Good morning. And welcome to the Beazer Homes Earnings Conference Call for the Fourth Quarter and Fiscal Year Ended September 30, 2012. This conference is being recorded and will be hosted by Allan Merrill, the company’s Chief Executive Officer. Joining him on the call today will be Bob Salomon, the company’s Chief Financial Officer. Before he begins, Carey Phelps, Director of Investor Relations, will give instructions on accessing the company’s slide presentation over the Internet and will make comments regarding forward-looking information. Ms. Phelps?

Thank you. Good morning. And welcome to the Beazer Homes conference call discussing our results for the fiscal year and quarter ended September 30, 2012. During this call, we will webcast a synchronized presentation which can be found on the Investor page of beazer.com. Before we begin, you should be aware that during this call, we will be making forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors are described in our SEC filings, including our annual report on Form 10-K. Any forward-looking statement speaks only as of the date on which such statement is made and as except as required by law, we do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time and it is not possible for management to predict all such factors. Joining me today are Allan Merrill, our President and Chief Executive Officer; and Bob Salomon, our Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will take questions in the time remaining. I will now turn the call over to Allan.

Thank you, Carey, and thank you for joining us. On our call this morning, we will provide highlights of our results for fiscal 2012, including our recently concluded fourth quarter, update you on our progress on our four path to profitability strategies and share our primary financial goals for fiscal 2013. During fiscal ‘12, we made impressive progress in our path to profitability strategies, while dramatically strengthening our balance sheet. We generated solid growth in orders, closings and backlog across every geographic segment, and achieved companywide gross margin expansion. Although, we clearly benefited from improvements in the housing market, our team’s efforts to implement our strategies played a central role in our accomplishments. For the full year, we generated $22 million in positive adjusted EBITDA, up $47 million. We recorded 4,901 new home orders, an increase of 25% over last year. We closed 4,428 new homes up 36%. We ended fiscal ‘12 with a backlog that was 33% higher in units and 43% higher in value than at the end of fiscal ‘11 and we increase gross margins, excluding interest and impairments by 50 basis points, even though our primary focus was improving absorption rates. In terms of our balance sheet, we raised $170 million in growth capital, which we’ve started to invest in new communities. We reduced our annual cash interest expense by approximately $15 million and we increased our liquidity ending the year with $488 million in unrestricted cash, as well as a new undrawn $150 million revolver. Results in the fourth quarter contributed to the full year’s encouraging operational trends. Most importantly, we generated positive adjusted EBIDA of $15 million, even after absorbing nearly $6 million in charges related to discontinued operations. Orders were up 10% year-over-year, despite an 11% decline in community count in the quarter.…

Thanks, Allan. The progress we made in our path to profitability strategies resulted in significant improvement in our financial results for -- from continuing operation this year. For the quarter, our net loss excluding inventory impairments and the loss on debt extinguishment incurred when we refinanced our 2017 notes, improved to $0.69 per share this year, compared with a loss of $2.38 per share in the fourth quarter of fiscal 2011. Similarly, for the full year, when we exclude the first quarter FIN 48 tax benefit impairments and losses on debt extinguishment our loss per share was $6.17 for fiscal 2012, compared with $11.14 last year. We converted 66% of our beginning backlog this quarter, slightly better than I had predicted on our last call. This slide shows the factors which impact our backlog conversion ratio. Home schedule to close in future quarters, rose to 913 units at the end of September, this increase illustrates the growing percentage of to-be-built homes in our backlog, which at September 30th was 82%. Fortunately, these homes also tend to deliver higher margins than spec sales. 7.6% of our homes in beginning backlog canceled during the quarter, compared to 14% last year. We pushed 6% of our June 30th backlog in the future quarters and finally, we sold and closed 429 homes during the quarter. Assuming that the vast majority of our buyers continue to prefer to-be-built homes, I expect our quarterly conversion rates during fiscal ‘13 to be similar to fiscal 2012. As our experience indicates average sales prices can be especially volatile quarter-to-quarter due to changes in geographic, product and community mix. We have enjoyed an upward trend in ASP during the past several quarters. Our fourth quarter ASP grew to 228,600 and we finished fiscal ‘12 with an ASP of 224,900…

Okay. Thanks, Bob. I’m very pleased with the progress we made during fiscal 2012 and I’m encouraged about our prospects. With that said, we are the first to acknowledge that loosing money every year is a not sustainable financial model. That’s why we’ve made returning to profitability our overriding goal. For fiscal 2013, our financial goal is to deliver adjusted EBITDA of at least $50 million, or approximately $30 million more than our adjusted EBITDA in fiscal ‘12. This improvement will arise from four primary factors, higher closings driven by our higher backlog, increases in our ASP, further improvements in our gross margin percentage and dollars, and modest additional leverage of our overhead costs. Taken together with the benefit of the four years worth of interest savings from our recent transactions, we plan to improve our pretax profitability by at least $40 million in fiscal ‘13. That won’t return us to profitability but it does represent another sizable bite at the elephant in the room, our losses. Now, in terms of expectations for fiscal ‘13, I want to make sure we share all the news, not just the good news. Due to a decline in community account and our operational emphasis on improving gross margins, our plan to increase profitability by at least $40 million this year does not contemplate a meaningful increase in new home orders. We are committed to making improvements against all four of our path to profitability targets but order growth in the next few quarters isn’t a necessary part of their plan. That leads me to my final comment. Every single employee at Beazer takes our responsibility to return to profitability incredibly seriously. We’re appreciative of the opportunity we have and we know we need to continue our relentless and disciplined focus on our path to profitability. So far, our plan has yield a dramatic improvements and I’m convinced the best is yet to come. Thanks for your attention today. With that, I’ll turn the call over to the operator to take us into Q&A.

(Operator Instructions) Our first question comes from David Goldberg.

Thanks. Good morning, everybody.

Hi, David.

My first question and Allan, I’m talking about the elephant since you mentioned him at the end.

Yeah.

I wasn’t sure if you’re going away from it. But you talked about last quarter about the ability to kind of, maybe eat the elephant little bit at a time, nibble the elephant, whatever the analogy was. What -- we think as much maybe update on kind of the progress on gross margin improvements, $250 at a time, I think, we talked about last quarter.

Yeah.

Where are we? Have we seen that start to kind of come true? Is there more opportunity than what you expected less opportunity?

I think we are well under way, David. I know that when we said that in August, I mean, our quarter, the September quarter was largely baked. So the things that we had started doing in July and August to improve margin, we just barely begun describing service in terms of results that we have delivered. So I feel like the opportunity is comparable to, if not, greater than where it was 90 days ago, but actually I feel better about having identified more of those opportunities in individual divisions and really, they’re at the plan and at the elevation levels like I talked about a few months ago.

Got it. And then just as a follow-up on slide eight, you talked about the sales per community, the improvement that we’ve seen?

Yeah.

Trying to get an idea of, kind of, how you benchmark that against your peers. Do you think at 2.3 sales per community that’s about in line with market, a little light or little heavy and kind of how do you benchmark that and how do you improve it from here?

Well, as -- one of the things, I feel strongly is that we need to do -- what we need to do to improve our business. And so benchmarking is useful on things like sales per community and gross margin when you’re last, that’s not good. And that’s where we were a year ago. On the sales per community, in particular, I think that we’re now, I would, say in the middle of the pack. And I’m confident that the efforts that we’ve had going on for the last year can continue to push that up a little bit. But I don’t frankly want to push it through to the highest possible number because I think we’d be leaving margin dollars on the table and doing that. So I’ve had said, kind of, consistently 2.5 is a pretty good number to shoot at. I think with an improving market, maybe we’ll do a bit better than that. But of course, that’s where the attention where the gross margin improvement will come in. We clearly can eke out additional improvements in velocity but we want to take chunks on the margin side. In terms of how do you do it, its part and parcel of a community improvement plan. Now, the improvement plan for community is, at this point, two parts margin and one part velocity and really looking at the mix of features and the pricing that we’ve got and the incentives that we’re offering, those levers have to be designed at that individual community level to move both of those forward.

Got it. Thank you.

Our next question is from Ivy Zelman of Zelman & Associates.

Good morning, guys. It’s actually Alan on for Ivy. Allan, I was hoping that I’ll ask a little bit more about community count. So and the target range is very helpful in understanding that, putting a specific timeframe on that. But if we assume that community count continues to decline through the next year, I’m not sure if you quantify that. I may have missed it, but that would kind of imply that off of a lower base, you probably need to see 20% plus growth from that point to hit your target range. And going back historically, looking at your company’s history, we haven’t really seen organic growth in communities at that level. Certainly, we’ve seen you get there through acquisition. So I guess, the question is, are there any potential M&A baked into hitting that target number there or is it something that really we shouldn’t expect to hit in your firm, maybe, three or four years, which would be coming more in line with organic growth you’ve seen in prior cycles?

There are a lot of questions embedded in that one, very good questions. First of all, let me think. I don’t think I did, that I would expect that on a quarterly average basis, we’ll trough out in a 150 range on community count, which is down a little bit from the low 160s, where we were in the fourth quarter. But that implies a pretty big percentage down relative to the 178 that we average for the full year. In terms of history, I’ll be honest, I don’t spend a lot of time and I’m not too worried about five years ago or 10 years ago in terms of what organic growth rates were in communities. We have the capital and we have the pipeline that we can get to our target range, not in three or four years but over the next couple of years in terms of community count. Now, to the question of whether there is any M&A opportunity, we’ll keep our eyes peeled. I’m interested in that. If it makes sense, there is nothing currently active. And so I haven’t build a plan here, based on, kind of, the hope that something will drift into our field of view that we can -- that we can tackle. So I think you should look at our community count growth is primarily an organic exercise. But I think with focus, with the right balance sheet, I think we can execute it.

Great. That’s helpful. And just a follow-on to that, can you give us an update on how many communities, you currently have mothballed and whether any of those communities coming online, this contemplated in your ‘13 guidance?

Well, we don’t county communities. In my thought, I don’t have that figure but what I can tell you is the total dollar amount is just under $400 million. We pulled as Bob said one community in but it’s, kind of, a big community, so $20 million asset. We’ll have multiple price points in there. That will end up counting in our parlance for probably three different communities, when it’s active at the end of our fiscal year in ‘13 or ‘14. So that probably accounts for three. I think the size of that asset and the aggregate is in the range of 500 lots. So I would tell you that it’s hard because each of those assets is different. I would be real careful about trying to do an extrapolation of either community count or lot count from dollars. But absolutely harvesting that asset over the next eight quarters will be part of our growth in community count.

Can you maybe give a little bit more detail on the $400 million whether -- what percentage of that are finished lots that you can bring on pretty quickly versus what might be raw and still few years out?

Most of it is going to require development.

Yeah.

Most of it is -- in fact, the substantial majority of it. And I think we’ve said in the past that half of its in California. So that’s -- as Bob said, the issue really is when those deals compete with raw deals that we’re looking at from third parties, that’s pretty good indicator when we start bringing those out.

Great. Thanks a lot.

Yeah.

Our next question is from Michael Rehaut of JPMC.

Thanks. Good morning, everyone.

Good morning, Michael.

Good morning, Michael.

First question on the gross margin dollars that you have targeted. Again, I guess looking at the other targets, I’m not sure if that range is necessarily for fiscal ‘13, but certainly as you’ve also pointed out the ASP is starting to trend upward nicely, particularly this quarter and the average order price, average backlog. So working off of, I guess, where you were -- where you are in the fourth quarter in the low 17% pre-interest. I’m just trying to extrapolate if possible what that implies from a percentage basis?

I think we…

Top part.

I think we tried to lay out a lot of numbers to help people do that. If it was absolute tie-ups, I would have just given the answer. But I think with $18,000 improvement in backlog ASP and Bob showed some statistic, which showed that they -- I don’t want to say conversion, but the progression of that in the future ASP has been in the range of 92% to 98%. We think it will -- this year tend toward the higher end of that. If you’re taking $16,000, $17,000 improvement in ASP, even if the margin in percentage terms didn’t change at all, you’re picking up $3,000 or $4,000 in gross margin dollars this year. So -- and we’ve also said we do expect to see progress on the gross margin percentage. What we didn’t do and frankly, I think as you’re responsible to try and do is to give a quarter-by-quarter gross margin percentage. Our focus is very clearly pushing through 45,000 in gross margin dollars per closing. And I think that is probably the metric against which we’ll most easily be judged.

Okay. Also just talking about the land spend, which is very helpful as it provides that kind of bridge to ‘14 and beyond, where -- for potential growth. As a lot of this land in fiscal -- rent spend in fiscal ‘13 is -- is more development oriented. Does that development -- is it the length of which that you’re really not even going to see the full benefit in our ‘14 or how much of that -- those dollars would you start to see generating return in fiscal ‘14?

That’s a tremendously good question but a super hard one to answer because I can’t predict everything that we’ll buy this year. Let me tell you about the 20 communities that we bought since we did the financing. They represented about 2,000 total lots, which would suggest that the average size was about 100 units. We did at eight markets. About half were raw off land deals, half were at various stages of development. They may have been cash or option deals but they were at different stages of development. So I would say with respect to half of them, there is a very good chance we’ll have of sales, that we’ll certainly have full years worth of sales in ‘14 and probably, full years worth of closing. On a couple of the development deals, I don’t think we’ll have 12 full months of deliveries in ‘14 from those new communities. But -- and obviously, the longer we go into fiscal ‘13 is we’re making acquisitions, the more of that will be the case. So that’s why I try to articulate these targets including importantly the community count target, not as a fiscal ‘13 number, but something that we think that together with the other target to get us back to profitability.

Okay. One last one, if I could, the East and Southeast is certainly shortly showing below average -- below corporate average order growth then the West. Do you expect in fiscal ‘13 to those -- for those regions to stabilize or is that part of the movement in the community count that perhaps it’s more concentrated in those areas and that would kind of drive down the average, where the West would continue to lead?

It’s a good question. We definitely saw in ‘12 more reduction in community count percentage terms in the East than we did in the other segments. So that contributed to the order growth issues. But not only do I think they’ll stabilize, I’m sure that they will and I think we’ll see the East contribute nicely in ‘13. We’ve gone through a lot of improvement strategies in each of the divisions in our East segment and I feel like that is a good opportunity for us. Interestingly, if I’m right about that, our highest ASPs are in the East as well. So that’s going to add further fuel to the migration upward in our ASP.

Okay. Thank you.

Our next question comes from Dan Oppenheim of Credit Suisse.

Thanks very much. Allan, you’ve done a great job in terms of focusing on the -- trying to boost the margins in what you’re doing different -- the operational performance to get there. When you think about the land deals, just as you went through that there, talking about half raw, half partially developed. There is a lot of other builders talking about doing more, majority of the land that we’re getting now just being developed lots. How are you thinking about the margin opportunities you are seeing for those for raw versus partial versus fully developed at this point and how is that guiding you versus thinking about just bringing committees on more rapidly?

Well, there is no question and this was actually one of the things that I talked about in July and August when we did the financing. I was saying then that there were some builders that were very short land for ‘13. And it felt to me like disconnect in valuation between ‘13 deliveries and ‘14 deliveries was huge. It’s you’re really having to pay up to get ‘13 deliveries and by pay up, I mean, midteens margins unless you were bailed out by price appreciation. That didn’t strike me as being accretive to our strategy to improve gross margins. So by raising the money when we did, and sort of letting go the idea of ‘13 order growth, not ‘13 profit growth, we’re committed to that but ‘13 order growth and sort of skipping that year and being in the ‘14 context for our deliveries. I felt like we were going to be able to achieve both the IRR and the gross margin objectives that we stick to and that’s played out. In fact, it’s probably even more true today, anything that you would tie up or try and control today that we deliver physical ‘13 closings, very unlikely that, that would have decent margins associated with it and really that’s trying to leverage overheads, kind of, a play or a speculation of home prices, which may be valid strategies for others but that’s not where we’re focused on.

Great. And then I guess, in terms of the development, in terms of taking on those, the raw land deals that’s term wise betting the -- having the confidence, in terms of the market continuing to improve and working through those locations. Where are those raw land deals, are they -- where are you looking in terms of locations? And if you think about it relative to some of the mothballed land that you have right now, are these we call premium locations relative to that or is it thought that this -- the recovery that we’re going through right now continues to be confident in taking on partials further out?

Certainly, starting at the center and working outward, I mean, I think Southern California is good. It’s a little bit different but what we’ve done from a cash purchase on a development side has been much closer in, in the last six or eight months. We’ve done two really significant deals, one in Cucamonga, one in Fullerton, which are surrounded on four sides by development. I mean, they are not pioneering in any anyway. Some of our land held in California is out in that Temecula, Murrietta, French Valley corridor, which is hotter than a pistol right now from a land price perspective, but it’s not as attractive from a home selling perspective. So I think that’s going to come to us over the next year or two, in focus, closer in.

Great. Thanks very much.

Our next question is from Joel Locker of FBN Securities.

Hi guys. Just on your backlog conversion going forward, what you expected in fiscal -- by the end of fiscal 2013 and going into 2014? Would you expect it to normalize back to where it was, say 2003, before the boom/bust cycle?

Joel, this is Bob. In 2003, before the boom cycle, our conversion was in the low 50% range.

Right.

So, I think we’re kind of there, if you think of that as normalized. As long as our sales activity is, it’s heavily trended towards to-be-built. That cycle time is going to be a little bit longer and as you’re building backlog and the cycle time is a little bit longer, due to to-be-builts, it’s going to hold down that conversion a little bit.

Right. And then what about -- what did your community count, I might have missed it but what did it end the fiscal year with?

The quarter was 167, I think.

163.

163.

Because -- the average that I was saying, what did it end up?

Yeah. I think it ended about 158.

158. All right. Thanks a lot guys.

Our final question comes from Alex Barron of Housing Research Center.

Yeah. Thanks guys. I know, I guess it’s always a challenge to balance pace versus margin but I’m wondering what the -- do you guys have some kind of metrics at which you decided is time to raise prices or lower incentives. And why -- I guess why focus more on the margin it seems than on the sale base?

I guess the answer is every community is a little bit different. We’re in locations where there is an opportunity to raise prices and capture margin based on the competitive position that we have. We want to get fully paid for the value that we’re providing. If we’re in a location, where it’s high per competitive from a price and feature standpoint, we want at least our fare share -- share in terms of absorption. If I go back 15, 16 months frankly, I think we had an opportunity to do a lot of improvement in both. We got competitive, I believe, and have moved ourselves kind of into the center of the fairway from a sales per community perspective. But I am still convinced that we’re leaving dollars on the table every time we sell a home. In many of our markets, we still got opportunities to capture margin dollars. And I think it’s a little bit of a teeter-totter, Alex. I mean, we’ve got a little of this and then a little of that as back and forth, back and forth but it really has made community by community. And I just think at this point you look externally, somebody ask the question about benchmarking. We can’t take a lot of pride in a 17.7% gross margin. We’ve got to do better than that. We can do better than and we will.

Okay. And as far as your focus on -- on your target clients, what percentage do you think you guys will be doing like entry level type home in 2013?

I think, its going to stay very consistent. I mean, our pricing is changing a little bit but our buyer’s really aren’t. It’s very tough to deliver in the 140, 150, 160 price point in any of our markets today. We cant replace product at that level, where mortgage rates are that first time buyer who buy the way for us, is got a FICO according to our lending partners over seven and a quarter or over 7.25. They can afford the monthly payment at 2,000. I’m sure they like to buy at 150 but we can’t get the lots or the build cost delivering 150s. So I think our buyer profile stays much the same, but the pricing is definitely moving.

Thanks.

That concludes today’s conference call. Thank you for joining the Beazer Homes earnings conference call for the forth quarter and fiscal year ended September 30, 2012. You may now disconnect.