BEAZER HOMES USA INC Q1 FY2025 earnings call

• The first quarter was profitable and productive, positioning the company to achieve full-year outlook and multiyear goals. Ending community count was up nearly 20% vs prior year, active lot position grew ~10%, and 59% of lot position was controlled through options. Zero Energy Ready homes represented over 85% of sales in Q1. - Missed sales and closings guidance due to uneven sales environment and deferring nearly 50 home closings. - Initiatives: Activating more than 60 new communities by year-end, making mortgage financing for to-be-built homes more compelling, improving spec profitability, and reducing construction costs by about $3,000 since October 1.

No detailed breakdown of product segments by revenue contribution was provided. However, key highlights include ending community count up nearly 20% vs prior year, active lot position up about 10%, 59% of lot position controlled through options, and Zero Energy Ready homes representing more than 85% of sales during the quarter, up from 43% in last year's first quarter.

• Second quarter expected sales up ~10% vs same period last year, average community count up ~15%, closing ~1,050 homes, avg ASP ~$515,000, adjusted gross margin up sequentially, SG&A <13%, adjusted EBITDA >$30M, diluted EPS ~$0.30. - Full year: Community count ~180, sales pace 2.5-3 sales per community per month, gross margin ~19.5%, ASP ~$530,000, SG&A % ~11%, adjusted EBITDA double-digit return on capital.

• Uneven sales environment leading to deferred closings. - Impact of mortgage rate changes on sales. - Competition in certain markets (e.g., Texas and Florida) with aggressive incentives. - Potential issues with land development and community performance affecting profitability.

Q: Tyler Batory on demand in Q2 and January, incentives, gross margin guide A: Allan Merrill on online traffic stayed strong through December, January not a blowout but not down further; incentives had changes due to rate movements and year-end selling; gross margin progression due to discrete items like pushouts, mix changes, and cost reductions Q: Alan Ratner on order pace shortfall, energy efficiency tax impact, impairment risk A: Allan Merrill on sales shortfall in December in Texas and Florida due to aggressive incentives; Dave Goldberg on energy efficiency not driven by tax arbitrage but building better homes, no expectations for material impairment changes Q: Julio Romero on sales softness factors, community count cadence, margin improvement A: Allan Merrill on labor availability in Texas and meter availability in California causing closing delays, comfort these issues won't persist; community count cadence with 60+ new communities activated, closeouts based on sales pace; margin improvement through reducing spec percentage and cost reductions Q: Jay McCanless on immigration impact, spec vs to-be-built margins, fiscal '25 guide, West market growth A: Allan Merrill on no immigration impact on sales; margin differential between specs and to-be-builts (3-5 points); fiscal '25 guide with gross margin at lower end of range; West market growth due to easier community activation, but non-Western markets expected to grow community count faster