourth we through at year. previous pushed get But we're terms see case go we spend And acceleration largely land 'XX what was the other deals. quarter. until on that the that want the early relatively land to land QX We you spent looking the kind talked XXXX, distributed in quarter-to-quarter. that I many but did more cases, QX,

Julio Romero

be might then you And the obviously basis certainly, expectation outlined effect. ramp-up. if can community color gave while speak you -- mortgage in could for And you talk affected will you a growth? for fair. how a to That's just sure. path Maybe confidence count in for community appreciate ramp have speak there to that your I maybe just others? have And than that you've an on about rates less Maybe little bit relative Beazer count the

Allan Merrill

it, and Well, fix sure. up, it Julio. a stab at will I'll Dave then take

to the category. we've similar Clearly, lot where community are have during deals they're got 'XX were of very that to that up a Those in multiple going If ramp. owned count A really some that under think of lot this we but and rates loaded bit, the got we we've the market is year and to we tough I are get 'XX, a confident about years development, little could growth. controlled are. kind regardless things discretion. locked position and slow decided of feel of

to what on still last we committed So that we're year, track.

this months little terms a land buying being influence this but position there's activating a week, In X-year has this in and of sales on latency an between you month, a so look, different a and activity, deal. know quarter, X or deal

And asynchronous. things are be always so to a bit those going little

'XX, and into context community home little than community because From that meeting 'XX growth gives cadence of choice surprising 'XX the the and compromise. plans their having pretty in they to But find a clearly ways sales the count performance trying our as dreams they a we is different to opposed choice and can growth of to get 'XX. perspective, having view affordability customer are from an standpoint for and us ways that the made where of mortgage decisions count that's

Operator

Next, Zelman & Ratner of we'll Associates. go to from Alan the line

Alan Ratner

progress kind of first more had, I commentary all would love recent in appreciate on some drill which there. you of year the to this Congrats the the color just

if I more XXX But here. severe fully about your orders you're than down would look the few XX% out quarter. and That's guidance, maybe typically tougher So you sequentially. a extrapolating in guys weeks first much fiscal appreciate see I be at

the believe, of things We've from October. I you XXX in for And point incentives heard other increase, kind similar builders there. trajectory mentioned basis

the it's you are that of incentive a about maybe the between So like current the side what a thinking versus interplay how drop-off. are interpretation my pretty because that of kind be bit your seems order some competitors doing environment, you is year-end backseat maybe that taking might guys near the aggressive towards a of are a more calendar And companies significant bit in term.

Allan Merrill

lot question, that Alan. a right there's Well, on every And you're front. about in just

to we of positions, December with period up during time. not but this have just fiscal of November quarter in and make to companies our a a that strange and time a try lay trying and lower sure, year. little bit And is For it. compressed closings Dealing in sales relatively caught year-end they're is what not typically get first

this the every the but So the year. case that that's case, year. is case

X sales. October volatility it that early I been much XX mean traffic in and there's also I run that up to think last just rates then up of no true days, so it's great. that November X and the mortgage the run part question in there's the to affected wasn't easing, affected into

ago. true also last happened it's the has a X that weren't level But we days XX seeing what's X stimulated in definitely weeks of activity that or

So what's over say, mixed the call look I good it where or look we awkward for of did, find feel ourselves last at an you it's month I progression. X look of could well, can normal the earnings sort could at at, sort about X or and years you because and days well, as point really the

quarter. in think given I sales So of cautious we've land fairly first may where a the estimate

bit to by times in chase little we favor. now. rock-solid our got where you We've go compressing of feel the working sheet. lot have a place balance activity think like influenced got we're what don't left a right And we year. in a a runway fiscal We've in cycle it's unit got said. I We've

doesn't day, we set year. ourselves the the needed window So the in win week, this up where for feel to just like order to a win

ideas back of rooted mean the X different orders of there, months. a to We're X guide the or some tougher each X on ambitious. on very in touched weeks giving sort at them guide that's a of of I've giving super come So but not I definitely last

Alan Ratner

Allan. every multipart answered question, You my of part

topic buy-downs. discuss rate love second mortgage our -- to Second would

is you buy-downs choice a your spent program lot mortgage there's their focus that of being know a I the offering of talking across a the guys situation calls what have. their lot devoted now talked rate They're about to rate lot programs. And right there homebuilders mortgage You've on on the industry, other is. exact national different. time

the for rate is data bit of providing little actually you're or into give So what incentives your of comparison of bit any are stack into of your average put rate give based is just us or way insight kind on what up you there buyer getting to a us the buyers percentage kind buydown rest a versus the of point where to the to actually the little dollars industry? guys you a of choosing to a

Allan Merrill

can I couple things, But a mortgage color. Yes. give granular you I obviously, don't we interesting data of the think. I you little of bit because have can't a give company. same

of First are their We a on in well is specific tend offer in bit time, is differently, a operate mortgage we which of number which home. community home for all, little period finite aware a to incentive the short that obviously a of competitors rate. many the

let's some elaborate talking they consultants about, fascinating is X long "Hey, How at fully qualify but personally about do they Now a talk the and to choice rate. cycle, do feel maybe of are elongated to of sales through really it's fairly our Importantly, I a of go want thinking And I buyers, and in rates want what's indexed going be to I go process where lenders. buy our X down? actually the sales I the do can a through future? permanent an or to talking our XXX,

to save permanent?" the So really a the am I focus, interested I the temporary buydown is cash and want more in or

that. missing oh, an and But I not different feeling multiple have jammed not little isn't that home something. ends not buyer, think an like, that we because It's different lenders It dynamic I think as, that from are price. that than a get for lenders, getting seeing there was and more getting It more talking hey, percent obvious interesting. And what bit other X it's this also thing didn't lender to comfortable that each result they're customers that and up programs is across on to is offerings different whole lenders. the rate knows happening trick we simple they're they're we transparency understand as a as

that tell more in rates had -- permanent a period surmise start I a share it's and can move than little I to confidence temporary to of from temporary watermark a watermark buyers we that top, able through X as to is But our the not a buy-downs actually if which also probability. October be that for up time that you a a X, can of that degree high you a opt buyers tell towards going saw buy-downs I larger pushed more I'm higher buy-downs of that more bit a there's can and rate. higher this this or refinance higher due.

makes And the more temporary buy-down. the so permanent sense than

about that's we've I of talk can we getting quarter relates on can variables I it sheets at tell into sure, what But of mean what's to that that buyer, thing for many the -- But of got we credit kind type point and into the I rates. all buy-down value, vendors characteristic then of loan get a what's from mean, I too just can there's rate to. a mean, to you, the permanent granular level. specific

buyers proposals right, happy show me they a got me be. " All permanent? of that X permanent Show your dynamic Can like and an X. you, to permanent tell your XXXs. you Show I'm better and every is this. Xs, day I multiple here. just your in environment over me will your match Well, by this forth. our "hey, hey, I by what That know back every so awesome go is X me show seeing one would

Operator

the go line B. Next, of Rygiel to Alex from we'll Riley.

Alexander Rygiel

a a you're trending whether look add further any and there go that to shift upon been the this out right thoughts around appreciate directionally But the where we that you there first is little could based about on Your new mix ASP there? communities or I that could be bit ASPs can commentary not thoughts the or beyond as that, bringing XXX level. quarter. have

David Goldberg

lot initial remind Alex, conversation the to we talked you, and of don't on in kind the of year that. full I remarks, that really beyond we've had community kind It's But prepared about frankly, ASP. I it's around want a Dave. go XXXX is $XXX,XXX. of that It's down kind Really, it's choice. we're making, offering, right? it choice, it's that's And right from choices what now, included a product of where we're features. is

the on saying So imagine, buyer. making you it's declines but lower choices still not or rather as to affordability and we're value keep would assumption prices, for address price high

Alexander Rygiel

That's Florida an little the maybe about talked give very some interest I had growth helpful. past might in update bit then you have the geographies certain been in you states. you of And accelerating a think of there? one in that an us Can

Allan Merrill

Sure.

don't footprint. people but that of we in. love our paid it taxes, grow all, say say We when dumb number it First places. market every I them think We in I anyway. of can in love single I a we're

now so Florida, We in the there's that learnings Nashville, Carolina's, be are it's in way. are are And mean, Indie. we in in And growth see in great are are question. had are the point from the jobs no along opportunities. to jobs jobs I the jobs those jobs that are. the Atlanta, places where jobs want benefit we've to

us business business to going a to little a think that's tough issues. bit land a to do has obviously of big become San recently market. engine. in very amount a don't big larger I role for the Phoenix challenging. then, our Antonio been growth will East be I a West I bit in our And It's Florida, the is the Coast. more bigger Texas, will growth of there. But us. that, going be up are water good is course, think acquired think There play

Operator

in currently, McCanless our from from is Jay last Wedbush. [Operator Instructions] queue And question

James McCanless

function to are one, put margin it's look in all anywhere 'XX. that cuts built some the on XX, about, now? fiscal adjusted two, XX price going up that? of then assumptions into thinking seeing range, I is maybe are rate be it gross 'XX I that what what to the you of like right versus when Page discounting of guidance from at a fiscal and So type looks And basis mortgage XXX your down some could we're of from you the competitors guess, talk points

Allan Merrill

a and have say. Dave So Jay, there, on things I few going think and to things both I

point, first assume in are assumes to a it, be point range this and now, is We assume rates The either that made we roughly they the don't X.XX% thing We it of they're way. assume they're -- going where that Dave's X.XX% comments are don't call that following. point, sustainably over X%.

of thought So how framing the full year that's kind for we about guidance. our

with think it's the margin, has you do If and actually to more got with about mix to less shift. discounting it do

to I a said communities opened think comments, communities we in in either XXXX. Dave going or XX 'XX. of our We're in bunch I open

of going in closings to to our check the experience, the that this very is we and channel young 'XX vintage. tilted generating And So across mix it's think have been be industry. you a communities can I

the gross in margins X, the highest of first community not your getting months. X, out typically You're X

the margin in that not It by of factor communities. So does mix a current reflect had level the June that normal cost, the we've It's or and leaned rate gets I that significant and kind but a really think in new that's into a since bit it's of the we've little are mix it's like increase financing of guide. assume driven that mortgage normalized at more worse. of that, issue a

have in above they to interest to place renegotiated, excited different be. pretty generate market able envisioned, new tied really communities that bunch good our margins to are originally to were a much XX-year I'm of environment the have brought Like rate I than to a a average. that's that were when And up, say,

James McCanless

now get finished I I pre-COVID? you are giving I were be you're cycle from guess, in or range months quarter, guess the to they need to the up the where to X guess selling built. straight just those homes selling of cycle down delivery where know you're had, what's times said that times I even you're do a what question will times Absolutely. that second that fourth the now, compared And now? I out

Allan Merrill

of all probably back like staffed about I'd some it built I back back still don't because is The not structural or into that I half multifamily there's haven't get the of They commercial get municipal that know days wide there's and We're up. XX pre-COVID, activity. year. the a this of we'll delays start flip processes. side lot to think

on think But crews, of quality I targeting a number this is. side, the weeks at the crews, think opportunity couple get of I year. where that's trade of to back So least

Operator

Housing final in question our And Center. Alex from queue Barron comes from Research

Alex Barrón

it is I the figure rate. expect still take if rate years low DTA you expected Dave, the other about resets before words, few up? Maybe tax do to you I'm up. Yes, will this a wanted ask In use years and more to back another tax to it before going completely out stay trying for X, X

David Goldberg

we'll in in we're But kind cash we over GAAP slide going question. that the yes, payments for tax have good you for tax would that benefits start expectations closing you presentation We appendix energy And I a benefits 'XX, to the tax to 'XX efficiency as tell we're of the tax into using into as the see our you'll what Alex, think get home. and detail. do go then for and credits use be 'XX. we're generating tax some potentially

will more builders. most it simultaneous much be like So

real about below normal We lower factory and the basis, levels a perspective be of talked time. of kind have 'XX. ongoing an midpoint XX% of yes, the 'XX using because statutory kind think rate. So we'll generating I range I from tax on think tax quite frankly, credits in we're to And we'll in a XX% them

Alex Barrón

hoping Xx is then given was around your buybacks And I stock on share book. Got could trading . you comment it. thoughts below still

David Goldberg

you, really and aspirations before, and to continue sheet. Absolutely, liquidity growth ability we've our kind we're about to strategy of and support our Jay. sufficient our confident tell balance in talked balanced I would growth delever generate to the this

repurchasing. As it But right would an and priority price. on relates tell our depending clearly of clearly debt now, repurchases to share highest use attractive are is repurchase, capital share I you, share growth

Operator

showing And currently, in no I'm queue. other questions

David Goldberg

on want everybody evening. for you and I talking everybody on fiscal in your this quarter look quarter for our much fourth us to call, time very to joining forward X to call. Thank months thank . Okay. our first

Operator

all for you Thank participating conference. in today's

You may of line, enjoy disconnect your day. rest your the and

Beazer Homes USA (BZH) 16 Nov 232023 Q4 Earnings call transcript