BZH Beazer Homes USA Inc New

Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced its financial results for the quarter ended March 31, 2012.

“I was very pleased with our second quarter results,” said Allan Merrill, CEO of Beazer Homes. “We generated significant year-over-year increases in new home orders and home closings, reflecting both the initial operational benefits of our path-to-profitability strategies and gradually improving conditions in the housing market. We remain hopeful, but cautious, about the prospects for a sustained market recovery, as a number of factors continue to pose challenges for prospective homebuyers. Nevertheless, we are committed to taking the steps necessary to return to profitability as soon as possible.”

Summary results of the quarter are as follows:

As of March 31, 2012

• Total cash and cash equivalents: $534.4 million, including unrestricted cash of approximately $257.0 million
• Stockholders' equity: $218.4 million, not including $9.4 million of mandatory convertible subordinated notes, which automatically convert to common stock at maturity in 2013
• Total backlog from continuing operations: 1,975 homes with a sales value of $465.0 million, compared to 1,396 homes with a sales value of $335.2 million as of March 31, 2011
• Land and lots controlled: 25,617 lots (83.8% owned), a decrease of 17.1% from March 31, 2011

Quarter Ended March 31, 2012 - Results from Continuing Operations (unless otherwise specified)

• Total new orders: 1,512 homes, a 29.0% increase from fiscal 2011
  • Cancellation rates: 22.5%, compared with 20.0% in fiscal 2011
• Total home closings: 844 homes, a 49.9% increase from fiscal 2011
• Revenue: $191.6 million, compared to $125.7 million in fiscal 2011
  • Average sales price from closings: $224.7 thousand, compared with $216.3 thousand in fiscal 2011
• Gross profit margin: 10.5%, compared to (1.1)% in fiscal 2011. These margins were impacted by $1.2 million and $17.8 million in fiscal 2012 and fiscal 2011, respectively, for impairments and option contract abandonments.
  • Homebuilding gross profit margin, excluding impairments and abandonments: 10.9%, compared to 12.4% in fiscal 2011
  • Homebuilding gross profit margin, excluding impairments, abandonments and interest amortized to cost of sales: 17.5%, compared to 19.2% in fiscal 2011. Our margin this quarter benefited from approximately $3.2 million of bond reimbursements and product liability and warranty payment improvements. Excluding these items, our margin would have been 15.8%.
• Net loss from continuing operations: $(37.9) million, or a diluted loss per share of $(0.48), including non-cash pre-tax charges of $1.2 million for inventory impairments and a loss on debt extinguishment of $2.7 million. This compared to a loss from continuing operations in the second quarter of fiscal 2011 of $(53.8) million, or $(0.73) per share, which included non-cash pre-tax charges of $17.8 million for inventory impairments.
• Net Loss: $(39.9) million (including a loss from discontinued operations of $(2.1) million), compared with a net loss of $(53.8) million for fiscal 2011 (including income from discontinued operations of $0.02 million)
• Total Company land and land development spending: $41.9 million, compared with $61.1 million in fiscal 2011

Conference Call

The Company will hold a conference call on May 2, 2012 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 800-619-8639. 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 800-839-5574 or 203-369-3669 and enter the passcode “3740” (available until 11:00 pm ET on May 9, 2012), 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, Georgia, is one of the ten largest single-family homebuilders in the United States. The Company's industry-leading high performance homes are designed to lower the total cost of home ownership while reducing energy and water consumption. With award-winning floor-plans, the Company offers homes that incorporate exceptional value and quality to consumers in 16 states, including Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia. Beazer Homes is listed on the New York Stock Exchange and trades under the ticker symbol “BZH.”

Forward Looking Statements

This press release 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 putative class action lawsuits, multi-party suits and similar proceedings as well as the results of any other litigation or government proceedings and fulfillment of the obligations in the Deferred Prosecution Agreement and consent orders with governmental authorities and other settlement agreements; (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 and inflation; (iv) the effect of changes in lending guidelines and regulations and the uncertain availability of mortgage financing; (v) a slower economic rebound than anticipated, coupled with persistently high unemployment and additional foreclosures; (vi) continued or increased downturn in the homebuilding industry; (vii) 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, (viii) 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 or liquidity levels; (ix) potential inability to comply with covenants in our debt agreements or satisfy such obligations through repayment or refinancing; (x) increased competition or delays in reacting to changing consumer preference in home design; (xi) shortages of or increased prices for labor, land or raw materials used in housing production; (xii) factors affecting margins such as decreased land values underlying lot option agreements, increased land development costs on communities under development or delays or difficulties in implementing initiatives to reduce production and overhead cost structure; (xiii) the performance of our joint ventures and our joint venture partners; (xiv) the impact of construction defect and home warranty claims including those related to possible installation of drywall imported from China; (xv) the cost and availability of insurance and surety bonds; (xvi) delays in land development or home construction resulting from adverse weather conditions; (xvii) potential delays or increased costs in obtaining necessary permits and possible penalties for failure to comply with laws, regulations and governmental policies; (xviii) potential exposure related to additional repurchase claims on mortgages and loans originated by Beazer Mortgage Corp.; (xix) estimates related to the potential recoverability of our deferred tax assets; (xx) effects of changes in accounting policies, standards, guidelines or principles; or (xxi) 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 Six Months Ended March 31, March 31, 2012     2011 2012     2011 Total revenue $ 191,643 $ 125,716 $ 380,191 $ 234,668 Home construction and land sales expenses 170,283 109,238 333,059 206,289 Inventory impairments and option contract abandonments 1,170   17,822   4,673   18,461   Gross profit (loss) 20,190 (1,344 ) 42,459 9,918 Commissions 8,375 5,233 16,746 10,223 General and administrative expenses 26,319 36,068 54,513 68,571 Depreciation and amortization 3,190   2,062   5,593   3,967   Operating loss (17,694 ) (44,707 ) (34,393 ) (72,843 ) Equity in income (loss) of unconsolidated joint ventures 4 71 (73 ) 309 Loss on extinguishment of debt (2,747 ) (102 ) (2,747 ) (3,004 ) Other expense, net (18,265 ) (11,466 ) (36,538 ) (29,531 ) Loss from continuing operations before income taxes (38,702 ) (56,204 ) (73,751 ) (105,069 ) Benefit from income taxes (836 ) (2,426 ) (36,583 ) (3,019 ) Loss from continuing operations (37,866 ) (53,778 ) (37,168 ) (102,050 ) (Loss) income from discontinued operations, net of tax (2,082 ) 23   (2,041 ) (513 ) Net loss $ (39,948 ) $ (53,755 ) $ (39,209 ) $ (102,563 ) Weighted average number of shares: Basic and Diluted 78,553 73,930 76,347 73,904 Basic and diluted loss per share: Continuing Operations $ (0.48 ) $ (0.73 ) $ (0.49 ) $ (1.38 ) Discontinued operations $ (0.03 ) $ — $ (0.02 ) $ (0.01 ) Total $ (0.51 ) $ (0.73 ) $ (0.51 ) $ (1.39 )         Three Months Ended     Six Months Ended March 31,   March 31, 2012       2011 2012       2011 Capitalized interest in inventory, beginning of period $ 46,510 $ 43,433 $ 45,973 $ 36,884 Interest incurred 32,190 32,937 64,715 65,303 Capitalized interest impaired (25 ) (1,409 ) (53 ) (1,409 ) Interest expense not qualified for capitalization and included as other expense (18,797 ) (19,058 ) (37,914 ) (37,981 ) Capitalized interest amortized to house construction and land sales expenses (12,636 ) (8,279 ) (25,479 ) (15,173 ) Capitalized interest in inventory, end of period $ 47,242   $ 47,624   $ 47,242   $ 47,624    

BEAZER HOMES USA, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

          March 31, 2012 September 30, 2011 ASSETS Cash and cash equivalents $ 257,028 $ 370,403 Restricted cash 277,395 277,058 Accounts receivable (net of allowance of $4,099 and $3,872, respectively) 21,701 28,303 Income tax receivable 2,399 4,823 Inventory Owned inventory 1,191,572 1,192,380 Land not owned under option agreements 14,405   11,753   Total inventory 1,205,977 1,204,133 Investments in unconsolidated joint ventures 21,391 9,467 Deferred tax assets, net 6,145 2,760 Property, plant and equipment, net 21,895 22,613 Previously owned rental homes, net 18,980 11,347 Other assets 25,033   46,570   Total assets $ 1,857,944   $ 1,977,477     LIABILITIES AND STOCKHOLDERS’ EQUITY Trade accounts payable $ 54,947 $ 72,695 Other liabilities 144,789 212,187 Obligations related to land not owned under option agreements 6,260 5,389 Total debt (net of discounts of $21,313 and $23,243, respectively) 1,433,582   1,488,826   Total liabilities $ 1,639,578   $ 1,779,097     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, 101,196,954 and 75,588,396 issued and outstanding, respectively) 101 76 Paid-in capital 683,920 624,750 Accumulated deficit (465,655 ) (426,446 ) Total stockholders’ equity 218,366   198,380   Total liabilities and stockholders’ equity $ 1,857,944   $ 1,977,477     Inventory Breakdown Homes under construction $ 277,984 $ 277,331 Development projects in progress 421,892 424,055 Land held for future development 386,280 384,761 Land held for sale 13,224 12,837 Capitalized interest 47,242 45,973 Model homes 44,950 47,423 Land not owned under option agreements 14,405   11,753   Total inventory $ 1,205,977   $ 1,204,133    

BEAZER HOMES USA, INC.

CONSOLIDATED OPERATING AND FINANCIAL DATA – CONTINUING OPERATIONS

     

Quarter EndedMarch 31,

Six Months EndedMarch 31,

SELECTED OPERATING DATA 2012   2011 2012   2011 Closings: West region 369 181 739 397 East region 292 219 602 421 Southeast region 183   163   370   264 Continuing Operations 844 563 1,711 1,082 Discontinued Operations 1   20   16   50 Total closings 845   583   1,727   1,132   New orders, net of cancellations: West region 655 417 958 591 East region 502 480 751 737 Southeast region 355   275   527   378 Continuing Operations 1,512 1,172 2,236 1,706 Discontinued Operations (1 ) 27   (1 ) 46 Total new orders 1,511   1,199   2,235   1,752   Backlog units at end of period: West region 789 463 789 463 East region 787 682 787 682 Southeast region 399 251 399   251 Continuing Operations 1,975 1,396 1,975 1,396 Discontinued Operations —   20 —   20 Total backlog units 1,975   1,416   1,975   1,416   Dollar value of backlog at end of period (in millions) $ 465.0   $ 339.6   $ 465.0   $ 339.6   Revenue (in thousands): West region $ 77,857 $ 36,791 $ 148,634 $ 76,339 East region 75,192 58,418 157,010 108,632 Southeast region 38,070 30,507 73,638 49,697 Pre-owned homes 524   —   909   — Total revenue $ 191,643   $ 125,716   $ 380,191   $ 234,668  

BEAZER HOMES USA, INC.

CONSOLIDATED OPERATING AND FINANCIAL DATA – CONTINUING OPERATIONS

(Dollars in thousands)

       

Quarter EndedMarch 31,

 

Six Months EndedMarch 31,

SUPPLEMENTAL FINANCIAL DATA 2012       2011 2012       2011 Revenues: Homebuilding $ 189,617 $ 121,804 $ 376,469 $ 230,443 Land sales and other 2,026   3,912   3,722   4,225 Total $ 191,643   $ 125,716   $ 380,191   $ 234,668   Gross profit (loss): Homebuilding $ 19,467 $ (2,701 ) $ 40,819 $ 8,250 Land sales and other 723   1,357   1,640   1,668 Total $ 20,190   $ (1,344 )   $ 42,459   $ 9,918  

Reconciliation of homebuilding gross profit before impairments and abandonments and interest amortized to cost of sales and the related gross margins to homebuilding gross profit (loss) and gross margin, the most directly comparable GAAP measure, is provided for each period discussed below:

       

 

     

 

   

 

     

 

   

 

     

 

   

 

Quarter Ended March 31, Six Months Ended March 31, 2012 2011 2012 2011 Homebuilding gross profit (loss) $ 19,467 10.3 % $ (2,701 ) (2.2 )% $ 40,819 10.8 % $ 8,250 3.6 % Inventory impairments and lot option abandonments (I&A) 1,170 17,822   4,673   18,461   Homebuilding gross profit before I&A 20,637 10.9 % 15,121 12.4 % 45,492 12.1 % 26,711 11.6 % Interest amortized to cost of sales 12,636 8,279   25,479   15,173   Homebuilding gross profit before I&A and interest amortized to cost of sales 33,273 17.5 % 23,400 19.2 % 70,971 18.9 % 41,884 18.2 %  

Reconciliation of Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and impairments) to net income (loss), the most directly comparable GAAP measure, is provided for each period discussed below. Management believes that Adjusted EBITDA assists investors in understanding and comparing the operating characteristics of homebuilding activities by eliminating many of the differences in companies' respective capitalization, tax position and level of impairments.

   

Quarter EndedMarch 31,

   

Six Months EndedMarch 31,

2012     2011 2012     2011 Net loss $ (39,948 ) $ (53,755 ) $ (39,209 ) $ (102,563 ) (Benefit) provision from Income Taxes (850 ) (2,414 ) (36,996 ) (3,013 ) Interest amortized to home construction and land sales expenses, capitalized interest impaired, and interest expense not qualified for capitalization 31,458 28,746 63,446 54,563 Depreciation and amortization and stock compensation amortization 4,423 4,517 8,126 9,395 Inventory impairments and option contract abandonments 1,147 16,451 4,654 17,372 Joint venture impairment and abandonment charges 7   157   36   424   Adjusted EBITDA $ (3,763 ) $ (6,298 ) $ 57   $ (23,822 )