管理層發言
Good afternoon, and welcome to the Beazer Homes Earnings Conference Call for the Fourth Fiscal Quarter and Full Year Ended September 30, 2025. Today's call is being recorded, and a replay will be available on the company's website later today. In addition, PowerPoint slides intended to accompany this call are available in the Investor Relations section of the company's website at www.beazer.com. At this point, I will now turn the call over to David Goldberg, Senior Vice President and Chief Financial Officer.
Thank you. Good afternoon, and welcome to the Beazer Homes Conference Call discussing our results for the fourth quarter of fiscal 2025. Before we begin, you should be aware that during this call, we will be making forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors described in our SEC filings, which may cause actual results to differ materially from our projections. Any forward-looking statement speaks only as of the date the statement is made. We do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is simply not possible to predict all such factors. Joining me today is Allan Merrill, our Chairman and Chief Executive Officer. On our call today, Allan will discuss highlights from the full year, the current operating environment, including the discussion of both our operational response and our strategic positioning and the progress we're making towards our multiyear goals. I will then provide some highlights from our fourth quarter results, guidance for our first fiscal quarter fiscal '26 results and some commentary on how we are thinking about full year fiscal '26 expectations. Updates on our balance sheet and liquidity, including our outlook for capital allocation and land spend and finish with a discussion about our shareholder rights agreement. Allan will conclude with a wrap-up after which we will take any questions in the remaining time. I will now turn the call over to Allan.
Thank you, Dave, and thank you for joining us on our call this afternoon. Fiscal '25 was a productive but challenging year, highlighted by both community count growth, and prudent balance sheet management as we operated in a very difficult new home sales environment. In the fourth quarter, we were able to improve our sales base, including in Texas, and exceed our expectations for home closings and profitability. For the full year, we were able to make continued progress on our multiyear goals. Specifically, we finished fiscal '25 with an average active community count of 164, up 14% from last year. We reduced our net debt to net capitalization below 40% and we grew book value per share to nearly $43 from a combination of profitability and the impact of share repurchases. It is certainly the case that fiscal '25 didn't go exactly like we expected at this time last year but I'm very proud of the resilience our team demonstrated. We effectively responded to the environment, allowing us to remain on track to achieve our multiyear goals for community count growth, deleveraging and book value per share accretion by the end of fiscal '27. By this time in the quarterly reporting cycle, you've already heard from our peers that the macro environment remains quite challenging as consumers grapple with both confidence and affordability and builders work through excess inventory. For now, conversion and sales paces remain well below historical norms and aggressive incentives and move-in ready specs are still required to sell homes. However, we are encouraged by the recent decrease in months supply of new homes and the improvement in affordability arising from wage growth and lower mortgage rates. If these trends persist, we should see better selling conditions over the next year. But rather than waiting for the environment to improve, we are taking actions to enhance returns and capitalize on our differentiated strategy. Over the course of fiscal '25, we took steps to improve both profitability and balance sheet efficiency. Relative to profitability, we rebid our material and labor costs, which has resulted in savings of about $10,000 per home so far. These savings should be fully realized in our closings by the fourth quarter and we continue to pursue additional opportunities. In the fourth quarter, we completed a reduction in force, a painful but necessary reflection of the current environment, which resulted in run rate savings of about $12 million per year. And we made product and sales leadership changes in several divisions, including Houston and San Antonio. Our Texas pace improved to 1.8 in the quarter, up from 1.3 last quarter. To enhance balance sheet efficiency, we re-underwrote our portfolio to identify assets that were not a strong fit with our strategy; this led to asset sales of $63 million and a profit contribution of about $7 million. This portfolio realignment will continue in fiscal '26 with non-strategic asset sales likely to generate more than $100 million in capital for reinvestment and likely to occur at or above book value in the aggregate. We increased the share of our lot position controlled by options from 58% to 62%, and we completed a sale leaseback of about 80 of our model homes to free up cash for higher return uses. Our entire industry seems to use some version of the same affordability playbook. Higher purchase incentives, smaller square footage and fewer features all help buyers attain home ownership. But they don't excite homebuyers and they don't address all of the costs that are straining affordability. At Beazer, we are focused on the total cost of homeownership by offering lower mortgage rates through competition and elimination of the middleman, lower utility bills from dramatically more efficient homes, and lower insurance premiums through competition and advanced building practices. On this slide, we've shown these savings for a recent closing here in Atlanta. This example demonstrates savings of about $3,000 per year versus comparable new homes. That represents nearly $50,000 in buying power or additional value for our buyers. And this is demonstrative of what we can do for every home buyer. We think that's an incredibly compelling value proposition in a housing market hampered by affordability constraints. The next step in our journey and likely the most important one for our shareholders is to ensure that homebuyers and realtors in our market know what we have created. Last month, we introduced "Enjoy the Great Indoors." Our campaign to increase brand awareness and help our sales team explain the many benefits of owning a Beazer Home. Strategically, we believe we are uniquely well-positioned to offer homebuyers solutions that address affordability concerns. Both our operational responses and our differentiated strategy are designed to help us achieve our multiyear goals for growth, deleveraging, and book value per share accretion. With 169 active communities at year-end and nearly 25,000 active lots under control, we are confident we can reach our greater than 200 community count goal over the next two years. In fiscal '25, we were able to deleverage to just under 40%, an important milestone in our progression. We anticipate decreasing net leverage by several points in fiscal '26 and our goal remains to reach a net debt to net capitalization ratio in the low 30% range by the end of fiscal '27. Finally, we grew book value per share to nearly $43, extending our track record for strong book value growth. Our goal is to generate a double-digit compound annual growth rate in book value per share through the end of fiscal '27 through both profitability and share repurchases, which would equate to a book value in the mid-50s. With that, I'll turn the call over to Dave.
Thanks, Allan. During the fourth quarter, we closed 1,400 homes well ahead of our expectations. Our stronger-than-anticipated closings in the quarter were a function of two factors: First, we executed 83 model home sale leasebacks to improve balance sheet efficiency. Second, we sold more specs that could close in the quarter than we expected. Given the competitive environment currently, the margins on the specs we sold and closed in the quarter were below our expectations heading into the quarter. The combination of a higher percentage of specs and larger incentives resulted in a 17.2% gross margin. On the positive side, our strong fourth quarter closings led to improved operating leverage in the period with SG&A at 9.6% of total revenue. All told, in a tough market, we were able to deliver fourth quarter adjusted EBITDA of approximately $64 million and $1.02 in diluted earnings per share. With that said, let's detail our expectations for the first quarter compared to the same quarter last year. Our outlook contemplates market conditions remaining challenging, with incentives elevated as builders push calendar year-end closings. We expect to sell approximately 900 homes with specs representing up to 75% of the total. We expect to end the first quarter with about 170 communities. We anticipate closing about 800 homes in the quarter with an average selling price around $515,000. While spec sales will remain elevated, we expect a lower portion of these sales to close in the period compared to the fourth quarter. Adjusted gross margin should be around 16%. This is primarily being driven by the higher level of incentive on specs and a very low share of to-be-built sales in the quarter's closings. SG&A total dollar spend should be relatively flat compared to last year's first quarter. We expect land sale revenue to be about $10 million with minimal profit and loss benefit. This should generate adjusted EBITDA between breakeven and $5 million. Interest amortized as a percentage of homebuilding revenue should be about 3%. We should generate a net tax benefit of approximately $2 million. All of this should lead to a net loss of about $0.50 per diluted share. While it's difficult to predict full-year results at a seasonally slower time of the year, we wanted to provide some commentary on our full-year goals. Simply put, we want to meet or exceed our fiscal 2025 adjusted EBITDA despite beginning the year with fewer homes in backlog and lower first-quarter margins. It won't be easy, but here's why we think we can do it. We expect a combination of community count growth and a slightly improved sales pace, especially in the third quarter to help generate a 5% to 10% increase in closings versus fiscal 2025. Average selling price will also be up from a changing mix of communities delivering homes. We expect first-quarter gross margin to represent the low point for the year, and we have a clear strategy to deliver about three points of margin improvement by the fourth quarter, assuming no reduction in current incentives. Here are the catalysts we believe will drive this improvement. First, the realization of the savings from our rebidding should grow sequentially over the year, adding about $10,000 a home or nearly two points of margin by year-end. Second, we expect to benefit from a positive mix shift within our existing communities. Our most aggressive incentives have occurred in our communities priced below $500,000, typically three to five points above our higher average selling price communities. The share of our closings from these lower-priced communities should fall by double digits by the fourth quarter. And third, our newest communities are performing very well. The 48 opened since April 1 have generated margins more than 200 basis points above our reported margins. These new locations should grow to more than one-third of our closings by year-end. Any reduction in incentives or a more favorable mix of to-be-built homes would only help. Estimating the timing and exact impact of these factors is difficult but they should all contribute to sequential margin improvements this year. Finally, SG&A as a percentage of total revenue should be down compared to our full-year fiscal 2025. Our balance sheet remains healthy with total liquidity at the end of the fourth quarter of nearly $540 million, with $215 million of unrestricted cash nothing drawn against our revolver and no maturities until October 2027; we have ample resources to fund our growth plans in fiscal '26 and still allocate capital toward our other goals. In fiscal '25, we repurchased about 1.5 million shares for about 5% of the company. We continue to view our stock's current valuation as compelling, and we expect to repurchase at least that many shares in fiscal '26. During the fourth quarter, we spent $122 million on land acquisition and development, bringing our full year fiscal '25 total to $684 million. At the same time, we generated $63 million in land sale proceeds for the full year, leaving our net land spend just above $600 million. At year-end, our active controlled lot position was nearly 25,000 with 62% of our lots under option contracts. With our 2027 community count under control, we're able to be very disciplined in our land spending allowing us to allocate capital to maximize flexibility and returns. Finally, earlier this week, our Board unanimously authorized the company to enter into a new rights agreement to continue the protection of our deferred tax assets. At the end of September, our deferred tax assets totaled more than $140 million, about $84 million of which related to energy tax credits. The rights agreement is critical to reduce the risk of an unintended ownership change, which would limit our ability to realize benefits related to these credits. We would note two important points about our rights agreement. First, at the end of the year, our deferred tax assets represented more than 10% of our book value and that percentage is expected to grow through June 30 as we continue to recognize additional energy efficiency credits. Second, the agreement will be presented for shareholder ratification at our upcoming annual meeting in February and will expire if shareholders do not support it. Ultimately, our board took this action because they believed it was prudent to protect these assets, which were earned through our incorporation of energy efficiency products in our homes on our way to becoming America's #1 energy-efficient builder. With that, I'll now turn the call back over to Allan.
Thank you, Dave. 2025 was certainly challenging, but it was also productive. We demonstrated both operational agility and strategic discipline and we made progress towards each of our multiyear goals. Although we don't expect 2026 to be dramatically different at a macro level, we are encouraged by following new home inventories and better affordability. But we aren't just waiting around hoping for better conditions. With a leaner, more efficient balance sheet and numerous catalysts for margin improvement, we're positioned to make further progress toward our multiyear community count, deleveraging and book value growth goals. Our homes are different, they're better, and in 2026, we expect that both customers and investors will notice. Let me finish by thanking our team for their ongoing efforts to create value for our customers, our partners, our shareholders and for each other. With that, I'll turn the call over to the operator to take us into Q&A.
分析師問答
Our first question comes from Rohit Seth with B. Riley Securities.
Just on the gross margin, you got a 17.2% in the fourth quarter. You're guiding to 16% in Q1, a little bit of a decline there, but you have the cost savings coming through. So just curious, you mentioned incentives are going up. Just curious when the rebate benefits start to hit, is that in Q2, Q3?
Well, yes, Rohit. Look, we really talked about three things. So you put it correctly in Q1, obviously, going in, we have incentives, higher and specs have been a higher percentage of our sales closings and backlog, frankly. So that you're going to see in Q1 and close in Q1. But as we go through the year, we didn't give an exact timing, but we talked about being able to pick up three points, and those are really the three points that we talked about, right? The direct costs, which are nearly two points of margin improvement with the $10,000 of rebid we've got so far. And frankly, what we continue to work on. And then you think about the mix shift that we discussed in some of our existing communities, we went into some depth about lower-priced communities and what that means and the shift away from lower-priced communities, that's going to add some margin accretion as we move through the year. And then finally, and we talked about it pretty in-depthly, we've got a lot of new communities that have come online. The margin profile of our new communities is better than our existing communities. And frankly, as those constitute a higher percentage of our overall closings that will be accretive to margins. So look, we try to make it pretty clear. We're not waiting for the market to get better. This isn't about assuming incentives are going to come down or that something is going to change in the macro environment. If those things happen, great, but what we're really trying to do is control what we can control.
And then on your orders, your orders improved substantially from your third quarter; I think you had some issues there that you resolved. What did you see maybe in October and November?
I think October was sluggish as it typically is, so it aligned with our expectations. I would expect, as we have seen almost every year, that November and December will build on that. There's nothing unusual about the seasonal pattern, and the overall guidance is just below 2. I think it's about 1,800 for the quarter.
Our next question comes from Alan Ratner with Zelman & Associates.
Thank you for your insightful comments. I understand that providing an outlook for 2026 is challenging at the moment, but you highlighted the various factors at play. Allan, regarding the margin improvement for the year, you covered the favorable influences well. However, I didn’t hear any mention of land costs. I would be surprised if the land costs reflected in the profit and loss statement aren't a bit of a challenge compared to 2025. How should we consider that as at least a partial counterbalance to the favorable factors you mentioned regarding materials, labor, and mix?
I completely understand your question, and you always ask insightful ones. What we have observed is that the newest communities, specifically 48 that opened since April, have consistently shown better margins than our existing communities. While their impact on closings in Q1 was minimal, it is expected to grow. You are correct that having purchased later may result in a higher per lot cost, but so far, the combination of the product mix and pricing has enabled us to achieve margin improvement in these new communities. I acknowledge this may differ from some other views, but it's been our experience since April.
And there's not a big move in the percentage of land cost as you look forward. And remember, the average selling price we talked about is probably going to go up, especially in the second half of the year as we come out of some of our lower-cost communities, and that's part of that percentage that's not changing.
And then second, on the volume side, just 5% to 10% growth being, I guess, the goal for next year. I'm hoping you can help bridge that a little bit for me. I mean, I'm looking at your backlog; it's down 36% to start the year. I look at your spec count, that's also a bit lower than it was entering 2025. Not that that's a bad thing, but your first-quarter orders guidance is also down year-on-year. So it feels like you had a pretty big hill to climb out of to put up closing growth for the year. So can you help us think through exactly how that's going to flow through at least based on your expectations?
Yes. Look, Alan, I would kind of focus on a couple of things. And there's a lot that goes into it, obviously. Backlog is less and less predictive in a more spec-oriented market. And so what you really have to think about is units under production, your ability to turn units. And frankly, given the community count growth that we have and the sales pace improvement that we expect, especially in the third quarter off a pretty easy comp, we get to our 5% to 10% number. But that's really where it comes from.
Alan, as you know, if you look back at the years 2016 to 2019 and examine the units under production along with their turnover rates compared to closings, you'll see that in a time when sales paces were not in the 3s but rather in the low, mid, and high 2s, we were turning units under production 2.5 times. We don't even need to maintain that turnover rate from September to increase closings. It primarily hinges on sales rather than backlog or the number of units under production. We truly believe that increasing our community count and avoiding the challenges we faced in Q3 of 2025 will support our objectives. You've described it well, and we agree; that's our target, and we have clearly outlined how we plan to achieve it.
There's been a lot of discussion recently about potential actions the administration might take to influence your business in terms of improving affordability and increasing production. An article in the Journal today discussed forward rate commitments, highlighting some negative aspects regarding their mechanics, although I won't express my opinion on it. You have a unique mortgage program, and you are competing against aggressive rate commitments from competitors, which you may also be offering to some degree. What are your views on forward rate commitments? Are they beneficial for the market? Do you anticipate they will persist, or could FHFA impose restrictions on them? Any insights you can share would be appreciated.
It's obviously a tricky topic because there are lots of different facts and we can look at different buyer profiles and different lenders and see things that are good or bad from our perspective. We'd like to give customers choices. And if they want to use incentive dollars to buy rates down, we have a mechanism for them to do that, and they get tremendous transparency from multiple lenders on exactly how those dollars are being spent on their behalf to achieve that rate buydown. If they want to use those dollars in the design center, if they want to use those dollars on the price, our buyers have the opportunity to make those choices. And I think any time you've got transparency in the marketplace and consumers are making choices, we feel pretty good about that.
Our next question comes from Alex Rygiel with Texas Capital.
Dave, I do appreciate all the guidance here for 2026. A couple of quick questions. The gross margin on your land sales was obviously low in the quarter, and you talked a little bit about your expectations for 2026. Can you just talk a little bit bigger picture sort of exactly what you're doing here with regards to your land sales and what the strategy is?
We have implemented a combination of approaches. One aspect is that several of the communities we acquired over the past few years are larger than we originally planned to use. Now that we have advanced them through the entitlement and development stages, we can consider selling off a product line. This is fairly standard practice, though it doesn't occur frequently. There have been opportunities to manage 300 or 400 lots across maybe four product lines. We prefer to handle two or three of these ourselves while partnering for the remaining one, but we will maintain control over the asset. This will be part of our asset sale activities in 2026. Additionally, as I mentioned earlier, we realized in the middle of last year that the demand environment did not pick up as expected by the spring selling season. We took a deliberate approach to reassess everything in our pipeline. One of the insights we gained relates to our incentive strategy; in the lower-priced communities where incentives were highest, we did not achieve the returns we sought. I'm pleased to report that we sold around $60 million in that segment in 2025 at a substantial gain. We foresee other opportunities to reinvest that capital in locations where we can achieve excellent returns. While it's difficult to predict the outcomes of negotiations for each sale, we anticipate that the total value will exceed $100 million, and we expect to achieve a gain overall that is above our costs. I can't guarantee this will be true for every single asset, but I am confident in the assessments we've made regarding our assets, which have either retained or increased in value since their acquisition. We're focusing on the locations where we have the strongest opportunities to capitalize on our unique value proposition.
And then coming back to your spec home strategy, with 75% of your sales in the quarter being spec-related. What's your view on sort of how we end 2026 and what that mix looks like sort of heading into 2027?
You know how people say it's nice to want things? If you have kids, you get that when they ask for something. I want us to have a significantly lower spec ratio. However, the reality is that currently, the buyer dynamic relies on specs to maintain a reasonable sales pace. There are countless possible outcomes. If the environment remains the same and rates hold steady, we will still face affordability challenges and have a surplus of inventory in the market. In that scenario, I think specs will remain much higher than our long-term preference. On the other hand, if the spring selling season shows some improvement, which is not something I'm predicting but is a possibility, we have observed some signs of improvement in affordability and a slight reduction in inventory, which we expected. This could enable us to return to a more balanced 60-40 or 50-50 ratio. We don’t prefer the current 75-25 split because we definitely earn more from to-be-built homes where buyers can choose their style selections. However, we have to operate in the market as it stands, not as we wish it to be. We recognize that things are different from what we prefer at the moment, but that's the reality we face.
And then one last question. Any directional thoughts on net land spend next year?
I think directionally, it's going to be on the order of what it was in '25. It could be a little more; it could be a little less. I mean but it's not going to be dramatically different. We've got development activity going on as we move toward that 200 community count and we'll have some takedowns as we open additional communities. But as Dave said, we have a lot of discretion over our land spending this year, which is a good place to be.
Our next question comes from Sam Reid with Wells Fargo. I think directionally, net land spend next year is going to be similar to what it was in '25. It could be slightly higher or lower, but it won't be dramatically different. We have development activity as we aim for 200 communities and will have some takedowns with new community openings. As Dave mentioned, we have significant discretion over our land spending this year, which is a positive situation to be in.
I would like to follow up on the direct cost savings you mentioned, specifically the $10,000. It appears to be related to both labor and materials. Could you provide more detail on how those savings break down? Some of your competitors have highlighted significant savings in labor, and we've also heard anecdotal evidence of savings in materials. I'm interested in understanding what you're experiencing and what the factors are behind that $10,000 figure.
Sam, I appreciate the question, but we don't really bucket out the individual labor versus material cost. I don't know, Allan, if you have other thoughts.
Well, I can help you in one way, and then it's something that's a little bit different for us, and we kind of committed to it last year that we would do it, and that is drive down the cost of delivering a Zero Energy Ready Home. And I think of that $10,000 probably it's not half, but probably several thousand dollars relate to finding efficiencies but maintaining the performance of our homes. Again, I come back to we're the first builder at scale to do Zero Energy Ready. And so some of the trades, some of the material providers we weren't getting discounts as we were doing that for the first time. And I think we've been able to use our experience in the construction science that we have to reduce those costs. So that's a piece of that $10,000 but the larger share of it, as Dave said, is a combination of things. We've got some turnkey trades. We've got some piecemeal trades. So I kind of distrust people talking about labor and materials as they can completely bucket it because, again, in a turnkey market, if you've got a cost reduction, it's a combination of both, and you can't really know that.
And then just wanted to quickly hear any thoughts on the economics of the model home sale leasebacks. I mean, I realize that's not something that's going to be big every quarter. But just kind of curious, high level sort of what those economics look like.
Yes. Look, just big picture. There were 83 sales, and you can kind of work out the revenue impact from that. We've given that information. And the profitability was roughly in line with what we did as an overall business.
There was a financing cost. Look at it like if you're doing land banking or something like that, maybe a little better than that. I mean, it was just a way to use our cash we can redeploy it in the business earning a higher return than that cost of funds.
Our next question comes from Julio Romero with Sidoti & Company.
You guys said that the sales pace in Texas improved sequentially in the fourth quarter. Can you just talk about your expectations for Texas from a sequential sales pace in the first quarter? And then secondly, what's kind of embedded with regards to the market in Texas from a full year standpoint?
Look, our full year forecast for all three of our Texas markets is subdued but it's nothing like what we experienced in the aggregate in the third quarter of last year. I don't want to get into quarterly state-wide projections but it's nothing like a snap back to what I would call normalcy. We were under 2 in the fourth quarter. I think we want 1.8, which is better than the one free for sure, but it's still not great. we're not assuming, as I said, some dramatic improvement. But I'm really, really happy with our teams in San Antonio and Houston. I mean, we struggled in the third quarter, and they really found a different gear. I'd like that whole state to lift up. It did have a huge effect for us as a company with nearly 40% of our communities in Texas. But I think we're taking a fairly cautious static view that this market doesn't get dramatically better over the next 9 or 10 months.
And you mentioned one of the things that's encouraging you is the improvement in affordability arising from wage growth. Can you just speak to which markets in particular you're seeing that? And which markets are you encouraged about the prospects for improving wage growth helping your business in '26?
We have been consistently tracking the percentage of mortgage payments as a share of income for multiple years and every quarter. We haven't altered the data in any way, and all our sources are cited. Over time, this has been a consistent comparison. You can observe that with interest rates dropping by 40 or 50 basis points, and in some cases 2% or 3%, along with increased wage growth in certain markets over the last year, these factors have influenced the trend significantly. Although the level remains high, we are very deliberate about our presence in specific markets, which we choose due to their diverse job growth opportunities and demand. We are committed to these areas because we believe in their economic potential.
Our next question comes from Jay McCanless with Wedbush.
So good job on getting the specs down sequentially. I guess, should we expect further diminution there? Or are you guys going to have to add some to get ready for the spring season? How should we look for the direction on that?
That's a great question. I think that number will pick up a little bit, honestly, as we do get ready for the spring selling season, but we're very careful. We watch sales paces. We don't start specs just to start specs. We react to where the demand is. So to the extent that it's up, it's going to be because sales pace is supported at being up, not because we were chasing a dream.
I had a question regarding the fiscal '26 slide. You're indicating that land revenue is expected to increase from $60 million to $100 million, which suggests a 5% to 10% increase in closings. Based on some rough calculations, this points to high single-digit growth, possibly low double-digit growth in total revenues. How confident are you about reaching the $100 million target in land sales, and could you provide more details on when you expect the increase in closings to happen, perhaps in the latter half of the year or another timeframe?
Well, the closings are certainly going to be in the back half. I mean we know exactly where our backlog was coming into the quarter. We've guided to as few as 800 closings in the first quarter. So for us to have closing growth, it is going to be back half weighted to also where the community count growth will appear. On the land sale side, Jay, we've got good visibility. I mean these are transactions where in every instance, we have multiple parties that we're either talking to or we're talking to before going under contract or under LOI. So I feel pretty good about it. These are highly desirable locations and we're going to get out of them at or above book. So I feel like that's going to be great because that's the capital we can recycle into higher returns.
And then just the last question I had makes a lot of sense on protecting the DTAs like you all talk about in the deck, assuming that the shareholders do vote for that, I guess, how much of that remaining balance do you think you guys can monetize whereas some portion of that is going to be lost within the program? I think in the deck, if it's ratified, it's still going to expire sometime in '28, I guess how much of that value do you think you can get out of those DTAs before it has to disappear?
Well, let's sort of separate it. We're really focused on the energy efficiency tax credits. And I think Dave quoted the number of $84 million. That number is going to grow through June of 2026, every Zero Energy Ready Home that we deliver is eligible for a $5,000 credit. So that's going to be the source of that number growing. The program ends in June but we will be able to use all of those energy efficiency credits. It's just a question of how quickly we can use them, which in turn, is a function of what level of profitability we have in '26, '27, '28. We think we will use them relatively quickly, and that's why one of the features of this rights plan is that subject to shareholder approval, it will go away the sooner of those energy efficiency credits being gone for three years. This is absolutely to allow our shareholders to recoup the costs that we've already incurred to build these homes. And I think we'll be able to do that over the next several years, and that's what the rights plan is really about.
At this time, I am showing no further questions.
All right. I want to thank everybody for dialing into our fourth quarter call, and we look forward to speaking to you on our first quarter call. Thanks so much. This concludes today's call.
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