Beazer Homes Usa, Inc. · NYSE:BZH
Beazer Homes Usa — Q3 2024 Earnings Presentation
31 slides from Beazer Homes Usa's earnings presentation, Aug 1, 2024
Slide 1: Q3 2024 Earnings Presentation
Beazer Homes USA, Inc. Q3 2024 Earnings Presentation Skye Hills Las Vegas, NV © Beazer Homes – Confidential and Proprietary – Distribution Prohibited 1
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements. These forward-looking statements represent our expectations or beliefs concerning future events, and it is possible that the results described in this press release will not be achieved. These forward-looking statement
Slide 3: Introduction
Introduction Allan P. Merrill David I. Goldberg Chairman & Chief Executive Officer Sr. Vice President & Chief Financial Officer © Beazer Homes – Confidential and Proprietary – Distribution Prohibited 3
Slide 4: 3rd Quarter Highlights
3rd Quarter Highlights Closings & Revenue Adjusted Gross Margins Adjusted EBITDA / EPS Book Value Land Position Beazer has now certified more Zero Energy Ready homes to the DOE’s Single Family National Program requirements than any builder in the country © Beazer Homes – Confidential and Proprietary
Slide 5: Current Operating Environment
Current Operating Environment New & Existing Housing Inventory Units Monthly Mortgage Payment as a % of Income (in millions) 4.50 34% 32% 4.00 30% 3.50 28% 3.00 26% 24% 2.50 22% 2.00 20% 1.50 18% 16% 1.00 14% 0.50 12% - 10% Average Monthly Mortgage Pmt as % of Income (a) Data reflects new and existi
Slide 6: Multi-Year Goals
Multi-Year Goals > 200 Communities Fiscal Year-end 2026 < 30% Net Debt to Net Capitalization Fiscal Year-end 2026 100% Zero Energy Ready Starts Calendar Year-end 2025 © Beazer Homes – Confidential and Proprietary – Distribution Prohibited 6
Slide 7: Community Count Growth
Community Count Growth > 200 Active Communities FYE26 200 40 180 35 > 15% Total Lots Controlled (thousands) Active Community Count - Period-End Growth 164 160 30 > 155 by FYE24 146 140 25 124 125 120 120 20 100 15 18k 20k 25k 23k 28k 80 10 Q3 FY20 Q3 FY21 Q3 FY22 Q3 FY23 Q3 FY24 FYE24 FYE25 FYE26 Lo
Slide 8: Balance Sheet Improvement
Balance Sheet Improvement 70% 64.5% 60% 54.0% Increase versus PY due to timing 52.7% of land spend and closings volume 50% 45.8% 40% 40.3% Mid 30’s by FYE24 30% < 30% Net Debt / Net Cap 20% Q3 FY20 Q3 FY21 Q3 FY22 Q3 FY23 Q3 FY24 FYE24 FYE25 FYE26 Net Debt to Net Capitalization See “Non-GAAP Net Deb
Slide 9: Zero Energy Ready Starts
Zero Energy Ready Starts 100% ZER Starts by CYE25 100% 93% ZER Starts as % of Total Period Starts 80% 77% 60% 54% Beazer is the only public builder to commit 100% of starts to ZER 40% 28% 20% 11% 4% 0% 2% © Beazer Homes – Confidential and Proprietary – Distribution Prohibited 9
Slide 10: 3rd Quarter Results
3rd Quarter Results Balanced Growth Results Q3 FY24 YoY Change New Home Orders 1,070 (10.8%) Sales Pace 2.4 (23.9%) Community Count, Avg 146 17.2% Homebuilding Revenue ($mm) $589.6 3.3% Closings 1,167 4.5% Average Selling Price ($k) $505.3 (1.1)% HB Gross Margin %(a) 20.3% (310 bps) SG&A as % of Tot
Slide 11: 4th Quarter Expectations
4th Quarter Expectations Metric Expectations Orders ~1,100 Active Community Count, Ending >155 Closings ~1,500 Average Selling Price ~$520k HB Gross Margin %(a) ~20.0% SG&A as % of Total Revenue ~10.0% Adjusted EBITDA >$80MM Interest Amort. % of HB Revenue ~ 3% Effective Tax Rate ~12% Diluted EPS -
Slide 12: Fiscal 2024 Expectations
Fiscal 2024 Expectations Metric Expectations Land Spend >$750MM Active Community Count, Ending >155 Net Debt / Net Capitalization Mid 30s Diluted EPS - Cont. Ops. ~$4.20 Adjusted EBITDA ~$230MM Book Value Per Share ~$40.00 © Beazer Homes – Confidential and Proprietary – Distribution Prohibited 12
Slide 13: Units Under Production Set Up FY25
Units Under Production Set Up FY25 Fiscal Year Closings / Backlog Units Fiscal Year Closings / Units Under Production 2.6 10,000 4.00 9,000 2.75 COVID related supply COVID related supply chain disruptions 2.5 chain disruptions 3.4 2.3 9,000 8,000 3.50 3.2 3.1 2.25 8,000 7,000 3.00 1.9 1.9 2.6 7,000
Slide 14: Drivers of FY25 Profitability Growth
Drivers of FY25 Profitability Growth ~20% Revenue Growth Operating Margin Expansion 1. Higher Units Under Production 1. Ready Series Cost Reductions 2. Shorter Cycle Times 2. SG&A Leverage 3. Sales Pace Improvement 4. Average Sales Price Up YoY Fiscal 2025 Profitability Growth © Beazer Homes – Confi
Slide 15: Land Investment
Land Investment $450 60% 57% 55% Land Acquisition and Development Spend ($ in millions) $400 53% 52% 50% Total Active Lots Controlled by Option $350 LTM Land Investment >$810MM Largest investment in over a decade $300 40% $250 $214 30% $199 $198 $201 $200 $65 $150 $62 $68 20% $73 $100 $149 $137 10%
Slide 16: Liquidity and Capitalization
Liquidity and Capitalization $ in millions Net Debt / Net Cap(a) 45.8% $400 Net Debt / Adj. EBITDA 4.1x $300 Total liquidity of $255 ~$328 million $200 $357 $350 $250 $100 $35 $73 $76 $- Unrestricted Cash Restricted Cash - LC/Escrow Undrawn Revolver Senior Unsecured Debt Junior Debt - Net of Accreti
Slide 17: Book Value Per Share Growth
Book Value Per Share Growth $40.00 $38.09 $35.00 $33.86 $30.00 $27.73 $25.00 $22.04 $20.00 $19.02 $15.00 $10.00 $5.00 $- Q3 FY20 Q3 FY21 Q3 FY22 Q3 FY23 Q3 FY24 Homebuilding Assets DTA Diluted weighted-average shares outstanding at period-end used for all per share calculations Balances as of 6/30 u
Slide 18: Wrap-Up
Wrap-Up Q3 FY24 results • Solid Profitability • Continued Land Growth • Energy Efficiency Milestone FY24 Expectations • Double-Digit Return On Equity Progress Towards Multi-Year Goals • > 200 Communities - FYE26 • < 30% Net Debt to Net Capitalization - FYE26 • 100% Zero Energy Ready Starts - CYE25 ©
Slide 19: Appendix
Appendix © Beazer Homes – Confidential and Proprietary – Distribution Prohibited 19
Slide 20: Zero Energy Ready Homes
Zero Energy Ready Homes A DOE Zero Energy Ready Home® is a high-performance home that is so energy efficient that a renewable energy system could offset most or all the home's annual energy use. Each DOE Zero Energy Ready Home meets rigorous efficiency and performance criteria. • Homeowner Benefits
Slide 21: Improving SG&A Leverage is a Priority
Improving SG&A Leverage is a Priority SG&A Per Closing SG&A Leverage LTM Homebuilding % of Total Revenue $ in thousands Increase versus PY due to our continued $70 14% investment for our growing community count $61.0 $61.6 $62.1 12.0% $59.6 11.7% $60 12% 11.3% 11.4% 10.7% $50 10% $40 8% $30 6% 11.7%
Slide 22: Cancellation Rates
Cancellation Rates 25% 21% 20% 19% 17% 16% 16% 15% 12% 12% 11% 10% 6% 5% 4% 0% Q3 FY20 Q3 FY21 Q3 FY22 Q3 FY23 Q3 FY24 Cancellation Rate Cancellation Rate (% of Backlog)(a) (a) Cancellation Rate as a % of Backlog is calculated using the quarter's beginning backlog units © Beazer Homes – Confidential
Slide 23: Specs per Community
Spec Homes 20 1,200 1,135 18 899 1,000 16 936 881 14 Specs per Community 800 Spec Homes 714 720 12 531 592 10 600 8 8 437 8 400 397 6 6 4 4 4 200 236 183 2 128 40 55 - - Q3 FY20 Q3 FY21 Q3 FY22 Q3 FY23 Q3 FY24 Completed Under Construction Per Community Note: Spec count as of each quarter end include
Slide 24: Segment ASP & Margins
Segment ASP & Margins ($ in thousands) Q3 FY23 Q3 FY24 Change in Change in Q3 FY23 Q3 FY24 Change in ASP ASP ASP ($) ASP (%) Closings Closings Mix West $515.6 $502.6 ($13.0) (2.5%) 56.8% 62.4% 5.6% East $525.2 $505.2 ($20.0) (3.8%) 22.6% 20.6% (2.0%) Southeast $481.7 $515.1 $33.4 6.9% 20.6% 17.1% (3
Slide 25: Q3 Results
Q3 Results $ in millions (except ASP) Q3 FY23 Q3 FY24 ∆(d) Profitability Total Revenue $ 572.5 $ 595.7 4.0% Adjusted EBITDA (a) $ 72.8 $ 53.5 ($19.3) Net Income - Cont. Ops. $ 43.8 $ 27.2 ($16.6) Unit Activity New Home Orders 1,200 1,070 (10.8%) Closings 1,117 1,167 4.5% Average Selling Price ($k) $
Slide 26: Backlog Detail
Backlog Detail Q3 FY23 Q3 FY24 Quarter Ending Backlog (units) 1,941 1,949 Quarter Ending Backlog ($ in millions) $ 1,009.8 $ 1,046.5 ASP in Backlog ($ in thousands) $ 520.3 $ 536.9 Quarter Beg. Backlog 1,858 2,046 Scheduled to Close in Future Qtrs. (915) (972) Backlog Scheduled to Close in the Qtr.
Slide 27: Non-GAAP Homebuilding Gross Margin Reconciliation
Non-GAAP Homebuilding Gross Margin Reconciliation Three Months Ended June 30, 2024 HB Gross HB Gross HB Gross HB Gross Profit Margin Profit Margin excluding excluding HB Gross Impairments & excluding excluding Interest I&A and I&A and HB Gross Margin Abandonments I&A I&A Amortized to Interest (Non-
Slide 28: Non-GAAP Adjusted EBITDA Reconciliation
Non-GAAP Adjusted EBITDA Reconciliation Three Months Ended June 30, LTM Ended June 30, (In thousands) 2023 2024 24 vs 23 2023 2024 24 vs 23 Net income (GAAP) $ 43,817 $ 27,210 $ (16,607) $ 189,678 $ 143,865 $ (45,813) Expense from income taxes 6,241 2,453 (3,788) 39,050 18,843 (20,207) Interest amor
Slide 29: Non-GAAP Net Debt to Net Capitalization Reconciliation
Non-GAAP Net Debt to Net Capitalization Reconciliation in thousands As of June 30, 2023 As of June 30, 2024 Total debt (GAAP) $ 981,128 $ 1,069,408 Stockholders' equity (GAAP) 1,044,785 1,178,315 Total capitalization (GAAP) $ 2,025,913 $ 2,247,723 Total debt to total capitalization ratio (GAAP) 48.4
Slide 30: Beazer Tax Benefits
Beazer Tax Benefits FY23 FY24 - FY26 FY27 - FY33(a) Building industry-leading, energy efficient homes provides tax benefits: Energy Prior tax code – $2K Home Efficiency Current tax code (Energy Star) – $2.5K SFD Credits Current tax code (DOE Zero Energy Ready) – $5K SFD < 15% > 10% & < 18%(b) < 17%
Slide 31: Deferred Tax Assets - Summary
Deferred Tax Assets - Summary ($ in millions) June 30, 2023 June 30, 2024 Deferred Tax Assets $ 167.2 $ 162.4 Valuation Allowance $ (25.4) $ (30.4) Net Deferred Tax Assets $ 141.8 $ 132.0 As of June 30, 2024, our conclusions on whether we are more likely than not to realize all of our federal tax at