Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today
announced its financial results for the fiscal quarter and fiscal
year ended September 30, 2010. Summary results of the quarter and
fiscal year are as follows:
Fiscal Year Ended September 30,
2010
- Total home closings: 4,645 homes, a
5.9% increase from fiscal 2009, of which 4,513 were from our
continuing operations, representing a 7.6% increase
year-over-year.
- Total new orders: 4,248 homes, a 0.6%
increase from fiscal 2009, of which 4,122 new orders were from our
continuing operations, representing a 1.1% increase
year-over-year.
- Revenue from continuing operations:
$1.01 billion, compared to $971.7 million in the prior year.
- Gross profit margin from continuing
operations was 8.5% (13.4% without impairments and abandonments),
compared to 1.6% (11.4% without impairments and abandonments) in
the prior year.
- Loss from continuing operations of
$29.9 million, or a loss of $0.50 per share, including:
- non-cash pre-tax charges of $50.0
million for inventory impairments;
- an $8.8 million impairment of our
investment in an unconsolidated joint venture;
- a $43.9 million gain on debt
extinguishment primarily related to the exchange of our junior
subordinated notes; and
- a $118.4 million benefit from income
taxes.
- For the prior year, the Company
reported a loss from continuing operations of $175.5 million, or
$4.54 per share, which included non-cash pre-tax charges of $95.2
million for inventory impairments and $12.6 million of
unconsolidated joint venture impairments offset by a gain on debt
extinguishment of $144.5 million.
- Net loss of $34.05 million, including a
loss from discontinued operations of $4.13 million, net of a $14.8
million benefit from income taxes.
- For the prior year, the net loss of
$189.4 million included a loss from discontinued operations of
$13.9 million, net of a $0.7 million benefit from income
taxes.
- During fiscal 2010, we received a tax
refund of $133 million related to our carry-back claim under The
Worker, Homeownership and Business Assistance Act of 2009.
- As previously reported, during fiscal
2010, the Company completed public offerings of 34.9 million shares
of its common stock, $57.5 million of mandatory convertible
subordinated notes, $300 million of senior notes due 2018 and 3
million tangible equity units. Net proceeds of these transactions
were approximately $597 million and were used for debt repurchases,
including the retirement of our outstanding 2011, 2012 senior notes
and 2024 convertible senior notes. We also completed an exchange of
$75 million of our junior subordinated notes during fiscal
2010.
Quarter Ended September 30,
2010
- Total home closings: 1,189, a 29.5%
decrease from fiscal 2009, of which 1,149 homes were from our
continuing operations, representing a 30.0% decrease
year-over-year.
- Total new orders: 810 homes, a 20.0%
decrease from fiscal 2009, of which 778 new orders were from
continuing operations, representing a 20.6% decrease
year-over-year.
- Revenue from continuing operations:
$274.8 million, compared to $365.6 million in the fourth quarter of
the prior year.
- Gross profit margin from continuing
operations of 1.7% (11.3% without impairments and abandonments),
compared to 6.1% (14.3% without impairments and abandonments) in
the fourth quarter of the prior year.
- Loss from continuing operations of
$57.4 million, or a loss of $0.78 per share, including non-cash
pre-tax charges of $26.5 million for inventory impairments.
- For the fourth quarter of the prior
fiscal year, the Company reported income from continuing operations
of $33.5 million, or $0.86 diluted earnings per share, including a
gain on debt extinguishment of $89.3 million offset partially by
non-cash pre-tax charges of $29.9 million for inventory
impairments.
- Net loss of $59.5 million, including a
net loss from discontinued operations of $2.1 million.
- For the fourth quarter of the prior
fiscal year, our net income was $33.8 million, including net income
from discontinued operations of $0.3 million.
Discontinued Operations
Commencing with the fiscal quarter ended September 30, 2010, the
Company has reclassified the results of operations of its
homebuilding operations in Jacksonville, Florida and Albuquerque,
New Mexico and its title services operations as discontinued
operations in its consolidated statements of operations for all
periods presented.
As of September 30, 2010
- Total cash and cash equivalents: $576.3
million, including restricted cash of $39.2 million.
- Stockholders’ equity: $397.1 million
not including $57.5 million of mandatory convertible subordinated
notes, which automatically convert to common stock at
maturity.
- Total Backlog: 796 homes with a sales
value of $189.1 million compared to 1,193 homes with a sales value
of $280.8 million as of September 30, 2009.
Ian J. McCarthy, President and Chief Executive Officer, said,
“We are pleased with the overall operational and financial progress
we made during fiscal 2010, in spite of the continuing difficult
conditions in the economy and the homebuilding industry. We
recognize that consumers remain hesitant to commit to new home
purchases because of concerns about employment and prospective
foreclosures, among other issues. But, with a substantially
improved balance sheet and gradually improving operational
performance, we believe we are well positioned to participate in
the eventual housing recovery.”
Results for the Year and Quarter Ended
September 30, 2010
For the fiscal year ended September 30, 2010, net new home
orders increased 1.1%, the number of homes closed increased 7.6%
and homebuilding revenues from continuing operations increased 3.3%
as compared to fiscal 2009. Our gross profit margin improved to
8.5% (13.4% without impairments and abandonments) for fiscal 2010
compared to 1.6% (11.4% without impairments and abandonments) in
the prior year. Although full year gross margins improved
year-over-year, we continued to be impacted by a challenging
homebuilding environment, with weak closing volumes and a lower
average sales price. In addition, we recorded non-cash pre-tax
charges for inventory impairments and lot option abandonments of
$50.0 million for the fiscal year ended September 30, 2010, which
compared to similar charges of $95.2 million in the prior year.
For the fourth quarter, net new home orders decreased 20.6%, the
number of homes closed decreased 30.0% and homebuilding revenues
from continuing operations decreased 25.5% as compared to the
fourth quarter of fiscal 2009. The decrease in home closings and
related revenue was closely related to the acceleration of closings
into our fiscal third quarter in connection with the expiration of
the First Time Homebuyer Tax Credit on June 30, 2010. The reduction
in net new home orders from continuing operations was driven by a
23.1% decrease in gross new orders, partially offset by a decrease
in the cancellation rate to 33.0%, compared to 35.2% a year ago.
Our gross profit margin declined to 1.7% (11.3% without impairments
and abandonments) in the quarter, compared to 6.1% (14.3% without
impairments and abandonments) in the prior year. This reduction in
gross margins was primarily attributable to non-recurring changes
in warranty expense, greater concessions made to homebuyers during
the quarter and higher indirect construction costs associated with
our newly acquired communities. In addition, we recorded non-cash
pre-tax charges for inventory impairments and lot option
abandonments of $26.5 million for the quarter, which compared to
similar charges of $29.9 million in the prior year.
The Company controlled 28,996 lots at September 30, 2010 (80%
owned and 20% controlled under options) a reduction of 5.4% from
the level at September 30, 2009.
As of September 30, 2010, unsold homes consisted of 423 finished
homes and 382 homes under construction, a total reduction of 311
homes or 28% compared to June 30, 2010.
As of September 30, 2010, we had deferred tax assets, net of
$57.2 million of deferred tax liabilities, of $411.6 million, of
which, all but $7.8 million has been reserved for with a $403.8
million valuation allowance. While the actual realization of the
deferred tax assets is difficult to predict and is dependent on
future events, as evidenced by our current valuation allowance, we
currently anticipate that between $228 million and $350 million of
these deferred tax assets may be available even after consideration
of the Section 382 imposed limitation.
September 30, Recovery
Range ($ in millions)
2010 Minimum
Estimated Deferred tax assets Subject to annual limitation
$
79.5 $ 79.5 $ 79.5 Generally not subject to annual
limitation
206.1 206.1 206.1 Certain components likely to be
subject to annual limitation
183.2 -
122.0 Total deferred tax assets
468.8 285.6
407.6
Deferred tax liabilities
(57.2 )
(57.2 ) (57.2 ) Net deferred tax assets before valuation
allowance
$ 411.6 $ 228.4 $ 350.4
Other Items
We operated Beazer Mortgage Corporation (BMC) from 1998 through
February 2008 to offer mortgage financing to the buyers of our
homes. BMC entered into various agreements with mortgage investors
for the origination of mortgage loans. Underwriting decisions were
not made by BMC but by the investors or third-party service
providers. To date, we have received requests to repurchase fewer
than 100 mortgage loans from various investors. While we have not
been required to repurchase any mortgage loans, we have established
an immaterial amount as a reserve for the repurchase of mortgage
loans originated by BMC. We cannot rule out the potential for
additional mortgage loan repurchase claims in the future, although,
at this time, we do not believe that the exposure related to any
such additional claims would be material to the Company.
Conference Call
The Company will hold a conference call on November 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 November 13, 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, 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, declines in employment
levels, 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 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) potential exposure related to
additional repurchase claims on mortgages and loans originated by
BMC; (xviii) estimates related to the potential recoverability of
our deferred tax assets; (xviv) effects of changes in accounting
policies, standards, guidelines or principles; or (xvv) 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. UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except per share
data) Three Months
Ended Fiscal Year Ended September 30,
September 30, 2010 2009
2010 2009 Total revenue
$
274,774 $ 365,585
$ 1,009,841 $ 971,703 Home
construction and land sales expenses
243,742 313,242
874,197 860,733 Inventory impairments and option contract
abandonments
26,481 29,887
50,036 95,216 Gross profit
4,551 22,456
85,608 15,754 Selling, general
and administrative expenses
44,296 57,041
186,556
222,691 Depreciation and amortization
3,467 5,724
12,874 18,392 Goodwill impairment
-
-
- 16,143
Operating loss
(43,212 ) (40,309 )
(113,822
) (241,472 ) Equity in income (loss) of unconsolidated joint
ventures
12 (106 )
(8,807 ) (12,112 ) Gain on
extinguishment of debt
- 89,289
43,901 144,503 Other
expense, net
(15,625 ) (15,818 )
(69,543 ) (74,791 ) Loss from continuing
operations before income taxes
(58,825 ) 33,056
(148,271 ) (183,872 ) (Benefit from) provision for
income taxes
(1,400 ) (453 )
(118,355 ) (8,350 ) (Loss) income from
continuing operations
(57,425 ) 33,509
(29,916
) (175,522 ) (Loss) income from discontinued operations, net
of tax
(2,105 ) 282
(4,133 ) (13,861 ) Net (loss) income
$
(59,530 ) $ 33,791
$ (34,049
) $ (189,383 ) Weighted average number of shares:
Basic
73,814 38,753
59,801 38,688 Diluted
73,814 41,865
59,801 38,688 (Loss) earnings
per share: Basic (loss) earnings per share from continuing
operations
$ (0.78 ) $ 0.86
$
(0.50 ) $ (4.54 ) Basic (loss) earnings per share
from discontinued operations
$ (0.03 ) $ 0.01
$ (0.07 ) $ (0.36 ) Basic (loss) earnings per
share
$ (0.81 ) $ 0.87
$ (0.57
) $ (4.90 ) Diluted (loss) earnings per share from
continuing operations
$ (0.78 ) $ 0.83
$ (0.50 ) $ (4.54 ) Diluted (loss) earnings
per share from discontinued operations
$ (0.03
) $ 0.01
$ (0.07 ) $ (0.36 ) Diluted
(loss) earnings per share
$ (0.81 ) $ 0.84
$ (0.57 ) $ (4.90 )
Interest
Data: Three Months Ended Fiscal Year Ended
September 30, September 30, 2010
2009
2010 2009
Capitalized interest in inventory, beginning of period
$ 38,647 $ 44,386
$ 38,338 $ 45,977
Interest incurred
30,339 30,422
127,316 133,481
Capitalized interest impaired
(1,021 ) (1,263 )
(2,313 ) (3,376 ) Interest expense not qualified for
capitalization
and included as other expense
(16,736 ) (17,044 )
(74,214 ) (83,030 )
Capitalized interest amortized to house
construction and land sales expenses
(14,345 ) (18,163 )
(52,243 ) (54,714 ) Capitalized interest in
inventory, end of period
$ 36,884 $ 38,338
$ 36,884 $ 38,338
BEAZER HOMES USA, INC. UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except share and per
share data) September
30, September 30,
2010 2009
ASSETS Cash and cash equivalents
$ 537,121 $
507,339 Restricted cash
39,200 49,461 Accounts receivable
(net of allowance of $3,567 and $7,545, respectively)
32,647
28,405 Income tax receivable
7,684 9,922 Inventory Owned
inventory
1,153,703 1,265,441 Consolidated inventory not
owned
49,958 53,015 Total
inventory
1,203,661 1,318,456 Investments in unconsolidated
joint ventures
8,721 30,124 Deferred tax assets, net
7,779 7,520 Property, plant and equipment, net
23,995
25,939 Other assets
42,094 52,244
Total assets
$ 1,902,902 $ 2,029,410
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable
$ 53,418 $ 70,285 Other
liabilities
210,170 227,315 Obligations related to
consolidated inventory not owned
30,666 26,356 Total debt
(net of discounts of $23,617 and $27,257, respectively)
1,211,547 1,508,899 Total liabilities
1,505,801 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, 80,000,000 shares authorized,
75,669,381 and 43,150,472 issued and 75,669,381 and 39,793,316
outstanding, respectively)
76 43 Paid-in capital
618,612 568,019 Accumulated deficit
(221,587 )
(187,538 ) Treasury stock, at cost (0 and 3,357,156 shares,
respectively)
- (183,969 ) Total
stockholders' equity
397,101 196,555
Total liabilities and stockholders' equity
$
1,902,902 $ 2,029,410 Inventory
Breakdown Homes under construction
$ 210,105 $
219,724 Development projects in progress
444,062 487,457
Land held for future development
382,889 417,834 Land held
for sale
36,259 42,470 Capitalized interest
36,884
38,338 Model homes
43,505 59,618 Consolidated inventory not
owned
49,957 53,015 Total
inventory
$ 1,203,661 $ 1,318,456
BEAZER HOMES USA, INC. CONSOLIDATED
OPERATING AND FINANCIAL DATA - CONTINUING OPERATIONS
(Dollars in millions)
OPERATING
DATA Quarter Ended Fiscal Year
Ended September 30, September 30, SELECTED
OPERATING DATA 2010 2009
2010 2009
Closings: West region
399 726
1,777 1,883 East region
455 593
1,729 1,432 Southeast region
295 322
1,007 881 Continuing
Operations
1,149 1,641
4,513 4,196 Discontinued
Operations 40 45 132 192 Total closings
1,189 1,686
4,645 4,388
New orders, net of cancellations: West region
262 390
1,615 1,793 East region
313 389
1,563 1,509
Southeast region
203 201
944
775 Continuing Operations
778 980
4,122 4,077
Discontinued Operations 32 32 126 146
Total new orders
810 1,012
4,248
4,223 Backlog units at end of period: West region
269
431 East region
366 532 Southeast region
145
208 Continuing Operations
780 1,171
Discontinued Operations 16 22 Total backlog
units
796 1,193 Dollar value of backlog
at end of period
$ 189.1 $ 280.8
BEAZER HOMES USA, INC. CONSOLIDATED OPERATING AND
FINANCIAL DATA - CONTINUING OPERATIONS (Dollars in
thousands)
Quarter Ended Fiscal Year Ended
September 30, September 30, SUPPLEMENTAL FINANCIAL
DATA 2010 2009
2010 2009 Revenues Homebuilding
operations
$ 270,794 $ 363,565
$
1,000,531 $ 968,314 Land sales and other
3,980
2,020
9,310
3,389 Total revenues
$ 274,774
$ 365,585
$ 1,009,841 $
971,703 Gross profit (loss) Homebuilding operations before
inventory impairments
and lot option abandonments
$ 29,636 51,779
$ 131,564 110,350
Inventory impairments and lot option abandonments
(26,481
) (29,887 )
(50,036 ) (95,216 ) Land sales and
other
1,396 564
4,080 620 Total gross profit
(loss)
$ 4,551 $ 22,456
$
85,608 $ 15,754
SELECTED SEGMENT INFORMATION Revenue: West region
$ 80,203 $ 148,706
$ 364,530 $ 409,168
East region
138,339 151,265
451,162 374,618 Southeast
region
56,232 65,614
194,149 187,917 Total
revenue
$ 274,774 $ 365,585
$ 1,009,841 $ 971,703
Operating income (loss) West region
$ (5,008
) $ 946
$ 1,120 $ (31,889 ) East region
(8,667 ) 9,638
11,329 (2,722 ) Southeast
region
490 (10,946 )
(518 ) (32,151 ) Segment operating
income (loss)
(13,185 ) (362 )
11,931 (66,762
) Corporate and unallocated
(30,027 )
(39,947 )
(125,753 )
(174,710 ) Total operating loss
$ (43,212 )
$ (40,309 )
$ (113,822 ) $
(241,472 )
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