BEAZER HOMES USA INC (BZH)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview and Outlook

Market Conditions and Strategy

During the third quarter of fiscal 2026, consumer sentiment remained near all-time lows, reflecting ongoing uncertainties around geopolitical events and economic conditions. While financial market volatility caused by the start of the military conflict in the Middle East has since subsided, energy prices have continued to fluctuate and mortgage rates remain elevated near 52-week highs. We believe these macro factors contributed to sales pace remaining relatively soft versus historical levels. Despite the impact of these trends on homebuyers, the Company continued to execute on several margin-enhancing cost and mix initiatives that were realized in the quarter.

In response to persistent affordability concerns and overall economic uncertainty, we have maintained a disciplined approach to operations and capital allocation. We continue to focus on our differentiated product strategy, increasing margins, selling non-strategic assets, and improving the efficiency of our land spend to support community count growth and facilitate share repurchases. Further, we are utilizing capital-efficient option agreements, when possible, to finance land spending, while keeping a prudent balance between optioned lots and on-balance sheet inventory.

With our common stock trading below book value, we continued our share buyback program in the third quarter, repurchasing another 1.0 million shares of our common stock, or approximately 3.5% of our outstanding shares at the end of our fiscal second quarter, for an aggregate $21.0 million. This brings our year-to-date share repurchases to $66.2 million, or 2.9 million shares, representing approximately 9.7% of our outstanding shares at fiscal year end 2025.

We believe the Company is uniquely positioned to address affordability concerns of today’s buyers and deliver a superior product and buying experience. Our differentiated strategy focuses on:

•Advanced Home Performance, which provides energy savings and lower utility bills, cleaner air, and a quieter and more durable home,

•Curated Choices, which include competitive mortgage pricing to drive customer savings, and a range of floorplan and interior design styles,

•Elevated Experiences, highlighting our easy shopping process and trusted homebuyer support teams to drive high customer satisfaction, and

•Community Impact, featuring the Beazer Charity Foundation and our commitment to make a positive impact in the communities where we build.

Together, these lower the total ongoing costs of homeownership and deliver meaningful financial and lifestyle benefits that make buying a Beazer home more attainable and rewarding.

Overview of Results for Our Fiscal Third Quarter

The following is a summary of our performance against certain key operating and financial metrics during the quarter ended June 30, 2026 and a comparison to the quarter ended June 30, 2025:

•During the quarter ended June 30, 2026, orders per community per month were 1.8 compared to 1.7 in the prior year quarter, and our net new orders were 900, up 4.5% from 861 in the prior year quarter. The year-over-year increase was primarily attributed to softer sales performance in the prior year quarter. However, the sales environment remains challenging due to affordability constraints, weaker consumer sentiment, and broader macroeconomic uncertainty. We continue to adjust prices, features and incentives to align with the current competitive market conditions.

•During the quarter ended June 30, 2026, our average active community count of 169 was up 0.8% from 167 in the prior year quarter. We ended the quarter with 170 active communities, up 1.8% from 167 a year ago, as we continue to work toward reaching 200 active communities by the end of fiscal 2027.

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•As of June 30, 2026, our land position included 24,489 controlled lots, down 11.9% from 27,794 as of June 30, 2025. We invested $199.6 million in land acquisition and land development during the quarter ended June 30, 2026, up from $153.8 million during the quarter ended June 30, 2025. We continued to manage our land spend and lot position to improve our capital efficiency and support future community count growth. As part of these efforts, we have realigned the portfolio, divested non-strategic assets, and sustained the efficiency of our land spend by using lot option agreements. As of June 30, 2026, we had 13,841 lots, or 60.0% of our total active lots, under option agreements as compared to 16,195 lots, or 60.1% of our total active lots, under option agreements as of June 30, 2025.

•Our Average Selling Price (ASP) for homes closed during the quarter ended June 30, 2026 was $547.8 thousand, up 5.9% from $517.3 thousand in the prior year quarter. Our backlog ASP as of June 30, 2026 was $582.1 thousand, up 6.0% from $549.2 thousand in the prior year quarter. The increase in closing and backlog ASP compared to the prior year quarter was primarily due to changes in product and community mix.

•Homebuilding gross margin for the quarter ended June 30, 2026 was 13.6%, up from 13.5% compared to the prior year quarter. Homebuilding gross margin, excluding impairments, abandonments, and interest amortization, for the quarter ended June 30, 2026 was 16.9%, down from 18.4% in the prior year quarter. The decrease in homebuilding gross margin compared to the prior year quarter was primarily due to an increase in price concessions and closing cost incentives and changes in existing product and community mix. Although down year-over-year, homebuilding gross margin was up by 160 basis points sequentially from 12.0% in the prior fiscal quarter, and up 130 basis points from 15.6% sequentially when excluding impairments, abandonments, and interest amortization, primarily driven by reductions in direct construction costs and a larger share of closings from newer, higher-margin communities.

•SG&A for the quarter ended June 30, 2026 was 14.1% of total revenue, up from 13.2% in the prior year quarter. The increase in SG&A as a percentage of total revenue compared to the prior year quarter was primarily due to lower homebuilding revenue. SG&A expense was relatively flat compared to the prior year quarter, as we remain focused on prudently managing overhead costs.

Seasonal and Quarterly Variability

Our homebuilding operating cycle historically has reflected escalating new order activity in the second and third fiscal quarters and increased closings in the third and fourth fiscal quarters. However, these seasonal patterns may be impacted by a variety of factors, including periods of market volatility and changes in mortgage interest rates, which may result in increased or decreased new orders and/or revenues and closings that are outside of the normal ranges typically realized on account of seasonality. Accordingly, our financial results for the three and nine months ended June 30, 2026 may not be indicative of our full year results.

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RESULTS OF OPERATIONS:

The following table summarizes certain key income statement metrics for the periods presented:

(a) Excluding impairments, abandonments, and interest amortized to cost of sales, homebuilding gross margin was 16.9% and 18.4% for the three months ended June 30, 2026 and 2025, respectively, and 15.6% and 18.3% for the nine months ended June 30, 2026 and 2025, respectively. During the nine months ended June 30, 2026, homebuilding gross margin was impacted by a litigation-related charge associated with a confidential settlement agreement with a homeowners' association. This charge reduced homebuilding gross margin, excluding impairments, abandonments, and interest, by 0.5%. Please see the "Homebuilding Gross Profit and Gross Margin" section below for a reconciliation of homebuilding gross profit and the related gross margin excluding impairments and abandonments and interest amortized to cost of sales (non-GAAP measures) to homebuilding gross profit and gross margin, the most directly comparable GAAP measure.

(b) Calculated as land sales and other gross profit divided by land sales and other revenue.

(c) Calculated as tax (benefit) expense for the period divided by (loss) income before income taxes. Our income tax (benefit) expense is not always directly correlated to the amount of pre-tax (loss) income for the associated period due to a variety of factors, including, but not limited to, the impact of tax credits and permanent differences. Our tax credits are predominantly due to the energy efficiency of our homes, with credits valued between $2,000 and $5,000 per single family home. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The OBBBA repeals many of the energy efficiency credits enacted under the Inflation Reduction Act, including our ability to claim energy efficient new home tax credits for homes that close after June 30, 2026. For the three and nine months ended June 30, 2026, the Company's effective tax rates were also affected by a change in the approach used to calculate the interim income tax provision, reducing comparability with the prior year periods. Refer to Note 10 to the condensed consolidated financial statements included in this Form 10-Q for additional details.

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Reconciliation of Net (Loss) Income (GAAP) to Adjusted EBITDA (Non-GAAP)

Reconciliation of Net (Loss) Income (GAAP measure) to Adjusted EBITDA (Non-GAAP measure) is provided for each period discussed below. Management believes that Adjusted EBITDA assists investors in understanding and comparing core operating results and underlying business trends by eliminating many of the differences in companies' respective capitalization, tax position, level of impairments, and other non-recurring items. This non-GAAP financial measure may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financi

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations is intended to help the reader understand our Company, business, operations and present business environment and is provided as a supplement to, and should be read together with the sections entitled “Risk Factors,” and the financial statements and the accompanying notes included elsewhere in this Form 10-K.

In addition, the statements in this discussion and analysis regarding industry outlook, our expectations regarding the performance of our business, anticipated financial results, liquidity and the other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Forward-Looking Statements” and in “Risk Factors” above. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Executive Overview and Outlook

Market Conditions

Fiscal 2025 presented a challenging operating environment, driven by persistent affordability concerns, elevated mortgage rates, weak consumer sentiment, and continued uncertainties in the macroeconomic environment. In response, we offered discounts and incentives to stimulate sales and turn inventory. We also maintained a disciplined approach to our operations and capital allocation. This included slowing land spend to match current market conditions, renegotiating more favorable land acquisition terms, and pursuing capital-efficient growth opportunities through expanded usage of lot option agreements. During fiscal 2025, we allocated more capital to share repurchases, as our shares traded at a discount to book value, which we believe represented a compelling investment opportunity. Despite the soft selling environment, we continue to see longer-term housing market conditions as favorable with production shortfalls over the past decade contributing to a fundamental long-term undersupply of housing.

Multi-Year Goals

During fiscal 2025, we made steady progress toward our Multi-Year Goals and remain on track to achieve each of these objectives.

•Growth: reaching more than 200 active communities by the end of fiscal 2027,

•Deleveraging: reducing our net debt to net capitalization ratio to the low 30% range by the end of fiscal 2027, and

•Book value per share: achieving a double-digit compound annual growth rate in book value per share from the end of fiscal 2024 through fiscal 2027.

As of September 30, 2025, our ending active community count was 169, up 4.3% from 162 in the prior year. This marks the third consecutive year of growth in community count as we work towards our goal of reaching more than 200 active communities by the end of fiscal 2027.

Our total debt to total capitalization ratio and net debt to net capitalization ratio were 45.2% and 39.5%, respectively, as of September 30, 2025, down 20 basis points and 50 basis points, respectively, compared to the prior year, despite the difficult environment. This reduction reflects our capital allocation and strategic asset alignment decisions to moderate land spend and increase land sales. With a strong balance sheet and ample liquidity, we believe we are well-equipped to navigate the evolving market dynamics and reduce our net debt to net capitalization ratio to the low 30% range by the end of fiscal 2027.

Our book value per share as of September 30, 2025 was $42.57, up from $40.05 in the prior year, an increase of 6.3%. This growth reflects our continued profitability and active share repurchase program, which has contributed meaningfully to long-term value creation. During fiscal 2025, we repurchased 1.5 million shares of our common stock, approximately 5% of our outstanding shares, for $33.1 million at an average price per share of $22.20.

As we look to fiscal 2026, we continue to advance towards the achievement of our Multi-Year Goals, while maintaining a strong liquidity position. We are accelerating our brand-building and marketing efforts to communicate our differentiated value proposition and drive customer engagement. A key component of this proposition is the energy efficiency of our homes, which enables homeowners to generate meaningful utility savings and reduce their total cost of ownership. We believe these operational and strategic initiatives will enhance our differentiated market position and support significant value creation for our stockholders.

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Overview of Results for Our Fiscal 2025

The following is a summary of our performance against certain key operating and financial metrics during fiscal 2025, as compared to fiscal 2024.

•During the fiscal year ended September 30, 2025, our average active community count of 164 was up 14.2% from 144 in the prior year. As of September 30, 2025, our ending active community count was 169, up 4.3% from 162 in the prior year. We invested $684.0 million in land acquisition and land development during the year ended September 30, 2025, down 11.9% compared to $776.5 million in land spend during the year ended September 30, 2024. In response to the evolving market conditions, we reallocated a portion of our land investment toward reaching our Multi-Year Goals of deleveraging and growing book value per share. This shift underscores our confidence in our strong land position and the visibility we have into our community count growth.

•As of September 30, 2025, our land position included 25,660 controlled lots, down 10.1% from 28,538 as of September 30, 2024. We remain focused on the expanded usage of lot option agreements, which allow us to position for future growth while providing the flexibility to respond to market conditions. As of September 30, 2025, we had 15,373 lots, or 62.1% of our total active lots, under option agreements as compared to 16,125 lots, or 57.8% of our total active lots, under option agreements as of September 30, 2024.

•During the fiscal year ended September 30, 2025, orders per community per month were 2.0 compared to 2.4 in the prior year, and our net new orders were 3,890, down 7.8% from 4,221 in the prior year. The decrease in sales pace compared to the prior year reflected weaker consumer sentiment driven by affordability challenges and uncertainties in the macroeconomic environment. We continue to adjust prices, features and incentives to align with the current competitive market conditions.

•Homebuilding gross margin for the fiscal year ended September 30, 2025 was 14.3%, down from 18.0% in the prior year. Homebuilding gross margin was impacted by inventory impairment and abandonment charges of $10.2 million during the year ended September 30, 2025, of which $8.6 million related to impairments recorded for two projects in progress communities, one located in our Phoenix market and the other in our Orlando market, principally due to a reduction in price driven by the competitive and market dynamics. The remaining $1.6 million represents abandonment charges related to land acquisition deals we terminated during the year. Refer to Note 4 of the notes to the consolidated financial statements included in this Form 10-K for further discussion. Homebuilding gross margin, excluding impairments, abandonments and interest amortization, for the fiscal year ended September 30, 2025 was 18.0%, down from 21.1% in the prior year. The year-over-year decrease in homebuilding gross margin for the fiscal year ended September 30, 2025 was primarily driven by an increase in price concessions and incentives, such as mortgage rate buydowns, an increased share of spec home closings which generally have lower margins than "to be built" homes, and changes in product and community mix.

•SG&A for the fiscal year ended September 30, 2025 was 11.9% of total revenue compared with 11.4% a year earlier. SG&A expense was $281.7 million for the fiscal year ended September 30, 2025, up 5.8% compared to prior year primarily due to higher sales and marketing costs and other G&A expenses to support community count growth, partially offset by lower commissions.

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Seasonal and Quarterly Variability: Our homebuilding operating cycle historically has reflected escalating new order activity in the second and third fiscal quarters and increased closings in the third and fourth fiscal quarters. However, these seasonal patterns may be impacted by a variety of factors, including periods of market volatility and changes in mortgage interest rates, which may result in increased or decreased new orders and/or revenues and closings that are outside of the normal ranges typically realized on account of seasonality.

The following tables present new order and closings data for the periods presented:

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RESULTS OF CONTINUING OPERATIONS

The following table summarizes certain key income statement metrics for the periods presented:

(a) Excluding impairments, abandonments, and interest amortized to cost of sales, homebuilding gross margin was 18.0%, 21.1% and 23.1% for the fiscal years ended September 30, 2025, 2024 and 2023, respectively. Please see the "Homebuilding Gross Profit and Gross Margin" section below for a reconciliation of homebuilding gross profit and the related gross margin excluding impairments and abandonments and interest amortized to cost of sales (non-GAAP measures) to homebuilding gross profit and gross margin, the most directly comparable GAAP measure.

(b) Calculated as land sales and other gross profit divided by land sales and other revenue.

(c) Calculated as tax (benefit) expense for the period divided by income from continuing

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