Beazer Homes USA, Inc.

Good afternoon and welcome to the Beezer Homes Earnings Conference call for the fourth quarter and fiscal year ended September 30th, 2023. Today's call is being recorded and a replay will be available on the company's website later today. In addition, presentation slides intended to accompany this call are available within 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 for our fourth quarter and full year 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 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 is Alan Merrill, our Chairman and Chief Executive Officer. Today, Alan will discuss highlights from our fiscal 2023 results, an update on our multi-year goals, how we are navigating the affordability challenges for homebuyers, and our growth expectations for fiscal 2024. I'll then provide details on our fiscal 2023 full year results, updates on our cycle time and cost reduction initiatives, additional details on our expectations for the first quarter and full year, and end with a look at our balance sheet and book value. We will conclude with a wrap-up by Alan. After our prepared remarks, we will take questions during the remaining time. I will now turn the call over to Alan.

Thank you, Dave, and thank you for joining us on our call today. I'm extremely proud of our team's efforts and results for fiscal 23. We overcame an exceptionally difficult sales environment in the first quarter of last year, which allowed us to make significant progress against our balanced growth and multi-year goals. With a strong finish in the fourth quarter, we delivered both financial and operational results that met or exceeded our expectations. From a financial perspective, we generated more than $150 million of net income, resulting in healthy returns on both assets and equity. We invested almost $600 million in land and land development And at the same time, we strengthened our balance sheet with leverage now below 40% and stockholders' equity above $1 billion. From an operational perspective, we positioned ourselves for growth by increasing our community count and controlled lot position. We reclaimed more than two months of construction cycle time, and we expanded our leadership in energy efficiency. We were also recognized as a top workplace, reflecting our efforts to sustain an exceptional level of employee engagement. Against a very difficult interest rate and housing backdrop, FY23 challenged us in many ways, and we came through in very good shape. In the middle of fiscal 23, we laid out three multi-year goals intended to define specific targets and timelines as part of our long-standing balanced growth strategy. These targets represent our highest priorities and are centered around community count growth, balance sheet strength, and the energy efficiency of our homes. As it relates to our growth, we ended the year with 134 active communities, up 9% versus the prior year as we successfully activated 60 new communities. In FY24, we expect year-over-year growth in our active community count each quarter. Further out, we have excellent visibility to more than 200 active communities by the end of fiscal 2026. As it relates to our balance sheet, we finished the year with our net debt to net capitalization ratio at 36%, representing a nine point decline versus the prior year. Our profitability expectations for fiscal 24 should allow us to reduce that ratio into the low 30s by the end of this year. putting our multi-year goal of net debt to net cap below 30% well within reach by the end of fiscal 26. Finally, as it relates to the homes we build, we remain the only public builder with a commitment to building 100% of our homes to the Department of Energy's zero energy ready standard. In 2023, we greatly expanded our production of these homes with the share of zero energy ready starts jumping from 2% in Q1 to 28% in the fourth quarter. By the end of fiscal 24, we expect well over half our starts will meet the DOE standard, positioning us to have every home we start zero energy ready by the end of 2025. We remain confident in the longer-term supply and demand dynamics that underpin our strategy and our industry, but affordability has been is and is likely to remain the central challenge for new home sales. Part of the challenge is consumer psychology, with buyers daunted by monthly payments larger than they're accustomed to. But the other part is math. Many prospects simply don't have the income to afford the payments for the home or the location they desire. To help combat this, we have structured our incentives to allow customers to direct dollars between home price discounts and closing costs, which often include buy downs. This allows different buyers to make different choices. In a rising rate environment, builder financing incentives typically increase, at least initially, and our experience confirms this. As the 30-year mortgage rate moved from about 7% at the end of June to just over 8% in October, Our contribution towards closing costs increased about one point on new sales. As part of our mortgage choice program, our lenders also contribute to closing costs and rate buy downs, which leverages our contributions. Of course, our mortgage strategy is about more than just buy downs. It's about choice. We have multiple choice lenders available to provide loan estimates to every buyer, which incentivizes our lenders to compete on loan programs, closing costs, buy downs, and service levels, in addition to rates. We have two other differentiators for home buyers, both of which directly target affordability concerns. Surprising performance encompasses our construction quality and energy efficiency efforts, with measurable monthly savings on utility bills for our buyers. Choice plans enables buyers of to-be-built homes to select floor plan elements to match their lifestyle at no additional cost. We are laser focused on affordability and believe we have created a differentiated strategy to address it. While the year ahead undoubtedly holds both opportunities and challenges, we continue to expect growth on many fronts. Our larger community count provides the basis for our expectations for more closings, leading to higher revenue and profitability in 2024 as we aggressively pursue our multi-year goals. Overall, I'm very pleased with what we were able to accomplish in fiscal 23 and remain excited about where we're going in fiscal 24 and beyond. With that, I'll turn the call back to Dave.