Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced
its financial results for the quarter and year ended September 30,
2008. The Company previously provided fourth quarter home closings
and new home orders and its September 30, 2008 cash balance.
Summary results of the quarter and the year are as follows: Quarter
Ended September 30, 2008 Reported net loss from continuing
operations of $(475.2) million, or $(12.32) per share, including
non-cash pre-tax charges related to inventory impairments and
abandonment of land option contracts of $58.8 million, impairments
in joint ventures of $6.0 million and a non-cash deferred tax
valuation allowance under SFAS 109 of $398.6 million. For the
fourth quarter of the prior fiscal year, the Company reported a net
loss from continuing operations of $(152.0) million, or $(3.95) per
share. Home closings: 2,441 homes, a decrease of 38.2% from 3,949
in the fourth quarter of the prior year. Total revenues: $712.6
million, compared to $1.09 billion in the fourth quarter of the
prior year. New orders: 1,083 homes, an increase of 10.3% from 982
in the fourth quarter of the prior year. Net cash provided by
operating activities: $291.1 million, compared to $387.3 million in
the fourth quarter of the prior year. Year Ended September 30, 2008
Reported net loss from continuing operations of $(951.2) million,
or $(24.68) per share, including non-cash pre-tax charges related
to inventory impairments and abandonment of land option contracts
of $510.6 million, goodwill impairments of $52.5 million,
impairments in joint ventures of $68.8 million and a non-cash
deferred tax valuation allowance of $400.3 million. For the prior
fiscal year, net loss from continuing operations totaled $(410.4)
million, or $(10.68) per share. Home closings: 7,692 homes, a
decrease of 36.0% from 12,020 in the prior year. Total revenues:
$2.07 billion, compared to $3.47 billion in the prior year. New
orders: 6,065 homes, a decrease of 38.8% from 9,903 in the prior
year. Net cash provided by operating activities: $315.6 million,
compared to $509.4 million in the prior year. As of September 30,
2008 Cash and cash equivalents: $584.3 million compared to $454.3
million as of September 30, 2007. Backlog: 1,358 homes with a sales
value of $326.6 million compared to 2,985 homes with a sales value
of $838.8 million as of September 30, 2007. �Conditions in both the
overall economy and housing market came under greater pressure
during our fourth quarter and have continued to deteriorate since
that time,� said Ian J. McCarthy, President and Chief Executive
Officer. �Home buyer demand for new homes continues to be adversely
affected by low levels of consumer confidence, falling home prices,
extensive new and existing home supply and reduced access to
mortgage financing. In recent months this difficult environment has
been greatly exacerbated by turmoil in financial markets,
heightened concerns about the global economy and a substantial rise
in the number of home foreclosures. Against this backdrop we
continue to focus on generating liquidity, reducing overhead and
direct costs, and limiting investment in land and unsold home
inventory. As evidenced by our strengthened cash balance over the
fiscal year, our efforts are helping us weather this unprecedented
housing environment while positioning Beazer Homes for a return to
profitability upon the market�s eventual recovery.� Quarter Ended
September 30, 2008 In connection with the Company�s realignment of
management, operational and financial reporting lines and its
decision to exit a number of markets during fiscal 2008, the
Company has correspondingly realigned its reportable segments as
follows: West (Arizona, California, Nevada, New Mexico and Texas),
East (Delaware, Indiana, Maryland, New Jersey, New York, North
Carolina, Pennsylvania, Tennessee and Virginia), Southeast
(Florida, Georgia and South Carolina) and Other Homebuilding. The
Other Homebuilding segment is comprised of markets the Company has
exited or is in the process of exiting including Cincinnati,
Columbus, Lexington, Columbia, Charlotte, Colorado Springs, Denver
and Fresno. Homebuilding revenues declined 44.6% for the quarter
ended September 30, 2008, due to both a 38.2% decline in home
closings and a 9.9% decline in average selling price from the same
period in the prior fiscal year. Home closings declined in all
regions, with the most significant declines in the Southeast and
Other Homebuilding segments. Net new home orders totaled 1,083 for
the quarter, an increase of 10.3% from the same period in the prior
fiscal year. This year-over-year increase was driven largely by a
lower cancellation rate of 45.7% during the fourth quarter,
compared to 68.1% in the same period of the prior year. The
increase in net orders year-over-year was also achieved through a
17.2% increase in net orders in markets where the Company maintains
a presence, partially offset by a 31.7% decline in net orders in
markets the Company had previously announced it was exiting.
Revenues from land and lot sales totaled $121.3 million in the
fourth quarter as the Company completed asset sales in Virginia
totaling $99.1 million, including the previously announced sale of
two condominium projects, as well as additional asset sales
primarily related to market exits. During the fourth quarter,
margins continued to be negatively impacted by both the average
sales price decline and reduced closing volumes as compared to the
same period a year ago. In addition, the Company incurred pre-tax
charges to abandon land option contracts of $13.3 million, and to
recognize inventory impairments of $45.5 million and impairments in
joint ventures of $6.0 million. The Company controlled 39,627 lots
at September 30, 2008 (73% owned and 27% controlled under options),
reflecting reductions of approximately 14% and 36% from levels as
of June 30, 2008 and September 30, 2007, respectively. As of
September 30, 2008, unsold finished homes totaled 408, declining by
approximately 53% from the level a year ago. The Company
substantially reduced its land and land development spending, which
totaled $333 million in fiscal 2008, compared to $824 million for
the prior year. With respect to the Company�s cash position, at
September 30, 2008, the Company had a cash balance of $584.3
million, compared to $314.2 million at June 30, 2008 and $454.3
million at September 30, 2007. Cash provided by operating
activities for the three months and year ended September 30, 2008
was $291.1 and $315.6 million, respectively. Tax Matters As of
September 30, 2008, the Company had a non-cash deferred tax asset
valuation allowance under SFAS 109 of $400.6 million following an
assessment of the recoverability of its deferred tax assets, which
consist primarily of inventory valuation adjustments, reserves and
accruals that are not currently deductible for tax purposes, as
well as operating loss carry-forwards from losses incurred during
fiscal 2008. This reserve reflects the Company�s application of
SFAS 109 which requires companies to reserve against deferred tax
assets when, based on the weight of available evidence, it is more
likely than not that some portion or all of the deferred tax asset
will not be realized. The Company is now in a cumulative loss
position over the four prior years, which, among other things, the
Company relied upon in reaching the determination that such a
reserve was appropriate. In future periods the reserve could be
reduced based on sufficient evidence indicating that it is more
likely than not that a portion of our deferred tax asset will be
realized. Separately and as previously announced, the Company has
also conducted an analysis of whether an �ownership change�
occurred under Internal Revenue Code Section 382 (�Section 382�).
Ownership changes under Section 382 generally relate to the
cumulative change in ownership among shareholders with more than a
5% ownership interest over a three year period. The Company has
determined that an �ownership change� under Section 382 did occur
as of December 31, 2007. As a result, the Company�s ability to
utilize certain of its loss carry-forwards and recognize certain
built-in losses or deductions will be limited in the future.
Finally, notwithstanding the deferred tax asset valuation allowance
and the determination of an �ownership change� under Section 382,
the Company continues to expect to receive a cash tax refund of
approximately $150 million during fiscal 2009. Secured Revolving
Credit Facility As a result of recording the deferred tax asset
valuation allowance, the Company�s tangible net worth, as defined
in its secured revolving credit facility (the �facility�)
agreement, fell below $350 million as of September 30, 2008.
Pursuant to the previously negotiated terms of the facility, and
effective as of the filing of the Company�s 2008 10-K, the facility
size will be reduced from $400 million to $250 million, and the
collateral value of assets securing the facility must exceed 4.5
times outstanding loans and letters of credit (up from 3.0 times
previously). At September 30, 2008, the Company was in compliance
with the collateral coverage requirements but had no additional
borrowing capacity. In order to comply with the new higher
collateralization requirements effective as of the filing of the
Company�s 2008 10-K, the Company will restrict approximately $20
million in cash to sufficiently collateralize the outstanding
letters of credit until additional real estate collateral is added
to the borrowing base. Although the Company has had no cash
borrowings under the facility since its inception in July 2007, and
has no current plans that would require cash borrowings, the
Company intends to add approximately $250 million in assets to the
borrowing base over the next year which should create approximately
$35 million in availability, after providing a return of the
restricted cash. Beazer Homes USA, Inc., headquartered in Atlanta,
is one of the country�s ten largest single-family homebuilders with
continuing operations in Arizona, California, Delaware, Florida,
Georgia, Indiana, Maryland, Nevada, New Jersey, New Mexico, New
York, North Carolina, Pennsylvania, South Carolina, Tennessee,
Texas, and Virginia. Beazer Homes is listed on the New York Stock
Exchange under the ticker symbol �BZH.� Forward Looking Statements
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 timing and final outcome of the United States
Attorney investigation and other state and federal agency
investigations, the putative class action lawsuits, the derivative
claims, multi-party suits and similar proceedings as well as the
results of any other litigation or government proceedings; (ii)
additional asset impairment charges or writedowns; (iii) economic
changes nationally or in local markets, including changes in
consumer confidence, volatility of mortgage interest rates and
inflation; (iv) continued or increased downturn in the homebuilding
industry; (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) continued
or increased disruption in the availability of mortgage financing;
(vii) our cost of and ability to access capital and otherwise meet
our ongoing liquidity needs including the impact of any further
downgrades of our credit ratings or reductions in our tangible net
worth or liquidity levels; (viii) potential inability to comply
with covenants in our debt agreements; (ix) increased competition
or delays in reacting to changing consumer preference in home
design; (x) shortages of or increased prices for labor, land or raw
materials used in housing production; (xi) factors affecting
margins such as decreased land values underlying land option
agreements, increased land development costs on projects under
development or delays or difficulties in implementing initiatives
to reduce production and overhead cost structure; (xii) the
performance of our joint ventures and our joint venture partners;
(xiii) the impact of construction defect and home warranty claims
and the cost and availability of insurance, including the
availability of insurance for the presence of moisture intrusion;
(xiv) delays in land development or home construction resulting
from adverse weather conditions; (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 and governmental policies; (xvi) effects of changes in
accounting policies, standards, guidelines or principles; or (xvii)
terrorist acts, acts of war and 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.
CONSOLIDATED OPERATING AND FINANCIAL DATA - CONTINUING OPERATIONS
(Dollars in thousands, except per share amounts) � � � � � �
FINANCIAL DATA Quarter Ended Fiscal Year Ended September 30,
September 30, 2008 � � 2007 � � 2008 � 2007 � CONSOLIDATED
STATEMENTS OF OPERATIONS Total revenue $ 712,649 $ 1,093,677 $
2,074,298 $ 3,466,725 Home construction and land sales expenses
663,259 936,973 1,886,511 2,959,660 Inventory impairments and
option contract abandonments � 58,774 � � 212,008 � � 510,628 � �
611,864 � Gross loss (9,384 ) (55,304 ) (322,841 ) (104,799 ) �
Selling, general and administrative expenses 99,227 111,451 344,923
413,774 Depreciation and amortization 9,294 10,338 27,544 33,176
Goodwill impairment � - � � 23,003 � � 52,470 � � 52,755 �
Operating loss (117,905 ) (200,096 ) (747,778 ) (604,504 ) Equity
in loss of unconsolidated joint ventures (6,245 ) (28,142 ) (81,314
) (35,154 ) Other (expense) income � (16,085 ) � (371 ) � (36,992 )
� 7,499 � � Loss from continuing operations before income taxes
(140,235 ) (228,609 ) (866,084 ) (632,159 ) Income tax provision
(benefit) � 334,935 � � (76,617 ) � 85,164 � � (221,778 ) Net loss
from continuing operations � (475,170 ) � (151,992 ) � (951,248 ) �
(410,381 ) Net income (loss) from discontinued operations � 1,229 �
� (3,240 ) � (664 ) � (692 ) Net loss $ (473,941 ) $ (155,232 ) $
(951,912 ) $ (411,073 ) � Net loss per common share - continuing
operations: Basic $ (12.32 ) � $ (3.95 ) $ (24.68 ) $ (10.68 )
Diluted $ (12.32 ) � $ (3.95 ) $ (24.68 ) $ (10.68 ) Net income
(loss) per common share - discontinued operations: Basic $ 0.03 � �
$ (0.08 ) $ (0.01 ) $ (0.02 ) Diluted $ 0.03 � � $ (0.08 ) $ (0.01
) $ (0.02 ) Net loss per common share: Basic $ (12.29 ) � $ (4.03 )
$ (24.69 ) $ (10.70 ) Diluted $ (12.29 ) � $ (4.03 ) $ (24.69 ) $
(10.70 ) � � Weighted average shares outstanding, in thousands:
Basic 38,561 38,475 38,549 38,410 Diluted 38,561 38,475 38,549
38,410 � � � BEAZER HOMES USA, INC. CONSOLIDATED BALANCE SHEET DATA
- CONTINUING OPERATIONS (Dollars in thousands, except per share
amounts) � � CONSOLIDATED BALANCE SHEETS September 30, September
30, 2008 � � 2007 � Assets Cash and cash equivalents $ 584,334 $
454,337 Restricted cash 297 5,171 Accounts receivable, net 46,555
45,501 Income tax receivable 173,500 63,981 Inventory Owned
inventory 1,545,006 2,537,791 Consolidated inventory not owned �
106,655 � � 237,382 � Total inventory 1,651,661 2,775,173
Residential mortgage loans available-for-sale 94 781 Investments in
unconsolidated joint ventures 33,065 109,143 Deferred tax assets,
net 20,216 232,949 Property, plant and equipment, net 39,822 71,682
Goodwill 16,143 68,613 Other assets � 76,112 � � 102,690 � Total
assets $ 2,641,799 � $ 3,930,021 � � Liabilities and Stockholders'
Equity Trade accounts payable $ 90,371 $ 118,030 Other liabilities
358,592 453,089 Obligations related to consolidated inventory not
owned 70,608 177,931 Senior Notes (net of discounts of $2,565 and
$3,033, respectively) 1,522,435 1,521,967 Junior subordinated notes
103,093 103,093 Other secured notes payable 50,618 118,073 Model
home financing obligations � 71,231 � � 114,116 � Total liabilities
� 2,266,948 � � 2,606,299 � � 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, 80,000,000
shares authorized, 42,612,801 and 42,597,229 issued and 39,270,038
and 39,261,721 outstanding, respectively) 43 43 Paid-in capital
556,910 543,705 Retained earnings 1,845 963,869 Treasury stock, at
cost (3,342,763 and 3,335,508 shares, respectively) � (183,947 ) �
(183,895 ) Total stockholders' equity � 374,851 � � 1,323,722 �
Total liabilities and stockholders' equity $ 2,641,799 � $
3,930,021 � � � Inventory Breakdown � Homes under construction $
338,971 $ 787,102 Development projects in progress 618,252
1,233,140 Land held for future development 407,320 324,350 Land
held for sale 85,736 49,473 Model homes 94,727 143,726 Consolidated
inventory not owned � 106,655 � � 237,382 � $ 1,651,661 � $
2,775,173 � � � � � � � BEAZER HOMES USA, INC. CONSOLIDATED
OPERATING AND FINANCIAL DATA - CONTINUING OPERATIONS (Dollars in
thousands) � � OPERATING DATA � � Quarter Ended Fiscal Year Ended
SELECTED OPERATING DATA September 30, September 30, 2008 � 2007
2008 2007 Closings: West region 1,038 1,342 2,777 4,369 East region
733 1,017 2,405 2,821 Southeast region 455 1,019 1,515 2,970 Other
homebuilding � 215 � � 571 995 1,860 Total closings � 2,441 � �
3,949 7,692 12,020 New orders, net of cancellations: West region
440 297 2,499 3,444 East region 318 325 1,573 2,816 Southeast
region 230 221 1,331 2,117 Other homebuilding � 95 � � 139 662
1,526 Total new orders � 1,083 � � 982 6,065 9,903 Backlog units at
end of period: West region 527 805 East region 485 1,317 Southeast
region 306 490 Other homebuilding � 40 � � 373 Total backlog units
� 1,358 � � 2,985 Dollar value of backlog at end of period $
326,599 � $ 838,806 BEAZER HOMES USA, INC. CONSOLIDATED OPERATING
AND FINANCIAL DATA - CONTINUING OPERATIONS (Dollars in thousands) �
� � � � � � Quarter Ended Fiscal Year Ended SUPPLEMENTAL FINANCIAL
DATA - September 30, September 30, CONTINUING OPERATIONS � 2008 � �
2007 � � 2008 � � 2007 � � Revenues Homebuilding operations $
590,138 $ 1,065,408 $ 1,914,304 $ 3,359,594 Land and lot sales
121,257 25,670 155,801 99,063 Financial Services � 1,254 � � �
2,599 � � 4,193 � � 8,068 � Total revenues $ 712,649 � � $
1,093,677 � $ 2,074,298 � $ 3,466,725 � Gross (loss) profit
Homebuilding operations $ (17,313 ) $ (59,881 ) $ (334,711 ) $
(116,290 ) Land and lot sales 6,675 1,978 7,677 3,423 Financial
Services � 1,254 � � � 2,599 � � 4,193 � � 8,068 � Total gross loss
$ (9,384 ) � $ (55,304 ) $ (322,841 ) $ (104,799 ) Selling, general
and administrative Homebuilding operations $ 98,650 $ 110,410 $
342,440 $ 410,432 Financial Services � 577 � � � 1,041 � � 2,483 �
� 3,342 � Total selling, general and administrative $ 99,227 � � $
111,451 � $ 344,923 � $ 413,774 � � � SELECTED SEGMENT INFORMATION
- CONTINUING OPERATIONS Revenue: West region $ 236,734 $ 367,228 $
674,103 $ 1,321,870 East region 307,873 326,858 780,380 889,597
Southeast region 103,934 263,453 354,837 817,453 Other homebuilding
62,854 133,539 260,785 429,737 Financial services � 1,254 � � �
2,599 � � 4,193 � � 8,068 � Total revenue $ 712,649 � � $ 1,093,677
� $ 2,074,298 � $ 3,466,725 � � Operating (loss) income West region
$ (439 ) $ (121,269 ) $ (140,989 ) $ (229,121 ) East region (887 )
(6,933 ) (63,913 ) (66,725 ) Southeast region (21,054 ) 4,238
(109,675 ) (19,921 ) Other homebuilding (15,530 ) (9,926 ) (127,355
) (55,111 ) Financial services � 669 � � � 1,552 � � 1,681 � � �
4,696 � Segment operating loss (37,241 ) (132,338 ) (440,251 )
(366,182 ) Corporate and unallocated � (80,664 ) � � (67,758 ) �
(307,527 ) � (238,322 ) Total operating loss $ (117,905 ) � $
(200,096 ) $ (747,778 ) $ (604,504 )
Beazer Homes USA (NYSE:BZH)
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