Beazer Homes USA, Inc.

Good afternoon and welcome to the Beezer Homes Earnings Conference call for the second quarter ended March 31st, 2023. 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 second quarter of fiscal 2023. 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 FCC 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 is Alan Merrill, our Chairman and Chief Executive Officer. On our call today, Alan will discuss highlights from our second quarter, the current environment for new home sales, and an update on our company's strategy and the primary goals we have for the future. I'll then provide details on our second quarter results, expectations for the third quarter and full year, updates on our cycle time and cost reduction initiatives, and end with a look at our balance sheet and capital allocation priorities. We will conclude the wrap-up by Allen. After our prepared remarks, we will take questions and the time remaining. I will now turn the call over to Allen.

Thank you, Dave, and thank you for joining us on our call this afternoon. Our team delivered strong operational performance in the second quarter, which allowed us to exceed the expectations we outlined in January. On sales, we generated a pace of 3.2 homes per community per month, as a strong start to the spring selling season enabled us to more than double the pace we saw in the first quarter. And on profitability, adjusted EBITDA was over $62 million, with better than expected operating margins and closings lifting results. We also celebrated an important balance sheet milestone. For the first time since 2005, the dollar value of our total shareholders' equity exceeded our outstanding debt at the end of the quarter. with book value now in excess of $32 per share. During the second quarter, we were also pleased to be recognized for the homes we deliver and the culture we have created among customers and employees. For the eighth straight year, we received the Sustained Excellence Award from the U.S. Department of Energy and the EPA. This is their highest honor among ENERGY STAR awards granted for delivering homes that exceed their stringent requirements. For the second consecutive year, we were named by Newsweek as one of America's most trustworthy companies as determined through extensive polling of employees, customers, and investors. And for the first time, we were recognized as a 2023 Top 100 Workplace by Intergage. These awards speak to the commitment we've made to delivering exceptional homes, building trust with our customers, and becoming an employer of choice. Those are all outcomes that should contribute to growing shareholder value in the years ahead. Turning to the new home sales environment, the momentum we experienced in January continued through the quarter. In fact, I was a bit surprised by the strength of demand during the quarter, especially because affordability remains quite challenging. While I know our team did a terrific job marketing and selling our homes, there were clearly some other macro factors that helped. The economy has weathered the rapid increase in rates better than many feared. Employment remains strong and wages have continued to grow. With home prices modestly lower and incentives somewhat higher than this time last year, wage gains have contributed to an improvement in affordability. Second, homebuyers seem to be adjusting to higher mortgage rates, particularly as they consider the costs of renting. They may buy a smaller home or one with fewer design options But buying a home still represents a way to cap a family's housing costs in an inflationary environment. And third, the supply of existing homes for sale is incredibly constrained because owners with low mortgage rates have little incentive to trade in or trade up. This has led to share gains for new homes compared to existing homes this spring with no signs of excess inventory in any of our markets. The structural housing shortage in this country is very real. So, even as we acknowledge that it is a challenge for many consumers to attain homeownership, we are confident in the durability of demand for well-priced new homes. To that end, we remain committed to our balanced growth strategy. This strategy is designed to deliver profitable growth from an efficient and less leveraged balance sheet, resulting in returns above our cost of capital over a housing cycle. Of course, doing these things in a competitive environment isn't easy, which is why we created and have embraced three pillars to differentiate our homes and home buying experience. During the second quarter, we commissioned an investor perception study to help us better understand what investors and analysts thought about our strategy and how we could improve our investor communications. We were encouraged that there was broad support for both growing our business and improving our balance sheet, a clear validation of balanced growth. But we also heard that we could do a better job describing our longer-term goals. So today, we'll outline three multi-year goals that should help investors track our progress. As it relates to growth, starting in the fourth quarter, we expect a double-digit annual growth rate in our community count for the next several years, with a target of exceeding 200 active communities by the end of 2026. The growth in our lot position, particularly through options, provides early evidence we're on this path. As it relates to our balance sheet, we will continue to reduce leverage, and we're targeting a net debt to net cap ratio below 30% by the end of 2026. Investors noted the significant progress we've made reducing this ratio in the past several years and should take comfort that we intend to continue this journey. And finally, as it relates to the homes we build, we are the only national home builder who is fully committed to the Department of Energy's Net Zero Energy Ready program. More specifically, in our ESG report, we pledged that by the end of 2025, every home we start will meet this DOE standard. In Q2, 4% of our starts were net zero energy ready, and we expect this to ramp quickly in the years ahead. In fact, we now have net zero energy ready homes under production in 14 of our 16 markets. While there are technical and financial challenges associated with attaining this goal, we are well on our way. The fact is we are building tomorrow's home today, and we are excited to explain the benefits of our homes to buyers. As the past few years have clearly demonstrated, it is hard to predict market dynamics and even harder to translate those kinds of predictions into precise financial guidance. What's remained constant is our commitment to improving our profitability, our balance sheet, and our returns. As I've outlined today, we believe we have the strategy that will allow us to make further progress in the years ahead. With that, I'll turn the call over to Dave.