Beazer Homes USA, Inc.

and welcome to the Beezer Homes Earning Conference call for the quarter ended December 31st, 2020. Today's call is being recorded and a replay will be available on the company's website later today. In addition, PowerPoint slides intended to accompany this call are available in the investor relations section of the company's website at www.beezer.com. At this point, I will turn the call over to David Goldberg, Senior Vice President and Chief Financial Officer.

Thank you. Good afternoon and welcome to the Beezer Homes conference call discussing our results for the first quarter of fiscal 2021. Before we begin, you should be aware that during this call, we will be making forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors which are described in our SEC filings, which may cause actual results to differ materially from our projections. Any forward-looking statement speaks only as to the date the statement is made, and we do not undertake any obligation to update or revise any forward-looking statement, whether it is a result of new information, future events, or otherwise. New factors emerge from time to time, and it is simply not possible to predict all such factors. Joining me today is Alan Merrill, our Chairman and Chief Executive Officer. On our call today, Alan will review highlights from the first quarter, explain the basis of our confidence in the new home market, and discuss our improving expectations for fiscal 2021. He will also describe two significant commitments we recently made as part of our ESG strategy. I will cover our first quarter results in greater depth and provide detailed expectations for the second quarter and full year of fiscal 2021. I will then update our expectation for continued growth in our land position, followed by a wrap-up by Alan. After our prepared remarks, we will take questions in the time remaining. I will now turn the call over to Alan.

Thank you, Dave, and thank you for joining us on our call this afternoon. With an acute focus on health and safety, we generated outstanding operational and financial results in the first quarter. Operationally, orders were up more than 15% year-over-year, driven by a sales pace that was up more than 40%. In fact, both orders and our sales pace reached their highest first quarter levels in more than a decade, even as we intentionally slowed sales with price increases. We also expanded our lot supply, creating a path for future growth. Financially, we delivered big improvements in gross margin, adjusted EBITDA, and net income. The strength in demand for new homes has exceeded our expectation over the past six months. We have known that pent-up demand was building based on the disconnect between demographics and strong affordability on the one hand and anemic housing starts for most of the last decade on the other. What we did not anticipate was that a pandemic would be a catalyst for that demand to begin to materialize. Many consumers are now focused on improving their living situation. Whether their motivation is more space, better space, outdoor space, or an entirely new location, demand for housing has been excellent. The question on everyone's mind is, how long will this strength last? Well, we believe it's likely to persist for some time. From a supply perspective, our industry has delivered far fewer homes in the last 10 years than job growth and household formation would have predicted. We think this cumulative deficit is conservatively well above one million homes, which means that a few good quarters are unlikely to exhaust the need for new homes. So what about the durability of demand? Well, to buy a home, prospective homeowners typically need two things, income security in the form of a job, and homes for sale that they can afford. With vaccines at hand, we're optimistic that economic and job growth may resume as soon as this spring. In that case, the concern about the durability of demand may be better seen as a question about affordability. Affordability ultimately boils down to mortgage rates and home prices. Although the Fed is on record as supporting low rates for an extended period, we know we have to work hard to keep home prices within the reach of most buyers, and that is exactly why our positioning is so important. We believe we're in the right markets with the best job growth. We're targeting the largest buyer segments, baby boomers and millennials, and we focus on delivering exceptional value at an affordable price, not competing primarily on price. Ultimately, this positioning gives us confidence that our pivot toward growth will allow us to fully participate in a strong housing market over the next several years. As we enter this spring's selling season, we have an unusually high degree of visibility and therefore confidence in our likely full year results. That's because the dollar value of our backlog is up nearly 60% compared to last year. So today we're increasing our expectations for each of the objectives we outlined for fiscal 2021. Dave will provide more precise figures in his comments, but we now expect higher earnings and increased land activity this year while exceeding earlier debt repayment objectives. In summary, We're going to make significant progress on our balanced growth strategy, which is designed to grow profitability faster than assets and revenue from a more efficient and less leveraged balance sheet. Although ESG is receiving increased attention, it isn't something new at Beazer. We have been addressing all three facets of ESG for years because we see it as fundamental to fulfilling our purpose statement, which we've included on slide seven. Today I'd like to draw your attention to the significant commitment we announced in our most recent proxy statement that will result in a reduction in greenhouse gas emissions. In short, we have committed that by the end of 2025, every home we build will be net zero energy ready. In numeric terms, it means all of our homes will achieve a home energy rating system, or HERS rating, of 45 or less. which is an energy conservation standard that is far beyond most existing building and energy codes. At this level, our homes will generate as much energy as they consume by attaching a properly sized alternative energy system. Underscoring this commitment, we're a proud builder partner of the Department of Energy's Zero Energy Ready Homes program, and we're the first national production builder to commit to building 100% of our homes in accordance with the program. Improving energy efficiency is so important that we've made it a part of our long-term compensation plans as well. Before turning the call back over to Dave, I want to talk about one more aspect of our ESG strategy, namely our commitment to social responsibility. We have a long-standing relationship with Fisher House Foundation, an organization that builds homes where military and veteran families can stay free of charge while a loved one is in the hospital. Our work with Fisher House has had a profound impact on our employees, our customers, and our partners, and it's caused us to want to do more. To fund this ambition, last year we started a title insurance agency called Charity Title that will donate 100% of its profits to charity. By creating an innovative, dedicated funding source for our philanthropic efforts, we expect to be able to expand both our contribution levels and the number of organizations we can support. We encourage you to review the ESG materials contained in our proxy statement and 2020 annual report, which are available in the investor relations section of our website. With that, I'll turn the call over to Dave. Thanks, Alan.