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BEAZER HOMES USA INC (BZH)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue grew modestly to $565.3M (+3.2% YoY) with diluted EPS of $0.42 (vs. $1.26 YoY) as homebuilding gross margin compressed to 15.1%, while adjusted gross margin excluding interest improved sequentially to 18.3%; Adjusted EBITDA was $38.8M .
  • Orders softened: net new orders -15.5% YoY on slower sales pace (2.3 per community per month), and backlog dollar value -22.7% YoY; community count rose 11.7% YoY to 162, supporting revenue resiliency amid demand headwinds .
  • Capital allocation pivot: authorized a new $100M multi‑year buyback (repurchased $20.6M in Q2 at $22.73/share) and extended multi‑year goals timelines to FY27; added a new goal for double‑digit BVPS CAGR through FY27, reflecting focus on buybacks below book value and moderated growth/deleveraging cadence .
  • Q3 outlook: 1,050–1,100 closings, ASP ~ $525k, adjusted gross margin up slightly q/q, SG&A <12%, ~ $40M Adjusted EBITDA, EPS > $0.40; FY25 outlook includes adjusted gross margin ~18.5%, ASP ~ $520k, SG&A ~11%, and reduced land spend of $750–$800M .
  • Potential stock reaction catalysts: the $100M buyback, sequential margin stabilization and Q3 EPS > $0.40 guide; risks include affordability-driven demand softness, elevated spec mix and higher cancellations .

What Went Well and What Went Wrong

  • What Went Well

    • Better-than-anticipated earnings on growing community count, improved cycle times, modest sequential gross margin increase, and disciplined overheads; “Adjusted EBITDA of $38.8M and EPS $0.42” .
    • Capital allocation sharpened: $100M repurchase authorization and rationale to buy at “substantial discount to book value” while moderating growth/deleveraging pace .
    • Differentiation on energy efficiency: nearly 99% of Q2 starts were Zero Energy Ready; management notes ZER homes have carried better margins than prior series, supporting pricing power over time .

  • What Went Wrong

    • Demand/sales pace weakened: net new orders -15.5% YoY; orders per community per month fell to 2.3; cancellation rate rose to 16.9% (vs. 12.2% a year ago) amid affordability and sentiment headwinds .
    • Margin pressure: homebuilding gross margin fell to 15.1% (-360 bps YoY), driven by higher price concessions/closing cost incentives, elevated spec mix, and product/community mix shifts .
    • Backlog/liquidity/ leverage mixed: backlog dollar value -22.7% YoY; liquidity $377.7M (down vs. $432.9M YoY); net debt to net cap 44.8% (vs. 43.4% YoY), reflecting the environment and capital deployment .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Total Revenue ($M)$806.2 $469.0 $565.3
Diluted EPS ($)$1.69 $0.10 $0.42
Homebuilding Gross Margin (%)17.2% 15.2% 15.1%
Adjusted Homebuilding Gross Margin ex I&A and interest (%)20.4% 18.2% 18.3%
Adjusted EBITDA ($M)$93.1 $23.0 $38.8

Segment revenue by region (YoY view)

RegionQ2 2024 Revenue ($M)Q2 2025 Revenue ($M)
West$344.9 $365.1
East$111.6 $120.4
Southeast$82.1 $70.5
Total Homebuilding$538.6 $556.0

Key KPIs and operating metrics

KPIQ4 2024Q1 2025Q2 2025
Net New Orders (units)1,029 932 1,098
Cancellation Rate (%)21.9% 16.5% 16.9%
Orders per Community per Month2.2 1.9 2.3
Avg Active Community Count153 161 163
Active Communities (period-end)162 163 162
Total Home Closings (units)1,496 907 1,079
ASP from Closings ($000s)$523.9 $507.6 $515.3
Backlog Units (period-end)1,482 1,507 1,526
Backlog $ (period-end, $M)$797.2 $816.0 $831.5
Backlog ASP ($000s)$537.9 $541.5 $544.9

Non-GAAP notes: Q2 2025 homebuilding gross margin excluding I&A and interest was 18.3% (vs. 21.7% in Q2 2024) . Q2 2024 included an $8.6M gain on sale of an investment recognized in other income .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
ClosingsQ3 2025Not previously provided1,050–1,100 homes New
ASPQ3 2025Not previously provided~ $525k New
Adjusted Gross MarginQ3 2025Not previously providedUp slightly q/q New
SG&A as % of RevenueQ3 2025Not previously provided<12% New
Adjusted EBITDAQ3 2025Not previously provided~ $40M New
EPSQ3 2025Not previously provided> $0.40 New
Adjusted Gross MarginFY 2025Not previously provided~18.5% New
ASPFY 2025Not previously provided~ $520k New
SG&A as % of RevenueFY 2025Not previously provided~11% New
Land SpendFY 2025Not previously provided$750–$800M New
Community Count (year-end)FY 2025~180 (Q1 outlook) “In the 170s” Lowered
>200 Active Communities GoalMulti‑YearBy end FY 2026 (land control to reach) Targeted by end FY 2027 Deferred 1 year
Net Debt / Net Cap TargetMulti‑YearMid‑30% by FY25; <30% by FY26 (updated Feb 6) High‑30s by FY25; low‑30s by FY27 Deferred ~1 year
Share Repurchase AuthorizationMulti‑Year~$24.8M remaining (Feb 6) New $100M authorization Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Affordability & demandQ4’24 noted stronger Oct sales despite higher rates; Q1’25 “challenging environment” “Slower‑than‑anticipated selling environment” tied to affordability, weaker sentiment Near‑term softer
Spec vs. to‑be‑built mixQ4’24/Q1’25 benefited from spec sold/closed in‑quarter ~70% of sales spec; expect elevated spec; boosts backlog conversion Spec‑heavy persists
Gross margin trajectoryQ4’24 down YoY; Q1’25 adj ~18.2% Adj GM 18.3% with slight q/q improvement; guide slight q/q lift in Q3/Q4 to FY ~18.5% Stabilizing to slight up
Capital allocationQ1’25 reiterated growth/deleveraging goals $100M buyback; prioritize repurchases at discount to BV; extend timelines Pivot to buybacks
Labor/inputs/tariffsLimited prior commentaryLabor availability improving; tariffs impact could be more 2026 than 2025 Potential 2026 cost tailwind
Zero Energy ReadyQ4’24 91% starts ZER; Q1’25 98% starts ZER Nearly 99% of Q2 starts ZER; prior series nearly complete ZER adoption complete

Management Commentary

  • “In our second quarter we made progress towards our Multi‑Year Goals and surpassed our profitability expectations despite challenging macroeconomic conditions… Adjusted EBITDA of $38.8 million, net income of $12.8 million and EPS of $0.42” (Allan Merrill, CEO) .
  • “Presented with the opportunity to buy back stock at less than half of book value, we think it is appropriate to slow the rate of growth in our community count and… deleveraging” (Allan Merrill, CEO) .
  • “We anticipate closing between 1,050 and 1,100 homes [Q3]… adjusted gross margin should be up slightly sequentially… [and] diluted EPS above $0.40” (David Goldberg, CFO) .
  • “Nearly 99% of our second fiscal quarter new home starts [were] Zero Energy Ready” (Press release) .
  • “Could we have cut prices more to drive some volume? Maybe. But… we want to preserve the value of the land that we have and the lots that we have” (David Goldberg, CFO) .

Q&A Highlights

  • Affordability & timelines: Management is not assuming affordability improves soon; extended community count goal provides capital allocation flexibility; still investing for growth into 2026–27 despite headwinds .
  • Book value per share: DTA <10% of book value; BVPS growth primarily from earnings and buybacks; targeting double‑digit BVPS CAGR to mid‑$50s by FY27 .
  • Repurchase cadence: Will balance land opportunities, growth, leverage, and share returns; all tools (including ASR) are “in the toolkit” if conditions warrant .
  • Margins & pricing posture: Chose not to over‑incentivize to chase orders; sequential margin improvement driven by better spec profitability, product standardization, ZER build efficiencies, and new community deliveries; spec mix remains a headwind .
  • Overheads & land discipline: Expect SG&A leverage as revenue grows; may renegotiate land terms; willing to walk from deals that don’t meet updated return hurdles .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q2 2025 (EPS, revenue, EBITDA), but the feed did not return estimates for that quarter in our query; as a result, we cannot quantify beats/misses vs Street for Q2 2025. S&P Global consensus for adjacent periods (e.g., Q4 2025) is available but not relevant to this Q2 recap [GetEstimates]. Values retrieved from S&P Global*.
  • Management indicated “better‑than‑anticipated earnings,” but this reflects internal expectations, not consensus .

Key Takeaways for Investors

  • Demand remains affordability‑constrained: orders and pace weakened, and cancellations ticked up, but higher community count and improved cycle times supported revenue .
  • Margins are stabilizing: adjusted gross margin improved sequentially and is guided slightly up in H2, though spec mix keeps pressure vs. prior year .
  • Capital returns front‑and‑center: new $100M buyback authorization and rationale to repurchase below book value; expect a balanced approach alongside moderated growth and deleveraging .
  • FY25 operating guardrails: adj GM ~18.5%, ASP ~ $520k, SG&A ~11%, land spend $750–$800M; Q3 EPS guided above $0.40—near‑term earnings support despite softer demand .
  • Strategic differentiation: ZER leadership (nearly 99% of starts) should aid margins and pricing power over time; operational efficiencies from standardization continue to accrue .
  • Watch list: sales pace trajectory into summer, spec mix normalization, land renegotiation outcomes, and execution against community count growth into FY26–27 .
  • Near‑term trading setup: buyback authorization and sequential margin uptick are supportive; downside risks include further demand softness and elevated spec mix diluting margins .