UPDATE: Beazer Homes Swings To 1Q Profit On Tax Benefit

Builder Beazer Homes USA Inc. (BZH) swung to a fiscal first-quarter profit as the company was helped by a tax benefit and revenue eked upward as the cancellation rate dropped.

Shares rose in early trading, recently up 2.9% at $4.23.

Several home builders of late have returned to profitability on the back of tax benefits. But it is too early to call a bottom to the worst downturn in generations because signals about the housing market have been mixed in recent months.

"While it is premature to signal the beginning of a sustainable recovery in the housing market, we are seeing indications that historically high levels of home affordability, home price stability, low mortgage interest rates and home buyer tax credits may be beginning to balance out prospective home buyers' concerns about falling home prices, foreclosures, and risk of job loss in most of our markets," Chief Executive Ian McCarthy said in the earnings release.

For the quarter ended Dec. 31, Beazer reported a profit of $48 million, or $1.17 a share, compared with a year-earlier loss of $80.3 million, or $2.08 a share. The tax benefit in the latest quarter equated to $2.24 a share. Revenue rose 0.3% to $218.8 million.

Analysts polled by Thomson Reuters forecast a loss of 90 cents a share on $201 million in revenue. Gross margin rose to 8.8% from 5.6%.

The Atlanta-based builder's cancellation rate fell to 26.9% from 46.1%, as fewer buyer abandoned deals, and the average sales price fell 8.8%. Beazer said in January that total new orders for the quarter jumped 37% to 728 and closings were up 8% to 961.

Orders were led by the West region, which saw a 41% boost, while the East and Southeast rose 36% and 23%, respectively. The "order growth is consistent with our outlook for the housing market to continue to stabilize into 2010," Michael Rehaut, a home-building analyst with J.P. Morgan, wrote in a note to clients.

-By Dawn Wotapka, Dow Jones Newswires; 212-416-2193; dawn.wotapka@dowjones.com

Beazer Homes USA (NYSE:BZH)
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