Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today
announced its financial results for the three and six months ended
March 31, 2018.
“Improvements in nearly every one of our core operational
metrics led to a significant improvement in profitability in the
second quarter,” said Allan P. Merrill, President and CEO of Beazer
Homes. “Customer interest was quite strong as continuing job and
wage growth, together with low inventories of new and used homes,
more than offset concerns about higher home prices and mortgage
rates.”
“Our commitment to deliver ‘extraordinary value at an affordable
price’ has us well positioned in this environment. We anticipate
reaching our ‘2B-10’ and de-leveraging objectives this year, while
continuing to improve our return on assets in the quarters and
years ahead.”
Beazer Homes Fiscal Second Quarter 2018
Highlights and Comparison to Fiscal Second Quarter 2017
- Net income from continuing operations
of $11.6 million, compared to net loss of $7.5 million in Fiscal
2017
- Adjusted EBITDA of $39.5 million, up
19.1%
- Homebuilding revenue of $441.1 million,
up 4.6%, on a 2.2% increase in home closings to 1,266 and a 2.3%
increase in average selling price to $348.4 thousand
- Homebuilding gross margin was 16.9%, up
90 basis points. Excluding impairments, abandonments and interest
amortized, homebuilding gross margin was 21.3%, up 60 basis
points
- SG&A as a percentage of total
revenue was 12.8%, down 50 basis points
- Unit orders of 1,679, up 8.4% on a
10.3% increase in sales/community/month to 3.7 and a 1.7% decline
in average community count to 151
- Dollar value of backlog of $885.4
million, up 14.0%
- Unrestricted cash at quarter end was
$158.8 million
Profitability. Net income from continuing operations was $11.6
million, an increase of $9.1 million after adjusting for the $15.6
million loss on debt extinguishment and impairments incurred in the
second quarter of Fiscal 2017. Second quarter Adjusted EBITDA of
$39.5 million was up $6.3 million, or 19.1%, compared to the same
period last year.
Orders. Net new orders for the second quarter increased 8.4%
from the prior year, which was achieved even as average community
count decreased by 3 communities to 151. The growth in net new
orders was driven by an increase in absorption rate to 3.7 sales
per community per month, up 10.3% from the previous year. The
cancellation rate was 14.9%, down 170 basis points from the second
quarter of last year.
Homebuilding Revenue. Second quarter closings of 1,266 homes
were 2.2% above the level achieved in the same period last year.
Combined with a 2.3% increase in the average selling price to
$348.4 thousand, homebuilding revenue rose 4.6% over the prior year
to $441.1 million.
Backlog. The dollar value of homes in backlog as of March 31,
2018 increased 14.0% to $885.4 million, or 2,312 homes, which
compared to $776.4 million, or 2,236 homes, for the same period
last year. The average selling price of homes in backlog rose 10.3%
year over year to $383.0 thousand.
Homebuilding Gross Margin. Homebuilding gross margin for the
second quarter was 16.9%, an increase of 90 basis points over the
prior year. Excluding impairments, abandonments and interest
amortized, homebuilding gross margin was 21.3%, up 60 basis
points.
SG&A Expenses. Selling, general and administrative expenses,
as a percentage of total revenue, were 12.8% for the quarter, down
50 basis points compared to the prior year.
Liquidity. The Company ended the quarter with $329.1 million of
available liquidity, including $158.8 million of unrestricted cash
and $170.3 million available on its secured revolving credit
facility.
Gatherings
The Company made continued progress with regard to its
Gatherings expansion during the second quarter of Fiscal 2018. As
of the end of March, two communities were open for sale and another
three were owned and in various stages of development. In Orlando’s
Gatherings at Lake Nona, building one was in its final stages and
was expected to deliver its first closings in May. Additionally,
land acquisition for a third Gatherings community in the Dallas
market was approved during the second quarter. The Company is
currently reviewing a large pipeline of potential communities
across its geographic footprint and expects to see Gatherings
acquisition activity accelerate in the second half of Fiscal
2018.
Summary results for the three and six months ended
March 31, 2018 are as follows:
Three Months Ended March 31, 2018
2017
Change* New home orders,
net of cancellations
1,679 1,549 8.4 % Orders per community
per month
3.7 3.4 10.3 % Average active community count
151 154 (1.7 )% Actual community count at quarter-end
153 158 (3.2 )% Cancellation rates
14.9 % 16.6
% -170 bps Total home closings
1,266 1,239 2.2 %
Average selling price (ASP) from closings (in thousands)
$
348.4 $ 340.5 2.3 % Homebuilding revenue (in millions)
$ 441.1 $ 421.9 4.6 % Homebuilding gross margin
16.9 % 16.0 % 90 bps Homebuilding gross margin,
excluding impairments and abandonments and interest amortized to
cost of sales
21.3 % 20.7 % 60 bps Income
(loss) from continuing operations before income taxes (in millions)
$ 12.6 $ (12.0 ) $ 24.6 Expense (benefit) from income
taxes (in millions)
$ 1.0 $ (4.5 ) $ 5.5 Income
(loss) from continuing operations (in millions)
$
11.6 $ (7.5 ) $ 19.1 Basic and diluted income (loss) per
share from continuing operations
$ 0.36 $ (0.23 ) $
0.59 Income (loss) from continuing operations before income
taxes (in millions)
$ 12.6 $ (12.0 ) $ 24.6 Loss on
debt extinguishment (in millions)
$ — $ 15.6 $ (15.6
) Inventory impairments and abandonments (in millions)
$
— $ 0.3 $ (0.3 ) Income from continuing operations excluding
loss on debt extinguishment and inventory impairments and
abandonments before income taxes (in millions)
$ 12.6
$ 3.9 $ 8.7 Net income (loss)
$ 11.6 $ (7.5 )
$ 19.1 Net income excluding loss on debt extinguishment and
inventory impairments and abandonments (in millions)*+
$
11.6 $ 2.5 $ 9.1 Land and land development spending
(in millions)
$ 143.4 $ 102.9 $ 40.5 Adjusted
EBITDA (in millions)
$ 39.5 $ 33.2 $ 6.3 LTM Adjusted
EBITDA (in millions)
$ 189.1 $ 161.8 $ 27.3
*
Change and totals are calculated using
unrounded numbers.
+
Loss on debt extinguishment was
tax-effected at annualized effective tax rates of 26.8% and 36.7%
for the three months ended March 31, 2018 and March 31, 2017,
respectively.
“LTM” indicates amounts for the trailing 12 months.
Six Months Ended March 31, 2018
2017
Change* New home orders, net of
cancellations
2,789 2,554 9.2 % LTM orders per community per
month
3.1 2.8 10.7 % Cancellation rates
16.5 %
18.6 % -210 bps Total home closings
2,332 2,234 4.4 %
ASP from closings (in thousands)
$ 346.9 $ 339.3 2.2
% Homebuilding revenue (in millions)
$ 808.9 $ 758.0
6.7 % Homebuilding gross margin
16.6 % 15.9 % 70 bps
Homebuilding gross margin, excluding impairments and abandonments
and interest amortized to cost of sales
21.1 % 20.6 %
50 bps Loss from continuing operations before income taxes
(in millions)
$ (9.8 ) $ (15.9 ) $ 6.0 Expense
(benefit) from income taxes (in millions)
$ 109.1 $
(7.0 ) $ 116.1 Loss from continuing operations (in millions)*
$ (119.0 ) $ (8.9 ) $ (110.1 ) Basic and
diluted loss per share from continuing operations
$
(3.71 ) $ (0.27 ) $ (3.44 ) Loss from
continuing operations before income taxes (in millions)
$
(9.8 ) $ (15.9 ) $ 6.0 Loss on debt extinguishment
(in millions)
$ 25.9 $ 15.6 $ 10.3 Inventory
impairments and abandonments (in millions)
$ — $ 0.3
$ (0.3 ) Write-off of deposit on legacy land investment
$
— $ 2.7 $ (2.7 ) Income from continuing operations excluding
loss on debt extinguishment, inventory impairments and abandonments
and write-off of deposit before income taxes (in millions)
$
16.1 $ 2.7 $ 13.4 Net loss
$ (119.4
) $ (9.0 ) $ (110.4 ) Net income excluding loss on debt
extinguishment, inventory impairments and abandonments and
write-off of deposit (in millions)*+
$ 14.3 $ 2.5 $
11.8 Land and land development spending (in millions)
$ 285.1 $ 206.1 $ 79.0 Adjusted EBITDA (in
millions)
$ 67.9 $ 57.6 $ 10.3
*
Change and totals are calculated using
unrounded numbers.
+
Loss on debt extinguishment was
tax-effected at annualized effective tax rates of 26.8% and 36.7%
for the six months ended March 31, 2018 and March 31, 2017,
respectively.
As of March 31, 2018
As of March 31, 2018 2017
Change Backlog units
2,312 2,236 3.4 %
Dollar value of backlog (in millions)
$ 885.4 $ 776.4
14.0 % ASP in backlog (in thousands)
$ 383.0 $ 347.2
10.3 % Land and lots controlled
22,092 23,181 (4.7 )%
Conference Call
The Company will hold a conference call on May 2, 2018 at
5:00 p.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, enter the
passcode “7072668.” A replay of the call will be available shortly
after the conclusion of the live call. To directly access the
replay, dial 800-284-7031 (for international callers, dial
203-369-3222) and enter the passcode “3740” (available until 11:59
p.m. ET on May 9, 2018), 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 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 Arizona, California, Delaware, Florida, Georgia,
Indiana, Maryland, Nevada, North Carolina, 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) economic changes nationally or in local markets,
changes in consumer confidence, declines in employment levels,
inflation or increases in the quantity and decreases in the price
of new homes and resale homes on the market; (ii) the cyclical
nature of the homebuilding industry and a potential deterioration
in homebuilding industry conditions; (iii) 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 our production and overhead cost structure; (iv) 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; (v) 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;
(vi) estimates related to homes to be delivered in the future
(backlog) are imprecise, as they are subject to various
cancellation risks that cannot be fully controlled; (vii) a
substantial increase in mortgage interest rates, increased
disruption in the availability of mortgage financing, the recent
change in tax laws regarding the deductibility of mortgage interest
for tax purposes or an increased number of foreclosures; (viii)
government actions, policies, programs and regulations directed at
or affecting the housing market (including the Tax Cuts and Jobs
Act, the Dodd-Frank Act and the tax benefits associated with
purchasing and owning a home); (ix) changes in existing tax laws or
enacted corporate income tax rates, including pursuant to the Tax
Cuts and Jobs Act; (x) our cost of and ability to access capital,
due to factors such as limitations in the capital markets or
adverse credit market conditions, 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; (xi) our ability to reduce our outstanding indebtedness and
to comply with covenants in our debt agreements or satisfy such
obligations through repayment or refinancing; (xii) increased
competition or delays in reacting to changing consumer preferences
in home design; (xiii) weather conditions or other related events
that could result in delays in land development or home
construction, increase our costs or decrease demand in the impacted
areas; (xiv) estimates related to the potential recoverability of
our deferred tax assets; (xv) 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 or governmental policies, including those related to
the environment; (xvi) the results of litigation or government
proceedings and fulfillment of any related obligations; (xvii) the
impact of construction defect and home warranty claims, including
water intrusion issues in Florida; (xviii) the cost and
availability of insurance and surety bonds, as well as the
sufficiency of these instruments to cover potential losses
incurred; (xix) the performance of our unconsolidated entities and
our unconsolidated entity partners; (xx) the impact of information
technology failures or data security breaches; (xxi) terrorist
acts, natural disasters, acts of war or other factors over which
the Company has little or no control; or (xxii) the impact on
homebuilding in key markets of governmental regulations limiting
the availability of water.
Any forward-looking statement speaks only as of the date on
which such statement is made and, except as required by law, we
undertake no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated
events. 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.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share
data)
(Unaudited)
Three Months Ended Six Months Ended March
31, March 31, 2018 2017
2018
2017 Total revenue
$ 455,178 $ 425,468
$
827,667 $ 764,709 Home construction and land sales expenses
380,101 357,788
691,761 643,366 Inventory impairments
and abandonments
— 282
— 282
Gross profit
75,077 67,398
135,906 121,061
Commissions
17,334 16,632
31,690 29,955 General and
administrative expenses
40,852 40,100
78,137 76,488
Depreciation and amortization
3,066 3,155
5,573 5,832 Operating income
13,825
7,511
20,506 8,786 Equity in income of unconsolidated
entities
256 33
155 55 Loss on extinguishment of debt
— (15,563 )
(25,904 ) (15,563 ) Other expense,
net
(1,453 ) (3,940 )
(4,598 ) (9,136 )
Income (loss) from continuing operations before income taxes
12,628 (11,959 )
(9,841 ) (15,858 ) Expense
(benefit) from income taxes
1,012 (4,464 )
109,118 (7,004 ) Income (loss) from continuing
operations
11,616 (7,495 )
(118,959 ) (8,854 )
Loss from discontinued operations, net of tax
(58 )
(40 )
(430 ) (110 ) Net income (loss) and
comprehensive income (loss)
$ 11,558 $ (7,535
)
$ (119,389 ) $ (8,964 ) Weighted average
number of shares: Basic
32,140 31,969
32,097 31,931
Diluted
32,721 31,969
32,097 31,931 Basic earnings
(loss) per share: Continuing operations
$ 0.36 $
(0.23 )
$ (3.71 ) $ (0.27 ) Discontinued
operations
— —
(0.01 ) —
Total
$ 0.36 $ (0.23 )
$ (3.72
) $ (0.27 ) Diluted income (loss) per share: Continuing
operations
$ 0.36 $ (0.23 )
$ (3.71
) $ (0.27 ) Discontinued operations
(0.01 ) —
(0.01 ) — Total
$ 0.35
$ (0.23 )
$ (3.72 ) $ (0.27 )
Three Months Ended Six Months Ended March
31, March 31, Capitalized Interest in Inventory
2018 2017
2018 2017 Capitalized interest in
inventory, beginning of period
$ 144,847 $ 144,299
$ 139,203 $ 138,108 Interest incurred
25,492
26,482
51,047 53,569 Interest expense not qualified for
capitalization and included as other expense
(1,650 )
(4,046 )
(5,085 ) (9,298 ) Capitalized interest
amortized to home construction and land sales expenses
(19,655 ) (19,819 )
(36,131 ) (35,463 )
Capitalized interest in inventory, end of period
$
149,034 $ 146,916
$ 149,034
$ 146,916
BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share and per
share data)
(Unaudited)
March 31, 2018 September 30, 2017
ASSETS Cash
and cash equivalents
$ 158,787 $ 292,147 Restricted
cash
12,783 12,462 Accounts receivable (net of allowance of
$346 and $330, respectively)
30,183 36,323 Income tax
receivable
112 88 Owned Inventory
1,677,361 1,542,807
Investments in unconsolidated entities
4,293 3,994 Deferred
tax assets, net
199,229 307,896 Property and equipment, net
20,166 17,566 Other assets
4,589 7,712
Total assets
$ 2,107,503 $ 2,220,995
LIABILITIES AND STOCKHOLDERS’ EQUITY Trade accounts payable
$ 117,143 $ 103,484 Other liabilities
97,937
107,659 Total debt (net of premium of $3,027 and $3,413,
respectively, and debt issuance costs of $15,905 and $14,800,
respectively)
1,325,457 1,327,412 Total
liabilities
1,540,537 1,538,555 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, 33,628,126 issued
and outstanding and 33,515,768 issued and outstanding,
respectively)
34 34 Paid-in capital
876,978 873,063
Accumulated deficit
(310,046 ) (190,657 ) Total
stockholders’ equity
566,966 682,440 Total
liabilities and stockholders’ equity
$ 2,107,503
$ 2,220,995
Inventory Breakdown Homes
under construction
$ 527,102 $ 419,312 Development
projects in progress
825,355 785,777 Land held for future
development
87,718 112,565 Land held for sale
9,927
17,759 Capitalized interest
149,034 139,203 Model homes
78,225 68,191 Total owned inventory
$
1,677,361 $ 1,542,807
BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL
DATA – CONTINUING OPERATIONS
($ in thousands, except otherwise
noted)
Three Months Ended March 31, Six Months Ended
March 31, SELECTED OPERATING DATA 2018 2017
2018 2017
Closings: West region
652 561
1,178
1,071 East region
279 286
504
503 Southeast region
335 392
650
660 Total closings
1,266 1,239
2,332
2,234
New orders, net of cancellations: West region
906 683
1,440
1,150 East region
321 414
580
642 Southeast region
452 452
769
762 Total new orders, net
1,679 1,549
2,789
2,554
As of March 31, Backlog
units at end of period: 2018 2017 West region
1,141
907 East region
489
583 Southeast region
682
746 Total backlog units
2,312
2,236 Dollar value of backlog at end of period (in millions)
$
885.4
$ 776.4
Three Months Ended March 31, Six
Months Ended March 31, SUPPLEMENTAL FINANCIAL DATA
2018 2017
2018 2017
Homebuilding revenue: West
region
$ 224,361 $ 185,155
$ 400,917 $
356,904 East region
103,731 113,279
189,419
194,529 Southeast region
113,023 123,440
218,533
206,567 Total homebuilding revenue
$ 441,115 $
421,874
$ 808,869 $ 758,000
Revenues:
Homebuilding
$ 441,115 $ 421,874
$
808,869 $ 758,000 Land sales and other
14,063
3,594
18,798
6,709 Total revenues
$ 455,178 $ 425,468
$ 827,667 $ 764,709
Gross profit:
Homebuilding
$ 74,366 $ 67,324
$
134,598 $ 120,528 Land sales and other
711 74
1,308
533 Total gross profit
$ 75,077 $ 67,398
$ 135,906 $ 121,061
Reconciliation of homebuilding gross profit and the related
gross margin before impairments and abandonments and interest
amortized to cost of sales 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.
Three Months Ended March 31, Six
Months Ended March 31, 2018 2017
2018
2017 Homebuilding gross profit/margin
$ 74,366
16.9 % $ 67,324 16.0 %
$
134,598 16.6 % $ 120,528 15.9 %
Inventory impairments and abandonments (I&A)
—
188
— 188 Homebuilding gross
profit/margin before I&A
74,366 16.9 %
67,512 16.0 %
134,598 16.6 % 120,716 15.9 %
Interest amortized to cost of sales
19,655 19,819
36,123 35,463 Homebuilding gross
profit/margin before I&A and interest amortized to cost of
sales
$ 94,021 21.3 % $ 87,331
20.7 %
$ 170,721 21.1 % $
156,179 20.6 %
Reconciliation of Adjusted EBITDA to total company net income
(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. These EBITDA measures should
not be considered alternatives to net income determined in
accordance with GAAP as an indicator of operating performance.
The reconciliation of Adjusted EBITDA to total company net
income (loss) below differs from the prior year, as it provides a
more simplified presentation of EBIT, EBITDA and Adjusted EBITDA
that excludes certain non-recurring amounts recorded during the
periods presented. Management believes that this presentation best
reflects the operating characteristics of the Company.
Three Months EndedMarch
31,
Six Months EndedMarch
31,
LTM Ended March 31,(a)
(In thousands)
2018 2017
2018 2017
2018 2017 Net income (loss)
$ 11,558 $
(7,535 )
$ (119,389 ) $ (8,964 )
$
(78,612 ) $ (4,036 ) Expense (benefit) from income
taxes
993 (4,493 )
108,972 (7,072 )
118,665
12,511 Interest amortized to home construction and land sales
expenses and capitalized interest impaired
19,655 19,819
36,131 35,463
89,488 84,977 Interest expense not
qualified for capitalization
1,650 4,046
5,085 9,298
11,423 20,621
EBIT
33,856 11,837
30,799 28,725
140,964
114,073 Depreciation and amortization and stock-based compensation
amortization
5,664 5,495
10,781
10,354
22,600 22,272 EBITDA
39,520 17,332
41,580 39,079
163,564 136,345
Loss on extinguishment of debt
— 15,563
25,904 15,563
22,971 26,527 Inventory impairments and abandonments (b)
— 282
450 282
2,557 11,757 Additional
insurance recoveries from third-party insurer
— —
— —
— (15,500 ) Write-off of deposit on legacy land investment
— —
— 2,700
—
2,700 Adjusted EBITDA
$ 39,520 $
33,177
$ 67,934 $ 57,624
$ 189,092 $ 161,829 (a) “LTM”
indicates amounts for the trailing 12 months. (b) In periods during
which we impaired certain of our inventory assets, capitalized
interest that is impaired is included in the line above titled
“Interest amortized to home construction and land sales expenses
and capitalized interest impaired.”
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180502006536/en/
Beazer Homes USA, Inc.David I. Goldberg, 770-829-3700Vice
President of Treasury and Investor Relationsinvestor.relations@beazer.com
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