Beazer Homes USA Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Julio Romero - Sidoti & Company, LLC - Analyst : My first one -- my first one is just -- curious how the affordability challenge of today is considered in your updated multiyear goals and the adjusted community count timeline, does that longer timeline for community count afford to any bargaining power with regards to your suppliers as they kind of try to push on price increases? Just your thoughts on how affordability is kind of considered into your updated goals. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00PM, BZH.N - Q2 2025 Beazer Homes USA Inc Earnings Call

Question: Julio Romero - Sidoti & Company, LLC - Analyst : Got it. That's helpful. Thinking about the newer goal about book value per share and -- some of that is driven by the deferred tax asset with book value.

Question: Julio Romero - Sidoti & Company, LLC - Analyst : Got you. Understood. Just last one for me, if I could, is just thinking about the share repurchase of $20 million in this quarter. The share release says that you are -- the new authorization of $100 million is for over multiple years. So just thinking about what you did this quarter that longer-term goal would kind of imply less quarterly repurchases less of a pace than it was done this quarter. So how would you have to think about the expected cadence of repurchases? And could we see you step in for something larger than what you did this quarter if you see a large enough disconnect?

Question: Julio Romero - Sidoti & Company, LLC - Analyst : Very helpful. Exciting to see the new multiyear goals. I'll pass it on.

Question: Tyler Batory - Oppenheimer & Co. Inc. - Analyst : I'll start with a couple on the guidance and then switch over to capital allocation. In terms of sales pace, can you talk a little bit about what you saw in April? And you need to see a little bit of a better May or June to hit the order guide that you provided for Q3. And then when you take a step back and you look at the sales pace and the adjustment that you made to the guide there, I mean I think you did just over [2.1%] in the first half. When you look at the back half of the year, implies a little bit of a better than normal seasonal ramp. So is that the way that you're thinking about it? And kind of what gives you confidence that the sales pace can grow a little bit from where it was in the second quarter.

Question: Tyler Batory - Oppenheimer & Co. Inc. - Analyst : Okay. Thank you for that. In terms of gross margin, too, to bring that into the discussion here, in terms of what you reported in the second quarter. Is that kind of what we should think of in terms of the lower bound on gross margin? I look at where you were in terms of the sizable orders missed versus what you expected and perhaps, I should read that as you really holding the line on margin. Somoebody asked it another way, I mean, do you think you could have gotten a little bit more maybe aggressive on incentives and you would have a little bit more orders and you kind of chose to pull back? Is that how I should interpret what happened in terms of the results? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00PM, BZH.N - Q2 2025 Beazer Homes USA Inc Earnings Call

Question: Tyler Batory - Oppenheimer & Co. Inc. - Analyst : Okay. Perfect. That's very helpful. Switching gears to the capital allocation side of things, and you gave a lot of great detail there. But I just want to put a finer point on what you're thinking in terms of the weighted investment side of things. And you did bring down the expectation of what you're going to spend this year. But you're in a pretty fortunate situation where you already have a pretty robust land portfolio. You've got some pretty good community counts. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00PM, BZH.N - Q2 2025 Beazer Homes USA Inc Earnings Call So is this going to be a multiyear maybe into next year in terms of pulling back on the land investment? What do you think about ramping things up? And just maybe give a little bit more detail just kind of where that fits in, in terms of the decisions that you made today.

Question: Natalie Kulasekere - Zelman & Associates - Analyst : Thanks for all the details so far. So what impact will the adjustments to your growth plans and capital allocation have on your overheads and I guess, your interest expense leverage. With your SG&A running above 12% and your interest at 3% of revenue, would you still be able to pose leverage on these line items at least in the near term, if you're not growing at the rate we were previously expecting?

Question: Natalie Kulasekere - Zelman & Associates - Analyst : Okay. That's fair. I have a follow-up to that. So is it safe to assume that some of the land that is tied up -- that was tied up before the market, like the demand started declining, that it may not make economic sense anymore? And will you be walking away from some of these deals? Or do you think this opens up an opportunity for renegotiating some of these contracts to lower prices.

Question: Natalie Kulasekere - Zelman & Associates - Analyst : Okay. And final question for me. So given the incentives that your competitors are offering, and I guess it's clearly ramped up since your last call. So do you still feel like you can earn a premium for your energy-ready homes?

Question: Jay McCanless - Wedbush Securities Inc. - Analyst : I guess the first one, we've heard from some of your peers that labor market availability is loosening up. I'm just wondering if you guys have been seeing that if it might be a tailwind for gross margin later this year and then also maybe what you're seeing for the rest of the input costs into the house.

Question: Jay McCanless - Wedbush Securities Inc. - Analyst : Okay. And actually, you just -- you sold my next question, Alan, about Zero Energy Ready. It sounds like the process, the subs are trained, that part of it is getting better, it sounds like.

Question: Jay McCanless - Wedbush Securities Inc. - Analyst : Good. Can you tell us what percentage of your homes were sold and closed during the quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00PM, BZH.N - Q2 2025 Beazer Homes USA Inc Earnings Call

Question: Jay McCanless - Wedbush Securities Inc. - Analyst : Yep.

Question: Jay McCanless - Wedbush Securities Inc. - Analyst : Okay. I mean, are you thinking for the rest of this year that, that number is going to go up? Just you said earlier that the percentage of specs -- or sorry, the percentage of 2B builds is probably going to be less this year than what you thought it would be. Should we expect orders and closings to run a little more close together when we think about forecasting not only the rest of this year, but maybe even into fiscal '26 if conditions to keep up like they are.

Question: Jay McCanless - Wedbush Securities Inc. - Analyst : Okay. And then, yeah, I'd like to see the share repurchase. I guess if it gets even worse from here, would you guys consider more aggressive measures, whether they like an ASR like you did before something else along those lines?

Question: Alex Barron - Housing Research Center, LLC - Analyst : Yes. I just wanted to congratulate you guys on the decision to shift towards share buybacks. I think it's a great decision. And also, I wanted to congratulate you on the energy-efficient homes. I had an opportunity to go see one of your homes in the Texas markets, and it was pretty impressive. So that said, I think you guys don't -- are not building a commodity like other guys. So no, I don't think there's a need to follow them down the spiral in terms of price cuts. That said, what is your general incentive at this point? Are you guys doing more of a great buy down and closing costs? And if so, how much is your total incentive as a percentage of price.

Question: Alex Barron - Housing Research Center, LLC - Analyst : Got it. And Other than that, are all of your homes pretty much at this point, super energy efficient? Or is it just a percentage?