Beazer Homes USA, Inc.

And welcome to the Beezer's Homes Earning Conference Call for the quarter ended March 31st, 2021. 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 Investors Relations section of the company's website at www.beezer.com. Now, I will turn over the conference call to David Goldberg, Senior Vice President and Chief Financial Officer. Thank you.

Thank you. Good afternoon, and welcome to the Beezer Homes Conference Call discussing our results for the second quarter of fiscal 21. 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 described in our SEC filings, which may cause actual results to differ materially from our projections. Any forward-looking statement speaks only as the date the statement is made. We do not undertake any obligation to update or revise any forward-looking statement, whether as 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 second quarter and discuss the supportive macro environment. He will then provide a preview for the remainder of the year and outline our expectations for growth in fiscal 22. I'll then provide more details on our results, projections, and balance sheet. We will conclude with 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.

Thanks, Dave, and thank you for joining us on our call this afternoon. We had an extraordinary quarter. highlighted by an unprecedented increase in our sales pace and significant growth in our gross margin, EBITDA, and net income. At the same time, we invested for the future, grew our share of lots controlled by options, and continued to reduce debt. In sum, we had a nearly perfect balanced growth quarter, with profitability growing faster than revenue, while operating from a less leveraged and more efficient balance sheet. Perhaps the best news is that our team is poised to translate continuing strength in market conditions into even better results in the quarters ahead. As I'm sure you've heard, the strength in new home demand has contributed to both longer cycle times and higher construction costs. To date, we have successfully adapted to this environment by raising prices, limiting sales paces, and extending delivery dates on sold homes. As we work through these issues, our objectives remain the same. we expect to create value for customers, partners, employees, and shareholders by delivering great homes on time and at the margin we intended when we made the sale. Our commitment to creating value for our stakeholders can also be seen in our recent accomplishments and goals on the ESG front, as summarized on slide five. This quarter's highlights included being named an Energy Star Partner of the Year for the sixth consecutive year, representing another significant step toward our goal of having every home we build net zero energy ready by 2025. We believe the strength in the housing market will prove to be pretty durable. And the reasons are simple. Strong demographic demand, exceptionally limited supply, and a recovering economy. On the demand side, we expect many of the COVID housing norms to be persistent. namely the desire for more space, better space, and outdoor space. Even as we return to offices and schools, our homes have clearly taken on new roles in our lives. Couple that with the great awakening of millennials to the benefits of homeownership and the desire of many boomers to simplify, and you have a recipe for depth and breadth of demand that isn't likely to disappear anytime soon. On the supply side, The shortage of owner-occupied homes we described on our call in January turns out to be even more acute than we suggested. On that call, we conservatively estimated that the deficit was more than one million homes. In recent weeks, Freddie Mac published a deeply researched report which demonstrated the housing shortage is closer to four million homes. There's simply no way for our industry to accelerate entitlement, development, and construction to make a serious dent in that number anytime soon. Finally, on the economy, while there are still many COVID-related challenges, there's ample evidence of both job growth and wage growth, which bode well for consumer spending and housing. In sum, our industry is in a highly advantageous position with demographically driven demand in a recovering economy faced with seriously constrained supply beyond 2021. Turning now to our expectations. With our sold and already started backlog up more than 50% and continuing strength in lead and traffic trends, our visibility and confidence in fiscal 21 results is quite high. Dave will provide details on our outlook for the third quarter and full year, but I'm happy to share that we are raising our expectations again. The headline is that we now expect full year earnings per share to be above $3. Looking beyond this year, Our balanced growth strategy is a longer-term approach to generating shareholder value while carefully managing risk. Over the past several years, our strategy has yielded a big jump in profitability, even bigger improvements in our returns, and a meaningful reduction in debt. And we're not done. While it's too early for us to give any type of detailed guidance for next year, there are three factors that give us confidence that we can again improve profitability and returns in fiscal 2022. First, our current backlog already contains nearly 700 homes scheduled to close in the first quarter of next year. That's more than half of our typical first quarter closings. With our normal cycle times, most of these homes would have closed this year. But these aren't normal times. So instead, we have a great start on next year. Second, community count growth is coming. Incredibly strong sales over the past six months mean the dip in our community count arrived a little sooner than we previously anticipated. But next year, the positive progression in our community count will be evident. And remember, these communities were tied up 6 to 12 months ago before the recent run-up in home prices. And third, we will finally see real interest savings. We have dramatically deleveraged our balance sheet in recent years, but haven't really benefited from a reduction in interest expense in our earnings. That's because of the timing difference between the immediate cash benefit of much lower interest costs and the non-cash gap expense that arises from previously capitalized interest. Next year, we expect to realize a multimillion-dollar reduction in our gap interest expense based on actions we have already taken. These factors and our confidence in the industry's supply and demand equation should yield another successful year for our balanced growth strategy. Before closing, I would like to again express our appreciation for the scientists, doctors, first responders, and essential workers who saw us through what appears to be the worst of the pandemic and have positioned our country to begin to recover. With that, I'll turn the call over to Dave. Thanks, Alan.