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BEAZER HOMES USA INC (BZH)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY25 delivered a clean top- and bottom-line beat: total revenue was $791.9M vs consensus $674.8M*, and diluted EPS was $1.02 vs consensus $0.80*; adjusted EBITDA was $63.8M as spec-driven incentives weighed on gross margins but strong closings boosted operating leverage .
  • Homebuilding gross margin compressed to 13.7% GAAP and 17.2% ex-I&A/interest, reflecting higher spec mix and mortgage buydowns; SG&A improved to 9.6% of revenue, aided by scale and cost actions .
  • FY26 setup: management guides Q1 FY26 to a net loss of ~$0.50 EPS with ~800 closings, ASP ~$515k, and ~16% adjusted gross margin; full-year plan targets a 5–10% increase in closings, ~300 bps margin improvement by Q4 via $10k/unit cost savings, mix shift, and new communities, aiming to meet/exceed FY25 adjusted EBITDA .
  • Strategic catalysts: >$100M of non-strategic asset sales (at/above book) to recycle capital, continued deleveraging, and at least 1.5M share repurchases in FY26; liquidity remains robust at $538M with no maturities until Oct-2027 .
  • Brand and differentiation: “Enjoy the Great Indoors” campaign enhances awareness of energy efficiency/health value proposition, supporting price realization and sales conversion as affordability improves .

What Went Well and What Went Wrong

What Went Well

  • Strong closings and operating leverage: 1,406 closings drove EPS $1.02 and SG&A at 9.6% of revenue; adjusted EBITDA reached $63.8M despite margin pressure .
  • Cost and efficiency actions: management rebid labor/materials for ~$10k per home savings and executed 83 model-home sale-leasebacks to free cash; “run-rate” SG&A reductions ~$12M/yr from a Q4 reduction in force .
  • Strategic repositioning and liquidity: $63M FY25 asset sales with ~$7M profit; plan for >$100M asset sales in FY26; liquidity $538.3M, $214.7M cash, undrawn revolver .

Quote: “We rebid our material and labor costs… savings of about $10,000 per home… and completed a reduction in force… ~$12 million per year” .

What Went Wrong

  • Margin compression: GAAP homebuilding gross margin fell 350 bps YoY to 13.7%; adjusted margin ex-I&A/interest fell 320 bps to 17.2%, driven by larger incentives and higher spec mix .
  • Demand softness and backlog decline: net orders pace down to 2.0 per community per month; backlog units fell 36.2% YoY to 945, backlog dollars down 35.2% .
  • Regional/price tier headwinds: more aggressive incentives in sub-$500k communities and elevated spec reliance pressured profitability; Texas sales pace still sub-2.0, though improved sequentially .

Financial Results

MetricQ2 2025Q3 2025Q4 2025
Total Revenue ($USD Millions)$1,034.3 $545.4 $791.9
Diluted EPS ($)$0.42 $(0.01) $1.02
Homebuilding Gross Margin (GAAP, %)15.1% 13.5% 13.7%
Homebuilding Gross Margin excl I&A and interest (%)18.3% 18.4% 17.2%
SG&A as % of Total Revenue12.0% 13.2% 9.6%
Adjusted EBITDA ($USD Millions)$38.8 $32.1 $63.8

Estimates vs Actuals (Q4 FY25):

MetricConsensusActualResult
Revenue ($USD Millions)$674.8*$791.9 Beat*
Diluted EPS ($)$0.80*$1.02 Beat*

Note: *Values retrieved from S&P Global.

Segment Breakdown (Q4 FY25 vs Q4 FY24):

SegmentClosings Q4 2025Closings Q4 2024Revenue Q4 2025 ($M)Revenue Q4 2024 ($M)
West870 972 $442.3 $503.4
East335 329 $201.0 $179.0
Southeast201 195 $107.5 $101.4
Total1,406 1,496 $750.8 $783.8

KPIs and Operating Metrics:

KPIQ2 2025Q3 2025Q4 2025
Net New Orders (units)1,098 861 999
Orders per Community per Month2.3 1.7 2.0
Cancellation Rate (%)16.9% 19.8% 17.9%
Avg Active Community Count163 167 166
Active Communities (period-end)162 167 169
Backlog Units1,526 1,352 945
Backlog ASP ($k)$544.9 $549.2 $546.5
Controlled Lots28,290 27,794 25,660
Liquidity ($M)$377.7 $292.3 $538.3
Net Debt / Net Capitalization (%)44.8% 46.6% 39.5%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Orders (~units)Q1 FY26N/A~900; specs up to 75% of sales New
Closings (~units)Q1 FY26N/A~800 New
ASP ($)Q1 FY26N/A~$515,000 New
Adjusted Gross Margin (%)Q1 FY26N/A~16% New
Adjusted EBITDA ($)Q1 FY26N/ABreak-even to $5M New
Interest Amortized (% of HB revenue)Q1 FY26N/A~3% New
Net Tax Benefit ($)Q1 FY26N/A~$2M New
Diluted EPS ($)Q1 FY26N/A~$(0.50) New
Communities (period-end)Q1 FY26N/A~170 New
Land Sale Revenue ($)Q1 FY26N/A~$10M; minimal P&L benefit New
Closings Growth (%)FY26N/A+5% to +10% vs FY25 New
Gross Margin TrajectoryFY26N/A~+300 bps by Q4 FY26 (assuming incentives unchanged) New
ASP TrendFY26N/AUp, driven by mix shift New
Asset Sales ($)FY26N/A>$100M; at/above book in aggregate New
Share RepurchasesFY26N/A≥1.5M shares New
Net LeverageFY26–FY27Prior path to low-30s by FY27Continue deleveraging; target low-30% by FY27 Maintained/Updated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4 FY25)Trend
Affordability & IncentivesQ2/Q3: Margin pressure from incentives and spec mix; gross margin down 340–380 bps YoY Q4: 13.7% GAAP, 17.2% adj; incentives and spec mix remain headwinds Stabilizing but still pressured
Spec StrategyQ3: Elevated spec closings to offset lower backlog; cycle time improvements Q4: Spec share elevated; Q1 guide up to 75% of sales; aim to reduce over time if conditions improve High near-term; target normalization
Texas PerformanceQ3: Weaker-than-expected sales pace in Texas Q4: Pace improved to ~1.8 from 1.3; cautious 2026 outlook Sequential improvement; cautious
Cost ActionsQ2/Q3: SG&A up YoY on growth; impairments in Q3 Q4: $10k/unit cost savings; RIF ($12M run-rate); margin improvement plan to add ~300 bps by Q4 FY26 Positive tailwinds building
Asset Sales & Capital AllocationQ3: Liquidity $292M; share repurchases $12.5M Q4: $63M FY25 land sales; plan >$100M FY26; ≥1.5M shares to repurchase; liquidity $538M Accelerating recycling/buybacks
Energy Efficiency & BrandingQ2/Q3: Zero Energy Ready progress; HERS scores leadership Q4: “Enjoy the Great Indoors” brand refresh; health/comfort story; HERS 32 gross 38 Strengthening differentiation
Deferred Tax Assets Protection-New rights agreement to protect ~$142.6M DTA incl. ~$84.1M energy credits; shareholder ratification in Feb Governance action; tax shield preserved

Management Commentary

  • “In the fourth quarter, we… exceed[ed] our expectations for home closings and profitability… average active community count of 164, up 14%… reduced net debt to net capitalization below 40%” .
  • “Savings of about $10,000 per home… reduction in force… ~$12 million per year… Texas pace improved to 1.8” .
  • “We completed a sale leaseback of about 80 [83] of our model homes to free up cash… asset sales likely to generate more than $100 million in capital in fiscal 2026” .
  • “Adjusted gross margin should be around 16% [in Q1]… strategy to deliver about three percentage points of margin improvement by the fourth quarter [FY26]” .
  • “Total liquidity at the end of the fourth quarter of nearly $540 million… expect to repurchase at least [~]1.5 million shares in fiscal 2026” .
  • “New Rights Agreement… to protect… deferred tax assets… ~$84 million… related to energy tax credits” .

Q&A Highlights

  • Margin trajectory: Three levers to add ~300 bps by Q4 FY26—$10k/unit cost savings (~2 pts), mix shift away from sub-$500k communities, and higher-margin new communities (48 opened since Apr 1) .
  • Land cost concerns: Newer communities still deliver better margins despite higher per-lot costs due to product/price mix; ASP expected to rise as mix shifts .
  • Volume bridge: Despite backlog down 36%, closings can grow 5–10% via community count growth and sales pace improvement; focus on units under production and turns .
  • Spec mix outlook: Spec-heavy near term; potential normalization to 60/40 or 50/50 if spring conditions improve; profitability higher on to-be-built homes .
  • Model home sale-leasebacks: 83 sales; economics roughly in line with overall business margins; financing cost outweighed by cash redeployment opportunity .
  • Texas outlook: Sequential improvement; cautious for 2026 with ~40% of communities in TX; no snap-back assumed .
  • Energy credits utilization: ~$84M energy credits expected to grow through June 2026; plan anticipates full utilization over several years; rights plan expires earlier if credits used .

Estimates Context

  • Q4 FY25: Revenue $791.9M vs $674.8M consensus*; EPS $1.02 vs $0.80 consensus*—both beats, driven by >1,400 closings, model home sale-leasebacks, and improved operating leverage despite elevated incentives .
  • Q3 FY25: Revenue $545.4M vs $554.35M consensus*; EPS −$0.01 vs $0.42 consensus*—misses due to weaker sales pace, Texas headwinds, and impairments .
  • Q2 FY25: Revenue $565.3M vs $541.83M consensus*; EPS $0.42 vs $0.27 consensus*—beats on higher spec closings and cycle-time gains .
  • FY25 actuals: Revenue $2.372B vs $2.254B consensus*; EPS $1.52 vs $1.31 consensus*; FY26 preliminary consensus: Revenue ~$2.438B*, EPS ~$1.39* .

Note: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q4 FY25 was a high-quality beat on revenue and EPS; strong closings overcame margin pressure from incentives/specs—supportive for near-term sentiment .
  • Near-term caution: Q1 FY26 guide to a net loss and ~16% adjusted gross margin underscores continued incentive-driven market; expect back-half improvement as cost/mix/new-community levers accrue .
  • Execution drivers: ~$10k/unit cost reductions, double-digit mix shift away from lower-priced communities, and better margins in 48 newly opened communities—clear roadmap to ~300 bps margin uplift by Q4 FY26 .
  • Capital strategy: >$100M asset sales at/above book and ≥1.5M share repurchases provide tangible capital return and ROIC enhancement; liquidity $538M with no maturities until Oct-2027 mitigates risk .
  • Differentiation moat: Energy efficiency and health features via Zero Energy Ready positioning and the brand refresh should aid price realization, absorption, and appraisal support in an affordability-constrained market .
  • Risk monitor: Backlog down 35%, elevated spec mix (guiding up to 75% of sales in Q1), and incentives remain headwinds; Texas remains a swing factor given footprint concentration .
  • Governance/tax asset protection: Rights plan preserves ~$143M DTAs including ~$84M energy credits, supporting cash taxes and capital allocation flexibility through FY26–FY28 .