BZH Beazer Homes USA Inc New

Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced its financial results for the three and nine months ended June 30, 2015.

The Company reported net income from continuing operations of $12.2 million for the quarter ended June 30, 2015, compared with a net loss of $13.2 million, which included a $19.8 million loss on the extinguishment of debt, for the quarter ended June 30, 2014.

New home orders grew 18.1% for the quarter, with an average active community count that was 17.1% higher than a year ago. Absorption rates were especially strong at 3.1 sales per community per month for the quarter, while the average selling price (“ASP”) increased to $318.0 thousand, the highest ASP for any quarter in the Company’s history. Finally, the Company ended June 2015 with 2,764 units in backlog, a 25.0% increase from the prior year period, with an ASP of $325.3 thousand (8.5% greater than the ASP of backlog as of the end of the prior year quarter). The Company's backlog value for the quarter ended June 30, 2015 was $899.2 million, a 35.6% increase from the prior year quarter.

Adjusted EBITDA of $36.9 million was up more than $5 million versus last year. For the trailing twelve months, Adjusted EBITDA of $134.4 million was up more than $21 million, or 18.6%, compared to last year. Due to a lower than expected backlog conversion ratio in the second half of our fiscal year, caused primarily by weather-related delays in Texas, we now expect full year fiscal 2015 EBITDA growth of approximately $10 million versus the prior year, excluding certain previously disclosed warranty and litigation settlement costs.

“This quarter marked another step toward achieving our ‘2B-10’ objectives, with increased home closings, higher average sales prices, and G&A leverage leading to improved profitability,” said Allan Merrill, CEO of Beazer Homes. “Although there will always be factors such as weather that are outside of our control, our focus on improving profitability is unwavering. Driven by a growing community count, strong sales pace, higher selling prices, and further G&A leverage, we remain resolved to reach our ‘2B-10’ objectives.”

Summary results for the three and nine months ended June 30, 2015 are as follows:

Q3 Results from Continuing Operations (unless otherwise specified)

  Quarter Ended June 30, 2015   2014   Change New Home Orders 1,524 1,290 18.1 % Orders per month per community 3.1 3.1 — % Actual community count at month-end 168 142 18.3 % Average active community count 164 140 17.1 % Cancellation rates 19.6 % 21.0 % -140 bps   Total Home Closings 1,293 1,241 4.2 % Average sales price from closings (in thousands) $ 318.0 $ 284.6 11.7 % Homebuilding revenue (in millions) $ 411.1 $ 353.2 16.4 % Homebuilding gross profit margin, excluding impairments and abandonments (I&A) 18.1 % 20.0 % -190 bps Homebuilding gross profit margin, excluding I&A and interest amortized to cost of sales 21.3 % 22.7 % -140 bps   Income (loss) from continuing operations before income taxes (in millions) $ 12.1 $ (15.0 ) $ 27.1 Provision for (benefit from) income taxes (in millions) $ (0.1 ) $ (1.8 ) $ 1.7 Net income (loss) from continuing operations (in millions) $ 12.2 $ (13.2 ) $ 25.4 Basic Income (Loss) Per Share $ 0.46 $ (0.50 ) $ 0.96 Diluted Income (Loss) Per Share $ 0.38 $ (0.50 ) $ 0.88   Total Company land and land development spending (in millions) $ 105.9 $ 129.1 $ (23.2 ) Total Company Adjusted EBITDA, excluding unexpected warranty costs and a litigation settlement in discontinued operations (in millions) $ 36.9 $ 31.6 16.8 % LTM Adjusted EBITDA, excluding unexpected warranty costs and a litigation settlement in discontinued operations (in millions) $ 134.4 $ 113.3 18.6 %         Nine Months Ended June 30, 2015 2014 Change New Home Orders 4,188 3,575 17.1 % LTM orders per month per community 2.8 2.9 (3.4

)

%

Cancellation rates 18.9 % 20.6 % -170 bps   Total Home Closings 3,114 3,256 (4.4

)

%

Average sales price from closings (in thousands) $ 307.9 $ 279.3 10.2 % Homebuilding revenue (in millions) $ 959.0 $ 909.2 5.5 % Homebuilding gross profit margin, excluding impairments and abandonments (I&A) 16.9 % 19.5 % -260 bps Homebuilding gross profit margin, excluding I&A and interest amortized to cost of sales 20.2 % 22.2 % -200 bps Homebuilding gross profit margin, excluding I&A, interest amortized to cost of sales and unexpected warranty costs 21.6 % 22.2 % -60 bps   Loss from continuing operations before loss on debt extinguishment (in millions) $ (7.9 ) $ (5.5 ) $ (2.4

)

 

Loss on debt extinguishment (in millions) $ — $ (19.9 ) $ 19.9 Net loss from continuing operations (in millions) $ (7.9 ) $ (25.4 ) $ 17.5 Basic and Diluted Loss Per Share $ (0.30 ) $ (0.99 ) $ 0.69   Total Company land and land development spending (in millions) $ 353.5 $ 381.5 $ (28.0

)

 

Total Company Adjusted EBITDA, excluding unexpected warranty costs and a litigation settlement in discontinued operations (in millions) $ 73.0 $ 71.8 1.7 %  

As of June 30, 2015

  As of June 30, 2015   2014   Change Backlog 2,764 2,212 25.0 % Dollar value of backlog at end of period (in millions) $ 899.2 $ 663.2 35.6 % ASP in backlog $ 325.3 $ 299.8 8.5 % Land and lots controlled 27,183 29,783 (8.7

)

%

 

Conference Call

The Company will hold a conference call on August 4, 2015 at 10:00 a.m. 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 888-568-0807 or 402-998-0235 and enter the passcode “3740” (available until 11:59 p.m. ET on August 11, 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 a geographically diversified homebuilder with active operations in 15 states within three geographic regions in the United States. 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's active operations are in the following states: Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, New Jersey, 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) continuing severe weather conditions or other related events could result in delays in land development or home construction, increase our costs or decrease demand in the impacted areas; (ii) 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; (iii) 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; (iv) the cyclical nature of the homebuilding industry and a potential deterioration in homebuilding industry conditions; (v) 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; (vi) shortages of or increased prices for labor, land or raw materials used in housing production and the level of quality and craftsmanship provided by our subcontractors; (vii) 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; (viii) our ability to comply with covenants in our debt agreements or satisfy such obligations through repayment or refinancing; (ix) 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; (x) increased competition or delays in reacting to changing consumer preference in home design; (xi) 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; (xii) estimates related to the potential recoverability of our deferred tax assets; (xiii) 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, including these related to the environment; (xiv) the results of litigation or government proceedings and fulfillment of the obligations in the consent orders with governmental authorities and other settlement agreements; (xv) the impact of construction defect and home warranty claims, including water intrusion issues in Florida and New Jersey; (xvi) the cost and availability of insurance and surety bonds; (xvii) the performance of our unconsolidated entities and our unconsolidated entity partners; (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 or 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 CONSOLIDATED STATEMENTS OF INCOME

($ in thousands, except per share data)

          Three Months Ended Nine Months Ended June 30, June 30, 2015   2014 2015   2014 Total revenue $ 429,438 $ 354,671 $ 994,561 $ 917,862 Home construction and land sales expenses 353,081 283,857 829,073 739,295 Inventory impairments and option contract abandonments 249   2,010   249   2,921   Gross profit 76,108 68,804 165,239 175,646 Commissions 17,246 14,322 40,141 37,239 General and administrative expenses 37,669 35,994 101,837 97,032 Depreciation and amortization 3,497   3,400   8,619   9,138   Operating income 17,696 15,088 14,642 32,237 Equity in income (loss) of unconsolidated entities 153 (81 ) 377 221 Loss on extinguishment of debt — (19,764 ) — (19,917 ) Other expense, net (5,763 ) (10,205 ) (23,670 ) (39,689 ) Income (loss) from continuing operations before income taxes 12,086 (14,962 ) (8,651 ) (27,148 ) Benefit from income taxes (135 ) (1,769 ) (726 ) (1,783 ) Income (loss) from continuing operations 12,221 (13,193 ) (7,925 ) (25,365 ) Income (loss) from discontinued operations, net of tax (46 ) 838   (4,236 ) (99 ) Net income (loss) $ 12,175   $ (12,355 ) $ (12,161 ) $ (25,464 ) Weighted average number of shares: Basic 26,482 26,421 26,473 25,582 Diluted 31,800 26,421 26,473 25,582 Basic income (loss) per share: Continuing operations $ 0.46 $ (0.50 ) $ (0.30 ) $ (0.99 ) Discontinued operations $ — $ 0.03 $ (0.16 ) $ (0.01 ) Total $ 0.46 $ (0.47 ) $ (0.46 ) $ (1.00 ) Diluted income (loss) per share Continuing operations $ 0.38 $ (0.50 ) $ (0.30 ) $ (0.99 ) Discontinued operations $ — $ 0.03 $ (0.16 ) $ (0.01 ) Total $ 0.38 $ (0.47 ) $ (0.46 ) $ (1.00 )       Three Months Ended     Nine Months Ended June 30,   June 30, 2015   2014 2015   2014 Capitalized interest in inventory, beginning of period $ 112,476 $ 72,256 $ 87,619 $ 52,562 Interest incurred 30,748 31,678 91,290 96,577 Interest expense not qualified for capitalization and included as other expense (5,954 ) (10,421 ) (23,396 ) (41,112 ) Capitalized interest amortized to house construction and land sales expenses (13,558 ) (9,430 ) (31,801 ) (23,944 ) Capitalized interest in inventory, end of period $ 123,712   $ 84,083   $ 123,712   $ 84,083    

BEAZER HOMES USA, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

($ in thousands, except share and per share data)

        June 30, 2015 September 30, 2014 ASSETS Cash and cash equivalents $ 128,752 $ 324,154 Restricted cash 37,811 62,941 Accounts receivable (net of allowance of $1,292 and $1,245, respectively) 44,882 34,429 Income tax receivable 262 46 Inventory: Owned inventory 1,822,090 1,557,496 Land not owned under option agreements —   3,857   Total inventory 1,822,090 1,561,353 Investments in unconsolidated entities and marketable securities 11,407 38,341 Deferred tax assets, net 46 2,823 Property, plant and equipment, net 22,683 18,673 Other assets 22,239   23,460   Total assets $ 2,090,172   $ 2,066,220   LIABILITIES AND STOCKHOLDERS’ EQUITY Trade accounts payable $ 127,063 $ 106,237 Other liabilities 136,292 142,516 Obligations related to land not owned under option agreements — 2,916 Total debt (net of discounts of $3,829 and $4,399, respectively) 1,554,207   1,535,433   Total liabilities $ 1,817,562   $ 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, 27,449,806 issued and outstanding and 27,173,421 issued and outstanding, respectively) 27 27 Paid-in capital 856,001 851,624 Accumulated deficit (583,418 ) (571,257 ) Accumulated other comprehensive loss —   (1,276 ) Total stockholders’ equity 272,610   279,118   Total liabilities and stockholders’ equity $ 2,090,172   $ 2,066,220     Inventory Breakdown Homes under construction $ 508,853 $ 282,095 Development projects in progress 792,662 786,768 Land held for future development 270,619 301,048 Land held for sale 56,203 51,672 Capitalized interest 123,712 87,619 Model homes 70,041 48,294 Land not owned under option agreements —   3,857   Total inventory $ 1,822,090   $ 1,561,353    

BEAZER HOMES USA, INC.

CONSOLIDATED OPERATING AND FINANCIAL DATA – CONTINUING OPERATIONS

($ in thousands, except otherwise noted)

        Quarter Ended June 30, Nine Months Ended June 30, SELECTED OPERATING DATA 2015   2014 2015   2014 Closings: West region 473 514 1,175 1,402 East region 412 383 986 978 Southeast region 408   344   953   876 Total closings 1,293   1,241   3,114   3,256   New orders, net of cancellations: West region 691 486 1,811 1,387 East region 390 418 1,164 1,150 Southeast region 443   386   1,213   1,038 Total new orders, net 1,524   1,290   4,188   3,575   Backlog units at end of period: West region 1,193 723 1,193 723 East region 778 833 778 833 Southeast region 793   656   793   656 Total backlog units 2,764   2,212   2,764   2,212   Dollar value of backlog at end of period (in millions) $ 899.2   $ 663.2   $ 899.2   $ 663.2   Homebuilding revenue: West region $ 143,328 $ 136,775 $ 338,412 $ 376,031 East region 148,898 127,147 347,488 316,392 Southeast region 118,923   89,243   273,053   216,825 Total homebuilding revenue $ 411,149   $ 353,165   $ 958,953   $ 909,248       Quarter Ended June 30,     Nine Months Ended June 30, SUPPLEMENTAL FINANCIAL DATA 2015   2014 2015   2014 Revenues: Homebuilding $ 411,149 $ 353,165 $ 958,953 $ 909,248 Land sales and other 18,289   1,506   35,608   8,614 Total $ 429,438   $ 354,671   $ 994,561   $ 917,862   Gross profit: Homebuilding $ 74,221 $ 68,672 $ 161,877 $ 174,777 Land sales and other 1,887   132   3,362   869 Total $ 76,108   $ 68,804   $ 165,239   $ 175,646  

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 the charges recorded related to the Florida stucco issues during the nine months ended June 30, 2015, homebuilding gross profit is also shown excluding these charges. Management believes that this representation best reflects the operating characteristics of the Company.

  Quarter Ended June 30,     Nine Months Ended June 30, 2015     2014 2015     2014 Homebuilding gross profit $ 74,221     18.1 % $ 68,672     19.4 % $ 161,877     16.9 % $ 174,777     19.2 % Inventory impairments and lot option abandonments (I&A) — 2,010 — 2,921 Homebuilding gross profit before I&A 74,221 18.1 % 70,682 20.0 % 161,877 16.9 % 177,698 19.5 % Interest amortized to cost of sales 13,548 9,430 31,524 23,944 Homebuilding gross profit before I&A and interest amortized to cost of sales 87,769 21.3 % 80,112 22.7 % 193,401 20.2 % 201,642 22.2 % Unexpected warranty costs related to Florida stucco issues — — 13,582 — Homebuilding gross profit before I&A, interest amortized to cost of sales and unexpected warranty costs $ 87,769 21.3 % $ 80,112 22.7 % $ 206,983 21.6 % $ 201,642 22.2 %  

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 certain charges recorded during the periods presented, Adjusted EBITDA is also shown excluding these charges. Management believes that this representation best reflects the operating characteristics of the Company.

   

Three Months EndedJune 30,

   

Nine Months EndedJune 30,

   

LTM EndedJune 30, (a)

2015   2014 2015   2014 2015   2014 Net income (loss) $ 12,175 $ (12,355 ) $ (12,161 ) $ (25,464 ) $ 47,686 $ (13,516 ) Benefit from income taxes (137 ) (1,661 ) (731 ) (1,665 ) (40,868 ) (4,252 ) Interest amortized to home construction and land sales expenses, capitalized interest impaired and interest expense not qualified for capitalization 19,512 19,851 55,197 65,056 81,989 91,228 Depreciation and amortization and stock compensation amortization 5,128 4,013 13,165 11,017 18,014 15,623 Inventory impairments and option contract abandonments 249 2,010 249 2,921 5,390 3,325 Loss on debt extinguishment —   19,764   —   19,917   —   20,915   Adjusted EBITDA $ 36,927 $ 31,622 $ 55,719 $ 71,782 $ 112,211 $ 113,323 Unexpected warranty costs related to stucco issues in Florida — — 13,582 — 17,872 — Unexpected warranty costs related to water intrusion issues in New Jersey — — — — 648 — Litigation settlement in discontinued operations —   —   3,660   —   3,660   —   Adjusted EBITDA excluding unexpected warranty costs and a litigation settlement in discontinued operations $ 36,927   $ 31,622   $ 72,961   $ 71,782   $ 134,391   $ 113,323  

(a) “LTM” indicates amounts for the trailing 12 months.

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Beazer Homes USA, Inc.David I. Goldberg, 770-829-3700Vice President of Treasury and Investor Relationsinvestor.relations@beazer.com