Beazer Homes USA, Inc.

Good afternoon and welcome to the Beezer earnings conference call for the quarter ended June 30th, 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 investor relations section of the company's website at www.beezer.com. At this point, I'll turn the call over to David Goldberg, Senior Vice President and Chief Financial Officer. Thank you, sir. You may begin.

Thank you. Good afternoon, and welcome to the Beezer Homes conference call discussing our results for the third 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 of 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 third quarter, discuss our view of the current macroeconomic environment, and outline how we have strategically positioned for continued growth in fiscal 22 and beyond. I will cover our third quarter results in greater depth, our expectations for the fourth quarter and full fiscal year, and update our expectations for continued growth in our land position, followed by a wrap-up by Alan. After our prepared remarks, we'll 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 a very successful third quarter, generating financial results that met or exceeded our expectations, positioning us for a strong end to the fiscal year. Our sales pace in the third quarter was one of the highest levels that we've generated in the last five years. And in fact, this pace would have been even higher if not for our deliberate efforts to proactively slow sales to align with our production capacity and limit our exposure to raw material price inflation. We delivered substantial gains in operating margin, EBITDA, and net income as we benefited from increased pricing and improved overhead leverage. On the balance sheet, we expanded both our total lot position and the share of lots controlled by option while retiring $14 million in debt. Together, these results perfectly demonstrate our longstanding Balanced Growth Strategy, which is a multi-year plan to grow profitability faster than revenue from a less leveraged and more efficient balance sheet. With these results and confidence in our expectations for the fourth quarter, we are once again raising full-year guidance highlighted by earnings per share of at least $3.25. Taking a step back, we acknowledge the benefit our entire industry has experienced from the powerful confluence of demographics, new home supply constraints, and massive workplace changes unleashed by the pandemic. Collectively, these factors have led to significant home price appreciation, which has clearly outpaced wage and income growth. In the coming quarters, we do not expect this level of price appreciation to continue. Our view is that disciplined mortgage underwriting will effectively limit the extent of home price appreciation. That's entirely healthy and gives us confidence that we won't experience the kind of pricing excesses that could set up a painful correction in the future. The demand and supply characteristics of our industry remain highly compelling. Aspiration for home ownership among millennials, and changing homeownership expectations among baby boomers provide a durable source of demand for new homes, particularly with enduring work-from-home expectations. And a significant deficit of new homes simply can't be addressed quickly with the supply chain, land use, and entitlement barriers that exist. Ultimately, our industry's challenge will be to ensure that labor and material cost expectations in the supply chain remain tethered to affordable home prices. That's where we believe our market positioning will prove advantageous. With three strong customer-facing differentiators, we have a lot of tools to work with to enable us to deliver extraordinary value at an affordable price in a highly competitive environment. Last quarter, we provided initial visibility into our expectations for profitability growth in fiscal 22, and our confidence has only increased since then. Here's why. First, at the end of our third quarter, we had more than 1,500 homes in backlog scheduled to close next year, nearly double the level at this time last year. And importantly, these homes have higher prices and higher margins. Second, even as our ASP has increased, we have remained focused on carefully managing our overhead costs. This will drive SG&A leverage, pushing SG&A below 11% next year. And finally, our deleveraging efforts continue to reduce our cash interest expense, setting us up for reductions in gap interest over time. Next year, we expect at least $5 million in gap interest savings, with further reductions in subsequent years. Taken together, we're confident that these factors will allow us to achieve our goal of generating double digit earnings per share growth in fiscal 22. Before I turn the call over to Dave, I want to provide updates on two unique aspects of our business. First, over the past six months, we've experienced exceptional demand in gatherings, our 55 plus active adult business. While traffic and engagement among this buyer segment was particularly impacted during the early part of the pandemic, The strength in the resale market and the availability of vaccines have contributed to much higher sales activity. This is a growing part of our business with communities underway in Atlanta, Dallas, Houston, Nashville, and Orlando. Second, the rollout of charity title, our title business committed to contributing 100% of its profits to charity, continues to gain momentum. In fiscal 21, we expect to provide title insurance for more than a third of our closings. Next year, we expect to provide title for two-thirds of our customers, which should generate philanthropic resources of over a million dollars a year on a run rate basis. This will allow us to expand our efforts with Fisher House and support local charities in each of our markets. I'm incredibly proud of our team's innovative strategy to develop a dedicated funding mechanism that aligns our customers, employees, and partners in supporting our communities. With that, I'll turn the call over to Dave.