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Corporate Headquarters
Beazer Homes USA, Inc.
1000 Abernathy Road, Suite 260
Atlanta, Georgia 30328
(770) 829-3700 | www.beazer.com
2022
Annual Report
Net Zero Energy Ready Home – New Whiteland, Indiana
BEAZER HOMES
BEAZER HOMES
2 0 2 2 A N N U A L R E P O R T
2 0 2 2 A N N U A L R E P O R T
About Beazer Homes
Headquartered in Atlanta, Georgia, Beazer Homes is one of the country’s largest homebuilders with operations in
13 states within the West, East and Southeast regions of the United States. Our homes are designed to appeal
to homeowners at different price points across various demographic segments and are most often offered for
sale in advance of their construction. We have developed three key competitive differentiators to help our homes
and neighborhoods stand out from other new homes:
First, our Mortgage Choice program gives homebuyers the resources to easily compare multiple loan offers from a curated
set of lenders—rather than having to accept the terms from a single “in house” lender. This choice increases the likelihood
a buyer can qualify for a mortgage and can potentially result in thousands of dollars in savings over the life of the loan.
Second, every Beazer home is designed and built to provide Surprising Performance, which includes qualifying under the
ENERGY STAR® program. Our homes deliver quality, comfort and savings far beyond what is required by local building and
energy codes.
Third, with our Choice Plans™ homebuyers can personalize the layout of several living areas within their home—at no
additional cost. These flexible floorplans allow buyers to configure their home to match their lifestyle, without paying extra
for change orders.
We build our homes in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, North Carolina,
South Carolina, Tennessee, Texas and Virginia. Beazer Homes is listed on the New York Stock Exchange under the
ticker symbol “BZH”.
Mortgage
Choice
Surprising
Performance
Choice
PlansTM
Board of
Directors
Elizabeth S. Acton (1)(4)(5)(6)
Former Executive Vice President Finance and
Chief Financial Officer
Comerica Incorporated
Lloyd E. Johnson (1)(2)(5)(6)
Former Global Managing Director,
Finance and Internal Audit
Accenture Corporation
Allan P. Merrill
Chairman, President and Chief Executive Officer
Beazer Homes USA, Inc.
Peter M. Orser (2)(4)(5)(6)
Former President and Chief Executive Officer
Weyerhaeuser Real Estate Company
Norma A. Provencio, Lead Director (2)(3)(5)(6)
President and Owner
Provencio Advisory Services Inc.
Danny R. Shepherd (1)(3)(5)(6)
Former Vice Chairman, Senior Vice President,
Executive Vice President and Chief Operating Officer
Vulcan Materials Company
David J. Spitz (2)(3)(5)(6)
Former Chief Executive Officer
ChannelAdvisor Corp.
C. Christian Winkle (1)(4)(5)(6)
Former Chief Executive Officer
Sunrise Senior Living
Committees
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating/Corporate
Governance Committee
(4) Member of the Finance Committee
(5) Audit Committee Financial Expert, as defined by
SEC regulations
(6) Independent, within the meaning of the Sarbanes-
Oxley Act and NYSE Listing Standards
Officers
Allan P. Merrill
Chairman, President and Chief Executive Officer
Keith L. Belknap
Executive Vice President, General
Counsel and Corporate Secretary
David I. Goldberg
Senior Vice President and Chief Financial Officer
INDEPENDENT AUDITORS
Deloitte & Touche LLP
BEAZER HOMES CONFIDENTIAL ETHICS HOTLINE
Beazer Homes is committed to maintaining the highest ethical standards and compliance
with the law at all levels. To help ensure that all instances of known or suspected fraud, theft,
accounting or auditing improprieties, other financial misconduct, and any other type of
misconduct involving a violation of Beazer Homes’ Code of Business Conduct and Ethics, the
assets, operations, or employees of Beazer Homes USA, Inc. are reported, we maintain an ethics
hotline.
Interested parties may contact the hotline by calling 1-866-457-9346 and reporting their
concerns to a representative of Global Compliance, a third-party company that administers
our ethics hotline.
Alternatively, interested parties can report any such concern by visiting the following
website: www.integrity-helpline.com/Beazer.jsp. The link provides an online form that upon
completion will be submitted directly to Global Compliance. Interested parties may report
their concerns anonymously, should they wish to do so. All concerns, whether reported through the
toll-free number or the online form, will be directed to certain officers of Beazer Homes,
and will be reviewed and investigated as appropriate. Where warranted after investigation,
messages will be summarized and referred to the Audit Committee of our Board of Directors
for appropriate action.
INQUIRIES
Individuals seeking financial data or information about the Company and its operations should
visit the Company’s website at www.beazer.com or contact our Investor Relations and Corporate
Communications Department.
FINANCIAL INFORMATION
Copies of Beazer Homes USA, Inc.’s Annual Report on Form 10-K, Proxy Statement, and Forms
10-Q and 8-K, as filed with the United States Securities and Exchange Commission, will be
furnished upon written request to our Investor Relations and Corporate Communications
Department or can be accessed at www.beazer.com.
TRANSFER AGENT
American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
(212) 936-5100
TRADING INFORMATION
Beazer Homes USA, Inc. lists its common shares on the New York Stock Exchange (NYSE) under
the symbol “BZH.”
DUPLICATE MAILINGS
If you are receiving duplicate or unwanted copies of our publications, please contact American
Stock Transfer & Trust Company at the number listed above.
CERTIFICATION TO NYSE
Pursuant to Section 303A.12(a) of the New York Stock Exchange Listed Company Manual, the
Company submitted the Annual CEO Certification to the NYSE, effective February 15, 2022.
Financial Summary
(Total Revenue and Adjusted EBITDA dollars in millions, Average Selling Price dollars
in thousands)
Year Ended September 30
2018
2019
2020
2021
2022
Continuing Operations Data
Home Orders
Home Closings
Total Revenue
5,544
5,576
6,293
5,564
4,061
5,767
5,500
5,492
5,287
4,756
$ 2,107
$ 2,088
$ 2,127
$ 2,140
$ 2,317
Average Selling Price
$
360
$
378
$
385
$
402
$
484
Homebuilding Gross Margin(1)
21.2%
19.7%
21.0%
23.0%
26.3%
Net (Loss) Income Per Share
$
(1.40)
$
(2.59)
Adjusted EBITDA(2)
$
205
$
180
$
$
1.78
204
$
$
4.01
263
$
$
7.17
370
RETURN ON ASSETS
2022
Financial Goals
Increase EBITDA by
>10% and EPS >$5.00
EBITDA
up nearly
41%
EPS of
$7.00
at year-end
16.3%
12.6%
Grow Our Total
Lot Position
9.6%
9.2%
10.2%
FY18
FY19
FY20
FY21
FY22
Increased active
lot position
nearly 14%
primarily by
securing options
NET DEBT/LTM ADJUSTED EBITDA(2)
5.9x
5.3x
Reduce Debt Below
$1 Billion
$983 million
debt at year-end
3.9x
3.1x
2.1x
Deliver Return on
Total Equity of ~20%
Q4/FY18 Q4/FY19 Q4/FY20 Q4/FY21 Q4/FY22
(1) Excluding impairments, abandonments, and interest
included in cost of sales, detailed in Item 7 on our
Form 10-K.
(2) For a full reconciliation of our Adjusted EBITDA, see
Item 7 on our Form 10-K.
ROE of 26.5%
or 33.9%
excluding
our deferrred
tax assets
1
BEAZER HOMES
2 0 2 2 A N N U A L R E P O R T
Dear Stockholder:
Dear Stockholder:
Fiscal 2022 was a successful year for Beazer Homes. We were able to achieve historically strong financial results and exceed
Fiscal 2022 was a successful year for Beazer Homes. We were able to achieve historically strong financial results and exceed
each of the strategic objectives we established at the beginning of the year. In short, we did what we said we were going to
each of the strategic objectives we established at the beginning of the year. In short, we did what we said we were going to
do despite a fundamental shift in the environment for new home sales during the year. Of course, our success would not have
do despite a fundamental shift in the environment for new home sales during the year. Of course, our success would not have
been possible without the tireless efforts and extraordinary grit of our employees.
been possible without the tireless efforts and extraordinary grit of our employees.
Our long-standing Balanced Growth strategy has allowed us to dramatically improve profitability and reduce leverage over
Our long-standing Balanced Growth strategy has allowed us to dramatically improve profitability and reduce leverage over
the past decade. As a result, we have positioned ourselves to be more resilient and opportunistic in the face of significant
the past decade. As a result, we have positioned ourselves to be more resilient and opportunistic in the face of significant
affordability and demand challenges that have arisen in recent quarters as mortgage rates have rapidly increased.
affordability and demand challenges that have arisen in recent quarters as mortgage rates have rapidly increased.
Stakeholder Commitment
We were proud to see our commitment to stakeholders recognized in April 2022 when
Beazer was ranked first among construction companies in Newsweek’s inaugural list of
America’s Most Trusted Companies. The rankings were based on an independent survey
of approximately 50,000 U.S. residents, who were asked to rate companies they knew
from the perspective of customers, investors and employees.
We have also enrolled in the TrustBuilder® program to conduct independent third-party
surveys of our buyers. 100% of our customers are contacted, and 100% of all survey
participants are verified. In 2022, we maintained our positive TrustBuilder® ratings and
saw an increase in customer satisfaction. You can view all of our TrustBuilder® scores and
reviews at www.newhomesource.com.
Commitment
Commitment
to ESG
to ESG
In 2022, we continued to expand and accelerate
In 2022, we continued to expand and accelerate
our commitment to our ongoing ESG initiatives.
our commitment to our ongoing ESG initiatives.
These efforts are not intended as a response to
These efforts are not intended as a response to
any particular external pressure for more ESG.
any particular external pressure for more ESG.
Instead, they reflect our view that improving our
Instead, they reflect our view that improving our
environmental, social and governance
environmental, social and governance
performance will provide real value to our
performance will provide real value to our
stakeholders, including our employees,
stakeholders, including our employees,
investors and customers.
investors and customers.
On the Environmental side, we were pleased to be named an ENERGY STAR® Partner of
On the Environmental side, we were pleased to be named an ENERGY STAR® Partner of
the Year—Sustained Excellence for the seventh consecutive year. We were also excited to
the Year—Sustained Excellence for the seventh consecutive year. We were also excited to
begin designing and building homes to the U.S. Environmental Protection Agency’s Indoor
begin designing and building homes to the U.S. Environmental Protection Agency’s Indoor
airPLUS qualifications. We reduced the average HERS® score of all homes closed in fiscal
airPLUS qualifications. We reduced the average HERS® score of all homes closed in fiscal
2022 to 54 from 56 in fiscal 2021, and we remain on track to meet or exceed our industry-first
2022 to 54 from 56 in fiscal 2021, and we remain on track to meet or exceed our industry-first
goal of building 100% Net Zero Energy Ready homes by the end of 2025. We are proud that,
goal of building 100% Net Zero Energy Ready homes by the end of 2025. We are proud that,
for the first time, the home pictured on the cover of this Annual Report is a Net Zero Energy
for the first time, the home pictured on the cover of this Annual Report is a Net Zero Energy
Ready home.
Ready home.
On the Social side, we completed the rollout of Charity Title, our title agency business
On the Social side, we completed the rollout of Charity Title, our title agency business
committed to contributing 100% of its profits to charity. In fiscal 2022, Charity Title
committed to contributing 100% of its profits to charity. In fiscal 2022, Charity Title
contributed over $1.5 million to numerous 501(c)(3) organizations supporting the
contributed over $1.5 million to numerous 501(c)(3) organizations supporting the
communities in which we operate, including our national philanthropic partner,
communities in which we operate, including our national philanthropic partner,
Fisher House. We believe this program has created meaningful opportunities for
Fisher House. We believe this program has created meaningful opportunities for
employee engagement and enhanced employee wellness.
employee engagement and enhanced employee wellness.
On the Governance side, our diverse and highly-engaged Board continues to receive high ratings from third-party rating
On the Governance side, our diverse and highly-engaged Board continues to receive high ratings from third-party rating
services. Among other responsibilities, our Board has overseen the development of, and compliance with, our various ESG
services. Among other responsibilities, our Board has overseen the development of, and compliance with, our various ESG
initiatives. As a reminder, we published our inaugural ESG summary earlier this year, which is available at www.beazer.com
initiatives. As a reminder, we published our inaugural ESG summary earlier this year, which is available at www.beazer.com
and provides substantial ESG disclosures under the SASB framework for homebuilders.
and provides substantial ESG disclosures under the SASB framework for homebuilders.
2
2
3
2022 ANNUAL REPORTBEAZER HOMES Dear Stockholder:
Fiscal 2022 was a successful year for Beazer Homes. We were able to achieve historically strong financial results and exceed
each of the strategic objectives we established at the beginning of the year. In short, we did what we said we were going to
do despite a fundamental shift in the environment for new home sales during the year. Of course, our success would not have
been possible without the tireless efforts and extraordinary grit of our employees.
Our long-standing Balanced Growth strategy has allowed us to dramatically improve profitability and reduce leverage over
the past decade. As a result, we have positioned ourselves to be more resilient and opportunistic in the face of significant
affordability and demand challenges that have arisen in recent quarters as mortgage rates have rapidly increased.
Stakeholder Commitment
Stakeholder Commitment
We were proud to see our commitment to stakeholders recognized in April 2022 when
We were proud to see our commitment to stakeholders recognized in April 2022 when
Beazer was ranked first among construction companies in Newsweek’s inaugural list of
Beazer was ranked first among construction companies in Newsweek’s inaugural list of
America’s Most Trusted Companies. The rankings were based on an independent survey
America’s Most Trusted Companies. The rankings were based on an independent survey
of approximately 50,000 U.S. residents, who were asked to rate companies they knew
of approximately 50,000 U.S. residents, who were asked to rate companies they knew
from the perspective of customers, investors and employees.
from the perspective of customers, investors and employees.
We have also enrolled in the TrustBuilder® program to conduct independent third-party
We have also enrolled in the TrustBuilder® program to conduct independent third-party
surveys of our buyers. 100% of our customers are contacted, and 100% of all survey
surveys of our buyers. 100% of our customers are contacted, and 100% of all survey
participants are verified. In 2022, we maintained our positive TrustBuilder® ratings and
participants are verified. In 2022, we maintained our positive TrustBuilder® ratings and
saw an increase in customer satisfaction. You can view all of our TrustBuilder® scores and
saw an increase in customer satisfaction. You can view all of our TrustBuilder® scores and
reviews at www.newhomesource.com.
reviews at www.newhomesource.com.
BEAZER HOMES
2 0 2 2 A N N U A L R E P O R T
Commitment
to ESG
In 2022, we continued to expand and accelerate
our commitment to our ongoing ESG initiatives.
These efforts are not intended as a response to
any particular external pressure for more ESG.
Instead, they reflect our view that improving our
environmental, social and governance
performance will provide real value to our
stakeholders, including our employees,
investors and customers.
On the Environmental side, we were pleased to be named an ENERGY STAR® Partner of
the Year—Sustained Excellence for the seventh consecutive year. We were also excited to
begin designing and building homes to the U.S. Environmental Protection Agency’s Indoor
airPLUS qualifications. We reduced the average HERS® score of all homes closed in fiscal
2022 to 54 from 56 in fiscal 2021, and we remain on track to meet or exceed our industry-first
goal of building 100% Net Zero Energy Ready homes by the end of 2025. We are proud that,
for the first time, the home pictured on the cover of this Annual Report is a Net Zero Energy
Ready home.
On the Social side, we completed the rollout of Charity Title, our title agency business
committed to contributing 100% of its profits to charity. In fiscal 2022, Charity Title
contributed over $1.5 million to numerous 501(c)(3) organizations supporting the
communities in which we operate, including our national philanthropic partner,
Fisher House. We believe this program has created meaningful opportunities for
employee engagement and enhanced employee wellness.
On the Governance side, our diverse and highly-engaged Board continues to receive high ratings from third-party rating
services. Among other responsibilities, our Board has overseen the development of, and compliance with, our various ESG
initiatives. As a reminder, we published our inaugural ESG summary earlier this year, which is available at www.beazer.com
and provides substantial ESG disclosures under the SASB framework for homebuilders.
2
33
2022 ANNUAL REPORTBEAZER HOMES BEAZER HOMES
2 0 2 2 A N N U A L R E P O R T
Objectives for
Fiscal 2023
In fiscal 2023, we are selectively adjusting prices, incentives,
and/or specification levels as necessary to enhance buyer
affordability and address the weak demand environment.
We are also pursuing reductions in our construction costs
and improvements in our construction cycle times. From
a capital standpoint, we’ll continue to adhere to our long-
standing Balanced Growth strategy. This
should allow us to enhance our strong
liquidity position while investing sufficiently
in land and land development to ensure we
achieve community count growth in both
2023 and 2024.
Conclusion
We had an impressive fiscal 2022, but we are acutely aware of the challenges we
face headed into 2023. Our long-term Balanced Growth strategy has served us
well in recent years—leading to improved returns from a less leveraged and
more efficient balance sheet. We’ll continue along this course in 2023, aided
by a sizable and efficiently controlled land position and durable competitive
strategies to compete for buyers. Our team is battle-tested and ready to work
through the currently challenging environment. Thank you for your continued
support and confidence.
Sincerely,
Allan P. Merrill
Chairman, President and CEO
4
Allan P. Merrill
Chairman, President and CEO
2022 ANNUAL REPORTBEAZER HOMES UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________________________________
FORM 10-K
_____________________________________________________________
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 001-12822
_____________________________________________________________
BEAZER HOMES USA, INC.
(Exact name of registrant as specified in its charter)
_____________________________________________________________
Delaware
(State or other jurisdiction of
incorporation or organization)
1000 Abernathy Road, Suite 260,
Atlanta, Georgia
(Address of principal executive offices)
58-2086934
(I.R.S. employer
Identification no.)
30328
(Zip Code)
(770) 829-3700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.001 par value
Trading Symbol(s)
BZH
Name of each exchange on which
registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ¨ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ¨ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes ☒ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files). Yes ☒ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company,” and ""emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Non-accelerated filer
¨ Accelerated filer
¨ Smaller reporting company
Emerging growth company
☒
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b) by the registered public accounting firm that prepared or issued its audit report.☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☒
The aggregate market value of the registrant’s Common Stock held by non-affiliates of the registrant as of March 31, 2022,
based on the closing sale price per share as reported by the New York Stock Exchange on such date, was $460,369,020.
Class
Common Stock, $0.001 par value
Outstanding at November 7, 2022
30,880,138
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Proxy Statement for the registrant’s 2022 Annual Meeting of Stockholders are incorporated by
reference into Part III of this Form 10-K to the extent stated herein. The Proxy Statement will be filed within 120 days of the
registrant’s fiscal year ended September 30, 2022.
BEAZER HOMES USA, INC.
TABLE OF CONTENTS
Forward-Looking Statements
PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Item 6. [Reserved]
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10. Directors, Executive Officers, and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
PART IV
Item 15. Exhibits and Financial Statement Schedules
SIGNATURES
1
3
13
22
22
22
22
23
24
25
40
41
77
77
77
77
78
78
78
78
78
79
85
References to “we,” “us,” “our,” “Beazer,” “Beazer Homes” and the “Company” in this Annual Report on Form 10-K refer to
Beazer Homes USA, Inc.
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (Form 10-K) contains forward-looking statements. These forward-looking statements
represent our expectations or beliefs concerning future events or results, and it is possible that such events or results described
in this Form 10-K will not occur or be achieved. These forward-looking statements can generally be identified by the use of
statements that include words such as "outlook," "may," "will," "strategy," "believe," "expect," "anticipate," "intend," "plan,"
"foresee," "likely," "goal," "target," "estimate," "project," "initial" or other similar words or phrases.
These forward-looking statements involve 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
other things, the matters discussed in this Form 10-K in the section captioned “Management’s Discussion and Analysis of
Financial Condition and Results of Operations.” Additional information about factors that could lead to material changes is
contained in Part I, Item 1A – Risk Factors of this Form 10-K. These factors are not intended to be an all-inclusive list of risks
and uncertainties that may affect the operations, performance, development and results of our business, but instead are the risks
that we currently perceive as potentially being material. Such factors may include:
•
•
•
•
•
•
•
•
•
•
the cyclical nature of the homebuilding industry and further deterioration in homebuilding industry conditions;
continued increases in mortgage interest rates and reduced availability of mortgage financing due to, among other
factors, recent and likely continued actions by the Federal Reserve to address sharp increases in inflation;
other economic changes nationally and in local markets, including changes in consumer confidence, wage levels,
declines in employment levels, and an increase in the number of foreclosures, each of which is outside our control and
affects the affordability of, and demand for, the homes we sell;
continued supply chain challenges negatively impacting our homebuilding production, including shortages of raw
materials and other critical components such as windows, doors, and appliances;
continued shortages of or increased costs for labor used in housing production, and the level of quality and
craftsmanship provided by such labor;
inaccurate estimates related to homes to be delivered in the future (backlog), as they are subject to various cancellation
risks that cannot be fully controlled;
potential negative impacts of the COVID-19 pandemic, which, in addition to exacerbating each of the risks listed
above and below, may include a significant decrease in demand for our homes or consumer confidence generally with
respect to purchasing a home, an inability to sell and build homes in a typical manner or at all, increased costs or
decreased supply of building materials, including lumber, or the availability of subcontractors, housing inspectors, and
other third-parties we rely on to support our operations, and recognizing charges in future periods, which may be
material, for goodwill impairments, inventory impairments and/or land option agreement abandonments;
factors affecting margins, such as increased sales incentives and mortgage rate buy down programs; decreased
revenues; decreased land values underlying land option agreements; increased land development costs in communities
under development or delays or difficulties in implementing initiatives to reduce our production and overhead cost
structure; not being able to pass on cost increases through pricing increases;
the availability and cost of land and the risks associated with the future value of our inventory, such as asset
impairment charges we took on select California assets during the second quarter of fiscal 2019;
our ability to raise debt and/or equity capital, due to factors such as limitations in the capital markets (including market
volatility) or adverse credit market conditions, and our ability to otherwise meet our ongoing liquidity needs (which
could cause us to fail to meet the terms of our covenants and other requirements under our various debt instruments
and therefore trigger an acceleration of a significant portion or all of our outstanding debt obligations), including the
impact of any downgrades of our credit ratings or reduction in our liquidity levels;
• market perceptions regarding any capital raising initiatives we may undertake (including future issuances of equity or
debt capital);
•
•
•
changes in tax laws or otherwise regarding the deductibility of mortgage interest expenses and real estate taxes;
increased competition or delays in reacting to changing consumer preferences in home design;
natural disasters or other related events that could result in delays in land development or home construction, increase
our costs or decrease demand in the impacted areas;
1
•
•
•
•
•
•
•
•
•
•
the potential recoverability of our deferred tax assets;
increases in corporate tax rates;
potential delays or increased costs in obtaining necessary permits as a result of changes to, or complying with, laws,
regulations or governmental policies, and possible penalties for failure to comply with such laws, regulations or
governmental policies, including those related to the environment;
the results of litigation or government proceedings and fulfillment of any related obligations;
the impact of construction defect and home warranty claims;
the cost and availability of insurance and surety bonds, as well as the sufficiency of these instruments to cover
potential losses incurred;
the impact of information technology failures, cybersecurity issues or data security breaches;
the impact of governmental regulations on homebuilding in key markets, such as regulations limiting the availability of
water;
the success of our ESG initiatives, including our ability to meet our goal that every home we build will be Net Zero
Energy Ready by 2025 as well as the success of any other related partnerships or pilot programs we may enter into in
order to increase the energy efficiency of our homes and prepare for a Net Zero future; and
terrorist acts, protests and civil unrest, political uncertainty, acts of war or other factors over which the Company has
no control.
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.
2
Item 1. Business
PART I
We are a geographically diversified homebuilder with active operations in 13 states within three geographic regions in the
United States: the West, East, and Southeast. Our homes are designed to appeal to homeowners at different price points across
various demographic segments and are generally offered for sale in advance of their construction. Our objective is to provide
our customers with homes that incorporate extraordinary value and quality, at affordable prices, while seeking to maximize our
return on invested capital over the course of a housing cycle.
Beazer Homes USA, Inc. was incorporated in Delaware in 1993. Our principal executive offices are located at 1000 Abernathy
Road, Suite 260, Atlanta, Georgia 30328, and our main telephone number is (770) 829-3700. We also provide information
about our company, including active communities, through our Internet website located at www.beazer.com. Information on
our website is not a part of this Form 10-K and shall not be deemed incorporated by reference.
Business Strategy
We continue to execute against our long-term balanced growth strategy, which we define as the expansion of earnings at a
faster rate than our revenue growth, supported by a less-leveraged and return-driven capital structure. This strategy provides us
with the flexibility to reduce leverage and increase return of capital, or increase investment in land and other operating assets in
response to changing market conditions.
We remain committed to this strategy, which is designed to increase shareholder value by improving our return on assets while
reducing operational risk and debt. Our objectives at the beginning of fiscal 2022 included growing our lot position through
land spending and increased use of lot option agreements, improving profitability while reducing our total debt below $1.0
billion, delivering extraordinary customer experience, and encouraging employee well-being. We have successfully achieved
our goals as following:
•
•
As of September 30, 2022, our land position included 25,170 controlled lots, up 14.5% from 21,987 a year ago.
Through expansion of our use of lot option agreements, 54.6% of our total active lots were under option agreements as
of September 30, 2022 compared to 46.6% a year ago.
For fiscal 2022, we recorded net income of $220.7 million, or $7.17 per diluted share, compared to net income of
$122.0 million, or $4.01 per diluted share, for fiscal 2021. Adjusted EBITDA was $370.1 million in fiscal 2022,
compared to $262.7 million in the prior year, an increase of $107.4 million, or 40.9%. Over the past five years, we
have achieved a compound annual growth rate (CAGR) of 15.7% for Adjusted EBITDA.
• We have successfully reached our deleveraging goal of reducing total debt to below $1.0 billion. During fiscal 2022,
we repurchased $24.4 million of our Senior Notes and retired our Senior Unsecured Term Loan by repaying the final
$50.0 million. As of September 30, 2022, we had outstanding debt of $983.4 million. During fiscal 2022, we also
repurchased $8.2 million of outstanding common stock.
•
In April 2022, Beazer Homes was ranked first among construction companies in Newsweek's inaugural list of
America's Most Trusted Companies 2022, which were identified based on an independent survey of approximately
50,000 U.S. residents who rated companies they knew from the perspective of customers, investors and employees.
This award demonstrated recognition for our efforts to create and sustain a strong reputation among employees,
shareholders, customers and other partners.
For fiscal 2023, our objectives include investing strategically in our land position, upholding operating margin, activating new
communities, reducing cycle time, and delivering extraordinary customer experience.
3
Differentiating Beazer Homes
We know that our buyers have many choices when purchasing a home. To help us become a builder of choice, we have
identified the following three strategic pillars that differentiate Beazer's homes from both resale homes and other newly built
homes:
Mortgage Choice – Most of our buyers need to arrange financing in order to purchase a new home. Unlike many of our major
competitors, we have no ownership or other interest in a mortgage company, which allows us to partner with our customers to
help them get the most competitive interest rates, fees and service levels available. For every Beazer community, we identify
Choice Lenders, who are selected for their ability to provide a comprehensive array of products and programs, meet our high
customer service standards and willingness to compete to earn our customer’s business. We then provide our customers with an
industry-leading online comparison tool that helps them easily compare multiple mortgage offers side-by-side.
Choice Plans® – Every family lives in their home differently, which is why we created Choice Plans. Choice Plans provide our
buyers with more floor plan flexibility at no additional cost. For example, buyers of to-be-built homes can typically choose
between two different configurations in the kitchen/great room and in the primary bedroom/bathroom at no additional cost.
Offering these pre-designed floor plan alternatives allows us to offer fewer different plans, which improves efficiency and
reduce costs while creating living areas that match an individual buyer's lifestyle.
Surprising Performance – We place an emphasis on building high-quality homes and delivering outstanding customer
experience. All Beazer homes are designed and built to provide Surprising Performance, which means more quality, comfort,
and savings. We deliver these benefits through our people, materials, and process. Some examples of these benefits are as
follows:
•
•
•
•
Our homes are built to the latest ENERGY STAR® standards, and we provide buyers with an energy rating for their
home, completed by a qualified third-party rating company. Used homes typically have a HERS® index score (on a
scale in which a lower score is better) of 130. As of September 30, 2022, the average new Beazer home has a gross
HERS® index score of 54.
Beazer is the first national builder to publicly commit to ensuring that by the end of 2025 every home we build will be
Net Zero Energy Ready, which means that every home will meet the requirements of both the Environmental
Protection Agency’s ENERGY STAR program and the U.S. Department of Energy’s Zero Energy Ready Home
program, and have a gross HERS® index score (before any benefit of renewable energy production) of 45 or less. With
a Net Zero Energy Ready home, homeowners will be able to achieve net zero energy consumption by attaching a
properly sized renewable energy system.
In fiscal 2022, we began designing and building to Indoor airPLUS standards. A program of the U.S. Environmental
Protection Agency, homes built to earn the Indoor airPLUS qualification have features to reduce mold, moisture,
carbon monoxide, toxic chemicals and more.
Each new Beazer home also comes equipped with powerful technologies, including Category 6 ethernet wiring (Cat6),
a centralized network panel and immediate internet connectivity via a LTE Wi-Fi router.
4
Reportable Business Segments
Our active homebuilding operations consist of the design, sale, and construction of single-family and multi-family homes in the
following geographic regions, which represent our reportable segments:
Segment/State
West:
Market(s)
Arizona
California
Nevada
Texas
East:
Indiana
Phoenix
Placer County, Riverside County, Sacramento County, San Diego
County, Tulare County
Las Vegas
Dallas/Ft. Worth, Houston, San Antonio
Indianapolis
Maryland/Delaware
Anne Arundel County, Baltimore County, Howard County, Sussex
Tennessee
Virginia
Southeast:
Florida
Georgia
North Carolina
South Carolina
County
Nashville
Fairfax County, Loudoun County, Prince William County, Stafford
County
Orlando, Tampa
Atlanta, Savannah
Raleigh/Durham
Charleston, Myrtle Beach
The following tables summarize certain operating information of our reportable segments, including number of homes closed,
the average selling price (ASP) for the periods presented, and units and dollar value in backlog as of September 30, 2022, 2021
and 2020. Refer to “Management's Discussion and Analysis of Results of Operations and Financial Condition” in Item 7 of this
Form 10-K for additional information.
($ in thousands)
West
East
Southeast
Total Company
West
East
Southeast
Total Company
ASP in backlog (in thousands)
Fiscal Year Ended September 30,
2022
2021
2020
Closings
Average
Selling Price
Closings
Average
Selling Price
Closings
Average
Selling Price
2,833 $
1,080
843
4,756 $
468.7
514.4
497.2
484.1
2022
2,945 $
1,185
1,157
5,287 $
377.0
477.6
390.2
402.4
As of September 30,
2021
3,206 $
1,045
1,241
5,492 $
368.2
455.7
370.8
385.5
2020
Units in
Backlog
Dollar Value
in Backlog (in
millions)
Units in
Backlog
Dollar Value
in Backlog (in
millions)
Units in
Backlog
Dollar Value
in Backlog (in
millions)
1,257 $
410
424
711.6
223.7
209.6
2,091 $ 1,144.9
547.5
$
1,653 $
611
522
736.0
302.0
246.0
2,786 $ 1,284.0
460.9
$
1,365 $
624
520
2,509 $
$
493.7
301.1
200.5
995.3
396.7
5
Markets and Product Description
We evaluate a number of factors in determining which geographic markets to enter and remain in as well as which consumer
segments to target with our homebuilding activities. We compete in 17 geographic markets across the United States in part to
reduce our exposure to any particular regional economy. Within these markets, we build homes in a variety of new home
communities. We continually review our 17 markets based on aggregate demographic information, land prices and availability,
competitive dynamics, and our own operating results. We use the results of these reviews to re-allocate our investments
generally to those markets where we believe we can maximize our profitability and return on capital.
We maintain the flexibility to alter our product mix within a given market, depending on market conditions. In determining our
product mix, we consider demographic trends, demand for a particular type of product, product affordability, consumer
preferences, land availability, margins, timing, and the economic strength of the market. Depending on the market, we attempt
to address one or more of the following categories of home buyers: entry-level, move-up, or 55+. Within these buyer groups,
we have developed detailed targeted buyer profiles based on demographic and psychographic data, including information about
marital and family status, employment, age, affluence, special interests, media consumption, and distance moved. Although we
offer a selection of amenities and home customization options, we generally do not build “custom homes.” In all of our home
offerings, we attempt to increase customer satisfaction by incorporating quality and energy-efficient materials, distinctive
design features, convenient locations, and competitive prices.
Gatherings – In 2016, Gatherings® by Beazer Homes was officially introduced across several markets within Beazer's
geographic footprint through age restricted condominiums. We strive to provide extraordinary value, a strong commitment to
customer service, and a quality, lower-maintenance home for those seeking a 55+ lifestyle. In addition to condominiums, the
Gatherings® brand also includes town homes, villas, duets, and single-family homes. Our Dallas, Houston, Las Vegas,
Maryland, Atlanta, and Orlando markets are actively selling Gatherings homes, while development is currently underway in
Virginia and additional sites in Maryland. As of September 30, 2022, we have approved communities representing 714 potential
future sales, and we have sold 456 Gatherings branded homes since 2016.
Marketing and Sales
We make extensive use of digital and traditional marketing vehicles and other promotional activities, including our website
(www.beazer.com), real estate listing sites, digital advertising (including search engine marketing and display advertising),
social media, video, brochures, direct marketing, and out-of-home advertising (including billboards and signage) located in the
immediate areas of our developments, as well as additional activities. In connection with these marketing vehicles, we have
registered or applied for registration of trademarks and Internet domain names, including Beazer Homes®, Gatherings®, and
Choice Plans®, for use in our business.
In response to the changing needs of consumers, our sales operations continue to improve our virtual sales tools to connect with
our customers online, including a 24/7 chatbot feature, self-guided tours to allow homebuyers to tour models privately, safely,
and outside of normal business hours, and self-service appointments to help customers schedule an appointment with ease and
speed.
Our practice is to build, decorate, furnish, and landscape model homes for each community we build and maintain on-site sales
offices. As of September 30, 2022, we maintained and owned 215 model homes. We believe that model homes play a
particularly important role in our selling efforts, and we are continuously innovating within our model homes to provide a
unique, memorable, and hands-on experience, including digital kiosks, interactive site maps/plans, interactive magnetic floor
plan boards, interactive cutaway homes, interactive Surprising Performance rooms, signage, and more. The selection of interior
features is also a principal component of our marketing and sales efforts.
Our homes are customarily sold through commissioned new home sales counselors (who work from sales offices located in the
model homes used in the community) as well as through independent brokers. Our new home counselors are available to assist
prospective homebuyers by providing them with floor plans, pricing information, tours of model homes, the community's
unique selling proposition, detailed explanations of our differentiators as discussed above, and associated savings opportunities.
Sales personnel are trained internally through a structured training program focused on sales techniques, product familiarity,
competitive products in the area, construction schedules, and Company policies around compliance, which management
believes results in a sales force with extensive knowledge of our operating policies and housing products. Sales personnel must
be licensed real estate agents where required by law.
We sometimes use various sales incentives in order to attract homebuyers. The use of incentives depends largely on local
economic and competitive market conditions.
6
Depending on market conditions, we also at times begin construction on a number of homes for which no signed sales contract
exists, known as “speculative” or “spec” homes. This speculative inventory satisfies demand by providing near ready or move-
in ready homes targeted at relocated personnel and others who require a completed home within a shorter timeframe.
Operational Overview
Corporate Operations
We perform the following functions at our corporate office to promote standardization and operational excellence:
•
•
•
•
•
•
•
evaluate and select geographic markets;
allocate capital resources for land acquisitions;
maintain and develop relationships with lenders and capital markets to create and maintain access to financial
resources;
maintain and develop relationships with national product vendors;
perform various centralized functions including accounting, finance, purchasing, legal, risk, planning/design, and
marketing activities to support our field operations;
operate and manage information systems and technology support operations; and
monitor the operations of our divisions and partners.
We allocate capital resources in a manner consistent with our overall business strategy. We will vary our capital allocation
based on market conditions, results of operations, and other factors. Capital commitments are determined through consultation
among executive and operational personnel who play an important role in ensuring that new investments are consistent with our
strategy. Financial controls are also maintained through the centralization and standardization of accounting and finance
activities, policies, and procedures.
Field Operations
The development and construction of each of our communities is managed by our operating divisions, each of which is led by a
regional market leader and/or an area president who reports to our Chief Executive Officer. Within our operating divisions, our
field teams are equipped with the skills needed to complete the functions of land acquisition, land entitlement, land
development, home construction, local marketing, sales, warranty service, and certain purchasing and planning/design
functions. However, the accounting and accounts payable functions of our field operations are concentrated in our national
accounting center, which we consider to be part of our corporate operations.
Land Acquisition and Development
Generally, the land we acquire is purchased only after necessary entitlements have been obtained so that we have the right to
begin development or construction as market conditions dictate. The term “entitlements” refers to subdivision approvals,
development agreements, tentative maps, or recorded plats, depending on the jurisdiction in which the land is located.
Entitlements generally give a developer the right to obtain building permits upon compliance with conditions that are usually
within the developer's control. Although entitlements are ordinarily obtained prior to the purchase of land, we are still required
to obtain a variety of other governmental approvals and permits during the development process. In limited circumstances, we
will purchase property without all necessary entitlements where we have identified an opportunity to build on such property in a
manner consistent with our strategy.
We select land for purchase based upon a variety of factors, including:
•
•
•
•
•
•
internal and external demographic and marketing studies;
suitability for development during the time period of one to five years from the beginning of the development process
to the last closing;
financial review as to the feasibility of the proposed project, including profit margins and returns on capital employed;
the ability to secure governmental approvals and entitlements;
environmental and legal due diligence;
competition in the area;
7
•
proximity to local traffic corridors, job centers, and other amenities; and
• management's judgment of the real estate market and economic trends and our experience in a particular market.
We generally purchase land or obtain an option to purchase land, which, in either case, requires certain site improvements prior
to home construction. Where required, we then undertake, or the grantor of the option then undertakes in the case of land under
option, the development activities (through contractual arrangements with local developers, general contractors, and/or
subcontractors), which include site planning and engineering as well as constructing roads, water, sewer, and utility
infrastructures, drainage and recreational facilities, and other amenities. In some transactions, land bankers take title to the land
at closing subject to agreements which obligate us to perform all development activities (which may be reimbursed by the land
bankers) with respect to the land and provide us with an option to purchase the finished lots. When available in certain markets,
we also buy finished lots that are ready for home construction. During our fiscal 2022 and 2021, we continued to pursue land
acquisition opportunities and develop our land positions, spending approximately $418.5 million and $440.8 million,
respectively, for land acquisition and $155.1 million and $154.7 million, respectively, for land development.
Option Agreements
We acquire certain lots by means of option agreements from various sellers and developers, including land banking entities.
Option agreements generally require the payment of a cash deposit or issuance of a letter of credit or surety bond for the right to
acquire lots during a specified period of time at a fixed or variable price.
Under option agreements, purchase of the underlying properties is contingent upon satisfaction of certain requirements by us
and the sellers. Our liability under option agreements is generally limited to forfeiture of the non-refundable deposits, letters of
credit or surety bonds, and other non-refundable amounts incurred, which totaled approximately $142.4 million as of
September 30, 2022. The total remaining purchase price, net of cash deposits, committed under all land option agreements was
$827.6 million as of September 30, 2022.
We expect to exercise, subject to market conditions and seller satisfaction of contract terms, substantially all of our option
agreements. Various factors, some of which are beyond our control, such as market conditions, weather conditions, and the
timing of the completion of development activities, will have a significant impact on the timing of option exercises or whether
lot options will be exercised at all.
8
The following table summarizes land controlled by us by reportable segment as of September 30, 2022:
Lots Owned
Lots with
Homes Under
Construction (a)
Finished
Lots
Lots Under
Development
Lots Held
for Future
Development
Lots
Held for
Sale
Total Lots
Owned
Total Lots
Under
Contract
Total Lots
Controlled
West
Arizona
California
Nevada
Texas
280
333
162
996
59
90
232
1,129
Total West
1,771
1,510
East
Indiana
Maryland/Delaware
New Jersey
Tennessee
Virginia
Total East
Southeast
Florida
Georgia
North Carolina
South Carolina
Total Southeast
Total
134
187
133
373
—
—
149
42
512
130
155
76
259
114
157
777
241
202
51
443
296
757
400
1,637
3,090
171
207
—
467
—
845
104
353
294
272
—
—
66
—
66
—
59
—
408
467
—
—
—
—
117
—
—
—
—
—
635
1,239
860
4,170
6,904
438
767
117
730
199
117
—
2,251
—
—
—
34
475
710
442
1,076
—
—
21
68
89
272
767
657
859
5,231
1,402
1,896
1,719
9,401
7,514
14,418
589
1,081
—
1,473
309
3,452
935
320
358
733
1,027
1,848
117
2,203
508
5,703
1,410
1,030
800
1,809
620
2,903
937
3,224
1,023
4,958
34
501
2,703
11,858
2,346
13,312
5,049
25,170
(a) This category represents lots upon which construction of a home has commenced, including model homes.
9
The following table summarizes the dollar value of our land under development, land held for future development, and land
held for sale by reportable segment as of September 30, 2022:
in thousands
West
East
Southeast
Corporate and unallocated
Total
Construction
Land Under
Development
Land Held for Future
Development
Land Held for Sale
429,491 $
3,483 $
14,998
171,900
129,791
8
10,888
5,508
—
—
676
—
731,190 $
19,879 $
15,674
$
$
We typically act as the general contractor for the construction of our new home communities. Our project development
activities are controlled by our operating divisions whose employees supervise the construction of each new home community
by coordinating the activities of independent subcontractors and suppliers, subjecting their work to quality and cost controls and
ensuring compliance with zoning and building codes. We specify that quality, durable materials be used in the construction of
our homes. Our subcontractors follow design plans prepared by architects and engineers who are retained or directly employed
by us and whose designs are geared to the local market and staying current with changing home design trends as well as
expanding our focus on engineering without sacrificing value for our customers.
Agreements with our subcontractors and materials suppliers are generally entered into after a competitive bidding process
during which we obtain information from prospective subcontractors and vendors with respect to their financial condition and
ability to perform their agreements with us in accordance with the specifications we provide. Subcontractors typically are
retained on a project-by-project basis to complete construction at a fixed price. We do not maintain significant inventories of
construction materials, except for materials being utilized for homes under construction. We have numerous suppliers of raw
materials and services used in our business. While such materials and services generally have been and continue to be available,
from time to time, supply chain disruptions may occur due to material and labor shortages, such as the widespread supply chain
disruptions we experienced throughout fiscal 2022. In addition, material prices may fluctuate due to various factors, including
demand or supply shortages and the price of certain commodities, which may be beyond the control of us or our vendors. When
it is economically advantageous, we enter into regional and national supply contracts with certain of our vendors. We believe
that we maintain positive and productive relationships with our suppliers and subcontractors.
Warranty Program
We currently provide a limited warranty ranging from one to two years covering workmanship and materials per our defined
standards. In addition, we provide a limited warranty for up to ten years covering only certain defined structural element
failures.
Our homebuilding work is performed by subcontractors who typically must agree to indemnify us with regard to their work and
provide certificates of insurance demonstrating that they have met our insurance requirements and have named us as an
additional insured under their policies. Therefore, many claims relating to workmanship and materials that result in warranty
spending are the primary responsibility of these subcontractors.
In addition, we maintain third-party insurance, subject to applicable self-insured retentions, for most construction defects that
we encounter in the normal course of business. We believe that our warranty and litigation accruals and third-party insurance
are adequate to cover the ultimate resolution of our potential liabilities associated with known and anticipated warranty and
construction-defect related claims and litigation. However, there can be no assurance that the terms and limitations of the
limited warranty will be effective against claims made by homebuyers; that we will be able to renew our insurance coverage or
renew it at reasonable rates; that we will not be liable for damages, the cost of repairs, and/or the expense of litigation
surrounding possible construction defects, soil subsidence, or building related claims; or that claims will not arise out of events
or circumstances not covered by insurance and/or not subject to effective indemnification agreements with our subcontractors.
Please see Note 9 of notes to the consolidated financial statements in this Form 10-K for additional information.
Customer Financing
As previously mentioned, we do not provide mortgage origination services. Unlike many of our peers, we have no ownership
interest in any lender and are able to promote competition among lenders on behalf of our customers through our Mortgage
Choice program. Approximately 92% of our fiscal 2022 customers elected to finance a portion of their home purchase.
10
Competition
The development and sale of residential properties is highly competitive and fragmented. We compete for residential sales on
the basis of a number of interrelated factors, including location, reputation, amenities, design, quality, and price with numerous
large and small homebuilders, including many homebuilders with nationwide operations and greater financial resources and/or
lower costs than us. We also compete for residential sales with individual resales of existing homes and available rental
housing.
We utilize our experience within our geographic markets and the breadth of our product line to vary regional product offerings
to reflect changing market conditions. We strive to respond to market conditions and to capitalize on the opportunities for
advantageous land acquisitions in desirable locations. Our product offerings strive to provide extraordinary value at an
affordable price with intentional focus on Millennials and Baby Boomers because they are the two largest demographic groups
of potential home buyers.
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 or reduced by a
variety of factors, including periods of economic downturn, which result in decreased revenues and closings.
Government Regulation and Environmental Matters
We are subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning zoning, building,
design, constructions, the availability of water, and matters concerning the protection of health, safety and the environment.
These laws may result in delays, cause us to incur substantial compliance and other costs, and prohibit or severely restrict
development in certain environmentally sensitive regions or areas. Any delay or refusal from government agencies to grant us
necessary licenses, permits and approvals could have an adverse effect on our financial condition and results of operations.
As part of our due diligence process for land acquisitions, we often use third-party environmental consultants to investigate
potential environmental risks, and we require disclosures, representations and warranties from land sellers regarding
environmental risks. We also take steps prior to our acquisition of the land to gain reasonable assurance as to the precise scope
of any remediation work required and the costs associated with removal, site restoration and/or monitoring. To the extent
contamination or other environmental issues have occurred in the past, we will attempt to recover restoration costs from third
parties, such as the generators of hazardous waste, land sellers or others in the prior chain of title and/or their insurers.
In order to provide homes to homebuyers qualifying for Federal Housing Administration (FHA)-insured or Veterans Affairs
(VA)-guaranteed mortgages, we must construct homes in compliance with FHA and VA regulations. These laws and
regulations include provisions regarding operating procedures, investments, lending, and privacy disclosures and premiums.
In some states, we are required to be registered as a licensed contractor and comply with applicable rules and regulations. Also,
in various states, our new home counselors are required to be licensed real estate agents and to comply with the laws and
regulations applicable to real estate agents.
Failure to comply with any of these laws or regulations, where applicable, could result in loss of licensing and a restriction of
our business activities in the applicable jurisdiction.
Human Capital Resources
As of September 30, 2022, we employed 1,129 persons, of whom 272 were sales and marketing personnel and 294 were
construction personnel. Although none of our employees are covered by collective bargaining agreements, at times certain of
the independent subcontractors engaged by us may be represented by labor unions or may be subject to collective bargaining
arrangements.
11
A safe and healthy working environment for our employees at every level of our organization is our highest priority. This
begins with our health and safety audit system, which is designed to assist our employees in locating resources tailored for their
specific employment responsibilities. We also conduct various safety-related inspections and training programs, such as daily
visual inspections of our jobsites, weekly written safety inspections and bi-weekly “toolbox” talks with our trade partners. We
have also increased our focus on employee wellness by expanding our program options to include a number of webinars, online
classes, and virtual support groups. Upon the onset of the COVID-19 pandemic, we established a cross-functional taskforce and
deployed enhanced IT resources to facilitate new processes and procedures to keep our teams informed with the most up to date
information and create new work protocols to ensure the continued safety and health of our stakeholders, as well as the
continuation of our business operations.
We believe that our employees are critical to our continued growth and success, and competition for qualified personnel is
intense across our footprint. To remain competitive, we continue to focus on attracting and retaining qualified employees and
providing them with comprehensive training and continuous development. In addition, we center our employee experience on
engagement and work-life balance by offering a broad range of company-paid benefits and compensation packages, such as a
12-week parental leave and flexible time off program (with no accrual or maximum time away from work).
We are also committed to building an inclusive culture in which everyone feels welcome, respected, safe and valued. As we
continue to progress in this area, we are reaching across all facets of our functional and operational areas. For example, in 2020,
we implemented an ongoing inclusion and diversity learning program that is completed quarterly by every employee. As of
September 30, 2022, women made up approximately 40.7% of our workforce and 31.5% of our managerial employees, with
ethnic and racial minorities making up approximately 23.7% of our workforce and 15.2% of our managerial employees.
Charitable Giving
Across our Company, our team members are committed to supporting causes that make a difference. From local service
activities to Company-wide initiatives, giving back is a central element of our culture, championed by passionate employees
and embraced by partners who share our commitment to have a positive impact on the communities we serve. As part of our
ongoing commitment to strengthen the communities we serve, we created a wholly-owned title insurance agency, Charity Title
Agency. Charity Title Agency donates 100% of its net profits to charity. During the year ended September 30, 2022, Charity
Title Agency made $1.5 million charitable contributions to Beazer Charity Foundation, our Company's philanthropic arm.
Beazer Charity Foundation is a non-profit entity that provides donations to unrelated national and local non-profits and is
managed by current employees of the Company.
Available Information
Our Internet website address is www.beazer.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities
Exchange Act are available free of charge through our website as soon as reasonably practicable after we electronically file with
or furnish them to the Securities and Exchange Commission (SEC), and are available in print to any stockholder who requests a
printed copy. The public may also read and copy any materials that we file with the SEC at the SEC's Public Reference Room at
100 F Street N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. Furthermore, the SEC maintains a website that contains reports, proxy statements,
information statements and other information regarding issuers, including us, that file electronically with the SEC at
www.sec.gov.
In addition, many of our corporate governance documents are available on our website at www.beazer.com. Specifically, our
Audit, Finance, Compensation, and Nominating/Corporate Governance Committee Charters, our Corporate Governance
Guidelines and Code of Business Conduct and Ethics are available. Each of these documents is also available in print to any
stockholder who requests it.
The content on our website is available for information purposes only and is not a part of and shall not be deemed incorporated
by reference in this Form 10-K.
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Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well
as other information in this Form 10-K, before deciding whether to invest in shares of our common stock. The occurrence of
any of the events described below could harm our business, financial condition, results of operations, and growth prospects. In
such an event, the trading price of our common stock may decline, and you may lose all or part of your investment.
Business and Market Risks
A number of conditions that affect demand for the homes we sell are outside of our control. Many of these conditions, such
as interest rates, inflation, employment levels, wage levels and governmental actions also impact consumer confidence, upon
which our business is highly dependent.
Changes in national and regional economic conditions, as well as local economic conditions where we conduct our operations,
may result in more caution on the part of homebuyers and, consequently, fewer home purchases. While housing market
conditions remained robust and demand remained strong during the first half of fiscal 2022, during the second half of fiscal
2022, housing demand weakened due to a sharp increase in mortgage rates, the substantial increase in home prices experienced
over the past two years, significant inflation in the broader economy, stock market volatility, and other macro-economic
conditions, which have negatively impacted buyer sentiment and behavior. These economic uncertainties are out of our control
and affect buyer sentiment and behavior, as well as the affordability of, and demand for, the homes we sell. These conditions
also impact consumer confidence, upon which our business is highly dependent. Adverse changes in any of these conditions
could decrease demand and pricing for our homes or result in customer cancellations of pending contracts, which could
adversely affect the number of home sales we make or reduce home prices, either of which could result in a decrease in our
revenues and earnings and adversely affect our financial condition and results of operations.
During periods of downturn in the homebuilding industry, housing markets across the United States may experience an
oversupply of both new and resale home inventory, an increase in foreclosures, reduced levels of consumer demand for new
homes, increased cancellation rates, aggressive price competition among homebuilders, and increased incentives for home
sales. In the event of a downturn, we would likely experience a material reduction in revenues and margins and our financial
condition as well as our results of operations could be adversely affected.
Because almost all of our customers require mortgage financing, increases in interest rates would likely negatively affect the
affordability of the homes we sell. In addition, reductions in mortgage availability or increases in the effective costs of
owning a home could prevent our customers from buying our homes and adversely affect our business and financial results.
Substantially all of the purchasers of our homes finance their acquisition with mortgage financing. Over the past year, the
Federal Reserve raised interest rates multiple times in response to concerns about inflation and economic uncertainties, and it
may raise them again. Increases in interest rates increase the costs of owning a home and have adversely affected the purchasing
power of consumers and lower demand for the homes we sell, which could result in a decrease in our revenues and earnings and
adversely affect our financial condition.
The availability of mortgage financing is significantly influenced by governmental entities such as the Federal Housing
Administration, Veteran’s Administration, and Government National Mortgage Association and government-sponsored
enterprises known as Fannie Mae and Freddie Mac. If these or other lenders’ borrowing standards are tightened and/or the
federal government were to reduce or eliminate these mortgage loan programs (including due to any failure of lawmakers to
agree on a budget or appropriation legislation to fund relevant programs or operations), it would likely make it more difficult
for our customers to obtain acceptable financing, which would, in turn, adversely affect our business, financial condition and
results of operations.
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Mortgage interest expense and real estate taxes represent significant costs of homeownership. Therefore, when there are
changes in federal or state income tax laws that eliminate or substantially limit the income tax deductions relating to these
expenses, the after-tax costs of owning a new home can increase significantly. For example, the Tax Cuts and Jobs Act, which
was enacted in December 2017, includes provisions that impose significant limitations with respect to these income tax
deductions. Under this legislation, through the end of 2025, the annual deduction for real estate property taxes and state and
local income or sales taxes has been limited to a combined amount of $10,000 ($5,000 in the case of a separate return filed by a
married individual). In addition, through the end of 2025, the deduction for mortgage interest will generally only be available
with respect to acquisition indebtedness that does not exceed $750,000 ($375,000 in the case of a separate return filed by a
married individual). There also continues to be meaningful discussion around certain proposed tax legislation contemplated by
the Biden administration, including increasing the U.S. corporate tax rate, as well as long standing discussions within the
Organization for Economic Co-operation and Development (“OECD”). It is unclear at this time which of these proposals, if
any, may be enacted and how these various provisions will interact on a local, country and global scale. We believe changes
such as these adversely impact or, in case of the proposed tax legislation, could adversely impact the demand for and sales
prices of homes in certain markets, including parts of California, Maryland, and Virginia, and therefore could adversely affect
our business, financial condition and results of operations.
If we are unsuccessful in competing against our competitors, our market share could decline or our growth could be
impeded and, as a result, our financial condition and results of operations could suffer.
Competition in the homebuilding industry is intense, and there are relatively low barriers to entry into our business. Increased
competition could hurt our business, as it could prevent us from acquiring attractive parcels of land on which to build homes or
make such acquisitions more expensive, hinder our market share expansion and lead to pricing pressures on our homes that may
adversely impact our margins and revenues. If we are unable to successfully compete, our financial results could suffer and our
ability to service our debt could be adversely affected. Our competitors may independently develop land and construct housing
units that are superior or substantially similar to our products. Furthermore, many of our competitors have substantially greater
financial resources, less leverage, and lower costs of funds and operations than we do. Many of these competitors also have
longstanding relationships with subcontractors and suppliers in the markets in which we operate. We currently build in several
of the top markets in the nation and, therefore, we expect to continue to face additional competition from new entrants into our
markets.
Our business could be materially and adversely disrupted by an epidemic or pandemic (such as COVID-19), or similar
public threat, or fear of such an event, and the measures that international, federal, state and local governments, agencies,
law enforcement and/or health authorities implement to address it.
An epidemic, pandemic, or similar serious public health issue, and the measures undertaken by governmental authorities to
address it, could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period,
and thereby, and/or along with any associated economic and/or social instability or distress, have a material adverse impact on
our consolidated financial statements.
For example, our business and operations were significantly impacted by the COVID-19 pandemic and the corresponding
actions taken by governmental authorities. While general economic conditions have improved and our operations have since
normalized, we are uncertain of the potential full magnitude or duration of the business and economic impacts from the
unprecedented public health effort to contain and combat the spread of COVID-19, which include, among other things,
significant volatility in financial markets and a sharp decrease in the value of equity securities, including our common stock.
If COVID-19 or another public health emergency were to reemerge, we could again experience material disruptions in our
operating environment, impairing our ability to sell and build homes in a typical manner, as occurred in during our 2020 fiscal
year, or at all, due to, among other things, increased costs or decreased supply of building materials, reduced availability of
subcontractors, employees, and other talent, as a result of infections or recommended self-quarantining, or governmental
mandates to direct production activities to support public health efforts. This could result in our recognizing charges in future
periods, which may be material, for inventory impairments or land option agreement abandonments, or both, related to our
inventory assets.
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Should the adverse impacts described above (or others that are currently unknown) occur, whether individually or collectively,
we would expect to experience, among other things, decreases in our net new orders, home closings, average selling prices,
revenues, and profitability, and such impacts could be material to our consolidated financial statements. Along with an increase
in cancellations of home purchase contracts, if there are prolonged government restrictions on our business and our customers,
and/or an extended economic recession, we could be unable to produce revenues and cash flows sufficient to conduct our
business; meet the terms of our covenants and other requirements under the Secured Revolving Credit Facility, our senior notes,
and the related indenture, and/or mortgages and land contracts due to land sellers and other loans; service our outstanding debt.
Such a circumstance could, among other things, exhaust our available liquidity (and ability to access liquidity sources) and/or
trigger an acceleration to pay a significant portion or all of our then-outstanding debt obligations, which we may be unable to
do.
The market value of our land and/or homes may decline, leading to impairments or other charges and reduced profitability.
We regularly acquire land for replacement and expansion of our land inventory within our existing and new markets. The
market value of land, building lots and housing inventories can fluctuate significantly as a result of changing market conditions.
While we employ measures to manage inventory risk, we may not be able to adequately insulate our operations from a severe
drop in inventory values. As a result, we may incur impairment charges or have to sell land at a loss. For example, during the
second quarter of fiscal 2019, we recognized impairments of $110.0 million on projects in progress and $38.6 million on land
held for sale. In addition, when market conditions are such that land values are not appreciating, option agreements previously
entered into may become less desirable, at which time we may elect to forgo deposits and pre-acquisition costs and terminate
the agreements, which could result in abandonment charges. Material impairment charges, abandonment charges or other write-
downs of assets could adversely affect our financial condition and results of operations.
Negative publicity or poor relations with the residents of our communities could negatively impact sales, which could cause
our revenues or results of operations to decline.
Unfavorable media related to our industry, company, brands, marketing, personnel, operations, business performance, or
prospects may affect our stock price and the performance of our business, regardless of its accuracy or inaccuracy. Our success
in maintaining, extending and expanding our brand image depends on our ability to adapt to a rapidly changing media
environment. Adverse publicity or negative commentary on social media outlets could hurt operating results, as consumers
might avoid or protest brands that receive bad press or negative reviews. Negative publicity may result in a decrease in our
operating results. In addition, residents of communities we develop may look to us to resolve issues or disputes that may arise
in connection with the operation or development of their communities. Efforts made by us to resolve these issues or disputes
could be deemed unsatisfactory by the affected residents, and subsequent actions by these residents could adversely affect sales
or our reputation.
Operational, Legal and Regulatory Risks
Inflation may adversely affect us by increasing costs beyond what we can recover through price increases.
Inflation can adversely affect us by increasing costs of land, materials, and labor. In addition, inflation is often accompanied by
higher interest rates. In an inflationary environment, depending on homebuilding industry and other economic conditions, we
may be unable to raise home prices enough to keep up with the rate of inflation, which would reduce our profit margins. Given
the inflation rates in fiscal year 2022, we have experienced, and continue to experience, increases in the prices of land, labor,
and materials.
15
An increase in cancellation rates will negatively impact our business and could lead to imprecise estimates related to homes
to be delivered in the future (backlog).
Our backlog reflects the number and value of homes for which we have entered into a sales contract with a customer but have
not yet delivered the home. Although these sales contracts typically require a cash deposit and do not make the sale contingent
on the sale of the customer's existing home, in some cases a customer may cancel the contract and receive a complete or partial
refund of the deposit as a result of local laws or as a matter of our business practices. If industry or economic conditions
deteriorate or if mortgage financing becomes less accessible, more homebuyers may have an incentive to cancel their contracts
with us, even where they might be entitled to no refund or only a partial refund, rather than complete the purchase. For
example, the cancellation rate increased significantly from the low teens in the first half of the fiscal year to 17.0% in fiscal
third quarter and 32.8% in fiscal fourth quarter, resulting in a cancellation rate for the year ended September 30, 2022 was
17.6%, up from 11.1% in the prior year. Significant cancellations have had, and could have, a material adverse effect on our
business as a result of lost sales revenue and the accumulation of unsold housing inventory. It is important to note that both
backlog and cancellation metrics are operational, rather than accounting data, and should be used only as a general gauge to
evaluate our performance. There is an inherent imprecision in these metrics based on an evaluation of qualitative factors during
the transaction cycle.
Supply shortages and other risks related to the demand for skilled labor and building materials could increase costs, delay
deliveries and could adversely affect our financial condition and results of operations.
The residential construction industry experiences price fluctuations and shortages in labor and materials from time to time.
Shortages in labor can be due to shortages in qualified trades people, changes in immigration laws and trends in labor
migration, lack of availability of adequate utility infrastructure and services, or our need to rely on local subcontractors who
may not be adequately capitalized or insured. Shortages of materials can be due to certain disruptions, such as natural disasters,
civil or political unrest and conflicts (such as the ongoing conflict between Russia and Ukraine), trade disputes, difficulties in
production or delivery or health issues like the COVID-19 pandemic. Labor and material shortages can be more severe during
periods of strong demand for housing or during periods in which the markets where we operate experience natural disasters
such as hurricanes or flooding as discussed more fully below. Pricing for labor and materials can be affected by the factors
discussed above, changes in energy prices, and various other national, regional, and local economic and political factors. For
example, government imposed tariffs and trade regulations on imported building supplies have, and in the future could have,
significant impacts on the cost to construct our homes. Such measures limit our ability to control costs, which if we are not able
to successfully offset such increased costs through higher sales prices, could adversely affect our margins on the homes we
build.
Our long-term success depends on our ability to acquire finished lots and undeveloped land suitable for residential
homebuilding at reasonable prices, in accordance with our land investment criteria.
The homebuilding industry is highly competitive for suitable land and the risk inherent in purchasing and developing land
increases as consumer demand for housing increases. The availability of finished and partially finished developed lots and
undeveloped land for purchase that meet our investment criteria depends on a number of factors outside our control, including
land availability in general, competition with other homebuilders and land buyers, inflation in land prices, zoning, allowable
housing density, the ability to obtain building permits, and other regulatory requirements. Should suitable lots or land become
less available, the number of homes we may be able to build and sell could be reduced, and the cost of land could increase,
perhaps substantially, which could adversely impact our financial condition and results of operations.
As competition for suitable land increases, the cost of acquiring both finished and undeveloped lots and the cost of developing
owned land could rise, and the availability of suitable land at acceptable prices may decline, which could adversely impact our
financial results. The availability of suitable land assets could also affect the success of our land acquisition strategy and
ultimately our long-term strategic goals by impacting our ability to increase the number of actively selling communities, grow
our revenues and margins and achieve or maintain profitability.
Reduced numbers of home sales extend the time it takes us to recover land purchase and property development costs,
negatively impacting profitability and our results of operations.
We incur many costs even before we begin to build homes in a community. Depending on the stage of development a land
parcel is in when we acquire it, these may include costs of preparing land, finishing and entitling lots, installing roads, sewers,
water systems, and other utilities, taxes, and other costs related to ownership of the land on which we plan to build homes. If the
rate at which we sell and deliver homes slows, or if we delay the opening of new home communities, we may incur additional
pre-construction costs, and it may take longer for us to recover our costs, which could adversely affect our profitability and
results of operations.
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We could experience a reduction in home sales and revenues due to our inability to acquire and develop land for our
communities if we are unable to obtain reasonably priced financing.
The homebuilding industry is capital intensive and homebuilding requires significant up-front expenditures to acquire land and
to begin development. Accordingly, we incur substantial indebtedness to finance our homebuilding activities. If internally
generated funds are not sufficient, we would seek additional capital in the form of equity or debt financing from a variety of
potential sources, including additional bank financing and/or securities offerings. The amount and types of indebtedness that we
may incur are limited by the terms of our existing debt. In addition, the availability of borrowed funds, especially for land
acquisition and construction financing, may be greatly reduced nationally, and the lending community may require increased
amounts of equity to be invested in a project by borrowers in connection with both new loans and the extension of existing
loans. The credit and capital markets have continued to experience significant volatility. If we are required to seek additional
financing to fund our operations, the volatility in these markets may restrict our flexibility to access such financing. If we are
not successful in obtaining sufficient capital to fund our planned capital and other expenditures, we may be unable to acquire
land for our housing developments, thereby limiting our anticipated growth and community count. Additionally, if we cannot
obtain additional financing to fund the purchase of land under our option agreements, we may incur contractual penalties and
fees.
Natural disasters and other related events could result in delays in land development or home construction, increase our
costs or decrease demand in the impacted areas.
The climates and geology of many of the states in which we operate, including California, Florida, Georgia, North Carolina,
South Carolina, Tennessee, Texas and certain mid-Atlantic states, present increased risks of natural disasters. To the extent that
hurricanes, tornadoes, severe storms, heavy or prolonged precipitation, earthquakes, droughts, floods, wildfires or other natural
disasters or similar events occur, our homes under construction or our building lots in such states could be damaged or
destroyed, which may result in losses exceeding our insurance coverage. For example, in fiscal 2017 and 2018, Hurricanes
Harvey, Irma and Florence disrupted our operations in Texas, Florida, North Carolina and South Carolina, which resulted in
temporary reductions in sales and closings. In fiscal 2022, Hurricane Ian disrupted our operations in Florida, which resulted in
temporary reductions in sales and closings. Natural disasters can also lead to increased competition for subcontractors, which
can delay our progress even after the event has concluded. Additionally, and as discussed above, increased competition for
skilled labor can lead to cost overruns, as we may have to incentivize the impacted region’s limited trade base to work on our
homes. Finally, natural disasters and other related events may also temporarily impact demand, as buyers are not as willing to
shop for new homes during or after the event. These risks could adversely affect our business, financial condition, and results of
operations.
We may incur additional operating expenses or longer construction cycle times due to compliance programs or fines,
penalties and remediation costs pertaining to environmental regulations within our markets. Additionally, any violations of
such regulations could harm our reputation, thereby negatively impacting our financial condition and results of operations.
We are subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning the protection of
health and the environment. The particular environmental laws that apply to any given community vary greatly according to the
location of the community site, the site's environmental conditions and the present and former use of the site. Environmental
laws may result in delays, may cause us to implement time consuming and expensive compliance programs and may prohibit or
severely restrict development in certain environmentally sensitive regions or areas. From time to time, the United States
Environmental Protection Agency (EPA) and similar federal or state agencies review homebuilders' compliance with
environmental laws and may levy fines and penalties for failure to strictly comply with applicable environmental laws or
impose additional requirements for future compliance as a result of past failures. Any such actions taken with respect to us may
increase our costs or harm our reputation. Further, we expect that increasingly stringent requirements will be imposed on
homebuilders in the future. Environmental regulations can also have an adverse impact on the availability and price of certain
raw materials such as lumber. Our communities in California are especially susceptible to restrictive government regulations
and environmental laws, particularly surrounding water usage due to continuing drought conditions within that region.
In addition, there is a growing concern from advocacy groups and the general public that the emissions of greenhouse gases and
other human activities have caused, or will cause, significant changes in weather patterns and temperatures and the frequency
and severity of natural disasters. Government mandates, standards and regulations enacted in response to these projected
climate change impacts could result in restrictions on land development in certain areas or increased energy, transportation, and
raw material costs that may adversely affect our financial condition and results of operations.
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We are subject to extensive government regulation, which could cause us to incur significant liabilities or restrict our
business activities.
Regulatory requirements could cause us to incur significant liabilities and operating expenses and could restrict our business
activities. We are subject to local, state and federal statutes and rules regulating, among other things, certain developmental
matters, building and site design, the availability of water and matters concerning the protection of health, safety and the
environment. Our operating costs may be increased by governmental regulations, such as building permit allocation ordinances
and impact and other fees and taxes, which may be imposed to defray the cost of providing certain governmental services and
improvements. Other governmental regulations, such as building moratoriums and “no growth” or “slow growth” initiatives,
which may be adopted in communities that have developed rapidly, may cause delays in new home communities or otherwise
restrict our business activities, resulting in reductions in our revenues. Any delay or refusal from government agencies to grant
us necessary licenses, permits and approvals could have an adverse effect on our financial condition and results of operations.
We may be subject to significant potential liabilities as a result of construction defect, product liability and warranty claims
made against us.
As a homebuilder, we have been, and continue to be, subject to construction defect, product liability and home warranty claims,
including moisture intrusion and related claims, arising in the ordinary course of business. These claims are common to the
homebuilding industry and can be costly.
With respect to certain general liability exposures, including construction defect claims, product liability claims and related
claims, assessment of claims and the related liability and reserve estimation process is highly judgmental due to the complex
nature of these exposures and unique circumstances of each claim. Furthermore, once claims are asserted for construction
defects, it can be difficult to determine the extent to which the assertion of these claims will expand geographically. Although
we have obtained insurance for construction defect claims, such policies may not be available or adequate to cover liability for
damages, the cost of repairs and/or the expense of litigation. Current and future claims may arise out of events or circumstances
not covered by insurance and not subject to effective indemnification agreements with our subcontractors.
At any given time, we may be the subject of civil litigation that could require us to pay substantial damages or could
otherwise have a material adverse effect on us.
While no current material lawsuits are pending, we may be subject to civil litigation regarding claims made by homebuyers. We
cannot predict or determine the timing or final outcome of such lawsuits, or the effect that any adverse determinations the
lawsuits may have on us. An unfavorable determination in any of the lawsuits could result in the payment by us of substantial
monetary damages that may not be covered by insurance. Further, the legal costs associated with the lawsuits and the amount of
time required to be spent by management and the Board of Directors on these matters, even if we are ultimately successful,
could have a material adverse effect on our business, financial condition and results of operations. In addition to expenses
incurred to defend the Company in these matters, under Delaware law and our bylaws, we may have an obligation to indemnify
our current and former officers and directors in relation to these matters. We have obligations to advance legal fees and
expenses to directors and certain officers.
Our insurance carriers may seek to rescind or deny coverage with respect to such lawsuits, or we may not have sufficient
coverage under our insurance policies. If the insurance companies are successful in rescinding or denying coverage, or if we do
not have sufficient coverage under our policies, our business, financial condition and results of operations could be materially
adversely affected.
Our operating expenses could increase if we are required to pay higher insurance premiums or litigation costs for various
claims, which could negatively impact our financial condition and results of operations. Additionally, our insurance policies
may not offset our entire expense due to limitation in coverages, amounts payable under the policies or other related
restrictions.
The costs of insuring against construction defect, product liability and director and officer claims are substantial. Increasingly in
recent years, lawsuits (including class action lawsuits) have been filed against builders, asserting claims of personal injury and
property damage. Our insurance may not cover all of the claims, including personal injury claims, or such coverage may
become prohibitively expensive. If we are not able to obtain adequate insurance against these claims, we may experience losses
that could negatively impact our financial condition and results of operations, as well as our cash flows.
Historically, builders have recovered from subcontractors and their insurance carriers a significant portion of the construction
defect liabilities and costs of defense that the builders have incurred. However, insurance coverage available to subcontractors
for construction defects is becoming increasingly expensive and the scope of coverage is restricted. If we cannot effectively
recover from our subcontractors or their carriers, we may suffer even greater losses.
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A builder's ability to recover against any available insurance policy depends upon the continued solvency and financial strength
of the insurance carrier that issued the policy. Many of the states in which we build homes have lengthy statutes of limitations
and/or repose applicable to claims for construction defects. To the extent that any carrier providing insurance coverage to us or
our subcontractors becomes insolvent or experiences financial difficulty in the future, we may be unable to recover on those
policies, thereby negatively impacting our financial condition and results of operations.
We are dependent on the services of certain key employees and the loss of their services could hurt our business.
Our future success depends upon our ability to attract, train and retain skilled personnel, including officers and directors. If we
are unable to retain our key employees or attract, train or retain other skilled personnel in the future, it could hinder our business
strategy and impose additional costs of identifying and training new individuals. Competition for qualified personnel in all of
our operating markets, as well as within our corporate operations, is intense.
Global economic and political instability and conflicts, such as the conflict between Russia and Ukraine, could adversely
affect our business, financial condition or results of operations.
Our business could be adversely affected by unstable economic and political conditions within the United States and foreign
jurisdictions and geopolitical conflicts, such as the conflict between Russia and Ukraine. While we do not have any customer or
direct supplier relationships in either country, the current military conflict, and related sanctions, as well as export controls or
actions that may be initiated by nations (e.g., potential cyberattacks, disruption of energy flows, etc.) and other potential
uncertainties could adversely affect our supply chain by causing shortages or increases in costs for materials necessary to
construct homes and/or increases to the price of gasoline and other fuels. In addition, such events could cause higher interest
rates, inflation or general economic uncertainty, which could negatively impact our business partners, employees or customers,
or otherwise adversely impact our business.
Terrorist attacks or acts of war against the United States or increased domestic or international instability could have an
adverse effect on our operations.
Adverse developments in the war on terrorism, terrorist attacks against the United States or any outbreak or escalation of
hostilities between the United States and/or any foreign power may cause disruption to the economy, our Company, our
employees and our customers, which could negatively impact our financial condition and results of operations.
Information technology failures, cybersecurity breaches or data security breaches could harm our business.
We use information technology and other computer resources to perform important operational and marketing activities and to
maintain our business records. Certain of these resources are provided to us and/or maintained by third-party service providers
pursuant to agreements that specify certain security and service level standards. Our computer systems, including our back-up
systems and portable electronic devices, and those of our third-party providers, are subject to damage or interruption from
power outages, computer and telecommunication failures, computer viruses, security breaches including malware and phishing,
cyberattacks, natural disasters, usage errors by our employees or contractors, and other related risks. As part of our normal
business activities, we collect and store certain confidential information, including information about employees, homebuyers,
customers, vendors and suppliers. This information is entitled to protection under a number of regulatory regimes. We share
some of this information with third parties who assist us with certain aspects of our business. A significant and extended
disruption of or breach of security related to our computer systems and back-up systems may result in business disruption,
damage our reputation and cause us to lose customers, sales and revenue, result in the unintended misappropriation of
proprietary, personal and confidential information, and require us to incur significant expense to remediate or otherwise resolve
these issues including financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation with
potentially large costs and other competitive disadvantages. While, to date, we have not had a significant cybersecurity breach
or attack that had a material impact on our business or results of operations, there can be no assurance that our efforts to
maintain the security and integrity of these types of IT networks and related systems will be effective or that attempted security
breaches or disruptions would not be successful or damaging.
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Financial and Liquidity Risks
Our access to capital and our ability to obtain additional financing could be affected by any downgrade of our credit ratings,
as well as limitations in the capital markets or adverse credit market conditions.
The Company's credit rating and ratings on our senior notes and our current credit condition affect, among other things, our
ability to access new capital, especially debt. Negative changes in these ratings may result in more stringent covenants and
higher interest rates under the terms of any new debt. If our credit ratings are lowered or rating agencies issue adverse
commentaries in the future, it could have a material adverse effect on our business, financial condition, results of operations and
liquidity. In particular, a weakening of our financial condition, including a significant increase in our leverage or decrease in
our profitability or cash flows, could adversely affect our ability to obtain necessary funds, result in a credit rating downgrade
or change in outlook, or otherwise increase our cost of borrowing.
Our Senior Notes, Secured Revolving Credit Facility, Senior Unsecured Revolving Credit Facility, letter of credit facilities
and certain other debt impose significant restrictions and obligations on us. Restrictions on our ability to borrow could
adversely affect our liquidity. In addition, our substantial indebtedness could adversely affect our financial condition, limit
our growth and make it more difficult for us to satisfy our debt obligations.
Our senior notes, revolving credit facilities, letter of credit facilities and certain other debt impose certain restrictions and
obligations on us. Under certain of these instruments, we must comply with defined covenants that limit our ability to, among
other things, incur additional indebtedness, engage in certain asset sales, make certain types of restricted payments, engage in
transactions with affiliates and create liens on our assets. Failure to comply with certain of these covenants could result in an
event of default under the applicable instrument. Any such event of default could negatively impact other covenants or lead to
cross defaults under certain of our other debt agreements. There can be no assurance that we will be able to obtain any waivers
or amendments that may become necessary in the event of a future default situation without significant additional cost or at all.
Our substantial indebtedness could have important consequences to us and the holders of our securities, including, among other
things:
•
•
causing us to be unable to satisfy our obligations under our debt agreements;
causing us to pay higher interest rates upon refinancing indebtedness if interest rates rise;
• making us more vulnerable to adverse general economic and industry conditions;
• making it difficult to fund future working capital, land purchases, acquisitions, capital expenditures, share repurchases,
general corporate or other activities; and
•
causing us to be limited in our flexibility in planning for, or reacting to, changes in our business.
In addition, subject to the restrictions of our existing debt instruments, we may incur additional indebtedness. If new debt is
added to our current debt levels, the related risks that we now face could intensify. Our growth plans and our ability to make
payments of principal or interest on, or to refinance, our indebtedness will depend on our future operating performance and our
ability to enter into additional debt and/or equity financings. If we are unable to generate sufficient cash flows in the future to
service our debt, we may be required to refinance all or a portion of our existing debt, to sell assets or to obtain additional
financing. We may not be able to do any of the foregoing on terms acceptable to us, if at all.
The tax benefits of our pre-ownership change net operating loss carryforwards and built-in losses were substantially limited
since we experienced an “ownership change” as defined in Section 382 of the Internal Revenue Code, and portions of our
deferred income tax asset have been written off since they were not fully realizable. Any subsequent ownership change,
should it occur, could have a further impact on these tax attributes.
Section 382 of the Internal Revenue Code contains rules that limit the ability of a company that undergoes an “ownership
change,” which is generally defined as any change in ownership of more than 50% of its common stock over a three-year
period, to utilize its net operating loss carryforwards, tax credits and certain built-in losses or deductions, as of the ownership
change date, that are recognized during the five-year period after the ownership change. These rules generally operate by
focusing on changes in the ownership among shareholders owning, directly or indirectly, 5% or more of the company's
common stock (including changes involving a shareholder becoming a 5% shareholder) or any change in ownership arising
from a new issuance of stock or share repurchases by the company.
20
We currently have an immaterial amount of "built-in losses" in our assets, i.e., an excess tax basis over current fair market
value, which may result in tax losses as such assets are sold. Those "built-in losses" could become significant in the future if
market conditions worsen and our inventory is impaired. Net operating losses and tax credits generally may be carried forward
for a 20-year period to offset future earnings and reduce our federal income tax liability. Any net operating losses created
during or after our fiscal 2019 may be carried forward indefinitely; however, the loss can only be utilized to offset 80% of
taxable income generated in a tax year. Built-in losses, if and when recognized, generally will result in tax losses that may then
be deducted or carried forward. However, we experienced an “ownership change” under Section 382 as of January 12, 2010. As
a result of this previous “ownership change” for purposes of Section 382, our ability to use certain net operating loss
carryforwards, tax credits and built-in losses or deductions in existence prior to the ownership change was limited by Section
382. We cannot predict or control the occurrence or timing of another ownership change in the future. If another ownership
change were to occur, the limitations imposed by Section 382 could result in a material amount of our net operating loss
carryforwards and tax credits expiring unused and, therefore, significantly impair the future value of our deferred tax assets.
Our certificate of incorporation prohibits certain transfers of our common stock that could result in an ownership change. In
addition, we are party to a rights agreement intended to act as a deterrent to any person desiring to acquire 4.95% or more of our
common stock. In February 2022, our stockholders approved an extension of these protective provisions in our certificate of
incorporation and the rights agreement, which as a result are scheduled to expire on November 2025. Any extension of these
protective provisions and our entry into a new rights agreement will require additional approval by our stockholders. We cannot
guarantee that the requisite stockholder approvals will be obtained. In addition, neither the protective provisions nor the rights
agreement offer a complete solution, and an ownership change may occur even if the protective provisions of our charter are
extended and a new rights agreement is approved upon expiration. The protective provisions of our certificate of incorporation
may not be enforceable against all stockholders and may not prevent all stock transfers that have the potential to cause a Section
382 ownership shift, and the rights agreement may deter, but ultimately may not block all transfers of our common stock that
might result in an ownership change.
The realization of all or a portion of our deferred income tax assets (including net operating loss carryforwards and tax credits)
is dependent upon the generation of future income during the statutory carryforward periods. Our inability to utilize our limited
pre-ownership change net operating loss carryforwards, tax credits and recognized built-in losses or deductions, or the
occurrence of a future ownership change and resulting additional limitations to these tax attributes, could have a material
adverse effect on our financial condition, results of operations, and cash flows.
Inefficient or ineffective allocation of capital could adversely affect our operating results and/or stockholder value.
Our goal is to allocate capital to maximize our overall long-term returns. This includes spending on capital projects, such as
developing strategic businesses (e.g., the launch of our Gatherings® business in 2016 to meet the needs of the growing 55 plus
segment) and acquiring other homebuilders with the potential to strengthen our industry position. In addition, from time to time
we may engage in bond repurchases to reduce our indebtedness and return value to our stockholders through share repurchases.
If we do not properly allocate our capital, we may fail to produce optimal financial results and we may experience a reduction
in stockholder value, including increased volatility in our stock price.
Risk Relating to an Investment in our Common Stock
Our stock price is volatile and could decline.
The securities markets in general and our common stock in particular have experienced significant price and volume volatility
over the past several years. The market price and volume of our common stock may continue to experience significant
fluctuations due not only to general stock market conditions, but also to a change in sentiment in the market regarding our
industry, operations or business prospects. The price and volume volatility of our common stock may be affected by:
•
•
•
•
•
factors influencing home purchases, such as higher interest rates and availability of home mortgage loans, credit
criteria applicable to prospective borrowers, ability to sell existing residences and homebuyer sentiment in general;
the operating and securities price performance of companies that investors consider comparable to us;
operating results that vary from the expectations of securities analysts and investors;
announcements of strategic developments, acquisitions and other material events by us or our competitors; and
changes in global financial markets and global economies and general market conditions, such as inflation, interest
rates, commodity and equity prices and the value of financial assets.
21
Our ability to raise funds through the issuance of equity or otherwise use our common stock as consideration is impacted by the
price of our common stock. A low stock price may adversely impact our ability to reduce our financial leverage, as measured
by the ratio of total debt to total capital. Continued high levels of leverage or significant increases may adversely affect our
credit ratings and make it more difficult for us to access additional capital. These factors may limit our ability to implement our
operating and growth plans.
We experience fluctuations and variability in our operating results on a quarterly basis and, as a result, our historical
performance may not be a meaningful indicator of future results.
We historically have experienced, and expect to continue to experience, variability in home sales and earnings on a quarterly
basis. As a result of such variability, our historical performance may not be a meaningful indicator of future results. Our
quarterly results of operations may continue to fluctuate in the future as a result of a variety of both national and local factors,
including, among others:
•
•
•
•
•
•
•
the timing of home closings and land sales;
our ability to continue to acquire additional land or secure option agreements to acquire land on acceptable terms;
conditions of the real estate market in areas where we operate and of the general economy;
inventory impairments or other material write-downs;
raw material and labor shortages;
seasonal home buying patterns; and
other changes in operating expenses, including the cost of labor and raw materials, personnel and general economic
conditions.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
As of September 30, 2022, we had under lease approximately 32,000 square feet of office space in Atlanta, Georgia to house
our corporate headquarters. We also lease and own an aggregate of approximately 158,000 and 4,500 square feet of office
space, respectively, for our divisional and other corporate operations at various locations. All facilities are in good condition,
adequately utilized, and sufficient to meet our present operating needs.
Due to the nature of our business, significant amounts of property are held by us as inventory in the ordinary course of our
homebuilding operations. See Note 5 of notes to the consolidated financial statements in this Form 10-K for a further discussion
of our inventory.
Item 3. Legal Proceedings
Litigation
In the normal course of business, we are subject to various lawsuits. We cannot predict or determine the timing or final outcome
of these lawsuits or the effect that any adverse findings or determinations in pending lawsuits may have on us. In addition, an
estimate of possible loss or range of loss, if any, cannot presently be made with respect to certain of these pending matters. An
unfavorable determination in any of the pending lawsuits could result in the payment by us of substantial monetary damages
that may not be fully covered by insurance. Further, the legal costs associated with the lawsuits and the amount of time required
to be spent by management and our Board of Directors on these matters, even if we are ultimately successful, could have a
material adverse effect on our financial condition, results of operations, or cash flows.
For a discussion of our legal proceedings, see Note 9 of the notes to our consolidated financial statements in this Form 10-K.
Item 4. Mine Safety Disclosures
Not applicable.
22
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information
The Company lists its common stock on the New York Stock Exchange (NYSE) under the symbol “BZH.” On November 7,
2022, the last reported sales price of the Company's common stock on the NYSE was $11.21, and we had approximately 207
stockholders of record and 30,880,138 shares of common stock outstanding.
Dividends
The indentures under which our senior notes were issued contain certain restrictive covenants, including limitations on the
payment of dividends. There were no dividends paid during our fiscal 2022, 2021 or 2020. The Board of Directors will
periodically reconsider the declaration of dividends, assuming payment of dividends is not limited under our indentures. The
reinstatement of quarterly dividends, the amount of such dividends and the form in which the dividends are paid (cash or stock)
will depend upon our financial condition, results of operations, and other factors that the Board of Directors deems relevant.
Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information about the Company's shares of common stock that may be issued under our existing
equity compensation plans as of September 30, 2022, all of which have been approved by our stockholders:
Plan Category
Number of Common
Shares to be Issued Upon
Exercise of Outstanding
Options, Warrants and
Rights
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
Number of Common Shares
Remaining Available for
Future Issuance Under
Equity Compensation Plans
Equity compensation plans approved by stockholders
27,507
$14.31
1,487,202
Issuer Purchases of Equity Securities
The following table summarizes the Company's common stock repurchases during the fourth fiscal quarter of 2022:
Period
Total Number of
Shares Purchased
Average Price Paid
per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Program(a)
Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under the
Program
July 1, 2022 - July 31, 2022
August 1, 2022 - August 31, 2022
September 1, 2022 - September 30, 2022
— $
244,957 $
149,903 $
—
14.69
13.54
— $
244,957 $
149,903 $
47,467,968
43,870,670
41,840,522
(a) In May 2022, the Company's Board of Directors approved a new share repurchase program that authorizes the Company to
repurchase up to $50.0 million of its outstanding common stock. As part of this new program, the Company repurchased
570 thousand shares of its common stock for $8.2 million at an average price per share of $14.33 during the year ended
September 30, 2022 through open market transactions. All shares have been retired upon repurchase. The repurchase program
has no expiration date.
23
Performance Graph
The following graph illustrates the cumulative total stockholder return on Beazer Homes' common stock for the last five fiscal
years through September 30, 2022 as compared to the S&P 500 Index and the S&P 500 Homebuilding Index. The comparison
assumes an investment of $100 at September 30, 2018 in Beazer Homes' common stock and in each of the benchmark indices
specified, assumes that all dividends were reinvested, and accounts for the impact of any stock splits, where applicable.
Stockholder returns over the indicated period are based on historical data and should not be considered indicative of future
stockholder return.
u Beazer Homes USA, Inc.
g S&P 500 Index
p S&P 500 Homebuilding Index
Item 6. [Reserved]
Fiscal Year Ended September 30,
2018
2019
2020
2021
2022
56.03
117.91
96.65
79.51
122.93
125.09
70.44
141.55
168.52
92.05
184.02
189.24
51.60
155.55
154.60
24
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
During the first half of fiscal 2022, housing market conditions remained robust and demand remained relatively strong despite
the geopolitical environment and increasing affordability concerns due to the substantial increase in home prices over the past
two years. However, during the second half of fiscal 2022, housing demand sharply weakened due to a rapid and substantial
increase in mortgage rates, significant inflation in the broader economy, stock market volatility, and other macro-economic
conditions, which have negatively impacted buyer sentiment and behavior. We expect these factors to continue to negatively
impact demand in fiscal 2023. We believe, however, that the long-term housing market outlook remains positive, supported by
a demographic shift towards homeownership, robust employment market, and a multimillion unit housing deficit that has
accumulated over the past decade.
We are focused on making the necessary adjustments to adapt to the weak demand environment. For instance, our sales process
involves continuous analysis of competitive market data, including pricing, features and incentives, which enables us to adjust
pricing, incentives and specification levels to enhance affordability and respond to competitive dynamics and to best position
each of our communities. In relation to land acquisition, we are more conservative in our underwriting of new land deals and
will continue to attempt to renegotiate or terminate deals if a project no longer meets our stricter underwriting standards.
Like many other homebuilders, we continue to experience production challenges due to supply chain disruptions and tightness
in labor markets. These factors have resulted in elongated construction cycle times and decreased backlog conversion. We have
been proactively working with our suppliers and trade partners to address these issues and expect to see some improvements in
fiscal 2023.
Balanced Growth Strategy
Fiscal 2022 represented significant progress towards the execution of our balanced growth strategy. We successfully reached
our goal of reducing total debt below $1.0 billion. We believe our improvements in operating margin, land position and use of
lot option agreements, together with a less-leveraged and more efficient balance sheet, have positioned us well for the
headwinds we expect to encounter in fiscal 2023.
As we look to fiscal 2023, we are anticipating continuing weakness in both demand and pricing in the quarters ahead. During
fiscal 2022, we made sizable improvement in our land position and share of lots controlled through option agreements. In fiscal
2023, we plan to continue to invest in land strategically and increase our use of lot option agreements to position ourselves for
long-term growth, while focusing on the appropriate balance between pursuing growth opportunities, controlling risk and
maintaining a strong liquidity position.
Overview of Results for Our Fiscal 2022
The following is a summary of our performance against certain key operating and financial metrics during fiscal 2022:
•
During the year ended September 30, 2022, sales per community per month was 2.8 compared to 3.7 in the
prior year, and our net new orders were 4,061, down 27.0% from 5,564 in the prior year. The decrease in sales
pace is a reflection of the previously discussed macro-economic factors adversely impacting homebuyers. As we
navigate the current environment, we are focused on balancing sales pace, incentives and price adjustments to
maximize return on capital over time.
25
•
•
As of September 30, 2022, our land position includes 25,170 controlled lots, up 14.5% from 21,987 as of
September 30, 2021. Excluding land held for future development and land held for sale lots, we controlled 24,397
active lots, up 13.9% from the prior year. As of September 30, 2022, we had 13,312 lots, or 54.6% of our total active
lots, under option agreements as compared to 9,992 lots controlled, or 46.6% of our total active lots, under option
agreements as of September 30, 2021.
ASP for homes closed during the year ended September 30, 2022 was $484.1 thousand, up 20.3% from $402.4
thousand in the prior year. The year-over-year increase in ASP on closings was impacted primarily by price
appreciation due to strong demand and limited supply of homes. However, higher mortgage interest rates and softening
demand may temper ASP growth in the future.
• Homebuilding gross margin for the fiscal year ended September 30, 2022 was 23.1%, up from 18.9% in the
prior year. Homebuilding gross margin excluding impairments, abandonments, and interest for the fiscal year ended
September 30, 2022 was 26.3%, up from 23.0% in the prior year. Our homebuilding gross margin has been driven by a
favorable pricing environment, although softening demand may temper gross margin in the future.
•
•
Cancellation rate for the fiscal year ended September 30, 2022 was 17.6%, up from 11.1% in the prior year.
Cancellation rates increased significantly during the second half of the fiscal year due to the previously discussed
unfavorable macro-economic factors.
SG&A for the fiscal year ended September 30, 2022 was 10.9% of total revenue compared with 11.4% a year
earlier. The decrease in SG&A as a percentage of revenue is primarily due to increased homebuilding revenue. The
dollar amount of SG&A increased by $8.2 million, or 3.4%, primarily due to increased personnel expense. We remain
focused on improving overhead cost management in relation to our revenue growth.
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 or reduced by a variety of factors, including periods of economic downturn, which result in decreased
revenues and closings.
The following tables present new order and closings data for the periods presented:
2022
2021
2020
2022
2021
2020
New Orders (Net of Cancellations)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Total
1,141
1,442
1,251
1,291
1,854
1,661
1st Qtr
Closings
2nd Qtr
925
1,199
1,372
704
1,069
2,009
4,061
5,564
6,293
3rd Qtr
4th Qtr
Total
1,019
1,114
1,112
1,078
1,388
1,277
1,043
1,378
1,366
1,616
1,407
1,737
4,756
5,287
5,492
26
RESULTS OF CONTINUING OPERATIONS
The following table summarizes certain key income statement metrics for the periods presented:
$ in thousands
Revenue:
Homebuilding
Land sales and other
Total
Gross profit (loss):
Homebuilding
Land sales and other
Total
Gross margin:
Homebuilding(a)
Land sales and other(b)
Total
Commissions
General and administrative expenses (G&A)
Fiscal Year Ended September 30,
2022
2021
2020
$ 2,302,520
$ 2,127,700
$ 2,116,910
14,468
12,603
10,167
$ 2,316,988
$ 2,140,303
$ 2,127,077
$ 532,149
$
401,720
$
348,110
5,358
2,535
(470)
$ 537,507
$
404,255
$
347,640
23.1 %
37.0 %
23.2 %
18.9 %
20.1 %
18.9 %
16.4 %
(4.6) %
16.3 %
$
74,336
$ 177,320
$
$
80,125
163,285
$
$
82,507
170,386
SG&A (commissions plus G&A) as a percentage of total revenue
G&A as a percentage of total revenue
10.9 %
7.7 %
11.4 %
7.6 %
Depreciation and amortization
Operating income
Operating income as a percentage of total revenue
Effective tax rate(c)
Inventory impairments and abandonments
Gain (loss) on extinguishment of debt, net
$
13,360
$ 272,491
$
$
13,976
146,869
11.8 %
19.4 %
$
$
2,963
309
$
$
6.9 %
15.0 %
853
(2,025)
$
$
$
$
11.9 %
8.0 %
15,640
79,107
3.7 %
25.2 %
2,903
—
(a) Excluding impairments, abandonments, and interest amortized to cost of sales, homebuilding gross margin was 26.3%, 23.0%
and 21.0% for the fiscal years ended September 30, 2022, 2021 and 2020, respectively. Please see "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 to homebuilding gross profit and gross
margin, the most directly comparable GAAP measure.
(b) Calculated as land sales and other gross profit (loss) divided by land sales and other revenue.
(c) Calculated as tax expense for the period divided by income from continuing operations. Due to a variety of factors, our
income tax expense is not always directly correlated to the amount of pre-tax income for the associated periods. Our effective
tax rate was impacted by, among other factors, tax credits of $12.1 million, $12.1 million and $0.9 million for the fiscal years
ended September 30, 2022, 2021 and 2020, respectively. Please see Note 13 of the notes to our consolidated financial
statements in this Form 10-K for details of significant items that impact our effective tax rate.
27
Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Adjusted EBITDA to total company net income (loss), the most directly comparable GAAP measure, is
provided for each period discussed below. Management believes that Adjusted EBITDA assists investors in understanding and
comparing the operating characteristics of homebuilding activities by eliminating many of the differences in companies'
respective capitalization, tax position, and level of impairments. These EBITDA measures should not be considered alternatives
to net income (loss) determined in accordance with GAAP as an indicator of operating performance.
The following table reconciles our net income (loss) to Adjusted EBITDA for the periods presented:
in thousands
Net income (loss)
Expense (benefit) from income taxes
Interest amortized to home construction and land
sales expenses and capitalized interest impaired
Interest expense not qualified for capitalization
EBIT
Depreciation and amortization
EBITDA
Stock-based compensation expense
(Gain) loss on extinguishment of debt
Inventory impairments and abandonments(a)
Litigation settlement in discontinued operations
Restructuring and severance expenses
Joint venture impairment and abandonment charges
Adjusted EBITDA
Fiscal Year Ended September 30,
2022
2021
2020
2019
2018
$ 220,704 $ 122,021 $
52,226 $
(79,520) $
(45,375)
53,267
21,501
17,664
(37,245)
94,373
72,058
—
346,029
13,360
359,389
8,478
(309)
2,524
—
—
87,290
2,781
233,593
13,976
247,569
12,167
2,025
853
120
(10)
95,662
8,468
174,020
15,640
189,660
10,036
—
2,111
1,260
1,317
108,941
3,109
93,113
5,325
(4,715)
147,436
14,759
10,044
10,526
24,920
134,711
—
—
13,807
161,243
10,258
27,839
4,988
—
—
—
341
$ 370,082 $ 262,724 $ 204,384 $ 180,201 $ 204,669
—
—
—
(a) In periods during which we impaired certain of our inventory assets, capitalized interest that is impaired is included in the
line above titled "Interest amortized to home construction and land sales expenses and capitalized interest impaired."
28
Homebuilding Operations Data
The following table summarizes new orders and cancellation rates by reportable segment for the periods presented:
West
East
Southeast
Total
New Orders, net
Cancellation Rates
2022
2021
2020
22 v 21
21 v 20
2022
2021
2020
2,437
879
745
4,061
3,233
1,172
1,159
5,564
3,589
1,328
1,376
6,293
(24.6) %
(9.9) %
(25.0) % (11.7) %
(35.7) % (15.8) %
(27.0) % (11.6) %
18.4 %
16.2 %
16.3 %
17.6 %
12.0 %
9.6 %
10.2 %
11.1 %
16.5 %
14.5 %
15.1 %
15.8 %
Net new orders for the year ended September 30, 2022 decreased to 4,061, down 27.0% from the year ended September 30,
2021. The decrease in net new orders was driven primarily by a decrease in average active community count from 127 in the
prior year to 120, a decrease in sales pace from 3.7 sales per community per month in the prior year to 2.8, and an increase in
cancellation rates from 11.1% in the prior year to 17.6%. The decreases in sales pace and the increases in cancellation rates
across reportable segments were primarily driven by the sharp increase in mortgage rates as well as the previously discussed
other macro-economic factors adversely impacting homebuyers. During the second half of fiscal 2022, cancellation rates
increased significantly from the low teens in the first half of the fiscal year to 17.0% in fiscal third quarter and 32.8% in fiscal
fourth quarter, although when compared to beginning backlog, cancellations for fiscal third quarter and fiscal fourth quarter
2022 only represented 6.0% and 11.4% of the respective fiscal quarter's beginning backlog.
The table below summarizes backlog units by reportable segment as well as the aggregate dollar value and ASP of homes in
backlog as of September 30, 2022, 2021 and 2020:
As of September 30,
2022
2021
2020
22 v 21
21 v 20
Backlog Units:
West
East
Southeast
Total
1,257
410
424
2,091
1,653
611
522
2,786
Aggregate dollar value of homes in backlog (in millions)
ASP in backlog (in thousands)
$ 1,144.9 $ 1,284.0 $
460.9 $
$
547.5 $
1,365
624
520
2,509
995.3
396.7
(24.0) %
(32.9) %
(18.8) %
(24.9) %
(10.8) %
18.8 %
21.1 %
(2.1) %
0.4 %
11.0 %
29.0 %
16.2 %
Backlog reflects the number of homes for which the Company has entered into a sales contract with a customer but has not yet
delivered the home. Homes in backlog have historically been delivered within three to six months following commencement of
construction. Ongoing supply chain disruptions, including the availability of certain materials and construction labor, has led to
extended construction cycle times. While we are beginning to see improvements, we are still experiencing increased
construction cycle times by an average of two to three months across our markets compared to the prior year. The aggregate
dollar value of homes in backlog as of September 30, 2022 decreased 10.8% compared to the prior year due to a 24.9%
decrease in backlog units, partially offset by an 18.8% increase in the ASP of homes in backlog.
29
Homebuilding Revenue, Average Selling Price, and Closings
The table below summarizes homebuilding revenue, ASP of our homes closed, and closings by reportable segment for the
periods presented:
Homebuilding Revenue
Average Selling Price
$ in thousands
2022
2021
2020
22 v 21
21 v 20
2022
2021
2020
22 v 21
21 v 20
West
East
Southeast
$ 1,327,770 $ 1,110,208 $ 1,180,577
19.6 % (6.0) % $
468.7 $
377.0 $
368.2
24.3 % 2.4 %
555,598
419,152
565,989
476,167
(1.8) % 18.9 %
451,503
460,166
(7.2) % (1.9) %
514.4
497.2
477.6
390.2
455.7
7.7 % 4.8 %
370.8
27.4 % 5.2 %
Total
$ 2,302,520 $ 2,127,700 $ 2,116,910
8.2 % 0.5 % $
484.1 $
402.4 $
385.5
20.3 % 4.4 %
West
East
Southeast
Total
2022
2021
2,833
1,080
843
4,756
2,945
1,185
1,157
5,287
Closings
2020
3,206
1,045
1,241
5,492
22 v 21
21 v 20
(3.8) %
(8.9) %
(27.1) %
(10.0) %
(8.1) %
13.4 %
(6.8) %
(3.7) %
The increase in homebuilding revenue for fiscal 2022 as compared to fiscal 2021 is the result of an increase in ASP, partially
offset by a decrease in closings.
The increase in ASP across all segments was primarily attributed to price appreciation due to strong demand, short supply of
homes, and inflation. In the East segment, ASP changes were also impacted by a change in mix of closings between products
and among communities within the markets as compared to the prior year period. On average, we anticipate that our ASP will
continue to increase in the near-term as indicated by the ASP for homes in backlog as of September 30, 2022, although higher
mortgage interest rates and softening demand may temper ASP growth in the future.
The decrease in closings was primarily due to a decrease in backlog conversion rates as a result of longer construction cycle
times compared to the prior year. Among the three reportable segments, our Southeast segment has experienced the highest
increase in construction cycle times by an average of 3.1 months, resulting in a significant decrease in backlog conversion rates
and closings.
30
Homebuilding Gross Profit and Gross Margin
The following tables present our homebuilding (HB) gross profit and gross margin by reportable segment and in total. In
addition, such amounts are presented excluding inventory impairments and abandonments and interest amortized to cost of
sales (COS). Homebuilding gross profit is defined as homebuilding revenue less home cost of sales (which includes land and
land development costs, home construction costs, capitalized interest, indirect costs of construction, estimated warranty costs,
closing costs, and inventory impairments and abandonment charges).
Reconciliation of homebuilding gross profit and the related gross margin excluding impairments and abandonments, and
interest amortized to cost of sales to homebuilding gross profit and gross margin, the most directly comparable GAAP measure,
is provided for each period discussed below. Management believes that this information assists investors in comparing the
operating characteristics of homebuilding activities by eliminating many of the differences in companies' respective level of
impairments and level of debt. These measures should not be considered alternatives to homebuilding gross profit and gross
margin determined in accordance with GAAP as an indicator of operating performance.
$ in thousands
Fiscal Year Ended September 30, 2022
HB Gross
Profit (Loss)
HB Gross
Margin
Impairments
&
Abandonments
(I&A)
HB Gross
Profit (Loss)
excluding
I&A
HB Gross
Margin
excluding
I&A
Interest
Amortized to
COS
(Interest)
HB Gross
Profit (Loss)
excluding
I&A and
Interest
HB Gross
Margin
excluding
I&A and
Interest
West
East
Southeast
Corporate &
unallocated(a)
$
353,370
26.6 % $
289 $
353,659
26.6 % $
— $
353,659
137,937
104,341
(63,499)
24.8 %
24.9 %
143
663
138,080
105,004
24.9 %
25.1 %
—
—
138,080
105,004
—
(63,499)
71,619
8,120
26.6 %
24.9 %
25.1 %
Total homebuilding $
532,149
23.1 % $
1,095 $
533,244
23.2 % $
71,619 $
604,863
26.3 %
$ in thousands
Fiscal Year Ended September 30, 2021
HB Gross
Profit (Loss)
HB Gross
Margin
Impairments &
Abandonments
(I&A)
HB Gross
Profit (Loss)
excluding
I&A
HB Gross
Margin
excluding
I&A
Interest
Amortized to
COS
(Interest)
HB Gross
Profit
excluding
I&A and
Interest
HB Gross
Margin
excluding
I&A and
Interest
$
270,671
24.4 % $
— $
270,671
24.4 % $
— $
270,671
125,928
22.2 %
98,525
21.8 %
465
388
126,393
98,913
22.3 %
21.9 %
—
—
126,393
98,913
24.4 %
22.3 %
21.9 %
(93,404)
—
(93,404)
87,037
(6,367)
West
East
Southeast
Corporate &
unallocated(a)
Total homebuilding
$
401,720
18.9 % $
853 $
402,573
18.9 % $
87,037 $
489,610
23.0 %
$ in thousands
Fiscal Year Ended September 30, 2020
HB Gross
Profit (Loss)
HB Gross
Margin
Impairments &
Abandonments
(I&A)
HB Gross
Profit (Loss)
excluding
I&A
HB Gross
Margin
excluding
I&A
Interest
Amortized to
COS
(Interest)
HB Gross
Profit
excluding
I&A and
Interest
HB Gross
Margin
excluding
I&A and
Interest
West
East
Southeast
Corporate &
unallocated(a)
$
258,675
21.9 % $
923 $
259,598
22.0 % $
— $
259,598
98,446
87,935
(96,946)
20.7 %
19.1 %
82
641
98,528
88,576
20.7 %
19.2 %
—
—
98,528
88,576
—
(96,946)
94,844
(2,102)
22.0 %
20.7 %
19.2 %
Total homebuilding
$
348,110
16.4 % $
1,646 $
349,756
16.5 % $
94,844 $
444,600
21.0 %
(a) Corporate and unallocated includes capitalized interest and capitalized indirect costs expensed to homebuilding cost of sale
related to homes closed, as well as capitalized interest and capitalized indirect costs impaired in order to reflect projects in
progress assets at fair value.
31
Our homebuilding gross profit increased by $130.4 million to $532.1 million for the fiscal year ended September 30, 2022,
compared to $401.7 million in the prior year. The increase in homebuilding gross profit was primarily driven by an increase in
homebuilding revenue of $174.8 million and an increase in gross margin of 420 basis points to 23.1%. However, as shown in
the tables above, the comparability of our gross profit and gross margin was modestly impacted by impairments and
abandonment charges which increased by $0.2 million and interest amortized to homebuilding cost of sales which decreased by
$15.4 million year-over-year (refer to Note 5 and Note 6 of the notes to the consolidated financial statements in this Form 10-K
for additional details). When excluding the impact of impairments and abandonment charges and interest amortized to
homebuilding cost of sales, homebuilding gross profit increased by $115.3 million compared to the prior year while
homebuilding gross margin increased by 330 basis points to 26.3%. The year-over-year improvement in gross margin for the
fiscal year ending September 30, 2022 is primarily driven by lower sales incentives and pricing increases, although softening
demand may temper gross margin in the future.
West Segment: Compared to the prior fiscal year, homebuilding gross profit increased by $82.7 million due to the increase in
homebuilding revenue and higher gross margin. Homebuilding gross margin, excluding impairments and abandonments,
increased to 26.6%, up from 24.4% in the prior year. The increase in gross margin was driven primarily by lower sales
incentives and pricing increases.
East Segment: Compared to the prior fiscal year, homebuilding gross profit increased by $12.0 million due to higher gross
margin, partially offset by a decrease in homebuilding revenue. Homebuilding gross margin, excluding impairments and
abandonments, increased to 24.9%, up from 22.3% in the prior year. The increase in gross margin was driven primarily by
lower sales incentives and pricing increases.
Southeast Segment: Compared to the prior fiscal year, homebuilding gross profit increased by $5.8 million due to higher gross
margin, partially offset by a decrease in homebuilding revenue. Homebuilding gross margin, excluding impairments and
abandonments, increased to 25.1%, up from 21.9% in the prior year. The increase in gross margin was driven primarily by
lower sales incentives and pricing increases.
Measures of homebuilding gross profit and gross margin after excluding inventory impairments and abandonments, interest
amortized to cost of sales, and other non-recurring items are not GAAP financial measures. These measures should not be
considered alternatives to homebuilding gross profit and gross margin determined in accordance with GAAP as an indicator of
operating performance.
In particular, the magnitude and volatility of non-cash inventory impairments and abandonment charges for the Company and
other homebuilders have been significant historically and, as such, have made financial analysis of our industry more difficult.
Homebuilding metrics excluding these charges, as well as interest amortized to cost of sales and other similar presentations by
analysts and other companies, are frequently used to assist investors in understanding and comparing the operating
characteristics of homebuilding activities by eliminating many of the differences in companies' respective level of impairments
and levels of debt. Management believes these non-GAAP measures enable holders of our securities to better understand the
cash implications of our operating performance and our ability to service our debt obligations as they currently exist and as
additional indebtedness is incurred in the future. These measures are also useful internally, helping management to compare
operating results and to measure cash available for discretionary spending.
In a given period, our reported gross profit is generated from both communities previously impaired and communities not
previously impaired. In addition, as indicated above, certain gross profit amounts arise from recoveries of prior period costs,
including warranty items that are not directly tied to communities generating revenue in the period. Home closings from
communities previously impaired would, in most instances, generate very low or negative gross margins prior to the impact of
the previously recognized impairment. Gross margin for each home closing is higher for a particular community after an
impairment because the carrying value of the underlying land was previously reduced to the present value of future cash flows
as a result of the impairment, leading to lower cost of sales at the home closing. This improvement in gross margin resulting
from one or more prior impairments is frequently referred to in the aggregate as the “impairment turn” or “flow-back” of
impairments within the reporting period. The amount of this impairment turn may exceed the gross margin for an individual
impaired asset if the gross margin for that asset prior to the impairment would have been negative. The extent to which this
impairment turn is greater than the reported gross margin for the individual asset is related to the specific historical cost basis of
that individual asset.
32
The asset valuations that result from our impairment calculations are based on discounted cash flow analyses and are not
derived by simply applying prospective gross margins to individual communities. As such, impaired communities may have
gross margins that are somewhat higher or lower than the gross margins for unimpaired communities. The mix of home
closings in any particular quarter varies to such an extent that comparisons between previously impaired and never impaired
communities would not be a reliable way to ascertain profitability trends or to assess the accuracy of previous valuation
estimates. In addition, since any amount of impairment turn is tied to individual lots in specific communities, it will vary
considerably from period to period. As a result of these factors, we review the impairment turn impact on gross margin on a
trailing 12-month basis rather than a quarterly basis as a way of considering whether our impairment calculations are resulting
in gross margins for impaired communities that are comparable to our unimpaired communities. For fiscal 2022, our
homebuilding gross margin was 23.1% and excluding interest and inventory impairments and abandonments, it was 26.3%. For
the same period, homebuilding gross margin was as follows in those communities that have previously been impaired, which
represented 3.4% of total closings during fiscal 2022:
Homebuilding Gross Margin from previously impaired communities:
Pre-impairment turn gross margin
Impact of interest amortized to COS related to these communities
Pre-impairment turn gross margin, excluding interest amortization
Impact of impairment turns
Gross margin (post impairment turns), excluding interest amortization
11.3 %
2.4 %
13.7 %
19.3 %
33.0 %
For further discussion of our impairment policies, refer to Note 2 and Note 5 of the notes to consolidated financial statements in
this Form 10-K.
Land Sales and Other Revenue and Gross Profit (Loss)
Land sales relate to land and lots sold that do not fit within our homebuilding programs and strategic plans. We also have other
revenue related to title examinations provided for our homebuyers in certain markets. The following tables summarize our land
sales and other revenue and related gross profit (loss) by reportable segment for the periods presented:
$ in thousands
West
East
Southeast
Total
$ in thousands
West
East
Southeast
Corporate and unallocated(a)
Total
Land Sales and Other Revenue
2022
2021
2020
22 v 21
21 v 20
3,783 $
8,370 $
5,149
5,536
3,846
387
2,762
1,457
5,948
14,468 $
12,603 $
10,167
(54.8) %
33.9 %
1,330.5 %
14.8 %
203.0 %
164.0 %
(93.5) %
24.0 %
2022
2021
2020
22 v 21
21 v 20
Land Sales and Other Gross Profit (Loss)
734 $
4,206
984
(566)
5,358 $
2,330 $
440
73
(308)
2,535 $
417
111
200
(1,198)
(470)
(68.5) %
855.9 %
1,247.9 %
(83.8) %
111.4 %
458.8 %
296.4 %
(63.5) %
74.3 %
639.4 %
$
$
$
$
(a) Includes capitalized interest and capitalized indirect costs expensed to land cost of sale related to land sold, as well as
capitalized interest and capitalized indirect costs impaired in order to reflect land held for sale assets at net realizable value.
To further support our efforts to improve capital efficiency, we continued to focus on closing a number of land sales for land
positions that did not fit within our strategic plans. Future land and lot sales will depend on a variety of factors, including local
market conditions, individual community performance, and changing strategic plans.
33
Operating Income
The table below summarizes operating income by reportable segment for the periods presented:
in thousands
West
East
Southeast
Corporate and Unallocated(a)
Fiscal Year Ended September 30,
2022
2021
2020
22 v 21
21 v 20
$
253,961 $
181,303 $
161,786 $
72,658 $
102,146
68,726
(152,342)
84,630
56,319
57,581
(176,645)
40,746
(179,744)
17,516
11,145
24,303
19,517
28,311
16,835
3,099
67,762
Operating income
$
272,491 $
146,869 $
79,107 $
125,622 $
(a) Includes amortization of capitalized interest, capitalization and amortization of indirect costs, impairment of capitalized
interest and capitalized indirect costs, expenses related to numerous shared services functions that benefit all segments but are
not allocated to the operating segments, and certain other amounts that are not allocated to our operating segments.
Our operating income increased by $125.6 million to $272.5 million for the year ended September 30, 2022, compared to
operating income of $146.9 million for year ended September 30, 2021, primarily driven by the previously discussed increase
in gross profit, partially offset by an increase in SG&A expense. The dollar amount of SG&A increased by $8.2 million, or
3.4%, primarily due to increased personnel expense. Additionally, SG&A as a percentage of total revenue decreased year-over-
year by 50 basis points from 11.4% to 10.9% primarily due to the increase in homebuilding revenue.
West Segment: The $72.7 million increase in operating income compared to the prior year was primarily due to the increase in
gross profit previously discussed, partially offset by higher commissions expense on higher homebuilding revenue, higher sales
and marketing expenses, and higher other G&A expenses in the segment.
East Segment: The $17.5 million increase in operating income compared to the prior year was primarily due to the increase in
gross profit previously discussed and lower commissions expense on lower homebuilding revenue in the segment. This increase
to operating income is partially offset by higher sales and marketing expenses and higher other G&A expenses in the segment.
Southeast Segment: The $11.1 million increase in operating income compared to the prior year was primarily due to the
increase in gross profit previously discussed and lower commissions expense on lower homebuilding revenue. This increase to
operating income is partially offset by higher sales and marketing expenses and higher other G&A expenses in the segment.
Corporate and Unallocated: Our Corporate and unallocated results include amortization of capitalized interest, capitalization
and amortization of indirect costs, impairment of capitalized interest and capitalized indirect costs, expenses for various shared
services functions that benefit all segments but are not allocated, including information technology, treasury, corporate finance,
legal, branding and national marketing, and certain other amounts that are not allocated to our operating segments. For the fiscal
year ended September 30, 2022, corporate and unallocated net expenses decreased by $24.3 million from the prior fiscal year,
primarily due to lower amortization of capitalized interest and capitalized indirect costs to cost of sales, partially offset by
higher G&A costs.
Below operating income, we had two noteworthy fluctuations between fiscal 2022 and fiscal 2021 as follows: (1) we
experienced an increase in other income and expense, net, as we had no interest expense not qualified for capitalization during
fiscal 2022 compared to $2.8 million during fiscal 2021, and (2) we recorded a gain on extinguishment of debt of $0.3 million
during fiscal 2022 compared to a loss on extinguishment of debt of $2.0 million in fiscal 2021. See Note 6 and Note 7 of the
notes to our consolidated financial statements in this Form 10-K for further discussion of these items.
Income Taxes
We recognized income tax expense from continuing operations of $53.3 million for the fiscal year ended September 30, 2022,
compared to income tax expense from continuing operations of $21.5 million and $18.0 million for our fiscal years ended
September 30, 2021 and 2020, respectively. Income tax expense in our fiscal 2022, 2021 and 2020 primarily resulted from
income generated in the fiscal year and permanent book/tax differences, partially offset by the generation of additional federal
tax credits. Refer to Note 13 of the notes to the consolidated financial statements in this Form 10-K for a further discussion of
our income taxes.
34
Liquidity and Capital Resources
Our sources of liquidity include, but are not limited to, cash from operations, proceeds from Senior Notes, our Secured
Revolving Credit Facility (the Facility) and other bank borrowings, the issuance of equity and equity-linked securities, and
other external sources of funds. Our short-term and long-term liquidity depends primarily upon our level of net income,
working capital management (cash, accounts receivable, accounts payable and other liabilities), and available credit facilities.
Net changes in cash, cash equivalents, and restricted cash are as follows for the periods presented:
in thousands
Cash provided by operating activities
Cash used in investing activities
Cash used in financing activities
Net (decrease) increase in cash, cash equivalents, and restricted
cash
2022
2021
2020
$
81,074 $
31,656 $
(14,709)
(88,680)
(14,189)
(85,852)
289,095
(10,164)
(59,197)
$
(22,315) $
(68,385) $
219,734
Operating Activities
Net cash provided by operating activities was $81.1 million for the fiscal year ended September 30, 2022. The primary drivers
of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development
spending. Net cash provided by operating activities during the period was primarily driven by income before income taxes of
$274.0 million, which included $24.0 million of non-cash charges, a net decrease in non-inventory working capital of $14.5
million, partially offset by an increase in inventory of $231.4 million resulting from land acquisition, land development, and
house construction spending to support continued growth.
Net cash provided by operating activities was $31.7 million during the fiscal year ended September 30, 2021, primarily driven
by income before income taxes of $143.5 million, which included $28.1 million of non-cash charges, a net decrease in non-
inventory working capital of $7.6 million, and a decrease in inventory of $147.5 million as a result of home sales, partially
offset by land acquisition, land development, and house construction spending to support continued growth.
Investing Activities
Net cash used in investing activities for the fiscal year ended September 30, 2022 and 2021 was $14.7 million and 14.2 million,
respectively, primarily driven in both periods by capital expenditures for model homes and information systems infrastructure.
Financing Activities
Net cash used in financing activities was $88.7 million for the fiscal year ended September 30, 2022 primarily driven by
repayment of the Senior Unsecured Term Loan (the Term Loan), repurchases of a portion of our 2025 and 2027 Senior Notes,
common stock repurchases under our share repurchase program, and tax payments for stock-based compensation awards
vesting.
Net cash used in financing activities was $85.9 million during the fiscal year ended September 30, 2021 primarily driven by
installment payment of the Senior Unsecured Term Loan (the Term Loan), partial extinguishment of our 2027 Senior Notes, the
payment of cash for debt issuance costs, and tax payments for stock-based compensation awards vesting.
Debt
We generally fulfill our short-term cash requirements with cash generated from our operations and available borrowings.
Additionally, our Secured Revolving Credit Facility provides working capital and letter of credit capacity of $250.0 million. As
of September 30, 2022, no borrowings were outstanding under the Facility, and after accounting for outstanding letters of credit
under the Facility, there was a remaining capacity of $244.5 million.
On October 13, 2022, the Company entered into a Senior Unsecured Revolving Credit Facility (the “New Unsecured Facility”).
The New Unsecured Facility replaces the Secured Revolving Credit Facility, and the Company expects to use the proceeds from
the New Unsecured Facility for general corporate purposes. The New Unsecured Facility provides for a revolving credit facility
with borrowing capacity up to $265.0 million. The Company also will have the right from time to time to request to increase the
size of the commitments under the New Unsecured Facility by up to $135.0 million for a maximum of $400.0 million. The New
Unsecured Facility terminates on October 13, 2026 (the “Termination Date”), and the Company may borrow, repay and
reborrow amounts under the New Unsecured Facility until the Termination Date. See Note 8 of the notes to the consolidated
financial statements in this Form 10-K for additional details related to the New Unsecured Facility.
35
We have also entered into a number of stand-alone, cash-secured letter of credit agreements with banks. These combined
facilities provide for letter of credit needs collateralized by either cash or assets of the Company. We currently have $29.7
million of outstanding letters of credit under these facilities, which are secured by cash collateral that is maintained in restricted
accounts totaling $31.5 million.
In the future, we may from time to time seek to continue to retire or purchase our outstanding debt through cash repurchases or
in exchange for other debt securities, in open market purchases, privately-negotiated transactions, or otherwise. In addition, any
material variance from our projected operating results could require us to obtain additional equity or debt financing. There can
be no assurance that we will be able to complete any of these transactions in the future on favorable terms or at all. See Note 8
of the notes to the consolidated financial statements in this Form 10-K for additional details related to our borrowings.
Financial Position
As of September 30, 2022, we had $459.1 million of available liquidity, including $214.6 million in cash and cash equivalents
and $244.5 million of remaining capacity under our $250.0 million Secured Revolving Credit Facility, which was subsequently
replaced and expanded by the new $265.0 million Senior Unsecured Revolving Credit Facility as noted above.
While we believe we possess sufficient liquidity, we are mindful of potential short-term or seasonal requirements for enhanced
liquidity that may arise to operate and grow our business. As of the date of this report, we believe we have adequate capital
resources and sufficient access to external financing sources to satisfy our current and reasonably anticipated requirements for
funds to conduct our operations and meet other needs in the ordinary course of our business.
At times, we may also engage in capital markets, bank loan, project debt or other financial transactions, including the
repurchase of debt or potential new issuances of debt or equity securities to support our business needs. The amounts involved
in these transactions, if any, may be material. In addition, as necessary or desirable, we may adjust or amend the terms of and/or
expand the capacity of the Facility, or enter into additional letter of credit facilities, or other similar facility arrangements, in
each case with the same or other financial institutions, or allow any such facilities to mature or expire.
Supplemental Guarantor Information
As discussed in Note 8 of the notes to the consolidated financial statements in this Form 10-K, the Company's obligations to
pay principal and interest under certain debt agreements are guaranteed on a joint and several basis by substantially all of the
Company's subsidiaries. Some of the immaterial subsidiaries do not guarantee the Senior Notes. The guarantees are full and
unconditional.
The following summarized financial information is presented for Beazer Homes USA, Inc. and the guarantor subsidiaries on a
combined basis after elimination of intercompany transactions between entities in the combined group and amounts related to
investments in any subsidiary that is a non-guarantor.
in thousands
Due from non-guarantor subsidiary
Total assets
Total liabilities
in thousands
Total revenues
Gross profit
Income from continuing operations
Net income
As of September 30,
2022
2021
3,145 $
2,245,160 $
1,312,185 $
1,532
2,075,518
1,353,734
Fiscal Year Ended September 30,
2022
2021
2,312,307 $
533,942 $
219,898 $
219,884 $
2,137,976
402,646
120,571
121,372
$
$
$
$
$
$
$
36
Credit Ratings
Our credit ratings are periodically reviewed by rating agencies. In July 2022, S&P reaffirmed the Company’s corporate credit
rating of B and the Company's positive outlook. In October 2022, Moody's upgraded the ratings for our senior unsecured notes
from B3 to B2, reaffirmed the Company's issuer corporate family rating of B2 and returned the Company's outlook from stable
to positive. These ratings and our current credit condition affect, among other things, our ability to access new capital. Negative
changes to these ratings may result in more stringent covenants and higher interest rates under the terms of any new debt. Our
credit ratings could be lowered, or rating agencies could issue adverse commentaries in the future, which could have a material
adverse effect on our business, financial condition, results of operations, and liquidity. In particular, a weakening of our
financial condition, including any further increase in our leverage or decrease in our profitability or cash flows, could adversely
affect our ability to obtain necessary funds, could result in a credit rating downgrade or change in outlook, or could otherwise
increase our cost of borrowing.
Stock Repurchases and Dividends Paid
In May 2022, the Company's Board of Directors approved a new share repurchase program that authorizes the Company to
repurchase up to $50.0 million of its outstanding common stock. This newly authorized program replaced the prior share
repurchase program authorized in the first quarter of fiscal 2019 of up to $50.0 million of common stock repurchases, pursuant
to which $12.0 million of the capacity remained prior to the replacement of the program. As part of this new program, the
Company repurchased 570 thousand shares of its common stock for $8.2 million at an average price per share of $14.33 during
the year ended September 30, 2022 through open market transactions. No share repurchases were made during fiscal year 2021.
During the year ended September 30, 2020, the Company repurchased approximately 362 thousand shares of its common stock
for $3.3 million at an average price per share of $9.20 through open market transactions, including 10b5-1 plans. All shares
have been retired upon repurchase. The aggregate reduction to stockholders’ equity related to share repurchases during the
fiscal years ended September 30, 2022 and 2020 was $8.2 million and $3.3 million, respectively. As of September 30, 2022, the
remaining availability of the new share repurchase program was $41.8 million. The repurchase program has no expiration date.
The indentures under which our Senior Notes were issued contain certain restrictive covenants, including limitations on our
payment of dividends. There were no dividends paid during our fiscal years ended September 30, 2022, 2021 or 2020.
Off-Balance Sheet Arrangements and Aggregate Contractual Commitments
Lot Option Agreements
In addition to purchasing land directly, we control a portion of our land supply through lot option agreements. In recent years,
we have focused on increasing our lot option agreement usage to minimize risk as we grow our land position. As of
September 30, 2022, we controlled 25,170 lots, which includes 272 lots of land held for future development and 501 lots of
land held for sale. Of the 24,397 total active lots, we owned 11,085, or 45.4%, of these lots and the remaining 13,312 of these
lots, or 54.6%, were under option agreements, primarily through lot option agreements with land developers and land bankers,
which generally require the payment of cash or the posting of a letter of credit or surety bond for the right to acquire lots during
a specified period of time at a certain price. In comparison, we controlled 9,992 lots, or 46.6% of our total active lot position,
through option agreements as of September 30, 2021. As a result of the flexibility that these options provide us, upon a change
in market conditions, we may renegotiate the terms of the options prior to exercise or terminate the agreement. Under option
agreements, purchase of the properties is contingent upon satisfaction of certain requirements by us and the sellers, and our
liability is generally limited to forfeiture of the non-refundable deposits and other non-refundable amounts incurred, which
totaled approximately $142.4 million as of September 30, 2022. The total remaining purchase price, net of cash deposits,
committed under all options was $827.6 million as of September 30, 2022. Subject to market conditions and our liquidity, we
plan to further expand our use of option agreements to supplement our owned inventory supply.
We expect to exercise, subject to market conditions and seller satisfaction of contract terms, most of our option agreements.
Various factors, some of which are beyond our control, such as market conditions, weather conditions, and the timing of the
completion of development activities, will have a significant impact on the timing of option exercises or whether lot options
will be exercised at all.
We have historically funded the exercise of lot options with operating cash flows. We expect these sources to continue to be
adequate to fund anticipated future option exercises. Therefore, we do not anticipate that the exercise of our lot options will
have a material adverse effect on our liquidity.
37
Investments in Unconsolidated Entities
Occasionally, we use legal entities in which we have less than a controlling interest. We enter into the majority of these
arrangements with land developers, other homebuilders, and financial partners to acquire attractive land positions, to manage
our risk profile, and to leverage our capital base. The underlying land positions are developed into finished lots for sale to the
unconsolidated entity’s members or other third parties. We account for our interest in unconsolidated entities under the equity
method.
Historically, we and our partners have provided varying levels of guarantees of debt or other obligations of our unconsolidated
entities. As of September 30, 2022, we had no repayment guarantees outstanding related to the debt of our unconsolidated
entities. See Note 2 and Note 4 of the notes to the consolidated financial statements in this Form 10-K for more information.
Letters of Credit and Surety Bonds
In connection with the development of our communities, we are frequently required to provide performance, maintenance, and
other bonds and letters of credit in support of our related obligations with respect to such developments. The amount of such
obligations outstanding at any time varies in accordance with our pending development activities. In the event any such bonds
or letters of credit are drawn upon, we would be obligated to reimburse the issuer of such bonds or letters of credit. We had
outstanding letters of credit and surety bonds of $35.2 million and $279.6 million, respectively, as of September 30, 2022,
primarily related to our obligations to local governments to construct roads and other improvements in various developments.
Contractual Commitments
The following table summarizes our aggregate contractual commitments as of September 30, 2022:
in thousands
Senior notes and junior subordinated
notes(a)
Interest commitments under senior notes
and junior subordinated notes(b)
Obligations related to lots under option
Operating leases
Uncertain tax positions(c)
Total
Payments Due by Period
Total
Less than 1 Year
1-3 Years
3-5 Years
More than 5
Years
$ 1,019,223 $
— $
211,195 $
357,255 $
450,773
399,154
827,600
12,357
—
$ 2,258,334 $
65,892
386,844
3,799
131,784
368,458
4,987
103,273
61,954
2,345
—
456,535 $
—
716,424 $
—
524,827 $
98,205
10,344
1,226
—
560,548
(a) For a listing of our borrowings, refer to Note 8 of the notes to the consolidated financial statements in this Form 10-K.
(b) Interest on variable rate obligations is based on rates effective as of September 30, 2022.
(c) Based on its current inventory of uncertain tax positions and tax carryforward attributes, the Company does not expect a cash
settlement of unrecognized tax benefits related to uncertain tax positions in future years. See Note 13 of the notes to the
consolidated financial statements in this Form 10-K for additional information regarding the Company's unrecognized tax
benefits related to uncertain tax positions as of September 30, 2022.
We had outstanding letters of credit and surety bonds of $35.2 million and $279.6 million, respectively, as of September 30,
2022, primarily related to our obligations to local governments to construct roads and other improvements in various
developments.
Critical Accounting Estimates
Our critical accounting policies require the use of judgment in their application and in certain cases require estimates of
inherently uncertain matters. Although our accounting policies are in compliance with accounting principles generally accepted
in the United States of America (GAAP), a change in the facts and circumstances of the underlying transactions could
significantly change the application of the accounting policies and the resulting financial statement impact. Listed below are
those policies that we believe are critical and require the use of complex judgment in their application.
38
Inventory Valuation - Projects in Progress
Projects in progress inventory includes homes under construction and land under development grouped together as
communities. Generally, upon the commencement of land development activities, it may take three to five years (depending on,
among other things, the size of the community and its sales pace) to fully develop, sell, construct and close all the homes in a
typical community. Projects in progress are stated at cost unless facts and circumstances indicate that the carrying value of the
assets may not be recoverable.
We assess our projects in progress inventory for indicators of impairment at the community level on a quarterly basis. We
evaluate, among other things, the average sales price and margins on recent home closings, homes in backlog and expected
future home sales for each community. If indicators of impairment are present for a community with more than ten homes
remaining to close, we perform a recoverability test by comparing the expected undiscounted cash flows for the community to
its carrying value. For those communities whose carrying values exceed the aggregate undiscounted cash flows, we perform a
discounted cash flow analysis to determine the fair value of the community, and impairment charges are recorded if the fair
value of the community's inventory is less than its carrying value.
There is uncertainty associated with preparing the undiscounted cash flow analyses because future market conditions will
almost certainly be different, either better or worse, than current conditions. Significant valuation assumptions include expected
pace of closings, average sales price, expected costs for land development, direct construction, overhead, and interest. The risk
of over or under-stating any of the important cash flow variables is greater with longer-lived communities and within markets
that have historically experienced greater home price volatility. To address these risks, we consider home price and construction
cost appreciation in future years for certain communities that are expected to be selling for more than a year and/or if the market
has typically exhibited high levels of price volatility. Absent these assumptions on cost and sales price appreciation, we believe
the long-term cash flow analysis would be unrealistic. Finally, we also ensure that the pace of sales and closings used in our
undiscounted cash flow analyses are reasonable by considering seasonal variations in sales and closings, our development
schedules and what we have achieved historically, and by comparing to those achieved by our competitors for comparable
communities.
The fair value of the community is estimated based on the present value of the estimated future cash flows using discount rates
commensurate with the risk associated with the underlying community. The discount rate used may be different for each
community. The factors considered when determining an appropriate discount rate for a community include, among others: (1)
community specific factors such as product types, development stage and expected duration of the project, and the competitive
factors influencing the sales performance of the community and (2) local market factors such as employment levels, consumer
confidence and the existing supply of new and used homes for sale. The assumptions used in the determination of fair value of
projects in progress communities are based on factors known to us at the time such estimates are made and our expectations of
future operations and market conditions. Due to uncertainties in the estimation process, the significant volatility in market
conditions, the long life cycles of many communities, and potential changes in our strategy related to certain communities,
actual results could differ significantly from our estimates.
Warranty Reserves
The adequacy of our warranty reserves is based on historical experience and management's estimate of the costs to remediate
any claims. Our review includes a quarterly analysis of the historical data and trends in warranty expense by division. An
analysis by division allows us to consider market specific factors such as our warranty experience, the number of home
closings, the prices of homes, product mix, and other data in estimating our warranty reserves. In addition, our analysis also
factors in the existence of any non-recurring or community-specific warranty matters that might not be contemplated in our
historical data and trends that may need to be separately estimated based on management's judgment of the ultimate cost of
repair for that specific issue.
At September 30, 2022, our warranty reserve was $13.9 million, reflecting an accrual range of 0.3% to 1.0% of total revenue
recognized for each home closed depending on our loss history in the division in which the home was built. A ten basis point
increase in our warranty reserve rate would have increased our accrual and corresponding cost of sales by $2.5 million as of
September 30, 2022.
There were no material changes in assumptions in calculating our reserve balance for the year ended September 30, 2022.
Our estimation process is discussed in Note 9 of notes to the consolidated financial statements in this Form 10-K. While we
believe that our current warranty reserves are adequate, there can be no assurances that historical data and trends will accurately
predict our actual warranty costs or that future developments might not lead to a significant change in the reserve.
39
Income Taxes - Valuation Allowance
The carrying amounts of deferred tax assets are reduced by a valuation allowance if an assessment of their components
indicates that it is more likely than not that all or some portion of these assets will not be realized. Judgment is required in
estimating valuation allowances for deferred tax assets. The realization of a deferred tax asset ultimately depends on the
existence of sufficient taxable income in either the carryback or carryforward periods under tax law. We assess the need for
valuation allowances for deferred tax assets based on more-likely-than-not realization threshold criteria. In our assessment,
appropriate consideration is given to all positive and negative evidence related to the realization of the deferred tax assets. This
assessment considers, among other matters, (1) the nature, frequency and severity of any current and cumulative losses; (2)
forecasts of future profitability; (3) the duration of statutory carryforward periods; (4) our experience with operating loss and
tax credit carryforwards not expiring unused; (5) the Section 382 limitation on our ability to carryforward pre-ownership
change net operating losses; (6) recognized built-in losses or deductions; and (7) tax planning alternatives.
Our assessment of the need for the valuation of deferred tax assets includes assessing the likely future tax consequences of
events that have been recognized in our financial statements or tax returns. We base our estimate of deferred tax assets and
liabilities on current tax laws and rates and, in certain cases, business plans and other expectations about future outcomes.
Changes in existing tax laws or rates could affect actual tax results and future business results may affect the amount of deferred
tax liabilities or the valuation of deferred tax assets over time. Our analysis includes several scenarios with both increases and
decreases in our estimates of operating income across future periods. Routine or cyclical reductions in our pre-tax earnings
would not have changed our assessment of our ability to utilize various tax carryforwards. In addition to various company-
specific factors, we consider several positive and negative external factors that may impact our estimates. These factors may
include broad economic considerations such as mortgage interest rates, the relative health of the U.S. economy and employment
levels, as well as industry or market specific factors such as housing supply and demand outlook.
In fiscal 2022, our conclusions about our ability to more likely than not realize all of our federal and certain state tax attributes
remain consistent with our prior determinations. We considered positive factors including significant increases in our current
earnings, interest savings from our debt reduction strategies, shortage in housing supply, and our backlog. The negative factors
included the overall health of the broader economy, significant increases in mortgage interest rates, and weakened housing
demand.
Our accounting for deferred tax consequences represents our best estimate of future events. It is possible there will be changes
that are not anticipated in our current estimates. If those changes resulted in significant and sustained reduction in our pre-tax
earnings or our utilization of existing tax carryforwards, it is likely such changes would have a material impact on our financial
condition or results of operations. The nature and amounts of the various tax attributes comprising our deferred tax assets are
discussed in Note 13 of notes to the consolidated financial statements in this Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to a number of market risks in the ordinary course of business. Our primary market risk exposure relates to
fluctuations in interest rates. We do not believe that our exposure in this area is material to our cash flows or results of
operations. As of September 30, 2022, we had variable-rate debt outstanding, totaling approximately $72.3 million. A one
percent increase in the interest rate for these notes would result in an increase of our interest expense by approximately
$1.0 million over the next twelve-month period. The estimated fair value of our fixed rate debt as of September 30, 2022 was
$753.3 million, compared to a carrying value of $911.2 million. The effect of a hypothetical one-percentage point decrease in
our estimated discount rates would increase the estimated fair value of the fixed rate debt instruments from $753.3 million to
$784.2 million as of September 30, 2022.
40
Item 8. Financial Statements and Supplementary Data
BEAZER HOMES USA, INC.
CONSOLIDATED BALANCE SHEETS
in thousands (except share and per share data)
ASSETS
Cash and cash equivalents
Restricted cash
Accounts receivable (net of allowance of $284 and $290, respectively)
Income tax receivable
Owned inventory
Investments in unconsolidated entities
Deferred tax assets, net
Property and equipment, net
Operating lease right-of-use assets
Goodwill
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Trade accounts payable
Operating lease liabilities
Other liabilities
Total debt (net of debt issuance costs of $7,280 and $8,983, respectively)
Total liabilities
Stockholders’ equity:
Preferred stock (par value $0.01 per share, 5,000,000 shares authorized, no shares
issued)
Common stock (par value $0.001 per share, 63,000,000 shares authorized, 30,880,138
issued and outstanding and 31,294,198 issued and outstanding, respectively)
Paid-in capital
Retained earnings (accumulated deficit)
Total stockholders’ equity
Total liabilities and stockholders’ equity
September 30,
2022
September 30,
2021
$
214,594 $
246,715
37,234
35,890
9,606
27,428
25,685
9,929
1,737,865
1,501,602
964
156,358
24,566
9,795
11,376
13,715
4,464
204,766
22,885
12,344
11,376
11,616
$
$
2,251,963 $
2,078,810
143,641 $
11,208
174,388
983,440
1,312,677
133,391
14,154
152,351
1,054,030
1,353,926
—
31
859,856
79,399
939,286
2,251,963 $
$
—
31
866,158
(141,305)
724,884
2,078,810
See accompanying notes to consolidated financial statements.
41
BEAZER HOMES USA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
in thousands (except per share data)
Total revenue
Home construction and land sales expenses
Inventory impairments and abandonments
Gross profit
Commissions
General and administrative expenses
Depreciation and amortization
Operating income
Equity in income of unconsolidated entities
Gain (loss) on extinguishment of debt, net
Other income (expense), net
Income from continuing operations before income taxes
Expense from income taxes
Income from continuing operations
Loss from discontinued operations, net of tax
Net income
Weighted-average number of shares:
Basic
Diluted
Basic income (loss) per share:
Continuing operations
Discontinued operations
Total
Diluted income (loss) per share:
Continuing operations
Discontinued operations
Total
Fiscal Year Ended September 30,
2022
2021
2020
$
2,316,988 $
2,140,303 $
2,127,077
1,776,518
1,735,195
1,776,534
2,963
537,507
74,336
177,320
13,360
272,491
521
309
668
273,989
53,271
220,718
853
404,255
80,125
163,285
13,976
146,869
594
(2,025)
(1,712)
143,726
21,546
122,180
(14)
(159)
$
220,704 $
122,021 $
30,432
30,796
29,954
30,437
7.25 $
—
7.25 $
7.17 $
—
7.17 $
4.08 $
(0.01)
4.07 $
4.01 $
—
4.01 $
$
$
$
$
2,903
347,640
82,507
170,386
15,640
79,107
347
—
(8,165)
71,289
17,973
53,316
(1,090)
52,226
29,704
29,948
1.80
(0.04)
1.76
1.78
(0.04)
1.74
See accompanying notes to consolidated financial statements.
42
BEAZER HOMES USA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
in thousands
Balance as of September 30, 2019
Net income and comprehensive income
Stock-based compensation expense
Stock option exercises
Shares issued under employee stock plans, net
Forfeiture and other settlements of restricted stock
Common stock redeemed for tax liability
Share repurchases
Balance as of September 30, 2020
Net income and comprehensive income
Stock-based compensation expense
Stock option exercises
Shares issued under employee stock plans, net
Forfeiture and other settlements of restricted stock
Common stock redeemed for tax liability
Balance as of September 30, 2021
Net income and comprehensive income
Stock-based compensation expense
Stock option exercises
Shares issued under employee stock plans, net
Forfeiture and other settlements of restricted stock
Common stock redeemed for tax liability
Share repurchases
Balance as of September 30, 2022
Common Stock
Shares
Amount
(Accumulated
Deficit)
Retained
Earnings
Paid-in
Capital
Total
30,933 $
31 $ 854,275 $ (315,552) $ 538,754
—
—
52
588
(26)
(173)
(362)
—
—
—
—
—
—
—
—
52,226
10,036
226
—
(2,058)
(2,686)
(3,327)
—
—
—
—
—
52,226
10,036
226
—
(2,058)
(2,686)
(3,327)
31,012 $
31 $ 856,466 $ (263,326) $ 593,171
—
—
198
417
(29)
(304)
31,294 $
—
—
1
518
(55)
(308)
(570)
30,880 $
—
—
—
—
122,021
122,021
12,167
569
—
—
12,167
569
—
—
(3,044)
—
—
—
—
(3,044)
—
31 $ 866,158 $ (141,305) $ 724,884
—
—
—
—
—
—
—
—
—
—
8,478
5
—
—
(6,631)
220,704
—
220,704
8,478
—
—
—
—
5
—
—
(6,631)
—
(8,154)
31 $ 859,856 $
—
(8,154)
79,399 $ 939,286
See accompanying notes to consolidated financial statements.
43
BEAZER HOMES USA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended September 30,
2022
2021
2020
$
220,704 $
122,021 $
52,226
in thousands
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
Stock-based compensation expense
Inventory impairments and abandonments
Deferred and other income tax expense
Gain on sale of fixed assets
Change in allowance for doubtful accounts
Equity in income of unconsolidated entities
Cash distributions of income from unconsolidated entities
(Gain) loss on extinguishment of debt, net
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
Decrease in income tax receivable
(Increase) decrease in inventory
(Increase) decrease in other assets
Increase in trade accounts payable
Increase in other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Proceeds from sale of fixed assets
Net cash used in investing activities
Cash flows from financing activities:
Repayment of debt
Repayment of borrowings from credit facility
Borrowings from credit facility
Debt issuance costs
Repurchase of common stock
Tax payments for stock-based compensation awards
Stock option exercises and other financing activities
Net cash used in financing activities
Net (decrease) increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
Cash, cash equivalents, and restricted cash at end of period
$
13,360
8,478
2,963
53,267
(332)
(6)
(521)
380
(309)
(10,199)
—
(231,445)
(2,620)
10,250
17,104
81,074
(15,048)
339
(14,709)
(73,900)
(195,000)
195,000
—
(8,154)
(6,631)
5
(88,680)
(22,315)
274,143
251,828 $
13,976
12,167
853
21,501
(392)
(68)
(594)
132
2,025
(5,800)
460
(147,511)
(1,922)
1,199
13,609
31,656
(14,645)
456
(14,189)
(82,476)
—
—
(901)
—
(3,044)
569
(85,852)
(68,385)
342,528
274,143 $
15,640
10,036
2,903
17,664
(335)
54
(347)
306
—
6,524
315
154,865
3
1,040
28,201
289,095
(10,642)
478
(10,164)
(51,150)
(390,000)
390,000
(202)
(3,327)
(2,686)
(1,832)
(59,197)
219,734
122,794
342,528
See accompanying notes to consolidated financial statements.
44
BEAZER HOMES USA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Description of Business
Beazer Homes USA, Inc. (“we,” “us,” “our,” “Beazer,” “Beazer Homes” and the “Company”) is a geographically diversified
homebuilder with active operations in 13 states within three geographic regions in the United States: the West, East, and
Southeast.
Our homes are designed to appeal to homeowners at different price points across various demographic segments, and are
generally offered for sale in advance of their construction. Our objective is to provide our customers with homes that
incorporate extraordinary value at an affordable price, delivered through our three strategic pillars discussed previously, while
seeking to maximize our return on invested capital over the course of a housing cycle.
(2) Basis of Presentation and Summary of Significant Accounting Policies
Basis of Consolidation
The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP), and present the consolidated financial position, income,
stockholders' equity, and cash flows of Beazer Homes USA, Inc. and its consolidated subsidiaries. Intercompany transactions
and balances have been eliminated in consolidation. Our net income is equivalent to our comprehensive income, so we have not
presented a separate statement of comprehensive income.
In the past, we have discontinued homebuilding operations in various markets. Results from certain of these exited markets are
reported as discontinued operations in the accompanying consolidated statements of operations for all periods presented (see
Note 19 for a further discussion of our discontinued operations).
Our fiscal year 2022 began on October 1, 2021 and ended on September 30, 2022. Our fiscal year 2021 began on October 1,
2020 and ended on September 30, 2021. Our fiscal year 2020 began on October 1, 2019 and ended on September 30, 2020.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make informed estimates and
judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Accordingly,
actual results could differ from these estimates.
Cash and Cash Equivalents and Restricted Cash
We consider highly liquid investments with maturities of three months or less when acquired to be cash equivalents. As of
September 30, 2022, the majority of our cash and cash equivalents were on demand deposits with major banks. These assets
were valued at par and had no withdrawal restrictions. Restricted cash includes cash restricted by state law or a contractual
requirement, including cash collateral for our outstanding cash-secured letters of credit (refer to Note 8).
Accounts Receivable and Allowance
Accounts receivable include escrow deposits to be received from title companies associated with closed homes, receivables
from municipalities related to the development of utilities or other infrastructure, land banker reimbursements to be received
related to land development costs, rebates to be received from our suppliers and other miscellaneous receivables. Generally, we
receive cash from title companies within a few days of the home being closed. We regularly review our receivable balances for
collectability and record an allowance for expected credit losses.
Owned Inventory
Owned inventory includes land acquisition costs, land development costs, home construction costs, capitalized interest, real
estate taxes, direct overhead costs and capitalized indirect costs incurred during land development and home construction, and
common costs that benefit the entire community, less impairments, if any. Land acquisition, land development and other
common costs (both incurred and estimated to be incurred) are allocated to individual lots on a pro-rata basis, and the cost of
individual lots is transferred to homes under construction when home construction begins. Changes in estimated land and other
common costs to be incurred in a community are generally allocated to the remaining lots on a prospective basis. Home
construction costs are accumulated on a per-home basis. Cost of home closings includes the specific construction costs of the
home and the allocated lot costs. Refer to Note 5 for a further discussion and detail of our inventory balance.
45
Inventory Valuation - Projects in Progress
Projects in progress inventory includes homes under construction and land under development grouped together as
communities. Generally, upon the commencement of land development activities, it may take three to five years (depending on,
among other things, the size of the community and its sales pace) to fully develop, sell, construct and close all the homes in a
typical community. Projects in progress are stated at cost unless facts and circumstances indicate that the carrying value of the
assets may not be recoverable.
We assess our projects in progress inventory for indicators of impairment at the community level on a quarterly basis. We
evaluate, among other things, the average sales price and margins on recent home closings, homes in backlog and expected
future home sales for each community. If indicators of impairment are present for a community with more than ten homes
remaining to close, we perform a recoverability test by comparing the expected undiscounted cash flows for the community to
its carrying value. This undiscounted cash flow analysis requires important assumptions including, among other things, the
current and future home sale prices, margins and the pace of closings to occur in the future. For those communities whose
carrying values exceed the aggregate undiscounted cash flows, we perform a discounted cash flow analysis to determine the fair
value of the community, and impairment charges are recorded if the fair value of the community's inventory is less than its
carrying value.
The assumptions used in the determination of fair value of projects in progress communities are based on factors known to us at
the time such estimates are made and our expectations of future operations and market conditions. The fair value of the
community is estimated using the present value of the estimated future cash flows using discount rates commensurate with the
risk associated with the underlying community. Should the estimates or expectations used in determining estimated fair values
deteriorate in the future, we may be required to recognize additional impairment charges and write-offs related to these assets,
and such amounts could be material.
Inventory Valuation - Land Held for Future Development
Land held for future development consists of communities for which construction and development activities are expected to
occur in the future or have been idled. All applicable carrying costs, such as interest and real estate taxes, are expensed as
incurred. Land held for future development is stated at cost unless facts and circumstances indicate that the carrying value of the
assets may not be recoverable, such as the future enactment of a development plan or the occurrence of outside events. We
evaluate the potential plans for each community in land held for future development if changes in facts and circumstances occur
that would give rise to a more detailed analysis for a change in the status of a community.
Inventory Valuation - Land Held for Sale
Land held for sale includes land and lots that do not fit within our homebuilding programs and strategic plans in certain
markets. We record land held for sale at the lower of the asset's carrying value or fair value less costs to sell (net realizable
value). Land is classified as held for sale when the following criteria are met:
• management has the authority and commits to a plan to sell the land;
•
•
•
•
•
the land is available for immediate sale in its present condition, subject only to terms that are usual and customary for
sales of land assets;
there is an active program to locate a buyer and the plan to sell the property has been initiated;
the sale of the land is probable within one year;
the property is being actively marketed at a reasonable sale price relative to its current fair value; and
it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made.
We evaluate the net realizable value of a land held for sale asset when indicators of impairment are present. In determining the
fair value of the assets less cost to sell, we consider factors including current sales prices for comparable assets in the area,
recent market analysis studies, appraisals, any recent legitimate offers and listing prices of similar properties. If the current
carrying value of the asset exceeds the estimated fair value less cost to sell, the asset is impaired and written down to its
estimated fair value less cost to sell.
Due to uncertainties in the estimation process, it is reasonably possible that actual results could differ from the estimates used in
our analysis. Our assumptions about land sales prices require significant judgment because the market is highly sensitive to
changes in economic conditions. We calculate the estimated fair values of land held for sale based on current market conditions
and assumptions made by management, which may differ materially from actual results and may result in additional
impairments if market conditions deteriorate.
46
Lot Option Agreements and Variable Interest Entities (VIE)
In addition to purchasing land directly, we utilize lot option agreements that enable us to defer acquiring portions of properties
owned by third parties and unconsolidated entities until we have determined whether to exercise our lot option. The majority of
our lot option agreements require a non-refundable cash deposit, irrevocable letter of credit or surety bond based on a
percentage of the purchase price of the land for the right to acquire lots during a specified period at a specified price. Purchase
of the properties under these agreements is contingent upon satisfaction of certain requirements by us and the sellers. Under lot
option agreements, our liability is generally limited to forfeiture of the non-refundable deposits, letters of credit or surety bonds,
and other non-refundable amounts incurred. If the Company cancels a lot option agreement, it would result in a write-off of the
related deposits and pre-acquisition costs, but would not expose the Company to the overall risks or losses of the applicable
entity we are purchasing from. We expect to exercise, subject to market conditions and seller satisfaction of contract terms,
most of our remaining option agreements. Various factors, some of which are beyond our control, such as market conditions,
weather conditions, and the timing of the completion of development activities, will have a significant impact on the timing of
option exercises or whether lot options will be exercised at all.
The following table provides a summary of our interests in lot option agreements as of September 30, 2022 and 2021:
in thousands
As of September 30, 2022
Unconsolidated lot option agreements
As of September 30, 2021
Unconsolidated lot option agreements
Deposits &
Non-refundable
Pre-acquisition
Costs Incurred(a)
Remaining
Obligation,
Net of Cash
Deposits
$
$
142,433 $
827,600
114,688 $
676,149
(a) Amount is included as a component of land under development within our owned inventory in the consolidated balance sheet.
In accordance with Accounting Standards Codification (ASC) Topic 810, Consolidation (ASC 810), if the entity holding the
land under option is a variable VIE, the Company's deposit represents a variable interest in that entity. ASC 810 requires a
company consolidate a VIE if the company is determined to be the primary beneficiary. To determine whether we are the
primary beneficiary of the VIE, we first evaluate whether we have the ability to control the activities of the VIE that most
significantly impact its economic performance. Such activities include, but are not limited to, (1) the ability to determine the
budget and scope of land development work, if any; (2) the ability to control financing decisions for the VIE; (3) the ability to
acquire additional land into the VIE or dispose of land in the VIE not under contract with Beazer; and (4) the ability to change
or amend the existing option agreement with the VIE. If we are not determined to control such activities, we are not considered
the primary beneficiary of the VIE and thus do not consolidate the VIE. If we do have the ability to control such activities, we
will continue our analysis by determining if we are expected to absorb a potentially significant amount of the VIE's losses or, if
no party absorbs the majority of such losses, if we will benefit from potentially a significant amount of the VIE's expected
gains.
If we are the primary beneficiary of the VIE, we will consolidate the VIE even though creditors of the VIE have no recourse
against the Company. For those we consolidate, we record the remaining contractual purchase price under the applicable lot
option agreement, net of option deposits already paid, to consolidated inventory not owned with an offsetting increase to
obligations related to consolidated inventory not owned on our consolidated balance sheets. Also, to reflect the total purchase
price of this inventory on a consolidated basis, we present the related option deposits as consolidated inventory not owned. No
VIEs required consolidation as of September 2022 and 2021 because we have determined that we were not the primary
beneficiary of any VIEs.
47
Investments in Unconsolidated Entities
We participate in a number of joint ventures and other investments in which we have less than a controlling interest. We enter
into the majority of these investments with land developers, other homebuilders and financial partners to acquire attractive land
positions, to manage our risk profile and to leverage our capital base. The land positions are developed into finished lots for sale
to the unconsolidated entity's members or other third parties. We recognize our share of equity in income (loss) and profits
(losses) from the sale of lots to other buyers. Our share of profits from lots we purchase from the unconsolidated entities is
deferred and treated as a reduction of the cost of the land purchased from the unconsolidated entity. Such profits are
subsequently recognized at the time the home closes and title passes to the homebuyer. We evaluate our investments in
unconsolidated entities for impairment during each reporting period. A series of operating losses of an investee or other factors
may indicate that a decrease in the value of our investment in the unconsolidated entity has occurred that is other-than-
temporary. The amount of impairment recognized is the excess of the investment’s carrying value over its estimated fair value,
which is determined primarily using a discounted cash flow model. Our unconsolidated entities typically obtain secured
acquisition, development and construction financing. We account for our interest in unconsolidated entities under the equity
method. For additional discussion of these entities, refer to Note 4.
Property and Equipment, Net
Our property and equipment is recorded at cost, net of accumulated depreciation. Depreciation is computed on a straight-line
basis based on estimated useful lives as follows:
Asset Class
Buildings and improvements
Information systems
Furniture, fixtures and computer and office equipment
Model and sales office improvements
Leasehold improvements
Goodwill
Useful Lives
25 - 30 years
Lesser of estimated useful life of the asset or 5 years
3 - 7 years
Lesser of estimated useful life of the asset or estimated life
of the community
Lesser of the lease term or the estimated useful life of the
asset
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets from the businesses that we
acquire. The Company's entire goodwill balance is recorded in our Southeast reportable segment. The Company evaluates
goodwill for impairment at the reporting unit level annually during the fourth quarter or more often if indicators of impairment
exist.
The Company has the option to perform a qualitative or quantitative assessment to determine whether the fair value of a
reporting unit exceeds its carrying value. Qualitative factors may include, but are not limited to, economic conditions, industry
and market considerations, cost factors, overall financial performance of the reporting unit and other entity and reporting unit
specific events. If after assessing these qualitative factors, the Company determines it is more likely than not that the fair value
of the reporting unit is less than the carrying value, then a quantitative assessment is performed.
The fair value of the reporting unit is estimated using a combination of the income approach, utilizing the discounted cash flow
method, and the market approach, utilizing readily available market valuation multiples. If the estimated fair value of the
reporting unit is less than its carrying value, an impairment will be recognized for the amount by which the carrying amount
exceeds the reporting unit’s fair value. Determining the fair value of a reporting unit under the quantitative goodwill impairment
assessment requires the Company to make estimates and assumptions regarding future operating results, cash flows (including
timing), discount rates, expected growth rates, capital expenditures and cost of capital, similar to those a market participant
would use to assess fair value. We also make certain assumptions about future economic conditions and other data. Many of the
factors used in assessing fair value are outside the control of management, and these assumptions and estimates may change in
future periods.
During the fourth quarter of 2022, the Company performed its annual goodwill impairment analysis and concluded our
goodwill was not impaired.
Other Assets
Our other assets principally include prepaid expenses, unamortized debt issuance costs on our Secured Revolving Credit
Facility, and assets related to our deferred compensation plan (refer to Note 15 for a discussion of our deferred compensation
plan).
48
Other Liabilities
Our other liabilities principally include accrued compensations and benefits, accrued interest on our outstanding borrowings,
customer deposits, accrued warranty expense, litigation accruals, income tax liabilities and other accruals related to our
operations. Refer to Note 12 for a detail of our other liabilities.
Income Taxes
Our provision for income taxes is comprised of taxes that are currently payable and deferred taxes that relate to temporary
differences between financial reporting carrying values and tax bases of assets and liabilities. Deferred tax assets and liabilities
result from deductible or taxable amounts in future years when such assets and liabilities are recovered or settled, and are
measured using the enacted tax rates and laws that are expected to be in effect when the assets and liabilities are recovered or
settled. We include any estimated interest and penalties on tax related matters in income taxes payable. We recognize the effect
of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are
measured at the largest amount that is greater than 50% likely of being realized. We record interest and penalties related to
unrecognized tax benefits in income tax expense within our consolidated statements of operations. Changes in recognition of
measurement are recorded in the period in which the change in judgment occurs. Refer to Note 13 for a detailed discussion of
our tax provision, deferred tax assets and valuation allowance.
Our income tax receivable includes the refundable portion of our alternative minimum tax credit. The alternative minimum tax
credit became a refundable credit when the alternative minimum tax was eliminated with the enactment of the Tax Cuts and
Jobs Act on December 22, 2017. During fiscal 2019, we recorded our initial refund claim of $4.6 million, or half of our
outstanding $9.2 million credit. During fiscal 2020, the enactment of the Coronavirus Aid, Relief and Economic Security
(CARES) Act on March 27, 2020 enabled us to claim the entire $9.2 million alternative minimum tax credit with the filing of
our fiscal 2019 return. As a result, we reduced our deferred tax asset by the remaining $4.6 million of alternative minimum tax
credits and increased our tax receivable for the refund we expect to receive.
Revenue Recognition
We recognize revenue upon the transfer of promised goods to our customers in an amount that reflects the consideration to
which we expect to be entitled by applying the process specified in ASC Topic 606, Revenue from Contracts with Customers.
The following table presents our total revenue disaggregated by revenue stream:
in thousands
Homebuilding revenue
Land sales and other revenue
Total revenue(a)
Fiscal Year Ended
September 30,
2022
2021
2020
$
2,302,520 $
2,127,700 $
2,116,910
14,468
12,603
10,167
$
2,316,988 $
2,140,303 $
2,127,077
(a) Please see Note 18 for total revenue disaggregated by reportable segment.
Homebuilding revenue
Homebuilding revenue is reported net of any discounts and incentives and is generally recognized when title to and possession
of the home is transferred to the buyer at the closing date. The performance obligation to deliver the home is generally satisfied
in less than one year from the original contract date. Home sale contract assets consist of cash from home closings held by title
companies in escrow for our benefit, typically for less than five days, and are considered accounts receivable. Contract
liabilities include customer deposits related to sold but undelivered homes and totaled $34.3 million and $28.5 million as of
September 30, 2022 and 2021, respectively. Of the customer liabilities outstanding as of September 30, 2021, $26.3 million was
recognized in revenue during the year ended September 30, 2022, upon closing of the related homes, and $1.2 million was
refunded to or forfeited by the buyer.
Land sales and other revenue
Land sales revenue relates to land that does not fit within our homebuilding programs and strategic plans. Land sales typically
require cash consideration on the closing date, which is generally when performance obligations are satisfied. We also provide
title examinations for our homebuyers in certain markets. Revenues associated with our title operations are recognized when
closing services are rendered and title insurance policies are issued, both of which generally occur as each home is closed.
49
Home Construction Expenses
Home construction expenses includes the specific construction costs of the home and the allocated lot costs (land acquisition,
land development and other common costs are allocated to individual lots on a pro-rata basis based on the number of lots
remaining to close). All home closing costs are charged to home construction expenses in the period when the revenues from
home closing are recognized.
Sales discounts and incentives include discounts on home prices, discounts on home building options and option upgrades, and
seller-paid financing or closing costs. Home price discounts and option discounts are accounted for as a reduction in the sale
price of the home, thereby decreasing the amount of revenue we recognize on that closing. All other sales incentives are
recognized as a cost of selling the home and are included in home construction expenses.
Estimated future warranty costs are charged to home construction expense in the period when the revenues from home closings
are recognized. Such estimated warranty costs generally range from 0.3% to 1.0% of total revenue recognized for each home
closed. Additional warranty costs are charged to home construction expenses as necessary based on management's estimate of
the costs to remediate existing claims. See Note 9 for a more detailed discussion of warranty costs and related reserves.
Advertising Costs
Advertising costs related to continuing operations of $14.4 million, $14.0 million and $15.9 million for our fiscal years 2022,
2021 and 2020, respectively, were expensed as incurred and were included in general and administrative (G&A) expenses in the
consolidated statements of operations.
Fair Value Measurements
Certain of our assets are required to be recorded at fair value on a recurring basis, for example, the fair value of our deferred
compensation plan assets are based on market-corroborated inputs (level 2). Certain of our assets are required to be recorded at
fair value on a non-recurring basis when events and circumstances indicate that the carrying value may not be recovered (level
3). For example, we review our long-lived assets, including inventory, for recoverability when factors indicate an impairment
may exist, but no less than quarterly. Fair value is based on estimated cash flows discounted for market risks associated with the
long-lived assets. The fair value of certain of our financial instruments approximates their carrying amounts due to the short
maturity of these assets and liabilities or the variable interest rates on such obligations. The fair value of our publicly-held debt
is generally estimated based on quoted bid prices for these instruments (level 2). Certain of our other financial liabilities are
estimated by discounting scheduled cash flows through maturity or using market rates currently being offered on loans with
similar terms and credit quality. See Note 10 for additional discussion of our fair value measurements.
Stock-Based Compensation
We use the Black-Scholes option-pricing model to value our stock option grants. Restricted stock awards with market
conditions are valued using the Monte Carlo valuation method. Other restricted stock awards without market conditions are
valued based on the market price of the Company's common stock on the date of the grant. In addition, we reflect the benefits
of tax deductions in excess of recognized compensation cost as an operating cash outflow. Compensation cost arising from all
stock-based compensation awards is recognized as expense using the straight-line method over the vesting period and is
included in G&A in our consolidated statements of operations. See Note 16 for additional discussion of our stock-based
compensation.
Recent Accounting Pronouncements
Reference Rate Reform. In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on
Financial Reporting (ASU 2020-04). ASU 2020-04 provides companies with optional guidance to ease the potential accounting
burden associated with transitioning away from reference rates that are expected to be discontinued. This guidance is effective
beginning on March 12, 2020, and all entities may elect to apply the amendments prospectively through December 31, 2022.
The Company is currently evaluating the impact but do not expect that the adoption of ASU 2020-04 will have a material
impact on our consolidated financial statements and related disclosures.
50
(3) Supplemental Cash Flow Information
The following table presents supplemental disclosure of non-cash and cash activity as well as a reconciliation of total cash
balances between the consolidated balance sheets and consolidated statements of cash flows for the periods presented:
in thousands
Supplemental disclosure of non-cash activity:
Beginning operating lease right-of-use assets (ASC 842 adoption)(a) $
Beginning operating lease liabilities (ASC 842 adoption)(a)
$
Increase in operating lease right-of-use assets(b)
Increase in operating lease liabilities(b)
Derecognition of investment in unconsolidated entities(c)
$
$
$
Fiscal Year Ended September 30,
2022
2021
2020
— $
— $
835 $
835 $
3,641 $
— $
— $
2,905 $
2,905 $
— $
13,895
16,028
3,104
3,104
—
Supplemental disclosure of cash activity:
Interest payments
Income tax payments
Tax refunds received
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents, and restricted cash shown in the
statement of cash flows
$
$
$
$
70,132 $
74,171 $
71,888
4,216 $
— $
3,462 $
1,078 $
546
315
214,594 $
37,234
246,715 $
27,428
327,693
14,835
$
251,828 $
274,143 $
342,528
(a) On October 1, 2019, we adopted Accounting Standards Update (ASU) No. 2016-02, Leases (ASU 2016-02) and related
amendments, collectively codified in ASC Topic 842, Leases (ASC 842). Upon adoption of ASC 842, we recorded net
operating lease right-of-use (ROU) assets of $13.9 million and operating lease liabilities of $16.0 million. Existing prepaid
rent and accrued rent were recorded as an offset to the gross operating lease ROU assets.
(b) Represents leases renewed or additional leases commenced during the fiscal years ended September 30, 2022, 2021 and
2020.
(c) Represents the derecognition of investment in unconsolidated entities associated with the carrying value of previously held
interest in Imagine Homes upon the acquisition of substantially all of the assets of Imagine Homes during the quarter ended
June 30, 2022. Refer to Note 4 for further discussion.
51
(4) Investments in Unconsolidated Entities
Unconsolidated Entities
As of September 30, 2022, the Company participated in certain joint ventures and had investments in unconsolidated entities in
which it had less than a controlling interest. The following table presents the Company's investment in these unconsolidated
entities as well as the total equity and outstanding borrowings of these unconsolidated entities as of September 30, 2022 and
2021:
in thousands
Investment in unconsolidated entities
Total equity of unconsolidated entities
Total outstanding borrowings of unconsolidated entities
September 30, 2022
September 30, 2021
$
$
$
964 $
1,564 $
— $
4,464
7,316
12,708
On May 20, 2022, the Company acquired substantially all of the assets of Imagine Homes, a private San Antonio-based
homebuilder. For the past 16 years, Beazer has held a one-third ownership stake in Imagine Homes, recorded as an investment
in unconsolidated entities on the consolidated balance sheet. The transaction was deemed an asset acquisition under the
guidance of ASC Topic 805-50, Business Combinations - Related Issues. The Company accounted for the asset acquisition
following the cost accumulation model, whereby the sum of the carrying value of the previously held interest, additional
consideration paid and transaction costs were allocated to the acquired assets on a relative fair value basis. The reduction in
balances of the Company's investment in unconsolidated entities, total equity and outstanding borrowings of unconsolidated
entities reflects the Imagine Homes transaction.
Equity in income from unconsolidated entity activities included in income from continuing operations is as follows for the
periods presented:
in thousands
Fiscal Year Ended September 30,
2022
2021
2020
Equity in income of unconsolidated entities
$
521 $
594 $
347
For the fiscal years ended September 30, 2022, 2021 and 2020, there were no impairments related to investments in
unconsolidated entities.
Guarantees
Historically, the Company's joint ventures typically obtained secured acquisition, development, and construction financing. In
addition, the Company and its joint venture partners provided varying levels of guarantees of debt and other debt-related
obligations for these unconsolidated entities. However, as of September 30, 2022 and 2021, the Company had no outstanding
guarantees or other debt-related obligations related to our investments in unconsolidated entities.
The Company and its joint venture partners generally provide unsecured environmental indemnities to land development joint
venture project lenders. These indemnities obligate the Company to reimburse the project lenders for claims related to
environmental matters for which they are held responsible. During our fiscal years ended September 30, 2022 and 2021, the
Company was not required to make any payments related to environmental indemnities.
In assessing the need to record a liability for these guarantees, the Company considers its historical experience in being required
to perform under the guarantees, the fair value of the collateral underlying these guarantees, and the financial condition of the
applicable unconsolidated entities. In addition, the fair value of the collateral of unconsolidated entities is monitored to ensure
that the related borrowings do not exceed the specified percentage of the value of the property securing the borrowings. As of
September 30, 2022, no liability was recorded for the contingent aspects of any guarantees that were determined to be
reasonably possible but not probable.
52
(5) Owned Inventory
The components of our owned inventory are as follows as of September 30, 2022 and 2021:
in thousands
Homes under construction
Land under development
Land held for future development
Land held for sale
Capitalized interest
Model homes
Total owned inventory
September 30, 2022
September 30, 2021
$
785,742 $
731,190
19,879
15,674
109,088
76,292
648,283
648,404
19,879
9,179
106,985
68,872
$
1,737,865 $
1,501,602
Homes under construction include homes substantially finished and ready for delivery and homes in various stages of
construction, including costs of the underlying lot, direct construction costs and capitalized indirect costs. As of September 30,
2022, we had 2,688 homes under construction, including 887 spec homes totaling $246.5 million (793 in-process spec homes
totaling $208.7 million, and 94 finished spec homes totaling $37.8 million). As of September 30, 2021, we had 2,912 homes
under construction, including 576 spec homes totaling $116.4 million 542 in-process spec homes totaling $105.2 million, and
34 finished spec homes totaling $11.2 million).
Land under development consists principally of land acquisition, land development and other common costs. These land related
costs are allocated to individual lots on a pro-rata basis, and the lot costs are transferred to homes under construction when
home construction begins for the respective lots. Certain of the fully developed lots in this category are reserved by a customer
deposit or sales contract.
Land held for future development consists of communities for which construction and development activities are expected to
occur in the future or have been idled and are stated at cost unless facts and circumstances indicate that the carrying value of the
assets may not be recoverable. All applicable carrying costs, such as interest and real estate taxes, are expensed as incurred.
Land held for sale includes land and lots that do not fit within our homebuilding programs and strategic plans in certain
markets, and land is classified as held for sale once certain criteria are met (refer to Note 2). These assets are recorded at the
lower of the carrying value or fair value less costs to sell (net realizable value).
The amount of interest we are able to capitalize depends on our qualified inventory balance, which considers the status of our
inventory holdings. Our qualified inventory balance includes the majority of our homes under construction and land under
development but excludes land held for future development and land held for sale (see Note 6 for additional information on
capitalized interest).
53
Total owned inventory by reportable segment is presented in the table below as of September 30, 2022 and 2021:
in thousands
September 30, 2022
West
East
Southeast
Corporate and unallocated(b)
Total
September 30, 2021
West
East
Southeast
Corporate and unallocated(b)
Projects in
Progress (a)
Land
Held for Future
Development
Land Held
for Sale
Total Owned
Inventory
$
934,309 $
3,483 $
14,998 $
313,613
284,424
169,966
10,888
5,508
—
—
676
—
952,790
324,501
290,608
169,966
$
$
1,702,312 $
19,879 $
15,674 $
1,737,865
781,036 $
3,483 $
4,478 $
264,991
269,738
156,779
10,888
5,508
—
584
4,117
—
788,997
276,463
279,363
156,779
Total
$
1,472,544 $
19,879 $
9,179 $
1,501,602
(a) Projects in progress include homes under construction, land under development, capitalized interest, and model home
categories from the preceding table.
(b) Projects in progress amount includes capitalized interest and indirect costs that are maintained within our Corporate and
unallocated segment.
Inventory Impairments
The following table presents, by reportable segment, our total impairments and abandonment charges for the periods presented:
in thousands
Land Held for Sale:
West
Southeast
Corporate and unallocated(a)
Total impairment charges on land held for sale
Abandonments:
West
East
Southeast
Total abandonments charges
Total impairments and abandonment charges
Fiscal Year Ended September 30,
2022
2021
2020
$
$
$
$
$
1,303 $
—
565
1,868 $
289 $
143
663
1,095 $
2,963 $
— $
—
—
— $
— $
465
388
853 $
853 $
89
8
1,160
1,257
923
82
641
1,646
2,903
(a) Amount represents capitalized interest and indirects balance that was impaired. Capitalized interest and indirects are
maintained within our Corporate and unallocated segment.
Projects in Progress Impairments
We assess our projects in progress inventory for indicators of impairment at the community level on a quarterly basis. If
indicators of impairment are present for a community with more than ten homes remaining to close, we perform a recoverability
test by comparing the expected undiscounted cash flows for the community to its carrying value. If the aggregate undiscounted
cash flows are in excess of the carrying value, the asset is considered to be recoverable and is not impaired. If the carrying value
exceeds the aggregate undiscounted cash flows, we perform a discounted cash flow analysis to determine the fair value of the
community, and impairment charges are recorded if the fair value of the community's inventory is less than its carrying value.
No project in progress impairments were recognized during the fiscal years ended September 30, 2022, 2021 and 2020.
54
Land Held for Sale Impairments
Impairments on land held for sale generally represent write downs of these properties to net realizable value based on sales
contracts, letters of intent, current market conditions and recent comparable land sale transactions, as applicable. Absent an
executed sales contract, our assumptions related to land sales prices require significant judgment because the real estate market
is highly sensitive to changes in economic conditions, and our estimates of sale prices could differ significantly from actual
results.
During the fiscal year ended September 30, 2022, we recognized $1.9 million land held for sale impairment charges related to
two held for sale communities in the West segment. No land held for sale impairment charges were recognized during the fiscal
year ended September 30, 2021. During the fiscal year ended September 30, 2020, we recognized $1.3 million land held for
sale impairment charges related to two held for sale communities: one in the West segment and one in the Southeast segment.
Abandonments
From time-to-time, we may determine to abandon lots or not exercise certain option agreements that are not projected to
produce adequate results or no longer fit with our long-term strategic plan. Additionally, in certain limited instances, we are
forced to abandon lots due to seller non-performance, or permitting or other regulatory issues that do not allow us to build on
those lots. If we intend to abandon or walk away from a property, we record an abandonment charge to earnings for the deposit
amount and any related capitalized costs in the period such decision is made. During the fiscal years ended September 30, 2022,
2021 and 2020, we recognized $1.1 million, $0.9 million and 1.6 million in abandonment charges, respectively.
(6) Interest
Interest capitalized during the fiscal years ended September 30, 2022, 2021 and 2020 was limited by the balance of inventory
eligible for capitalization. The following table presents certain information regarding interest for the periods presented:
in thousands
Capitalized interest in inventory, beginning of period
Interest incurred
Capitalized interest impaired
Interest expense not qualified for capitalization and included as other
expense(a)
Capitalized interest amortized to home construction and land sales
expenses(b)
Capitalized interest in inventory, end of period
Fiscal Year Ended September 30,
2022
2021
2020
$
106,985 $
74,161
(439)
119,659 $
77,397
—
136,565
87,224
(792)
—
(2,781)
(8,468)
(71,619)
(87,290)
$
109,088 $
106,985 $
(94,870)
119,659
(a) The amount of interest capitalized depends on the qualified inventory balance, which considers the status of the Company's
inventory holdings. Qualified inventory balance includes the majority of homes under construction and land under
development but excludes land held for future development and land held for sale.
(b) Capitalized interest amortized to home construction and land sales expenses varies based on the number of homes closed
during the period and land sales, if any, as well as other factors.
(7) Property and Equipment
The following table presents our property and equipment as of September 30, 2022 and 2021:
in thousands
Model furnishings and sales office improvements
Information systems
Furniture, fixtures and office equipment
Leasehold improvements
Buildings and improvements
Property and equipment, gross
Less: Accumulated depreciation
Property and equipment, net
55
September 30, 2022
September 30, 2021
$
$
22,544 $
23,074
11,019
4,124
1,671
62,432
(37,866)
24,566 $
19,617
18,628
10,613
4,279
1,671
54,808
(31,923)
22,885
(8) Borrowings
The Company's debt, net of unamortized debt issuance costs consisted of the following as of September 30, 2022 and 2021:
in thousands
Senior Unsecured Term Loan
6.750% Senior Notes (2025 Notes)
5.875% Senior Notes (2027 Notes)
7.250% Senior Notes (2029 Notes)
Unamortized debt issuance costs
Total Senior Notes, net
Junior Subordinated Notes (net of unamortized accretion
of $28,503 and $30,570 , respectively)
Secured Revolving Credit Facility
Total debt, net
Maturity Date
September 30, 2022
September 30, 2021
September 2022
$
— $
March 2025
October 2027
October 2029
July 2036
February 2024(a)
211,195
357,255
350,000
(7,280)
911,170
72,270
—
50,000
229,555
363,255
350,000
(8,983)
983,827
70,203
—
$
983,440 $
1,054,030
(a) The Secured Revolving Credit Facility was scheduled to mature in February 2024; however, it was terminated early in
conjunction with the Company entering into the new Senior Unsecured Revolving Credit Facility. Refer to below for further
discussion.
As of September 30, 2022, the future maturities of our borrowings were as follows:
Fiscal Year Ended September 30,
in thousands
2023
2024
2025
2026
2027
Thereafter
Total
$
$
—
—
211,195
—
357,255
450,773
1,019,223
Secured Revolving Credit Facility
The Secured Revolving Credit Facility provides working capital and letter of credit capacity of $250.0 million. The Facility
allows us to issue letters of credit against the undrawn capacity. Subject to our option to cash collateralize our obligations under
the Facility upon certain conditions, our obligations under the Facility were secured by liens on substantially all of our personal
property and a significant portion of our owned real property. We also pledged approximately $1.06 billion of inventory assets
to the Facility to collateralize potential future borrowings or letters of credit (in addition to the letters of credit already issued
under the Facility, if any).
As of September 30, 2022 and 2021, no borrowings were outstanding under the Facility. As of September 30, 2022, we had
letters of credit outstanding of $5.5 million under the Facility, resulting in a remaining capacity of $244.5 million. We had no
letters of credit outstanding under the Facility as of September 30, 2021. The Facility requires compliance with certain
covenants, including negative covenants and financial covenants. As of September 30, 2022, the Company believes it was in
compliance with all such covenants.
New Senior Unsecured Revolving Credit Facility
On October 13, 2022, the Company entered into a Senior Unsecured Revolving Credit Facility (the “New Unsecured Facility”).
The New Unsecured Facility replaces the Secured Revolving Credit Facility, and the Company expects to use the proceeds from
the New Unsecured Facility for general corporate purposes.
The New Unsecured Facility provides for a revolving credit facility with borrowing capacity up to $265.0 million. The
Company also will have the right from time to time to request to increase the size of the commitments under the New
Unsecured Facility by up to $135.0 million for a maximum of $400.0 million. The New Unsecured Facility terminates on
October 13, 2026 (the “Termination Date”), and the Company may borrow, repay and reborrow amounts under the New
Unsecured Facility until the Termination Date.
56
Obligations of the Company under the New Unsecured Facility are jointly and severally guaranteed by certain of the
Company’s existing and future direct and indirect subsidiaries, excluding, among others, certain specified unrestricted
subsidiaries.
The New Unsecured Facility contains customary financial covenants, including (i) a maximum leverage ratio, (ii) a minimum
liquidity test, (iii) a minimum interest coverage ratio and (iv) a minimum net worth test. In addition, the New Unsecured
Facility contains customary affirmative and negative covenants for a transaction of this type, including covenants that limit
liens, asset sales and investments, in each case subject to negotiated exceptions and baskets. The New Unsecured Facility also
contains representations and warranties and event of default provisions customary for a transaction of this type.
Letter of Credit Facilities
The Company has entered into stand-alone, cash-secured letter of credit agreements with banks to maintain pre-existing letters
of credit and to provide for the issuance of new letters of credit (in addition to the letters of credit issued under the Facility). As
of September 30, 2022 and 2021, the Company had letters of credit outstanding under these additional facilities of $29.7 million
and $21.8 million, respectively, all of which were secured by cash collateral in restricted accounts totaling $31.5 million and
$22.3 million, respectively. The Company may enter into additional arrangements to provide additional letter of credit capacity.
Senior Notes
The Company's Senior Notes are unsecured obligations ranking pari passu with all other existing and future senior
indebtedness. Substantially all of the Company's significant subsidiaries are full and unconditional guarantors of the Senior
Notes and are jointly and severally liable for obligations under the Senior Notes and the Facility. Each guarantor subsidiary is a
wholly owned subsidiary of Beazer Homes.
All unsecured Senior Notes rank equally in right of payment with all existing and future senior unsecured obligations, senior to
all of the Company's existing and future subordinated indebtedness and effectively subordinated to the Company's existing and
future secured indebtedness, to the extent of the value of the assets securing such indebtedness. The unsecured Senior Notes and
related guarantees are structurally subordinated to all indebtedness and other liabilities of all of the Company's subsidiaries that
do not guarantee these notes, but are fully and unconditionally guaranteed jointly and severally on a senior basis by the
Company's wholly-owned subsidiaries party to each applicable indenture.
The Company's Senior Notes are issued under indentures that contain certain restrictive covenants which, among other things,
restrict our ability to pay dividends, repurchase our common stock, incur certain types of additional indebtedness, and make
certain investments. Compliance with the Senior Note covenants does not significantly impact the Company's operations. The
Company believes it was in compliance with the covenants contained in the indentures of all of its Senior Notes as of
September 30, 2022.
During the fiscal year ended September 30, 2022, we repurchased $6.0 million of our outstanding 2027 Notes and $18.4 million
of our outstanding 2025 Notes using cash on hand, resulting in a gain on extinguishment of debt of $0.3 million.
During the fiscal year ended September 30, 2021, we repurchased $30.7 million of our outstanding 2027 Notes using cash on
hand, resulting in a loss on extinguishment of debt of $2.0 million.
During the fiscal year ended September 30, 2020, we made no repurchases of Senior Notes and thus, no gain or loss on
extinguishment of debt was recognized.
57
For additional redemption features, refer to the table below that summarizes the redemption terms of our Senior Notes:
Senior Note Description
6.750% Senior Notes
Issuance Date
March 2017
Maturity Date
March 2025
Redemption Terms
Callable at any time prior to March 15, 2020, in whole or in part, at
a redemption price equal to 100.000% of the principal amount,
plus a customary make-whole premium; on or after March 15,
2020, callable at a redemption price equal to 105.063% of the
principal amount; on or after March 15, 2021, callable at a
redemption price equal to 103.375% of the principal amount; on or
after March 15, 2022, callable at a redemption price equal to
101.688% of the principal amount; on or after March 15, 2023,
callable at a redemption price equal to 100.000% of the principal
amount, plus, in each case, accrued and unpaid interest
5.875% Senior Notes
October 2017
7.250% Senior Notes
September
2019
October 2027 Callable at any time prior to October 15, 2022, in whole or in part,
at a redemption price equal to 100.000% of the principal amount,
plus a customary make-whole premium; on or after October 15,
2022, callable at a redemption price equal to 102.938% of the
principal amount; on or after October 15, 2023, callable at a
redemption price equal to 101.958% of the principal amount; on or
after October 15, 2024, callable at a redemption price equal to
100.979% of the principal amount; on or after October 15, 2025,
callable at a redemption price equal to 100.000% of the principal
amount, plus, in each case, accrued and unpaid interest.
October 2029 On or prior to October 15, 2022, we may redeem up to 35% of the
aggregate principal amount of the 2029 Notes with the net cash
proceeds of certain equity offerings at a redemption price equal to
107.250% of the principal amount, plus accrued and unpaid
interest to, but excluding, the redemption date, provided at least
65% of the aggregate principal amount of the 2029 Notes
originally issued remains outstanding immediately after such
redemption.
Callable at any time prior to October 15, 2024, in whole or in part,
at a redemption price equal to 100.000% of the principal amount,
plus a customary make-whole premium; on or after October 15,
2024, callable at a redemption price equal to 103.625% of the
principal amount; on or after October 15, 2025, callable at a
redemption price equal to 102.417% of the principal amount; on or
after October 15, 2026, callable at a redemption price equal to
101.208% of the principal amount; on or after October 15, 2027,
callable at a redemption price equal to 100.000% of the principal
amount, plus, in each case, accrued and unpaid interest
Junior Subordinated Notes
The Company's unsecured junior subordinated notes (Junior Subordinated Notes) mature on July 30, 2036 and have an
aggregate principal balance of $100.8 million as of September 30, 2022. The securities have a floating interest rate as defined in
the Junior Subordinated Notes Indentures, which was a weighted-average of 5.23% as of September 30, 2022. The obligations
relating to these notes were subordinated to the Facility and the Senior Notes, and they are now subordinated to the New
Unsecured Facility and the Senior Notes. In January 2010, the Company restructured $75.0 million of these notes and recorded
them at their then estimated fair value. Over the remaining life of the restructured notes, we will increase their carrying value
until this carrying value equals the face value of the notes. As of September 30, 2022, the unamortized accretion was $28.5
million and will be amortized over the remaining life of the restructured notes. The remaining $25.8 million of these notes are
subject to the terms of the original agreement, have a floating interest rate equal to three-month LIBOR plus 2.45% per annum,
resetting quarterly, and are redeemable in whole or in part at par value. The material terms of the $75.0 million restructured
notes are identical to the terms of the original agreement except that the floating interest rate is subject to a floor of 4.25% and a
cap of 9.25%. In addition, beginning on June 1, 2012, the Company has the option to redeem the $75.0 million principal
balance in whole or in part at 75% of par value; beginning on June 1, 2022, the redemption price will increase by 1.785%
annually. As of September 30, 2022, the Company believes it was in compliance with all covenants under the Junior
Subordinated Notes.
58
(9) Contingencies
Beazer Homes and certain of its subsidiaries have been and continue to be named as defendants in various construction defect
claims, complaints, and other legal actions. The Company is subject to the possibility of loss contingencies related to these
defects as well as others arising from its business. In determining loss contingencies, we consider the likelihood of loss and our
ability to reasonably estimate the amount of such loss. An estimated loss is recorded when it is considered probable that a
liability has been incurred and the amount of loss can be reasonably estimated.
Warranty Reserves
We currently provide a limited warranty ranging from one to two years covering workmanship and materials per our defined
quality standards. In addition, we provide a limited warranty for up to ten years covering only certain defined structural element
failures.
Our homebuilding work is performed by subcontractors who typically must agree to indemnify us with regard to their work and
provide certificates of insurance demonstrating that they have met our insurance requirements and have named us as an
additional insured under their policies. Therefore, many claims relating to workmanship and materials that result in warranty
spending are the primary responsibility of these subcontractors.
Warranty reserves are included in other liabilities within the consolidated balance sheets, and the provision for warranty
accruals is included in home construction expenses in the consolidated statements of operations. Reserves covering anticipated
warranty expenses are recorded for each home closed. Management assesses the adequacy of warranty reserves each reporting
period based on historical experience and the expected costs to remediate potential claims. Our review includes a quarterly
analysis of the historical data and trends in warranty expense by division. An analysis by division allows us to consider market
specific factors such as warranty experience, the number of home closings, the prices of homes, product mix, and other data in
estimating warranty reserves. In addition, the analysis also contemplates the existence of any non-recurring or community-
specific warranty-related matters that might not be included in historical data and trends that may need to be separately
estimated based on management's judgment of the ultimate cost of repair for that specific issue. While estimated warranty
liabilities are adjusted each reporting period based on the results of our quarterly analyses, we may not accurately predict actual
warranty costs, which could lead to significant changes in the reserve.
In addition, we maintain third-party insurance, subject to applicable self-insured retentions, for most construction defects that
we encounter in the normal course of business. We believe that our warranty and litigation accruals and third-party insurance
are adequate to cover the ultimate resolution of our potential liabilities associated with known and anticipated warranty and
construction-defect related claims and litigation. However, there can be no assurance that the terms and limitations of the
limited warranty will be effective against claims made by homebuyers; that we will be able to renew our insurance coverage or
renew it at reasonable rates; that we will not be liable for damages, the cost of repairs, and/or the expense of litigation
surrounding possible construction defects, soil subsidence, or building related claims; or that claims will not arise out of events
or circumstances not covered by insurance and/or not subject to effective indemnification agreements with our subcontractors.
Changes in warranty reserves are as follows for the periods presented:
in thousands
Balance at beginning of period
Accruals for warranties issued(a)
Changes in liability related to warranties existing in prior periods
Payments made
Balance at end of period
Fiscal Year Ended September 30,
2022
2021
2020
$
$
12,931 $
12,711
382
(12,098)
13,926 $
13,052 $
10,963
864
(11,948)
12,931 $
13,388
10,910
(1,352)
(9,894)
13,052
(a) Accruals for warranties issued are a function of the number of home closings in the period, the selling prices of the homes
closed and the rates of accrual per home estimated as a percentage of the selling price of the home.
Insurance Recoveries
The Company has insurance policies that provide for the reimbursement of certain warranty costs incurred above specified
thresholds for each period covered. Amounts recorded for anticipated insurance recoveries are reflected within the consolidated
statements of operations as a reduction of home construction expenses. Amounts not yet received from our insurer are recorded
on a gross basis, without any reduction for the associated warranty expense, within accounts receivable on our consolidated
balance sheets.
59
Litigation
In the normal course of business, we and certain of our subsidiaries are subject to various lawsuits and have been named as
defendants in various claims, complaints, and other legal actions, most relating to construction defects, moisture intrusion, and
product liability. Certain of the liabilities resulting from these actions are covered in whole or in part by insurance.
We cannot predict or determine the timing or final outcome of these lawsuits or the effect that any adverse findings or
determinations in pending lawsuits may have on us. In addition, an estimate of possible loss or range of loss, if any, cannot
presently be made with respect to certain of these pending matters. An unfavorable determination in any of the pending lawsuits
could result in the payment by us of substantial monetary damages that may not be fully covered by insurance. Further, the
legal costs associated with the lawsuits and the amount of time required to be spent by management and our Board of Directors
on these matters, even if we are ultimately successful, could have a material adverse effect on our financial condition, results of
operations, or cash flows.
We have an accrual of $9.8 million and $8.3 million in other liabilities on our consolidated balance sheets related to litigation
matters as of September 30, 2022 and 2021, respectively.
Surety Bonds and Letters of Credit
We had outstanding letters of credit and surety bonds of $35.2 million and $279.6 million, respectively, as of September 30,
2022, related principally to our obligations to local governments to construct roads and other improvements in various
developments.
(10) Fair Value Measurements
As of the dates presented, we had assets on our consolidated balance sheets that were required to be measured at fair value on a
recurring or non-recurring basis. We use a fair value hierarchy that requires us to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value as follows:
•
•
•
Level 1 – Quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices included in Level 1 that are observable either directly or indirectly through
corroboration with market data; and
Level 3 – Unobservable inputs that reflect our own estimates about the assumptions market participants would use in
pricing the asset or liability.
Certain of our assets are required to be recorded at fair value on a non-recurring basis when events and circumstances indicate
that the carrying value of these assets may not be recoverable. We review our long-lived assets, including inventory, for
recoverability when factors indicate an impairment may exist, but no less than quarterly. Fair value on assets deemed to be
impaired is determined based upon the type of asset being evaluated. Fair value of our owned inventory assets, when required to
be calculated, is further discussed within Notes 2 and 5. Due to the substantial use of unobservable inputs in valuing the assets
on a non-recurring basis, they are classified within Level 3.
During the fiscal year ended September 30, 2022, we recognized no impairments on projects in progress and $1.9 million of
impairments on land held for sale.
During the fiscal year ended September 30, 2021, we recognized no impairments on projects in progress and land held for sale.
During the fiscal year ended September 30, 2020, we recognized no impairments on projects in progress and $1.3 million of
impairments on land held for sale.
60
Determining within which hierarchical level an asset or liability falls requires significant judgment. We evaluate our hierarchy
disclosures each quarter. The following table presents the period-end balances of assets measured at fair value on a recurring
basis and the impairment-date fair value of certain assets measured at fair value on a non-recurring basis for each hierarchy
level. These balances represent only those assets whose carrying values were adjusted to fair value during the periods presented:
in thousands
As of September 30, 2022
Deferred compensation plan assets(a)
Land held for sale(b)
As of September 30, 2021
Deferred compensation plan assets(a)
As of September 30, 2020
Deferred compensation plan assets(a)
Land held for sale(b)
Level 1
Level 2
Level 3
Total
$
$
$
— $
—
3,179 $
—
—
902 (c)
— $
2,730 $
—
— $
—
2,339 $
—
—
6,240 (c)
$
$
$
3,179
902
2,730
2,339
6,240
(a) Measured at fair value on a recurring basis.
(b) Measured at fair value on a non-recurring basis, including the capitalized interest and indirect costs related to the asset.
(c) Amount represents the impairment-date fair value of land held for sale assets that were impaired during the period indicated.
The fair value of cash and cash equivalents, restricted cash, accounts receivable, trade accounts payable, other liabilities, and
amounts due under the Facility (if outstanding) approximate their carrying amounts due to the short maturity of these assets and
liabilities. When outstanding, obligations related to land not owned under option agreements approximate fair value.
The following table presents the carrying value and estimated fair value of certain other financial liabilities as of September 30,
2022 and 2021:
in thousands
Senior Notes and Term Loan(b)
Junior Subordinated Notes(c)
Total
As of September 30, 2022
As of September 30, 2021
Carrying
Amount(a)
Fair Value
Carrying
Amount(a)
Fair Value
$
$
911,170 $
72,270
753,338 $
72,270
983,827 $
70,203
1,046,965
70,203
983,440 $
825,608 $
1,054,030 $
1,117,168
(a)
Carrying amounts are net of unamortized debt issuance costs or accretion.
(b)
The estimated fair value for our publicly-held Senior Notes and the Term Loan have been determined using quoted market
rates (Level 2).
(c) Since there is no trading market for our Junior Subordinated Notes, the fair value of these notes is estimated by discounting
scheduled cash flows through maturity (Level 3). The discount rate is estimated using market rates currently being offered on
loans with similar terms and credit quality. Judgment is required in interpreting market data to develop these estimates of fair
value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize in a
current market exchange.
(11) Operating Leases
The Company leases certain office space and equipment under operating leases for use in our operations. We recognize
operating lease expense on a straight-line basis over the lease term. Certain of our lease agreements include one or more options
to renew. The exercise of lease renewal options is generally at our discretion. Variable lease expense primarily relates to
maintenance and other monthly expense that do not depend on an index or rate.
We determine if an arrangement is a lease at contract inception. Lease and non-lease components are accounted for as a single
component for all leases. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on
the present value of the future lease payments over the expected lease term, which includes optional renewal periods if we
determine it is reasonably certain that the option will be exercised. As our leases do not provide an implicit rate, the discount
rate used in the present value calculation represents our incremental borrowing rate determined using information available at
the commencement date.
61
Operating lease expense is included as a component of general and administrative expenses in our consolidated statements of
operations. Sublease income and variable lease expenses are de minimis. For the fiscal years ended September 30, 2022, 2021
and 2020, we recorded operating lease expense of $4.0 million, $4.3 million and $4.5 million, respectively. Cash payments on
lease liabilities during the fiscal years ended September 30, 2022, 2021 and 2020 totaled $4.4 million, $4.8 million and
$4.6 million, respectively.
At September 30, 2022 and 2021, weighted-average remaining lease term and discount rate were as follows:
Weighted-average remaining lease term
Weighted-average discount rate
Fiscal Year Ended September 30,
2022
4.3 years
4.43%
2021
4.8 years
4.56%
The following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating
lease liabilities as of September 30, 2022:
Fiscal Years Ending September 30,
in thousands
2023
2024
2025
2026
2027
Thereafter
Total lease payments(a)
Less: imputed interest
Total operating lease liabilities
$
$
3,799
2,688
2,299
1,643
702
1,226
12,357
1,149
11,208
(a) Lease payments excludes $11.2 million legally binding minimum lease payments for an office lease signed but not yet
commenced as of September 30, 2022. The related ROU asset and operating lease liability are not reflected on the Company's
consolidated balance sheet as of September 30, 2022.
(12) Other Liabilities
Other liabilities include the following as of September 30, 2022 and 2021:
in thousands
Accrued compensations and benefits
Customer deposits
Accrued interest
Accrued warranty expenses
Litigation accruals
Income tax liabilities
Other
Total
September 30, 2022
September 30, 2021
$
$
57,781 $
34,270
22,723
13,926
9,832
320
35,536
174,388 $
54,606
28,526
22,835
12,931
8,325
—
25,128
152,351
62
(13) Income Taxes
The Company's expense (benefit) from income taxes from continuing operations consists of the following for the periods
presented:
in thousands
Current federal(a)
Current state
Deferred federal
Deferred state
Total expense
Fiscal Year Ended September 30,
2022
2021
2020
— $
— $
4,859
47,239
1,173
1,126
20,331
89
53,271 $
21,546 $
(4,641)
485
20,639
1,490
17,973
$
$
(a) Fiscal 2020 federal current benefit is primarily driven by the expected refund of our remaining alternative minimum tax
credit balance due to the enactment of the CARES Act. Refer to Note 2 for further discussion.
The Company's expense (benefit) from income taxes from continuing operations differs from the amount computed by applying
the federal income tax statutory rate as follows for the periods presented:
in thousands
Income tax computed at statutory rate
State income taxes, net of federal benefit
Deferred rate change
Changes in uncertain tax positions
Permanent differences
Tax credits
Other, net
Total expense
Fiscal Year Ended September 30,
2022
2021
2020
$
57,538 $
30,182 $
14,971
4,482
346
—
2,952
(12,081)
34
1,564
(904)
—
2,433
(12,088)
359
1,300
260
(2)
2,177
(939)
206
$
53,271 $
21,546 $
17,973
The principal differences between our effective tax rate and the U.S. federal statutory rate for fiscal years 2022, 2021 and 2020
relate to state taxes, permanent differences and tax credits. Due to the effects of tax credits, our income tax expense is not
always directly correlated to the amount of pre-tax income for the associated periods.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of our assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of significant
temporary differences that give rise to the net deferred tax assets are as follows as of September 30, 2022 and 2021:
in thousands
Deferred tax assets:
Federal and state net operating loss carryforwards
Incentive compensation
Warranty and other reserves
Inventory adjustments
Intangible assets
Property, equipment and other assets
Uncertain tax positions
Other
Total deferred tax assets
Valuation allowance
Deferred tax assets, net
September 30, 2022
September 30, 2021
$
$
149,299 $
12,914
7,091
6,716
1,515
771
705
2,743
181,754
(25,396)
156,358 $
177,611
13,793
6,006
25,174
6,016
2,085
705
2,435
233,825
(29,059)
204,766
63
As of September 30, 2022, our gross deferred tax assets above included $61.0 million of federal net operating loss (NOL)
carryforwards, $57.8 million of federal tax credits, and $33.9 million of state NOL carryforwards. The majority of our federal
NOL carryforwards expire at various dates through our fiscal 2033, our federal tax credits expire at various dates through our
fiscal 2042, and a majority of our state NOL carryforwards expire at various dates through our fiscal 2041. As of September 30,
2022, valuation allowance of $25.4 million remains on various state NOL carryforwards for which the Company has concluded
it is not more likely than not that these attributes would be realized.
We experienced an “ownership change” as defined in Section 382 of the Internal Revenue Code (Section 382) as of January 12,
2010. Section 382 contains rules that limit the ability of a company that undergoes an “ownership change” to utilize its net
operating loss carryforwards, tax credits and certain built-in losses or deductions recognized during the five-year period after
the ownership change to offset future taxable income. Because the five-year period has expired, we have determined the actual
impact and final classification of those amounts, which are properly reflected in the amounts presented above. There can be no
assurance that another ownership change, as defined in the tax law, will not occur. If another “ownership change” occurs, a new
annual limitation on the utilization of net operating loss carryforwards, tax credits and built-in losses would be determined as of
that date. This limitation, should one be required in the future, is subject to assumptions and estimates that could differ from
actual results.
Valuation Allowance
A reduction of the carrying amounts of deferred tax assets by a valuation allowance is required if, based on the available
evidence, it is more likely than not that such assets will not be realized. Accordingly, we assess the need to establish valuation
allowances for deferred tax assets periodically based on the more-likely-than-not realization threshold criterion. In our
assessment, appropriate consideration is given to all positive and negative evidence related to the realization of the deferred tax
assets. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses,
forecasts of future profitability, the duration of statutory carryforward periods, the Company's experience with operating loss
carryforwards and tax credit carryforwards not expiring unused, the Section 382 limitation on our ability to carryforward pre-
ownership change net operating losses, recognized built-in losses or deductions and tax planning alternatives. Our assessment,
while rooted in actual Company performance, are highly subjective and rely on certain estimates, including forecasts, which
could differ materially from actual results.
In fiscal 2022, our conclusions about our ability to more likely than not realize all of our federal and certain state tax attributes
remain consistent with our prior determinations. We considered positive factors including significant increases in our current
earnings, interest savings from our debt reduction strategies, shortage in housing supply, and our backlog. The negative factors
included the overall health of the broader economy, significant increases in mortgage interest rates, and weakened housing
demand. As of September 30, 2022, the Company will have to cumulatively generate approximately $907.1 million in pre-tax
income over the course of its carryforward period to realize its deferred tax assets prior to their expiration, which, as previously
discussed, is the Company's fiscal 2042.
Unrecognized Tax Benefits
A reconciliation of our unrecognized tax benefits is as follows for the beginning and end of each period presented:
in thousands
Balance at beginning of year
Additions for tax positions related to current year
Additions for tax positions related to prior years
Reductions in tax positions of prior years
Lapse of statute of limitations
Balance at end of year
Fiscal Year Ended September 30,
2022
2021
2020
$
$
3,358 $
—
—
—
—
3,358 $
3,441 $
—
—
—
(83)
3,358 $
3,473
—
—
—
(32)
3,441
If we were to recognize our $3.4 million of gross unrecognized tax benefits remaining as of September 30, 2022, substantially
all would impact our effective tax rate. Additionally, we had no accrued interest and penalties as of September 30, 2022, 2021
and 2020. If applicable, we would record interest and penalties related to unrecognized tax benefits in income tax expense
within our consolidated statements of operations.
In the normal course of business, we are subject to audits by federal and state tax authorities regarding various tax liabilities.
The statute of limitations for our major tax jurisdictions remains open for examination for fiscal year 2007 and subsequent
years. As of September 30, 2022, we do not expect that any of our uncertain tax positions will reverse within the next twelve
months.
64
(14) Stockholders' Equity
Preferred Stock
The Company currently has no shares of preferred stock outstanding.
Common Stock
As of September 30, 2022, the Company had 63,000,000 shares of common stock authorized and 30,880,138 shares both issued
and outstanding.
Common Stock Repurchases
In May 2022, the Company's Board of Directors approved a new share repurchase program that authorizes the Company to
repurchase up to $50.0 million of its outstanding common stock. This newly authorized program replaced the prior share
repurchase program authorized in the first quarter of fiscal 2019 of up to $50.0 million of common stock repurchases, pursuant
to which $12.0 million of the capacity remained prior to the replacement of the program. As part of this new program, the
Company repurchased 570 thousand shares of its common stock for $8.2 million at an average price per share of $14.33 during
the year ended September 30, 2022 through open market transactions. No share repurchases were made during fiscal year 2021.
During the year ended September 30, 2020, the Company repurchased approximately 362 thousand shares of its common stock
for $3.3 million at an average price per share of $9.20 through open market transactions, including 10b5-1 plans. All shares
have been retired upon repurchase.
The aggregate reduction to stockholders’ equity related to share repurchases during the fiscal years ended September 30, 2022,
2021 and 2020 was $8.2 million, $0.0 million and $3.3 million, respectively. As of September 30, 2022, the remaining
availability of the new share repurchase program was $41.8 million. The repurchase program has no expiration date.
Dividends
The indentures under which our Senior Notes were issued contain certain restrictive covenants, including limitations on our
payment of dividends. There were no dividends paid during our fiscal 2022, 2021 or 2020.
Section 382 Rights Agreement
Our certificate of incorporation prohibits certain transfers of our common stock that could result in an ownership change as
defined in Section 382. In addition, we are party to a rights agreement intended to act as a deterrent to any person desiring to
acquire 4.95% or more of our common stock. These instruments are designed to preserve the value of certain tax assets
associated with our net operating loss carryforwards, tax credits and built-in losses under Section 382. In February 2022, our
stockholders approved an extension of these protective provisions in our certificate of incorporation and the rights agreement.
(15) Retirement and Deferred Compensation Plans
401(k) Retirement Plan
The Company sponsors a defined-contribution plan that is a tax-qualified retirement plan under section 401(k) of the Internal
Revenue Code (the Plan). Substantially all employees are eligible for participation in the Plan. Participants may defer and
contribute from 1% to 80% of their salary to the Plan, with certain limitations on highly compensated individuals. The
Company matches up to 50% of the participant's contributions limited to 6% of the participant's earnings. The participant's
contributions vest immediately, while the Company's contributions vest over five years. The total Company contributions for
the fiscal years ended September 30, 2022, 2021 and 2020 were approximately $3.5 million, $3.2 million and $3.4 million,
respectively. During fiscal 2022, 2021 and 2020, participants forfeited $0.3 million, $0.8 million and $1.0 million, respectively,
of unvested matching contributions.
65
Deferred Compensation Plan
The Beazer Homes USA, Inc. Deferred Compensation Plan (the DCP) is a non-qualified deferred compensation plan for a
select group of executives and highly compensated employees. The DCP allows the executives to defer current compensation
on a pre-tax basis to a future year, until termination of employment. The objectives of the DCP are to assist executives with
financial planning and capital accumulation and to provide the Company with a method of attracting, rewarding and retaining
executives. Participation in the DCP is voluntary. Beazer Homes may voluntarily make a contribution to the participants' DCP
accounts. Deferred compensation assets of $3.2 million and $2.7 million as of September 30, 2022 and 2021, respectively, are
included in other assets on our consolidated balance sheets and are recorded at fair value. Deferred compensation liabilities of
$5.5 million and $7.2 million as of September 30, 2022 and 2021, respectively, are included in other liabilities on our
consolidated balance sheets. For the years ended September 30, 2022, 2021 and 2020, the Company contributed approximately
$0.2 million, $0.2 million and $0.2 million, respectively, to the DCP in the form of voluntary contributions.
(16) Stock-Based Compensation
The Company has shares available for grant under the Amended and Restated 2014 Beazer Homes USA, Inc. Long-Term
Incentive Plan. We issue new shares upon the exercise of stock options and the grant of restricted stock awards. In cases of
forfeitures and cancellations, those shares are returned to the share pool for future issuance. As of September 30, 2022, we had
1.5 million shares of common stock for issuance under our various equity incentive plans, of which 1.5 million shares are
available for future grants.
Stock-based compensation expense is included in general and administrative expenses in our consolidated statements of
operations. The following is a summary of stock-based compensation expense related to stock options and restricted stock
awards for the fiscal years ended 2022, 2021 and 2020, respectively.
in thousands
Stock options expense
Restricted stock awards expense
Stock-based compensation expense
Stock Options
Fiscal Year Ended September 30,
2022
2021
2020
$
$
1 $
8,477
8,478 $
25 $
12,142
12,167 $
133
9,903
10,036
Stock options have an exercise price equal to the fair market value of the common stock on the grant date, generally vest two or
three years after the date of grant, and may be exercised thereafter until their expiration, subject to forfeiture upon termination
of employment as provided in the applicable plan. Under certain conditions of retirement, eligible participants may receive a
partial vesting of stock options. Stock options generally expire on the eighth anniversary from the date such options were
granted, depending on the terms of the award.
The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model
(Black-Scholes Model). As of September 30, 2022, the intrinsic value of our stock options outstanding and vested and
exercisable were less than $0.1 million and less than $0.1 million, respectively. As of both September 30, 2022 and 2021, there
was less than $0.1 million of total unrecognized compensation cost related to unvested stock options. The cost remaining as of
September 30, 2022 is expected to be recognized over a weighted-average period of 1.4 years.
During fiscal 2018, the Compensation Committee of our Board of Directors approved the Employee Stock Option Program
(ESOP). This program is available to all full-time employees and is designed to enable employees to share in potential price
appreciation of the Company's stock. The ESOP matches stock purchases made by eligible employees meeting certain
conditions with an option to purchase an additional share of the Company's shares on a one-to-one basis. The exercise price of
the options granted is equal to the closing price of the Company's stock on the day the underlying shares are purchased by the
employee, which is also the ESOP grant date. The options will vest on the second anniversary of the date of grant but are
forfeited if (1) the eligible employee no longer works for the Company or (2) the underlying shares are sold before the two-year
vesting period is over. The total number of options available under the ESOP is limited to 100,000, each for one share of the
Company's common stock, of which 31,968 options were granted through the end of fiscal 2022.
66
During the year ended September 30, 2022, we issued 236 stock options, all were issued under the ESOP. No stock options
were issued during the year ended September 30, 2021, and 950 stock options were issued during the year ended September 30,
2020. We used the following valuation assumptions for stock options granted for the periods presented:
Expected life of options
Expected volatility
Expected dividends
Weighted-average risk-free interest rate
Weighted-average fair value
Fiscal Year Ended September 30,
2022
2020
5.7 years
55.02 %
—
1.88 %
$
8.54
$
5.7 years
51.52 %
—
0.43 %
4.99
We relied upon a combination of the observed exercise behavior of our prior grants with similar characteristics, the vesting
schedule of the current grants, and an index of peer companies with similar grant characteristics to determine the expected life
of the options granted. We considered historic returns of our stock and the implied volatility of our publicly-traded options in
determining expected volatility. We assumed no dividends would be paid since our Board of Directors has suspended payment
of dividends indefinitely and payment of dividends is restricted under our Senior Notes covenants. The risk-free interest rate is
based on the term structure of interest rates at the time of the option grant.
A summary of stock option activity for the periods presented is as follows:
Outstanding at beginning of period
Granted
Exercised
Expired
Forfeited
Outstanding at end of period
Exercisable at end of period
2022
2021
2020
Weighted-
Average
Exercise
Price
Shares
Weighted-
Average
Exercise
Price
Weighted-
Average
Exercise
Price
Shares
Shares
114,259 $
236
(988)
(86,000)
—
27,507 $
27,271 $
17.89
16.58
11.32
19.11
—
14.31
14.29
392,465 $
—
(278,206)
—
—
114,259 $
113,309 $
15.47
—
14.48
—
—
17.89
17.95
523,754 $
950
(128,921)
—
(3,318)
392,465 $
354,796 $
14.34
10.67
11.01
—
9.55
15.47
15.90
Information pertaining to the intrinsic value of options exercised and the fair market value of options that vested is below:
in thousands
Intrinsic value of options exercised
Fair market value of options vested
Restricted Stock Awards
Fiscal Year Ended September 30,
2022
2021
2020
$
$
6 $
5 $
1,402 $
173 $
587
144
The fair value of each restricted stock award with market conditions is estimated on the date of grant using the Monte Carlo
valuation method. The fair value of restricted stock awards without market conditions is based on the market price of the
Company's common stock on the date of grant. If applicable, the cash-settled component of any awards granted to employees is
accounted for as a liability, which is adjusted to fair value each reporting period until vested.
Compensation cost arising from restricted stock awards granted to employees is recognized as an expense using the straight-line
method over the vesting period. As of September 30, 2022 and 2021, there was $7.3 million and $7.2 million, respectively, of
total unrecognized compensation cost related to unvested restricted stock awards. The cost remaining as of September 30, 2022
is expected to be recognized over a weighted-average period of 1.7 years.
During fiscal 2022, we issued time-based restricted stock awards and performance-based restricted stock awards with a payout
subject to certain performance and market conditions. Each award type is discussed below.
67
Performance-Based Restricted Stock Awards
During the year ended September 30, 2022, we issued 91,858 shares of performance-based restricted stock (2022 Performance
Shares), containing market conditions, to our executive officers and certain other employees. The 2022 Performance Shares are
structured to be awarded based on the Company's performance under three pre-determined financial and operational metrics at
the end of the three-year performance period. After determining the number of shares earned based on the financial and
operational metrics, which can range from 0% to 175% of the targeted number of shares, the award will be subject to further
upward or downward adjustment by as much as 20% based on the Company's relative total shareholder return (TSR) compared
against a selected small to mid-cap homebuilder peers during the three-year performance period. The 2022 Performance Shares
were valued using the Monte Carlo valuation model due to the existence of the TSR market condition and had an estimated fair
value of $23.36 per share on the date of grant.
A Monte Carlo valuation model requires the following inputs: (1) the expected dividend yield on the underlying stock; (2) the
expected price volatility of the underlying stock; (3) the risk-free interest rate for the period corresponding with the expected
term of the award; and (4) the fair value of the underlying stock. For the Company and each member of the peer group, the
following inputs were used, as applicable, in the Monte Carlo valuation model to determine the fair value as of the grant date
for performance-based restricted stock granted in each of the fiscal years ended.
Expected volatility range
Risk-free interest rate
Dividend yield
Grant-date stock price range
Fiscal Year Ended September 30,
2022
2021
2020
41.0% - 89.0%
26.1% - 67.0%
21.2% - 54.8%
0.81 %
—
0.23 %
—
1.61 %
—
$21.40 - $142.99
$14.07 - $4,318.03
$15.62 - $3,595.17
Each of our performance shares represent a contingent right to receive one share of the Company's common stock if vesting is
satisfied at the end of the three-year performance period. Our performance stock award plans provide that any performance
shares earned in excess of the target number of performance shares issued may be settled in cash or additional shares at the
discretion of the Compensation Committee. In November 2019, we cash settled 135,337 shares earned above target level based
on the performance level achieved under our 2017 performance-based award plan. The cash payment totaled $2.1 million,
which was reflected as a reduction to paid-in capital in the accompanying consolidated statements of stockholders' equity. We
have not cash settled any such performance-based awards prior to or subsequent to the November 2019 transaction, and we
have no current plans to cash settle any additional performance-based restricted shares in the future.
The performance criteria of the 2020 Performance Share grant were satisfied as of September 30, 2022. Based on the actual
performance level achieved, 334,736 performance-based restricted stock awards from the 2020 Performance Share grant cliff
vested at the end of the three-year vesting period on November 15, 2022. Of the total $7.0 million compensation cost related to
these awards, we have recognized $2.1 million, $3.3 million and $1.3 million during the fiscal years ended September 30, 2022,
2021 and 2020, respectively. The remaining $0.3 million of unrecognized compensation cost will be recognized in the first
quarter of fiscal 2023.
68
Time-Based Restricted Stock Awards
During the year ended September 30, 2022, we also issued 246,844 shares of time-based restricted stock (Restricted Shares) to
our directors, executive officers, and certain other employees. Restricted Shares are valued based on the market price of the
Company's common stock on the date of the grant. The Restricted Shares granted to our non-employee directors vest on the
first anniversary of the grant, while the Restricted Shares granted to our executive officers and other employees generally vest
ratably over three years from the date of grant.
Activity relating to all restricted stock awards for the periods presented is as follows:
Performance-Based(a)
Time-Based
Total
Year Ended September 30, 2022
Weighted-
Average
Grant
Date Fair
Value
13.45
18.98
10.50
17.27
17.76
Shares
738,155 $
269,617
(552,417)
(19,209)
436,146 $
Weighted-
Average
Grant
Date Fair
Value
13.79
21.40
13.21
16.49
18.52
Shares
486,574 $
246,844
(286,182)
(35,194)
412,042 $
Weighted-
Average
Grant
Date Fair
Value
13.59
20.14
11.42
16.77
18.13
Shares
1,224,729 $
516,461
(838,599)
(54,403)
848,188 $
Beginning of period
Granted
Vested
Forfeited
End of period
(a) Grant and vesting activity during the year ended September 30, 2022 include 177,759 shares that were issued above target
based on performance level achieved under performance-based restricted stock vesting in the current period.
Performance-Based(a)
Time-Based
Total
Year Ended September 30, 2021
Weighted-
Average
Grant
Date Fair
Value
14.71
17.90
22.40
—
13.45
Shares
796,024 $
164,296
(222,165)
—
738,155 $
Weighted-
Average
Grant
Date Fair
Value
13.85
14.21
14.36
11.77
13.79
Shares
610,130 $
251,788
(346,856)
(28,488)
486,574 $
Weighted-
Average
Grant
Date Fair
Value
14.34
15.67
17.50
11.77
13.59
Shares
1,406,154 $
416,084
(569,021)
(28,488)
1,224,729 $
Beginning of period
Granted
Vested
Forfeited
End of period
(a) Grant and vesting activity during the year ended September 30, 2021 include 60,930 shares that were issued above target
based on performance level achieved under performance-based restricted stock vesting in the current period.
Year Ended September 30, 2020
Performance-Based
Time-Based
Total
Weighted-
Average
Grant
Date Fair
Value
13.60
16.98
13.60
—
14.71
Shares
778,814 $
260,131
(242,921)
—
796,024 $
Weighted-
Average
Grant
Date Fair
Value
12.11
15.29
11.89
13.79
13.85
Shares
611,607 $
327,571
(302,255)
(26,793)
610,130 $
Weighted-
Average
Grant
Date Fair
Value
16.53
16.04
12.65
13.79
14.34
Shares
1,390,421 $
587,702
(545,176)
(26,793)
1,406,154 $
Beginning of period
Granted
Vested
Forfeited
End of period
69
(17) Earnings Per Share
Basic income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares outstanding
during the period. Diluted income (loss) per share adjusts the basic income (loss) per share for the effects of any potentially
dilutive securities in periods in which the Company has net income and such effects are dilutive under the treasury stock
method.
Following is a summary of the components of basic and diluted income (loss) per share for the periods presented:
in thousands (except per share data)
Numerator:
Income from continuing operations
Loss from discontinued operations, net of tax
Net income
Denominator:
Basic weighted-average shares
Dilutive effect of restricted stock awards
Dilutive effect of stock options
Diluted weighted-average shares(a)
Basic income (loss) per share:
Continuing operations
Discontinued operations
Total
Diluted income (loss) per share:
Continuing operations
Discontinued operations
Total
Fiscal Year Ended September 30,
2022
2021
2020
$
$
$
$
$
$
220,718 $
122,180 $
(14)
(159)
220,704 $
122,021 $
30,432
357
7
30,796
29,954
461
22
30,437
7.25 $
—
7.25 $
7.17 $
—
7.17 $
4.08 $
(0.01)
4.07 $
4.01 $
—
4.01 $
53,316
(1,090)
52,226
29,704
229
15
29,948
1.80
(0.04)
1.76
1.78
(0.04)
1.74
(a) The following potentially dilutive shares were excluded from the calculation of diluted income (loss) per share as a result of
their anti-dilutive effect.
in thousands
Stock options
Time-based restricted stock
Fiscal Year Ended September 30,
2022
2021
2020
22
—
142
—
375
46
70
(18) Segment Information
We currently operate in 13 states that are grouped into three homebuilding segments based on geography. Revenues from our
homebuilding segments are derived from the sale of homes that we construct and from land and lot sales. Our reportable
segments have been determined on a basis that is used internally by management for evaluating segment performance and
resource allocations. We have considered the applicable aggregation criteria, and have combined our homebuilding operations
into three reportable segments as follows:
West: Arizona, California, Nevada, and Texas(a)
East: Delaware, Indiana, Maryland, New Jersey(b), Tennessee, and Virginia
Southeast: Florida, Georgia, North Carolina, and South Carolina
(a) On May 20, 2022, we acquired substantially all of the assets of Imagine Homes, a private San Antonio-based homebuilder in
which the Company has held a one-third ownership stake for the past 16 years. The results of our San Antonio operations are
reported herein within our West reportable segment.
(b) During our fiscal 2015, we made the decision that we would not continue to reinvest in new homebuilding assets in our New
Jersey division; therefore, it is no longer considered an active operation. However, it is included in this listing because the
segment information below continues to include New Jersey.
Management’s evaluation of segment performance is based on segment operating income. Operating income for our
homebuilding segments is defined as homebuilding and land sales and other revenue less home construction, land development,
and land sales expense, commission expense, depreciation and amortization, and certain G&A expenses that are incurred by or
allocated to our homebuilding segments. The accounting policies of our segments are those described in Note 2.
The following tables contain our revenue, operating income, and depreciation and amortization by segment for the periods
presented:
in thousands
Revenue
West
East
Southeast
Total revenue
in thousands
Operating income
West
East
Southeast
Segment total
Corporate and unallocated(a)
Total operating income
Fiscal Year Ended September 30,
2022
2021
2020
1,331,553 $
560,747
424,688
2,316,988 $
1,118,578 $
569,835
451,890
2,140,303 $
1,183,339
477,624
466,114
2,127,077
Fiscal Year Ended September 30,
2022
2021
2020
253,961 $
102,146
68,726
424,833
(152,342)
272,491 $
181,303 $
84,630
57,581
323,514
(176,645)
146,869 $
161,786
56,319
40,746
258,851
(179,744)
79,107
$
$
$
$
(a) Includes amortization of capitalized interest, movement in capitalized indirect costs, expenses related to numerous shared
services functions that benefit all segments but are not allocated to the operating segments reported above, including
information technology, treasury, corporate finance, legal, branding and national marketing, and other amounts that are not
allocated to our operating segments.
71
in thousands
Depreciation and amortization
West
East
Southeast
Segment total
Corporate and unallocated(a)
Fiscal Year Ended September 30,
2022
2021
2020
$
8,178 $
7,250 $
1,649
1,843
11,670
1,690
2,207
2,552
12,009
1,967
Total depreciation and amortization
$
13,360 $
13,976 $
(a) Represents depreciation and amortization related to assets held by our corporate functions that benefit all segments.
The following table presents capital expenditures by segment for the periods presented:
in thousands
Capital expenditures
West
East
Southeast
Corporate and unallocated
Total capital expenditures
Fiscal Year Ended September 30,
2022
2021
2020
$
$
7,755 $
6,924 $
1,208
1,215
4,870
15,048 $
1,549
1,447
4,725
14,645 $
8,227
2,458
2,857
13,542
2,098
15,640
5,063
2,237
2,985
357
10,642
The following table presents assets by segment as of September 30, 2022 and 2021:
in thousands
Assets
West
East
Southeast
Corporate and unallocated(a)
Total assets
September 30, 2022
September 30, 2021
$
995,339 $
334,323
305,443
616,858
819,317
286,133
296,581
676,779
$
2,251,963 $
2,078,810
(a) Primarily consists of cash and cash equivalents, restricted cash, deferred taxes, capitalized interest and indirect costs, and
other items that are not allocated to the segments.
(19) Discontinued Operations
We continually review each of our markets in order to refine our overall investment strategy and to optimize capital and
resource allocations in an effort to enhance our financial position and to increase stockholder value. This review entails an
evaluation of both external market factors and our position in each market, and over time has resulted in the decision to
discontinue certain of our homebuilding operations.
72
We have classified the results of operations of our discontinued operations separately in the accompanying consolidated
statements of operations for all periods presented. There were no material assets or liabilities related to our discontinued
operations as of September 30, 2022 or 2021. Discontinued operations were not segregated in the consolidated statements of
cash flows. Therefore, amounts for certain captions in the consolidated statements of cash flows will not agree with the
respective data in the consolidated statements of operations. The results of our discontinued operations in the consolidated
statements of operations for the periods presented were as follows:
in thousands
Home construction and land sales expenses(a)
Gross profit (loss)
General and administrative expenses
Operating loss
Other income, net
Loss from discontinued operations before income taxes
Benefit from income taxes
Loss from discontinued operations, net of tax
$
$
Fiscal Year Ended September 30,
2022
2021
2020
(5) $
5
23
(18)
—
(18)
(4)
(14) $
119 $
(119)
85
(204)
—
(204)
(45)
(159) $
1,245
(1,245)
173
(1,418)
19
(1,399)
(309)
(1,090)
(a) Home construction and land sales expenses for the year ended September 30, 2020 include a $1.3 million estimated litigation
settlement accrual relating to a case regarding past construction defects in our discontinued operations. Pursuant to the
settlement agreement, the Company paid $1.4 million during fiscal 2021.
(20) Subsequent Events
On October 13, 2022, the Company entered into a Senior Unsecured Revolving Credit Facility (the “New Unsecured Facility”)
which replaced our existing secured revolving credit facility. Refer to Note 8 for additional details related to the New
Unsecured Facility.
73
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Beazer Homes USA, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Beazer Homes USA, Inc. and subsidiaries (the "Company")
as of September 30, 2022 and 2021, the related consolidated statements of operations, stockholders' equity, and cash flows, for
each of the three years in the period ended September 30, 2022, and the related notes (collectively referred to as the "financial
statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Company as of September 30, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in
the period ended September 30, 2022, in conformity with accounting principles generally accepted in the United States of
America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of September 30, 2022, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated November 10, 2022, expressed an unqualified opinion on the Company's internal control over
financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Owned Inventory—Valuation of Projects in Progress—Refer to Notes 2 and 5 to the financial statements.
Critical Audit Matter Description
Projects in progress inventory includes homes under construction and land under development grouped together as
communities. Projects in progress are stated at cost unless facts and circumstances indicate that the carrying value of the assets
may not be recoverable. The Company assesses its projects in progress inventory for indicators of potential impairment at the
community level on a quarterly basis. The Company evaluates, among other things, the average sales price and margins on
current homes and sales contracts in backlog for each community. As of September 30, 2022, the carrying value of the
Company’s projects in progress inventory was $1.70 billion.
Given the subjectivity in determining whether impairment indicators are present at a community, management exercises
significant judgment when evaluating for indicators of impairment. Accordingly, auditing management’s judgments regarding
the identification of impairment indicators involved an increased extent of effort and especially subjective auditor judgment.
74
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the Company’s identification of impairment indicators for projects in progress included the
following, among others:
a. We tested the operating effectiveness of controls over management’s evaluation of impairment indicators.
b. We evaluated management’s impairment indicator analysis by:
i.
ii.
iii.
Testing whether all communities classified as projects in progress inventory were included in the impairment
indicators analysis.
Testing each community classified as projects in progress inventory for indicators of impairment including
considering average sales price and margins on current homes and sales contracts in backlog.
Developing an independent expectation of indicators and compared such expectations to those included in the
impairment indicator analysis.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
November 10, 2022
We have served as the Company’s auditor since 1996.
75
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Beazer Homes USA, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Beazer Homes USA, Inc. and subsidiaries (the “Company”) as
of September 30, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of September 30, 2022, based on criteria established in
Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended September 30, 2022, of the Company and our
report dated November 10, 2022, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
November 10, 2022
76
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our Chief Executive Officer (CEO) and Chief Financial
Officer (CFO), evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as
of September 30, 2022 pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (Exchange Act). Our
disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our
management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Based on the
evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 2022.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for the preparation and fair presentation of the consolidated financial statements included in this
Annual Report on Form 10-K. The consolidated financial statements have been prepared in conformity with U.S. generally
accepted accounting principles (U.S. GAAP) and reflect management’s judgments and estimates concerning events and
transactions that are accounted for or disclosed.
Our management is also responsible for establishing and maintaining adequate internal control over financial reporting, as such
term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed
under the supervision of our CEO and CFO to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of the Company’s financial statements for external purposes in accordance with U.S. GAAP.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even
when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and
presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may
deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2022.
Management’s assessment was based on criteria for effective internal control over financial reporting described in Internal
Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
Framework). Based on this assessment, management concluded that the Company has maintained effective internal control over
financial reporting as of September 30, 2022. The effectiveness of our internal control over financial reporting as
of September 30, 2022 has been audited by Deloitte & Touche LLP, our independent registered public accounting firm, as
stated in their report, which is included in Part II, Item 8 – Financial Statements and Supplementary Data.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30,
2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Reporting Regarding Foreign Jurisdictions That Prevent Inspections
Not applicable.
77
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information required by this item is incorporated by reference to our proxy statement for our 2023 Annual Meeting of
Stockholders, which is expected to be filed on or before December 21, 2022.
Code of Ethics
Beazer Homes has adopted a Code of Business Conduct and Ethics (the “Code”) that applies to its principal executive officer,
principal financial officer, principal accounting officer, and other senior financial officers. In November 2019, the Company’s
Board of Directors amended the Code. The full text of the Code, as amended, can be found on the Company’s website at
www.beazer.com. If at any time there is an amendment or waiver of any provision of the Code that is required to be disclosed,
information regarding such amendment or waiver will be published on the Company’s website.
Item 11. Executive Compensation
The information required by this item is incorporated by reference to our proxy statement for our 2023 Annual Meeting of
Stockholders, which is expected to be filed on or before December 21, 2022.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information relating to securities authorized for issuance under equity compensation plans is set forth above in Item 5 –
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. All of the
other information required by this item is incorporated by reference to our proxy statement for our 2023 Annual Meeting of
Stockholders, which is expected to be filed on or before December 21, 2022.
Item 13. Certain Relationships and Related Transactions and Director Independence
The information required by this item is incorporated by reference to our proxy statement for our 2023 Annual Meeting of
Stockholders, which is expected to be filed on or before December 21, 2022.
Item 14. Principal Accountant Fees and Services
Our independent registered public accounting firm is Deloitte & Touche LLP (PCAOB ID No. 34).
Further information required by this item is incorporated by reference to our proxy statement for our 2023 Annual Meeting of
Stockholders, which is expected to be filed on or before December 21, 2022.
78
PART IV
Item 15. Exhibits and Financial Statement Schedules
The following documents are filed as part of this Annual Report on Form 10-K.
(a) 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2022 and 2021
Consolidated Statements of Operations for the fiscal years ended September 30, 2022, 2021 and 2020
Consolidated Statements of Stockholders' Equity for the fiscal years ended September 30, 2022, 2021 and
2020
Consolidated Statements of Cash Flows for the fiscal years ended September 30, 2022, 2021 and 2020
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
None required.
3. Exhibits
All exhibits were filed under File No. 001-12822, except as otherwise indicated below.
Exhibit
Number
Exhibit Description
Page Herein
41
42
43
44
45
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.10
4.1
4.2
4.3
—
—
—
—
—
—
—
—
—
—
—
—
Amended and Restated Certificate of Incorporation of the Company (incorporated herein by reference
to Exhibit 3.1 of the Company's Form 10-K for the year ended September 30, 2008)
Certificate of Amendment, dated April 13, 2010, to the Amended and Restated Certificate of
Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 of the Company's
Form 10-Q for the quarter ended March 31, 2010)
Certificate of Amendment, dated February 3, 2011, to the Amended and Restated Certificate of
Incorporation of the Company, as amended (incorporated herein by reference to Exhibit 3.1 of the
Company's Form 8-K filed on February 8, 2011)
Certificate of Amendment, dated October 11, 2012, to the Amended and Restated Certificate of
Incorporation of the Company, as amended (incorporated herein by reference to Exhibit 3.1 of the
Company's Form 8-K filed on October 12, 2012)
Certificate of Amendment, dated February 2, 2013, to the Amended and Restated Certificate of
Incorporation of the Company, as amended (incorporated herein by reference to Exhibit 3.1 of the
Company's Form 8-K filed on February 5, 2013)
Certificate of Amendment, dated November 6, 2013, to the Amended and Restated Certificate of
Incorporation of the Company, as amended (incorporated herein by reference to Exhibit 3.1 of the
Company's Form 8-K filed on November 7, 2013)
Certificate of Amendment, dated November 11, 2016, to the Amended and Restated Certificate of
Incorporation of the Company, as amended (incorporated herein by reference to Exhibit 3.8 of the
Company's Form 10-K for the year ended September 30, 2016)
Certificate of Amendment, dated as of November 8, 2019, and effective as of November 12, 2019, to
the Amended and Restated Certificate of Incorporation of the Company, as amended (incorporated
herein by reference to Exhibit 3.8 of the Company's Form 10-K for the year ended September 30, 2019)
Fourth Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.3
of the Company's Form 10-K for the year ended September 30, 2010)
Specimen Physical Common Stock Certificate of Beazer Homes USA, Inc. (incorporated herein by
reference to Exhibit 4.1 of the Company's Form 10-K filed on November 10, 2015)
Indenture, dated as of April 17, 2002 among the Company, the Guarantors party thereto and U.S. Bank
Trust National Association, as trustee (incorporated herein by reference to Exhibit 4.11 of the
Company’s Registration Statement on Form S-4 filed on July 16, 2002)
Seventh Supplemental Indenture, dated January 9, 2006, to the Indenture dated as of April 17, 2002
(incorporated herein by referenced to Exhibit 99.2 of the Company’s Form 8-K filed on January 17,
2006)
79
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.15
4.16
4.17
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
10.1*
10.2*
—
Reserved.
— Reserved.
—
Form of Junior Subordinated Indenture, dated June 15, 2006, between the Company and JPMorgan
Chase Bank, National Association (incorporated herein by reference to Exhibit 4.1 of the Company's
Form 8-K filed on June 21, 2006)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Form of Amended and Restated Trust Agreement, dated June 15, 2006, among the Company, JPMorgan
Chase Bank, National Association, Chase Bank USA, National Association, and certain individuals
named therein as Administrative Trustees (incorporated herein by reference to Exhibit 4.2 of the
Company's Form 8-K filed on June 21, 2006)
Ninth Supplemental Indenture, dated October 26, 2007, amending and supplementing the Indenture
dated April 17, 2002, by and among Beazer Homes USA, Inc., the subsidiary guarantors party thereto
and U.S. Bank National Association, as trustee (incorporated herein by reference to Exhibit 10.3 of the
Company's Form 8-K filed on October 30, 2007)
Junior Subordinated Indenture between Beazer Homes USA, Inc. and Wilmington Trust Company, as
trustee, dated as of January 15, 2010 (incorporated herein by reference to Exhibit 10.2 of the Company's
Form 8-K dated January 21, 2010)
Reserved.
Fifteenth Supplemental Indenture, dated July 22, 2011, to the Indenture dated April 17, 2002, between
the Company and U.S. Bank National Association, as trustee, amending and supplementing the
Thirteenth Supplemental Indenture, dated May 20, 2010, and the Fourteenth Supplemental Indenture,
dated November 12, 2010 (incorporated herein by reference to Exhibit 10.2 of the Company's Form 10-
Q for the quarter ended June 30, 2011)
Reserved.
Indenture, dated as of October 10, 2017, between the Company, the Guarantors and U.S. Bank National
Association, as trustee (incorporated herein by reference to Exhibit 4.1 of the Company’s Form 8-K
filed on October 10, 2017)
Form of 5.875% Senior Note due 2027 (incorporated herein by reference to Exhibit 4.2 of the
Company’s Form 8-K filed on October 10, 2017)
Registration Rights Agreement, dated as of October 10, 2017, between the Company, the Guarantors
and Credit Suisse Securities (USA) LLC, as representative of the Initial Purchasers (incorporated herein
by reference to Exhibit 4.3 of the Company’s Form 8-K filed on October 10, 2017)
Supplemental Indenture, dated April 2, 2014, between Beazer-Inspirada LLC and U.S. Bank National
Association, as trustee, related to the Company’s 7.250% Senior Notes due 2023 (incorporated herein
by reference to Exhibit 4.6(c) to the Company’s Form S-4 filed on June 10, 2014 (File No.
333-196637))
Indenture for 6.750% Senior Notes due 2025, dated March 14, 2017, by and among the Company, the
Guarantors and U.S. Bank National Association, as trustee (incorporated herein by reference to Exhibit
4.1 of the Company’s Form 8-K filed on March 15, 2017)
Form of 6.750% Senior Note due 2025 (incorporated by reference to Exhibit 4.2 of the Company’s
Form 8-K filed on March 15, 2017)
Registration Rights Agreement, dated as of March 14, 2017, by and among the Company, the
Guarantors and Credit Suisse Securities (USA) LLC, as representatives of the Initial Purchasers
(incorporated herein by reference to Exhibit 4.3 of the Company’s Form 8-K filed March 15, 2017)
Indenture for 7.250% Senior Notes due 2029, dated as of September 24, 2019, by and among the
Company, the Guarantors and U.S. Bank National Association, as trustee (incorporated herein by
reference to Exhibit 4.1 of the Company's Form 8-K filed on September 24, 2019)
Form of 7.250% Senior Note due 2029 (incorporated herein by reference to Exhibit 4.2 of the
Company's 8-K filed on September 24, 2019)
Registration Rights Agreement, dated as of September 24, 2019, by and among the Company, the
Guarantors and Credit Suisse Securities (USA) LLC, as representative of the Initial Purchasers
(incorporated herein by reference to Exhibit 4.3 of the Company's Form 8-K filed on September 24,
2019)
Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange
Act of 1934 (incorporated herein by reference to Exhibit 4.37 of the Company's Form 10-K for the year
ended September 30, 2021)
Non-Employee Director Stock Option Plan (incorporated herein by reference to Exhibit 10.2 of the
Company's Form 10-K for the year ended September 30, 2003)
Amended and Restated 1999 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.2 of
the Company's Form 10-Q for the quarter ended June 30, 2008)
80
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18
10.19
10.20
10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Second Amended and Restated Corporate Management Stock Purchase Program (incorporated herein
by reference to Exhibit 10.5 of the Company's Form 10-K for the year ended September 30, 2007)
Director Stock Purchase Program (incorporated herein by reference to Exhibit 10.7 of the Company's
Form 10-K for the year ended September 30, 2004)
Form of Stock Option and Restricted Stock Award Agreement (incorporated herein by reference to
Exhibit 10.8 of the Company's Form 10-K for the year ended September 30, 2004)
Form of Stock Option Award Agreement (incorporated herein by reference to Exhibit 10.9 of the
Company's Form 10-K for the year ended September 30, 2004)
Form of Amended and Restated 1999 Stock Incentive Plan Award Agreement for Performance Share
Awards, dated as of February 2, 2006 (incorporated herein by reference to Exhibit 10.18 of the
Company's Form 10-Q for the quarter ended March 31, 2006)
Form of Amended and Restated 1999 Stock Incentive Plan Award Agreement for Option and Restricted
Stock Awards, dated as of February 2, 2006 (incorporated herein by reference to Exhibit 10.19 of the
Company's Form 10-Q for the quarter ended March 31, 2006)
Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.1 of the Company's
Form 8-K filed on July 1, 2008)
2008 Beazer Homes USA, Inc. Deferred Compensation Plan, adopted effective January 1,
2008 (incorporated herein by reference to Exhibit 10.27 of the Company's Form 10-K for the fiscal year
ended September 30, 2007)
Discretionary Employee Bonus Plan (incorporated herein by reference to Exhibit 10.28 of the
Company's Form 10-K for the fiscal year ended September 30, 2007)
2010 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 of the Company's
Form 10-Q for the quarter ended March 31, 2010)
Form of 2010 Equity Incentive Plan Employee Award Agreement for Option and Restricted Stock
Awards (incorporated herein by reference to Exhibit 10.1 of the Company's Form 10-Q for the quarter
ended June 30, 2010)
Form of 2010 Equity Incentive Plan Award Agreement for Option and Restricted Stock Awards (Non-
Employee Directors) (incorporated herein by reference to Exhibit 10.2 of the Company's Form 10-Q for
the quarter ended June 30, 2010)
Form of 2010 Equity Incentive Plan Award Agreement for Option and Restricted Stock Awards
(Named Executive Officers) dated as of November 16, 2011 (incorporated herein by reference to
Exhibit 10.1 of the Company's 8-K filed on November 22, 2011)
Form of 2010 Equity Incentive Plan Performance Cash Award Agreement (Named Executive Officers)
(incorporated herein by reference to Exhibit 10.1 of the Company's 10-Q for the quarter ended
December 31, 2012)
2014 Long-Term Incentive Plan, as amended (incorporated herein by reference to Appendix I of the
Company’s Form DEF 14A filed on December 19, 2016)
Reserved.
Reserved.
Reserved.
Form of 2014 Long-Term Incentive Plan Award Agreement for Restricted Stock Awards (Named
Executive Officers) (incorporated herein by reference to Exhibit 10.21 of the Company’s Form 10-K
filed on November 13, 2014)
Form of 2014 Long-Term Incentive Plan Award Agreement for TSR Performance Share Awards
(Named Executive Officers) (incorporated herein by reference to Exhibit 10.22 of the Company’s Form
10-K filed on November 13, 2014)
Form of 2014 Long-Term Incentive Plan Award Agreement for Pre-Tax Income Performance Share
Awards (Named Executive Officers) (incorporated herein by reference to Exhibit 10.23 of the
Company’s Form 10-K filed on November 13, 2014)
Form of 2014 Long-Term Incentive Plan Award Agreement for Restricted Stock Awards (Non-
Employee Directors) (incorporated herein by reference to Exhibit 10.24 of the Company’s Form 10-K
filed on November 13, 2014)
Form of 2014 Long-Term Incentive Plan Award Agreement for Performance Shares (Named Executive
Officers) (incorporated herein by reference to Exhibit 10.1 of the Company’s Form 10-Q filed on
February 4, 2016)
Form of 2014 Long-Term Incentive Plan Award Agreement for Performance Shares (Named Executive
Officers) (incorporated herein by reference to Exhibit 10.26 of the Company's Form 10-K filed on
November 14, 2017)
81
10.27*
10.28*
10.29*
10.30*
10.31*
10.32
10.33
10.34
10.35
10.36
—
—
—
—
—
—
—
—
—
—
10.37
—
10.38
—
10.39
10.40
—
—
10.41
—
10.42
—
10.43
—
10.42
—
Severance and Change In Control Agreement by and between Allan P. Merrill and the Company,
effective as of September 18, 2018 (incorporated herein by reference to Exhibit 10.1 of the Company’s
Form 8-K filed on September 24, 2018)
Severance and Change In Control Agreement by and between Robert L. Salomon and the Company,
effective as of September 18, 2018 (incorporated herein by reference to Exhibit 10.2 of the Company’s
Form 8-K filed on September 24, 2018)
Severance and Change In Control Agreement by and between Keith L. Belknap and the Company,
effective as of September 18, 2018 (incorporated herein by reference to Exhibit 10.29 of the Company's
Form 10-K filed on November 13, 2018)
Severance and Change in Control Agreement, dated November 20, 2020 (incorporated herein by
reference to Exhibit 10.1 of the Company's Form 8-K/A filed on November 20, 2020)
Letter Agreement dated November 20, 2020 (incorporated herein by reference to Exhibit 10.1 of the
Company's Form 8-K filed on November 20, 2020), as amended
Delayed-Draw Term Loan Facility, dated November 16, 2010, among Beazer Homes USA, Inc.,
Citibank, N.A. and Citigroup Global Markets Inc. (incorporated herein by reference to Exhibit 10.1 of
the Company's Form 8-K filed on November 18, 2010)
Delayed-Draw Term Loan Facility, dated November 16, 2010, among Beazer Homes USA, Inc.,
Deutsche Bank AG Cayman Islands Branch and Deutsche Bank Securities Inc. (incorporated herein by
reference to Exhibit 10.2 of the Company's Form 8-K filed on November 18, 2010)
First Amendment to the Delayed-Draw Term Loan Facility, dated as of November 16, 2010, by and
between Beazer Homes USA, Inc. and Citibank, N.A. (incorporated herein by reference to Exhibit 10.2
of the Company's 8-K filed on August 9, 2012)
First Amendment to the Delayed-Draw Term Loan Facility, dated as of November 16, 2010, by and
between Beazer Homes USA, Inc. and Deutsche Bank AG Cayman Islands Branch (incorporated herein
by reference to Exhibit 10.3 of the Company's 8-K filed on August 9, 2012)
Second Amended and Restated Credit Agreement, dated as of September 24, 2012, between Beazer
Homes USA, Inc., as borrower, the lenders party thereto, the issuers party thereto, and Credit Suisse
AG, Cayman Islands Branch, as agent (incorporated herein by reference to Exhibit 10.1 of the
Company's 8-K filed on September 26, 2012)
First Amendment to Second Amended and Restated Credit Agreement, dated as of November 10, 2014,
between Beazer Homes USA, Inc., as borrower, the lenders party thereto, the issuers party thereto, and
Credit Suisse AG, Cayman Islands Branch, as agent (incorporated herein by reference to Exhibit 10.33
of the Company’s Form 10-K filed on November 13, 2014)
Second Amendment to Second Amended and Restated Credit Agreement, dated as of November 6,
2015, between Beazer Homes USA, Inc., as borrower, the lenders party thereto, the issuers party
thereto, and Credit Suisse AG, Cayman Islands Branch, as agent (incorporated herein by reference to
Exhibit 10.34 of the Company's 10-K filed on November 10, 2015)
Credit Agreement, dated March 11, 2016, by and between Beazer Homes USA, Inc. and Wilmington
Trust (incorporated herein by reference to Exhibit 10.1 of the Company’s Form 8-K filed on March 11,
2016)
Third Amendment to Second Amended and Restated Credit Agreement, dated as of October 13, 2016,
by and among Beazer Homes USA, Inc., as borrower, the lenders party thereto, the issuers party thereto,
and Credit Suisse AG, Cayman Islands Branch (incorporated herein by reference to Exhibit 10.1 of the
Company’s Form 8-K filed October 13, 2016)
Fourth Amendment to the Second Amended and Restated Credit Agreement, dated as of September 24,
2012, among the Company, as borrower, the lenders party thereto, the issuers party thereto, and Credit
Suisse AG, Cayman Islands Branch, as agent, as amended (incorporated herein by reference to Exhibit
10.1 of the Company’s Form 8-K filed on October 24, 2017)
Fifth Amendment to the Second Amended and Restated Credit Agreement, dated as of September 24,
2012, among the Company, as borrower, the lenders party thereto, the issuers party thereto, and Credit
Suisse AG, Cayman Islands Branch, as agent, as amended (incorporated herein by reference to Exhibit
10.1 of the Company’s Form 8-K filed on October 5, 2018)
Sixth Amendment to the Second Amended and Restated Credit Agreement, dated as of September 24,
2012, among the Company, as borrower, the lenders party thereto, the issuers party thereto, and Credit
Suisse AG, Cayman Islands Branch, as agent, as amended (incorporated herein by reference to Exhibit
10.1 of the Company's Form 10-Q filed on May 2, 2019)
Seventh Amendment to the Second Amended and Restated Credit Agreement, dated as of September
24, 2012, among the Company, as borrower, the lenders party thereto, the issuers party thereto, and
Credit Suisse AG, Cayman Islands Branch, as agent, as amended (incorporated herein by reference to
Exhibit 10.1 of the Company's Form 8-K filed on September 10, 2019)
82
10.43
10.44
10.45
10.46*
10.47
—
—
—
—
—
10.48
—
10.49
21
22
23
31.1
31.2
32.1
32.2
101.INS
—
—
—
—
—
—
—
—
—
101.SCH —
101.CAL —
101.LAB —
101.PRE —
101.DEF —
—
104
Term Loan Agreement, dated as of September 9, 2019, by and among the Company, the subsidiaries of
the Company as guarantors thereto, and Credit Suisse International, as lender (incorporated herein by
reference to Exhibit 10.2 of the Company's Form 8-K filed on September 10, 2019)
Form of 2014 Long-Term Incentive Plan Award Agreement for Performance Shares (Named Executive
Officers) (incorporated herein by reference to Exhibit 10.2 of the Company’s Form 10-Q for the quarter
ended December 31, 2017)
Eighth Amendment to the Second Amended and Restated Credit Agreement, dated as of September 24,
2012, among the Company, as borrower, the lenders and issuers party thereto, and Credit Suisse AG,
Cayman Islands Branch, acting as agent, as amended (incorporated herein by reference to Exhibit 10.45
of the Company's Form 10-Q filed on April 4, 2020)
Amended and Restated 2014 Long-Term Incentive Plan (incorporated herein by reference to Appendix I
of the Company’s Form DEF 14A filed on December 20, 2019)
Ninth Amendment to the Second Amended and Restated Credit Agreement, dated as of September 24,
2012, among the Company, as borrower, the lenders party thereto, the issuers party thereto, and Credit
Suisse AG, Cayman Islands Branch, as agent, as amended (incorporated herein by reference to Exhibit
10.1 of the Company's Form 8-K filed on October 13, 2020)
Tenth Amendment to the Second Amended and Restated Credit Agreement, dated as of September 24,
2012, among the Company, as borrower, the lenders and issuers party thereto, and Credit Suisse AG
Cayman Islands Branch, acting as agent, as amended (incorporated herein by reference to Exhibit 10.1
of the Company's Form 8-K filed on September 27, 2021)
Credit Agreement, dated as of October 13, 2022, among Beazer Homes USA, Inc., the several lenders
from time to time parties thereto and JPMorgan Chase Bank, N.A., as an issuing lender and
administrative agent
Subsidiaries of the Company
List of Guarantor Subsidiaries
Consent of Deloitte & Touche LLP
Certification pursuant to 17 CFR 240.13a-14 promulgated under Section 302 of the Sarbanes-Oxley Act
of 2002
Certification pursuant to 17 CFR 240.13a-14 promulgated under Section 302 of the Sarbanes-Oxley Act
of 2002
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document.
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Represents a management contract or compensatory plan or arrangement.
83
(b) Exhibits
Reference is made to Item 15(a)3 above. The following is a list of exhibits, included in item 15(a)3 above, that are filed
concurrently with this report.
10.49
21
22
23
31.1
31.2
32.1
32.2
101.INS
—
—
—
—
—
—
—
—
—
101.SCH —
101.CAL —
101.LAB —
101.PRE
—
101.DEF —
Credit Agreement, dated as of October 13, 2022, among Beazer Homes USA, Inc., the several lenders
from time to time parties thereto and JPMorgan Chase Bank, N.A., as an issuing lender and
administrative agent
Subsidiaries of the Company
List of Guarantor Subsidiaries
Consent of Deloitte & Touche LLP
Certification pursuant to 17 CFR 240.13a-14 promulgated under Section 302 of the Sarbanes-Oxley Act
of 2002
Certification pursuant to 17 CFR 240.13a-14 promulgated under Section 302 of the Sarbanes-Oxley Act
of 2002
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document.
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
(c) Financial Statement Schedules
Reference is made to Item 15(a)2 above.
84
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 10, 2022
Beazer Homes USA, Inc.
By:
Name:
/s/ Allan P. Merrill
Allan P. Merrill
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: November 10, 2022
Date: November 10, 2022
Date: November 10, 2022
Date: November 10, 2022
Date: November 10, 2022
Date: November 10, 2022
Date: November 10, 2022
Date: November 10, 2022
Date: November 10, 2022
/s/ Allan P. Merrill
Allan P. Merrill
Chairman, President, Chief Executive Officer and
Director
/s/ David I. Goldberg
David I. Goldberg
Senior Vice President and Chief Financial Officer
/s/ Elizabeth S. Acton
Elizabeth S. Acton
Director
/s/ Lloyd E. Johnson
Lloyd E. Johnson
Director
/s/ Peter M. Orser
Peter M. Orser
Director
/s/ Norma A. Provencio
Norma A. Provencio
Director
/s/ Danny R. Shepherd
Danny R. Shepherd
Director
/s/ David J. Spitz
David J. Spitz
Director
/s/ C. Christian Winkle
C. Christian Winkle
Director
Name:
Name:
Name:
Name:
Name:
Name:
Name:
Name:
Name:
By:
By:
By:
By:
By:
By:
By:
By:
By:
85
SUBSIDIARIES OF THE COMPANY
Name
Ballard Green Utility Company
Beazer Charity Foundation, Inc.
Beazer Clarksburg, LLC
Beazer Employee Disaster Assistance Corp.
Beazer Fundamental, LLC
Beazer Gain, LLC
Beazer General Services, Inc.
Beazer Homes Capital Trust I
Beazer Homes Holdings, LLC
Beazer Homes Indiana Holdings Corp.
Beazer Homes Indiana LLP
Beazer Homes Investments, LLC
Beazer Homes, LLC
Beazer Homes Sales, Inc.
Beazer Homes Texas Holdings, Inc.
Beazer Homes Texas, L.P.
Beazer Mortgage Corporation
Beazer Realty Corp.
Beazer Realty Los Angeles, Inc.
Beazer Realty Services, LLC
BH Building Products, LP
BH Materials, LLC
BH Procurement Services, Inc.
Charity Title Agency, LLC
Charity Title Group, LLC
Clarksburg Arora, LLC
Clarksburg Skylark, LLC
Dove Barrington Development LLC
Gatherings, LLC
Marshfield Land, LLC
EXHIBIT 21
Jurisdiction of
Incorporation
Maryland
Delaware
Maryland
Georgia
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Indiana
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Georgia
Delaware
Delaware
Delaware
Delaware
Delaware
Texas
Delaware
Maryland
Maryland
Delaware
Delaware
Delaware
List of Guarantor Subsidiaries
EXHIBIT 22
As of September 30, 2022, the following subsidiaries of Beazer Homes USA, Inc., a Delaware corporation (the “Company”),
jointly and severally and fully and unconditionally, guaranteed the Company’s (i) 6 3/4% Senior Notes due 2025, (ii) 5 7/8%
Senior Notes due 2027, and (iii) 7 1/4% Senior Notes due 2029:
Name of Guarantor Subsidiary
Beazer Clarksburg, LLC
Beazer Fundamental, LLC
Beazer Gain, LLC
Beazer General Services, Inc.
Beazer Homes Holdings, LLC
Beazer Homes Indiana Holdings Corp.
Beazer Homes Indiana LLP
Beazer Homes Investments, LLC
Beazer Homes Sales, Inc.
Beazer Homes Texas Holdings, Inc.
Beazer Homes Texas, L.P.
Beazer Homes, LLC
Beazer Mortgage Corporation
Beazer Realty Corp.
Beazer Realty Los Angeles, Inc.
Beazer Realty Services, LLC
BH Building Products, LP
BH Procurement Services, Inc.
Clarksburg Arora LLC
Clarksburg Skylark, LLC
Dove Barrington Development LLC
Jurisdiction of
Incorporation
Maryland
Delaware
Delaware
Delaware
Delaware
Delaware
Indiana
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Georgia
Delaware
Delaware
Delaware
Delaware
Maryland
Maryland
Delaware
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-238487, 333-172483, 333-196642, and
333-218380 on Form S-3; Registration Statement Nos. 333-236484, 333-222166, and 333-217903 on Form S-4; and in
Registration Statement Nos. 333-237347, 333-116573, 333-168794, 333-200542, and 333-215991 on Form S-8 of our reports
dated November 10, 2022, relating to the consolidated financial statements of Beazer Homes USA, Inc. and subsidiaries (the
“Company”) and the effectiveness of the Company’s internal control over financial reporting, appearing in this Annual Report
on Form 10-K for the year ended September 30, 2022.
EXHIBIT 23
/s/ Deloitte & Touche LLP
Atlanta, Georgia
November 10, 2022
CERTIFICATION
PURSUANT TO 17 CFR 240.13a-14
PROMULGATED UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 31.1
I, Allan P. Merrill, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Beazer Homes USA, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions):
(a)
(b)
all significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: November 10, 2022
/s/ Allan P. Merrill
Allan P. Merrill
President and Chief Executive Officer
CERTIFICATION
PURSUANT TO 17 CFR 240.13a-14
PROMULGATED UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 31.2
I, David I. Goldberg, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Beazer Homes USA, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions):
(a)
(b)
all significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: November 10, 2022
/s/ David I. Goldberg
David I. Goldberg
Senior Vice President and Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of Beazer Homes
USA, Inc. (the “Company”) hereby certifies that the Report on Form 10-K of the Company for the period ended September 30,
2022, accompanying this certification, fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that information contained in the periodic report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: November 10, 2022
/s/ Allan P. Merrill
Allan P. Merrill
President and Chief Executive Officer
The foregoing certification is being furnished solely pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and
Section 1350 of Title 18, United States Code, and is not being filed as part of the report or as a separate disclosure document.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Financial Officer of Beazer Homes
USA, Inc. (the “Company”) hereby certifies that the Report on Form 10-K of the Company for the period ended September 30,
2022, accompanying this certification, fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that information contained in the periodic report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: November 10, 2022
/s/ David I. Goldberg
David I. Goldberg
Senior Vice President and Chief Financial Officer
The foregoing certification is being furnished solely pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and
Section 1350 of Title 18, United States Code, and is not being filed as part of the report or as a separate disclosure document.
BEAZER HOMES
BEAZER HOMES
2 0 2 2 A N N U A L R E P O R T
2 0 2 2 A N N U A L R E P O R T
About Beazer Homes
Headquartered in Atlanta, Georgia, Beazer Homes is one of the country’s largest homebuilders with operations in
13 states within the West, East and Southeast regions of the United States. Our homes are designed to appeal
to homeowners at different price points across various demographic segments and are most often offered for
sale in advance of their construction. We have developed three key competitive differentiators to help our homes
and neighborhoods stand out from other new homes:
First, our Mortgage Choice program gives homebuyers the resources to easily compare multiple loan offers from a curated
set of lenders—rather than having to accept the terms from a single “in house” lender. This choice increases the likelihood
a buyer can qualify for a mortgage and can potentially result in thousands of dollars in savings over the life of the loan.
Second, every Beazer home is designed and built to provide Surprising Performance, which includes qualifying under the
ENERGY STAR® program. Our homes deliver quality, comfort and savings far beyond what is required by local building and
energy codes.
Third, with our Choice Plans™ homebuyers can personalize the layout of several living areas within their home—at no
additional cost. These flexible floorplans allow buyers to configure their home to match their lifestyle, without paying extra
for change orders.
We build our homes in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, North Carolina,
South Carolina, Tennessee, Texas and Virginia. Beazer Homes is listed on the New York Stock Exchange under the
ticker symbol “BZH”.
Mortgage
Choice
Surprising
Performance
Choice
PlansTM
Board of
Directors
Elizabeth S. Acton (1)(4)(5)(6)
Former Executive Vice President Finance and
Chief Financial Officer
Comerica Incorporated
Lloyd E. Johnson (1)(2)(5)(6)
Former Global Managing Director,
Finance and Internal Audit
Accenture Corporation
Allan P. Merrill
Chairman, President and Chief Executive Officer
Beazer Homes USA, Inc.
Peter M. Orser (2)(4)(5)(6)
Former President and Chief Executive Officer
Weyerhaeuser Real Estate Company
Norma A. Provencio, Lead Director (2)(3)(5)(6)
President and Owner
Provencio Advisory Services Inc.
Danny R. Shepherd (1)(3)(5)(6)
Former Vice Chairman, Senior Vice President,
Executive Vice President and Chief Operating Officer
Vulcan Materials Company
David J. Spitz (2)(3)(5)(6)
Former Chief Executive Officer
ChannelAdvisor Corp.
C. Christian Winkle (1)(4)(5)(6)
Former Chief Executive Officer
Sunrise Senior Living
Committees
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating/Corporate
Governance Committee
(4) Member of the Finance Committee
(5) Audit Committee Financial Expert, as defined by
SEC regulations
(6) Independent, within the meaning of the Sarbanes-
Oxley Act and NYSE Listing Standards
Officers
Allan P. Merrill
Chairman, President and Chief Executive Officer
Keith L. Belknap
Executive Vice President, General
Counsel and Corporate Secretary
David I. Goldberg
Senior Vice President and Chief Financial Officer
INDEPENDENT AUDITORS
Deloitte & Touche LLP
BEAZER HOMES CONFIDENTIAL ETHICS HOTLINE
Beazer Homes is committed to maintaining the highest ethical standards and compliance
with the law at all levels. To help ensure that all instances of known or suspected fraud, theft,
accounting or auditing improprieties, other financial misconduct, and any other type of
misconduct involving a violation of Beazer Homes’ Code of Business Conduct and Ethics, the
assets, operations, or employees of Beazer Homes USA, Inc. are reported, we maintain an ethics
hotline.
Interested parties may contact the hotline by calling 1-866-457-9346 and reporting their
concerns to a representative of Global Compliance, a third-party company that administers
our ethics hotline.
Alternatively, interested parties can report any such concern by visiting the following
website: www.integrity-helpline.com/Beazer.jsp. The link provides an online form that upon
completion will be submitted directly to Global Compliance. Interested parties may report
their concerns anonymously, should they wish to do so. All concerns, whether reported through the
toll-free number or the online form, will be directed to certain officers of Beazer Homes,
and will be reviewed and investigated as appropriate. Where warranted after investigation,
messages will be summarized and referred to the Audit Committee of our Board of Directors
for appropriate action.
INQUIRIES
Individuals seeking financial data or information about the Company and its operations should
visit the Company’s website at www.beazer.com or contact our Investor Relations and Corporate
Communications Department.
FINANCIAL INFORMATION
Copies of Beazer Homes USA, Inc.’s Annual Report on Form 10-K, Proxy Statement, and Forms
10-Q and 8-K, as filed with the United States Securities and Exchange Commission, will be
furnished upon written request to our Investor Relations and Corporate Communications
Department or can be accessed at www.beazer.com.
TRANSFER AGENT
American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
(212) 936-5100
TRADING INFORMATION
Beazer Homes USA, Inc. lists its common shares on the New York Stock Exchange (NYSE) under
the symbol “BZH.”
DUPLICATE MAILINGS
If you are receiving duplicate or unwanted copies of our publications, please contact American
Stock Transfer & Trust Company at the number listed above.
CERTIFICATION TO NYSE
Pursuant to Section 303A.12(a) of the New York Stock Exchange Listed Company Manual, the
Company submitted the Annual CEO Certification to the NYSE, effective February 15, 2022.
B
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Corporate Headquarters
Beazer Homes USA, Inc.
1000 Abernathy Road, Suite 260
Atlanta, Georgia 30328
(770) 829-3700 | www.beazer.com
2022
Annual Report
Net Zero Energy Ready Home – New Whiteland, Indiana