Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today
announced its financial results for the three months ended
December 31, 2018.
"In the first quarter, we delivered improved revenue and net
income, despite challenging conditions for new home sales. In
addition, we completed the initial tranche of our share buyback
program, acquiring approximately 1.6 million shares, or 5% of total
shares outstanding, at prices well below our book value."
"Our strategy is designed to deliver extraordinary value at an
affordable price primarily for first-time and active-adult buyers,
leaving us well positioned to compete in a challenging demand
environment. As we continue to execute on our share and debt
repurchases this year, we will generate value for shareholders and
further reduce our leverage."
Beazer Homes Fiscal First Quarter 2019
Highlights and Comparison to Fiscal First Quarter 2018
- Net income from continuing operations
of $7.3 million. Diluted earnings per share was $0.23
- Adjusted EBITDA of $26.8 million, down
5.5%
- Homebuilding revenue of $401.0 million,
up 9.0%, on a 1.6% increase in home closings to 1,083 and a 7.3%
increase in average selling price to $370.3 thousand
- Homebuilding gross margin was 15.1%,
down 130 basis points. Excluding impairments, abandonments and
amortized interest, homebuilding gross margin was 19.7%, down 120
basis points
- SG&A as a percentage of total
revenue was 13.5%, down 40 basis points
- Unit orders of 976, down 12.1% on a
14.6% decrease in sales/community/month to 2.0 and a 3.0% increase
in average community count to 160
- Dollar value of backlog of $593.1
million, down 15.8%
- Unrestricted cash at quarter end was
$84.4 million
- Repurchases of 1.6 million shares of
common stock for $16.5 million
A reconciliation of each non-GAAP measure to the most directly
comparable GAAP measure is included in the tables accompanying this
release.
Profitability. Net income from continuing operations was $7.3
million, generating diluted earnings per share of $0.23. This
included energy tax credits of $5.3 million, partially offset by an
impairment of $1.0 million. First quarter Adjusted EBITDA of $26.8
million was down $1.6 million, or 5.5%, compared to the same period
last year.
Orders. Net new orders for the first quarter decreased 12.1%
from the prior year, to 976. The decrease in net new orders was
driven by a reduction in the absorption rate to 2.0 sales per
community per month, down from 2.4 during the same period last
year, but was comparable to the Company’s first quarter absorption
rate over the prior five years. The cancellation rate for the
quarter was 19.8%.
Homebuilding Revenue. First quarter home closings of 1,083 homes
were 1.6% above the level achieved in the same period last year.
Combined with a 7.3% increase in the average selling price to
$370.3 thousand, homebuilding revenue rose 9.0% over the same
period last year to $401.0 million.
Backlog. The dollar value of homes in backlog as of December 31,
2018 decreased 15.8% to $593.1 million, or 1,525 homes, compared to
$704.4 million, or 1,899 homes, at December 31, 2017. The average
selling price of homes in backlog rose 4.9% year-over-year to
$388.9 thousand.
Homebuilding Gross Margin. Homebuilding gross margin (excluding
impairments, abandonments and amortized interest) was 19.7% for the
first quarter, down 120 basis points from the same period in fiscal
2018. This was in part due to the Company’s efforts to sell and
close additional spec homes during the quarter, with specs
accounting for a higher percentage of our closings than they have
historically.
SG&A Expenses. Selling, general and administrative expenses
as a percentage of total revenue were 13.5% for the quarter, an
improvement of 40 basis points compared to the same period last
year.
Liquidity. The Company ended the quarter with approximately
$267.9 million of available liquidity, including $84.4 million of
unrestricted cash and $183.5 million available on its secured
revolving credit facility after accounting for borrowings and
outstanding letters of credit.
Share Repurchases. Completed a $16.5 million accelerated share
repurchase program during the first quarter. The Company bought
back approximately 1.6 million common shares at an average share
price of $10.62.
Gatherings
The Company continued the rollout of its Gatherings active-adult
communities during the initial quarter of fiscal 2019. As of
December 31, 2018, there were 9 active or approved Gatherings
projects spread across 6 divisions, and the Company expects to
acquire, begin construction and/or launch sales in additional
communities throughout the remainder of the year.
Summary results for the three months ended December 31,
2018 are as follows:
Three Months Ended December 31, 2018
2017
Change* New home orders, net of cancellations
976 1,110 (12.1 )% Orders per community per month
2.0
2.4 (14.6 )% Average active community count
160 155 3.0 %
Actual community count at quarter-end
162 156 3.8 %
Cancellation rates
19.8 % 18.9 %
90
bps
Total home closings
1,083 1,066 1.6 % Average selling
price (ASP) from closings (in thousands)
$ 370.3 $
345.0 7.3 % Homebuilding revenue (in millions)
$
401.0 $ 367.8 9.0 % Homebuilding gross margin
15.1
% 16.4 %
-130
bps
Homebuilding gross margin, excluding impairments and abandonments
(I&A)
15.4 % 16.4 %
-100
bps
Homebuilding gross margin, excluding I&A and interest amortized
to cost of sales
19.7 % 20.9 %
-120
bps
Income (loss) from continuing operations before income taxes
(in millions)
$ 3.4 $ (22.5 ) $ 25.9 (Benefit)
expense from income taxes (in millions)
$ (3.9
) $ 108.1 $ (112.0 ) Income (loss) from continuing
operations (in millions)
$ 7.3 $ (130.6 ) $ 137.9
Basic and diluted income (loss) per share from continuing
operations
$ 0.23 $ (4.07 ) $ 4.30 Income
(loss) from continuing operations before income taxes (in millions)
$ 3.4 $ (22.5 ) $ 25.9 Loss on debt extinguishment
(in millions)
$ — $ (25.9 ) $ (25.9 ) Inventory
impairments and abandonments (in millions)
$ 1.0 $ —
$ 1.0 Income from continuing operations excluding loss on debt
extinguishment and inventory impairments and abandonments before
income taxes (in millions)
$ 4.4 $ 3.4 $ 1.0
Net income (loss)
$ 7.3 $ (130.9 ) $ 138.2 Net income
excluding loss on debt extinguishment, inventory impairments and
abandonments, and remeasurement of deferred tax assets due to Tax
Act (in millions)+
$ 8.1 $ 2.8 $ 5.3 Land and
land development spending (in millions)
$ 121.0 $
141.7 $ (20.7 ) Adjusted EBITDA (in millions)
$
26.8 $ 28.4 $ (1.6 ) LTM Adjusted EBITDA (in millions)
$ 203.1 $ 182.7 $ 20.4
* Change and totals are calculated using
unrounded numbers.
+ For the first quarter of fiscal 2019,
inventory impairments and abandonments were tax-effected at the
effective tax rate of 24.9%. For the prior year quarter, loss on
debt extinguishment was tax-effected at the effective tax rate of
26.6%, which excludes the impact of the $112.6 million provisional
tax expense that was recognized due to the remeasurement of our
deferred tax assets as a result of the enactment of the Tax Cut and
Jobs Act (Tax Act) in December 2017.
“LTM” indicates amounts for the trailing
12 months.
As of December 31, 2018 2017
Change
Backlog units
1,525 1,899 (19.7 )% Dollar value of backlog
(in millions)
$ 593.1 $ 704.4 (15.8 )% ASP in backlog
(in thousands)
$ 388.9 $ 370.9 4.9 % Land and lots
controlled
23,149 22,324 3.7 %
Conference Call
The Company will hold a conference call on February 4, 2019
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 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 800-285-8790 or
203-369-3103 and enter the passcode “3740” (available until 11:59
p.m. ET on February 11, 2019), 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, and wage levels, 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) increases in mortgage interest rates, increased
disruption in the availability of mortgage financing, a change in
tax laws regarding the deductibility of mortgage interest for tax
purposes or an increased number of foreclosures; (viii)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; (ix) our ability to reduce our
outstanding indebtedness and to comply with covenants in our debt
agreements or satisfy such obligations through repayment or
refinancing; (x) our ability to implement and complete debt
repurchases and the share repurchase program; (xi) increased
competition or delays in reacting to changing consumer preferences
in home design; (xii) 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; (xiii) estimates related to the potential recoverability of
our deferred tax assets, and a potential reduction in corporate tax
rates that could reduce the usefulness of our existing deferred tax
assets; (xiv) 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; (xv) the
results of litigation or government proceedings and fulfillment of
any related obligations; (xvi) the impact of construction defect
and home warranty claims; (xvii) the cost and availability of
insurance and surety bonds, as well as the sufficiency of these
instruments to cover potential losses incurred; (xviii) the
performance of our unconsolidated entities and our unconsolidated
entity partners; (xix) the impact of information technology
failures or data security breaches; (xx) terrorist acts, natural
disasters, acts of war or other factors over which the Company has
little or no control; or (xxi) 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 to predict all such factors.
-Tables Follow-
BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended December 31, in thousands
(except per share data)
2018 2017 Total revenue
$ 402,040 $ 372,489 Home construction and land sales
expenses
340,378 311,660 Inventory impairments and
abandonments
1,007 — Gross profit
60,655 60,829 Commissions
15,737 14,356 General and
administrative expenses
38,642 37,285 Depreciation and
amortization
2,770 2,507 Operating income
3,506 6,681 Equity in loss of unconsolidated entities
(64 ) (101 ) Loss on extinguishment of debt
—
(25,904 ) Other expense, net
(42 ) (3,145 ) Income
(loss) from continuing operations before income taxes
3,400
(22,469 ) (Benefit) expense from income taxes
(3,922
) 108,106 Income (loss) from continuing operations
7,322 (130,575 ) Loss from discontinued operations, net of
tax
(11 ) (372 ) Net income (loss)
$
7,311 $ (130,947 ) Weighted average number of shares:
Basic
31,967 32,055 Diluted
32,222 32,055 Basic and
diluted earnings (loss) per share: Continuing operations
$
0.23 $ (4.07 ) Discontinued operations
— (0.01
) Total
$ 0.23 $ (4.08 )
Three
Months Ended December 31, Capitalized Interest in
Inventory 2018 2017 Capitalized interest in inventory,
beginning of period
$ 144,645 $ 139,203 Interest
incurred
24,921 25,555 Capitalized interest impaired
(115 ) — Interest expense not qualified for
capitalization and included as other expense
(242 )
(3,435 ) Capitalized interest amortized to home construction and
land sales expenses
(17,323 ) (16,476 ) Capitalized
interest in inventory, end of period
$ 151,886
$ 144,847
BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
in thousands (except share and per share data)
December
31, 2018 September 30, 2018
ASSETS Cash and cash
equivalents
$ 84,399 $ 139,805 Restricted cash
12,637 13,443 Accounts receivable (net of allowance of $378
and $378, respectively)
19,349 24,647 Owned inventory
1,722,120 1,692,284 Investments in unconsolidated entities
3,650 4,035 Deferred tax assets, net
218,025 213,955
Property and equipment, net
24,408 20,843 Goodwill
10,605 9,751 Other assets
8,197 9,339
Total assets
$ 2,103,390 $ 2,128,102
LIABILITIES AND STOCKHOLDERS’ EQUITY Trade accounts payable
$ 99,864 $ 126,432 Other liabilities
112,633
126,389 Total debt (net of premium of $2,447 and $2,640,
respectively, and debt issuance costs of $13,651 and $14,336,
respectively)
1,255,784 1,231,254 Total
liabilities
1,468,281 1,484,075 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, 32,674,596 issued
and outstanding and 33,522,046 issued and outstanding,
respectively)
33 34 Paid-in capital
863,797 880,025
Accumulated deficit
(228,721 ) (236,032 ) Total
stockholders’ equity
635,109 644,027 Total
liabilities and stockholders’ equity
$ 2,103,390
$ 2,128,102
Inventory Breakdown Homes
under construction
$ 478,539 $ 476,752 Development
projects in progress
925,728 907,793 Land held for future
development
83,177 83,173 Land held for sale
6,997
7,781 Capitalized interest
151,886 144,645 Model homes
75,793 72,140 Total owned inventory
$
1,722,120 $ 1,692,284
BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL
DATA – CONTINUING OPERATIONS
Three Months Ended December 31, SELECTED OPERATING
DATA 2018 2017
Closings: West region
601 526 East region
188 225 Southeast region
294 315 Total closings
1,083 1,066
New orders, net of cancellations: West region
519 534 East region
201 259 Southeast region
256 317 Total new orders, net
976 1,110
As of December 31, Backlog units at end of
period: 2018 2017 West region
776 887 East region
294 447 Southeast region
455 565 Total backlog
units
1,525 1,899 Dollar value of backlog at end of
period (in millions)
$ 593.1 $ 704.4 in
thousands
Three Months Ended December 31, SUPPLEMENTAL
FINANCIAL DATA 2018 2017
Homebuilding revenue:
West region
$ 208,944 $ 176,556 East region
87,765 85,688 Southeast region
104,273 105,510
Total homebuilding revenue
$ 400,982 $ 367,754
Revenue: Homebuilding
$ 400,982 $
367,754 Land sales and other
1,058 4,735 Total
revenues
$ 402,040 $ 372,489
Gross
profit: Homebuilding
$ 60,619 $ 60,232 Land sales
and other
36 597 Total gross profit
$
60,655 $ 60,829
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 December 31, in thousands
2018 2017 Homebuilding gross profit/margin
$
60,619 15.1 % $ 60,232 16.4 %
Inventory impairments and abandonments (I&A)
1,007
— Homebuilding gross profit/margin before I&A
61,626 15.4 % 60,232 16.4 % Interest amortized
to cost of sales
17,323 16,468 Homebuilding
gross profit/margin before I&A and interest amortized to cost
of sales
$ 78,949 19.7 % $
76,700 20.9 %
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.
Three Months Ended December 31, LTM Ended
December 31,(a) in thousands
2018 2017
2018 2017 Net income (loss)
$ 7,311 $
(130,947 )
$ 92,883 $ (97,705 ) (Benefit) expense
from income taxes
(3,924 ) 107,979
(17,530
) 113,179 Interest amortized to home construction and land
sales expenses and capitalized interest impaired
17,438
16,476
92,293 89,652 Interest expense not qualified for
capitalization
242 3,435
2,132
13,819 EBIT
21,067 (3,057 )
169,778 118,945
Depreciation and amortization and stock-based compensation
amortization
4,884 5,117
23,832
22,431 EBITDA
25,951 2,060
193,610 141,376
Loss on extinguishment of debt
— 25,904
1,935 38,534
Inventory impairments and abandonments (b)
892 450
7,212 2,839 Joint venture impairment and abandonment charges
— —
341 — Adjusted EBITDA
$ 26,843 $ 28,414
$
203,098 $ 182,749 (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/20190204005626/en/
Beazer Homes USA, Inc.David I. GoldbergVice President of
Treasury and Investor Relations770-829-3700investor.relations@beazer.com
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