Beazer Homes Accelerates Pace of Share Repurchases

Rhea-AI Summary

Beazer Homes USA (NYSE: BZH) announced an acceleration of its share repurchase program due to recent share price dislocation. Since January 30th, following Q1 2025 earnings report, the company has repurchased approximately $4.1 million of shares at an average price of $21.86, with $24.8 million still available under the authorized program.

Due to this acceleration, the company updated its debt reduction expectations, projecting its net debt to net capitalization ratio to be in the low 30% range by fiscal 2026 and mid-to-high 30% range by fiscal 2025. Despite this near-term moderation, BZH remains committed to reducing this ratio below 30% long-term.

The company also reaffirmed its other Multi-Year Goals, including reaching 200 active communities by fiscal 2026 end and achieving 100% Zero Energy Ready homes by calendar 2025 end.

Positive

• Opportunistic share repurchases at significant discount to book value
• Maintains target of 200 active communities by fiscal 2026
• On track for 100% Zero Energy Ready homes by end of 2025

Negative

• Slowing pace of debt reduction with higher debt-to-capitalization ratios expected
• Net debt to net capitalization ratio target of below 30% delayed

Insights

Financial Analyst

This strategic pivot by Beazer Homes represents a sophisticated capital allocation decision that warrants careful analysis. The acceleration of share repurchases below book value effectively increases per-share equity value for remaining shareholders, creating immediate value through financial engineering. The $24.8 million remaining authorization represents approximately 3.7% of current market capitalization, suggesting meaningful potential impact on share count reduction.

The moderation in deleveraging targets reflects a calculated risk-reward assessment. While pushing the net debt to net capitalization ratio targets to the 30-39% range might concern some investors, it's important to note that these levels remain conservative by historical homebuilder standards. The trade-off between debt reduction and share repurchases appears favorable given current market conditions and valuation metrics.

The company's balanced approach is evident in maintaining its operational targets:

• 200 active communities by FY2026 supporting growth trajectory
• 100% Zero Energy Ready homes commitment enhancing competitive positioning
• Long-term sub-30% leverage target providing financial flexibility

What's particularly noteworthy is management's opportunistic timing - deploying capital when shares trade at a significant discount to book value rather than adhering rigidly to predetermined debt reduction schedules. This flexibility in capital allocation strategy, while maintaining operational excellence targets, demonstrates sophisticated financial management aimed at maximizing shareholder value through market cycles.

Updates Net Debt to Net Capitalization Ratio Expectations

ATLANTA--(BUSINESS WIRE)-- Beazer Homes USA, Inc. (NYSE: BZH) today announced that it is accelerating the pace of its share repurchases in light of recent share price dislocation. The Company will continue to repurchase shares pursuant to the Company’s previously authorized share repurchase program, under which approximately $24.8 million remains available.

Since January 30^th, after reporting earnings for the first quarter of 2025, the Company has repurchased approximately $4.1 million of its shares at a weighted average price of $21.86. The Company plans to increase the pace of its repurchases in light of current market conditions.

"We believe accelerating the pace of our share repurchases makes a lot of sense. The ability to buy back our shares at a significant discount to book value represents a compelling investment opportunity and we plan to act on it,” said Allan P. Merrill, Chairman and Chief Executive Officer.

Considering the acceleration of its share repurchase program, the Company also announced that debt reduction is expected to moderate in the near term. Specifically, the Company now projects its net debt to net capitalization ratio will be in the low 30% range by the end of fiscal 2026 and will be in the mid-to-high 30% range by the end of fiscal 2025. Notwithstanding this near-term moderation in leverage reduction, the Company remains committed to its long-term goal of reducing its net debt to net capitalization ratio below 30%. Furthermore, the Company reaffirmed its outlook for its two other Multi-Year Goals: reaching 200 active communities by the end of fiscal 2026 and starting 100% of its homes qualified as Zero Energy Ready by the end of calendar 2025.

“From a capital allocation perspective, we believe modestly slowing our deleveraging efforts in order to repurchase a meaningful amount of our stock at a significant discount to book value is fully consistent with our balanced growth strategy, which was specifically designed to give us the flexibility necessary to quickly respond to changing market conditions,” Mr. Merrill stated.

About Beazer Homes

Headquartered in Atlanta, Beazer Homes (NYSE: BZH) is one of the country’s largest homebuilders. Every Beazer home is designed and built to provide Surprising Performance, giving you more quality and more comfort from the moment you move in – saving you money every month. With Beazer's Choice Plans™, you can personalize a number of primary living areas – giving you a choice of how you want to live in the home, at no additional cost. And unlike most national homebuilders, we empower our customers to shop and compare loan options. Our Mortgage Choice program gives you the resources to easily compare multiple loan offers and choose the best lender and loan offer for you, saving you thousands over the life of your loan.

We build our homes in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, North Carolina, South Carolina, Tennessee, Texas, and Virginia. For more information, visit beazer.com, or check out Beazer on Facebook, Instagram and Twitter.

Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements represent our expectations or beliefs concerning future events, including our plans to accelerate our share repurchases and moderate our debt reduction goals, and it is possible that the results described in this press release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from the results discussed in the forward-looking statements, including, among others, the risks, uncertainties and other factors discussed under “Risk Factors” in the our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, which was filed with the SEC on November 13, 2024. Statements in this press release that are “forward-looking” include, without limitation, statements about (i) our plans to accelerate the pace of share repurchases in light of current market conditions, (ii) our belief that buying back shares at a significant discount to book value represents a compelling investment opportunity, (iii) moderating our expectations with respect to our net debt to net capitalization ratios at the end of 2025 and 2026 and (iv) our plans and expectations with respect to capital allocation. Any forward-looking statement, including any statement expressing confidence regarding future outcomes, speaks only as of the date on which such statement is made and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible to predict all such factors.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250206053200/en/

David I. Goldberg

SVP and Chief Financial Officer

Beazer Homes USA, Inc.

770-829-3756

david.goldberg@beazer.com

Source: Beazer Homes

FAQ

How much money remains in BZH's share repurchase program as of March 2024?

Approximately $24.8 million remains available in Beazer Homes' share repurchase program.

What is BZH's revised net debt to net capitalization ratio target for fiscal 2026?

Beazer Homes expects its net debt to net capitalization ratio to be in the low 30% range by the end of fiscal 2026.

How many shares has BZH repurchased since January 30th, 2024?

Since January 30th, Beazer Homes has repurchased approximately $4.1 million of shares at a weighted average price of $21.86.

What are BZH's Multi-Year Goals for community count and energy efficiency?

Beazer Homes aims to reach 200 active communities by fiscal 2026 end and achieve 100% Zero Energy Ready homes by calendar 2025 end.