BZH Beazer Homes USA Inc New

Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced its financial results for the quarter and fiscal year ended September 30, 2013.

The Company closed out its fiscal year with improved fourth quarter results highlighted by positive net income of $11.9 million and 21.4% homebuilding gross margins. Adjusted EBITDA was $41.5 million for the quarter, up from $15.1 million in the fourth quarter of fiscal 2012.

For the full year fiscal 2013, the Company made significant progress on its objective to return to sustainable profitability. The Company’s net loss for fiscal 2013 was $33.9 million, compared to a loss of $145.3 million for fiscal 2012. New home orders were up 2.6% despite an 18.5% reduction in average community count, while full year homebuilding gross margins increased to 20.0%. And, adjusted EBITDA for the full year was significantly improved at $86.3 million for fiscal 2013, up from $21.8 million last year.

“We finished 2013 with solidly improved operating and financial results,” said Allan Merrill, CEO of Beazer Homes. “In the fourth quarter, we reported our first net profit from operations in many years, realizing the benefits of our path-to-profitability strategies and the impact of an improved homebuilding market. For the full year, with continued improvements in average sales price, sales per community per month and homebuilding gross margins, we achieved adjusted EBITDA that was more than triple the amount reported for fiscal 2012.

“With this positive momentum heading into fiscal 2014 as well as our continued belief that new home affordability and inventory levels will remain favorable, we expect to report a full year of profitability for fiscal 2014.”

Q4 Results from Continuing Operations (unless otherwise specified)

  Quarter Ended September 30, 2013   2012   Change New Home Orders 1,192 1,110 7.4 % Average community count 135 163 (17.2 )% QTD orders per month per community 3.0 2.3 30.4 % Cancellation rates 23.9 % 31.1 % -720 bps   Total Home Closings 1,657 1,608 3.0 % Average sales price from closings (in thousands) $ 263.2 $ 228.6 15.1 % Homebuilding revenue (in millions) $ 436.2 $ 367.5 18.7 % Homebuilding gross profit margin, excluding impairments and abandonments (I&A) 18.3 % 11.8 % 650 bps Homebuilding gross profit margin, excluding I&A and interest amortized to cost of sales 21.4 % 17.2 % 420 bps   Income (loss) from continuing operations before income taxes (in millions) $ 8.9 $ (64.3 ) $ 73.2 Benefit from income taxes (in millions) $ 2.5 $ 3.9 $ (1.4 ) Net income (loss) from continuing operations (in millions) $ 11.3 $ (60.4 ) $ 71.7 Basic Income (Loss) Per Share $ 0.46 $ (2.57 ) $ 3.03 Diluted Income (Loss) Per Share $ 0.36 $ (2.57 ) $ 2.93 Loss on debt extinguishment (in millions) $ (1.0 ) $ (42.4 ) $ 41.4 Inventory impairments (in millions) $ (0.4 ) $ (1.7 ) $ 1.3 Net income (loss) from continuing operations excluding loss on debt extinguishment and inventory impairments (in millions) $ 12.7 $ (16.3 ) $ 29.0 Land and land development spending (in millions) $ 160.8 $ 45.0 $ 115.8 Total Company Adjusted EBITDA (in millions) $ 41.5 $ 15.1 $ 26.4  

Full Year Results from Continuing Operations (unless otherwise specified)

  Year Ended September 30, 2013   2012   Change New Home Orders 5,026 4,901 2.6 % Average community count 145 178 (18.5 )% LTM orders per month per community 2.9 2.3 26.1 % Cancellation rates 21.8 % 27.2 % -540 bps   Total Home Closings 5,056 4,428 14.2 % Average sales price from closings (in thousands) $ 253.0 $ 224.9 12.5 % Homebuilding revenue (in millions) $ 1,279.2 $ 996.1 28.4 % Homebuilding gross profit margin, excluding impairments and abandonments 16.8 % 11.6 % 520 bps Homebuilding gross profit margin, excluding impairments, abandonments and interest amortized to cost of sales 20.0 % 17.7 % 230 bps   Loss from continuing operations before income taxes (in millions) $ (35.7 ) $ (176.0 ) $ 140.3 Benefit from income taxes (in millions) $ 3.5 $ 40.3 $ (36.8 ) Net loss from continuing operations (in millions) $ (32.2 ) $ (135.6 ) $ 103.4 Basic and Diluted Loss Per Share $ (1.30 ) $ (7.34 ) $ 6.04 Loss on debt extinguishment (in millions) $ (4.6 ) $ (45.1 ) $ 40.5 Inventory impairments (in millions) $ (2.6 ) $ (12.2 ) $ 9.6 Net loss from continuing operations excluding loss on debt extinguishment and inventory impairments (in millions) $ (25.0 ) $ (78.3 ) $ 53.3 Land and land development spending (in millions) $ 475.2 $ 185.5 $ 289.7 Adjusted EBITDA (in millions) $ 86.3 $ 21.8 $ 64.5  

As of September 30, 2013

• Total cash and cash equivalents: $553.4 million, including unrestricted cash of approximately $504.5 million
• Stockholders' equity: $240.6 million
• Total backlog from continuing operations: 1,893 homes with a sales value of $528.1 million, compared to 1,923 homes with a sales value of $479.1 million as of September 30, 2012
• Land and lots controlled: 28,004 lots (79.4% owned), an increase of 16.0% from September 30, 2012

Capital Markets Activity

During the year ended September 30, 2013, we engaged in several capital raising transactions designed to further strengthen our balance sheet and provide additional capital for land acquisitions and development. In February 2013, we issued and sold $200 million aggregate principal amount of 7.25% Senior Notes due 2023 through a private placement to qualified institutional buyers. A portion of these proceeds were used to fund the redemption of all of our outstanding 6.875% Senior Notes due 2015 and to repurchase $2 million of our 9.125% Senior Notes due 2018. In September 2013, we issued and sold $200 million aggregate principal amount of 7.5% Senior Notes due 2021 through a private placement to qualified institutional buyers. Proceeds from the 2021 Notes and the remaining funds from the 2023 Notes have been or will be used to expand our new home community count in targeted markets and for general corporate purposes.

Conference Call

The Company will hold a conference call on November 7, 2013 at 10:00 am ET 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 (for international callers, dial 312-470-7002). 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 800-839-1193 or 402-998-0566 and enter the passcode “3740” (available until 11:00 pm ET on November 14, 2013), or visit www.beazer.com. A replay of the webcast will be available at www.beazer.com for approximately 30 days.

Headquartered in Atlanta, Beazer Homes is one of the country’s 10 largest single-family homebuilders. The Company’s homes meet or exceed the benchmark for energy-efficient home construction as established by ENERGY STAR® and are designed with flexible floorplan options to meet the personal preferences and lifestyles of its buyers. In addition, the Company is committed to providing a range of preferred lender choices to facilitate transparent competition between lenders and enhanced customer service. The Company offers homes 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 under the ticker symbol “BZH.” For more info visit Beazer.com, or check out Beazer on Facebook and Twitter.

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 availability and cost of land and the risks associated with the future value of our inventory such as additional asset impairment charges or writedowns; (ii) economic changes nationally or in local markets, including changes in consumer confidence, declines in employment levels, inflation and increases in the quantity and decreases in the price of new homes and resale homes in the market; (iii) the cyclical nature of the homebuilding industry and a potential deterioration in homebuilding industry conditions; (iv) 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; (v) shortages of or increased prices for labor, land or raw materials used in housing production; (vi) 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; (vii) our ability to comply with covenants in our debt agreements or satisfy such obligations through repayment or refinancing; (viii) a substantial increase in mortgage interest rates, increased disruption in the availability of mortgage financing, a change in tax laws regarding the deductibility of mortgage interest, or an increased number of foreclosures; (ix) increased competition or delays in reacting to changing consumer preference in home design; (x) factors affecting margins such as decreased land values underlying land option agreements, increased land development costs on communities under development or delays or difficulties in implementing initiatives to reduce production and overhead cost structure; (xi) estimates related to the potential recoverability of our deferred tax assets; (xii) potential delays or increased costs in obtaining necessary permits as a result of changes to, or complying with, laws, regulations, or governmental policies and possible penalties for failure to comply with such laws, regulations and governmental policies; (xiii) the results of litigation or government proceedings and fulfillment of the obligations in the Deferred Prosecution Agreement and consent orders with governmental authorities and other settlement agreements; (xiv) the impact of construction defect and home warranty claims; (xv) the cost and availability of insurance and surety bonds; (xvi) the performance of our unconsolidated entities and our unconsolidated entity partners; (xvii) delays in land development or home construction resulting from adverse weather conditions; (xviii) the impact of information technology failures or data security breaches; (xix) effects of changes in accounting policies, standards, guidelines or principles; or (xx) 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, 2013   2012 2013   2012 Total revenue $ 438,334 $ 370,931 $ 1,287,577 $ 1,005,677 Home construction and land sales expenses 357,884 327,815 1,070,814 888,379 Inventory impairments and option contract abandonments 404   1,718   2,633   12,210   Gross profit 80,046 41,398 214,130 105,088 Commissions 17,516 16,063 52,922 43,585 General and administrative expenses 36,428 27,671 121,163 110,051 Depreciation and amortization 4,023   4,174   12,784   13,510   Operating income (loss) 22,079 (6,510 ) 27,261 (62,058 ) Equity in income (loss) of unconsolidated entities 93 329 (113 ) 304 Loss on extinguishment of debt (998 ) (42,350 ) (4,636 ) (45,097 ) Other expense, net (12,307 ) (15,777 ) (58,165 ) (69,119 ) Income (loss) from continuing operations before income taxes 8,867 (64,308 ) (35,653 ) (175,970 ) Benefit from income taxes (2,461 ) (3,909 ) (3,489 ) (40,347 ) Income (loss) from continuing operations 11,328 (60,399 ) (32,164 ) (135,623 ) Income (loss) from discontinued operations, net of tax 620   (5,834 ) (1,704 ) (9,703 ) Net income (loss) $ 11,948   $ (66,233 ) $ (33,868 ) $ (145,326 ) Weighted average number of shares: Basic 24,888 23,528 24,651 18,474 Diluted 31,560 23,528 24,651 18,474 Income (loss) per share: Basic income (loss) per share from continuing operations $ 0.46 $ (2.57 ) $ (1.30 ) $ (7.34 ) Basic income (loss) per share from discontinued operations $ 0.02 $ (0.25 ) $ (0.07 ) $ (0.53 ) Basic income (loss) per share $ 0.48 $ (2.82 ) $ (1.37 ) $ (7.87 ) Diluted income (loss) per share from continuing operations $ 0.36 $ (2.57 ) $ (1.30 ) $ (7.34 ) Diluted income (loss) per share from discontinued operations $ 0.02 $ (0.25 ) $ (0.07 ) $ (0.53 ) Diluted income (loss) per share $ 0.38 $ (2.82 ) $ (1.37 ) $ (7.87 )       Three Months Ended       Fiscal Year Ended September 30, September 30, 2013   2012 2013   2012 Capitalized interest in inventory, beginning of period $ 50,019 $ 45,373 $ 38,190 $ 45,973 Interest incurred 28,715 28,968 115,076 124,918 Capitalized interest impaired — — — (275 ) Interest expense not qualified for capitalization and included as other expense (12,749 ) (16,327 ) (59,458 ) (71,474 ) Capitalized interest amortized to house construction and land sales expenses (13,423 ) (19,824 ) (41,246 ) (60,952 ) Capitalized interest in inventory, end of period $ 52,562   $ 38,190   $ 52,562   $ 38,190    

BEAZER HOMES USA, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

      September 30, 2013 September 30, 2012 ASSETS Cash and cash equivalents $ 504,459 $ 487,795 Restricted cash 48,978 253,260 Accounts receivable (net of allowance of $1,651 and $2,235, respectively) 22,342 24,599 Income tax receivable 2,813 6,372 Inventory Owned inventory 1,304,694 1,099,132 Land not owned under option agreements 9,124   12,420   Total inventory 1,313,818 1,111,552 Investments in unconsolidated entities 44,997 42,078 Deferred tax assets, net 5,253 6,848 Property, plant and equipment, net 17,000 18,974 Other assets 27,129   30,740   Total assets $ 1,986,789   $ 1,982,218     LIABILITIES AND STOCKHOLDERS’ EQUITY Trade accounts payable $ 83,800 $ 69,268 Other liabilities 145,623 147,718 Obligations related to land not owned under option agreements 4,633 4,787 Total debt (net of discounts of $5,160 and $3,082, respectively) 1,512,183   1,498,198   Total liabilities $ 1,746,239   $ 1,719,971     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, 63,000,000 shares authorized, 25,245,945 and 24,601,830 issued and outstanding, respectively) 25 25 Paid-in capital 846,165 833,994 Accumulated deficit (605,640 ) (571,772 ) Total stockholders’ equity 240,550   262,247   Total liabilities and stockholders’ equity $ 1,986,789   $ 1,982,218     Inventory Breakdown Homes under construction $ 262,476 $ 251,828 Development projects in progress 578,453 391,019 Land held for future development 341,986 367,102 Land held for sale 31,331 10,149 Capitalized interest 52,562 38,190 Model homes 37,886 40,844 Land not owned under option agreements 9,124   12,420   Total inventory $ 1,313,818   $ 1,111,552    

BEAZER HOMES USA, INC.

CONSOLIDATED OPERATING AND FINANCIAL DATA – CONTINUING OPERATIONS

        Quarter Ended September 30, Fiscal Year Ended September 30, SELECTED OPERATING DATA 2013   2012 2013   2012 Closings: West region 724 689 2,277 1,883 East region 523 522 1,629 1,506 Southeast region 410   397   1,150   1,039 Continuing Operations 1,657 1,608 5,056 4,428 Discontinued Operations —   —   —   19 Total closings 1,657   1,608   5,056   4,447   New orders, net of cancellations: West region 480 464 2,176 2,152 East region 403 378 1,543 1,615 Southeast region 309   268   1,307   1,134 Continuing Operations 1,192 1,110 5,026 4,901 Discontinued Operations —   —   —   2 Total new orders 1,192   1,110   5,026   4,903   Backlog units at end of period: West region 738 839 738 839 East region 661 747 661 747 Southeast region 494   337   494   337 Continuing Operations 1,893 1,923 1,893 1,923 Discontinued Operations —   —   —   — Total backlog units 1,893   1,923   1,893   1,923   Dollar value of backlog at end of period (in millions) $ 528.1   $ 479.1   $ 528.1   $ 479.1   Homebuilding Revenue (in thousands): West region $ 183,472 $ 141,124 $ 543,524 $ 386,544 East region 158,134 146,295 482,468 401,814 Southeast region 94,581   80,100   253,220   207,701 Total homebuilding revenue $ 436,187   $ 367,519   $ 1,279,212   $ 996,059  

BEAZER HOMES USA, INC.

CONSOLIDATED OPERATING AND FINANCIAL DATA – CONTINUING OPERATIONS

(Dollars in thousands)

          Quarter Ended September 30, Fiscal Year Ended September 30, SUPPLEMENTAL FINANCIAL DATA 2013   2012 2013   2012 Revenues: Homebuilding $ 436,187 $ 367,519 $ 1,279,212 $ 996,059 Land sales and other 2,147   3,412   8,365   9,618 Total $ 438,334   $ 370,931   $ 1,287,577   $ 1,005,677   Gross profit: Homebuilding $ 79,583 $ 41,630 $ 212,054 $ 103,105 Land sales and other 463   (232 ) 2,076   1,983 Total $ 80,046   $ 41,398   $ 214,130   $ 105,088  

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 and gross margin, the most directly comparable GAAP measure, is provided for each period discussed below:

    Quarter Ended September 30,     Fiscal Year Ended September 30, 2013     2012 2013     2012 Homebuilding gross profit $ 79,583   18.2 % $ 41,630   11.3 % $ 212,054   16.6 % $ 103,105   10.4 % Inventory impairments and lot option abandonments (I&A) 404   1,718   2,633   12,210   Homebuilding gross profit before I&A 79,987 18.3 % 43,348 11.8 % 214,687 16.8 % 115,315 11.6 % Interest amortized to cost of sales 13,423   19,824   41,246   60,952   Homebuilding gross profit before I&A and interest amortized to cost of sales $ 93,410   21.4 % $ 63,172   17.2 % $ 255,933   20.0 % $ 176,267   17.7 %  

Reconciliation of Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, debt extinguishment, impairments and abandonments) to total company net income (loss) (excluding discontinued operations), 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 EndedSeptember 30,

   

Fiscal Year EndedSeptember 30,

2013   2012 2013   2012 Net income (loss) $ 11,948 $ (66,233 ) $ (33,868 ) $ (145,326 ) Benefit from income taxes (2,587 ) (3,901 ) (3,684 ) (40,747 ) Interest amortized to home construction and land sales expenses, capitalized interest impaired, and interest expense not qualified for capitalization 26,172 36,151 100,704 132,701 Depreciation and amortization and stock compensation amortization 4,606 4,991 15,642 17,573 Inventory impairments and option contract abandonments 404 1,718 2,650 12,514 Loss on debt extinguishment 998 42,350 4,636 45,097 Joint venture impairment and abandonment charges —   —   181   36   Adjusted EBITDA $ 41,541   $ 15,076   $ 86,261   $ 21,848  

Beazer Homes USA, Inc.Carey Phelps, 770-829-3700Director, Investor Relations & Corporate Communicationsinvestor.relations@beazer.com