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What changed in BEAZER HOMES USA INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BEAZER HOMES USA INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+254 added−250 removedSource: 10-K (2024-11-13) vs 10-K (2023-11-16)

Top changes in BEAZER HOMES USA INC's 2024 10-K

254 paragraphs added · 250 removed · 198 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeGatherings – In 2016, Gatherings ® by Beazer Homes was officially introduced across several markets within Beazer's geographic footprint through age restricted condominiums. We strive to provide extraordinary value, a strong commitment to customer service, and a quality, lower-maintenance home for those seeking to l ive in 55+ active adult communities .
Biggest changeWe cater to the 55+ home buyer category through our Gatherings ® branded offerings by providing quality, lower-maintenance homes for those seeking to live in an active adult community. In 2016, Gatherings ® by Beazer Homes was officially introduced across several markets within Beazer's geographic footprint through age restricted condominiums.
For every Beazer community, we identify Choice Lenders, who are selected for their ability to provide a comprehensive array of products and programs, meet our high customer service standards, and their willingness to compete to earn our customer’s business.
For every Beazer community, we identify Choice Lenders, who are selected for their ability to provide a comprehensive array of products and programs, meet our high customer service standards, and willingness to compete to earn our customer’s business.
In addition, we provide a limited warranty for up to ten years covering only certain defined structural element failures. 8 Our homebuilding work is performed by subcontractors who typically must agree to indemnify us with regard to their work and provide certificates of insurance demonstrating that they have met our insurance requirements and have named us as an additional insured under their policies.
In addition, we provide a limited warranty for up to ten years covering certain defined structural element failures. 8 Our homebuilding work is performed by subcontractors who typically must agree to indemnify us with regard to their work and provide certificates of insurance demonstrating that they have met our insurance requirements and have named us as an additional insured under their policies.
The SEC maintains a website that contains reports, proxy statements, information statements and other information regarding issuers, including us, that file electronically with the SEC at www.sec.gov. In addition, many of our corporate governance documents are available on our website at www.beazer.com.
The SEC maintains a website that contains reports, proxy statements, information statements and other information regarding issuers, including us, that file electronically with the SEC at www.sec.gov. 10 In addition, many of our corporate governance documents are available on our website at www.beazer.com.
Ending backlog represents the number of homes in backlog from the previous period plus the number of net new orders (new orders less cancellations) generated during the current period minus the number of homes closed during the current period. The following table summarizes units and dollar value in backlog by reportable segment as of September 30, 2023, 2022 and 2021.
Ending backlog represents the number of homes in backlog from the previous period plus the number of net new orders (new orders less cancellations) generated during the current period minus the number of homes closed during the current period. The following table summarizes units and dollar value in backlog by reportable segment as of September 30, 2024, 2023 and 2022.
Unlike many of our peers, we have no ownership interest in any lender and are able to promote competition among lenders on behalf of our customers through our Mortgage Choice program. Approximately 88% of our fiscal 2023 customers elected to finance a portion of their home purchase. Competition The development and sale of residential properties is highly competitive and fragmented.
Unlike many of our peers, we have no ownership interest in any lender and are able to promote competition among lenders on behalf of our customers through our Mortgage Choice program. Approximately 85% of our fiscal 2024 customers elected to finance a portion of their home purchase. Competition The development and sale of residential properties is highly competitive and fragmented.
Government Regulation and Environmental Matters We are subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning zoning, building, design, constructions, the availability of water, and matters concerning the protection of health, safety and the environment.
Government Regulation and Environmental Matters We are subject to a variety of local, state and federal stat utes, ordinances, rules and regulations concerning zoning, building, design, constructions, the availability of water, and matters concerning the protection of health, safety and the environment.
For example, buyers of to-be-built homes can typically choose between two different configurations in the kitchen/great room and in the primary bedroom/bathroom. Offering these pre-designed floor plan alternatives allows us to offer fewer plans, which improves efficiency and reduces cost w hile creating living areas that match an individual buyer's lifestyle.
For example, buyers of to-be-built homes can typically choose between two different configurations in the kitchen and in the primary baths. Offering these pre-designed floor plan alternatives allows us to offer fewer plans, which improves efficiency and reduces cost w hile creating living areas that match an individual buyer's lifestyle.
Sales personnel are trained internally through a structured training program focused on sales techniques, product familiarity, competitive products in the area, construction schedules, and Company policies around compliance, which management believes results in a sales force with extensive knowledge of our operating policies and housing products. Sales personnel must be licensed real estate agents where required by law.
Sales personnel are trained internally through a structured training program focused on sales techniques, product familiarity, competitive products in the area, construction schedules, and Company policies around compliance, resulting in a sales force with extensive knowledge of our operating policies and housing products. Sales personnel must be licensed real estate agents where required by law.
We remain committed to this balanced growth strategy, which is designed to increase shareholder value b y improving our return on assets while reducing operational risk and debt.
We remain committed to this balanced growth strategy, which is designed to increase shareholder value b y improving our return on assets while reducing operational risk and financial leverage.
For fiscal 2024, we are working towards three multi-year strategic goals as part of our balanced growth strategy: • reaching more than 200 active communities by the end of fiscal 2026, • reducing our net debt to net capitalization ratio to below 30% by the end of fiscal 2026, and • fulfilling our commitment that by the end of the calendar year 2025 every home we start will be Zero Energy Ready, which is discussed further below.
For fiscal 2025, we continue to focus on our three multi-year strategic goals as part of our balanced growth strategy: • reaching more than 200 active communities by the end of fiscal 2026, • reducing our net debt to net capitalization ratio to below 30% by the end of fiscal 2026, and • fulfilling our commitment that by the end of calendar year 2025, every home we start will be Zero Energy Ready, which is discussed further below.
Under option agreements, purchase of the underlying properties is contingent upon satisfaction of certain requirements by us and the sellers. Our liability under option agreements is generally limited to forfeiture of the non-refundable deposits, letters of credit or surety bonds, and other non-refundable amounts incurred, which totaled $165.4 million as of September 30, 2023.
Under option agreements, purchase of the underlying properties is contingent upon satisfaction of certain requirements by us and the sellers. Our liability under option agreements is generally limited to forfeiture of the non-refundable deposits, letters of credit or surety bonds, and other non-refundable amounts incurred, which totaled $227.8 million as of September 30, 2024.
Our practice is to build, decorate, furnish, and landscape model homes for each community we build and maintain on-site sales offices. As of September 30, 2023, we maintained and owned 242 model homes.
Our practice is to build, decorate, furnish, and landscape model homes for each community we build and maintain on-site sales offices. As of September 30, 2024, we maintained and owned 250 model homes.
Our product offerings strive to provide extraordinary value at an affordable price with intentional focus on Millennials and Baby Boomers because they are the two largest demographic groups of potential home buyers.
Through our three strategic differentiators discussed above, our product offerings strive to provide extraordinary value at an affordable price with intentional focus on Millennials and Baby Boomers because they are the two largest demographic groups of potential home buyers.
We select land for purchase based upon a variety of factors, including but not limited to: • internal and external demographic and marketing studies; • suitability for development during the time period of generally one to five years from the beginning of the development process to the last closing; • financial review as to the feasibility of the proposed project, including profit margins and returns on capital employed; • the ability to secure governmental approvals and entitlements; • environmental and legal due diligence; • competition in the area; • proximity to local traffic corridors, job centers, and other amenities; and • management's judgment of the real estate market and economic trends and our experience in a particular market.
We select land for purchase based upon a variety of factors, including but not limited to: • internal and external demographic and marketing studies; • suitability for development during the time period of generally one to five years from the beginning of the development process to the last closing; • financial review as to the feasibility of the proposed project, including profit margins and returns on capital employed; • the ability to secure governmental approvals and entitlements; • environmental and legal due diligence; • competition in the area; • proximity to local traffic corridors, job centers, and other amenities; and • management's judgment of the real estate market and economic trends and our experience in a particular market. 6 We generally purchase land or obtain an option to purchase land, which, in either case, requires certain site improvements prior to home construction.
The total remaining purchase price, net of cash deposits, committed under all land option agreements was $949.4 million as of September 30, 2023. We expect to exercise, subject to market conditions and seller satisfaction of contract terms, substantially all of our opt ion agreements.
The total remaining purchase price, net of cash deposits, committed under all land option agreements was $1.46 billion as of September 30, 2024. We expect to exercise, subject to market conditions and seller satisfaction of contract terms, substantially all of our opt ion agreements.
Unlike many of our major competitors, we have no ownership or other interest in a mortgage company, which allows us to partner with our customers to help them get the most competitive interest rates, fees and service levels available.
Mortgage Choice – Most of our buyers need to arrange financing in order to purchase a new home. Unlike many of our major competitors, we have no ownership or other interest in a mortgage company, which allows us to partner with our customers to help them get the most competitive interest rates, fees and service levels available.
When available in certain markets, we also buy finished lots that are ready for home construction. During our fiscal 2023 and 2022, we continued to pursue land 6 acquisition opportunities and develop our land positions, spending $384.2 million and $418.5 million, respectively, for land acquisition and $188.8 million and $155.1 million, respectively, for land development.
When available in certain markets, we also buy finished lots that are ready for home construction. During our fiscal 2024 and 2023, we continued to pursue land acquisition opportunities and develop our land positions, spending $507.8 million and $384.2 million, respectively, for land acquisition and $268.7 million and $188.8 million, respectively, for land development.
Surprising Performance – We place an emphasis on building high-quality homes and delivering outstanding customer experience. Our team is hyper-focused on including premium materials and high-caliber construction processes designed to increase performance and efficiency. All Beazer homes are designed and built to provide Surprising Performance, which means more quality, comfort, and savings.
Surprising Performance – We place an emphasis on building high-quality homes and delivering outstanding customer experience. Our team is hyper-focused on including premium materials and high-caliber construction processes designed to increase performance and efficiency.
Each of these documents is also available in print to any stockholder who requests it. 10 The content on our website is available for information purposes only and is not a part of and shall not be deemed incorporated by reference in this Form 10-K. 11
The content on our website is available for information purposes only and is not a part of and shall not be deemed incorporated by reference in this Form 10-K. 11
As of September 30, 2023 2022 2021 Units in Backlog Dollar Value in Backlog (in millions) Units in Backlog Dollar Value in Backlog (in millions) Units in Backlog Dollar Value in Backlog (in millions) West 1,033 $ 535.3 1,257 $ 711.6 1,653 $ 736.0 East 323 174.7 410 223.7 611 302.0 Southeast 355 176.3 424 209.6 522 246.0 Total Company 1,711 $ 886.4 2,091 $ 1,144.9 2,786 $ 1,284.0 ASP in backlog (in thousands) $ 518.0 $ 547.5 $ 460.9 Construction We typically act as the general contractor for the construction of our new home communities.
As of September 30, 2024 2023 2022 Units in Backlog Dollar Value in Backlog (in millions) Units in Backlog Dollar Value in Backlog (in millions) Units in Backlog Dollar Value in Backlog (in millions) West 965 $ 513.3 1,033 $ 535.3 1,257 $ 711.6 East 315 184.1 323 174.7 410 223.7 Southeast 202 99.7 355 176.3 424 209.6 Total Company 1,482 $ 797.2 1,711 $ 886.4 2,091 $ 1,144.9 Average selling price (ASP) in backlog (in thousands) $ 537.9 $ 518.0 $ 547.5 Construction We typically act as the general contractor for the construction of our new home communities.
Reportable Business Segments Our active homebuilding operations consist of the design, sale, and construction of single-family and multi-family homes in the following geographic regions, which represent our reportable segments: Segment/State Market(s) West: Arizona Phoenix California Placer County, Riverside County, Sacramento County, San Diego County, San Bernadino County, Tulare County Nevada Las Vegas Texas Dallas/Ft.
Reportable Business Segments Our active homebuilding operations consist of the design, sale, and construction of single-family and multi-family homes in the following geographic regions, which represent our reportable segments: Segment/State Market(s) West: Arizona Phoenix California Riverside-San Bernardino, Sacramento, San Diego Nevada Las Vegas Texas Dallas/Ft. Worth, Houston, San Antonio East: Indiana Indianapolis Maryland/Delaware Baltimore, Salisbury, Washington D.C.
Worth, Houston, San Antonio East: Indiana Indianapolis Maryland/Delaware Anne Arundel County, Baltimore County, Howard County, Sussex County Tennessee Nashville Virginia Fairfax County, Loudoun County, Prince William County, Stafford County Southeast: Florida Orlando Georgia Atlanta North Carolina Raleigh/Durham South Carolina Charleston, Myrtle Beach Markets and Product Description We evaluate a number of factors in determining which geographic markets to enter and remain in as well as which consumer segments to target with our homebuilding activities.
Tennessee Nashville Virginia Washington D.C. Southeast: Florida Orlando Georgia Atlanta North Carolina Raleigh/Durham South Carolina Charleston, Myrtle Beach Markets and Product Description We evaluate a number of factors in determining which geographic markets to enter and remain in as well as which consumer segments to target with our homebuilding activities.
In addition, we center our employee experience on engagement and work-life balance by offering a broad range of company-paid benefits and compensation packages, such as a 12-week parental leave and an unlimited flexible time off program (with no accrual or maximum time away from work).
In addition, we center our employee experience on engagement and work-life balance by offering a broad range of company-paid benefits and compensation packages, such as a 12-week parental leave and an unlimited flexible time off program. We are also deeply committed to fostering an inclusive culture where everyone feels welcome, respected, safe, and valued.
From local service activities to Company-wide initiatives, giving back is a central element of our culture, championed by passionate employees and embraced by partners who share our commitment to have a positive impact on the communities we serve. As part of our ongoing commitment to strengthen the communities we serve, we created a wholly-owned title insurance agency, Charity Title Agency.
Charitable Giving Across our Company, our team members are committed to supporting causes that make a difference. From local service activities to Company-wide initiatives, giving back is a central element of our culture, championed by passionate employees and embraced by partners who share our commitment to have a positive impact on the communities we serve.
According to the Residential Energy Services Network (RESNET), the developer of the HERS ® index, used homes typically have a HERS ® index score (on a scale in which a lower score is better) of 130, while on average new homes built to energy codes have a weighted national HERS score equivalent of 73.
According to the Residential Energy Services Network (RESNET), the developer of the HERS ® index, used homes typically have a HERS ® index score (on a scale in which a lower score is better) of 130 and homes built to the same standard as the HERS ® Reference Home (equivalent to the 2006 International Energy Conservation Code) have a HERS ® index score of 100.
Charity Title Agency donates 100% of its net profits to charity. During the fiscal year ended September 30, 2023 , Charity Title Ag ency made charitable contributions totaling $2.5 million to Beazer Charity Foundation, our Company's philanthropic arm.
As part of our ongoing commitment to strengthen the communities we serve, we operate a wholly-owned title insurance agency, Charity Title Agency, which d onates 100% of its net profits to charity. During the fiscal year ended September 30, 2024 , Charity Title Ag ency made charitable contributions totaling $2.1 million to Beazer Charity Foundation, our Company's philanthropic arm.
To remain competitive, we continue to focus on attracting and retaining qualified employees and providing them with comprehensive training and continuous development.
We believe that our employees are critical to our continued growth and success, and competition for qualified personnel is intense across our footprint. To remain competitive, we continue to focus on attracting and retaining qualified employees and providing them with comprehensive training and continuous development.
Information on our website is not a part of this Form 10-K and shall not be deemed incorporated by reference. Long-Term Business Strategy We continue to execute against our long-term balanced growth strategy, which we define as the expansion of earnings at a faster rate than our revenue growth, supported by a less-leveraged and return-driven capital structure.
Information on our website is not a part of this Form 10-K and shall not be deemed incorporated by reference. Long-Term Business Strategy We continue to execute against our long-term balanced growth strategy, which is characterized by growing profitability, improving balance sheet efficiency, and generating returns above our cost of capital .
Differentiating Beazer Homes We know that our buyers have many choices when purchasing a home.
Differentiating Beazer Homes We know that our buyers have many choices when purchasing a home. Beazer Homes is a builder of choice for homebuyers who recognize the built-in value of a new home.
Seasonal and Quarterly Variability Our homebuilding operating cycle historically has reflected escalating new order activity in the second and third fiscal quarters and increased closings in the third and fourth fiscal quarters. However, these seasonal patterns may be impacted or reduced by a variety of factors, including periods of economic downturn, which may result in decreased revenues and closings.
Seasonal and Quarterly Variability Our homebuilding operating cycle historically has reflected escalating new order activity in the second and third fiscal quarters and increased closings in the third and fourth fiscal quarters.
With a Zero Energy Ready home, net zero energy consumption can be achieved if a properly sized renewable energy system is attached. • We also build Indoor airPLUS qualified homes under the EPA Indoor airPLUS program, which include features to reduce contaminants that lead to poor indoor air quality such as mold, moisture, carbon monoxide, toxic chemicals and more.
We also consistently report our average HERS Index Scores as “gross” scores, setting a more rigorous standard by excluding any benefit of renewable energy technologies. • We also build Indoor AirPlus qualified homes under the EPA Indoor AirPlus program, which include features to reduce contaminants that lead to poor indoor air quality such as mold, moisture, carbon monoxide, toxic chemicals and more.
In addition to condominiums, the Gatherings ® brand also includes town homes, villas, duets, and single-family homes. As of September 30, 2023, we have approved communities representing 854 potential future sales.
In addition to condominiums, the Gatherings ® brand also includes villas, duets, and single-family homes.
We deliver these benefits through our people, materials, and process. Some examples of these benefits are as follows: 3 • Our homes are built to the latest ENERGY STAR ® standards, and we provide buyers with an energy rating (HERS ® index score) for their home, completed by a qualified third-party rating company.
Notably, Beazer Homes has now certified more Zero Energy Ready homes to the DOE's Single Family National Program requirements than any other home builder. • All of our homes are also built to the latest ENERGY STAR ® standards, and we provide buyers with an energy rating (HERS ® index score) for their home, completed by a qualified third-party rating company.
Department of Energy’s Zero Energy Ready Home program and have a HERS ® index score (before any benefit of renewable energy production) of 45 or less.
Department of Energy 's (DOE) Zero Energy Ready Home TM program and have a HERS ® index score (before any benefit of renewable energy production) of 45 or less. During fiscal 2024, we accelerated our transition to Zero Energy Ready homes with 91% of our fiscal fourth quarter new home starts being built to Zero Energy Ready standards.
Specifically, our Audit, Finance, Compensation, and Nominating/Corporate Governance Committee Charters, our Corporate Governance Guidelines and Code of Business Conduct and Ethics are available.
Specifically, our Audit, Finance and Development, Human Capital, and Governance Committee Charters, our Corporate Governance Guidelines and Code of Business Conduct and Ethics are available. Each of these documents is also available in print to any stockholder who requests it.
Although none of our employees are covered by collective bargaining agreements, at times certain of the independent subcontractors engaged by us may be represented by labor unions or may be subject to collective bargaining arrangements. A safe and healthy working environment for our employees at every level of our organization is our highest priority.
Human Capital Resources As of September 30, 2024, we employed 1,158 persons, of whom 344 were sales and marketing personnel and 254 were construction personnel. Although none of our employees are covered by collective bargaining agreements, at times certain of the independent subcontractors engaged by us may be represented by labor unions or may be subject to collective bargaining arrangements.
We are also committed to building an inclusive culture in which everyone feels welcome, respected, safe and valued. As we continue to progress in this area, we are reaching across all facets of our functional and operational areas through our bi-annual inclusion and diversity learning program.
As we continue to advance in this area, we are reaching across all functional and operational areas through our bi-annual Inclusion and Diversity Learning Program and our employee-driven storytelling platform, which empowers our teams to share and learn from one another’s lived experiences.
This begins with our health and safety audit system, which is designed to assist our employees in locating resources tailored for their specific employment responsibilities. We also conduct various safety-related inspections and training programs, such as daily visual inspections of our job sites, weekly written safety inspections and bi-weekly “toolbox” talks with our trade partners.
A safe and healthy working environment for our employees at every level of our organization is our highest priority. This begins with our health and safety audit system, which is designed to assist our employees in locating resources tailored for their specific employment responsibilities.
We have also increased our focus on employee wellness by expanding our program options to include a number of webinars, online classes, and virtual support groups. We believe that our employees are critical to our continued growth and success, and competition for qualified personnel is intense across our footprint.
We also conduct various safety-related inspections and training programs, such as daily visual inspections of our job sites, weekly written safety inspections and bi-weekly “toolbox” talks with our trade partners. We have also increased our focus on employee wellness by expanding our program options to include a number of webinars, online classes, and virtual support groups.
For the year ended September 30, 2023, new Beazer homes had an average HERS ® index score of 49. • Beazer is the first national builder to publicly commit to ensuring that by the end of 2025 every home we start will be Zero Energy Ready, which means that every home will meet the requirement of the U.S.
Some examples of these benefits are as follows: 3 • We remain dedicated to continually enhancing the energy efficiency of our homes in support of our industry-first pledge that, by the end of calendar year 2025, every new home we start will be Zero Energy Ready, which means it will meet the requirements of the U.S.
As of September 30, 2023 , women made up approximately 43.7% of our workforce and 33.0% of our managerial employees, with ethnic and racial minorities making up approximately 26.0% of our workforce and 16.6% of our managerial employees. Charitable Giving Across our Company, our team members are committed to supporting causes that make a difference.
Our skills-first approach remains instrumental in driving stronger representation of women, ethnic and racial minorities throughout our workforce. As of September 30, 2024, women made up approximately 43.6% of our workforce and 31.6% of our managerial employees, with ethnic and racial minorities making up approximately 28.0% of our workforce and 17.8% of our managerial employees.
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To help us become a builder of choice, we have identified the following three strategic pillars that differentiate Beazer's homes from both resale homes and other newly built homes: Mortgage Choice – Most of our buyers need to arrange financing in order to purchase a new home.
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Through our three strategic differentiators discussed below, we deliver quality homes with energy efficiency for real savings, improved indoor air quality for healthier living, and superior comfort that homebuyers will appreciate long after they move in. We take pride in offering customers unmatched value throughout the entire homebuilding experience.
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We generally purchase land or obtain an option to purchase land, which, in either case, requires certain site improvements prior to home construction.
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All Beazer homes are designed and built to provide Surprising Performance, which means giving our homeowners more quality and more comfort from the moment they move in and saving them money every month. We deliver these benefits through our people, materials, and process.
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The following table summarizes land controlled by us by reportable segment as of September 30, 2023: Lots Owned Lots with Homes Under Construction (a) Finished Lots Lots Under Development Lots Held for Future Development Lots Held for Sale Total Lots Owned Total Lots Under Contract Total Lots Controlled West Arizona 95 240 223 — — 558 366 924 California 294 178 380 — 15 867 837 1,704 Nevada 208 360 180 66 — 814 455 1,269 Texas 877 1,242 1,596 — 297 4,012 6,575 10,587 Total West 1,474 2,020 2,379 66 312 6,251 8,233 14,484 East Indiana 79 180 131 — — 390 989 1,379 Maryland/Delaware 127 273 409 — 4 813 907 1,720 New Jersey — — — 117 — 117 — 117 Tennessee 156 133 477 — — 766 1,102 1,868 Virginia 93 80 — — — 173 238 411 Total East 455 666 1,017 117 4 2,259 3,236 5,495 Southeast Florida 172 91 273 — — 536 1,277 1,813 Georgia 110 135 338 — — 583 941 1,524 North Carolina 43 33 580 21 — 677 134 811 South Carolina 151 278 862 68 34 1,393 669 2,062 Total Southeast 476 537 2,053 89 34 3,189 3,021 6,210 Total 2,405 3,223 5,449 272 350 11,699 14,490 26,189 (a) This category represents lots upon which construction of a home has commenced, including model homes.
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For the year ended September 30, 2024, new Beazer homes had an average HERS ® index score of 42, a seven point improvement from 49 for the year ended September 30, 2023 .
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The following table summarizes the dollar value of our land under development, land held for future development, and land 7 held for sale by reportable segment as of September 30, 2023: in thousands Land Under Development Land Held for Future Development Land Held for Sale West $ 507,784 $ 3,483 $ 14,702 East 192,683 10,888 3,201 Southeast 170,273 5,508 676 Total $ 870,740 $ 19,879 $ 18,579 Backlog Backlog reflects the number of homes for which the Company has entered into a sales contract with a customer but has not yet delivere d the home.
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The following table summarizes land controlled by us by reportable segment as of September 30, 2024: Lots Owned Lots with Homes Under Construction (a) Finished Lots Lots Under Development Lots Held for Future Development Lots Held for Sale Total Lots Owned Total Lots Under Contract Total Lots Controlled West Arizona 162 242 215 — — 619 356 975 California 312 92 134 — 15 553 1,543 2,096 Nevada 240 252 119 66 — 677 704 1,381 Texas 961 2,180 1,604 — 310 5,055 5,960 11,015 Total West 1,675 2,766 2,072 66 325 6,904 8,563 15,467 East Indiana 94 212 368 — — 674 696 1,370 Maryland/Delaware 209 383 171 — 2 765 1,265 2,030 New Jersey — — — 117 — 117 — 117 Tennessee 177 295 256 — — 728 2,077 2,805 Virginia 78 59 — — 1 138 684 822 Total East 558 949 795 117 3 2,422 4,722 7,144 Southeast Florida 97 28 532 — — 657 1,027 1,684 Georgia 70 139 313 — — 522 943 1,465 North Carolina 44 74 595 21 — 734 174 908 South Carolina 121 143 808 68 34 1,174 696 1,870 Total Southeast 332 384 2,248 89 34 3,087 2,840 5,927 Total 2,565 4,099 5,115 272 362 12,413 16,125 28,538 (a) This category represents lots upon which construction of a home has commenced, including model homes. 7 The following table summarizes the dollar value of our land under development, land held for future development, and land held for sale by reportable segment as of September 30, 2024: in thousands Land Under Development Land Held for Future Development Land Held for Sale West $ 531,254 $ 3,483 $ 17,110 East 230,756 10,888 1,300 Southeast 261,178 5,508 676 Total $ 1,023,188 $ 19,879 $ 19,086 Backlog Backlog reflects the number of homes for which the Company has entered into a sales contract with a customer but has not yet delivere d the home.
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Human Capital Resources As of September 30, 2023, we empl oyed 1,067 persons, of whom 277 were sales and marketing personnel and 240 w ere construction personnel.
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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.
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In 2021, we introduced our Inclusion, Diversity, and Belonging statement and three-year roadmap, including our skills-first hiring approach. The skills-first approach has led to stronger representation of women and ethnic and racial minorities in our workforce.
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We also use our website as a means of disclosing additional information, including for complying with our disclosure obligations under the SEC's Regulation FD (Fair Disclosure).

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

57 edited+16 added−22 removed68 unchanged
Biggest changeAdditionally, and as discussed above, increased competition for skilled labor can lead to cost overruns, as we may have to incentivize the impacted region’s limited trade base to work on our homes. Finally, natural disasters and other related events may also temporarily impact demand, as buyers are not as willing to shop for new homes during or after the event.
Biggest changeNatural disasters can also lead to increased competition for subcontractors, which can delay our progress even after the event has concluded. Additionally, and as discussed above, increased competition for skilled labor can lead to cost overruns, as we may have to incentivize the impacted region’s limited trade base to work on our homes.
Other governmental regulations, such as building moratoriums and “no growth” or “slow growth” initiatives, which may be adopted in communities that have developed rapidly, may cause delays in new home communities or otherwise restrict our business activities, resulting in reductions in our revenues.
Other governmental regulations, such as building moratoriums and “no growth” or “slow growth” initiatives may be adopted in communities that have developed rapidly, which may cause delays in new home communities or otherwise restrict our business activities, resulting in reductions in our revenues.
Our quarterly results of operations may continue to fluctuate in the future as a result of a variety of both national and local factors, including, among others: • the timing of home closings and land sales; • our ability to continue to acquire additional land or secure option agreements to acquire land on acceptable terms; • conditions of the real estate market in areas where we operate and of the general economy; 19 • inventory impairments or other material write-downs; • raw material and labor shortages; • seasonal home buying patterns; and • other changes in operating expenses, including the cost of labor and raw materials, personnel and general economic conditions.
Our quarterly results of operations may continue to fluctuate in the future as a result of a variety of both national and local factors, including, among others: • the timing of home closings and land sales; • our ability to continue to acquire additional land or secure option agreements to acquire land on acceptable terms; • conditions of the real estate market in areas where we operate and of the general economy; • inventory impairments or other material write-downs; • raw material and labor shortages; • seasonal home buying patterns; and • other changes in operating expenses, including the cost of labor and raw materials, personnel and general economic conditions.
Current and future claims may arise out of events or circumstances not covered by insurance and not subject to effective indemnification agreements with our subcontractors. At any given time, we may be the subject of civil litigation that could require us to pay substantial damages or could otherwise have a material adverse effect on us.
Current and future claims may arise out of events or circumstances not covered by insurance and not subject to effective indemnification agreements with our subcontractors. 15 At any given time, we may be the subject of civil litigation that could require us to pay substantial damages or could otherwise have a material adverse effect on us.
Although these sales contracts typically require a cash deposit and do not make the sale contingent on the sale of the customer's existing home, in some cases a customer may cancel the contract and receive a complete or partial refund of the deposit as a result of local laws or as a matter of our business practices.
Although these sales contracts typically require a cash deposit and generally do not make the sale contingent on the sale of the customer’s existing home, in some cases a customer may cancel the contract and receive a complete or partial refund of the deposit as a result of local laws or as a matter of our business practices.
The protective provisions of our certificate of incorporation may not be enforceable against all stockholders and may not prevent all stock transfers that have the potential to cause a Section 382 ownership shift, and the rights agreement may deter, but ultimately may not block all transfers of our common stock that might result in an ownership change.
Additionally, the protective provisions of our certificate of incorporation may not be enforceable against all stockholders and may not prevent all stock transfers that have the potential to cause a Section 382 ownership shift, and the rights agreement may deter, but ultimately may not block all transfers of our common stock that might result in an ownership change.
Adverse changes in any of these conditions could decrease demand and pricing for our homes or result in customer cancellations of pending contracts, which could adversely affect the number of h ome sales we make or reduce home prices, either of which could result in a decrease in our revenues and earnings and adversely affect our financial condition and results of operations.
Adverse changes in any of these conditions could decrease demand and pricing for our homes or result in customer cancellations of pending contracts, which could adversely affect the number of home sales we make or reduce home prices, either of which could result in a decrease in our revenues and earnings and adversely affect our financial condition and results of operations.
The Company's credit rating and ratings on our senior notes and our current credit condition affect, among other things, our ability to access new capital, especially debt. Negative changes in these ratings may result in more stringent covenants and higher interest rates under the terms of any new debt.
The Company’s credit rating and ratings on our senior notes and our current credit condition affect, among other things, our ability to access new capital, especially debt. Negative changes in these ratings may result in more stringent covenants and higher interest rates under the terms of our indentures or of any new debt.
Our senior notes, revolving credit facility, letter of credit facilities and certain other debt impose certain restrictions and obligations on us.
Our Senior Notes, Senior Unsecured Revolving Credit Facility, letter of credit facilities and certain other debt impose certain restrictions and obligations on us.
Labor and material shortages can be more severe during periods of strong demand for housing or during periods in which the markets where we operate experience natural disasters such as hurricanes or flooding as discussed more fully below.
Labor and material shortages can be more severe during periods of strong demand for housing or during periods in which the markets where we operate experience natural disasters such as hurricanes or flooding as discussed more fully above.
To the extent that hurricanes, tornadoes, severe storms, heavy or prolonged precipitation, earthquakes, droughts, floods, wildfires or other natural disasters or similar events occur, our homes under construct ion or our building lots in such states could be damaged or destroyed, which may result in losses exceeding our insurance coverage.
To the extent that hurricanes, tornadoes, severe storms, heavy or prolonged precipitation, earthquakes, droughts, floods, wildfires or other natural disasters or similar events occur, our homes under construction or our building lots in such states could be damaged or destroyed, which may result in losses exceeding our insurance coverage.
We currently have an immaterial amount of "built-in losses" in our assets, i.e., an excess tax basis over current fair market value, which may result in tax losses as such assets are sold. Those "built-in losses" could become significant in the future if market conditions worsen and our inventory is impaired.
We currently have an immaterial amount of “built-in losses” in our assets, i.e., an excess tax basis over current fair market value, which may result in tax losses as such assets are sold. Those “built-in losses” could become significant in the future if market conditions worsen, and our inventory is impaired.
Mortgage interest expenses and real estate taxes represent significant costs of homeownership. Therefore, when there are changes in federal or state income tax laws that eliminate or substantially limit the income tax deductions relating to these expenses, the after-tax costs of owning a new home can increase signifi cantly.
Mortgage interest expenses and real estate taxes represent significant costs of homeownership. Therefore, when there are changes in federal or state income tax laws that eliminate or substantially limit the income tax deductions relating to these expenses, the after-tax costs of owning a new home can increase significantly.
During periods of downturn in the homebuilding industry, housing markets across the United States may experience an oversupply of both new and resale home inventory, an increase in foreclosures, reduced levels of consumer demand for new homes, increased cancellation rates, aggressive price competition among homebuilders, and increased incentives for home sales.
During downturns in the homebuilding industry, housing markets across the United States may experience an oversupply of both new and resale home inventory, an increase in foreclosures, reduced levels of consumer demand for new homes, increased cancellation rates, aggressive price competition among homebuilders, and increased incentives for home sales.
If industry or economic conditions deteriorate or if mortgage financing becomes less accessible, more homebuyers may have an incentive to cancel their contracts with us, even where they might be entitled to no refund or only a partial refund, rather than complete the purchase.
If industry or economic conditions deteriorate or if mortgage financing becomes less accessible, more homebuyers may have an incentive to cancel their contracts with us, even where they might be entitled to no refund or only a partial refund, rather than complete the pur chase.
Our business could be materially and adversely disrupted by an epidemic or pandemic (such as COVID-19), or similar public threat, or fear of such an event, and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it.
Our business could be materially and adversely disrupted by an epidemic or pandemic, or similar public threat, or fear of such an event, and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it.
In addition, reductions in mortgage availability or increases in the effective costs of owning a home could prevent our customers from buying our homes and adversely affect our business and financial results. Substantially all of the purchasers of our homes finance their acquisition with mortgage financing.
In addition, reductions in mortgage availability or increases in the effective costs of owning a home could prevent our customers from buying our homes and adversely affect our business and financial results. Most of the purchasers of our homes finance their acquisition with mortgage financing.
Because almost all of our customers require mortgage financing, elevated mortgage interest rates for prolonged periods and further increases in interest rates would likely negatively affect the affordability of the homes we sell.
Because most of our customers require mortgage financing, elevated mortgage interest rates for prolonged periods and further increases in interest rates would likely negatively affect the affordability of the homes we sell.
While, to date, we have not had a significant cybersecurity breach or attack that had a material impact on our business or results of operations, there can be no assurance that our efforts to maintain the security and integrity of these types of IT networks and related systems will be effective or that attempted security breaches or disruptions would not be successful or damaging.
A significant cybersecurity breach or attack could have a material impact on our business or results of operations, there can be no assurance that our efforts to maintain the security and integrity of these types of IT networks and related systems will be effective or that attempted security breaches or disruptions would not be successful or damaging.
These risks could adversely affect our business, financial condition, and results of operations. Global economic and political instability and conflicts could adversely affect our business, financial condition or results of operations.
Global economic and political instability and conflicts could adversely affect our business, financial condition or results of operations.
An epidemic, pandemic, or similar serious public health issue, and the measures undertaken by governmental authorities to address it, could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period, and thereby, and/or along with any associated economic and/or social instability or distress, have a material adverse impact on our consolidated financial statements.
An epidemic, pandemic, or similar serious public health issue, and the measures undertaken by governmental authorities to address it, could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period, and thereby, and/or along with any associated economic and/or social instability or distress, have a material adverse impact on our financial condition and results of operations.
Shortages of materials can be due to certain disruptions, such as natural disasters, civil or political unrest and conflicts, trade disputes, difficulties in production or delivery or health issues like the COVID-19 pandemic.
Shortages of materials can be due to certain disruptions, such as natural disasters, civil or political unrest and conflicts, trade disputes, difficulties in production or delivery or health issues like a pandemic.
Adverse developments in the war on terrorism, terrorist attacks against the United States or any outbreak or escalation of hostilities between the United States and/or any foreign power may cause disruption to the economy, our Company, our employees and our customers, which could negatively impact our financial condition and results of operations.
Adverse developments such as terrorist attacks against the United States or any outbreak or escalation of hostilities between the United States and/or any foreign power may cause disruption to the economy, our Company, our employees and our customers, which could negatively impact our financial condition and results of operations.
We experience fluctuations and variability in our operating results on a quarterly basis and, as a result, our historical performance may not be a meaningful indicator of future results. We historically have experienced, and expect to continue to experience, variability in home sales and earnings on a quarterly basis.
Risk Relating to an Investment in our Common Stock We experience fluctuations and variability in our operating results on a quarterly basis and, as a result, our historical performance may not be a meaningful indicator of future results. We historically have experienced, and expect to continue to experience, variability in home sales and earnings on a quarterly basis.
While no current material lawsuits are pending, we may be subject to civil litigation regarding claims made by homebuyers. We cannot predict or determine the timing or final outcome of such lawsuits, or the effect that any adverse determinations the lawsuits may have on us.
We may be subject to civil litigation regarding claims made by homebuyers. We cannot predict or determine the timing or final outcome of such lawsuits, or the effect that any adverse determinations the lawsuits may have on us.
If COVID-19 or another public health emergency were to reemerge, we could again experience material disruptions in our operating environment, impairing our ability to sell and build homes in a typical manner, as occurred in during our 2020 fiscal year, or at all, due to, among other things, increased costs or decreased supply of building materials, reduced availability of subcontractors, employees, and other talent, as a result of infections or recommended self-quarantining, or governmental mandates to direct production activities to support public health efforts.
If a public health emergency were to emerge, we could experience material disruptions in our operating environment, impairing our ability to sell and build homes in a typical manner, or at all, due to, among other things, increased costs or decreased supply of building materials, reduced availability of subcontractors, employees, and other talent, as a result of infections or recommended self-quarantining, or governmental mandates to direct production activities to support public health efforts.
If another ownership change were to occur, the limitations imposed by Section 382 could result in a material amount of our net operating loss carryforwards and tax credits expiring unused and, therefore, significantly impair the future value of our deferred tax assets. Our certificate of incorporation prohibits certain transfers of our common stock that could result in an ownership change.
If another ownership change were to occur, the limitations imposed by Section 382 could result in a material amount of our net operating loss carryforwards and tax credits expiring unused and, therefore, significantly impair the future value of our deferred tax assets.
Our business could be adversely affected by unstable economic and political conditions within the United States and foreign jurisdictions and geopolitical conflicts, such as the conflict between Russia and Ukraine and the conflict in Gaza.
Our business could be adversely affected by unstable economic and political conditions within the United States, including the 2024 election cycle, and foreign jurisdictions and geopolitical conflicts, such as the conflict between Russia and Ukraine, the conflict in Gaza and other conflicts in the Middle East.
Along with an increase in cancellations of home purchase contracts, if there are prolonged government restrictions on our business and our customers, and/or an extended economic recession, we could be unable to produce revenues and cash flows sufficient to conduct our business; meet the terms of our covenants and other requirements under the Unsecured Revolving Credit Facility, our senior notes, and the related indenture, and/or mortgages and land contracts due to land sellers and other loans; service our outstanding debt.
Along with an increase in cancellations of home purchase contracts, if there are prolonged government restrictions on our business and our customers, and/or an extended economic recession, we could be unable to produce revenues and cash flows sufficient to conduct our business; or meet the terms of our covenants and other requirements under our various debt obligations including but not limited to the Senior Unsecured Revolving Credit Facility, indentures for our senior and junior notes, land contracts due to land sellers and other loans.
Over the past year, the Federal Reserve raised interest rates multiple times in response to concerns about inflation and economic uncertainties, and it may raise them again.
In the last few years, the Federal Reserve raised interest rates multiple times in response to concerns about inflation and economic uncertainties, and it may raise them again.
If we are unable to generate sufficient cash flows in the future to service our debt, we may be required to refinance all or a portion of our existing debt, to sell assets or to obtain additional financing. We may not be able to do any of the foregoing on terms acceptable to us, if at all.
If we are unable to generate sufficient cash flows in the future to service our debt, we may be required to refinance all or a portion of our existing debt, to sell assets or to obtain additional financing.
The tax benefits of our pre-ownership change net operating loss carryforwards and built-in losses were substantially limited since we experienced an “ownership change” as defined in Section 382 of the Internal Revenue Code, and portions of our deferred income tax asset have been written off since they were not fully realizable.
We may not be able to do any of the foregoing on terms acceptable to us, if at all. 18 The tax benefits of our pre-ownership change net operating loss carryforwards and built-in losses were substantially limited since we experienced an “ownership change” as defined in Section 382 of the Internal Revenue Code, and portions of our deferred income tax asset have been written off since they were not fully realizable.
There can be no assurance that we will be able to obtain any waivers or amendments that may become necessary in the event of a future default situation without significant additional cost or at all. 17 Our indebtedness could have important consequences to us and the holders of our securities, including, among other things: • causing us to be unable to satisfy our obligations under our debt agreements; • causing us to pay higher interest rates upon refinancing indebtedness if interest rates rise; • making us more vulnerable to adverse general economic and industry conditions; • making it difficult to fund future working capital, land purchases, acquisitions, capital expenditures, share repurchases, general corporate or other activities; and • causing us to be limited in our flexibility in planning for, or reacting to, changes in our business.
Our indebtedness could have important consequences to us and the holders of our securities, including, among other things: • causing us to be unable to satisfy our obligations under our debt agreements; • causing us to pay higher interest rates upon refinancing indebtedness if interest rates rise; • making us more vulnerable to adverse general economic and industry conditions; • making it difficult to fund future working capital, land purchases, acquisitions, capital expenditures, share repurchases, general corporate or other activities; and • causing us to be limited in our flexibility in planning for, or reacting to, changes in our business.
If the rate at which we sell and deliver homes slows, or if we delay the opening of new home communities, we may incur additional pre-construction costs, and it may take longer for us to recover our costs, which could adversely affect our profitability and results of operations. 14 Natural disasters and other related events could result in delays in land development or home construction, increase our costs or decrease demand in the impacted areas.
If the rate at which we sell and deliver homes slows, or if we delay the opening of new home communities, we may incur additional pre-construction costs, and it may take longer for us to recover our costs, which could adversely affect our profitability and results of operations.
In addition, from time to time we may engage in bond repurchases to reduce our indebtedness and return value to our stockholders through share repurchases. If we do not properly allocate our capital, we may fail to produce optimal financial results and we may experience a reduction in stockholder value, including increased volatility in our stock price.
If we do not properly allocate our capital, we may fail to produce optimal financial results and we may experience a reduction in stockholder value, including increased volatility in our stock price.
Our inability to utilize our limited pre-ownership change net operating loss carryforwards, tax credits and recognized built-in losses or deductions, or the occurrence of a future ownership change and resulting additional limitations to these tax attributes, could have a material adverse effect on our financial condition, results of operations, and cash flows. 18 We could experience a reduction in home sales and revenues due to our inability to acquire and develop land for our communities if we are unable to obtain reasonably priced financing.
Our inability to utilize our limited pre-ownership change net operating loss carryforwards, tax credits and recognized built-in losses or deductions, or the occurrence of a future ownership change and resulting additional limitations to these tax attributes, could have a material adverse effect on our financial condition, results of operations, and cash flows.
In an inflationary environment, depending on homebuilding industry and other economic conditions, we may be unable to raise home prices enough to keep up with the rate of inflation, which would reduce our profit margins.
Inflation can adversely affect us by increasing costs of land, materials, and labor. In addition, inflation is often accompanied by higher interest rates. In an inflationary environment, depending on homebuilding industry and other economic conditions, we may be unable to raise home prices enough to keep up with the rate of inflation, which would reduce our profit margins.
If we are not successful in obtaining sufficient capital to fund our planned capital and other expenditures, we may be unable to acquire land for our housing developments, thereby limiting our anticipated growth and community count. Additionally, if we cannot obtain additional financing to fund the purchase of land under our option agreements, we may incur contractual penalties and fees.
If we are not successful in obtaining sufficient capital to fund our planned capital and other expenditures, we may be unable to acquire land for our housing developments, thereby limiting our anticipated growth and community count.
The availability of suitable land assets could also affect the success of our land acquisition strategy and ultimately our long-term strategic goals by impacting our ability to increase the number of actively selling communities, grow our revenues and margins and achieve or maintain profitability.
The availability of suitable land assets could also affect the success of our land acquisition strategy and ultimately our long-term strategic goals by impacting our ability to increase the number of actively selling communities, grow our revenues and margins and achieve or maintain profitability. 13 Reduced numbers of home sales extend the time it takes us to recover land purchase and property development costs, negatively impacting profitability and our results of operations.
Our computer systems, including our back-up systems and portable electronic devices, and those of our third-party providers, are subject to damage or interruption from power outages, computer and telecommunication failures, computer viruses, security breaches including malware and phishing, cyberattacks, natural disasters, usage errors by our employees or contractors, and other related risks.
Competitors or other entities may integrate AI into their information systems and business operations more swiftly or effectively than us, potentially impairing our competitive edge and negatively impacting our financial performance. 16 Our computer systems, including our back-up systems and portable electronic devices, and those of our third-party providers, are subject to damage or interruption from power outages, computer and telecommunication failures, computer viruses, security breaches including malware and phishing, cyberattacks, natural disasters, usage errors by our employees or contractors, and other related risks.
Should the adverse impacts described above (or others that are currently unknown) occur, whether individually or collectively, we would expect to experience, among other things, decreases in our net new orders, home closings, average selling prices, revenues, and profitability, and such impacts could be material to our consolidated financial statements.
This could result in our recognizing charges in future periods, which may be material, for inventory impairments or land option agreement abandonments, or both, related to our inventory assets. 17 Should the adverse impacts described above (or others that are currently unknown) occur, whether individually or collectively, we would expect to experience, among other things, decreases in our net new orders, home closings, average selling prices, revenues, and profitability, and such impacts could be material to our financial condition and results of operations.
In additio n, we are party to a rights agreement intended to act as a deterrent to any person desiring to acquire 4.95% or more of our common stock.
Our certificate of incorporation currently prohibits certain transfers of our common stock that could result in an ownership change. In addition, we are currently party to a rights agreement intended to act as a deterrent to any person desiring to acquire 4.95% or more of our common stock.
Changes in national and regional economic conditions, as well as local economic conditions where we conduct our operations, may result in more caution on the part of homebuyers and, consequently, fewer home purchases.
Negative changes in national and regional economic conditions, as well as local economic conditions where we conduct our operations, may result in more caution on the part of homebuyers and, consequently, fewer home purchases. Demand during the second half of fiscal 2023 remained relatively steady as homebuyers faced a higher rate environment and a lack of supply of existing homes.
In February 2022, our stockholders approved an extension of these protective provisions in our certificate of incorporation and the rights agreement, which as a result are scheduled to expire in November 2025. Any extension of these protective provisions and our entry into a new rights agreement will require additional approval by our stockholders.
In February 2022, our stockholders approved an extension of these protective provisions in our certificate of incorporation and the rights agreement, which as a result are scheduled to expire in November 2025. Neither the protective provisions nor the rights agreement offers a complete solution, and an ownership change may still occur.
Nevertheless, si gnificant cancellations have had, and could again in the future have, a material adverse effect on our business as a result of lost sales revenue and the accumulation of unsold housing inventory.
While cancellation rates during fiscal 2024 have remained in line with our normal historical range, significant cancellations have had, and could again in the future have, a material adverse effect on o ur business as a result of lost sales revenue and the accumulation of unsold housing inventory.
The homebuilding industry is capital intensive and homebuilding requires significant up-front expenditures to acquire land and to begin development. Accordingly, we incur substantial indebtedness to finance our homebuilding activities.
We could experience a reduction in home sales and revenues due to our inability to acquire and develop land for our communities if we are unable to obtain reasonably priced financing. The homebuilding industry is capital intensive, and homebuilding requires significant up-front expenditures to acquire land and to begin development. Accordingly, we incur substantial indebtedness to finance our homebuilding activities.
Many of the states in which we build homes have lengthy statutes of limitations and/or repose applicable to claims for construction defects.
A builder’s ability to recover against any available insurance policy depends upon the continued solvency and financial strength of the insurance carrier that issued the policy. Many of the states in which we build homes have lengthy statutes of limitations and/or repose applicable to claims for construction defects.
However, insurance coverage available to subcontractors for construction defects is becoming increasingly expensive and the scope of coverage is restricted.
However, insurance coverage available to subcontractors for construction defects is becoming increasingly expensive and the scope of coverage is restricted. If we cannot effectively recover from our subcontractors or their carriers, we may suffer even greater losses.
Any delay or refusal from government agencies to grant us necessary licenses, permits and approvals could have an adverse effect on our financial condition and results of operations. We may be subject to significant potential liabilities as a result of construction defect, product liability and warranty claims made against us.
Any delay or refusal from government agencies to grant us necessary licenses, permits and approvals could have an adverse effect on our financial condition and results of operations. Our activities and disclosures related to sustainability expose us to risks.
In addition, through the end of 2025, the deduction for mortgage interest will generally only be available with respect to acquisition indebtedness that does not exceed $750,000 ($375,000 in the case of a separate return filed by a married individual). 12 If we are unsuccessful in competing against our competitors, our market share could decline or our growth could be impeded and, as a result, our financial condition and results of operations could suffer.
In addition, through the end of 2025, the deduction for mortgage interest will generally only be available with respect to acquisition indebtedness that does not exceed $750,000 ($375,000 in the case of a separate return filed by a married individual). 12 Inflation may adversely affect us by increasing costs beyond what we can recover through price increases.
We currently build in several of the top markets in the nation and, therefore, we expect to continue to face additional competition from new entrants into our markets.
We currently build in several of the top markets in the nation and, therefore, we expect to continue to face additional competition from new entrants into our markets. Operational, Legal and Regulatory Risks An increase in cancellation rates will negatively impact our business and could lead to imprecise estimates related to homes to be delivered in the future (backlog).
Inefficient or ineffective allocation of capital could adversely affect our operating results and/or stockholder value. Our goal is to allocate capital to maximize our overall long-term returns. This includes growing our land position and growing our active communities.
Additionally, if we cannot obtain additional financing to fund the purchase of land under our option agreements, we may incur contractual penalties and fees. 19 Inefficient or ineffective allocation of capital could adversely affect our operating results and/or stockholder value. Our goal is to allocate capital to maximize our overall long-term returns.
Increases in interest rat es increase the costs of owning a home, adversely affect the purchasing power of consumers, and lower demand for the homes we sell, which could result in a decrease in our revenues and earnings and adversely affect our financial condition.
Elevated mortgage rates for prolonged periods could lower demand for the homes we sell, resulting in a decrease in our revenues and earnings and adversely affect our financial condition.
The climates and geology of many of the states in which we operate present increased risks of natural disasters.
Natural disasters and other related events could result in delays in land development or home construction, increase our costs or decrease demand in the impacted areas. The climates and geology of many of the states in which we operate present increased risks of natural disasters.
Competition in the homebuilding industry is intense, and there are relatively low barriers to entry into our business.
If we are unsuccessful in competing against our competitors, our market share could decline or our growth could be impeded and, as a result, our financial condition and results of operations could suffer. Competition in the homebuilding industry is intense, and there are relatively low barriers to entry into our business.
Our communities in California are especially susceptible to restrictive government regulations and environmental laws, particularly surrounding water usage due to continuing drought conditions within that region.
In particular, our communities in California and Phoenix are especially susceptible to restrictive government regulations and environmental laws, particularly surrounding water usage. 14 We are subject to extensive government regulation, which could cause us to incur significant liabilities or restrict our business activities.
Reduced numbers of home sales extend the time it takes us to recover land purchase and property development costs, negatively impacting profitability and our results of operations. We incur many costs even before we begin to build homes in a community.
We incur many costs even before we begin to build homes in a community.
Removed
Demand during the second half of fiscal 2022 was negatively impacted by steep increases in interest rates from January to November 2022, as well as inflation, an uncertain economic outlook, and other macro-economic conditions. Due to these factors, housing market conditions during the first quarter of fiscal 2023 were challenging.
Added
In fiscal 2024, the new home sales environment continued to be affordability-challenged, and demand is highly sensitive to fluctuations in mortgage rates. These economic conditions are out of our control and affect buyer sentiment and behavior and the demand for the homes we sell. These conditions also impact consumer confidence, upon which our business is highly dependent.
Removed
Since the second quarter of fiscal 2023, interest rates have been less volatile, allowing homebuyers time to absorb the higher rate environment. As a result, demand and homebuyer traffic improved, and the housing market began to stabilize.
Added
Despite the September 2024 reduction in interest rates, future increases in interest rates could directly impact mortgage rates and increase the costs of owning a home, which could adversely affect the purchasing power of consumers.
Removed
Towards the end of September 2023, interest rates began to rise again with mortgage interest rates reaching a two-decade high, which further strained affordability. T hese economic uncertainties are out of our control and affect buyer sentiment and behavior, as well as the affordability of, and demand for, the homes we sell.
Added
Finally, natural disasters and other related events may also temporarily impact demand, as buyers are not as willing to shop for new homes during or after the event. These risks could adversely affect our business, financial condition, and results of operations.
Removed
These conditions also impact consumer confidence, upon which our business is highly dependent.
Added
Additionally, in 2023, Florida enacted legislation that will impose more stringent immigrant eligibility requirements. This legislation or similar legislation if adopted in other jurisdictions in which we operate, could result in labor shortages that could materially affect our operations.
Removed
For example, our business and operations were significantly impacted by the COVID-19 pandemic and the corresponding actions taken by governmental authorities.
Added
In recent years, we, along with many other companies, have been subject to increased focus and scrutiny from regulators, investors, employees and customers and other stakeholders regarding sustainability efforts, including compliance with evolving disclosure requirements. For example, the SEC has issued final rules that would require expanded disclosures related to climate change.
Removed
This could result in our recognizing charges in future periods, which may be material, for inventory impairments or land option agreement abandonments, or both, related to our inventory assets.
Added
Although these rules are currently stayed pending judicial review, if implemented as proposed, these rules would significantly increase our climate-related disclosure obligations. The State of California has also enacted legislation that will require large U.S. companies doing business in California to make broad-based climate-related disclosures, and other states are also considering similar measures.
Removed
Operational, Legal and Regulatory Risks Inflation may adversely affect us by increasing costs beyond what we can recover through price increases. Inflation can adversely affect us by increasing c osts of land, materials, and labor. In addition, inflation is often accompanied by higher interest rates.
Added
We are assessing our obligations under these proposed and enacted rules and expect that compliance could require substantial effort in the future. Standards for tracking and reporting on sustainability matters, including climate-related matters, have also not been harmonized.
Removed
Given the inflation over the past two years, we have experienced, and may continue to experience, increases in the prices of land, labor, and materials. 13 An increase in cancellation rates will negatively impact ou r business and could lead to imprecise estimates related to homes to be delivered in the future (backlog).
Added
Changes to these standards could require adjustments to our accounting or operational policies, as well as updates to our existing systems to meet these reporting obligations. We will therefore likely need to be prepared to contend with overlapping, yet distinct, climate-related disclosure approaches, frameworks and requirements. Our 2023 Sustainability Report is available on our website.
Removed
For example, cancellation rates increased significantly from the low teens in the first half of fiscal year 2022 to 17.0% and 32.8% in the third and fourth quarters of fiscal 2022, respectively.
Added
If our sustainability practices or disclosures do not meet, or are perceived not to meet, evolving regulatory, investor and other stakeholder expectations and standards, our reputation, our ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively affected.
Removed
Cancellation rates remained elevated through the first quarter of fiscal year 2023, but have since decreased (16.5% in the fourth quarter of fiscal 2023) and returned to a level within our normal historical range as buyers began to adjust to the higher rate environment.
Added
Similarly, our failure, or perceived failure, to pursue or fulfill any sustainability-focused goals, targets, or objectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy various reporting standards with respect to these matters, within the timelines we announce, or at all, could adversely affect our business or reputation, as well as expose us to government enforcement actions and private litigation.
Removed
For example, in fiscal 2022, Hurricane Ian disrupted our operations in Florida, which resulted in temporary reductions in sales and closings. Natural disasters can also lead to increased competition for subcontractors, which can delay our progress even after the event has conc luded.
Added
While we monitor a broad range of sustainability matters, we cannot be certain that we will manage such matters successfully, or that we will successfully meet the expectations of regulators, investors, employees, customers and other stakeholders. We may be subject to significant potential liabilities as a result of construction defect, product liability and warranty claims made against us.
Removed
For example, in November 2022, pursuant to the Global Warming Solutions Act of 2006 (AB32), the California Air Resources Board released a final scoping plan that, among other things, proposes to eliminate the installation of natural gas-powered appliances in favor of electric appliances in new residential construction effective in 2026.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties As of September 30, 2023, we had under lease appro ximately 23,600 square feet of office space in Atlanta, Georgia to house our corporate headquarters. We also lease and own an aggregate of approxima tely 160,000 and 4,500 s quare feet of office space, respectively, for our divisional operations at various locations.
Biggest changeItem 2. Properties As of September 30, 2024, we had under lease appro ximately 23,600 square feet of office space in Atlanta, Georgia to house our corporate headquarters. We also lease and own an aggregate of approxima tely 171,200 and 4,500 s quare feet of office space, respectively, for our divisional operations at various locations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings Litigation In the normal course of business, we are subject to various lawsuits. We cannot predict or determine the timing or final outcome of these lawsuits or the effect that any adverse findings or determinations in pending lawsuits may have on us.
Biggest changeItem 3. Legal Proceedings Litigation In the normal course of business, we and certain of our subsidiaries are subject to various lawsuits. We cannot predict or determine the timing or final outcome of these lawsuits or the effect that any adverse findings or determinations in pending lawsuits may have on us.
For a discussion of our legal proceedings, see Note 8 of the notes to our consolidated financial statements in this Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 20 PART II
For a discussion of our legal proceedings, see Note 8 of the notes to our consolidated financial statements in this Form 10-K. Item 4. Mine Safety Disclosures Not applicable. 22 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans The following table provides information about the Company's shares of common stock that may be issued under our existing equity compensation plans as of September 30, 2023, all of which have been approved by our stockholders: Plan Category Number of Common Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Common Shares Remaining Available for Future Issuance Under Equity Compensation Plans Equity compensation plans approved by stockholders 13,575 $9.61 810,940 Issuer Purchases of Equity Securities None. 21 Performance Graph The following graph illustrates the cumulative total stockholder return on Beazer Homes' common stock for the last five fiscal years through September 30, 2023 as compared to the S&P 500 Index and the S&P 500 Homebuilding Index.
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans The following table provides information about the Company's shares of common stock that may be issued under our existing equity compensation plans as of September 30, 2024, all of which have been approved by our stockholders: Plan Category Number of Common Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Common Shares Remaining Available for Future Issuance Under Equity Compensation Plans Equity compensation plans approved by stockholders 11,150 $10.04 2,945,076 Issuer Purchases of Equity Securities We did not repurchase any shares of our common stock in the fourth quarter ended September 30, 2024. 23 Performance Graph The following graph illustrates the cumulative total stockholder return on Beazer Homes' common stock for the last five fiscal years through September 30, 2024 as compared to the S&P 500 Index and the S&P 500 Homebuilding Index.
Dividends The indentures u nder which our senior notes were issued contain certain restrictive covenants, including limitations on the payment of dividends. There were no dividends paid during our fiscal 2023, 2022 or 2021. The Board of Directors will periodically reconsider the declaration of dividends, assuming payment of dividends is not limited under our indentures.
Dividends The indentures u nder which our senior notes were issued contain certain restrictive covenants, including limitations on the payment of dividends. There were no dividends paid during our fiscal 2024, 2023 or 2022. The Board of Directors will periodically reconsider the declaration of dividends, assuming payment of dividends is not limited under our indentures.
The graph assumes an investment of $100 at September 30, 2018 in Beazer Homes' common stock and in each of the benchmark indices specified, assumes that all dividends were reinvested, and accounts for the impact of any stock splits, where applicable.
The graph assumes an investment of $100 at September 30, 2019 in Beazer Homes' common stock and in each of the benchmark indices specified, assumes that all dividends were reinvested, and accounts for the impact of any stock splits, where applicable.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The Company lists its common stock on the New York Stock Exchange (NYSE) under the symbol “BZH.” On November 13, 2023, the last reported sales price of the Co mpany's common stock on the NYSE was $28.44, and we had approximately 194 stockholders of record and 31,322,989 shares of common stock outstanding.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The Company lists its common stock on the New York Stock Exchange (NYSE) under the symbol “BZH.” On November 8, 2024, the last reported sales price of the Company's common stock on the NYSE was $33.48, and we had approximately 187 stockholders of record and 31,050,227 shares of common stock outstanding.
Comparison of Five Year Cumulative Total Return Assuming $100 Investment as of September 30, 2018 September 30, 2018 2019 2020 2021 2022 2023 u Beazer Homes USA, Inc. $ 100.00 $ 141.90 $ 125.71 $ 164.28 $ 92.09 $ 237.20 g S&P 500 Index $ 100.00 $ 104.25 $ 120.05 $ 156.07 $ 131.92 $ 160.44 p S&P 500 Homebuilding Index $ 100.00 $ 129.43 $ 174.31 $ 195.80 $ 159.96 $ 258.59 Item 6. [Reserved] 22
Comparison of Five Year Cumulative Total Return Assuming $100 Investment as of September 30, 2019 September 30, 2019 2020 2021 2022 2023 2024 u Beazer Homes USA, Inc. $ 100.00 $ 88.59 $ 115.77 $ 64.90 $ 167.16 $ 229.27 g S&P 500 Index $ 100.00 $ 115.15 $ 149.70 $ 126.54 $ 153.89 $ 209.83 p S&P 500 Homebuilding Index $ 100.00 $ 134.71 $ 151.29 $ 123.59 $ 199.80 $ 351.52 Item 6. [Reserved] 24

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThese non-GAAP financial measures may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP. $ in thousands Fiscal Year Ended September 30, 2023 HB Gross Profit HB Gross Margin Impairments & Abandonments (I&A) HB Gross Profit excluding I&A HB Gross Margin excluding I&A Interest Amortized to COS (Interest) HB Gross Profit excluding I&A and Interest HB Gross Margin excluding I&A and Interest West $ 307,240 23.8 % $ 487 $ 307,727 23.8 % $ — $ 307,727 23.8 % East 103,102 20.5 % 154 103,256 20.5 % — 103,256 20.5 % Southeast 92,212 22.9 % — 92,212 22.9 % — 92,212 22.9 % Corporate & unallocated (a) (64,434) — (64,434) 68,489 4,055 Total homebuilding $ 438,120 19.9 % $ 641 $ 438,761 20.0 % $ 68,489 $ 507,250 23.1 % $ in thousands Fiscal Year Ended September 30, 2022 HB Gross Profit HB Gross Margin Impairments & Abandonments (I&A) HB Gross Profit excluding I&A HB Gross Margin excluding I&A Interest Amortized to COS (Interest) HB Gross Profit excluding I&A and Interest HB Gross Margin excluding I&A and Interest West $ 353,370 26.6 % $ 289 $ 353,659 26.6 % $ — $ 353,659 26.6 % East 137,937 24.8 % 143 138,080 24.9 % — 138,080 24.9 % Southeast 104,341 24.9 % 663 105,004 25.1 % — 105,004 25.1 % Corporate & unallocated (a) (63,499) — (63,499) 71,619 8,120 Total homebuilding $ 532,149 23.1 % $ 1,095 $ 533,244 23.2 % $ 71,619 $ 604,863 26.3 % $ in thousands Fiscal Year Ended September 30, 2021 HB Gross Profit HB Gross Margin Impairments & Abandonments (I&A) HB Gross Profit excluding I&A HB Gross Margin excluding I&A Interest Amortized to COS (Interest) HB Gross Profit excluding I&A and Interest HB Gross Margin excluding I&A and Interest West $ 270,671 24.4 % $ — $ 270,671 24.4 % $ — $ 270,671 24.4 % East 125,928 22.2 % 465 126,393 22.3 % — 126,393 22.3 % Southeast 98,525 21.8 % 388 98,913 21.9 % — 98,913 21.9 % Corporate & unallocated (a) (93,404) — (93,404) 87,037 (6,367) Total homebuilding $ 401,720 18.9 % $ 853 $ 402,573 18.9 % $ 87,037 $ 489,610 23.0 % (a) Corporate and unallocated includes capitalized interest and capitalized indirect costs expensed to homebuilding cost of sale related to homes closed, as well as capitalized interest and capitalized indirect costs impaired in order to reflect projects in progress assets at fair value. 30 Our homebuilding gross profit decreased by $94.0 million to $438.1 million for the fiscal year ended September 30, 2023, compared to $532.1 million in the prior year.
Biggest changeThese non-GAAP financial measures may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP. $ in thousands Fiscal Year Ended September 30, 2024 HB Gross Profit (GAAP) HB Gross Margin (GAAP) Impairments & Abandonments (I&A) HB Gross Profit excluding I&A (Non-GAAP) HB Gross Margin excluding I&A (Non-GAAP) Interest Amortized to COS (Interest) HB Gross Profit excluding I&A and Interest (Non-GAAP) HB Gross Margin excluding I&A and Interest (Non-GAAP) West $ 306,366 21.1 % $ 1,805 $ 308,171 21.3 % $ — $ 308,171 21.3 % East 87,481 18.1 % 91 87,572 18.1 % — 87,572 18.1 % Southeast 79,174 21.9 % 100 79,274 22.0 % — 79,274 22.0 % Corporate & unallocated (a) (59,410) — (59,410) 67,658 8,248 Total homebuilding $ 413,611 18.0 % $ 1,996 $ 415,607 18.1 % $ 67,658 $ 483,265 21.1 % $ in thousands Fiscal Year Ended September 30, 2023 HB Gross Profit (GAAP) HB Gross Margin (GAAP) Impairments & Abandonments (I&A) HB Gross Profit excluding I&A (Non-GAAP) HB Gross Margin excluding I&A (Non-GAAP) Interest Amortized to COS (Interest) HB Gross Profit excluding I&A and Interest (Non-GAAP) HB Gross Margin excluding I&A and Interest (Non-GAAP) West $ 307,240 23.8 % $ 487 $ 307,727 23.8 % $ — $ 307,727 23.8 % East 103,102 20.5 % 154 103,256 20.5 % — 103,256 20.5 % Southeast 92,212 22.9 % — 92,212 22.9 % — 92,212 22.9 % Corporate & unallocated (a) (64,434) — (64,434) 68,489 4,055 Total homebuilding $ 438,120 19.9 % $ 641 $ 438,761 20.0 % $ 68,489 $ 507,250 23.1 % $ in thousands Fiscal Year Ended September 30, 2022 HB Gross Profit (GAAP) HB Gross Margin (GAAP) Impairments & Abandonments (I&A) HB Gross Profit excluding I&A (Non-GAAP) HB Gross Margin excluding I&A (Non-GAAP) Interest Amortized to COS (Interest) HB Gross Profit excluding I&A and Interest (Non-GAAP) HB Gross Margin excluding I&A and Interest (Non-GAAP) West $ 353,370 26.6 % $ 289 $ 353,659 26.6 % $ — $ 353,659 26.6 % East 137,937 24.8 % 143 138,080 24.9 % — 138,080 24.9 % Southeast 104,341 24.9 % 663 105,004 25.1 % — 105,004 25.1 % Corporate & unallocated (a) (63,499) — (63,499) 71,619 8,120 Total homebuilding $ 532,149 23.1 % $ 1,095 $ 533,244 23.2 % $ 71,619 $ 604,863 26.3 % (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. 33 Our homebuilding gross profit decreased by $24.5 million to $413.6 million for the fiscal year ended September 30, 2024, compared to $438.1 million in the prior year.
This non-GAAP financial measure may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
This non-GAAP financial measure may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
Investing Activities Net cash used in investing activities for the fiscal year ended September 30, 2023 was $29.7 million, primarily driven by capital expenditures for model homes and information systems infrastructure, and investments in securities.
Net cash used in investing activities for the fiscal year ended September 30, 2023 was $29.7 million, primarily driven by capital expenditures for model homes and information systems infrastructure, and investments in securities.
This assessment considers, among other matters, (1) the nature, frequency and severity of any current and cumulative losses; (2) forecasts of future profitability; (3) the duration of statutory carryforward periods; (4) our experience with operating loss and tax credit carryforwards not expiring unused; (5) the Section 382 limitation on our ability to carryforward pre-ownership change net operating losses; (6) recognized built-in losses or deductions; and (7) tax planning alternatives. 38 Our assessment of the need for the valuation of deferred tax assets includes assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns.
This assessment considers, among other matters, (1) the nature, frequency and severity of any current and cumulative losses; (2) forecasts of future profitability; (3) the duration of statutory carryforward periods; (4) our experience with operating loss and tax credit carryforwards not expiring unused; (5) the Section 382 limitation on our ability to carryforward pre-ownership change net operating losses; (6) recognized built-in losses or deductions; and (7) tax planning alternatives. 41 Our assessment of the need for the valuation of deferred tax assets includes assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns.
For those communities whose carrying values exceed the aggregate undiscounted cash flows, we perform a discounted cash flow analysis to determine the fair value of the community, and impairment charges are recorded if the fair value of the community's inventory is less than its carrying value. 37 There is uncertainty associated with preparing the undiscounted cash flow analyses because future market conditions will almost certainly be different, either better or worse, than current conditions.
For those communities whose carrying values exceed the aggregate undiscounted cash flows, we perform a discounted cash flow analysis to determine the fair value of the community, and impairment charges are recorded if the fair value of the community's inventory is less than its carrying value. 40 There is uncertainty associated with preparing the undiscounted cash flow analyses because future market conditions will almost certainly be different, either better or worse, than current conditions.
The extent to which this impairment turn is greater than the reported gross margin for the individual asset is related to the specific historical cost basis of that individual asset. 31 The asset valuations that result from our impairment calculations are based on discounted cash flow analyses and are not derived by simply applying prospective gross margins to individual communities.
The extent to which this impairment turn is greater than the reported gross margin for the individual asset is related to the specific historical cost basis of that individual asset. 34 The asset valuations that result from our impairment calculations are based on discounted cash flow analyses and are not derived by simply applying prospective gross margins to individual communities.
In fiscal 2023, our conclusions about our ability to more likely than not realize all of our federal and certain state tax attributes remain consistent with our prior determinations. We considered positive factors including our recent earnings levels, interest savings from our debt reduction strategies, shortage in housing supply, and our backlog.
In fiscal 2024, our conclusions about our ability to more likely than not realize all of our federal and certain state tax attributes remain consistent with our prior determinations. We considered positive factors including our recent earnings levels, interest savings from our debt reduction strategies, shortage in housing supply, and our backlog.
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. 35 Stock Repurchases and Dividends Paid In May 2022 , the Company's Board of Directors approved a new share repurchase program that authorizes the Company to repurchase up to $50.0 million of its outstanding common stock.
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. 38 Stock Repurchases and Dividends Paid In May 2022, the Company's Board of Directors approved a share repurchase program that authorizes the Company to repurchase up to $50.0 million of its outstanding common stock.
(b) Interest on variable rate obligations is based on rates effective as of September 30, 2023. (c) Based on its current inventory of uncertain tax positions and tax carryforward attributes, the Company does not expect a cash settlement of unrecognized tax benefits related to uncertain tax positions in future years.
(b) Interest on variable rate obligations is based on rates effective as of September 30, 2024. (c) Based on its current inventory of uncertain tax positions and tax carryforward attributes, the Company does not expect a cash settlement of unrecognized tax benefits related to uncertain tax positions in future years.
At times, we may also engage in capital markets, bank loan, project debt or other financial transactions, including the repurchase of debt or potential new issuances of debt or equity securities to support our business needs. The amounts involved in these transactions, if any, may be material.
At times, we may also engage in capital markets, bank loans, project debt or other financial transactions, including the repurchase of debt or potential new issuances of debt or equity securities to support our business needs. The amounts involved in these transactions, if any, may be material.
Land Sales and Other Revenue and Gross Profit (Loss) Land sales relate to land and lots sold that do not fit within our homebuilding programs and strategic plans. We also have other revenue related to title examinations provided for our homebuyers in certain markets.
Land Sales and Other Revenue and Gross Profit Land sales relate to land and lots sold that do not fit within our homebuilding programs or strategic plans. We also have other revenue related to title examinations provided for our homebuyers in certain markets.
However, as shown in the tables above, the comparability of our gross profit and gross margin was modestly impacted by impairments and abandonment charges which decreased by $0.5 million and interest amortized to homebuilding cost of sales which decreased by $3.1 million year-over-year (refer to Note 4 and Note 5 of the notes to the consolidated financial statements in this Form 10-K for additional details).
However, as shown in the tables above, the comparability of our gross profit and gross margin was modestly impacted by impairments and abandonment charges which increased by $1.4 million and interest amortized to homebuilding cost of sales which decreased by $0.8 million year-over-year (refer to Note 4 and Note 5 of the notes to the consolidated financial statements in this Form 10-K for additional details).
The indentures under which our Senior Notes were issued contain certain restrictive covenants, including limitations on our payment of dividends. There were no dividends paid during our fiscal years ended September 30, 2023, 2022 or 2021.
The indentures under which our Senior Notes were issued contain certain restrictive covenants, including limitations on our payment of dividends. There were no dividends paid during our fiscal years ended September 30, 2024, 2023 or 2022.
See Note 12 of the notes to the consolidated financial statements in this Form 10-K for additional information regarding the Company's unrecognized tax benefits related to uncertain tax positions as of September 30, 2023.
See Note 12 of the notes to the consolidated financial statements in this Form 10-K for additional information regarding the Company's unrecognized tax benefits related to uncertain tax positions as of September 30, 2024.
Please see "Homebuilding Gross Profit and Gross Margin" section below for a reconciliation of homebuilding gross profit and the related gross margin excluding impairments and abandonments and interest amortized to cost of sales to homebuilding gross profit and gross margin, the most directly comparable GAAP measure.
Please see the "Homebuilding Gross Profit and Gross Margin" section below for a reconciliation of homebuilding gross profit and the related gross margin excluding impairments and abandonments and interest amortized to cost of sales (non-GAAP measures) to homebuilding gross profit and gross margin, the most directly comparable GAAP measure.
Income tax expense in our fiscal 2023, 2022 and 2021 primarily resulted from income generated in the fiscal year and permanent book/tax differences, partially offset by the generation of additional federal tax credits.
Income tax expense in our fiscal 2024, 2023 and 2022 primarily resulted from income generated in the fiscal year and permanent book/tax differences, partially offset by the generation of additional federal tax credits.
Off-Balance Sheet Arrangements and Aggregate Contractual Commitments Lot Option Agreements In addition to purchasing land directly, we control a portion of our land supply through lot option agreements with land developers and land bankers, which generally require the payment of cash or the posting of a letter of credit or surety bond for the right to acquire lots during a specified period of time at a specified price.
Off-Balance Sheet Arrangements and Aggregate Contractual Commitments Lot Option Agreements In addition to purchasing land directly, we control a portion of our land supply through lot option agreements 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.
Financing Activities Net cash used in financing activities was $13.9 million for the fiscal year ended September 30, 2023, primarily driven by the repurchases of a portion of our 2025 Senior Notes, debt issuance costs for the Unsecured Facility (see Note 7), and tax payments for stock-based compensation awards vesting.
Net cash used in financing activities was $13.9 million for the fiscal year ended September 30, 2023, primarily driven by the repurchases of a portion of our 2025 Notes, debt issuance costs for the Unsecured Facility, and tax payments for stock-based compensation awards vesting.
Refer to Note 12 of the notes to the consolidated financial statements in this Form 10-K for a further discussion of our income taxes. 33 Liquidity and Capital Resources Our sources of liquidity include, but are not limited to, cash from operations, proceeds from Senior Notes, our Senior Unsecured Revolving Credit Facility (the Unsecured Facility) and other bank borrowings, the issuance of equity and equity-linked securities, and other external sources of funds.
Refer to Note 1 2 of the notes to the consolidated financial statements in this Form 10-K for a further discussion of our income taxes. 36 Liquidity and Capital Resources Our sources of liquidity include, but are not limited to, cash from operations, proceeds from Senior Notes, our Senior Unsecured Revolving Credit Facility (the Unsecured Facility), and other bank borrowings, the issuance of equity and equity-linked securities, and other external sources of funds.
A ten basis point increase in our warranty reserve rate would have increased our accrual and corresponding cost of sales by $2.3 million as of September 30, 2023. There were no material changes in assumptions in calculating our reserve balance for the year ended September 30, 2023 .
A ten basis point increase in our warranty reserve rate would have increased our accrual and corresponding cost of sales by $2.5 million as of September 30, 2024. There were no material changes in assumptions in calculating our reserve balance for the year ended September 30, 2024 .
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 $165.4 million as of September 30, 2023.
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 $227.8 million as of September 30, 2024.
At September 30, 2023, our warranty reserve was $13.0 million, reflecting an accrual range of 0.3% to 1.0% of total revenue recognized for each home closed depending on our loss history in the division in which the home was built.
At September 30, 2024, our warranty reserve was $12.7 million, reflecting an accrual range of 0.3% to 1.1% of total revenue recognized for each home closed depending on our loss history in the division in which the home was built.
Southeast Segment: Th e $11.4 million decrease in operating income compared to the prior year was primarily due to the decrease in gross profit previously discussed, partially offset by lower sales and marketing expenses and lower other G&A expenses in the segment.
Southeast Segment: Th e $11.7 million decrease in operating income compared to the prior year was primarily due to the decrease in gross profit previously discussed, partially offset by lower other G&A expenses in the segment.
Debt We generally fulfill our short-term cash requirements with cash generated from our operations and available borrowings. Additionally, our Unsecured Facility provides borrowing capacity of $265.0 million, which includes a letter of credit capacity of $100.0 million.
Debt 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 $300.0 million, which includes a letter of credit capacity of $100.0 million.
For the same period, homebuilding gross margin was as follows in those communities that have previously been impaired, which represented 87 homes and 2.0% of total closings during fiscal 2023: Homebuilding Gross Margin from previously impaired communities: Pre-impairment turn gross margin (3.7) % Impact of interest amortized to COS related to these communities 2.7 % Pre-impairment turn gross margin, excluding interest amortization (1.0) % Impact of impairment turns 23.8 % Gross margin (post impairment turns), excluding interest amortization 22.8 % For further discussion of our impairment policies, refer to Note 2 and Note 4 of the notes to consolidated financial statements in this Form 10-K.
For the same period, homebuilding gross margin was as follows in those communities that have previously been impaired, which represented 88 homes and 2.0% of total closings during fiscal 2024: Homebuilding Gross Margin from previously impaired communities: Pre-impairment turn gross margin (2.2) % Impact of interest amortized to COS related to these communities 2.5 % Pre-impairment turn gross margin, excluding interest amortization 0.3 % Impact of impairment turns 21.2 % Gross margin (post impairment turns), excluding interest amortization 21.4 % For further discussion of our impairment policies, refer to Note 2 and Note 4 of the notes to consolidated financial statements in this Form 10-K.
Meanwhile, we invested $573.1 million and $573.6 million in land acquisition and land development during fiscal years ended September 30, 2023 and September 30, 2022, respectively. 34 While we believe we possess sufficient liquidity, we are mindful of potential short-term or seasonal requirements for enhanced liquidity that may arise to operate and grow our business.
Meanwhile, we invested $776.5 million and $573.1 million in land acquisition and land development during the fiscal years ended September 30, 2024 and September 30, 2023, respectively. 37 While we believe we possess sufficient liquidity, we are mindful of potential short-term or seasonal requirements for enhanced liquidity that may arise to operate and grow our business.
Income Taxes We recognized income tax expense from continuing operations of $24.0 million for the fiscal year ended September 30, 2023, compared to income tax expense from continuing operations of $53.3 million and $21.5 million for our fiscal years ended September 30, 2022 and 2021, respectively.
Income Taxes We recognized income tax expense from continuing operations of $18.9 million for the fiscal year ended September 30, 2024, compared to income tax expense from continuing operations of $24.0 million and $53.3 million for our fiscal years ended September 30, 2023 and 2022, respectively.
We had outstanding letters of credit and surety bonds of $31.2 million an d $254.2 million , respectivel y, as of September 30, 2023, primarily related to our obligations to local governments to construct roads and other improvements in various developments.
We had outstanding letters of credit and surety bonds of $36.4 million an d $332.2 million , respectivel y, as of September 30, 2024, primarily related to our obligations to local governments to construct roads and other improvements in various developments.
The negative factors included the overall health of the broader economy, significant increases in mortgage interest rates, and weakened housing demand. Our accounting for deferred tax consequences represents our best estimate of future events. It is possible there will be changes that are not anticipated in our current estimates.
The negative factors included the overall health of the broader economy, elevated mortgage interest rates, and softening housing demand due to affordability challenges. Our accounting for deferred tax consequences represents our best estimate of future events. It is possible there will be changes that are not anticipated in our current estimates.
The total remaining purchase price, net of cash deposits, committed under all options was $949.4 million as of September 30, 2023. Subject to market conditions and our liquidity, we may further expand our use of option agreements to supplement our owned inventory supply.
The total remaining purchase price, net of cash deposits, committed under all options was $1.46 billion as of September 30, 2024. Subject to market conditions and our liquidity, we may further expand our use of option agreements to supplement our owned inventory supply.
In recent years, we have focused on increasing our lot option agreement usage to minimize risk as we grow our land position. As of September 30, 2023, we controlled 26,189 lots, which includes 272 lots of land held for future development and 350 lots of land held for sale.
In recent years, we have focused on increasing our lot option agreement usage to minimize risk as we grow our land position. As of September 30, 2024, we controlled 28,538 lots, which includes 272 lots of land held for future development and 362 lots of land held for sale.
Reconciliation of homebuilding gross profit and the related gross margin excluding impairments and abandonments and interest amortized to cost of sales (each a non-GAAP financial measure) to their most directly comparable GAAP measures is provided for each period discussed below.
Reconciliation of homebuilding gross profit and homebuilding gross margin (GAAP measures) to homebuilding gross profit and the related gross margin excluding impairments and abandonments and interest amortized to cost of sales (non-GAAP measures) is provided for each period discussed below.
The table below summarizes backlog units by reportable segment as well as the aggregate dollar value and ASP of homes in backlog as of September 30, 2023, 2022 and 2021: As of September 30, 2023 2022 2021 23 v 22 22 v 21 Backlog Units: West 1,033 1,257 1,653 (17.8) % (24.0) % East 323 410 611 (21.2) % (32.9) % Southeast 355 424 522 (16.3) % (18.8) % Total 1,711 2,091 2,786 (18.2) % (24.9) % Aggregate dollar value of homes in backlog (in millions) $ 886.4 $ 1,144.9 $ 1,284.0 (22.6) % (10.8) % ASP in backlog (in thousands) $ 518.0 $ 547.5 $ 460.9 (5.4) % 18.8 % 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.
The table below summarizes backlog units by reportable segment as well as the aggregate dollar value and ASP of homes in backlog as of September 30, 2024, 2023 and 2022: As of September 30, 2024 2023 2022 24 v 23 23 v 22 Backlog Units: West 965 1,033 1,257 (6.6) % (17.8) % East 315 323 410 (2.5) % (21.2) % Southeast 202 355 424 (43.1) % (16.3) % Total 1,482 1,711 2,091 (13.4) % (18.2) % Aggregate dollar value of homes in backlog (in millions) $ 797.2 $ 886.4 $ 1,144.9 (10.1) % (22.6) % ASP in backlog (in thousands) $ 537.9 $ 518.0 $ 547.5 3.8 % (5.4) % Backlog reflects the number of homes for which the Company has entered into a sales contract with a customer but has not yet deli vered the home.
Net cash used in investing activities for the fiscal year ended September 30, 2022 was 14.7 million, primarily driven by capital expenditures for model homes and information systems infrastructure.
Investing Activities Net cash used in investing activities for the fiscal year ended September 30, 2024 was $30.0 million, primarily driven by capital expenditures for model homes and information systems infrastructure, and investments in securities.
When excluding the impact of impairments and abandonment charges and interest amortized to homebuilding cost of sales, homebuilding gross profit decreased by $97.6 million compared to the prior year while homebuilding gross margin decreased by 320 basis points to 23.1%.
When excluding the impact of impairments and abandonment charges and interest amortized to homebuilding cost of sales, homebuilding gross profit decreased by $24.0 million compared to the prior year while homebuilding gross margin decreased by 200 basis points to 21.1%.
The decrease in net new orders was driven primarily by a decrease in sales pace from 2.8 sales per community per month in the prior year to 2.6 and an increase in cancellation rates from 17.6% in the prior year to 20.3%, partially offset by an increase in average active community count from 120 in the prior year to 125.
The increase in net new orders was driven primarily by an increase in average active community count from 125 in the prior year to 144, partially offset by a decrease in sales pace from 2.6 orders per community per month in the prior year to 2.4.
The year-over-year decrease in closings in the Southeast segment is primarily due to lower beginning backlog, partially offset by a higher backlog conversion rate for fiscal 2023 compared to fiscal 2022. 29 Homebuilding Gross Profit and Gross Margin The following tables present our homebuilding (HB) gross profit and gross margin by reportable segment and in total.
The year-over-year decrease in closings in the Southeast segment is primarily due to lower beginning backlog, partially offset by improved construction cycle times for fiscal 2024 compared to fiscal 2023. 32 Homebuilding Gross Profit and Gross Margin The following tables present our homebuilding (HB) gross profit and gross margin by reportable segment and in total.
The decrease in gross margin was primarily driven by an increase in price concessions, and closing cost incentives including rate buydowns, as well as changes in product mix. East Segment: Compared to the prior fiscal year, homebuilding gross profit decreased by $34.8 million due to a decrease in homebuilding revenue and lower gross margin.
The decrease in gross margin was primarily driven by changes in product and community mix, an increase in price concessions, and an increase in closing cost incentives. Southeast Segment: Compared to the prior fiscal year, homebuilding gross profit decreased by $13.0 million due to a decrease in homebuilding revenue and lower gross margin.
West Segment: The $48.1 million decrease in operating income compared to the prior year was primarily due to the decrease in gross profit previously discussed and higher sales and marketing expenses and other G&A expenses, partially offset by lower commissions expense on lower revenue in the segment.
West Segment: The $16.1 million decrease in operating income compared to the prior year was primarily due to higher commissions on higher homebuilding revenue, higher sales and marketing expenses, and higher other G&A expenses, partially offset by an increase in g ross profit in the segment.
Balanced Growth Strategy Fiscal 2023 represented continued progress towards the execution of our balanced growth strategy, which is characterized by growing profitability, improving balance sheet efficiency, and generating returns above our cost of capital. We believe our balanced growth strategy has created significant value for our shareholders.
Balanced Growth Strategy Fiscal 2024 represented continued progress towards the execution of our balanced growth strategy , which is characterized by growing profitability, improving balance sheet efficiency, and generating returns above our cost of capital.
Net changes in cash, cash equivalents, and restricted cash are as follows for the periods presented: in thousands 2023 2022 2021 Net cash provided by operating activities $ 178,057 $ 81,074 $ 31,656 Net cash used in investing activities (29,670) (14,709) (14,189) Net cash used in financing activities (13,926) (88,680) (85,852) Net increase (decrease) in cash, cash equivalents, and restricted cash $ 134,461 $ (22,315) $ (68,385) Operating Activities Net cash provided by operating activities was $178.1 million for the fiscal year ended September 30, 2023.
Net changes in cash, cash equivalents, and restricted cash are as follows for the periods presented: in thousands 2024 2023 2022 Net cash (used in) provided by operating activities $ (137,545) $ 178,057 $ 81,074 Net cash used in investing activities (30,012) (29,670) (14,709) Net cash provided by (used in) financing activities 23,878 (13,926) (88,680) Net (decrease) increase in cash, cash equivalents, and restricted cash $ (143,679) $ 134,461 $ (22,315) Operating Activities Net cash used in operating activities was $137.5 million for the fiscal year ended September 30, 2024.
The following ta bles present new order and closings data for the periods presented: New Orders (Net of Cancellations) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 2023 482 1,181 1,200 1,003 3,866 2022 1,141 1,291 925 704 4,061 2021 1,442 1,854 1,199 1,069 5,564 Closings 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 2023 833 1,063 1,117 1,233 4,246 2022 1,019 1,078 1,043 1,616 4,756 2021 1,114 1,388 1,378 1,407 5,287 25 RESULTS OF CONTINUING OPERATIONS The following table summarizes certain key income statement metrics for the periods presented: Fiscal Year Ended September 30, $ in thousands 2023 2022 2021 Revenue: Homebuilding $ 2,198,400 $ 2,302,520 $ 2,127,700 Land sales and other 8,385 14,468 12,603 Total $ 2,206,785 $ 2,316,988 $ 2,140,303 Gross profit: Homebuilding $ 438,120 $ 532,149 $ 401,720 Land sales and other 4,575 5,358 2,535 Total $ 442,695 $ 537,507 $ 404,255 Gross margin: Homebuilding (a) 19.9 % 23.1 % 18.9 % Land sales and other (b) 54.6 % 37.0 % 20.1 % Total 20.1 % 23.2 % 18.9 % Commissions $ 73,450 $ 74,336 $ 80,125 General and administrative expenses (G&A) $ 179,794 $ 177,320 $ 163,285 SG&A (commissions plus G&A) as a percentage of total revenue 11.5 % 10.9 % 11.4 % G&A as a percentage of total revenue 8.1 % 7.7 % 7.6 % Depreciation and amortization $ 12,198 $ 13,360 $ 13,976 Operating income $ 177,253 $ 272,491 $ 146,869 Operating income as a percentage of total revenue 8.0 % 11.8 % 6.9 % Effective tax rate (c) 13.1 % 19.4 % 15.0 % Inventory impairments and abandonments $ 641 $ 2,963 $ 853 (Loss) gain on extinguishment of debt, net $ (546) $ 309 $ (2,025) (a) Excludi ng impairments, abandonments, and interest amortized to cost of sales, homebuilding gross margin was 23.1%, 26.3% and 23.0% for the fiscal years ended September 30, 2023, 2022 and 2021, respectively.
The following ta bles present new order and closings data for the periods presented: New Orders (Net of Cancellations) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 2024 823 1,299 1,070 1,029 4,221 2023 482 1,181 1,200 1,003 3,866 2022 1,141 1,291 925 704 4,061 Closings 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 2024 743 1,044 1,167 1,496 4,450 2023 833 1,063 1,117 1,233 4,246 2022 1,019 1,078 1,043 1,616 4,756 27 RESULTS OF CONTINUING OPERATIONS The following table summarizes certain key income statement metrics for the periods presented: Fiscal Year Ended September 30, $ in thousands 2024 2023 2022 Revenue: Homebuilding $ 2,292,984 $ 2,198,400 $ 2,302,520 Land sales and other 37,213 8,385 14,468 Total $ 2,330,197 $ 2,206,785 $ 2,316,988 Gross profit: Homebuilding $ 413,611 $ 438,120 $ 532,149 Land sales and other 10,683 4,575 5,358 Total $ 424,294 $ 442,695 $ 537,507 Gross margin: Homebuilding (a) 18.0 % 19.9 % 23.1 % Land sales and other (b) 28.7 % 54.6 % 37.0 % Total 18.2 % 20.1 % 23.2 % Commissions $ 80,056 $ 73,450 $ 74,336 General and administrative expenses (G&A) $ 186,345 $ 179,794 $ 177,320 SG&A (commissions plus G&A) as a percentage of total revenue 11.4 % 11.5 % 10.9 % G&A as a percentage of total revenue 8.0 % 8.1 % 7.7 % Depreciation and amortization $ 14,867 $ 12,198 $ 13,360 Operating income $ 143,026 $ 177,253 $ 272,491 Operating income as a percentage of total revenue 6.1 % 8.0 % 11.8 % Effective tax rate (c) 11.9 % 13.1 % 19.4 % Inventory impairments and abandonments $ 1,996 $ 641 $ 2,963 (Loss) gain on extinguishment of debt, net $ (437) $ (546) $ 309 (a) Excludi ng impairments, abandonments, and interest amortized to cost of sales, homebuilding gross margin was 21.1%, 23.1% and 26.3% for the fiscal years ended September 30, 2024, 2023 and 2022, respectively.
West Segment: Compared to the prior fiscal year, homebuilding gross profit decreased by $46.1 million due to the decrease in homebuilding revenue and lower gross margin. Homebuilding gross margin, excluding impairments and abandonments, decreased to 23.8%, down from 26.6% in the prior year.
East Segment: Compared to the prior fiscal year, homebuilding gross profit decreased by $15.6 million due to a decrease in homebuilding revenue and lower gross margin. Homebuilding gross margin, excluding impairments and abandonments, decreased to 18.1%, down from 20.5% in the prior year.
Financial Position As of September 30, 2023, our liquidity position consisted of $345.6 million in cash and cash equivalents and $265.0 million of remaining capacity under the Unsecured Facility, compared to $214.6 million in cash and cash equivalents and $244.5 million of remaining capacity under the Secured Revolving Credit Facility as of September 30, 2022.
Financial Position As of September 30, 2024, our liquidity position consisted of $203.9 million in cash and cash equivalents and $300.0 million of remaining capacity under the Unsecured Facility, compared to $345.6 million in cash and cash equivalents and $265.0 million of remaining capacity under the Unsecured Facility as of September 30, 2023.
East Segment: Homebuilding revenue decreased by 9.4% for the fiscal year ended September 30, 2023 compared to the prior fiscal year due to a 12.4% decrease in closings, partially offset by a 3.5% increase in ASP.
Southeast Segment: Homebuilding revenue decreased by 10.4% for the fiscal year ended September 30, 2024 compared to the prior fiscal year due to a 14.8% decrease in closings, partially offset by a 5.1% increase in ASP.
Future land and lot sales will depend on a variety of factors, including local market conditions, individual community performance, and changing strategic plans. 32 Operating Income The table below summarizes operating income by reportable segment for the periods presented: Fiscal Year Ended September 30, in thousands 2023 2022 2021 23 v 22 22 v 21 West $ 205,850 $ 253,961 $ 181,303 $ (48,111) $ 72,658 East 65,021 102,146 84,630 (37,125) 17,516 Southeast 57,326 68,726 57,581 (11,400) 11,145 Corporate and Unallocated (a) (150,944) (152,342) (176,645) 1,398 24,303 Operating income $ 177,253 $ 272,491 $ 146,869 $ (95,238) $ 125,622 (a) Includes amortization of capitalized interest, capitalization and amortization of indirect costs, impairment of capitalized interest and capitalized indirect costs, expenses related to numerous shared services functions that benefit all segments but are not allocated to the operating segments, and certain other amounts that are not allocated to our operating segments.
Future land and lot sales will depend on a variety of factors, including local market conditions, individual community performance, and changing strategic plans. 35 Operating Income The table below summarizes operating income by reportable segment for the periods presented: Fiscal Year Ended September 30, in thousands 2024 2023 2022 24 v 23 23 v 22 West $ 189,739 $ 205,850 $ 253,961 $ (16,111) $ (48,111) East 52,898 65,021 102,146 (12,123) (37,125) Southeast 45,666 57,326 68,726 (11,660) (11,400) Corporate and Unallocated (a) (145,277) (150,944) (152,342) 5,667 1,398 Operating income $ 143,026 $ 177,253 $ 272,491 $ (34,227) $ (95,238) (a) Includes amortization of capitalized interest, capitalization and amortization of indirect costs, impairment of capitalized interest and capitalized indirect costs, when applicable, expenses related to numerous shared services functions that benefit all segments but are not allocated to the operating segments reported above, including information technology, treasury, corporate finance, legal, branding and national marketing, and certain other amounts that are not allocated to our operating segments.
The following table reconciles our net income (loss) to Adjusted EBITDA for the periods presented: Fiscal Year Ended September 30, in thousands 2023 2022 2021 2020 2019 Net income (loss) $ 158,611 $ 220,704 $ 122,021 $ 52,226 $ (79,520) Expense (benefit) from income taxes 23,936 53,267 21,501 17,664 (37,245) Interest amortized to home construction and land sales expenses and capitalized interest impaired 68,489 72,058 87,290 95,662 108,941 Interest expense not qualified for capitalization — — 2,781 8,468 3,109 EBIT 251,036 346,029 233,593 174,020 (4,715) Depreciation and amortization 12,198 13,360 13,976 15,640 14,759 EBITDA 263,234 359,389 247,569 189,660 10,044 Stock-based compensation expense 7,275 8,478 12,167 10,036 10,526 Loss (gain) on extinguishment of debt 546 (309) 2,025 — 24,920 Inventory impairments and abandonments (a) 641 2,524 853 2,111 134,711 Litigation settlement in discontinued operations — — 120 1,260 — Restructuring and severance expenses 335 — (10) 1,317 — Adjusted EBITDA $ 272,031 $ 370,082 $ 262,724 $ 204,384 $ 180,201 (a) In periods during which we impaired certain of our inventory assets, capitalized interest that is impaired is included in the line above titled "Interest amortized to home construction and land sales expenses and capitalized interest impaired." Reconciliation of Total Debt to Total Capitalization Ratio to Net Debt to Net Capitalization Ratio Reconciliation of net debt to net capitalization ratio (a non-GAAP financial measure) to total debt to total capitalization ratio, the most directly comparable GAAP measure, is provided for each period below.
The following table reconciles our net income (GAAP) to Adjusted EBITDA (non-GAAP) for the periods presented: Fiscal Year Ended September 30, in thousands 2024 2023 2022 2021 2020 Net income (GAAP) $ 140,175 $ 158,611 $ 220,704 $ 122,021 $ 52,226 Expense from income taxes 18,910 23,936 53,267 21,501 17,664 Interest amortized to home construction and land sales expenses and capitalized interest impaired 68,233 68,489 72,058 87,290 95,662 Interest expense not qualified for capitalization — — — 2,781 8,468 EBIT (Non-GAAP) 227,318 251,036 346,029 233,593 174,020 Depreciation and amortization 14,867 12,198 13,360 13,976 15,640 EBITDA (Non-GAAP) 242,185 263,234 359,389 247,569 189,660 Stock-based compensation expense 7,391 7,275 8,478 12,167 10,036 Loss (gain) on extinguishment of debt 437 546 (309) 2,025 — Inventory impairments and abandonments (a) 1,996 641 2,524 853 2,111 Gain on sale of investment (b) (8,591) — — — — Litigation settlement in discontinued operations — — — 120 1,260 Restructuring and severance expenses — 335 — (10) 1,317 Adjusted EBITDA (Non-GAAP) $ 243,418 $ 272,031 $ 370,082 $ 262,724 $ 204,384 (a) In periods during which we impaired certain of our inventory assets, capitalized interest that is impaired is included in the line above titled "Interest amortized to home construction and land sales expenses and capitalized interest impaired." (b) 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.
Homebuilding gross margin, excluding impairments and abandonments, decreased to 20.5%, down from 24.9% in the prior year. The decrease in gross margin was primarily driven by an increase in price concessions and closing cost incentives including rate buydowns, as well as changes in product mix.
Homebuilding gross margin, excluding impairments and abandonments, decreased to 22.0%, down from 22.9% in the prior year. The decrease in gross margin was primarily driven by changes in product and community mix and an increase in closing cost incentives.
The year-over-year decrease in closings in the East segment was primarily due to lower beginning backlog, partially offset by a higher backlog conversion rate for fiscal 2023 compared to fiscal 2022 .
The year-over-year decrease in closings in the East segment was primarily due to lower beginning backlog, partially offset by improved construction cycle times for fiscal 2024 compared to fiscal 2023 .
The following tables summarize our land sales and other revenue and related gross profit (loss) by reportable segment for the periods presented: $ in thousands Land Sales and Other Revenue 2023 2022 2021 23 v 22 22 v 21 West $ 4,945 $ 3,783 $ 8,370 30.7 % (54.8) % East 2,365 5,149 3,846 (54.1) % 33.9 % Southeast 1,075 5,536 387 (80.6) % 1,330.5 % Total $ 8,385 $ 14,468 $ 12,603 (42.0) % 14.8 % $ in thousands Land Sales and Other Gross Profit (Loss) 2023 2022 2021 23 v 22 22 v 21 West $ 2,989 $ 734 $ 2,330 307.2 % (68.5) % East 736 4,206 440 (82.5) % 855.9 % Southeast 850 984 73 (13.6) % 1,247.9 % Corporate and unallocated (a) — (566) (308) 100.0 % (83.8) % Total $ 4,575 $ 5,358 $ 2,535 (14.6) % 111.4 % (a) Includes capitalized interest and capitalized indirect costs expensed to land cost of sale related to land sold, as well as capitalized interest and capitalized indirect costs impaired in order to reflect land held for sale assets at net realizable value.
The following tables summarize our land sales and other revenue and related gross profit by reportable segment for the periods presented: $ in thousands Land Sales and Other Revenue 2024 2023 2022 24 v 23 23 v 22 West $ 18,680 $ 4,945 $ 3,783 277.8 % 30.7 % East 17,595 2,365 5,149 644.0 % (54.1) % Southeast 938 1,075 5,536 (12.7) % (80.6) % Total $ 37,213 $ 8,385 $ 14,468 343.8 % (42.0) % $ in thousands Land Sales and Other Gross Profit (Loss) 2024 2023 2022 24 v 23 23 v 22 West $ 4,438 $ 2,989 $ 734 48.5 % 307.2 % East 6,391 736 4,206 768.3 % (82.5) % Southeast 688 850 984 (19.1) % (13.6) % Corporate and unallocated (a) (834) — (566) n/m (b) 100.0 % Total $ 10,683 $ 4,575 $ 5,358 133.5 % (14.6) % (a) Includes capitalized interest and capitalized indirect costs expensed to land cost of sale related to land sold, as well as capitalized interest and capitalized indirect costs impaired in order to reflect land held for sale assets at net realizable value.
The increase in SG&A as a percentage of total revenue was primarily due to lower revenues. We remain focused on prudently managing overhead costs. 24 Seasonal and Quarterly Variability: Our homebuilding operating cycle historically has reflected escalating new order activity in the second and third fiscal quarters and increased closings in the third and fourth fiscal quarters.
We remain focused on prudently managing overhead costs. 26 Seasonal and Quarterly Variability: Our homebuilding operating cycle historically has reflected escalating new order activity in the second and third fiscal quarters and increased closings in the third and fourth fiscal quarters.
During the fiscal year ended September 30, 2022, the Company repurchased 570 thousand shares of its common stock for $8.2 million at an average price per share of $14.33 through open market transactions. All shares have been retired upon repurchase.
The repurchase program has no expiration date. During the fiscal year ended September 30, 2024, the Company repurchased 455 thousand shares of its common stock for $12.9 million at an average price per share of $28.41 through open market transactions. All shares have been retired upon repurchase.
Southeast Segment: Homebuilding revenue decreased by 3.9% for the fiscal year ended September 30, 2023 compared to the prior fiscal year due to a 2.6% decrease in ASP as well as a decrease in closings of 1.3%. The year-over-year decrease in ASP was due to changes in pricing and product mix.
East Segment: Homebuilding revenue decreased by 3.9% for the fiscal year ended September 30, 2024 compared to the prior fiscal year due to a 2.7% decrease in closings as well as a 1.2% decrease in ASP.
East Segment: The $37.1 million decrease in operating income compared to the prior year was primarily due to the decrease in gross profit previously discussed and higher sales and marketing expenses, partially offset by lower commissions expense on lower revenue, and lower other G&A expenses in the segment.
East Segment: The $12.1 million decrease in operating income compared to the prior year was primarily due to the decrease in gross profit previously discussed and higher sales and marketing expenses in the segment.
For fiscal 2023, our homebuilding gross margin was 19.9% and excluding interest and inventory impairments and abandonments, it was 23.1%.
For fiscal 2024, our homebuilding gross margin was 18.0% and excluding interest and inventory impairments and abandonments, it was 21.1%.
Fiscal Year Ended September 30, in thousands 2023 2022 Total debt $ 978,028 $ 983,440 Stockholders' equity 1,102,819 939,286 Total capitalization $ 2,080,847 $ 1,922,726 Total debt to total capitalization ratio 47.0 % 51.1 % Total debt $ 978,028 $ 983,440 Less: cash and cash equivalents 345,590 214,594 Net debt 632,438 768,846 Stockholders' equity 1,102,819 939,286 Net capitalization $ 1,735,257 $ 1,708,132 Net debt to net capitalization ratio 36.4 % 45.0 % 27 Homebuilding Operations Data The following table summarizes new orders and cancellation rates by reportable segment for the periods presented: New Orders, net Cancellation Rates 2023 2022 2021 23 v 22 22 v 21 2023 2022 2021 West 2,244 2,437 3,233 (7.9) % (24.6) % 22.2 % 18.4 % 12.0 % East 859 879 1,172 (2.3) % (25.0) % 18.8 % 16.2 % 9.6 % Southeast 763 745 1,159 2.4 % (35.7) % 15.9 % 16.3 % 10.2 % Total 3,866 4,061 5,564 (4.8) % (27.0) % 20.3 % 17.6 % 11.1 % Net new orders for the y ear ended September 30, 2023 decreased to 3,866, down 4.8% from the year ended September 30, 2022.
Fiscal Year Ended September 30, in thousands 2024 2023 Total debt (GAAP) $ 1,025,349 $ 978,028 Stockholders' equity (GAAP) 1,232,111 1,102,819 Total capitalization (GAAP) $ 2,257,460 $ 2,080,847 Total debt to total capitalization ratio (GAAP) 45.4 % 47.0 % Total debt (GAAP) $ 1,025,349 $ 978,028 Less: cash and cash equivalents (GAAP) 203,907 345,590 Net debt (Non-GAAP) 821,442 632,438 Stockholders' equity (GAAP) 1,232,111 1,102,819 Net capitalization (Non-GAAP) $ 2,053,553 $ 1,735,257 Net debt to net capitalization ratio (Non-GAAP) 40.0 % 36.4 % 30 Homebuilding Operations Data The following table summarizes new orders and cancellation rates by reportable segment for the periods presented: New Orders, net Cancellation Rates 2024 2023 2022 24 v 23 23 v 22 2024 2023 2022 West 2,753 2,244 2,437 22.7 % (7.9) % 17.3 % 22.2 % 18.4 % East 912 859 879 6.2 % (2.3) % 19.5 % 18.8 % 16.2 % Southeast 556 763 745 (27.1) % 2.4 % 16.8 % 15.9 % 16.3 % Total 4,221 3,866 4,061 9.2 % (4.8) % 17.7 % 20.3 % 17.6 % Net new orders for the y ear ended September 30, 2024 increased to 4,221, up 9.2% from the year ended September 30, 2023.
Our credit ratings could be lowered, or rating agencie s could issue adverse commentaries in the future, which could have a material adverse effect on our business, financial condition, results of operations, and liquidity.
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 agencie s could issue adverse commentaries in the future, which could have a material adverse effect on our business, financial condition, results of operations, and liquidity.
Net cash provided by operating activities was $81.1 million for the fiscal year ended September 30, 2022, primarily driven by income before income taxes of $274.0 million, which included $24.0 million of non-cash charges, a net decrease in non-inventory working capital of $14.5 million, partially offset by an increase in inventory of $231.4 million resulting from land acquisition, land development, and house construction spending to support continued growth.
Net cash used in operating activities during the period was primarily driven by an increase in inventory of $282.1 million resulting from land acquisition, land development, and house construction spending to support continued growth and a net increase in non-inventory working capital of $30.2 million, partially offset by income before income taxes of $159.1 million, which included $15.7 million of non-cash charges.
The decrease in backlog units was primarily due to lower beginning backlog and lower net new orders year-over-year. 28 Homebuilding Revenue, Average Selling Price, and Closings The table below summarizes homebuilding revenue, ASP of our homes closed, and closings by reportable segment for the periods presented: Homebuilding Revenue Average Selling Price $ in thousands 2023 2022 2021 23 v 22 22 v 21 2023 2022 2021 23 v 22 22 v 21 West $ 1,292,060 $ 1,327,770 $ 1,110,208 (2.7) % 19.6 % $ 523.5 $ 468.7 $ 377.0 11.7 % 24.3 % East 503,479 555,598 565,989 (9.4) % (1.8) % 532.2 514.4 477.6 3.5 % 7.7 % Southeast 402,861 419,152 451,503 (3.9) % (7.2) % 484.2 497.2 390.2 (2.6) % 27.4 % Total $ 2,198,400 $ 2,302,520 $ 2,127,700 (4.5) % 8.2 % $ 517.8 $ 484.1 $ 402.4 7.0 % 20.3 % Closings 2023 2022 2021 23 v 22 22 v 21 West 2,468 2,833 2,945 (12.9) % (3.8) % East 946 1,080 1,185 (12.4) % (8.9) % Southeast 832 843 1,157 (1.3) % (27.1) % Total 4,246 4,756 5,287 (10.7) % (10.0) % West Segment: Homebuilding revenue decreased by 2.7% for the fiscal year ended September 30, 2023 compared to the prior fiscal year due to a 12.9% decrease in closings, partially offset by a 11.7% increase in ASP.
The increase in backlog ASP was primarily due to changes in product and community mix as well as price appreciation in certain communities. 31 Homebuilding Revenue, Average Selling Price, and Closings The table below summarizes homebuilding revenue, ASP of our homes closed, and closings by reportable segment for the periods presented: Homebuilding Revenue Average Selling Price $ in thousands 2024 2023 2022 24 v 23 23 v 22 2024 2023 2022 24 v 23 23 v 22 West $ 1,448,607 $ 1,292,060 $ 1,327,770 12.1 % (2.7) % $ 513.5 $ 523.5 $ 468.7 (1.9) % 11.7 % East 483,611 503,479 555,598 (3.9) % (9.4) % 525.7 532.2 514.4 (1.2) % 3.5 % Southeast 360,766 402,861 419,152 (10.4) % (3.9) % 508.8 484.2 497.2 5.1 % (2.6) % Total $ 2,292,984 $ 2,198,400 $ 2,302,520 4.3 % (4.5) % $ 515.3 $ 517.8 $ 484.1 (0.5) % 7.0 % Closings 2024 2023 2022 24 v 23 23 v 22 West 2,821 2,468 2,833 14.3 % (12.9) % East 920 946 1,080 (2.7) % (12.4) % Southeast 709 832 843 (14.8) % (1.3) % Total 4,450 4,246 4,756 4.8 % (10.7) % West Segment: Homebuilding revenue increased by 12.1% for the fiscal year ended September 30, 2024 compared to the prior fiscal year due to a 14.3% increase in closings, partially offset by a 1.9% decrease in ASP.
These combined facilities provide for letter of credit needs collateralized by either cash or assets of the Company. We currently have $31.2 million of o utstanding letters of c redit under these facilities.
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 $36.4 million of o utstanding letters of c redit under these facilities.
Of the 25,567 total active lots, we controlled 14,490 of these lots, or 56.7%, through option agreements, as compared to 13,312 active lots controlled, or 54.6% of our total active lots, through option agreements as of September 30, 2022.
Of the 27,904 total active lots, we controlled 16,125 of these lots, or 57.8%, through option agreements, as compared to 14,490 active lots controlled, or 56.7% of our total active lots, through option agreements as of September 30, 2023.
These measures should not be considered alternatives to homebuilding gross profit and gross margin determined in accordance with GAAP as an indicator of operating performance. In particular, the magnitude and volatility of non-cash inventory impairments and abandonment charges for the Company and other homebuilders have been significant historically and, as such, have made financial analysis of our industry more difficult.
In particular, the magnitude and volatility of non-cash inventory impairments and abandonment charges for the Company and other homebuilders have been significant historically and, as such, have made financial analysis of our industry more difficult.
Homebuilding gross margin excluding impairments, abandonments, and interest for the fiscal year ended September 30, 2023 was 23.1%, down fr om 26.3% in the prior year.
Homebuilding gross margin excluding impairments, abandonments, and interest for the fiscal year ended September 30, 2024 was 21.1%, down fr om 23.1% in the prior year . The year-over-year decrease in gross margin for the fiscal year ended September 30, 2024 was primarily driven by changes in product and community mix and an increase in closing cost incentives.
The decrease in homebuilding gross profit was primarily driven by a decrease in homebuilding revenue of $104.1 million and a decrease in gross margin of 320 basis points to 19.9%.
The decrease in homebuilding gross profit was primarily driven by a decrease in gross margin of 190 basis points to 18.0%, partially offset by an increase in homebuilding revenue of $94.6 million.
The aggregate dollar value o f homes in backlog as of September 30, 2023 decreased 22.6% compared to the prior year due to an 18.2% decrease in backlog units and a 5.4% decrease in the ASP of homes in backlog.
The aggregate dollar value of homes in backlog as of September 30, 2024 decreased 10.1% compared to the prior year due to a 13.4% decrease in backlog units, partially offset by a 3.8% increase in the ASP of homes in backlog.
We had outstanding letters of credit and surety bonds of $31.2 million and $254.2 million, respectively, as of September 30, 2023, primarily related to our obligations to local governments to construct roads and other improvements in various developments. 36 Contractual Commitments The following table summarizes our aggregate contractual commitments as of September 30, 2023: Payments Due by Period in thousands Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Senior notes and junior subordinated notes (a) $ 1,010,223 $ — $ 202,195 $ 357,255 $ 450,773 Interest commitments under senior notes and junior subordinated notes (b) 362,538 68,154 115,838 88,025 90,521 Obligations related to lots under option 949,447 415,842 419,236 107,204 7,165 Operating leases 24,161 4,123 7,394 4,677 7,967 Uncertain tax positions (c) — — — — — Total $ 2,346,369 $ 488,119 $ 744,663 $ 557,161 $ 556,426 (a) For a listing of our borrowings, refer to Note 7 of the notes to the consolidated financial statements in this Form 10-K.
We had outstanding letters of credit and surety bonds of $36.4 million and $332.2 million, respectively, as of September 30, 2024, primarily related to our obligations to local governments to construct roads and other improvements in various developments. 39 Contractual Commitments The following table summarizes our aggregate contractual commitments as of September 30, 2024: Payments Due by Period in thousands Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Senior notes and junior subordinated notes (a) $ 1,058,028 $ — $ — $ 357,255 $ 700,773 Interest commitments under senior notes and junior subordinated notes (b) 410,089 72,989 145,979 105,751 85,370 Obligations related to lots under option 1,458,679 563,709 631,509 191,595 71,866 Operating leases 24,875 4,572 7,332 5,887 7,084 Uncertain tax positions (c) — — — — — Total $ 2,951,671 $ 641,270 $ 784,820 $ 660,488 $ 865,093 (a) For a listing of our borrowings, refer to Note 7 of the notes to the consolidated financial statements in this Form 10-K.
Credit Ratings Our credit ratings are periodically reviewed by rating agencies. In August 2023, S&P upgraded the Company’s corporate credit rating of B to B+, updated the Company's outlook from positive to stable, and upgraded the rating for our senior unsecured notes from B to B+.
Credit Ratings Our credit ratings are periodically reviewed by rating agencies. In June 2024, S&P reaffirmed the Company’s corporate credit rating of B+ and reaffirmed the Company's outlook of stable. In October 2024, Moody's reaffirmed the Company's issuer corporate family rating of B1 and reaffirmed the Company's outlook of stable.
As of September 30, 2023, no borrowings and no letters of credit were outstanding under the Unsecured Facility , resulting in a remaining borrowing capacity of $265.0 million. Subsequently in October, 2023, we increased our available borrowing capacity under the Unsecured Facility from $265.0 million to $300.0 million.
As of September 30, 2024, no borrowings and no letters of credit were outstanding under the Unsecured Facility , resulting in a remaining borrowing capacity of $300.0 million. See Note 7 of the notes to the consolidated financial statements in this Form 10-K for further discussion.
Our operating income decreased by $95.2 million to $177.3 million for the year ended September 30, 2023, compared to operating income of $272.5 million for year ended September 30, 2022 , primarily driven by the previously discussed decrease in gross profit, as well as an increase in SG&A expense.
Our operating income decreased by $34.2 million to $143.0 million for the year ended September 30, 2024, compared to operating income of $177.3 million for year ended September 30, 2023 , primarily driven by the previously discussed decrease in gross profit, higher comm issions expense on higher homebuilding revenue, and higher sales and marketing costs, partially offset by lower other G&A expenses.
For the fiscal year ended September 30, 2023, corporate and unallocated net expenses decreased by $1.4 million from the prior fiscal year, primarily due to l ower amortization of capitalized interest to cost of sales on lower homebuilding revenue as well as lower G&A costs.
For the fiscal year ended September 30, 2024, corporate and unallocated net expenses decreased by $5.7 million from the prior fiscal year, primarily due to lower amortization of capitalized indirect costs to cost of sales. Below operating income, we had the following noteworthy year-over-year fluctuations for the fiscal year ended September 30, 2024 compared to the prior year.
The decrease in gross margin was primarily driven by an increase in price concessions, and closing cost incentives including rate buydowns, as well as changes in product mix. Measures of homebuilding gross profit and gross margin after excluding inventory impairments and abandonments, interest amortized to cost of sales, and other non-recurring items are not GAAP financial measures.
Measures of homebuilding gross profit and gross margin after excluding inventory impairments and abandonments, interest amortized to cost of sales, and other non-recurring items are non-GAAP financial measures. These measures should not be considered alternatives to homebuilding gross profit and gross margin determined in accordance with GAAP as an indicator of operating performance.
The year-over-year decrease in gross margin for the fiscal year ended September 30, 2023 was primarily driven by an increase in price concessions and closing cost incentives including rate buydowns, as well as changes in product mix.
The year-over-year decrease in gross margin for the fiscal year ended September 30, 2024 was primarily driven by changes in product and community mix and an increase in closing cost incentives. West Segment: Compared to the prior fiscal year, homebuilding gross profit decreased by $0.9 million due to lower gross margin, partially offset by an increase in homebuilding revenue.
However, these seasonal patterns may be impacted or reduced by a variety of factors, including periods of economic downturn, which may result in decreased revenues and closings.
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.
Net cash used in financing activities was $88.7 million during the fiscal year ended September 30, 2022, primarily driven by repayment of the Senior Unsecured Term Loan (the Term Loan), repurchases of a portion of our 2025 and 2027 Senior Notes, common stock repurchases under our share repurchase program, and tax payments for stock-based compensation awards vesting.
Financing Activities Net cash provided by financing activities was $23.9 million for the fiscal year ended September 30, 2024, primarily driven by inflows from the issuance of the 2031 Notes, partially offset by outflows from redemption of our 2025 Notes, debt issuance costs related to the 2031 Notes and extension of the term of our Unsecured Facility (see Note 7), repurchases of common stock, and tax payments for stock-based compensation awards vesting.
Land sales and other gross profit is primarily impacted by the profitability of individual land and lot sale transactions.
Year-over-year fluctuations on land sales and other revenue are primarily driven by the timing and volume of land and lot sales closings. Land sales and other gross profit are primarily impacted by the profitability of individual land and lot sale transactions as well as the volume of our title examinations operations.
Our actual results may differ materially from those contained in or implied by any forward-looking statements. Executive Overview and Outlook Market Conditions During the second half of fiscal 2022, mortgage interest rates began to increase sharply, pushing mortgage payments as a percentage of income substantially above their long-term average.
Our actual results may differ materially from those contained in or implied by any forward-looking statements. Executive Overview and Outlook Market Conditions At the outset of fiscal 2024, mortgage rates fluctuated at high levels with a notable peak in October 2023, which led to subdued housing market activity.
As of September 30, 2023, we had 14,490 lots, or 56.7% of our total active lots, under option agreements as compared to 13,312 lots, or 54.6% of our total active lots, under option agreements as of September 30, 2022. • SG&A for the fiscal year ended September 30, 2023 was 11.5% o f total revenue compared with 10.9% a year earlier.
As of September 30, 2024, we had 16,125 lots, or 57.8% of our total active lots, under option agreements as compared to 14,490 lots, or 56.7% of our total active lots, under option agreements as of September 30, 2023. • During the fiscal year ended September 30, 2024, our average active community count of 144 was up 15.7% from 125 in the prior year.
During fiscal 2023, our total stockholders' equity of $1.1 billion exceeded the outstanding balance of our total debt for the first time in over 15 years. As we look to fiscal 2024, we continue to position our business for longer-term growth, while focusing on the appropriate balance between pursuing growth opportunities, controlling risk, and maintaining a strong liquidity position.
As we look to fiscal 2025, we expect to take further steps to achieve our multi-year strategic goals by continuing to position our business for durable long-term growth, while focusing on the appropriate balance between pursuing growth opportunities, controlling risk, and maintaining a strong liquidity position.
Our long-term strategic business objectives include increasing active communities to more than 200 by the end of fiscal 2026, reducing our net debt to net capitalization ratio to below 30% by the end of fiscal 2026 , and reaching our target of 100% Zero Energy Ready starts by the end of the calendar year 2025. 23 Overview of Results for Our Fiscal 2023 The following is a summary of our performance against certain key operating and financial metrics during fiscal 2023: • During the fiscal year ended September 30, 2023, sales per community per month was 2.6 compared to 2.8 in the prior year, and our net new orders were 3,866, down 4.8% from 4,061 in the prior year.
Specifically, our three multi-year strategic goals include the following: • increasing active communities to more than 200 by the end of fiscal 2026, • reducing our net debt to net capitalization ratio to below 30% by the end of fiscal 2026, and • reaching our target of 100% Zero Energy Ready home starts by the end of calendar year 2025.
In October 2023, Moody's upgraded the rating for our senior unsecured notes from B2 to B1, upgraded the Company's issuer corporate family rating from B2 to B1, and updated the Company's outlook from positive to stable. These ratings and our current credit condition affect, among other things, our ability to access new capital.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe effect of a hypothetical one-percentage point decrease in our estimated discount rates would increase the estimated fair value of the fixed rate debt instruments from $858.5 million to $889.1 million as of September 30, 2023. 39
Biggest changeThe effect of a hypothetical one-percentage point decrease in our estimated discount rates would increase the estimated fair value of the fixed rate debt instruments from $976.5 million to $1.02 billion as of September 30, 2024. 42
As of September 30, 2023, we had variable rate debt outstanding, totaling $74.3 million. A one percent increase in the interest rate for these notes would result in an increase in our interest expense of approximately $1.0 million over the next twelve-month period.
As of September 30, 2024, we had variable rate debt outstanding, totaling $76.4 million. A one percent increase in the interest rate for these notes would result in an increase in our interest expense of approximately $1.0 million over the next twelve-month period.
The estimated fair value of our fixed rate debt as of September 30, 2023 was $858.5 million, compared to a carrying amount of $903.7 million.
The estimated fair value of our fixed rate debt as of September 30, 2024 was $976.5 million, compared to a carrying amount of $948.9 million.

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