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DATE

Thursday, April 30, 2026 at 5 p.m. ET

CALL PARTICIPANTS

  • President & Chief Executive Officer — Allan P. Merrill
  • Chief Financial Officer — David I. Goldberg

TAKEAWAYS

  • Homes Sold -- 1,048 homes were sold, with a 2.1 sales pace per community per month; sales pace rose from January to February and plateaued in March.
  • Spec vs. To-Be-Built Mix -- To-be-built sales accounted for 43% of gross sales, highest since 2024, while spec sales mix fell to 57% from 61% in the first quarter and from the mid- to high-70% range in 2025.
  • New Community Contribution -- New communities (those that began sales after March) represented 34% of gross sales, up sequentially from 24% last quarter.
  • Active Community Count -- Average active community count was 167, up 3% year over year; ended the quarter with 169 communities.
  • Home Closings and Average Price -- 757 homes closed at an average sales price (ASP) of $525,000; ASP in backlog exceeded $580,000.
  • Revenue -- Homebuilding revenue totaled $397.7 million for the quarter.
  • Gross Margin -- Homebuilding gross margin was 15.6%, flat compared to the previous quarter.
  • SG&A Expense -- Selling, general, and administrative expenses were $64 million, roughly $4 million below last year.
  • Tax Impact -- Taxes yielded an $18 million benefit due to an interim tax treatment adjustment disclosed in the 10-Q.
  • Diluted Loss Per Share -- Second quarter diluted loss per share was $0.03.
  • Adjusted EBITDA -- Adjusted EBITDA was $2.6 million.
  • Liquidity -- Total liquidity stood at approximately $400 million, including $116 million in unrestricted cash and $285 million in revolver availability.
  • Revolver Upsize and Maturity -- Revolver was increased by $160 million to $525 million and maturity extended by two years to March 2030.
  • Share Repurchases -- Over 1 million shares were repurchased in the quarter at roughly 60% of book value; $30 million of the $72 million buyback authorization executed in the quarter.
  • Book Value Per Share -- Book value per share ended the quarter at nearly $42 using weighted average shares and nearly $43 using period-end shares.
  • Land Pipeline -- 60% of lots are controlled by options, and land spend this year is expected to align with dollar value delivered.
  • Q3 Expectations: Sales -- More than 1,000 homes are expected to be sold, ~20% above the comparable quarter last year, with pace similar to Q2.
  • Q3 Expectations: Closings & ASP -- Approximately 900 home closings are projected, with ASP between $535,000 and $540,000, aided by more New York community closings.
  • Q3 Expectations: Margins -- Adjusted homebuilding gross margins are expected to increase by over 50 basis points sequentially.
  • Q3 Expectations: Land Sale Revenue -- ~$30 million in land sale revenue is anticipated; $150 million targeted for the full year.
  • Q3 Expectations: Adjusted EBITDA -- Forecast for total adjusted EBITDA is $5 million to $10 million.
  • Energy Efficiency Tax Credits -- Over $10 million net tax benefit expected for the full year, enabling minimal cash taxes for several years.
  • Deleveraging Target -- The company is focused on reducing leverage to the low-30% range by fiscal 2027, but share repurchases are prioritized in 2026.
  • Long-term Community Count Target -- More than 200 active communities are targeted by the end of fiscal 2027.

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RISKS

  • CEO Merrill stated, "Both are readily evident to potential homebuyers and both undoubtedly contributed to the recent drop in consumer sentiment," reducing the likelihood of achieving full-year EBITDA growth.
  • Management revised expectations for margin expansion downward to 200–300 basis points by Q4, citing the operating environment.
  • Allan P. Merrill indicated demand softness was not offset by increased cancellations.
  • Merrill noted there is a bit of a headwind from higher rates in the cost of buy downs that will affect the third and fourth quarter.

SUMMARY

Beazer Homes USA (BZH 4.45%) reported that to-be-built sales mix increased to 43%, while spec sales fell and average selling price reached $525,000 across 757 closings. The company grew its active community count to 169 and ended the quarter with nearly $43 in book value per share using period-end share count. Executed $30 million in share repurchases in the quarter. Completion of a revolver upsize and extension resulted in $400 million total liquidity and no debt maturities until 2027. The third quarter outlook guides to sequential margin improvement, further ASP gains, and continued capital deployment toward share buybacks and land pipeline optimization.

  • Management expects average sales price in backlog to remain above $580,000 and further accelerate margin expansion enabled by more to-be-built sales and new communities.
  • Executives indicated that energy efficiency tax credits will substantially reduce taxable income for several years, highlighted as a shield for future profitability.
  • Merrill stated the long-term strategy is to maintain "a majority to-be-built" sales mix, enabling durable returns and above-industry customer experience ratings.
  • Land price resilience and lower share price relative to book drove an emphasis on buybacks, with nearly 20% of shares retired since early fiscal 2025 upon completion of authorization.

INDUSTRY GLOSSARY

  • Spec (Speculative) Home: A house constructed without a committed buyer, typically sold as inventory.
  • To-be-Built Home: A home sold to a buyer before construction starts, allowing for customization and margin enhancement.
  • Revolver: A revolving credit facility, enabling ongoing borrowing and repayment, here upsized to improve liquidity.
  • ASP (Average Sales Price): The average selling price of homes closed in the period, a key indicator of revenue mix and pricing trends.

Full Conference Call Transcript

Allan P. Merrill: Thanks, Dave, and thank you for joining us. I am going to organize my comments today around three topics: the highlights from our second quarter results, our responses to a challenging demand environment, and a review of our progress toward our multiyear goals. Relative to the second quarter, despite some new challenges in the macro environment, we were encouraged that our community count, sales pace, ASP, and gross margin all came in right around our expectations. Of particular note, getting our sales pace back over two per community per month was important, as was the improvement in our Houston business, which was up nicely year over year.

Digging a little deeper into the quarter, we were able to drive to-be-built sales higher, to 43% of gross sales, the highest level since 2024. Our new communities, which we define as beginning sales after March, represented 34% of gross sales, up sequentially from 24% last quarter. Both of these positive mix dynamics will contribute to higher ASPs and margins in the back half of the year. From a balance sheet perspective, we have maintained a robust lot pipeline with a healthy 60% controlled by options. During the quarter, we increased liquidity by upsizing our revolver, and we grew book value per share by buying back more than 1 million shares at about 60% of book.

Bottom line, our results reflected solid execution in a challenging operating environment. Last quarter, we described the environment and operational results that would be necessary for us to grow EBITDA this year. Among other items, this included a sales pace above 2.5 in the second half of the year and 300 basis points of margin expansion by the fourth quarter. Several macro headwinds developed since then, notably higher mortgage rates and surging energy costs. Both are readily evident to potential homebuyers and both undoubtedly contributed to the recent drop in consumer sentiment. While these challenges may prove temporary, they have left us more cautious and reduced the likelihood of achieving sufficient pace and margin expansion to support full-year EBITDA growth.

We now think a sales pace above two for the balance of the year and margin expansion between 200 and 300 basis points by the fourth quarter are more likely and achievable outcomes. With the additional benefit of a sizable mix-driven increase in ASPs and a modest ramp in community counts, we are positioned to sequentially improve profitability and returns in the next two quarters. In this environment, we could probably achieve a higher sales pace by increasing spec starts and offering more incentives. We think that would do little more than spike revenue for a few quarters and burn through our valuable option position.

More importantly, it would undermine the progress we are making in getting paid for delivering a more efficient home and the industry's highest-rated customer experience. Our positive margin progression remains intact, but it is built on more than just lower construction costs. It also reflects a growing share of closings from both our newer and our higher-priced existing communities, where we are effectively competing on quality and value. While our sales pace is not where we want it yet, we are actively building awareness with buyers, realtors, and appraisers that our homes are different, perform better, and cost a lot less to operate.

We believe this approach will yield greater and more durable returns than simply putting more low-feature specs on the ground. Beyond improving margins, we believe the capital allocation decisions we are making will also improve our returns. Land prices remain quite resilient, and yet our share price implies our existing assets are worth a lot less than we paid for them, which we know is not the case. That is why our 2026 capital allocation approach has been to improve the efficiency of our land spend, sell non-strategic assets at or above book value, and buy back stock at a meaningful discount to book value, all while preserving our growing community count.

On our last call, we committed to completing our existing $72 million repurchase authorization this year, and we executed $30 million in the second quarter. Upon completion of the full authorization, we will have bought back nearly 20% of our shares since early fiscal 2025. Taken together, growing profitability and efficiently allocating capital will increase book value per share this year. Now, looking further out, we are still heading toward our longer-term multiyear goals for growth, deleveraging, and book value per share accretion—a combination we believe produces the best path for shareholder value creation. While progress is not easy to synchronize in a difficult environment, we continue to pursue each goal.

With 169 communities at quarter end, we are still targeting more than 200 active communities by the end of fiscal 2027. Sales paces in existing communities and the attractiveness of incremental land purchases will determine our path to reaching this goal. We remain focused on deleveraging to the low-30% range by the end of fiscal 2027. However, as we indicated last quarter, we are prioritizing share repurchase activity in fiscal 2026 and expect to make progress on our leverage goal next fiscal year. Growing book value per share into the fifties remains our goal through both earnings and stock buybacks.

At quarter end, book value per share was up versus last year, finishing at nearly $42 using weighted average shares and nearly $43 using period-end shares. With that, I will turn the call over to Dave.

David I. Goldberg: Thanks, Allan. During the second quarter, we sold 1,048 homes with a pace of 2.1 sales per community per month, with pace increasing from January to February and plateauing in March. On a positive note, our spec sales mix continued to move lower at 57% in the quarter. This is down from 61% in the first quarter and well below the mid- to high-70% range we saw in 2025. This shift toward more to-be-built supports our margin expansion opportunities in the second half. Of note, the impact of the headwinds we mentioned earlier has not been an increase in cancellation rates. Instead, we simply did not see our normal seasonal lift in traffic and leads in March.

Our average active community count was 167, representing 3% year-over-year growth. Our homebuilding revenue was $397.7 million; 757 homes closed at an average price of $525,000. As anticipated, our ASP continues to move higher given the positive mix shifts we have referenced. In fact, with an ASP in backlog over $580,000, this trend should accelerate. Homebuilding gross margin was 15.6%, essentially in line with our first quarter results. SG&A was $64 million, approximately $4 million below last year. Surprisingly, taxes represented nearly an $18 million benefit. This reflected an adjustment in our quarterly interim tax treatment. Interim taxes are not intuitive in GAAP, so we have added disclosure in our 10-Q discussing this change.

All told, the second quarter diluted loss per share was $0.03 and adjusted EBITDA was $2.6 million. Now let us walk through our third quarter expectations. We expect to sell more than 1,000 homes, up nearly 20% versus last year's third quarter. This implies a sales pace roughly in line with the second quarter. We expect to finish Q3 with about 170 active communities, flat to slightly up sequentially. We anticipate closing about 900 homes with an ASP between $535,000 to $540,000 as our New York communities contribute a larger share of closings. Adjusted homebuilding gross margins should be up more than 50 basis points sequentially, reflecting both direct cost savings and mix benefits.

SG&A dollars should be about flat with last year's third quarter. From a land sale perspective, expect to generate about $30 million of revenue in the quarter and still expect $150 million for the full year. Altogether, this should result in total adjusted EBITDA of $5 million to $10 million in the third quarter. Interest amortized as a percentage of homebuilding revenue should be about 3%. Given the variability of our interim tax rate, we are not giving tax or earnings guidance for the quarter.

For the full year, we expect our energy efficiency tax credits will drive a net tax benefit of over $10 million and, more importantly, we expect to pay minimal cash taxes for several years as a result of these credits. Finally, we expect further growth in book value per share in the third quarter. Coming into the year, we had two goals related to land spend. First, we wanted to sustain an investment level that supports community count growth. At the same time, we wanted to make our balance sheet more efficient and facilitate share repurchases. We feel pretty good about both.

Our total land spend this year, net of land sale proceeds, should be roughly in line with the dollar value of what we are delivering. That would typically lead to a flat community count, but we have been able to improve deal structure and timing and carefully grow our use of developer and land bank options. The resulting balance sheet and land spend efficiencies are helping us turn our assets more quickly and supporting both our growth outlook and buyback activity. Finally, our balance sheet remains strong with approximately $400 million of total liquidity. This includes $116 million of unrestricted cash and $285 million of revolver availability, and we have no maturities until October 2027.

During the quarter, we expanded our revolver by $160 million to $525 million and extended its maturity by two years to March 2030. With that, I will turn the call back over to Allan.

Allan P. Merrill: Thank you, Dave. To wrap up, I would like to summarize the reasons we are so confident we will create substantial value for our investors. We have a clear and differentiated strategy. We have chosen to compete by offering a home built to lower homeownership costs as the key attribute. This is different from other builders, and we think that is a good thing, and a lot less risky than trying to outmuscle all of the companies building lower-feature homes. We are building momentum toward greater profitability. Our sales pace improved this quarter. Our gross margins are headed in the right direction. Our average sales prices are trending higher, and our community count is growing.

Together, this creates a powerful setup for operational leverage. Our balance sheet is strong. We have plenty of liquidity, no looming maturities, ready access to the capital markets, and lots of tax credits that will shield a significant amount of our future profitability. Finally, we have been disciplined capital allocators. Prior to and during the pandemic, we grew our active land portfolio significantly, setting us up for sustained community count growth. In recent quarters, we have improved the efficiency of our balance sheet to facilitate substantial share repurchases. We are not spending time worrying about the macro or hoping for a turn in the market.

We are executing against a differentiated strategy that is poised to deliver growing profitability and shareholder returns. Let me finish, as always, by thanking our team for their ongoing efforts to create value for our customers, our partners, our shareholders, and each other. We will now open the call for questions. With that, I will turn the call over to the operator to take us into Q&A.

Operator: Thank you. To ask a question, please press star followed by the number one. To withdraw your question, you may press star followed by the number two. Please unmute your phones and state your name when prompted. Once again, that is star one. Our first caller is Natalie Kulasekere with Zelman & Associates. Your line is open.

Natalie Kulasekere: Good evening, and thank you for taking my question. Could you tell us what your targeted share of to-be-built sales is in the long run, and can we expect this 43% to climb higher over the coming quarters? If so, what are some changes that you made in the business to accommodate this, and any detail around that would be helpful.

Allan P. Merrill: Sure, Natalie. I would answer that a few ways. Longer term, we would like a majority of the homes that we sell to be to-be-built. That is not going to happen over the next several quarters, so that is a longer-term goal to be a majority to-be-built company, like we were, frankly, before the pandemic. In terms of the next couple of quarters, we are going to keep working to drive that percentage, but typically what has happened in the fourth quarter is we have a slight increase in spec sales close to fiscal year-end.

So it is not a straight line, but I think we will be able to do period-over-period comparisons over the next year and see slow, steady progress comparing quarters to one another, year over year, where I think we will be able to show increases in to-be-built sales.

Natalie Kulasekere: Got it. And what has this share been trending over, say, the past four quarters?

Allan P. Merrill: A year ago, it was in the thirties. Now it is 43%. It is the highest it has been since early 2024, and it held in nicely this spring. I do not have each quarter off the top of my head, but it is up over 10 points year over year.

Natalie Kulasekere: That is helpful. And just one more for me. What are the margins you see in your backlog right now? Also, is your guidance of 300 basis points of margin expansion in the fourth quarter based on what you are seeing in the backlog and the kind of interest you are seeing with your to-be-built sales?

David I. Goldberg: Yes, Natalie. I would tell you the margins in backlog are supportive of the guidance that we have given for the next two quarters. Obviously, we have a lot more visibility on Q3 just given that we are in the middle of Q3 now. The reason we went to 200 to 300 basis points is based on what happens with specs and specs that we sell and close in the next few quarters.

Natalie Kulasekere: Alright. Thank you.

Operator: Our next question is from Tyler Anton Batory with Oppenheimer. Your line is open.

Tyler Anton Batory: Good afternoon, everyone. Thanks for taking my questions. First, can you give some more detail on what you saw in March and April, and how sales in those months compared with normal seasonality?

Allan P. Merrill: March was fine, but it was not great. January was kind of normal. February was up a little bit. We were feeling reasonably optimistic. There was weather here and there, but it felt pretty good. In March, it was fine, but we did not see what we normally see—an increase sequentially from February to March in traffic and leads. It did not collapse, but it did not move up, and that is one of the things that made us a little bit more cautious as we look at the next couple of months. April has been very similar to March.

Tyler Anton Batory: Perfect. And then I am really trying to understand the EBITDA guide here. Your $5 million to $10 million in Q3—there was some talk earlier about EBITDA perhaps being pretty close to where you were in the prior year for the full year. If that were still the case, it would imply a pretty significant ramp in Q4. I am assuming there are some moving pieces, perhaps on the land side of things. I understand that the environment is a little bit weaker than when we came into the year, but can you help us understand any onetime items that might be moving around Q3 and Q4, and how you see EBITDA for the full year playing out?

David I. Goldberg: We are not giving a full-year EBITDA guide, but what we did last quarter was all about trying to create a path and show people what a path could look like to get to growth in EBITDA year over year. As Allan said in his opening comments, in a tougher sales environment—if we are not doing the 2.5 sales pace in Q3 and Q4—that becomes more difficult. There is not a significant change beyond what we just talked about. Our land sale guidance is still around $150 million of land sales. But when you compound having lower sales paces in Q3 and Q4, it has an impact on EBITDA, and there is a lot of operating leverage.

The good news is, as Allan talked about in his scripted remarks, there is also a lot of operating leverage the other way. I am happy to take it offline if you want to, but there is no change other than what we outlined in the script.

Tyler Anton Batory: Last one for me. Strategically, thinking about getting fair value in the markets for what you offer—you have made some changes to marketing and whatnot. Talk about the sales process and consumer adoption, and whether people are appreciating the value you provide in your homes.

Allan P. Merrill: Energy costs are much higher in consumers’ minds than they have been in many years, and that is great for us. What is really resonating is the simple math. One of our new home counselors explained it in a way that is both true and simple. She said that if we save somebody $100 a month or $200 a month in their utility bills—and we can look at homes in the community and the third-party ratings that we get—the purchasing power that creates is enormous. She likes to tell people, “$10,000 in price costs $50 a month.

So if we save you $200 a month, how does that $50 a month feel?” The idea about energy efficiency that has been elusive for most consumers is the notion they have to sacrifice something. Having an energy-efficient home is not a sacrifice. Another challenge is people ask, “What is the payback?” We like to talk about it as the payback being in weeks—any difference in monthly payment is less than the savings on the utility line. When you get it that simple for folks, it is easy. There are people who will say, “How did you do that?” and that gives us a great chance to nerd out.

What we have gotten better at is not nerding out first and then explaining the benefit, but talking about the math. Then, when they want to know how we did it, we have lots to talk about.

Tyler Anton Batory: That is good detail. That is all for me. Thank you.

Allan P. Merrill: Thanks, Howard.

Operator: Thank you. Once again, if you would like to ask a question, you may press star one. Our next caller is Julio Alberto Romero with Capital Company. Your line is open.

Julio Alberto Romero: Good afternoon. My first question is, if demand were to worsen in the second half, what levers do you have to pull on the margin front? Allan, you mentioned you can likely increase sales pace through incentives and increasing spec starts, but are there any other levers as potential offsets to help with margins?

Allan P. Merrill: Obviously, those are things that would move margins the wrong way, and we have decided that in this environment, that is not what we want to do. If the market gets a lot tougher, we are going to evaluate—like I think any builder would—everything. Are there changes we need to make to our product? Do we need to restructure the way we do our incentives? We have a full suite of tools available to us, and we have proved reasonably resilient over the last couple of years trying to match what the sentiment in the market is.

I wish I could give you the exact thing that we would do, but the trick is Southern California is different from Indianapolis, which is different from Maryland. So the adjustments would vary by market.

Julio Alberto Romero: Understood. And circling back on the to-be-built mix from earlier, how do you envision the fiscal 2027 mix of to-be-built to look?

Allan P. Merrill: It is not a guide, but my belief is that with the new communities and the enthusiasm around what we are doing, I am hopeful we will have year-over-year improvements in the mix of to-be-built sales. There will be quarter-to-quarter sequential volatility because we typically have a higher share of spec sales in our fourth quarter, but year over year our goal is to be higher than we were in the same quarter the year earlier. That is the plan over the next year or two.

Julio Alberto Romero: Got it. I will pass it on. Thank you.

Operator: Thank you. Our last question comes from Alexander Rygiel with Tech Capital. Your line is open.

Alexander Rygiel: Thank you. Good evening, David and Allan. A couple quick questions here. Can you talk to incentives and, directionally, where they were in the first quarter versus prior periods and where you feel like they are going in the fiscal third quarter?

David I. Goldberg: Sure. On an overall basis, incentives were down sequentially in the quarter, but a lot of that had to do with mix and what was coming through from a spec perspective. On a go-forward basis, we think incentives are going to be down a little bit, but again, not at the house level—it is mix-driven. We think we peaked in Q4 and have seen some improvement since then. We do not have a big expectation that house-level or community-level incentives are going to change; it is more mix-related.

Allan P. Merrill: And let me just add that at the house level, as I think about March and April, there was a slightly higher cost to buy downs as rates ticked up. We do not control the mortgage rate or what a buy down costs. We feel very good about the pull-through of the things that we can control to drive margins higher, but there is a bit of a headwind from higher rates in the cost of buy downs that will affect the third and fourth quarter, and that is baked into what we have talked about for the rest of the year.

Alexander Rygiel: Secondly, it appears that your cancellation rate declined a bit. I suspect that is also due to mix, but are you seeing any other positive trends from that?

David I. Goldberg: I would not tell you there is a big change in cancellation behavior. The number does look good. It has not really concerned us in the last couple of quarters, even being a little bit higher. We typically run the business between a 15%–20% cancellation rate, so I do not see that being a big factor on a go-forward basis.

Alexander Rygiel: Great. Thank you.

Operator: Thank you. At this time, I am showing no further questions.

Allan P. Merrill: I want to thank everybody for joining us on our second quarter call and look forward to speaking to everyone for our third quarter call in a few months. Thank you very much. This concludes today's call.

Operator: Thank you. Thank you for participating on today's conference call. You may go ahead and disconnect at this time.