- Solid order and community count
growth
- Year-over-year margin improvement,
excluding warranty charges
- On track to reach “2B-10” by the end
of fiscal 2016
Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today
announced its financial results for the three months ended
December 31, 2014.
The Company reported a net loss from continuing operations of
$18.1 million for the quarter ended December 31, 2014, compared
with a net loss of $3.9 million for the quarter ended December 31,
2013. Excluding unexpected warranty charges of $13.6 million, as
detailed below, the Company’s net loss from continuing operations
was $4.5 million.
The Company remains on track to meet its “2B-10” objectives to
reach $2 billion in revenue with a 10 percent Adjusted EBITDA
margin by the end of fiscal 2016. In the quarter ended December 31,
2014, orders were up 7.9 percent, average selling prices (ASP) were
up $16 thousand, or 5.8 percent, the quarter-end community count
was up 13 percent and homebuilding gross margins (excluding
impairments, abandonments, interest amortized to cost of sales and
the warranty charges) improved by 60 basis points.
“Improvements in new home orders, ASP, community count and gross
margins were all positive indicators of progress on our '2B-10'
objectives,” said Allan Merrill, CEO of Beazer Homes. “A
lower-than-expected backlog conversion rate and unexpected charges
adversely impacted quarterly revenue and profitability. However,
with an improving sales environment and the largest December 31st
backlog value since 2007 we remain optimistic about our ability to
achieve a $20 million improvement in Adjusted EBITDA for fiscal
2015, excluding the unexpected charges taken this quarter."
Warranty Charges
The Florida warranty charges referenced above are included in
the Company’s cost of sales and are associated with stucco
installation issues that resulted in water intrusion problems in
some of the homes in certain of the Company’s communities located
in Fort Myers and Tampa, Florida. Since first learning of these
potential issues, the Company expanded its efforts to identify,
examine and repair homes that may have been impacted. As a result,
the Company recorded $13.6 million in warranty charges during its
fiscal first quarter to cover the estimated remaining repair costs
on homes already identified as having stucco installation issues as
well as an estimate of repair costs that may arise from future
warranty claims in these markets.
The Company believes it is likely that it will recover a portion
of its repair costs, either from its direct insurers or from
involved subcontractors or their insurers. However, the amount of
any potential recovery is currently unknown and was therefore not
included in any assessment of the overall warranty liability.
Summary results for the three months ended December 31,
2014 are as follows:
Q1 Results from Continuing Operations
(unless otherwise specified)
Quarter Ended December 31, 2014
2013 Change New
Home Orders 966 895 7.9 % Orders per month per community 2.1 2.2
(4.5 )% Actual community count at month-end 156 138 13.0 % Average
active community count 154 138 11.6 % Cancellation rates 21.4 %
21.8 % 40 bps Total Home Closings 885 1,038 (14.7 )% Average
sales price from closings (in thousands) $ 295.6 $ 279.3 5.8 %
Homebuilding revenue (in millions) $ 261.6 $ 290.0 (9.8 )%
Homebuilding gross profit margin, excluding impairments and
abandonments (I&A) 13.5 % 18.8 % -530 bps Homebuilding gross
profit margin, excluding I&A and interest amortized to cost of
sales 16.6 % 21.2 % -460 bps Homebuilding gross profit margin,
excluding I&A, interest amortized to cost of sales and
unexpected warranty costs 21.8 % 21.2 % 60 bps Loss from
continuing operations before income taxes (in millions) $ (18.8 ) $
(3.9 ) $ (14.9 ) Benefit from income taxes (in millions) $ (0.7 ) $
— $ (0.7 ) Net loss from continuing operations (in millions) $
(18.1 ) $ (3.9 ) $ (14.2 ) Basic Loss Per Share $ (0.68 ) $ (0.16 )
$ (0.52 ) Total Company land and land development spending
(in millions) $ 145.4 $ 123.8 $ 21.6 Total Company Adjusted EBITDA
(in millions) $ (1.3 ) $ 21.6 $ (22.9 ) Total Company Adjusted
EBITDA, excluding unexpected warranty costs and the accrual in
discontinued operations (in millions) $ 16.3 $ 21.6 $ (5.3 )
As of December 31, 2014
As of December 31, 2014 2013
Change Backlog 1,771 1,750 1.2 % Dollar value of
backlog at end of period (in millions) $ 560.5 $ 500.0 12.1 % ASP
in Backlog $ 316.5 $ 285.7 10.8 % Land and lots controlled 27,908
28,978 (3.7 )%
Q1 Results from Discontinued
Operations
The Company recorded a $4.3 million charge in discontinued
operations (including $4.0 million related to an accrual for one
construction defect case) resulting in a total net loss of $22.3
million for the quarter ended December 31, 2014.
Conference Call
The Company will hold a conference call on January 30, 2015 at
9:30 am ET to discuss these results. Interested parties may listen
to the conference call and view the Company's slide presentation
over the Internet by visiting the “Investor Relations” section of
the Company's website at www.beazer.com. To access the conference call by
telephone, listeners should dial 800-619-8639 (for international
callers, dial 312-470-7002). To be admitted to the call, verbally
supply the passcode "BZH". A replay of the call will be available
shortly after the conclusion of the live call. To directly access
the replay, dial 866-436-9398 or 203-369-1041 and enter the
passcode “3740” (available until 10:59 pm ET on February 6, 2015),
or visit www.beazer.com. A replay of
the webcast will be available at www.beazer.com for at least 30 days.
Headquartered in Atlanta, Beazer Homes is one of the
country's 10 largest single-family homebuilders. The Company's
homes meet or exceed the benchmark for energy-efficient home
construction as established by ENERGY STAR® and are designed with
Choice Plans to meet the personal preferences and lifestyles of its
buyers. In addition, the Company is committed to providing a range
of preferred lender choices to facilitate transparent competition
between lenders and enhanced customer service. The Company offers
homes in 16 states, namely Arizona, California, Delaware, Florida,
Georgia, Indiana, Maryland, Nevada, New Jersey, New York, North
Carolina, Pennsylvania, South Carolina, Tennessee, Texas and
Virginia. Beazer Homes is listed on the New York Stock Exchange
under the ticker symbol “BZH.” For more info visit Beazer.com, or
check out Beazer on Facebook and Twitter.
This press release contains forward-looking statements. These
forward-looking statements represent our expectations or beliefs
concerning future events, and it is possible that the results
described in this press release will not be achieved. These
forward-looking statements are subject to risks, uncertainties and
other factors, many of which are outside of our control, that could
cause actual results to differ materially from the results
discussed in the forward-looking statements, including, among other
things: (i) the availability and cost of land and the risks
associated with the future value of our inventory such as
additional asset impairment charges or writedowns; (ii) economic
changes nationally or in local markets, including changes in
consumer confidence, declines in employment levels, inflation and
increases in the quantity and decreases in the price of new homes
and resale homes in the market; (iii) the cyclical nature of the
homebuilding industry and a potential deterioration in homebuilding
industry conditions; (iv) estimates related to homes to be
delivered in the future (backlog) are imprecise as they are subject
to various cancellation risks which cannot be fully controlled; (v)
shortages of or increased prices for labor, land or raw materials
used in housing production; (vi) our cost of and ability to access
capital and otherwise meet our ongoing liquidity needs including
the impact of any downgrades of our credit ratings or reductions in
our tangible net worth or liquidity levels; (vii) our ability to
comply with covenants in our debt agreements or satisfy such
obligations through repayment or refinancing; (viii) a substantial
increase in mortgage interest rates, increased disruption in the
availability of mortgage financing, a change in tax laws regarding
the deductibility of mortgage interest, or an increased number of
foreclosures; (ix) increased competition or delays in reacting to
changing consumer preference in home design; (x) factors affecting
margins such as decreased land values underlying land option
agreements, increased land development costs on communities under
development or delays or difficulties in implementing initiatives
to reduce production and overhead cost structure; (xi) estimates
related to the potential recoverability of our deferred tax assets;
(xii) potential delays or increased costs in obtaining necessary
permits as a result of changes to, or complying with, laws,
regulations, or governmental policies and possible penalties for
failure to comply with such laws, regulations and governmental
policies; (xiii) the results of litigation or government
proceedings and fulfillment of the obligations in the consent
orders with governmental authorities and other settlement
agreements; (xiv) the impact of construction defect and home
warranty claims, including water intrusion issues in Florida and
New Jersey; (xv) the cost and availability of insurance and surety
bonds; (xvi) the performance of our unconsolidated entities and our
unconsolidated entity partners; (xvii) delays in land development
or home construction resulting from adverse weather conditions;
(xviii) the impact of information technology failures or data
security breaches; (xix) effects of changes in accounting policies,
standards, guidelines or principles; or (xx) terrorist acts, acts
of war and other factors over which the Company has little or no
control.
Any forward-looking statement speaks only as of the date on
which such statement is made, and, except as required by law, we do
not undertake any obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. New factors emerge from time to time
and it is not possible for management to predict all such
factors.
-Tables Follow-
BEAZER HOMES USA, INC. UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thousands,
except per share data) Three Months Ended
December 31, 2014 2013 Total revenue
$ 265,764 $ 293,170 Home construction and land sales
expenses
230,546 238,469 Inventory impairments and option
contract abandonments
— 31 Gross profit
35,218 54,670 Commissions
10,926 11,821 General and
administrative expenses
31,441 28,410 Depreciation and
amortization
2,341 2,907 Operating (loss)
income
(9,490 ) 11,532 Equity in income of
unconsolidated entities
142 319 Other expense, net
(9,434 ) (15,757 ) Loss from continuing operations
before income taxes
(18,782 ) (3,906 ) (Benefit from)
provision for income taxes
(696 ) 42 Loss from
continuing operations
(18,086 ) (3,948 ) Loss from
discontinued operations, net of tax
(4,254 ) (1,190 )
Net loss
$ (22,340 ) $ (5,138 ) Weighted
average number of shares: Basic and Diluted
26,457 25,009
Basic and Diluted loss per share: Continuing Operations
$
(0.68 ) $ (0.16 ) Discontinued Operations
$
(0.16 ) $ (0.05 ) Total
$ (0.84
) $ (0.21 )
Three Months Ended
December 31, 2014 2013
Capitalized interest in inventory, beginning of period
$
87,619 $ 52,562 Interest incurred
30,283 32,441
Interest expense not qualified for capitalization and included as
other expense
(9,747 ) (16,032 ) Capitalized interest
amortized to house construction and land sales expenses
(8,287 ) (7,135 ) Capitalized interest in inventory,
end of period
$ 99,868 $ 61,836
BEAZER HOMES USA, INC. UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS ($ in thousands, except share and per share
data) December 31,
2014 September 30, 2014
ASSETS Cash and cash equivalents
$ 138,680 $ 324,154 Restricted cash
64,092
62,941 Accounts receivable (net of allowance of $1,267 and $1,245,
respectively)
32,316 34,429 Income tax receivable
46
46 Inventory Owned inventory
1,677,611 1,557,496 Land not
owned under option agreements
1,443 3,857
Total inventory
1,679,054 1,561,353 Investments in
marketable securities and unconsolidated entities
34,735
38,341 Deferred tax assets, net
46 2,823 Property, plant and
equipment, net
19,315 18,673 Other assets
21,102
23,460 Total assets
$ 1,989,386
$ 2,066,220
LIABILITIES AND STOCKHOLDERS’
EQUITY Trade accounts payable
$ 65,845 $ 106,237
Other liabilities
127,542 142,516 Obligations related to
land not owned under option agreements
1,248 2,916 Total
debt (net of discounts of $4,209 and $4,399 respectively)
1,536,591 1,535,433 Total liabilities
$
1,731,226 $ 1,787,102 Stockholders’
equity:
Preferred stock (par value $.01 per share,
5,000,000 shares authorized, no shares issued)
$ — $ —
Common stock (par value $0.001 per share,
63,000,000 shares authorized, 27,448,293 and 27,173,421 issued and
outstanding, respectively)
27 27 Paid-in capital
852,800 851,624 Accumulated
deficit
(593,597 ) (571,257 ) Accumulated other
comprehensive loss
(1,070 ) (1,276 ) Total
stockholders’ equity
258,160 279,118 Total
liabilities and stockholders’ equity
$ 1,989,386
$ 2,066,220
Inventory Breakdown Homes
under construction
$ 325,074 $ 282,095 Development
projects in progress
811,021 786,768 Land held for future
development
312,148 301,048 Land held for sale
68,358
51,672 Capitalized interest
99,868 87,619 Model homes
61,142 48,294 Land not owned under option agreements
1,443 3,857 Total inventory
$
1,679,054 $ 1,561,353
BEAZER HOMES
USA, INC. CONSOLIDATED OPERATING AND FINANCIAL DATA –
CONTINUING OPERATIONS ($ in thousands, except otherwise
noted) Quarter Ended December 31, SELECTED
OPERATING DATA 2014 2013 Closings:
West region
316 435 East region
305 338 Southeast
region
264 265 Total closings
885 1,038
New orders, net of cancellations: West region
405 351
East region
286 308 Southeast region
275 236
Total new orders
966 895 Backlog units at end
of period: West region
646 654 East region
581 631
Southeast region
544 465 Total backlog units
1,771 1,750 Dollar value of backlog at end of
period (in millions)
$ 560.5 $ 500.0
Homebuilding Revenue: West region
$ 86,318 $ 120,212
East region
101,832 106,879 Southeast region
73,432
62,867 Total homebuilding revenue
$ 261,582
$ 289,958
Quarter Ended
December 31, SUPPLEMENTAL FINANCIAL DATA 2014
2013 Revenues: Homebuilding
$
261,582 $ 289,958 Land sales and other
4,182
3,212 Total
$ 265,764 $ 293,170 Gross
profit (loss): Homebuilding
$ 35,277 $ 54,450 Land
sales and other
(59 ) 220 Total
$
35,218 $ 54,670
Reconciliation of homebuilding gross profit before impairments
and abandonments and interest amortized to cost of sales and the
related gross margins to homebuilding gross profit and gross
margin, the most directly comparable GAAP measure, is provided for
each period discussed below. Management believes that this
information assists investors in comparing the operating
characteristics of homebuilding activities by eliminating many of
the differences in companies' respective level of impairments and
level of debt.
In addition, given the unusual size and nature of charges
recorded during the quarter ended December 31, 2014, homebuilding
gross profit is also shown excluding these charges. Management
believes that this representation best reflects the operating
characteristics of the company.
Quarter Ended December 31, 2014
2013 Homebuilding gross profit
$ 35,277
13.5 % $ 54,450
18.8 % Inventory impairments and lot option abandonments
(I&A)
— 31 Homebuilding gross profit
before I&A
35,277 13.5 % 54,481 18.8 %
Interest amortized to cost of sales
8,194 7,135
Homebuilding gross profit before I&A and interest
amortized to cost of sales
43,471 16.6 %
61,616 21.2 % Unexpected warranty costs
13,582
— Homebuilding gross profit before I&A, interest
amortized to cost of sales and unexpected warranty costs
$
57,053 21.8 % $ 61,616 21.2 %
Reconciliation of Adjusted EBITDA (earnings before interest,
taxes, depreciation, amortization, debt extinguishment, impairments
and abandonments) to total company net loss, the most directly
comparable GAAP measure, is provided for each period discussed
below. Management believes that Adjusted EBITDA assists investors
in understanding and comparing the operating characteristics of
homebuilding activities by eliminating many of the differences in
companies' respective capitalization, tax position and level of
impairments.
In addition, given the unusual size and nature of charges
recorded during the quarter ended December 31, 2014, Adjusted
EBITDA is also shown excluding these charges. Management believes
that this representation best reflects the operating
characteristics of the company.
Quarter Ended December 31, 2014
2013 Net loss
$ (22,340 )
$ (5,138 ) (Benefit from) provision for income taxes
(697
) 52 Interest amortized to home construction and land sales
expenses, capitalized interest impaired, and interest expense not
qualified for capitalization
18,034 23,167 Depreciation and
amortization and stock compensation amortization
3,715 3,516
Inventory impairments and option contract abandonments
—
31
Adjusted EBITDA
$ (1,288 ) $ 21,628 Unexpected warranty costs
and discontinued operations accrual
17,582 —
Adjusted EBITDA excluding unexpected warranty costs and
discontinued operations accrual
$ 16,294 $
21,628
Beazer Homes USA, Inc.Carey Phelps, 770-829-3700Director,
Investor Relations & Corporate Communicationsinvestor.relations@beazer.com
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