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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150804005329/en/
Beazer Homes USA, Inc.David I. Goldberg, 770-829-3700Vice
President of Treasury and Investor Relationsinvestor.relations@beazer.com
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