Beazer Homes USA, Inc. (NYSE:BZH) Q4 2019 Earnings Conference Call - Final Transcript
Nov 13, 2019 • 05:00 pm ET
Thank you. [Operator Instructions] Our first question comes from Alan Ratner with Zelman & Associates. Your line is open.
Hey, guys. Good afternoon. Congrats on the progress on the balance sheet in the quarter. My question, just looking at your lot count, pretty sizable drop in lots, like quarter-over-quarter down about 10% and year-over-year almost 20%. And certainly appreciate all the comments on ROA and asset efficiency. But if I look at Slide 8 on your community count, it looks like -- just the way that slide is on Slide 8, it looks like community count should be declining fairly significantly throughout 2020 and correct me if I'm wrong there. But I'm just curious if you can talk a little bit about how you see your lot count right now. It's the lowest absolute level we've seen in a couple of decades. So is this the optimal level of land? And can you continue to grow community count? I know that's been a focus of yours, and you achieved that in '19. But how do you see that playing out over the next year or two?
So Alan, this is Dave. Let's talk about the lot count first. We mentioned in the script, we have 3.4 years of land. We think that's plenty of supply of land on a go-forward basis. And we think it's sufficient to grow the business as we move forward. So not really concerned on the land side.
In terms of community count in FY '20, look, we're not giving full year guidance. As you know, it's difficult to predict quarterly trends, let alone going more quarters out, so we don't give that level of guidance for the full year. We're clearly going to benefit from the community count growth we've already experienced and that should drive higher sales and top line growth in the first half of the year. So we'll have more to discuss as we move through the year, but it's just too early to give full year guidance now.
And the other thing I'd mention is the level of investment that we've talked about for the full year '20 and having higher land spend quarter-to-quarter, as we kind of mentioned in the script, should certainly bode well for 2021.
Okay. I appreciate that. And then second question on the margin. I just want to make sure I'm thinking about this correctly. So you mentioned in the past few years, you've typically seen a sequential pullback in 1Q margin versus 4Q and certainly encouraging to see that, expected to hold steady this time around. Should we still expect there to be the normal seasonality throughout 2020 in terms of typically your margins would increase through the year? I don't know how much visibility you have in your backlog beyond 1Q. But is there any reason maybe from a mix standpoint that you wouldn't expect it to follow that typical seasonal trend like we've seen in the last few years?
Robert L. Salomon
Hey. Alan, this is Bob.