Beazer Homes Usa, Inc. · NYSE:BZH
Beazer Homes Usa — JP Morgan High Yield Conference (February 2018)
32 slides from Beazer Homes Usa's conference presentation, Feb 26, 2018
Slide 1: Beazer Homes USA, Inc JP Morgan High Yield Conference
Mission Lane Oceanside, CA Beazer Homes USA, Inc JP Morgan High Yield Conference
Slide 2: Forward-Looking Statements
This presentation contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our expectations or beliefs concerning future results, and it is possible that the resu
Slide 3: Beazer at a Glance
• Top 10 US single-family homebuilder • Over 175,000 homes delivered since 1994 • Operations in 13 states across three regions with homes targeted to Millennials and Baby Boomers Southeast 28% East 28% West 44% 3 (LTM period ended 12/31/17) Southeast 24% East 21% West 55% (as of 12/31/17) Overview S
Slide 4: Focus on serving Millennials and Baby Boomers
Focus on serving Millennials and Baby Boomers Delivering Extraordinary Value at an Affordable Price - Desirable locations - Choices (Choice Plans & Mortgage Choice) - Energy Efficient homes 3,000 3,200 3,400 3,600 3,800 4,000 4,200 4,400 4,600 4,800 5,000 0 10 20 30 40 50 60 70 Emphasizing Value
Slide 5: Q1 Results
5 $ in millions, except ASP Q1 Results Note: Variances are calculated using un-rounded numbers *Details are included on the “Adjusted EBITDA Reconciliation” slide in the appendix **Active Community Count was 154 at 12/31/2016 and 156 at 12/31/2017 ***Excludes impairments, abandonments, interest incl
Slide 6: Balanced Growth Strategy
Balanced Growth Strategy Improving Balance Sheet Efficiency • Debt Refinancing • LHFFD Activation • Expanding Gatherings • Increased Land Spend 6 Six Levers for EPS Growth • Community count • ASP • Sales pace • Gross margin • SG&A leverage • Lower interest expense % Balanced Growth = Sales & Profit
Slide 7: "2B-10" Plan Ranges vs. LTM Results
7 “2B-10” is a multi-year plan to reach $2 billion in Revenue and 10% EBITDA Margin *Excludes impairments, abandonments, interest included in cost of sales and certain warranty items **Details are included on the “Adjusted EBITDA Reconciliation” slide in the appendix “2B-10” Plan Ranges vs. LTM Resu
Slide 8: Increases in LTM Revenue and EBITDA
$1,334 $1,436 $1,706 $1,817 $1,950 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 Q1 Q1 Q1 Q1 Q1 FY14 FY15 FY16 FY17 FY18 $100.2 $127.9 $153.7 $154.8 $182.7 $- $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 Q1 Q1 Q1 Q1 Q1 FY14 FY15 FY16 FY17 FY18 Increases in LTM Revenue and EBITDA
Slide 9: Average Total Assets vs. LTM EBITDA
Average Total Assets vs. LTM EBITDA* *Details are included on the “Adjusted EBITDA Reconciliation” slide in the appendix 9 $(25) $- $25 $50 $75 $100 $125 $150 $175 $200 $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 Q1 FY12 Q1 FY13 Q1 FY14 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 A
Slide 10: Increasing Land Spend & Capital Efficiency
71% 77% 81% 87% 93% 25% 19% 16% 11% 6% 4% 4% 3% 2% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1 Q1 Q1 Q1 Q1 FY14 FY15 FY16 FY17 FY18 Active Inventory % LHFFD % PHFS % 10 Increasing Land Spend & Capital Efficiency Quarterly Land Spend At December 31, 2017: 22,324 total controlled lots 20,383 act
Slide 11: Average Active Community Count
162 159 157 155 155 156 154 155 154 155 50 70 90 110 130 150 170 Q1 Q2 Q3 Q4 Q1 FY17 FY18 Active Community Count, LTM Active Community Count, Quarterly "2B-10" Range 175 170 Active Communities at 12/31/2017 156 Closing in Next 6 Months - 35 Opening in Next 6 Months + 35 Under Development (excluding
Slide 12: Capital Efficiency Strategies: LHFFD & Land Bank Impact
12 Capital Efficiency Strategies: LHFFD & Land Bank Impact LHFFD Activation Land Banking Reduction of inactive assets on balance sheet Cash generation from previously inactive assets Significantly lower initial cash outlay compared to standard deals. Enables us to do projects we otherwise would not
Slide 13: Leverage and Capital Structure Improvements
13 Leverage and Capital Structure Improvements *Details are included on the “Adjusted EBITDA Reconciliation” slide in the appendix 11.3x 10.8x 8.8x 7.6x 6.3x 4x 5x 6x 7x 8x 9x 10x 11x 12x 13x 14x Q1 FY14 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 5.0 7.3 - 1 2 3 4 5 6 7 8 9/30/2015 12/31/2017 7.3% 7.0% 6% 7% 8
Slide 14: Maturity Schedule – 12/31/2017
$177.8 $12.1 $165.8 $96.4 $500.0 $24.8 $250.0 $400.0 $62.5 $- $200 $400 $600 Unrestricted Cash Restricted Cash - LC/Escrow Undrawn Revolver Senior Unsecured Debt Junior Debt - Net of Accretion Notes: -There is an additional $4.2 million of secured divisional debt on the balance sheet with various ma
Slide 15: Push Toward 10+ ROA with Declining Cost of Capital
Push Toward 10+ ROA with Declining Cost of Capital 15 Notes • ROA is LTM Adjusted EBITDA/Total Assets at end of period • NTM Cash Int Exp is cash interest due for following 12-month period assuming principal balances and interest rates remain fixed at their end of period position 5.2% 6.5% 6.6% 7.1%
Slide 16: Driving ROA Through Increased Capital Efficiency
Total Assets as of 12/31/2017 $ in millions Assets EBITDA ROA Unrestricted & Restricted Cash 189.9$ Working Capital 38.2 PPE & Investments 23.0 Active Inventory 1,302.9 182.7$ 11.8% Former LHFFD - Under Development 207.4 Current LHFFD & PHFS 116.4 Deferred Tax Assets 200.1 Total Assets 2,078.0$ 182.
Slide 17: 2nd Quarter Expectations
2nd Quarter Expectations 17 Metric Q2 FY18 vs Prior Year New Home Orders Flat to Up Slightly Community Count Relatively Flat Closings Up Backlog Conversion Mid to High 60% Range Average Selling Price Mid to High $340k’s HB Gross Margin % Relatively Flat SG&A % of Total Revenue Down Land Sale Revenue
Slide 18: Focus for Fiscal 2018
18 Balanced Growth = Earnings Growth + Capital Efficiency Push to achieve 2B-10 Drive toward double-digit ROA Focus for Fiscal 2018
Slide 19: Appendices
Appendices 19
Slide 20: Backlog Detail
Q1 FY17 Q1 FY18 Quarter Ending Backlog (units) 1,926 1,899 Quarter Ending Backlog ($ in millions) 666.1$ 704.4$ ASP in Backlog ($ in thousands) 345.8$ 370.9$ Quarter Beg. Backlog 1,916 1,855 Scheduled to Close in Future Qtrs. (933) (870) Backlog Scheduled to Close in the Qtr. 983 985 Backlog Activit
Slide 21: Sales Pace Within "2B-10" Target Range
2.8 2.8 2.9 2.9 3.0 2.2 3.4 3.4 2.8 2.4 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Q1 Q2 Q3 Q4 Q1 FY17 FY18 Sales per Active Community per Month, LTM Sales per Active Community per Month, Quarterly Sales per Active Community per Month 2B-10 Range, 3.2 2.8 21 Note: An active community has achieved at least 2 in
Slide 22: Backlog ASP Suggests Further Growth
$333 $335 $338 $343 $344 $346 $347 $352 $359 $371 $338 $340 $341 $350 $345 $280 $290 $300 $310 $320 $330 $340 $350 $360 $370 $380 Q1 Q2 Q3 Q4 Q1 FY17 FY18 Average Sales Price, LTM Backlog ASP at Quarter End Average Sales Price, Quarterly "2B-10" Range, LTM $350 $340 22 Backlog ASP Suggests Further G
Slide 23: Homebuilding Gross Margin
$68.5 $69.4 $70.5 $72.9 $73.4 $65 $66 $67 $68 $69 $70 $71 $72 $73 $74 Q1 Q2 Q3 Q4 Q1 FY17 FY18 HB Gross Profit per Closing, LTM 20.6% 20.7% 20.9% 21.2% 21.3% 20.5% 20.7% 21.3% 22.0% 20.9% 15% 16% 17% 18% 19% 20% 21% 22% 23% Q1 Q2 Q3 Q4 Q1 FY17 FY18 HB Gross Margin, LTM HB Gross Margin, Quarterly "2B
Slide 24: SG&A Leverage as Revenue Grows
67.4 67.5 67.8 68.5 69.4 70.5 72.9 73.4 40.7 40.7 41.4 42.1 42.0 42.1 42.4 42.6 $30 $35 $40 $45 $50 $55 $60 $65 $70 $75 $80 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY16 FY17 FY18 HB Gross Profit* per Closing, LTM SG&A Per Closing, LTM 24 SG&A** Leverage (% of Total Revenue) SG&A Leverage as Revenue Grows *Excludes
Slide 25: Geographic Mix Impacts Year-Over-Year Q1 ASP
25 Geographic Mix Impacts Year-Over-Year Q1 ASP Q1 FY17 ASP Q1 FY18 ASP Change in ASP ($) Change in ASP (%) Q1 FY17 Closings Q1 FY18 Closings Change in Mix West $337K $336K $-1K -0.3% 51.3% 49.3% -2.0% East $374 $381 $7 1.7 21.8 21.1 -0.7 SE $310K $335K $25K 8.0% 26.9% 29.5% 2.6%
Slide 26: Geographic Mix Impacts Year-Over-Year Q1 Margin
26 Geographic Mix Impacts Year-Over-Year Q1 Margin Note: Segment gross margin excludes required capitalization of indirects, impairments and interest included in cost of sales Q1 FY17 GM% Q1 FY18 GM% Change in GM% Q1 FY17 Closings Q1 FY18 Closings Change in Mix West 21.4 21.6 20bps 51.3% 49.3% -2.0%
Slide 27: Land Position
2,359 4,317 8,362 5,345 1,354 587 27 Land Position Lot Position at December 31, 2017 Homes Under Construction Finished Lots Owned Land Under Development Land Held for Future Development Property Held for Sale Immediate Availability – 30% Near-Term Availability – 61% Long-Term and Non-Strategic Asset
Slide 28: Available Specs
178 162 119 132 171 167 290 427 536 571 423 481 468 589 655 703 594 648 0 250 500 750 Q4 Q1 Q2 Q3 Q4 Q1 FY16 FY17 FY18 Finished Homes Under Construction 28 Spec Homes Note: Spec count as of each quarter-end Available Specs
Slide 29: Debt Detail
(In thousands) Maturity Date Next Call Call Price Dec 31, 2016 Dec 31, 2017 5.750% Senior Notes June 2019 3/15/2019 100.000 321,393 96,393 7.500% Senior Notes September 2021 198,000 - 8.750% Senior Notes March 2022 3/15/2019 104.375 500,000 500,000 7.250% Senior Notes February 2023 2/1/2018 103.625
Slide 30: Adjusted EBITDA Reconciliation
Three Months Ended December 31, LTM Ended December 31, 2016 2017 Variance 2016 2017 Variance Net (loss) income (1,429)$ (130,947)$ (129,518)$ 2,265$ (97,705)$ (99,970)$ Expense (benefit) from income taxes (2,579) 107,979 110,558 13,139 113,179 100,040 Interest amortized to home construction and land
Slide 31: Deferred Tax Assets - Summary
31 Deferred Tax Assets - Summary As of December 31, 2017, our valuation allowance of $54.7 million related to our deferred tax assets remains consistent with the determinations we made during the period ended September 30, 2017. The reductions in our deferred tax assets and valuation allowance durin
Slide 32: Deferred Tax Assets – Impact of Tax Rate Change
Application of Reduction in Federal tax rate: Federal Book/Tax Differences and NOLs $310.4 million Federal Tax Credits State Tax Attributes Federal NOL VA ($28.9) million Federal Tax Credits VA State Tax Attributes VA (124.2) 11.6 Net Reduction of $112.6 million Not impacted by changes in federal ta
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