Julio Romero

Julio Romero inquired about the expected flow of Solar-Included Homes into orders and closings, their anticipated accretion to sales or profitability, and the drivers behind the favorable trend in to-be-built orders relative to closings.

Answer

Allan Merrill, Chairman and CEO, stated that Solar-Included Homes are currently a small percentage of closings but are trending towards 20% of the business by year-end, with higher margins. He noted that adoption depends on utility providers' posture, which is becoming more receptive due to surging electricity demand. Merrill attributed the positive to-be-built mix trend to the appeal of newer communities and buyers' increased willingness to wait due to decreasing inventory.

Julio Romero inquired about the contingency of the share repurchase plan on land sales timing, the gross margin spread between build-to-order and spec homes, the drivers behind improved traffic and buyer engagement observed in late December and January, the expected flow-through of Solar-Included Homes into orders and closings, their expected accretion to sales or profitability, and the drivers behind the favorable trend in the to-be-built mix in Q1 orders compared to closings.

Answer

Allan Merrill, Chairman and CEO, clarified that the repurchase plan is not strictly contingent on the timing of land sales. He estimated the gross margin spread between build-to-order and spec homes to be in the 4%-5% range, potentially wider recently. Merrill attributed improved traffic to a combination of slowly improving affordability (lower rates, stable home prices, rising incomes) and the strong traction of Beazer's newest, highly efficient, and solar-included communities. He stated that Solar-Included Homes are already in sales and closings, with a target of 20% of business by year-end, noting they have higher margins. Merrill attributed the positive to-be-built mix trend to newer communities attracting attention and decreasing inventory levels making buyers more willing to wait.