Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today
announced its financial results for the fiscal quarter ended June
30, 2010. Summary results of the quarter from continuing operations
are as follows:
Quarter Ended June 30,
2010
- Total revenue: $339.9 million,
compared to $224.1 million in the third quarter of the prior
year.
- Home closings from continuing
operations: 1,643 homes, an increase year-over-year of 73.3%.
- Loss from continuing operations
of $27.6 million, or a loss of $0.41 per share, including:
- non-cash pre-tax charges of $5.1
million for inventory impairments;
- a non-cash $12.5 million
impairment of our investment in two of our unconsolidated joint
ventures;
- a $9.0 million non-cash loss on
debt extinguishment related to the repurchase of our 2012 senior
notes and 2024 convertible senior notes; and
- $28.4 million benefit from
income taxes primarily related to an additional carry-back claim
under The Worker, Homeownership and Business Assistance Act of
2009.
- For the third quarter of the
prior fiscal year, the Company reported a loss from continuing
operations of $25.4 million, or $0.65 per share, including:
- non-cash pre-tax charges of
$11.8 million for inventory impairments;
- a non-cash $4.2 million
impairment of unconsolidated joint venture investments; and
- a $55.2 million non-cash gain on
debt extinguishment.
- New orders from continuing
operations: 1,037 homes, a decrease year-over-year of 32.5%. New
orders in the quarter were substantially impacted by a fall-off in
demand following the expiration of the New Home Buyer’s Tax Credit
on April 30, 2010 and continuing high unemployment levels.
- Cancellation rate increased to
28.9% in the third quarter compared to 23.0% in the third quarter
of the prior year.
- Gross profit margin of 11.8%
(13.3% without impairments and abandonments), compared to 2.6%
(7.9% without impairments and abandonments) in the third quarter of
the prior year.
- Average Selling Price of
$206,200 for the third quarter of fiscal 2010 compared to the
Average Selling Price of $235,100 for the third quarter of the
prior year. The reduction in ASP was primarily attributable to a
substantial geographic shift in closings to those markets with the
lowest ASP and the highest concentration of first time home
buyers.
- As previously reported, in May
2010, the Company closed its public offerings of $300 million
9.125% senior notes due 2018, 3.0 million 7.25% tangible equity
units and 12.5 million shares of its common stock. Net proceeds of
these transactions were approximately $437 million which together
with $28 million of our unrestricted cash, were used to repurchase
our outstanding 2012 senior notes and 2024 convertible senior notes
plus accrued and unpaid interest for a total of $465 million.
As of June 30,
2010
- Total cash and cash equivalents:
$514.6 million, including restricted cash of $42.6 million.
- Stockholders’ equity: $454.7
million not including $57.5 million of mandatory convertible
subordinated notes.
- Backlog: 1,175 homes with a
sales value of $288.2 million compared to 1,866 homes with a sales
value of $430.6 million as of June 30, 2009. The Average Selling
Price in backlog increased by over $14,000, or 6%, to $245,200 from
$230,800 in the prior year.
Ian J. McCarthy, President and Chief Executive Officer, said,
“As we anticipated earlier this year, the third quarter represented
two distinctly different business environments for us. Through the
expiration of the First Time Homebuyer Tax Credit on April 30th,
traffic and new home orders were tracking well above prior year
results. In May and June traffic and new home orders were
substantially below the levels experienced in the prior year. While
new home affordability and mortgage rates are at historically
attractive levels, homebuyers continue to be concerned about
employment, the impact of additional foreclosures and general
conditions in the economy. We believe employment growth and
improved consumer confidence remain the keys to a sustainable
recovery in the homebuilding industry. In the meantime, we are
taking the steps necessary to position the Company to fully
participate in the eventual housing recovery.”
Results for the Quarter Ended
June 30, 2010
Homebuilding revenues from continuing operations increased 52.0%
in the third quarter, due to a 73.3% increase in the number of
homes closed, offset by a 12.3% reduction in our Average Selling
Price. The reduction in Average Sales Price was primarily
attributable to a substantial geographic shift in closings to those
markets with the lowest ASP and the highest concentration of first
time home buyers. This change accounted for approximately 8.0% of
the total reduction in ASP. Net new home orders from continuing
operations decreased 32.5% compared to the third quarter of last
year, driven by a 26.9% decrease in gross new orders and an
increase in the cancellation rate to 28.9%, compared to 23.0% a
year ago.
Our gross profit margin improved to 11.8% (13.3% without
impairments and abandonments) for the current quarter compared to
2.6% (7.9% without impairments and abandonments) in the third
quarter of the prior year. Although margins improved as compared to
the prior year, we continued to be impacted by a challenging
homebuilding environment, impacted by the greater concentration of
lower priced homes and by non-cash pre-tax charges for inventory
impairments and lot option abandonments of $5.1 million for the
quarter ended June 30, 2010.
We recorded a $28.4 million benefit from income taxes primarily
due to an additional refund request of $32 million this quarter
related to our finalized carry back claim of $133 million, of which
$101 million had been previously requested and received. The
difference between the additional carry back claim requested this
quarter and our tax benefit from continuing operations results from
changes to our estimates of future sources of taxable income and
unrecognized tax benefits.
The Company controlled 29,768 lots at June 30, 2010 (80% owned
and 20% controlled under options), including 727 owned lots in
discontinued operations. Total controlled lots of 29,768 reflect a
reduction of 9.5% from the level at June 30, 2009 and 2.8% from the
level at September 30, 2009. During the quarter we entered into
purchase and option transactions relating to 1,679 lots.
Year-to-date we have contracted for 2,925 lots through a
combination purchase and lot option agreements.
As of June 30, 2010, unsold finished homes totaled 319, an
increase of 85 homes, from the level a year ago.
Liquidity and Liability
Management Initiatives
At June 30, 2010, the Company had cash and cash equivalents of
$514.6 million, including restricted cash of $42.6 million
primarily to collateralize outstanding letters of credit.
As previously reported, in May 2010, the Company closed its
concurrent public offerings of $300 million unsecured senior note
offering, 3.0 million 7.25% tangible equity units and 12.5 million
shares of its common stock. Net proceeds of these transactions were
approximately $437 million. We used the proceeds from these
offerings to repurchase debt including our outstanding 2012 senior
notes at par and our 2024 convertible senior notes at an average
premium price of 100.6 percent of par. We recorded a $9.0 million
loss related to these repurchases during our third quarter of
fiscal 2010, primarily related to the write-off of unamortized debt
issuance costs. As a result of these transactions and our fiscal
year-to-date results from operations, our stockholders’ equity
increased from $196.6 million as of September 30, 2009 to $454.7
million as of June 30, 2010. Our tangible net worth (stockholders’
equity less certain intangible assets as defined in our senior note
indentures) also increased by $267.6 million fiscal year-to-date to
$404.6 million at June 30, 2010.
Conference Call
The Company will hold a conference call on August 5, 2010, at
10:00 am EDT to discuss these results. Interested parties may
listen to the conference call and view the Company’s slide
presentation over the internet 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 877-601-3546 or
212-547-0388. To be admitted to the call, verbally supply the
passcode "BZH". A replay of the call will be available shortly
after the conclusion of the live call. To directly access the
replay, dial 866-409-7708 or 203-369-0641 and enter the passcode
“3740” (available until 5:00 pm ET on August 12, 2010), or visit
www.beazer.com. A replay of the webcast will be available at
www.beazer.com for approximately 30 days.
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, 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 presentation 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 final outcome of various lawsuits, as well as the
results of any government proceedings and fulfillment of the
obligations in the Deferred Prosecution Agreement and other
settlement agreements and consent orders with governmental
authorities; (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, availability of mortgage financing and inflation;
(iv) a slower economic rebound than anticipated, coupled with
persistently high unemployment and additional foreclosures; (v)
continued or increased downturn in the homebuilding industry; (vi)
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, (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; (viii) potential
inability to comply with covenants in our debt agreements or
satisfy such obligations through repayment or refinancing; (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 including those related to possible
installation of drywall imported from China; (xiv) the cost and
availability of insurance and surety bonds; (xv) delays in land
development or home construction resulting from adverse weather
conditions; (xvi) potential delays or increased costs in obtaining
necessary governmental permits and possible penalties for failure
to comply with laws, regulations and governmental policies; (xvii)
effects of changes in accounting policies, standards, guidelines or
principles; or (xviii) 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.
BEAZER HOMES USA, INC. UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except per share
data) Three Months Ended
Nine Months Ended June 30, June 30,
2010 2009
2010 2009 Total revenue
$
339,942 $ 224,071
$ 756,911 $ 628,864 Home
construction and land sales expenses
294,751 206,458
647,360 565,857 Inventory impairments and option contract
abandonments
5,052 11,792
24,049 67,111 Gross profit (loss)
40,139 5,821
85,502 (4,104 ) Selling, general
and administrative expenses
54,573 49,623
145,251
169,807 Depreciation and amortization
3,620 4,960
9,791 12,934 Goodwill impairment
-
-
- 16,143
Operating loss
(18,054 ) (48,762 )
(69,540
) (202,988 ) Equity in loss of unconsolidated joint ventures
(12,492 ) (3,428 )
(21,314 ) (13,191 )
(Loss) gain on extinguishment of debt
(9,045 ) 55,214
43,901 55,214 Other expense, net
(16,383
) (22,291 )
(53,951 )
(59,714 ) Loss from continuing operations before income taxes
(55,974 ) (19,267 )
(100,904 ) (220,679
) (Benefit from) provision for income taxes
(28,382
) 6,150
(124,091 )
(7,364 ) (Loss) income from continuing operations
(27,592
) (25,417 )
23,187 (213,315 ) (Loss) income from
discontinued operations, net of tax
(224 )
(2,559 )
2,294 (9,859 ) Net
(loss) income
$ (27,816 ) $ (27,976 )
$
25,481 $ (223,174 ) Weighted average number of
shares: Basic
68,310 38,815
55,079 38,666 Diluted
68,310 38,815
65,276 38,666 (Loss) earnings
per share: Basic (loss) earnings per share from continuing
operations
$ (0.41 ) $ (0.65 )
$
0.42 $ (5.52 ) Basic (loss) earnings per share from
discontinued operations
$ - $ (0.07 )
$
0.04 $ (0.25 ) Basic (loss) earnings per share
$
(0.41 ) $ (0.72 )
$ 0.46 $ (5.77 )
Diluted (loss) earnings per share from continuing operations
$ (0.41 ) $ (0.65 )
$ 0.38 $
(5.52 ) Diluted (loss) earnings per share from discontinued
operations
$ - $ (0.07 )
$ 0.03 $ (0.25
) Diluted (loss) earnings per share
$ (0.41 )
$ (0.72 )
$ 0.41 $ (5.77 )
Interest
Data: Three Months Ended Nine Months Ended
June 30, June 30, 2010 2009
2010 2009
Capitalized interest in inventory, beginning of period
$ 41,107 $ 45,466
$ 38,338 $ 45,977
Interest incurred
31,561 35,806
96,977 103,059
Capitalized interest impaired
(196 ) (160 )
(1,292 ) (2,113 ) Interest expense not qualified for
capitalization
and included as other expense
(17,381 ) (23,727 )
(57,478 ) (65,986 )
Capitalized interest amortized to house
construction and land sales
expenses
(16,444 ) (12,999 )
(37,898 ) (36,551 ) Capitalized interest in
inventory, end of period
$ 38,647 $ 44,386
$ 38,647 $ 44,386
BEAZER HOMES USA, INC. UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except share and per
share data) June 30, September 30,
2010 2009
ASSETS Cash and cash equivalents
$
471,958 $ 507,339 Restricted cash
42,608 49,461
Accounts receivable (net of allowance of $3,573 and $7,545,
respectively)
33,910 28,405 Income tax receivable
40,936 9,922 Inventory Owned inventory
1,235,073
1,265,441 Consolidated inventory not owned
43,285
53,015 Total inventory
1,278,358
1,318,456 Investments in unconsolidated joint ventures
8,679
30,124 Deferred tax assets, net
11,583 7,520 Property, plant
and equipment, net
23,266 25,939 Other assets
44,787 52,244 Total assets
$
1,956,085 $ 2,029,410
LIABILITIES AND STOCKHOLDERS' EQUITY Trade accounts payable
$ 67,034 $ 70,285 Other liabilities
198,325
227,315 Obligations related to consolidated inventory not owned
24,359 26,356 Total debt (net of discounts of $24,485 and
$27,257, respectively)
1,211,636
1,508,899 Total liabilities
1,501,354
1,832,855 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, 180,000,000 shares authorized, 75,677,360 and 43,150,472
issued and 75,677,360 and 39,793,316 outstanding, respectively)
76 43 Paid-in capital
616,712 568,019 Accumulated
deficit
(162,057 ) (187,538 ) Treasury stock, at cost
(0 and 3,357,156 shares, respectively)
-
(183,969 ) Total stockholders' equity
454,731
196,555 Total liabilities and stockholders'
equity
$ 1,956,085 $ 2,029,410
Inventory Breakdown Homes under construction
$
277,671 $ 219,724 Development projects in progress
452,383 487,457 Land held for future development
382,680 417,834 Land held for sale
37,373 42,470
Capitalized interest
38,647 38,338 Model homes
46,319
59,618 Consolidated inventory not owned
43,285
53,015 Total inventory
$ 1,278,358
$ 1,318,456
BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL DATA - CONTINUING
OPERATIONS (Dollars in millions)
OPERATING DATA
Quarter Ended Nine Months Ended June
30, June 30, SELECTED OPERATING DATA 2010
2009
2010 2009 Closings: West region
631 398
1,412 1,176 East region
713 368
1,442 913
Southeast region
299 182
602 556 Total
closings
1,643 948
3,456 2,645 New
orders, net of cancellations: West region
367 670
1,383 1,434 East region
445 599
1,420 1,238
Southeast region
225 267
635 521 Total
new orders
1,037 1,536
3,438 3,193
Backlog units at end of period: West region
416 785 East
region
559 810 Southeast region
200 271
Total backlog units
1,175 1,866 Dollar value
of backlog at end of period
$ 288.2 $ 430.6
BEAZER HOMES USA, INC. CONSOLIDATED OPERATING AND
FINANCIAL DATA - CONTINUING OPERATIONS (Dollars in
thousands) Quarter Ended
Nine Months Ended June 30, June 30,
SUPPLEMENTAL FINANCIAL DATA 2010 2009
2010
2009 Revenues Homebuilding operations
$
338,808 $ 222,895
$ 750,160 $ 626,338 Land
sales and other
461 819
5,330 1,369 Financial
Services
673 357
1,421 1,157 Total revenues
$
339,942 $ 224,071
$ 756,911
$ 628,864 Gross profit (loss) Homebuilding operations
$ 39,018 5,393
$ 81,397 (5,317 ) Land
sales and other
448 71
2,684 56 Financial Services
673 357
1,421
1,157 Total gross profit (loss)
$
40,139 $ 5,821
$ 85,502 $
(4,104 ) Selling, general and administrative Homebuilding
operations
$ 54,373 $ 49,438
$ 144,685
$ 168,887 Financial Services
200 185
566 920 Total selling,
general and administrative
$ 54,573 $ 49,623
$ 145,251 $ 169,807
SELECTED SEGMENT INFORMATION Revenue: West
region
$ 121,706 $ 87,328
$ 291,832 $
264,428 East region
162,274 95,043
347,488 240,029
Southeast region
55,289 41,343
116,170 123,250
Financial services
673 357
1,421 1,157 Total revenue
$ 339,942 $ 224,071
$
756,911 $ 628,864
Operating income
(loss) West region
$ 2,717 $ (6,467 )
$
6,437 $ (33,147 ) East region
11,446 (923 )
22,696 (14,760 ) Southeast region
3,568 (3,877 )
(3,800 ) (20,546 ) Financial services
473 172
853
228 Segment operating income (loss)
18,204 (11,095 )
26,186 (68,225 ) Corporate and unallocated
(36,258 ) (37,667 )
(95,726
) (134,763 ) Total operating loss
$
(18,054 ) $ (48,762 )
$ (69,540
) $ (202,988 )
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