(updates stock info in lede and sixth paragraph; adds analyst
comments in fifth and 10th paragraphs; adds context throughout)
DOW JONES NEWSWIRES
Shares of Beazer Homes USA Inc. (BZH) fell more than 5% after
the builder's results missed expectations and orders slumped
following the tax credit's expiration.
Beazer reported a 73% surge in closings as buyers raced to
qualify for a federal tax credit offering buyers up to $8,000. But,
orders fell by a third, mirroring declines seen from other builders
reporting results in recent weeks, as consumer buying interest
cooled.
Beazer Chief Executive Ian McCarthy said orders and traffic in
May and June were "substantially" below prior-year levels, despite
low home prices and record-low mortgage rates.
"Home buyers continue to be concerned about employment, the
impact of additional foreclosures and general conditions in the
economy," he said in the prepared release. "We believe employment
growth and improved consumer confidence remain the keys to a
sustainable recovery in the homebuilding industry."
Dan Oppenheim, a builder analyst with Credit Suisse, isn't
looking for imminent improvement. "We expect the weak levels of
demand seen in May and June to persist," he wrote in a client
note.
Shares of Beazer were down 3.29% at $4.11 in early trading, off
earlier lows. It is the sector's largest decliner.
Beazer had posted three consecutive profits before falling back
into the red in the most-recent quarter. For the quarter ended June
30, Beazer reported a loss of $27.8 million, or 41 cents a share,
compared with a year-earlier loss of $28 million, or 72 cents a
share, which included a $55.2 million debt-extinguishment gain.
The latest quarter had 76% more shares outstanding as the
company sold 30 million shares earlier this year to raise
capital.
Revenue jumped 52% to $339.9 million. Analysts polled by Thomson
Reuters had forecast a loss of 25 cents on $325 in revenue.
Gross margin excluding write-downs rose to 13.3% from 7.9%.
margins probably suffered based on the higher levels of closings on
spec homes--which can require bigger discounts to sell--and lower
pricing, Oppenheim wrote. "We anticipate further margin erosion in
fiscal fourth quarter and 1Q/11 as pricing comes under additional
pressure based on the weak demand."
The builder's cancellation rate climbed to 28.9% from
23%--potentially indicating more buyers walked away from or
couldn't qualify for deals--and the average sales price dropped
12%.
-By Nathan Becker and Kevin Kingsbury, Dow Jones Newswires;
212-416-2855; nathan.becker@dowjones.com
(Dawn Wotapka contributed to this article.)