Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today
announced its financial results for the three months ended December
31, 2019.
“We were very pleased with our first quarter results,” said
Allan P. Merrill, Chairman and CEO of Beazer Homes. “Increases in
both home sales and gross margins reflected improved consumer
demand for new homes and our efforts to drive increases in
profitability and returns. These results have enhanced our
visibility and confidence in reaching our Fiscal 2020 goals of
generating a return on assets above 10% and a double-digit growth
rate in Adjusted EBITDA.
“Longer term, our focus on delivering ‘extraordinary value at an
affordable price’, principally to first time and downsizing buyers,
is ideally aligned with demographics and responsive to the
challenge of providing affordable new homes. We remain confident in
our ability to improve profitability and returns while reducing
debt below $1 billion in the years ahead.”
Beazer Homes Fiscal First Quarter 2020
Highlights and Comparison to Fiscal First Quarter 2019
- Net income from continuing operations of $2.8 million, compared
to net income from continuing operations of $7.3 million in fiscal
first quarter 2019
- Adjusted EBITDA of $29.4 million, up 9.4%
- Homebuilding revenue of $417.4 million, up 4.1% on a 2.7%
increase in home closings to 1,112 and a 1.4% increase in average
selling price to $375.4 thousand
- Homebuilding gross margin was 15.1%, flat year-over-year.
Excluding impairments, abandonments and amortized interest,
homebuilding gross margin was 19.8%, up 10 basis points
- SG&A as a percentage of total revenue was 13.3%, down 20
basis points year-over-year
- Unit orders of 1,251, up 28.2% on an increase in
sales/community/month to 2.5 and an increase in average community
count to 168
- Dollar value of backlog of $732.1 million, up 23.4%
- Unrestricted cash at quarter end was $41.3 million; total
liquidity was $261.3 million
The following provides additional details on the Company's
performance during the fiscal first quarter 2020:
Profitability. First quarter adjusted EBITDA of $29.4 million
was up $2.5 million year-over-year. Net income from continuing
operations was $2.8 million, generating diluted earnings per share
of $0.09. Net income was down $4.5 million year-over-year with less
income tax credits and incremental interest expense more than
offsetting higher EBITDA .
Orders. Net new orders for the first quarter increased 28.2%
year-over-year, to 1,251. The increase in net new orders was
primarily driven by a 21.8% increase in sales/community/month to
2.5. The cancellation rate for the quarter was 14.9%, down 490
basis points year-over-year.
Homebuilding Revenue. First quarter closings rose 2.7% to 1,112
homes. Combined with a 1.4% increase in the average selling price
to $375.4 thousand, homebuilding revenue was $417.4 million, up
4.1% year-over-year.
Backlog. The dollar value of homes in backlog as of December 31,
2019 increased 23.4% to $732.1 million, or 1,847 homes, compared to
$593.1 million, or 1,525 homes, at the same time last year. The
average selling price of homes in backlog was $396.4 thousand, up
1.9% year-over-year.
Homebuilding Gross Margin. Homebuilding gross margin (excluding
impairments, abandonments and amortized interest) was 19.8% for the
first quarter, up 10 basis points year-over-year.
SG&A Expenses. Selling, general and administrative expenses,
as a percentage of total revenue, were 13.3% for the quarter, down
20 basis points year-over-year.
Liquidity. At the close of the first quarter, the Company had
approximately $261.3 million of available liquidity, including
$41.3 million of unrestricted cash and $220.0 million available on
its secured revolving credit facility after accounting for
borrowings.
Gatherings
The first quarter of fiscal 2020 represented another step
forward for our Gatherings business. Fiscal year-over-year,
Gatherings experienced an increase in sales in both actively
selling communities located in Dallas and Orlando. We anticipate
selling efforts to begin in two new communities in Dallas and
Nashville during early calendar 2020, adding to our selling
opportunities. New communities are under various stages of
entitlement and development in Atlanta, Charleston, Dallas,
Houston, Maryland, and Orlando, positioning Gatherings for
continued growth in fiscal 2020.
Summary results for the three months ended December 31, 2019 are
as follows:
Three Months Ended December
31,
2019
2018
Change*
New home orders, net of cancellations
1,251
976
28.2
%
Orders per community per month
2.5
2.0
21.8
%
Average active community count
168
160
5.2
%
Actual community count at quarter-end
166
162
2.5
%
Cancellation rates
14.9
%
19.8
%
-490 bps
Total home closings
1,112
1,083
2.7
%
Average selling price (ASP) from closings
(in thousands)
$
375.4
$
370.3
1.4
%
Homebuilding revenue (in millions)
$
417.4
$
401.0
4.1
%
Homebuilding gross margin
15.1
%
15.1
%
0 bps
Homebuilding gross margin, excluding
impairments and abandonments (I&A)
15.1
%
15.4
%
-30 bps
Homebuilding gross margin, excluding
I&A and interest amortized to cost of sales
19.8
%
19.7
%
10 bps
Income from continuing operations before
income taxes (in millions)
$
2.6
$
3.4
$
(0.8
)
Benefit from income taxes (in
millions)
$
(0.2
)
$
(3.9
)
$
3.7
Income from continuing operations (in
millions)
$
2.8
$
7.3
$
(4.5
)
Basic income per share from continuing
operations
$
0.09
$
0.23
$
(0.14
)
Diluted income per share from continuing
operations
$
0.09
$
0.23
$
(0.14
)
Income from continuing operations before
income taxes (in millions)
$
2.6
$
3.4
$
(0.8
)
Inventory impairments and abandonments (in
millions)
$
—
$
1.0
$
(1.0
)
Income from continuing operations
excluding inventory impairments and abandonments before income
taxes (in millions)
$
2.6
$
4.4
$
(1.8
)
Income from continuing operations
excluding inventory impairments and abandonments after income taxes
(in millions)+
$
2.8
$
8.1
$
(5.3
)
Net income
$
2.7
$
7.3
$
(4.6
)
Land and land development spending (in
millions)
$
146.0
$
121.0
$
25.0
Adjusted EBITDA (in millions)
$
29.4
$
26.8
$
2.5
LTM Adjusted EBITDA (in millions)
$
182.7
$
203.1
$
(20.4
)
* Change and totals are calculated using
unrounded numbers.
+ There was no inventory impairments and
abandonments for the three months ended December 31, 2019. For the
three months ended December 31, 2018, inventory impairments and
abandonments were tax-effected at the effective tax rate of
24.9%.
“LTM” indicates amounts for the trailing
12 months.
As of December 31,
2019
2018
Change
Backlog units
1,847
1,525
21.1
%
Dollar value of backlog (in millions)
$
732.1
$
593.1
23.4
%
ASP in backlog (in thousands)
$
396.4
$
388.9
1.9
%
Land and lots controlled
19,742
23,149
(14.7
)%
Conference Call
The Company will hold a conference call on January 30, 2020 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 on the "Investor Relations" page of the Company's
website, www.beazer.com. In addition, the conference call will be
available by telephone at 800-475-0542 (for international callers,
dial 517-308-9429). To be admitted to the call, enter the pass code
“8571348.” A replay of the conference call will be available, until
10:00 PM ET on February 6, 2020 at 800-324-4696 (for international
callers, dial 402-220-3856) with pass code “3740.”
Headquartered in Atlanta, Beazer Homes (NYSE: BZH) is one of
the country’s largest homebuilders. Every Beazer home is designed
and built to provide Surprising Performance, giving you more
quality and more comfort from the moment you move in - saving you
money every month. With Beazer's Choice Plans™, you can personalize
your primary living areas - giving you a choice of how you want to
live in the home, at no additional cost. And unlike most national
homebuilders, we empower our customers to shop and compare loan
options. Our Mortgage Choice program gives you the resources to
easily compare multiple loan offers and choose the best lender and
loan offer for you. We build our homes in Arizona, California,
Delaware, Florida, Georgia, Indiana, Maryland, Nevada, North
Carolina, South Carolina, Tennessee, Texas, and Virginia. For more
information, visit beazer.com, or check out beazer.com on Facebook,
Instagram 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 cyclical nature of the homebuilding industry and a
potential deterioration in homebuilding industry conditions; (ii)
economic changes nationally or in local markets, changes in
consumer confidence, 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; (iii) 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; (iv) the availability and cost of land and the
risks associated with the future value of our inventory, such as
asset impairment charges we took on select California assets during
the second quarter of fiscal 2019; (v) factors affecting margins,
such as decreased land values underlying land option agreements,
increased land development costs in communities under development
or delays or difficulties in implementing initiatives to reduce our
production and overhead cost structure; (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, changes in
tax laws or otherwise regarding the deductibility of mortgage
interest expenses and real estate taxes or an increased number of
foreclosures; (viii) our allocation of capital and the cost of and
ability to access capital, due to factors such as limitations in
the capital markets or adverse credit market conditions, and
ability to otherwise meet our ongoing liquidity needs, including
the impact of any downgrades of our credit ratings or reduction in
our 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 continue to execute and complete our capital allocation
plans, including our share and debt repurchase programs; (xi)
increased competition or delays in reacting to changing consumer
preferences in home design; (xii) natural disasters 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) the potential recoverability of our 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 impact
of information technology failures, cybersecurity issues or data
security breaches; (xix) terrorist acts, natural disasters, acts of
war or other factors over which the Company has little or no
control; or (xx) the impact on homebuilding in key markets of
governmental regulations limiting the availability of water.
Any forward-looking statement, including any statement
expressing confidence regarding future outcomes, 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)
2019
2018
Total revenue
$
417,804
$
402,040
Home construction and land sales
expenses
354,667
340,378
Inventory impairments and abandonments
—
1,007
Gross profit
63,137
60,655
Commissions
16,065
15,737
General and administrative expenses
39,699
38,642
Depreciation and amortization
3,427
2,770
Operating income
3,946
3,506
Equity in loss of unconsolidated
entities
(13
)
(64
)
Other expense, net
(1,340
)
(42
)
Income from continuing operations before
income taxes
2,593
3,400
Benefit from income taxes
(211
)
(3,922
)
Income from continuing operations
2,804
7,322
Loss from discontinued operations, net of
tax
(58
)
(11
)
Net income
$
2,746
$
7,311
Weighted average number of shares:
Basic
29,746
31,801
Diluted
30,138
32,055
Basic income per share:
Continuing operations
$
0.09
$
0.23
Discontinued operations
—
—
Total
$
0.09
$
0.23
Diluted income per share:
Continuing operations
$
0.09
$
0.23
Discontinued operations
—
—
Total
$
0.09
$
0.23
Three Months Ended
December 31,
Capitalized Interest in
Inventory
2019
2018
Capitalized interest in inventory,
beginning of period
$
136,565
$
144,645
Interest incurred
21,556
24,921
Capitalized interest impaired
—
(115
)
Interest expense not qualified for
capitalization and included as other expense
(1,442
)
(242
)
Capitalized interest amortized to home
construction and land sales expenses
(19,669
)
(17,323
)
Capitalized interest in inventory, end of
period
$
137,010
$
151,886
BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
in thousands (except share and per share
data)
December 31, 2019
September 30, 2019
ASSETS
Cash and cash equivalents
$
41,277
$
106,741
Restricted cash
18,759
16,053
Accounts receivable (net of allowance of
$313 and $304, respectively)
19,439
26,395
Income tax receivable
4,612
4,935
Owned inventory
1,574,280
1,504,248
Investments in unconsolidated entities
3,930
3,962
Deferred tax assets, net
247,382
246,957
Property and equipment, net
26,623
27,421
Operating lease right-of-use assets
12,975
—
Goodwill
11,376
11,376
Other assets
7,451
9,556
Total assets
$
1,968,104
$
1,957,644
LIABILITIES AND STOCKHOLDERS’
EQUITY
Trade accounts payable
$
110,153
$
131,152
Operating lease liabilities
$
15,158
$
—
Other liabilities
95,451
109,429
Total debt (net of debt issuance costs of
$12,080 and $12,470, respectively)
1,208,062
1,178,309
Total liabilities
1,428,824
1,418,890
Stockholders’ equity:
Preferred stock (par value $0.01 per
share, 5,000,000 shares authorized, no shares issued)
—
—
Common stock (par value $0.001 per share,
63,000,000 shares authorized, 31,383,068 issued and outstanding and
30,933,110 issued and outstanding, respectively)
31
31
Paid-in capital
852,055
854,275
Accumulated deficit
(312,806
)
(315,552
)
Total stockholders’ equity
539,280
538,754
Total liabilities and stockholders’
equity
$
1,968,104
$
1,957,644
Inventory Breakdown
Homes under construction
$
580,580
$
507,542
Development projects in progress
732,380
738,201
Land held for future development
28,531
28,531
Land held for sale
11,443
12,662
Capitalized interest
137,010
136,565
Model homes
84,336
80,747
Total owned inventory
$
1,574,280
$
1,504,248
BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND
FINANCIAL DATA – CONTINUING OPERATIONS
Three Months Ended December
31,
SELECTED OPERATING DATA
2019
2018
Closings:
West region
694
601
East region
192
188
Southeast region
226
294
Total closings
1,112
1,083
New orders, net of
cancellations:
West region
737
519
East region
233
201
Southeast region
281
256
Total new orders, net
1,251
976
As of December 31,
Backlog units at end of period:
2019
2018
West region
1,025
776
East region
382
294
Southeast region
440
455
Total backlog units
1,847
1,525
Dollar value of backlog at end of period
(in millions)
$
732.1
$
593.1
in thousands
Three Months Ended December
31,
SUPPLEMENTAL FINANCIAL DATA
2019
2018
Homebuilding revenue:
West region
$
254,398
$
208,944
East region
77,645
87,765
Southeast region
85,356
104,273
Total homebuilding revenue
$
417,399
$
400,982
Revenue:
Homebuilding
$
417,399
$
400,982
Land sales and other
405
1,058
Total revenue
$
417,804
$
402,040
Gross profit:
Homebuilding
$
63,108
$
60,619
Land sales and other
29
36
Total gross profit
$
63,137
$
60,655
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
2019
2018
Homebuilding gross profit/margin
$
63,108
15.1
%
$
60,619
15.1
%
Inventory impairments and abandonments
(I&A)
—
1,007
Homebuilding gross profit/margin before
I&A
63,108
15.1
%
61,626
15.4
%
Interest amortized to cost of sales
19,669
17,323
Homebuilding gross profit/margin before
I&A and interest amortized to cost of sales
$
82,777
19.8
%
$
78,949
19.7
%
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 (loss) determined in
accordance with GAAP as an indicator of operating performance.
Three Months Ended December
31,
LTM Ended December
31,(a)
in thousands
2019
2018
2019
2018
Net income (loss)
$
2,746
$
7,311
$
(84,085
)
$
92,883
Benefit from income taxes
(228
)
(3,924
)
(33,549
)
(17,530
)
Interest amortized to home construction
and land sales expenses and capitalized interest impaired
19,669
17,438
111,172
94,075
Interest expense not qualified for
capitalization
1,442
242
4,309
2,132
EBIT
23,629
21,067
(2,153
)
171,560
Depreciation and amortization and
stock-based compensation amortization
5,738
4,884
26,139
23,832
EBITDA
29,367
25,951
23,986
195,392
Loss on extinguishment of debt
—
—
24,920
1,935
Inventory impairments and abandonments
(b)
—
892
133,819
5,430
Joint venture impairment and abandonment
charges
—
—
—
341
Adjusted EBITDA
$
29,367
$
26,843
$
182,725
$
203,098
(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/20200130005736/en/
Beazer Homes USA, Inc. David I. Goldberg Vice President of
Treasury and Investor Relations 770-829-3700
investor.relations@beazer.com
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