Beazer Homes USA (BZH) Q1 2025 earnings summary

Executive summary

• First quarter saw strong revenue and community growth, with net new orders and closings up year-over-year, but profitability declined due to margin compression, higher incentives, and affordability challenges.

• Community count increased nearly 20% year-over-year, with active lot position up 10%, supporting future expansion and multi-year goals for over 200 communities by FY26.

• Beazer leads in energy efficiency, with over 85% of sales and 98% of Q1 starts as Zero Energy Ready homes, aiming for 100% by December 2025.

• Land acquisition and development investment increased, with controlled lots up 9.5% to 28,874 and 59% of lot position controlled via options.

• Management remains committed to double-digit returns on capital employed and equity, with deleveraging and sustainability as key priorities.

Financial highlights

• Q1 FY25 homebuilding revenue rose 20.9% year-over-year to $460.4M–$468.95M, with closings up 22.1% to 907 units.

• Net income from continuing operations dropped to $3.1M ($0.10 per share) from $21.7M ($0.70 per share) year-over-year.

• Adjusted EBITDA fell 39.4% to $23.0M; homebuilding gross margin declined 470 bps to 15.2% (18.2% ex. impairments/interest).

• SG&A as a percentage of revenue improved to 14.0%, and backlog units fell to 1,507, with backlog ASP up 4.0% to $541.5K.

• Net cash used in operating activities was $159.4M, improved from $225.6M prior year.

Outlook and guidance

• FY25 guidance: average community count up 12.5–15%, sales pace 2.5–3.0, gross margin ~19.5%, ASP approaching $530K, SG&A ~11%.

• Q2 FY25 expectations: new home orders up 10%, average community count ~160, closings ~1,050, adjusted EBITDA >$30M, diluted EPS ~$0.30.

• Full-year performance expected at lower end of prior ranges due to Q1 softness, but substantial improvement anticipated in the back half as new communities open.

• Net debt to net capitalization targeted in the mid-30% range by year-end, below 30% by end of FY26.

• 100% of home starts expected to be Zero Energy Ready by December 2025.