(Adds details on stock sale)
Beazer Homes USA Inc. (BZH) swung to a fiscal second-quarter
profit as the homebuilder was aided by a gain related to a note
exchange, while it reported a 49% order surge and a lower
cancellation rate.
But shares declined 7.6% to $6.36 in after-hours trading Monday,
despite the better-than-expected results, following the company's
announcement of concurrent underwritten public offerings of common
stock, tangible equity units and senior unsecured notes. Some
shareholders could view the move as dilutive to their holdings.
The Atlanta-based company was optimistic as it announced the
quarter's results. "We have been encouraged by the early signs of
improvement in our business, which started" in the fall and have
continued since, said Chairman and Chief Executive Ian McCarthy.
"We recognize both the signs of improvement and the continued risks
to a broad-based housing recovery, but we expect to see gradual
improvement over time."
McCarthy in February said the company, one of the nation's
largest builders, saw indications that its markets may be improving
as home affordability, stabilizing prices, low interest rates and
tax credits may be helping to balance out the fears of prospective
buyers. Standard & Poor's Ratings Services last month raised
Beazer's rating, saying the company's constrained liquidity profile
had improved and sales trends were looking up.
Housing-related data have been mixed in recent months, signaling
an industry that is limping back to life as several homebuilders
have begun to report profits, some helped by tax benefits.
For the quarter ended March 31, Beazer reported a profit of $5.3
million, or 9 cents a share, compared with a year-earlier loss of
$114.9 million, or $2.97 a share. The latest results included $19
million in write-downs, more than offset by a $53.6 million gain
related to a notes exchange. The year-earlier results included
$51.2 million in inventory and investment write-downs.
It was the third consecutive quarter that Beazer posted a
profit.
Revenue jumped 6.2% to $198.2 million.
Analysts polled by Thomson Reuters had most recently forecast a
loss of 62 cents on $194 million in revenue.
Gross margin rose to 13.1%, compared with negative 11.9% a year
ago amid the write-downs.
The builder's cancellation rate fell to 17.6% from 29.8% a year
ago, as fewer buyers abandoned deals. Closings increased 5.6%.
-By Nathan Becker, John Kell and Dawn Wotapka, Dow Jones
Newswires; 212-416-2855; nathan.becker@dowjones.com