BZH Beazer Homes USA Inc New

Beazer Homes Reports Record Earnings: Fourth Quarter Diluted EPS of $4.18 Up 38%; ATLANTA, Nov. 5 /PRNewswire-FirstCall/ -- Beazer Homes USA, Inc. ( http://www.beazer.com/ ) today announced results for the quarter and year ended September 30, 2003, reporting record earnings. The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.10 per common share. In addition, the Company released information about its new branding initiative and provided details regarding strategic growth initiatives. Highlights of the quarter and year, compared to the same periods of the prior year, are as follows: Quarter Ended September 30, 2003 - Record diluted EPS: $4.18 (up 38% vs. $3.03 in prior year) - Record home closings: 5,014 (up 4%) - Record total revenues: $1.0 billion (up 15%) - Earnings before interest, taxes, depreciation and amortization (EBITDA): $115.4 million (up 37%) - EBITDA margin: 11.1% (up 180 basis points) - Record net income: $57.2 million (up 41%) - Record September quarter new orders: 3,862 (up 4%) Year Ended September 30, 2003 - Record diluted EPS: $12.78 (up 19% vs. $10.74 in prior year) - Record home closings: 15,409 (up 13%) - Record total revenues: $3.2 billion (up 20%) - Earnings before interest, taxes, depreciation and amortization (EBITDA): $354.2 million (up 39%) - EBITDA margin: 11.1% (up 150 basis points) - Record net income: $172.7 million (up 41%) - Record new orders: 16,316 (up 20%) Record Year-End Backlog - Record year-end backlog: 7,426 homes (up 14%), sales value $1.6 billion (up 27%) Record Earnings for September Quarter and Fiscal Year "Beazer Homes ends the year with a strong finish, surpassing numerous milestones," said President and Chief Executive Officer Ian J. McCarthy. "For the first time we generated annual revenues in excess of $3 billion and the fourth quarter marked our first-ever $1 billion revenue quarter. This was accompanied by significant increases in earnings, illustrating our ongoing commitment to achieving profitable growth by leveraging our size, scale and geographic reach, as well as executing specific growth and profitability initiatives." "Beazer Homes' year-end backlog now stands at 7,426 homes with a sales value of $1.6 billion, up 14% and 27%, respectively from the backlog homes and sales value at September 30, 2002. This sizable year-end backlog increase provides excellent visibility for another strong performance during fiscal 2004," added McCarthy. Strong Financial Position; Profit Margin Expansion in Fiscal 2003 "We continued to strengthen Beazer Homes' financial position during fiscal 2003," said James O'Leary, Executive Vice President and Chief Financial Officer. "Interest coverage (EBITDA divided by interest incurred) increased from 5.0x to 5.4x, and at year-end, debt to total capitalization improved to 43% from 48% at September 30, 2002. Net debt to total capitalization now stands at 40%, including $73.4 million of cash on the balance sheet. Furthermore, we achieved significant profit margin improvement and expect recently introduced profit improvement initiatives to yield further increases to our margins in the future." During the fourth quarter and fiscal 2003, the Company increased its EBITDA margin by 180 and 150 basis points, respectively. This improvement reflects strong industry fundamentals and greater emphasis on focused profit improvement initiatives. These gains were achieved despite higher warranty expenses associated with construction defect claims from water intrusion in the Midwest and inventory write-downs in the Southeast. Board of Directors Declares Quarterly Dividend The Company also announced its intention to begin paying a quarterly cash dividend. The Board of Directors on November 4, 2003 declared an initial quarterly cash dividend of $0.10 per common share payable December 22, 2003 to shareholders of record at the close of business on December 10, 2003. "The decision by the Board to institute a quarterly dividend reflects its continued confidence in the Company's prospects for the future to both invest in the Company's growth and to allocate capital to dividends for our shareholders," said McCarthy. Branding and Strategic Growth Initiatives The Company also announced a new branding initiative. "On October 15, Beazer Homes began rolling out a strengthened brand identity which is the result of more than two years of work aimed at building a unified consumer brand across all regions in which we operate," said McCarthy. "Beazer Homes becomes a more dynamic force when we present ourselves as one company with one name, one logo, one message and one purpose." "This undertaking is about much more than a universal name and a new look," McCarthy continued. "The homebuilding industry continues to undergo change and rapid consolidation with large public builders poised to capitalize on sustainable competitive advantages." To benefit from these trends and achieve its growth potential, Beazer Homes will differentiate itself through qualities that lead to good recommendations, referrals to family and friends, and repeat purchases by loyal customers. "While our brand strategy has many components," said McCarthy, "the customer is the constant focus. A strengthened, national brand identity positions us to consistently address the needs of our customers across all of our markets." "Beazer Homes has grown both organically and through acquisition, establishing one of the most diversified geographic footprints in the industry," added McCarthy. "Significant opportunity exists to build on the strengths Beazer Homes has established in terms of size, experience, capabilities and talent. Moving forward, we will focus on consistently achieving sustainable and profitable growth. We will accomplish this through strategic growth initiatives that leverage our national brand, capitalize on our broad geographic profile through focused product expansion and price-point diversification, as well as drive best practices to achieve optimal efficiencies. All of these efforts are designed to deliver maximum value to our customers, and in turn, to our shareholders." Beazer Homes Targets EPS Growth of 10-15% in Fiscal 2004 "Our strong backlog coupled with our expectations of continued strength in the housing market provide us confidence in our future growth opportunities," said McCarthy. "We believe strong demographic trends combined with constraints on housing supply will continue to drive earnings growth for large public homebuilders, such as Beazer Homes. In addition, our strategic growth priorities, as outlined above, will place us in a strong position for continued success. As such, we expect to generate diluted earnings per share in the range of $14.00 - $14.75 in fiscal 2004, representing approximately 10-15% growth over fiscal 2003." Beazer Homes USA, Inc., headquartered in Atlanta is one of the country's ten largest single-family homebuilders with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas and Virginia. Beazer Homes also provides mortgage origination and title services to its homebuyers. Notes Forward-Looking Statements: Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to changes in general economic conditions, fluctuations in interest rates, increases in raw materials and labor costs, levels of competition and other factors described in the Company's Annual Report for the year ended September 30, 2002. Non-GAAP Financial Measures: EBITDA is not a generally accepted accounting principle (GAAP) financial measure. EBITDA is calculated by adding to net income the provision for income tax, depreciation, amortization and interest. EBITDA should not be considered an alternative to net income determined in accordance with GAAP as an indicator of operating performance. Because some analysts and companies may not calculate EBITDA in the same manner as Beazer, the EBITDA information presented above may not be comparable to similar presentations by others. Beazer's management believes that EBITDA reflects the changes in the Company's operating results, particularly changes in the Company's net income, and believes it to be an effective measure of operating performance. A reconciliation of EBITDA to net income, the most directly comparable GAAP measure, is provided below: Quarter Ended September 30, 2003 2002 Reconciliation of Net Income to EBITDA Net Income $57,164 $40,658 Add: Income taxes 37,321 26,545 Interest 17,302 14,176 Depreciation and amortization 3,623 3,131 EBITDA $115,410 $84,510 Year Ended September 30, 2003 2002 Reconciliation of Net Income to EBITDA Net Income $172,745 $122,634 Add: Income taxes 112,784 79,425 Interest 55,451 43,001 Depreciation and amortization 13,220 9,453 EBITDA $354,200 $254,513 Interest Incurred $65,295 $51,171 Interest Coverage 5.4x 5.0x BEAZER HOMES USA, INC. CONSOLIDATED OPERATING AND FINANCIAL DATA (Dollars in thousands, except per share amounts) FINANCIAL DATA Quarter Ended Year Ended September 30, September 30, 2003 2002 2003 2002 INCOME STATEMENT Revenues $1,039,923 $904,331 $3,177,408 $2,641,173 Costs and expenses: Home construction and land sales 812,681 720,661 2,478,584 2,112,414 Interest 17,302 14,176 55,451 43,001 Selling, general and administrative expense 117,306 105,394 356,648 292,584 Expenses related to early retirement of debt 0 0 7,570 0 Operating income 92,634 64,100 279,155 193,174 Other income 1,851 3,103 6,374 8,885 Income before income taxes 94,485 67,203 285,529 202,059 Income taxes 37,321 26,545 112,784 79,425 Net income $57,164 $40,658 $172,745 $122,634 Net income per common share: Basic $4.38 $3.21 $13.41 $11.64 Diluted $4.18 $3.03 $12.78 $10.74 Weighted average shares outstanding, in thousands: Basic 13,060 12,647 12,886 10,535 Diluted 13,679 13,407 13,514 11,415 Interest incurred $15,677 $16,653 $65,295 $51,171 Depreciation and amortization $3,623 $3,131 $13,220 $9,453 SELECTED BALANCE SHEET DATA September 30, 2003 2002 Cash $73,372 $124,989 Inventory 1,723,483 1,364,133 Total assets 2,212,034 1,892,847 Total debt 741,365 739,100 Shareholders' equity 993,695 799,515 BEAZER HOMES USA, INC. CONSOLIDATED OPERATING AND FINANCIAL DATA (Continued) (Dollars in thousands) OPERATING DATA Quarter Ended Year Ended September 30, September 30, SELECTED OPERATING DATA 2003 2002 2003 2002 Closings: Southeast region 1,770 1,719 5,160 4,575 West region 1,379 1,272 4,688 4,442 Central region 405 331 1,239 1,121 Mid-Atlantic region 449 324 1,238 1,412 Midwest region 1,011 1,193 3,084 2,053 Total closings 5,014 4,839 15,409 13,603 New orders, net of cancellations: Southeast region 1,298 1,185 5,614 4,623 West region 1,452 1,175 5,142 4,669 Central region 268 327 1,128 1,244 Mid-Atlantic region 273 263 1,655 1,365 Midwest region 571 781 2,777 1,709 Total new orders 3,862 3,731 16,316 13,610 Backlog at end of period 7,426 6,519 Dollar value of backlog at end of period $1,644,814 $1,293,290 Active subdivisions: Southeast region 178 188 West region 97 73 Central region 39 34 Mid-Atlantic region 40 35 Midwest region 140 138 Total active subdivisions 494 468 BEAZER HOMES USA, INC. CONSOLIDATED OPERATING AND FINANCIAL DATA (Continued) (Dollars in thousands) Quarter Ended Year Ended September 30, September 30, SUPPLEMENTAL FINANCIAL DATA: 2003 2002 2003 2002 Revenues Home sales $1,007,416 $885,548 $3,097,021 $2,594,910 Land and lot sales 19,266 8,422 39,069 18,051 Mortgage origination revenue 16,801 14,689 57,152 41,006 Intercompany elimination - mortgage (3,560) (4,328) (15,834) (12,794) Total revenues $1,039,923 $904,331 $3,177,408 $2,641,173 Cost of home construction and land sales Home sales $797,959 $717,347 $2,459,564 $2,109,756 Land and lot sales 18,282 7,642 34,854 15,452 Intercompany elimination - mortgage (3,560) (4,328) (15,834) (12,794) Total costs of home construction and land sales $812,681 $720,661 $2,478,584 $2,112,414 Selling, general and administrative Homebuilding operations $107,785 $97,316 $325,657 $269,655 Mortgage origination operations 9,521 8,078 30,991 22,929 Total selling, general and administrative $117,306 $105,394 $356,648 $292,584 DATASOURCE: Beazer Homes USA, Inc. CONTACT: Leslie H. Kratcoski, Director, Investor Relations of Beazer Homes USA, Inc., +1-770-829-3700, or email, Web site: http://www.beazer.com/

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