Good afternoon, and welcome to the Beazer Homes Earnings Conference Call for the Quarter and Fiscal Year Ended September 30, 2020. Today's call is being recorded, and a replay will be available on the company's website later today. In addition, the PowerPoint slides intended to accompany this call are available in the Investor Relations section of the company's website at www.beazer.com. At this point, I will turn the call over to David Goldberg, Vice President and Treasurer.

Thank you. Good afternoon, and welcome to the Beazer Homes conference call discussing our results for the fourth quarter and full year of fiscal 2020. 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, which are described in our SEC filings, including our Form 10-K, which may cause actual results to differ materially from our projections. Any forward-looking statement speaks only as of date this statement is made, and 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 today are Allan Merrill, our Chairman and Chief Executive Officer; and Bob Salomon, our Executive Vice President and Chief Financial Officer. On our call day, Allan will review highlights from our fiscal 2020 and then discuss why 2021 will be an important inflection year for the company. Bob will cover our fourth quarter results in greater depth, and then I will then come back to provide our expectations for the first quarter of fiscal 2021 and provide an update on how our balance sheet, liquidity and land spending will support our growth objectives for 2021 and beyond. My comments will then be followed by a wrap-up by Allan. After our prepared remarks, we'll take questions in the time remaining. I will now turn the call over to Allan.

Thanks, David, and thank you for joining us on our call this afternoon. In the beginning of our fiscal year, we laid out three strategic goals for 2020. At that time, we had no idea the global economy would be turned upside down by a pandemic. But we have an exceptionally talented group of employees who had the creativity and the grit to reinvent many of our business processes to deal with this new environment. And it is because of them that I can tell you, we exceeded every one of our strategic goals. First, we grew our adjusted EBITDA by more than 10%, as gross margins expanded to reflect the benefits of product simplification and the price improvements we achieved. Second, we generated a return on assets above 10%, up about 1 point from the prior year as we continue to grow EBITDA at a faster rate than our assets. And finally, we achieved a net debt-to-EBITDA below 5x as we simultaneously retire debt and add it to our already strong liquidity position. Of course, some of the success can be attributed to the low mortgage rates and the big reassessment of living arrangements during the pandemic, but these results would not have been possible without the resiliency of our team. We entered the New Year with the dollar value of our backlog, up an astounding 50%, giving us both visibility and confidence moving forward. But it's more than just our backlog that gives us confidence as many of the factors that contributed to sales strength last year remain in place. While demand likely won't remain as torrid as it has been in the last several months, we're optimistic that new home demand will remain strong. By historical standards, we've built far fewer new homes in the last decade than population growth, household formation or job growth would have predicted. And those families have been living somewhere. Now with remote work demonstrating long-lasting appeal, these deferred homebuyers are on our website, visiting our communities and buying our homes. They're finding that low rates have given them surprising purchasing power, but supply is highly constrained and prices are rising as we work to offset higher land, labor and material costs. With this supportive backdrop, 2021 will be an important inflection year for the company. Over the last 10 years, as we've executed our balanced growth strategy, we've translated incremental gains and operating metrics into more than $200 million of improvement in adjusted EBITDA. At the same time, we've actually reduced our operating assets by about 10%. These efforts have led to big increases in profitability and returns, but very little new order growth. In fact, that has been the tension at the heart of our balanced growth strategy to improve profitability and returns while reducing debt at the same time. Over the last five years, we've spent nearly $2.3 billion on land and land development activity. That's a big sounding number, but it was about $270 million less than the cash we generated from the land related to our home closings. So what did we do with that extra cash? We paid off debt. In fact, over that same time period, we spent about $450 million retiring and refinancing debt. Other than modest share repurchases, nearly all of the cash we generated was used to retire debt and build liquidity. That allocation of capital wasn't focused on top line growth, but it was the necessary and prudent course of action. It has radically reduced financial risk, lowered interest expense and accelerated our ability to use our deferred tax assets. The exciting news is that this year is different. Entering 2021, our liquidity and anticipated profitability are such that we expect to achieve the last leg of our debt retirement objective, which is to get total debt below $1 billion by the end of 2022 using only a portion of our future profits. This means we can reinvest all of the cash generated from operations as well as the balance of our profitability for growth. Our balance sheet and lot position will not continue shrinking. That is a fundamental change in our capital allocation posture. After many years of hard work, we can now tilt our balanced growth strategy towards growth, while we have operational momentum and a supportive macro environment. Investors may wonder about the time lag between increasing investment and generating growth. While it's true that land purchase this year is unlikely to contribute to this year's financial results, but our efforts to grow profitability will deliver results this year. For 2021, we're focused on achieving the following objectives. First, we expect to generate slightly higher EBITDA and double-digit earnings per share growth. Starting with a much larger backlog will help us overcome the reduction in community count we will experience this year. At the same time, we expect to increase our operating margin by delivering higher-margin homes and maximizing our overhead leverage. Earnings per share will benefit from significantly lower interest expense. Second, we expect to grow our total lot position. We'll achieve this through higher land spending and an even greater use of options, positioning us for community count growth. And third, we will continue to retire debt as we approach our deleveraging goal. Looking beyond this year, we're positioning our company for ongoing profitable growth, characterized by improving returns and funded with a less leveraged balance sheet. With that, I'll turn the call over to Bob to walk through the results for the quarter in more detail.

Thanks, Allan, and good afternoon, everyone. Looking at the fourth quarter compared to the prior year, new home orders increased nearly 40% to 2,009, driven by the highest fourth quarter sales pace we've achieved in the last decade. Homebuilding revenue decreased 12% to $679 million, primarily driven by a 14% decrease in closings related to the impact of the pandemic on order and construction timing. Our gross margin, excluding amortized interest, impairments and abandonments, was 21.7%, up approximately 180 basis points. SG&A was relatively flat on an absolute basis, but rose as a percentage of total revenue to 11.1%, reflecting the decrease in revenue. This led to adjusted EBITDA of $77.1 million in the quarter, down slightly in dollar terms, but up over 70 basis points as a percentage of revenue to 11.2%. Total GAAP interest expense was down nearly 16%, or $6 million. Our tax expense for the quarter was about $9 million for an average annual tax rate of 25%. Finally, these components taken together led to $24.6 million of net income from continuing operations, or $0.82 per share in earnings this quarter. Rather than recapping the full-year results, we refer investors to our press release for the results from our successful fiscal year of 2020 are detailed. At this point, and for the last time, I'll turn it over to David.

Thanks, Bob. Let's start with a review of our operational and financial expectations for the first quarter of fiscal 2021 compared to the prior year. Orders are expected to be essentially flat despite an approximately 15% decline in community count. Closing should be relatively flat versus the prior year. Although our backlog was up significantly heading into this year, this was largely driven by sales in August and September, which will close in our second quarter. Additionally, we remain focused on delivering an exceptional customer experience and in light of anticipated labor and material constraints, we are planning for slightly longer cycle times. Our ASP is expected to be approximately $380,000. We expect gross margin to be up more than 150 basis points, around 21.5%. Although we experienced higher lumber prices last quarter, this won't materially impact Q1 performance, but will be a modest headwind in Q2. SG&A as a percentage of total revenue should be down about 50 basis points, reflecting the benefit of our continued focus on controlling costs. We expect EBITDA to be up more than 20%. Interest amortized as a percentage of homebuilding revenue should be in the low 4s, supporting our goal of double-digit net income growth. Our tax rate is expected to be about 25%. And this should all lead to earnings per share above $0.30, up significantly versus the prior year. We ended the fourth quarter with $578 million of liquidity, up more than $200 million versus the prior year. This reflected about $328 million of unrestricted cash and nothing outstanding on our revolver. We are positioned to emphasize growth even with the commitment to retire more than $50 million of debt this year. At the end of the fourth quarter, we owned or controlled a 3-year supply of land based on our trailing 12-month closing. Fourth quarter land spending of $116 million, but our full year total spend of $441 million, it was about $100 million below the amount we generated from the land related to home closings, reflecting the deliberate pause in spending we undertook at the onset of the COVID pandemic. We expect to recapture this activity in 2021, which is likely to result in land spend approaching $600 million. On the table on the right-hand side of Slide 11, we depict our expectations for near-term community count, which we anticipate will likely trough in the 120s in the fourth quarter. Community count growth will be evident in fiscal 2022 as we benefit from our increased land spend and the greater use of options. With the strength in the new home market, land prices are somewhat frothy across our footprint. However, we are confident that we can achieve this increase in our land acquisition activity without materially changing our risk profile for three reasons. First, we have already contracted for or approved the majority of our land acquisition activity for the coming year, giving us confidence in our ability to fulfill our acquisition targets without chasing low-margin sites. Second, we are increasingly controlling lots of options, allowing us to better leverage our incremental spend and manage risk. As a matter of business, we grew our option lot as a percentage of active lots by 6 points to 35% last quarter -- last year and expect a similar improvement this year. And finally, our underwriting process and financial thresholds have not changed. We continue to include no price appreciation in our modeling and our required rate -- our required return and profitably metrics are unchanged. With that, let me turn the call back over to Allan for his conclusion.

Thank you, David. Fiscal 2020 was a challenging year, but with our team's resiliency, we rose to the occasion and generated very strong results. We improved profitability and returns, increased sales paces to close the year and grew our backlog significantly, giving us confidence going into fiscal '21. Importantly, we also position the company to adopt a more consistently growth-oriented allocation of capital. Of course, our highest priority remains the safety of our employees, customers and trade partners, and we will continue to adapt our activities to that end. As I say every quarter, I'm confident we have the people, the strategy and the resources to create value over the coming years. Before I turn the call over to the operator, I would like to acknowledge that this is Bob's last earnings call. I didn't let him see this part of the script, so he's squirming a little bit right now. As we announced this summer, Bob is stepping down as CFO this week, and I thought a moment of recognition was warranted. Bob joined me here 12 years ago at a very difficult time in our company's history and was integral in our turnaround. Since then, he's been deeply involved in every aspect of our business. He's been my partner and mentor to our corporate and operational leaders for his entire tenure. In fact, all of our constituents are indebted to him for his many contributions. I didn't want to sign off today without adding a public thank you for his service as his friendship. So Bob, thank you. Going forward, our management team is in great shape. Dave is ready to take the next step in his career, and he and I will ensure that this is a seamless transition. Congratulations, Dave. Now I'll get to work. Operator, please open the line for Q&A.

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. Our first question will come from Alan Ratner with Zelman & Associates. Your line is open.

Hey, guys, good afternoon. Congrats on the strong results. And Bob, best of luck in the next endeavor. Look forward to hearing from you at some point in the future on the other side. But I guess, my first question here, just thinking about the first quarter guidance on the order is roughly flattish. Obviously, that would be an impressive result on a down 15 community. But your absorption rate this quarter was up over 50%. So it implies a fairly meaningful deceleration in growth there. And I'm just curious, Allan, if maybe you could talk a little bit about what's the key driver on that? Is that an intentional slowing on your part to prevent an even further gap out of communities? Or is it the market maybe responding to the price increases that you guys have implemented over the course of the quarter? Any color you can give on that would be helpful?

Sure. So I think it is a variety of things, Alan. One of the things that I didn't say in the script, and it's worth noting, is we had a really good November and December last year, so that's also a part of that comparison that I want to point out. We ended up with -- and I've forgotten, just off the top of my head what the monthly sales pace was in November and December last year, but it was really, really good. So matching that and being down on community count, I agree with you is a strong result. I think -- our thinking about this has been not that we are masters, such that we can control what the market will do, but to pursue what I call the end. Get pace and margin. And so there is clearly a tension there, and we have, I think, found some success in where we can get price. We get price, that can have an effect on pace. But every community is different and it's very difficult to say that we've got some overriding rule that is going to control the absolute absorption rate. So I think for us, it's a balance trying to get pace and margin. And I think if we're wrong, we may be wrong to the low side because things have been very, very strong. But I just don't know that we can expect to sustain this level of enthusiasm in the markets. And rather than assuming that, I think, we've assumed that the effect of our price actions and the comparisons with last year, we'd be real happy with being roughly flat.

I think that's certainly prudent and makes a lot of sense. Second question, on the pricing you mentioned where you can, you're getting price. I was hoping you might be able to quantify kind of what price increases have been running at over the last several months? And you also made that comment about the land market being frothy. I'm curious what level of inflation you've seen as a result of the kind of the frenzy to replace all of these closing communities?

Yes. So let me talk about the land market for a second, and Dave will have to remind me the first part of the question. But on the land market side, we were proud of the fact in April that we showed a lot of discretion at the height of the COVID crisis that we pulled back significantly from land spend. But it was pretty clear by the time we got to June that this recovery was going to have good legs, and we got very active in June. We were able to recontract for a few of the deals that we had walked away from, we repriced a few deals. So we were very, very busy in that June, July, August, September time period getting locked up for a pretty big land spend year in 2021. So when we talk about the frothiness, I'm really talking about deals that we're just now investigating that may or may not come to fruition. And I think we've put ourselves in a pretty good spot, where almost all -- I mean, a big chunk of the activity in 2021 is contracted for or already approved. So the things that we're looking at now, and we will do some more deals are really to allow us to have a continued and consistent growth trajectory out of 2022 into 2023. And that allows us to be a little bit more selective. And I realize that's more a qualitative answer. But in terms of what we did this summer to get set up for the land spend this year, I just wanted to explain that a little bit, because I don't feel the pressure to go chase right now. We're out just a little bit, and I think that gives us a little bit more control. And you know this, Alan, I mean, you've done this a long time. The fact is in almost every market, there would be multiple bidders on any site. And so where we're really focused is what are we good at? What product do we have expertise in? What buyer profile? What submarket? And making sure that we're winning the deals where we've got that competitive advantage and trying really hard not to be too adventuresome in new submarkets, new price points, new product types, where we may not be the natural or the larger buyer. And that's kind of how we're dealing with the frothiness that we see in the land market. I'd be making numbers up to give you percentage changes because on any one deal, it would be a good number, but on five other deals, it may not be, but there is upward pressure on land prices kind of across the board. And as I said, I knew by the time I got done answering that question, I would have forgotten the first-half of the question.

On price appreciation.

Price appreciation. Just how much prices are up on the home side?

Yes. So it's a good question. And in fact, sort of interesting for us. We're actually going to -- because of product decisions that we've made over the last year to make sure we're really focused on having extraordinary value at an affordable price. We use the acronym EVAP. We'll actually have a lower ASP because of product decisions that we've made, and that's masking the fact that within on a like-for-like basis, we are seeing 3%, 4%, 5%. And in some cases, more sort of run rate price increase over the last six months or so. Certainly, there are some communities that are outliers to that, but there is good mid-single-digit price appreciation. But as a portfolio, we're actually managing to a total ASP that will be a little bit lower.

That's a 2021 comment that your ASP will be lower then...?

Correct. Yes.

Okay, got it. I appreciate that. All right, guys. Well, thanks a lot. And Dave, sorry, I neglected to say good luck to you in your new role as well. So thanks a lot, guys.

No reason to apologize. Thanks, Alan.

Thanks, Alan.

Thank you. Our next question will come from Jay McCanless with Wedbush. Your line is open.

Hey, good afternoon. Thanks for taking my questions. Congrats to Bob and Dave, in your new life, I guess, new adventures to come, right? So my first question on the DTA, Bob, could you talk about where that is now? And what kind of progress you've made on it this year?

Yes. Well, right now, it's about 2.25%, which is down almost $9 million year-over-year. And as the companies continue to be profitable, they will continue to decline.

Okay, great. Thanks. And then your spec count for the quarter was down about 25% versus the same time last year. I guess, could you talk a little bit about the balance between reloading that spec count versus going out and doing some land deals? Where are you all thinking about that right now?

Well, Jay, I'd tell you -- it's Dave. I would tell you, we have the capital certainly to do both. And you saw where we ended from a liquidity perspective. The reason the spec count is down and we have a comp -- a page on it in the appendix in the slide deck, it's because demand has been so strong. We keep starting specs because there's demand out there and we've talked about it before. It all still runs through the CFO's office. So we still very closely manage the spec count. But the reason it's down is not because it starts, it's because of demand in the market today.

And I guess any thought towards increasing the amount of specs on average that you're carrying in a given community or bringing that down a little bit? And then also any focus in terms of where you guys are buying the land, trying to build up the community count again?

Jay, let me answer both of those or give a perspective of both of those. On the spec side, I think one of the things that Dave said in his part of the script is we're really focused on delivering a spectacular customer experience. And there are clearly some risks in this next quarter around starts. A lot of our peers have talked about that. I want to make sure that we are taking care of the customers that we've got in backlog. So that's priority 1. I think we will have back starts as we always do, but the priority is going to be to make sure that we're starting our backlog. And in terms of an overall company strategy issue, we've been a 60-40 kind of a builder between to-be-built and specs, and I think we're still comfortable roughly in that range. Of course, at a community level, that math can look a little different. But overall, we're not trying to be something different. On the land side, the fact is it's nice to have a footprint that is as broad as ours, so that we've got lots of opportunities in different places and we're not locked into having to be in one place. We're seeing sales strength across the breadth of the footprint. I would tell you, the key for us in land acquisition is sticking or knitting. Lot widths, product types, submarkets that we know, where we've got competitive advantage, where we've got throughput, where we've got trade relations. That's where we want to win. That's where we want to deploy capital.

Got it. And then the last question for me. Just the cycle times, you said they are starting to get out there a little bit. Could you talk about maybe days now versus date last year? Or however you want to measure that metric?

Yes. Jay, I don't think we want to get into the specific number of days. I think we want to be kind of careful on that. What I would tell you is what I would point you to more is the commentary in the script, which is more about anticipation. Right? It's all about -- and Allan talked about delivering an exceptional customer experience. That's what we're really focused on. We think there's a likelihood for labor and material constraints. And so we're planning for a little bit of elongation on the cycle times. So what I would tell you is you've seen a little bit now, we think it could get a little bit more constrained. But the key for us is really about delivering an exceptional customer experience and making sure that we build a great house, which we think is long-term best for business.

Our next question will come from Alex Barron with Housing Research Center.

Good job on the quarter, guys. I wanted to see if you could comment on the order trends by month? And how did October look for you?

One second. I got it right here, Alex. So I would tell you, and we talked about it in the script about -- in terms of months, we had a pretty significant acceleration in August and September. July was a very strong month. But frankly, August and September were even better on a year-over-year basis. So very strong, frankly, as you move through the quarter. In terms of October specifically, we're not going to give numbers other than to say that things remain pretty strong in October. And you can see in our guidance, we're pretty comfortable, we think it's going to continue to remain strong.

Okay. And I'm not sure I caught your guidance for closings for the next quarter. Can you repeat that again, please?

Yes, we talked about flat closings, And we talked about, frankly, Alex, the backlog, a lot of what's in the backlog and the increase the backlog was August and September sales, which are going to close in Q2 predominantly. So flat closings even with the bigger backlog, but expectations that we'll see a lot of that backlog delivering in Q2.

Okay. Got it. And in terms of the land that you guys are buying, is there a big mix shift towards more affordable homes or more of the active adult homes? Or is it pretty much the same as it's been in the last year?

Very similar. Very, very similar, Alex, sticking or knitting. A little bit of adjustment in some markets where we are prices ran maybe, call it, 380, 390, and we're reloading on something at 370, 380, but we are trying to stick very closely to our strengths.

Okay. And if I could ask one last one. Is there any appetite to do share buyback given where the stock is at?

I would tell you, Alex, we've done share buybacks historically. We bought 10% of the companies at about half the book when we did the deal, and 10% of the company about half book. I would tell you, we're capital allocators. We focus on risk-adjusted returns and what makes the most sense. And if we sign the stock price that made sense, we have some dry powder to go do that. But predominantly, and Allan mentioned, I mentioned in the script, we are focused on growth in the business and land. Not to deter us from share repurchases, but it's a risk-adjusted return perspective that we're taking in allocating our capital.

[Operator Instructions]. Our next question comes from Julio Romero with Sidoti & Company.

So I think I heard you call out $600 million of expected land spend in fiscal '21. Can you just talk about the cadence of the spend throughout the year? I mean, would you expect that to be more front-loaded or more evenly spread throughout the year?

I think it's going to be relatively evenly spread, Julio. We don't like to get tied down too closely to specific numbers. But given what we have kind of in the pipeline and what we see, I think relatively even spread is a good expectation. And to Allan's point about a lot of the land that we're purchasing the stuff that we kind of picked up in June and kind of put in the pipeline, you've got a pretty good spread through the year.

Got it. And you said you expect your percentage of lots under option to grow at a similar amount to what that percentage grew in fiscal '20?

Yes. The 6 points that we referenced in the script, we think we can achieve something similar to that in 2021.

Got it. And I guess just last one for me is very strong order growth in the fourth quarter. And I think you may have touched on it earlier, but what parts of the value prop aside from price have been resonating well with customers? And do you see that part of a value proposition driving above-market growth in '21?

Julio, this is Allan. Like there's an inherently promotional part of answering this question when we talk about our value proposition. But I would tell you, I think one of the main things that's happening in the housing right now is you've got a bunch of millennials who deferred home purchases. And they're pretty selective, right? And so having value, not just price, at the core of our offering, I think, is valuable. I think our choice plans and our surprising performance. I mean it's not a strip down, lowest possible price value proposition. And I think that is perfectly positioned for the buyer profile in the market right now. So I think we are in exactly the right spot.

We are showing no further questions at this time.

Okay. Well, thank you, everybody, for jumping on the call. We'll talk again next quarter. We appreciate your participation, and we'll talk soon. Thank you.

That does conclude today's conference. Thank you for participating. You may disconnect at this time.