BEAZER HOMES USA INC
For the period ended Mar 31, 2026. Filed Apr 30, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed Apr 30, 2026
BZH$33.48+0.1%Stored close · as of Oct 19, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-12-31; filed 2026-01-29.
0000915840-26-000009
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-04-30.
0000915840-26-000041
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 106 previous paragraphs and 126 current paragraphs.
53 unchanged; 36 reworded; 34 added; 17 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 10 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (34)
Current report
During the second quarter of fiscal 2026, sales paces reflected positive early momentum before plateauing in March with the disruption from geopolitical events. The military conflict in the Middle East heightened existing economic uncertainty and contributed to a rapid increase in mortgage rates, sharply higher energy prices, and other adverse macroeconomic pressures. Despite these uncertainties, the Company continued to execute on several margin-enhancing cost and mix initiatives that are expected to be realized over the remainder of fiscal 2026.
Current report
In response to the persistent affordability concerns and overall economic uncertainty, we have maintained a disciplined approach to operations and capital allocation. We continue to focus on our differentiated product strategy, increasing margins, selling non-strategic assets, and improving the efficiency of our land spend to support community count growth and facilitate share repurchases. Further, we are utilizing capital-efficient option agreements, when possible, to finance land spending, while keeping a prudent balance between optioned lots and on-balance sheet inventory.
Current report
With our common stock trading below book value, we accelerated our share buyback in the second quarter and repurchased 1.2 million shares of our common stock, approximately 4.0% of our outstanding shares at the end of our fiscal first quarter, for an aggregate $30.0 million. This brings our year-to-date share repurchases to $45.1 million, equating to approximately 6.3% of our outstanding shares at fiscal year end 2025. We expect to continue buyback activity in the coming quarters, using a portion of land sale proceeds to fund the repurchases.
Current report
•Advanced Home Performance, which provides energy savings and lower utility bills, cleaner air, and a quieter and more durable home,
Current report
•Curated Choices, which include competitive mortgage pricing to drive customer savings, and a range of floorplan and style options,
Current report
•Elevated Experiences, highlighting our easy shopping process and trusted homebuyer support teams to drive high customer satisfaction, and
Current report
•Community Impact, featuring the Beazer Charity Foundation and our commitment to make a positive impact in the communities where we build.
Current report
•During the quarter ended March 31, 2026, our average active community count of 167 was up 2.9% from 163 in the prior year quarter. We ended the quarter with 169 active communities, up 4.3% from 162 a year ago, as we continue to make strides towards reaching 200 active communities by the end of fiscal 2027.
Current report
•As of March 31, 2026, our land position included 24,824 controlled lots, down 12.3% from 28,290 as of March 31, 2025. We invested $187.0 million in land acquisition and land development during the quarter ended March 31, 2026, down from$197.0 million during the quarter ended March 31, 2025. We continued to manage our land spend and lot position to improve our capital efficiency and support future community count growth. As part of these efforts, we have realigned the portfolio, divested non-strategic assets, and improved the efficiency of our land spend by using lot option agreements. As of March 31, 2026, we had 14,145 lots, or 59.9% of our total active lots, under option agreements as compared to 16,322 lots, or 59.3% of our total active lots, under option agreements as of March 31, 2025.
Current report
•Homebuilding gross margin for the quarter ended March 31, 2026 was 12.0%, down from 15.1% compared to the prior year quarter. Homebuilding gross margin was impacted by inventory impairment and abandonment charges of $1.3 million during the quarter ended March 31, 2026 related to a project in progress community in our Houston market, principally due to a reduction in price driven by the competitive market dynamics. Refer to Note 4 to the condensed consolidated financial statements included in this Form 10-Q for further discussion. Homebuilding gross margin, excluding impairments, abandonments and interest amortization, for the quarter ended March 31, 2026 was 15.6%, down from 18.3% in the prior year quarter. The decrease in homebuilding gross margin compared to the prior year quarter was primarily due to an increase in price concessions and closing cost incentives, and changes in product and community mix.
Current report
Net new orders for the quarter ended March 31, 2026 decreased to 1,048, down 4.6% from the quarter ended March 31, 2025. The decrease in net new orders compared to the prior year quarter was driven by a 7.2% decrease in sales pace from 2.3 orders per community per month in the prior year quarter to 2.1, partially offset by a 2.9% increase in average active community count from 163 in the prior year quarter to 167.
Current report
Net new orders for the six months ended March 31, 2026 decreased to 1,811, down 10.8% from the six months ended March 31, 2025. The decrease in net new orders compared to the prior year period was driven by a 13.6% decrease in sales pace from 2.1 orders per community per month in the prior year period to 1.8, partially offset by a 3.3% increase in average active community count from 162 in the prior year period to 167.
Current report
West Segment: Net new orders for the quarter ended March 31, 2026 decreased to 599, down 9.9% from the quarter ended March 31, 2025. The decrease in net new orders compared to the prior year quarter was driven by a 12.5% decrease in sales pace from 2.2 orders per community per month in the prior year quarter to 1.9, partially offset by a 3.0% increase in average active community count from 101 in the prior year quarter to 104.
Current report
East Segment: Net new orders for the quarter ended March 31, 2026 decreased to 249, down 3.1% from the quarter ended March 31, 2025. The decrease in net new orders compared to the prior year quarter was driven by a 9.3% decrease in average active community count from 36 in the prior year quarter to 32, partially offset by a 6.9% increase in sales pace from 2.4 orders per community per month in the prior year quarter to 2.6.
Current report
West Segment: Net new orders for the six months ended March 31, 2026 decreased to 1,057, down 15.7% from the six months ended March 31, 2025. The decrease in net new orders was driven by an 18.8% decrease in sales pace from 2.1 orders per community per month to 1.7, partially offset by a 3.8% increase in average active community count from 102 to 106.
Current report
East Segment: Net new orders for the six months ended March 31, 2026 decreased to 425, down 12.2% from the six months ended March 31, 2025. The decrease in net new orders was driven by a 10.3% decrease in average active community count from 36 to 32 and a 2.1% decrease in sales pace from 2.3 orders per community per month to 2.2.
Current report
Southeast Segment: Net new orders for the six months ended March 31, 2026 increased to 329, up 12.7% from the six months ended March 31, 2025. The increase in net new orders was driven by a 20.8% increase in average active community count from 25 to 30, partially offset by a 6.7% decrease in sales pace from 2.0 orders per community per month to 1.8. The growth in average active communities is mainly attributed to our Atlanta submarket.
Current report
Southeast Segment: Homebuilding revenue increased by 7.4% for the three months ended March 31, 2026 compared to the prior year quarter due to an 11.3% increase in ASP, partially offset by a 3.5% decrease in closings. The decrease in closings was primarily due to lower volume of spec homes that sold and closed within the current fiscal quarter, partially offset by higher beginning backlog andimproved construction cycle times compared to the prior year quarter.
Current report
West Segment: Homebuilding revenue decreased by 31.3% for the six months ended March 31, 2026 compared to the six months ended March 31, 2025 due to a 30.5% decrease in closings and a 1.1% decrease in ASP. The decrease in closings was primarily due to lower beginning backlog, partially offset by improved construction cycle times compared to the prior year period.
Current report
East Segment: Homebuilding revenue decreased by 19.7% for the six months ended March 31, 2026 compared to the six months ended March 31, 2025 due to a 21.6% decrease in closings, partially offset by a 2.4% increase in ASP. The decrease in closings was primarily due to lower beginning backlog, partially offset by improved construction cycle times compared to the prior year period.
Current report
West Segment: Compared to the prior year quarter, homebuilding gross profit decreased by $36.7 million due to a decrease in homebuilding revenue and lower gross margin. Homebuilding gross margin, excluding impairments and abandonments, decreased to 14.6%, down from 19.1% in the prior year quarter, primarily due to an increase in price concessions and closing cost incentives, and changes in product and community mix.
Current report
East Segment: Compared to the prior year quarter, homebuilding gross profit decreased by $4.4 million due to a decrease in homebuilding revenue. Homebuilding gross margin, excluding impairments and abandonments, remained relatively flat at 14.6% compared to 14.7% in the prior year quarter, as reductions in direct construction costs largely offset increases in price concessions and land costs.
Current report
Southeast Segment: Compared to the prior year quarter, homebuilding gross profit increased by $1.4 million due to an increase in homebuilding revenue and higher gross margin. Homebuilding gross margin, excluding impairments and abandonments, increased to 17.1%, up from 16.3% in the prior year quarter, primarily due to a decrease in price concessions and reductions in direct construction costs.
Current report
West Segment: Compared to the prior year period, homebuilding gross profit decreased by $60.6 million due to a decrease in homebuilding revenue and lower gross margin. Homebuilding gross margin, excluding impairments and abandonments, decreased to 14.3%, down from 18.7% in the prior year period, primarily due to an increase in price concessions and closing cost incentives and changes in product and community mix.
Current report
East Segment: Compared to the prior year period, homebuilding gross profit decreased by $7.1 million due to a decrease in homebuilding revenue. Homebuilding gross margin, excluding impairments and abandonments, remained relatively flat at 14.7% compared to 14.9% in the prior year period, as reductions in direct construction costs largely offset increases in price concessions and land costs.
Current report
Southeast Segment: Compared to the prior year period, homebuilding gross profit decreased by $1.5 million due to a decrease in homeb uilding revenue. Homebuilding gross margin, excluding impairments and abandonments, remained relatively flat at 16.1% compared to 16.2% in the prior year period, as reductions in direct construction costs largely offset increases in price concessions and land costs.
Current report
Our operating income decreased by $66.3 million to a loss of $50.8 million for the six months ended March 31, 2026, compared to operating income of $15.5 million for the six months ended March 31, 2025. This decrease compared to the prior year period was primarily due to the previously discussed decrease in gross profit and gross margin. SG&A expense decreased 3.9% compared to the prior year primarily due to lower commissions expense on lower homebuilding revenue, partially offset by higher sales and marketing costs. SG&A as a percentage of total revenue increased by 370 basis points compared to the prior year period, from 12.9% to 16.6%, primarily due to lower homebuilding revenue.
Current report
West Segment: The $33.4 million decrease in oper ating income compared to the prior year quarter was primarily due to the lower gross profit previously discussed and higher sales and marketing costs, partially offset by lower commissions expense on lower homebuilding revenue.
Current report
East Segment: The $3.2 million decrease in operating income compared to the prior year quarter was primarily due to the lower gross profit previously discussed and higher sales and marketing costs, partially offset by lower commissions expense on lower homebuilding revenue.
Current report
Southeast Segment: The $0.8 million increase in operating income compared to the prior year quarter was primarily due to the higher gross profit previously discussed and lower other G&A costs, partially offset by higher sales and marketing costs.
Current report
West Segment: The $56.6 million decrease in operating income compared to the prior year period was primarily due to the decrease in gross profit previously discussed and higher sales and marketing costs, partially offset by lower commissions expense on lower homebuilding revenue.
Current report
East Segment: The $6.4 million decrease in operating income compared to the prior year period was primarily due to the decrease in gross profit previously discussed and higher sales and marketing costs, partially offset by lower commission expenses on lower homebuilding revenue.
Current report
Southeast Segment: The $1.8 million decrease in operating income compared to the prior year period was primarily due to the decrease in gross profit previously discussed and higher sales and marketing costs, partially offset by lower commissions expense on lower homebuilding revenue.
Current report
Share Repurchases and Dividends Paid
Removed paragraphs (17)
Previous report
During the first quarter of fiscal 2026, the sales environment reflected continued weak consumer sentiment and economic uncertainty. Aggressive discounts and incentives remained necessary across the industry to generate volume and turn inventory despite mortgage rates decreasing to the low 6% range. In 2025, the industry began slowing new home starts to better align with demand, which we believe could create more favorable supply dynamics as fiscal 2026 progresses. Despite a soft current homebuilding environment, we remain positive on long-term housing market fundamentals, as production shortfalls over the past decade have left the market structurally undersupplied.
Previous report
In response to challenging conditions, we have maintained a disciplined approach to operations and capital allocation. We continue to focus on our differentiated product strategy, lowering construction costs, selling non-strategic assets, and moderating our land spend. Further, when making growth investments, we are utilizing capital-efficient option agreements when possible. With our common stock trading below book value, we prioritized share repurchases, buying back 697 thousand shares of our common stock, approximately 2.3% of our fiscal first quarter's outstanding shares, for an aggregate $15.1 million during the first quarter. We expect to accelerate buyback activity in the coming quarters, using a portion of land sale proceeds to fund the repurchases.
Previous report
•During the quarter ended December 31, 2025, our average active community count of 167 was up 3.7% from 161 in the prior year quarter. We ended the quarter with 168 active communities, up 3.1% from 163 a year ago. We invested $180.7 million in land acquisition and land development during the quarter ended December 31, 2025, down from$211.3 million in land spend during the quarter ended December 31, 2024. In response to the evolving market conditions, we reallocated a portion of our land investment toward reaching our Multi-Year Goals of deleveraging and growing book value per share. This shift underscores our confidence in our strong land position and the visibility we have into our community count growth.
Previous report
•As of December 31, 2025, our land position included 24,832 controlled lots, down 14.0% from 28,874 as of December 31, 2024. We remain focused on the expanded usage of lot option agreements, which allow us to position for future growth while providing the flexibility to respond to market conditions. As of December 31, 2025, we had 14,340 lots, or 61.0% of our total active lots, under option agreements as compared to 16,609 lots, or 58.9% of our total active lots, under option agreements as of December 31, 2024.
Previous report
•Homebuilding gross margin for the quarter ended December 31, 2025 was 10.4%, down from 15.2% compared to the prior year quarter. Homebuilding gross margin, excluding impairments, abandonments and interest amortization, for the quarter ended December 31, 2025 was 14.0%, down from 18.2% in the prior year quarter. The decrease in homebuilding gross margin compared to the prior year quarter was primarily due to an increase in price concessions and closing cost incentives, changes in product and community mix, and a litigation-related charge recognized during the quarter ended December 31, 2025. The litigation-related charge reduced homebuilding gross margin by 1.8%.
Previous report
(c) We previously held a minority interest in a technology company specializing in digital marketing for new home communities, which was sold during the quarter ended March 31, 2024. In exchange for the previously held investment, we received cash in escrow along with a minority partnership interest in the acquiring company, which was recorded within other assets in our condensed consolidated balance sheets. The resulting gain of $8.6 million from this transaction was recognized in other income, net on our condensed consolidated statement of operations. The Company believes excluding this one-time gain from Adjusted EBITDA provides a better reflection of the Company's performance as this item is not representative of our core operations.
Previous report
Net new orders for the quarter ended December 31, 2025 decreased to 763, down 18.1% from the quarter ended December 31, 2024. The decrease in net new orders compared to the prior year quarter was driven by a 21.1% decrease in sales pace from 1.9 orders per community per month in the prior year quarter to 1.5, partially offset by a 3.7% increase in average active community count from 161 in the prior year quarter to 167.
Previous report
West Segment: Net new orders for the quarter ended December 31, 2025 decreased to 458, down 22.2% from the quarter ended December 31, 2024. The decrease in net new orders compared to the prior year quarter was driven by a 25.6% decrease in sales pace from 1.9 orders per community per month in the prior year quarter to 1.4, partially offset by a 4.6% increase in average active community count from 102 in the prior year quarter to 107.
Previous report
East Segment: Net new orders for the quarter ended December 31, 2025 decreased to 176, down 22.5% from the quarter ended December 31, 2024. The decrease in net new orders compared to the prior year quarter was driven by a 12.6% decrease in sales pace from 2.1 orders per community per month in the prior year quarter to 1.9 and an 11.3% decrease in average active community count from 35 in the prior year quarter to 31.
Previous report
West Segment: Compared to the prior year quarter, homebuilding gross profit decreased by $24.0 million due to a decrease in homebuilding revenue and lower gross margin. Homebuilding gross margin, excluding impairments and abandonments, decreased to 13.9%, down from 18.3% in the prior year quarter, primarily due to an increase in price concessions and closing cost incentives.
Previous report
East Segment: Compared to the prior year quarter, homebuilding gross profit decreased by $2.7 million due to a decrease in homebuilding revenue and lower gross margin. Homebuilding gross margin, excluding impairments and abandonments, decreased to 14.7%, down from 15.1% in the prior year quarter, primarily due to an increase in price concessions, closing cost incentives, and changes in product and community mix.
Previous report
Southeast Segment: Compared to the prior year quarter, homebuilding gross profit decreased by $2.9 million due to a decrease in homebuilding revenue and lower gross margin. Homebuilding gross margin, excluding impairments and abandonments, decreased to 14.5%, down from 16.1% in the prior year quarter, primarily due to an increase in price concessions and changes in product and community mix.
Previous report
West Segment: The $23.2 million decrease in operating income compared to the prior year quarter was primarily due to the lower gross profit previously discussed and higher sales and marketing costs, partially offset by lower commissions expense on lower homebuilding revenue.
Previous report
East Segment: The $3.1 million decrease in operating income compared to the prior year quarter was primarily due to the lower gross profit previously discussed and higher sales and marketing costs, partially offset by lower commissions expense on lower homebuilding revenue.
Previous report
Southeast Segment: The $2.6 million decrease in operating income compared to the prior year quarter was primarily due to the lower gross profit previously discussed and higher sales and marketing costs, partially offset by lower commissions expense on lower homebuilding revenue.
Previous report
We have also entered into a number of stand-alone letter of credit agreements with banks, secured with cash or certificates of deposit. These combined facilities provide for letter of credit needs collateralized by either cash or assets of the Company. We currently have $4.6 million of outstanding letters of credit under these facilities.
Previous report
Stock Repurchases and Dividends Paid
Reworded paragraphs (36)
Previous wording
We believe the Company is uniquely positioned to address affordability concerns of today’s buyers and deliver a superior product and buying experience. Our differentiated strategy focuses on (1) Advanced Home Performance – energy savings, cleaner air, and a quieter home, (2) Curated Choices – competitive mortgage, floorplan, and style options, (3) Elevated Experiences – easy shopping, a trusted team, and continuing care, and (4) Community Impact – Beazer Charity Foundation and employee commitments. Together, these lower the cost of homeownership and deliver meaningful financial and lifestyle benefits that make buying a Beazer home more attainable and rewarding.
Current wording
We believe the Company is uniquely positioned to address affordability concerns of today’s buyers and deliver a superior product and buying experience. Our differentiated strategy focuses on:
Previous wording
We remain on track to achieve our Multi-Year Goals, which include reaching more than 200 active communities by the end of fiscal 2027, reducing our net debt to net capitalization ratio to the low-30% range by the end of fiscal 2027, and achieving a double-digit compound annual growth rate in book value per share from the end of fiscal 2024 through fiscal 2027. We are confident in our differentiated product strategy, the value of our assets, and our ability to generate improving returns for our shareholders.
Current wording
We continue to work towards our Multi-Year Goals, which include reaching more than 200 active communities by the end of fiscal 2027, reducing our net debt to net capitalization ratio to the low-30% range by the end of fiscal 2027, and achieving a double-digit compound annual growth rate in book value per share from the end of fiscal 2024 through fiscal 2027. We are confident in our differentiated product strategy, the value of our assets, and our ability to generate improving returns for our shareholders.
Previous wording
Overview of Results for Our Fiscal First Quarter
Current wording
Overview of Results for Our Fiscal Second Quarter
Previous wording
•During the quarter ended December 31, 2025, orders per community per month were 1.5 compared to 1.9 in the prior year quarter, and our net new orders were 763, down 18.1% from 932 in the prior year quarter. The decrease in sales pace compared to the prior year reflected weaker consumer sentiment driven by affordability challenges and uncertainties in the macroeconomic environment. We continue to adjust prices, features and incentives to align with the current competitive market conditions.
Current wording
•During the quarter ended March 31, 2026, orders per community per month were 2.1 compared to 2.3 in the prior year quarter, and our net new orders were 1,048, down 4.6% from 1,098 in the prior year quarter. The decrease in sales pace compared to the prior year reflected weaker consumer sentiment driven by affordability challenges and uncertainties in the macroeconomic environment. We continue to adjust prices, features and incentives to align with the current competitive market conditions.
Previous wording
•Our Average Selling Price (ASP) for homes closed during the quarter ended December 31, 2025 was $513.9 thousand, up 1.2% from $507.6 thousand in the prior year quarter. Our backlog ASP for homes sold during the quarter ended December 31, 2025 was $568.7 thousand, up 5.0% from $541.5 thousand in the prior year quarter. The increase in closing ASP and backlog ASP compared to prior year quarter was primarily due to changes in product and community mix.
Current wording
•Our Average Selling Price (ASP) for homes closed during the quarter ended March 31, 2026 was $525.4 thousand, up 2.0% from $515.3 thousand in the prior year quarter. Our backlog ASP as of March 31, 2026 was $582.1 thousand, up 6.8% from $544.9 thousand in the prior year quarter. The increase in closing and backlog ASP compared to the prior year quarter was primarily due to changes in product and community mix.
Previous wording
•SG&A for the quarter ended December 31, 2025 was 17.9% of total revenue, up from 14.0% in the prior year quarter. The increase in SG&A as a percentage of total revenue compared to the prior year quarter was primarily due to lower homebuilding revenue. We remain focused on prudently managing overhead costs.
Current wording
•SG&A for the quarter ended March 31, 2026 was 15.5% of total revenue, up from 12.0% in the prior year quarter. The increase in SG&A as a percentage of total revenue compared to the prior year quarter was primarily due to lower homebuilding revenue. SG&A expense was$63.6 million for the quarter ended March 31, 2026, down 6.5%compared to the prior year quarter primarily due to lower commissions. We remain focused on prudently managing overhead costs.
Previous wording
Our homebuilding operating cycle historically has reflected escalating new order activity in the second and third fiscal quarters and increased closings in the third and fourth fiscal quarters. However, these seasonal patterns may be impacted by a variety of factors, including periods of market volatility and changes in mortgage interest rates, which may result in increased or decreased new orders and/or revenues and closings that are outside of the normal ranges typically realized on account of seasonality. Accordingly, our financial results for the three months ended December 31, 2025 may not be indicative of our full year results.
Current wording
Our homebuilding operating cycle historically has reflected escalating new order activity in the second and third fiscal quarters and increased closings in the third and fourth fiscal quarters. However, these seasonal patterns may be impacted by a variety of factors, including periods of market volatility and changes in mortgage interest rates, which may result in increased or decreased new orders and/or revenues and closings that are outside of the normal ranges typically realized on account of seasonality. Accordingly, our financial results for the three and six months ended March 31, 2026 may not be indicative of our full year results.
Previous wording
(a)Excluding impairments, abandonments, and interest amortized to cost of sales, homebuilding gross margin was 14.0% and 18.2% for the three months ended December 31, 2025 and 2024, respectively. A litigation-related charge was recognized during the quarter ended December 31, 2025, which reduced homebuilding gross margin, excluding impairments, abandonments, and interest, by 1.8%. Please see the "Homebuilding Gross Profit and Gross Margin" section below for a reconciliation of homebuilding gross profit and the related gross margin excluding impairments and abandonments and interest amortized tocost of sales (non-GAAP measures) to homebuilding gross profit and gross margin, the most directly comparable GAAP measure.
Current wording
(a)Excluding impairments, abandonments, and interest amortized to cost of sales, homebuilding gross margin was 15.6% and 18.3% for the three months ended March 31, 2026 and 2025, respectively, and 14.9% and 18.3% for the six months ended March 31, 2026 and 2025, respectively. A litigation-related charge was recognized during the six months ended March 31, 2026, which reduced homebuilding gross margin, excluding impairments, abandonments, and interest, by 0.8%. Please see the "Homebuilding Gross Profit and Gross Margin" section below for a reconciliation of homebuilding gross profit and the related gross margin excluding impairments and abandonments and interest amortized tocost of sales (non-GAAP measures) to homebuilding gross profit and gross margin, the most directly comparable GAAP measure.
Previous wording
(c) Calculated as tax expense for the period divided by (loss) income before income taxes. Our income tax expense is not always directly correlated to the amount of pre-tax (loss) income for the associated period due to a variety of factors, including, but not limited to, the impact of tax credits and permanent differences. Our tax credits are predominantly due to the energy efficiency of our homes, with credits valued between $2,000 and $5,000 per single family home. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The OBBBA repeals many of the energy efficiency credits enacted under the Inflation Reduction Act, including our ability to claim energy efficient new home tax credits for homes that close after June 30, 2026.
Current wording
(c) Calculated as tax (benefit) expense for the period divided by (loss) income before income taxes. Our income tax (benefit)expense is not always directly correlated to the amount of pre-tax (loss) income for the associated period due to a variety of factors, including, but not limited to, the impact of tax credits and permanent differences. Our tax credits are predominantly due to the energy efficiency of our homes, with credits valued between $2,000 and $5,000 per single family home. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The OBBBA repeals many of the energy efficiency credits enacted under the Inflation Reduction Act, including our ability to claim energy efficient new home tax credits for homes that close after June 30, 2026. For the three and six months ended March 31, 2026, the Company's effective tax rates were also affected by a change in the approach used to calculate the interim income tax provision, reducing comparability with the prior year periods. Refer to Note 10 to the condensed consolidated financial statements included in this Form 10-Q for additional details.
Previous wording
Southeast Segment: Net new orders for the quarter ended December 31, 2025 increased to 129, up 11.2% from the quarter ended December 31, 2024. Theincrease in net new orders compared to the prior year quarter was driven by a 22.5% increase inaverage active community count from 24 in the prior year quarter to 29, partially offset by a 9.2% decrease in sales pace from 1.6 orders per community per month in the prior year quarter to 1.5.
Current wording
Southeast Segment: Net new orders for the quarter ended March 31, 2026 increased to 200, up 13.6% from the quarter ended March 31, 2025. Theincrease in net new orders compared to the prior year quarter was driven by a 19.2% increase inaverage active community count from 26 in the prior year quarter to 31, partially offset by a 4.7% decrease in sales pace from 2.3 orders per community per month in the prior year quarter to 2.2. The growth in average active communities is mainly attributed to our Atlanta submarket.
Previous wording
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. Thedecrease in backlog units was primarily due to beginning the fiscal quarter with fewer backlog units and year-over-year lower net new orders for the quarter ended December 31, 2025. The aggregate dollar value of homes in backlog as of December 31, 2025 decreased 29.7% compared to December 31, 2024 due to a 33.1% decrease in backlog units, partially offset by a 5.0% increase in the ASP of homes in backlog. The increase in backlog ASP compared to prior year quarter was primarily due to changes in product and community mix.
Current wording
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. Thedecrease in backlog units was primarily due to beginning the fiscal quarter with fewer backlog units and year-over-year lower net new orders for the quarter ended March 31, 2026. The aggregate dollar value of homes in backlog as of March 31, 2026 decreased 9.1% compared to March 31, 2025 due to a 14.9% decrease in backlog units, partially offset by a 6.8% increase in the ASP of homes in backlog. The increase in backlog ASP compared to the prior year quarter was primarily due to changes in product and community mix.
Previous wording
East Segment: Homebuilding revenue decreased by 14.2% for the three months ended December 31, 2025 compared to the prior year quarter due to an 11.9% decrease in closings and a 2.6% decrease in ASP. The decrease in closings was primarily due to the lower beginning backlog compared to prior year quarter.
Current wording
West Segment: Homebuilding revenue decreased by 36.7% for the three months ended March 31, 2026 compared to the prior year quarter due to a 35.1% decrease in closings and a 2.4% decrease in ASP. The decrease in closings was primarily due to lower beginning backlog, partially offset by improved construction cycle times compared to the prior year quarter.
Previous wording
West Segment: Homebuilding revenue decreased by 24.6% for the three months ended December 31, 2025 compared to the prior year quarter due to a 25.0% decrease in closings, partially offset by a 0.6% increase in ASP. The decrease in closings was primarily due to the lower beginning backlog compared to prior year quarter.
Current wording
East Segment: Homebuilding revenue decreased by 24.6% for the three months ended March 31, 2026 compared to the prior year quarter due to a 30.0% decrease in closings, partially offset by a 7.7% increase in ASP. The decrease in closings was primarily due to lower beginning backlog, partially offset by improved construction cycle times compared to the prior year quarter.
Previous wording
Southeast Segment: Homebuilding revenue decreased by 22.6% for the three months ended December 31, 2025 compared to the prior year quarter due to a 30.4% decrease in closings, partially offset by an 11.1% increase in ASP. The decrease in closings was primarily due to lower beginning backlog compared to prior year quarter.
Current wording
Southeast Segment: Homebuilding revenue decreased by 6.4% for the six months ended March 31, 2026 compared to the six months ended March 31, 2025 due to a 16.1% decrease in closings, partially offset by an 11.5% increase in ASP. The decrease in closings was primarily due to lower beginning backlog, partially offset by improved construction cycle times compared to the prior year period.
Previous wording
(a) Corporate and unallocated includes amortization of capitalized interest, capitalization and amortization of indirect costs related to homebuilding activities, as well as capitalized interest and capitalized indirect costs impaired in order to reflect projects in progress assets at fair value, when applicable. For thethree months ended December 31, 2025, Corporate and unallocated also included alitigation-related charge that reduced total homebuilding gross margin, excluding impairments, abandonments, and interest, by 1.8%.
Current wording
(a) Corporate and unallocated includes amortization of capitalized interest, capitalization and amortization of indirect costs related to homebuilding activities, as well as capitalized interest and capitalized indirect costs impaired in order to reflect projects in progress assets at fair value, when applicable. For the six months ended March 31, 2026, Corporate and unallocated also included alitigation-related charge that reduced total homebuilding gross margin, excluding impairments, abandonments, and interest, by 0.8%.
Previous wording
Our homebuilding gross profit decreased by $32.6 million to $37.4 million for the three months ended December 31, 2025, compared to $70.0 million in the prior year quarter. The decrease in homebuilding gross profit compared to the prior year quarter was primarily due to a decrease in homebuilding revenue of $100.7 million and a decrease in gross margin of 480 basis points to 10.4%. As shown in the tables above, the comparability of our gross profit and gross margin was impacted by impairment and abandonment charges, which increased by $1.3 million, and interest amortized to homebuilding cost of sales, which decreased by $2.2 million compared to the prior year quarter (refer to Note 4 and Note 5 of the notes to the condensed consolidated financial statements in this Form 10-Q for additional details). When excluding the impact of impairment and abandonment charges and interest amortized to homebuilding cost of sales, homebuilding gross profit decreased by $33.4 million compared to the prior year quarter, while homebuilding gross margin decreased by 420 basis points to 14.0%. The decrease in gross margin for the three months ended December 31, 2025 compared to the prior year quarter was due to an increase in price concessions and closing cost incentives, changes in product and community mix, and a litigation-related charge recognized in Corporate and unallocated during the quarter ended December 31, 2025 (refer to Note 8 of the notes to the condensed consolidated financial statements included in this Form 10-Q for further discussion). The litigation-related charge charge reduced homebuilding gross margin, excluding impairments, abandonments, and interest, by 1.8%.
Current wording
Our homebuilding gross profit decreased by $69.1 million to $85.1 million for the six months ended March 31, 2026, from $154.1 million in the prior year period. The decrease in homebuilding gross profit was primarily due to a decrease in homebuilding revenue of $259.0 million and a decrease in gross margin of 400 basis points to 11.2%. Similar to the three-month period discussed above, the comparability of our gross profit and gross margin for the six-month period was impacted by impairment and abandonment charges, which increased by $2.1 million, and interest amortized to homebuilding cost of sales, which decreased by $6.3 million year-over-year (refer to Note 4 and Note 5 to the condensed consolidated financial statements in this Form 10-Q for additional details). When excluding the impact of impairment and abandonment charges and interest amortized to homebuilding cost of sales, homebuilding gross profit decreased by $73.3 million compared to the prior year period, while homebuilding gross margin decreased by 340 basis points to 14.9%. The decrease in gross margin for the six months ended March 31, 2026 compared to the prior year period was primarily due to an increase in price concessions and closing cost incentives, changes in product and community mix, and a litigation-related charge recognized in Corporate and unallocated during the quarter ended December 31, 2025 (refer to Note 8 of the notes to the condensed consolidated financial statements included in this Form 10-Q for further discussion). The litigation-related charge reduced homebuilding gross margin, excluding impairments, abandonments, and interest, by 0.8%.
Previous wording
For the three months ended December 31, 2025, land sales and other revenue decreased by $4.8 million to $3.7 million, and land sales and other gross profit (loss) decreased by $2.3 million to a loss of $0.2 million compared to the prior year quarter. During the three months ended December 31, 2025, we recognized $1.0 million land held for sale impairment charges related to two held for sale communities in our West and East segments.
Current wording
For the three months ended March 31, 2026, land sales and other revenue increased by $2.8 million to $12.1 million, and land sales and other gross profit decreased by $0.8 million to $1.1 million compared to the prior year quarter. For the six months ended March 31, 2026, land sales and other revenue decreased by $2.0 million to $15.8 million, and land sales and other gross profit decreased by $3.1 million to $0.8 million compared to the prior year period. Also, during the six months ended March 31, 2026, we recognized $1.0 million in land held for sale impairment charges related to two held for sale communities in our West and East segments.
Previous wording
Our operating income decreased by $34.0 million to a loss of $31.8 million for the three months ended December 31, 2025, compared to operating income of $2.1 million for the three months ended December 31, 2024. This decrease compared to the prior year quarter was primarily due to the previously discussed decrease in gross profit and gross margin. SG&A as a percentage of total revenue increased by 390 basis points compared to the prior year quarter, from 14.0% to 17.9%, primarily due to lower homebuilding revenue.
Current wording
Our operating income decreased by $32.3 million to a loss of $19.0 million for the three months ended March 31, 2026, compared to operating income of $13.4 million for the three months ended March 31, 2025. This decrease compared to the prior year quarter was primarily due to the previously discussed decrease in gross profit and gross margin. SG&A expense decreased 6.5% compared to the prior year primarily due to lower commissions expense on lower homebuilding revenue. SG&A as a percentage of total revenue increased by 350 basis points compared to the prior year quarter, from 12.0% to 15.5%, primarily due to lower homebuilding revenue.
Previous wording
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 three months ended December 31, 2025, corporate and unallocated net expenses increased by $5.0 million from the prior year quarter primarily due to a litigation-related charge (refer to Note 8 of the notes to the condensed consolidated financial statements included in this Form 10-Q for further discussion) and higher G&A expenses, partially offset by lower amortization of capitalized interest costs expensed to homebuilding cost of sales on lower closings and homebuilding revenue.
Current wording
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 three months ended March 31, 2026, corporate and unallocated net expenses decreased by $3.5 million from the prior year quarter primarily due to lower amortization of capitalized interest costs expensed to homebuilding cost of sales on lower closings and homebuilding revenue, and lower G&A costs.
Previous wording
Our income tax assets and liabilities and related effective tax rate are affected by a variety of factors, including, but not limited to, tax credits, permanent differences and other discrete items. A comparison of our effective tax rates should also consider the changes in valuation allowance in periods when a change occurs. As such, our income tax expense (benefit) is not always directly correlated to the amount of pre-tax income or loss for the associated periods.
Current wording
Our income tax expense or benefit and related effective tax rate are affected by a variety of factors, including, but not limited to, tax credits, permanent differences and other discrete items. A comparison of our effective tax rates should also consider the changes in valuation allowance in periods when a change occurs. As such, our income tax expense or benefit is not always directly correlated to the amount of pre-tax income or loss for the associated periods. For the three and six months ended March 31, 2026, the Company's effective tax rates were also affected by a change in the approach used to calculate the interim income tax provision, reducing comparability with the prior year periods. Refer to Note 10 to the condensed consolidated financial statements included in this Form 10-Q for additional details.
Previous wording
We recognized income tax expense of $1.5 million for the three months ended December 31, 2025, compared to income tax expense of $36.0 thousand for the three months ended December 31, 2024. Income tax expense for the three months ended December 31, 2025 was primarily driven by energy efficiency tax credits generated from expected closings during the current fiscal year, a discrete tax benefit from tax credits related to prior year activities, and stock-based compensation activity in the period, partially offset by the operating loss, and permanent differences. Income tax expense for the three months ended December 31, 2024 was primarily driven byincome tax expense on earnings from operations and permanent differences, partially offset by energy efficiency tax credits generated from expected closings during the current fiscal year, and stock-based compensation activity in the period. Refer to Note 10 of the notes to the condensed consolidated financial statements included in this Form 10-Q for further discussion of our income taxes.
Current wording
We recognized income tax benefit of $17.6 million and $16.1 million for the three and six months ended March 31, 2026, compared to income tax expense of $1.4 million and $1.4 million for the three and six months ended March 31, 2025. Income tax benefit for the six months ended March 31, 2026 was primarily driven by income tax benefit on loss from operations, energy efficiency tax credits generated from closings during the current fiscal year, and a discrete tax benefit from tax credits related to prior year activities, partially offset by permanent differences, and stock-based compensation activity in the period. Income tax expense for the six months ended March 31, 2025 was primarily driven byincome tax expense on earnings from operations and permanent differences, partially offset by energy efficiency tax credits generated from expected closings during the current fiscal year, and stock-based compensation activity in the period.
Previous wording
Net cash used in operating activities was $165.3 million for the three months ended December 31, 2025. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development spending. Net cash used in operating activities during the period was primarily driven by an increase in inventory of $112.6 million resulting from land acquisition, land development and house construction spending, loss before income taxes of $31.1 million, which included $8.0 million of non-cash charges, and a net increase in non-inventory working capital balances of $29.6 million.
Current wording
Net cash used in operating activities was $228.8 million for the six months ended March 31, 2026. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development spending. Net cash used in operating activities during the period was primarily driven by an increase in inventory of $224.8 million resulting from land acquisition, land development and house construction spending and loss before income taxes of $49.6 million, which included $15.2 million of non-cash charges. This was partially offset by cash inflows from a net decrease in non-inventory working capital balances of $30.5 million.
Previous wording
Net cash used in operating activities was $159.4 million for the three months ended December 31, 2024. Net cash used in operating activities during the period was primarily driven by an increase in inventory of $122.3 million resulting from land acquisition, land development and house construction spending to support continued growth, and a net increase in non-inventory working capital balances of $46.1 million. This was partially offset by cash inflows from income before income taxes of $3.2 million, which included $5.9 million of non-cash charges.
Current wording
Net cash used in operating activities was $155.9 million for the six months ended March 31, 2025. Net cash used in operating activities during the period was primarily driven by an increase in inventory of $191.0 million resulting from land acquisition, land development and house construction spending to support growth. This was partially offset by cash inflows from income before income taxes of $17.3 million, which included $12.7 million of non-cash charges, and a net decrease in non-inventory working capital balances of $5.1 million.
Previous wording
Net cash used in investing activities was $6.3 million for the three months ended December 31, 2025, primarily driven by capital expenditures for model homes and information systems infrastructure and purchases of investment securities.
Current wording
Net cash used in investing activities was $14.3 million for the six months ended March 31, 2026, primarily driven by capital expenditures for model homes and information systems infrastructure and purchases of investment securities.
Previous wording
Net cash used in investing activities was $5.7 million for the three months ended December 31, 2024, primarily driven by capital expenditures for model homes and information systems infrastructure and purchases of investment securities.
Current wording
Net cash used in investing activities was $9.4 million for the six months ended March 31, 2025, primarily driven by capital expenditures for model homes and information systems infrastructure, partially offset by proceeds from maturities in investment securities.
Previous wording
Net cash provided by financing activities was $77.4 million for the three months ended December 31, 2025, primarily driven by borrowings from our Unsecured Facility (refer to Note 6 of the notes to the condensed consolidated financial statements included in this Form 10-Q for further discussion), partially offset by common stock repurchases under our share repurchase program and tax payments for stock-based compensation awards vesting.
Current wording
Net cash provided by financing activities was $145.0 million for the six months ended March 31, 2026, primarily driven by net borrowings from our Unsecured Facility, partially offset by common stock repurchases under our share repurchase program, tax payments for stock-based compensation awards vesting, and debt issuance costs incurred to increase the borrowing capacity and extend the term of our Unsecured Facility (refer to Note 6 to the condensed consolidated financial statements included in this Form 10-Q for further discussion).
Previous wording
Net cash provided by financing activities was $41.9 million for the three months ended December 31, 2024, primarily driven by net borrowings from our Unsecured Facility (see Note 6 of the notes to the condensed consolidated financial statements included in this Form 10-Q for further discussion), partially offset by tax payments for stock-based compensation awards vesting.
Current wording
Net cash provided by financing activities was $31.2 million for the six months ended March 31, 2025, primarily driven by net borrowings from our Unsecured Facility, partially offset by common stock repurchases under our share repurchase program and tax payments for stock-based compensation awards vesting.
Previous wording
As of December 31, 2025, our liquidity position consisted of $120.8 million in cash and cash equivalents and $221.9 million of remaining capacity under the Unsecured Facility, compared to $80.4 million in cash and cash equivalents and $255.0 million of remaining capacity under the Unsecured Facility as of December 31, 2024.
Current wording
As of March 31, 2026, our liquidity position consisted of $116.4 million in cash and cash equivalents and $284.7 million of remaining capacity under the Unsecured Facility, compared to $85.1 million in cash and cash equivalents and $292.6 million of remaining capacity under the Unsecured Facility as of March 31, 2025.
Previous wording
We generally fulfill our short-term cash requirements with cash generated from our operations and available borrowings. Additionally, our Unsecured Facility provides working capital and letter of credit capacity of $365.0 million, which includes a letter of credit capacity of $100.0 million. As of December 31, 2025, we had $95.0 million in borrowings and $48.1 million in letters of credit were outstanding under the Unsecured Facility, resulting in a remaining borrowing capacity of $221.9 million.
Current wording
We generally fulfill our short-term cash requirements with cash generated from our operations and available borrowings. Additionally, our Unsecured Facility provides working capital and letter of credit capacity of $525.0 million, which includes a letter of credit facility of up to $100.0 million. As of March 31, 2026, we had $195.0 million in borrowings and $45.3 million in letters of credit were outstanding under the Unsecured Facility, resulting in a remaining borrowing capacity of $284.7 million.
Previous wording
Our credit ratings are periodically reviewed by rating agencies. In November 2025, S&P revised the Company’s corporate credit rating from B+ to B and revised the Company's outlook from negative to stable. In September 2025, Moody's reaffirmed the Company's issuer corporate family rating of B1 and reaffirmed the Company's outlook of stable. In addition, our Senior Notes have a rating of B and B1 per S&P and Moody's, respectively. These ratings and our current credit condition affect, among other things, our ability to access new capital. These ratings are not recommendations to buy, sell or hold debt securities. 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.
Current wording
Our credit ratings are periodically reviewed by rating agencies. In March 2026, S&P reaffirmed the Company’s corporate credit rating of B, reaffirmed the Company's Senior Notes' rating of B, and revised the Company's outlook from stable to negative. Also in March 2026, Moody's revised the Company's issuer corporate family rating from B1 to B2, the Company's Senior Notes rating from B1 to a B2, and reaffirmed the Company's outlook of stable. These ratings and our current credit condition affect, among other things, our ability to access new capital. These ratings are not recommendations to buy, sell or hold debt securities. 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.
Previous wording
In April 2025, the Company's Board of Directors approved a share repurchase program that authorizes the Company to repurchase up to $100.0 million of its outstanding common stock. The repurchase program has no expiration date. The Company repurchased 697 thousand shares of its common stock, approximately 2.3% of our fiscal first quarter's outstanding shares, for an aggregate$15.1 million at an average price per share of$21.72 during the three months ended December 31, 2025 through open market transactions. All shares have been retired upon repurchase. No share repurchases were made during the three months ended December 31, 2024. The aggregate reduction to stockholders' equity related to share repurchases during the three months ended December 31, 2025 was$15.1 million. As of December 31, 2025, the remaining availability of the share repurchase program was $72.3 million.
Current wording
In April 2025, the Company's Board of Directors approved a share repurchase program that authorizes the Company to repurchase up to $100.0 million of its outstanding common stock. The repurchase program has no expiration date and repurchases may be conducted through open market purchases, 10b5-1 plans, accelerated share repurchases, or private transactions. The Company repurchased 1.2 million shares of its common stock for an aggregate$30.0 million (inclusive of commissions and exclusive of accrued excise tax) at an average price per share of$25.54 during the three months ended March 31, 2026. This brings the total repurchases for thesix months ended March 31, 2026 to 1.9 million shares of common stock for $45.1 million at an average price per share of $24.12. During the three and six months ended March 31, 2025,905 thousand shares were repurchased for$20.6 millionat an average price per share of$22.73. All shares have been retired upon repurchase. As of March 31, 2026, the remaining availability of the share repurchase program was $42.3 million.
Previous wording
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 the three months ended December 31, 2025 or 2024.
Current wording
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 the three and six months ended March 31, 2026 or 2025.
Previous wording
In addition to purchasing land directly, we control a portion of our land supply through lot option agreements with land developers and land bankers, which generally require the payment of cash or issuance of an irrevocable letter of credit or surety bond for the right to acquire lots during a specified period of time at a specified price. In recent years, we have focused on increasing our lot option agreement usage to minimize risk as we grow our land position. As of December 31, 2025, we controlled 24,832 lots, which includes 251 lots of land held for future development and 1,083 lots of land held for sale. Of the 23,498 active lots, we controlled 14,340 of these lots, or 61.0%, through option agreements, as compared to 16,609 active lots controlled, or 58.9% of our total active lots, through option agreements as of December 31, 2024. Lot option agreements allow us to position for future growth while providing the flexibility to respond to market conditions by renegotiating the terms of the options prior to exercise or terminating the agreement.
Current wording
In addition to purchasing land directly, we control a portion of our land supply through lot option agreements with land developers and land bankers, which generally require the payment of cash or issuance of an irrevocable letter of credit or surety bond for the right to acquire lots during a specified period of time at a specified price. In recent years, we have focused on increasing our lot option agreement usage to minimize risk as we grow our land position. As of March 31, 2026, we controlled 24,824 lots, which includes 251 lots of land held for future development and 954 lots of land held for sale. Of the 23,619 active lots, we controlled 14,145 of these lots, or 59.9%, through option agreements, as compared to 16,322 active lots controlled, or 59.3% of our total active lots, through option agreements as of March 31, 2025. Lot option agreements allow us to position for future growth while providing the flexibility to respond to market conditions by renegotiating the terms of the options prior to exercise or terminating the agreement.
Previous wording
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, letters of credit or surety bonds, and other non-refundable amounts incurred, which totaled $353.9 million as of December 31, 2025. The total remaining purchase price, net of cash deposits, committed under all options was $1.60 billion as of December 31, 2025. Subject to market conditions and our liquidity, we may further expand our use of option agreements to supp lement our inventory supply.
Current wording
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, letters of credit or surety bonds, and other non-refundable amounts incurred, which totaled $373.4 million as of March 31, 2026. The total remaining purchase price, net of cash deposits, committed under all options was $1.64 billion as of March 31, 2026. Subject to market conditions and our liquidity, we may further expand our use of option agreements to supp lement our inventory supply.
Previous wording
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, surety bonds, and surety-backed letters of credit of $52.7 million, $319.6 million, and $4.6 million respectively, as of December 31, 2025, primarily related to our obligations to local governments to construct roads and other improvements in various developments.
Current wording
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, surety bonds, and surety-backed letters of credit of $45.3 million, $364.3 million, and $4.6 million respectively, as of March 31, 2026, primarily related to our obligations to local governments to construct roads and other improvements in various developments.
Previous wording
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. It is also possible that other professionals applying reasonable judgment to the same set of facts and circumstances could reach a different conclusion. As disclosed in our 2025 Annual Report, our most critical accounting policies relate to inventory valuation of projects in progress, warranty reserves, and income tax valuation allowances. There have been no significant changes to our critical accounting policies and estimates during the three months ended December 31, 2025 as compared to those described in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in our 2025 Annual Report on Form 10-K.
Current wording
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. It is also possible that other professionals applying reasonable judgment to the same set of facts and circumstances could reach a different conclusion. As disclosed in our 2025 Annual Report, our most critical accounting policies relate to inventory valuation of projects in progress, warranty reserves, and income tax valuation allowances. There have been no significant changes to our critical accounting policies and estimates during the six months ended March 31, 2026 as compared to those described in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in our 2025 Annual Report on Form 10-K.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Together, these lower the total ongoing costs of homeownership and deliver meaningful financial and lifestyle benefits that make buying a Beazer home more attainable and rewarding.
Current report — wording carried from elsewhere
Our homebuilding gross profit decreased by $36.5 million to $47.6 million for the three months ended March 31, 2026, compared to $84.1 million in the prior year quarter. The decrease in homebuilding gross profit compared to the prior year quarter was primarily due to a decrease in homebuilding revenue of $158.3 million and a decrease in gross margin of 310 basis points to 12.0%. As shown in the tables above, the comparability of our gross profit and gross margin was impacted by impairment and abandonment charges, which increased by $0.8 million, and interest amortized to homebuilding cost of sales, which decreased by $4.1 million compared to the prior year quarter (refer to Note 4 and Note 5 to the condensed consolidated financial statements in this Form 10-Q for additional details). When excluding the impact of impairment and abandonment charges and interest amortized to homebuilding cost of sales, homebuilding gross profit decreased by $39.9 million compared to the prior year quarter, while homebuilding gross margin decreased by 270 basis points to 15.6%. The decrease in gross margin for the three months ended March 31, 2026 compared to the prior year quarter was due to an increase in price concessions and closing cost incentives, and changes in product and community mix.
Current report — wording carried from elsewhere
Corporate and Unallocated: For the six months ended March 31, 2026, corporate and unallocated net expenses increased by $1.5 million from the prior year period primarily due to a litigation-related charge (refer to Note 8 to the condensed consolidated financial statements included in this Form 10-Q for further discussion), partially offset by lower amortization of capitalized interest costs expensed to homebuilding cost of sales on lower closings and homebuilding revenue.