Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today
announced its financial results for the three and six months ended
March 31, 2020.
“We generated strong second quarter results, highlighted by
growth in revenue, margin and profitability, said Allan P. Merrill,
Chairman and Chief Executive Officer of Beazer Homes. “Of course,
these results were overshadowed by the effects of the COVID-19
pandemic beginning in mid-March. We have made significant
operational changes to help protect the health and safety of our
team, our customers and our trade partners and simultaneously taken
steps to enhance our liquidity.”
Beazer Homes Fiscal Second Quarter 2020
Highlights and Comparison to Fiscal Second Quarter 2019
- Net income from continuing operations of $10.6 million,
compared to net loss from continuing operations of $100.8 million
in fiscal second quarter 2019, which included an impairment charge
of $147.6 million pre-tax
- Adjusted EBITDA of $43.9 million, up 34.7%
- Homebuilding revenue of $488.0 million, up 15.9% on a 12.6%
increase in home closings to 1,277 and a 2.9% increase in average
selling price to $382.1 thousand
- Homebuilding gross margin was 16.1%. Excluding impairments,
abandonments and amortized interest, homebuilding gross margin was
20.8%, up 100 basis points
- SG&A as a percentage of total revenue was 12.0%, down 70
basis points year-over-year
- Unit orders of 1,661, up 3.9% on an increase in average
community count to 167 and a slight increase in
orders/community/month to 3.3
- Dollar value of backlog of $895.0 million, up 14.3%
The following provides additional details on the Company's
performance during the fiscal second quarter 2020:
Profitability. Second quarter net income from continuing
operations was $10.6 million, generating diluted earnings per share
of $0.35. Net income was up $4.4 million year-over-year after
adjusting for impairment charges and gain on debt extinguishment
taken during the same period last year. Adjusted EBITDA of $43.9
million was up $11.3 million year-over-year.
Orders. Net new orders for the second quarter increased 3.9%
year-over-year, to 1,661. The increase in net new orders was
primarily driven by a 2.2% increase in average community count to
167. The cancellation rate for the quarter was 15.8%, up 130 basis
points year-over-year.
Homebuilding Revenue. Second quarter closings rose 12.6% to
1,277 homes. Combined with a 2.9% increase in the average selling
price to $382.1 thousand, homebuilding revenue was $488.0 million,
up 15.9% year-over-year.
Backlog. The dollar value of homes in backlog as of March 31,
2020 increased 14.3% to $895.0 million, or 2,231 homes, compared to
$783.3 million, or 1,989 homes, at the same time last year. The
average selling price of homes in backlog was $401.2 thousand, up
1.9% year-over-year.
Homebuilding Gross Margin. Homebuilding gross margin (excluding
impairments, abandonments and amortized interest) was 20.8% for the
second quarter, up 100 basis points year-over-year.
SG&A Expenses. Selling, general and administrative expenses,
as a percentage of total revenue, were 12.0% for the quarter, down
70 basis points year-over-year.
Liquidity Update. At the close of the second quarter, total
liquidity was $294.3 million including a fully drawn $250.0 million
revolving credit facility. This compares to total liquidity of
$221.4 million at March 31, 2019, including cash of $86.4 million
and undrawn revolving credit facility capacity of $135.0
million.
As we stated in our April 6th announcement of preliminary
operating results, despite an increasingly challenging business
environment as a result of the COVID-19 pandemic, especially in the
final weeks of March, we generated strong fiscal second quarter
results. We also ended the quarter with substantially more
liquidity than in the same period in the prior year. However, due
to uncertainty surrounding this ongoing public health crisis and
its continued impact on the U.S. economy, we cannot predict either
the near-term or long-term effects that the pandemic will have on
our business. We intend to provide further updates on the current
impact of the pandemic on our operations during a conference call
on April 30, 2020 at 5:00 p.m. ET to discuss our second fiscal
quarter results. Information on the conference call is provided
below.
Summary results for the three and six months ended March 31,
2020 are as follows:
Three Months Ended March
31,
2020
2019
Change*
New home orders, net of cancellations
1,661
1,598
3.9
%
Orders per community per month
3.3
3.3
1.7
%
Average active community count
167
163
2.2
%
Actual community count at quarter-end
166
166
—
%
Cancellation rates
15.8
%
14.5
%
130 bps
Total home closings
1,277
1,134
12.6
%
Average selling price (ASP) from closings
(in thousands)
$
382.1
$
371.2
2.9
%
Homebuilding revenue (in millions)
$
488.0
$
420.9
15.9
%
Homebuilding gross margin
16.1
%
(10.5
)%
2660 bps
Homebuilding gross margin, excluding
impairments and abandonments (I&A)
16.1
%
15.4
%
70 bps
Homebuilding gross margin, excluding
I&A and interest amortized to cost of sales
20.8
%
19.8
%
100 bps
Income (loss) from continuing operations
before income taxes (in millions)
$
14.8
$
(139.0
)
$
153.8
Expense (benefit) from income taxes (in
millions)
$
4.2
$
(38.2
)
$
42.3
Income (loss) from continuing operations
(in millions)
$
10.6
$
(100.8
)
$
111.4
Basic income (loss) per share from
continuing operations
$
0.36
$
(3.28
)
$
3.64
Diluted income (loss) per share from
continuing operations
$
0.35
$
(3.28
)
$
3.63
Income (loss) from continuing operations
before income taxes (in millions)
$
14.8
$
(139.0
)
$
153.8
Gain on debt extinguishment (in
millions)
$
—
$
0.2
$
0.2
Inventory impairments and abandonments (in
millions)
$
—
$
(147.6
)
$
(147.6
)
Income from continuing operations
excluding gain on debt extinguishment and inventory impairments and
abandonments before income taxes (in millions)
$
14.8
$
8.4
$
6.4
Income from continuing operations
excluding gain on debt extinguishment and inventory impairments and
abandonments after income taxes (in millions)+
$
10.6
$
6.2
$
4.4
Net income (loss)
$
10.6
$
(100.9
)
$
111.5
Land and land development spending (in
millions)
$
123.0
$
139.9
$
(16.9
)
Adjusted EBITDA (in millions)
$
43.9
$
32.6
$
11.3
LTM Adjusted EBITDA (in millions)
$
194.0
$
196.2
$
(2.1
)
*
Change and totals are calculated using
unrounded numbers.
+
There were no debt extinguishment and
inventory impairments and abandonments for the three months ended
March 31, 2020. For the three months ended March 31, 2019, gain on
debt extinguishment and inventory impairments and abandonments were
tax-effected at the effective tax rate of 27.5%.
"LTM" indicates amounts for the trailing 12 months.
Six Months Ended March
31,
2020
2019
Change*
New home orders, net of cancellations
2,912
2,574
13.1
%
LTM orders per community per month
2.9
2.8
3.6
%
Cancellation rates
15.4
%
16.6
%
-120 bps
Total home closings
2,389
2,217
7.8
%
ASP from closings (in thousands)
$
379.0
$
370.7
2.2
%
Homebuilding revenue (in millions)
$
905.4
$
821.9
10.2
%
Homebuilding gross margin
15.7
%
2.0
%
1370 bps
Homebuilding gross margin, excluding
impairments and abandonments (I&A)
15.7
%
15.4
%
30 bps
Homebuilding gross margin, excluding
I&A and interest amortized to cost of sales
20.3
%
19.8
%
50 bps
Income (loss) from continuing operations
before income taxes (in millions)
$
17.4
$
(135.6
)
$
153.0
Expense (benefit) from income taxes (in
millions)
$
4.0
$
(42.1
)
$
46.0
Income (loss) from continuing operations
(in millions)
$
13.4
$
(93.5
)
$
106.9
Basic and diluted income (loss) per share
from continuing operations
$
0.45
$
(2.99
)
$
3.44
Income (loss) from continuing operations
before income taxes (in millions)
$
17.4
$
(135.6
)
$
153.0
Gain on debt extinguishment (in
millions)
$
—
$
0.2
$
(0.2
)
Inventory impairments and abandonments (in
millions)
$
—
$
(148.6
)
$
(148.6
)
Income from continuing operations
excluding gain on debt extinguishment and inventory impairments and
abandonments before income taxes (in millions)
$
17.4
$
12.8
$
4.6
Income from continuing operations
excluding gain on debt extinguishment and inventory impairments and
abandonments (in millions)+
$
13.4
$
14.1
$
(0.7
)
Net income (loss)
$
13.4
$
(93.6
)
$
106.9
Land and land development spending (in
millions)
$
269.0
$
260.9
$
8.1
Adjusted EBITDA (in millions)
$
73.3
$
59.4
$
13.8
*
Change and totals are calculated using
unrounded numbers.
+
There were no inventory impairments and
abandonments for the six months ended March 31, 2020. For the six
months ended March 31, 2019, gain on debt extinguishment and
inventory impairments and abandonments were tax-effected at the
effective tax rate of 27.5%.
“LTM” indicates amounts for the trailing 12 months.
As of March 31,
2020
2019
Change
Backlog units
2,231
1,989
12.2
%
Dollar value of backlog (in millions)
$
895.0
$
783.3
14.3
%
ASP in backlog (in thousands)
$
401.2
$
393.8
1.9
%
Land and lots controlled
19,654
22,383
(12.2
)%
Conference Call
The Company will hold a conference call on April 30, 2020 at
5:00 p.m. ET to discuss these results. Interested parties may
listen to the conference call and view the Company's slide
presentation on the "Investor Relations" page of the Company's
website, www.beazer.com. In addition, the conference call will be
available by telephone at 800-475-0542 (for international callers,
dial 517-308-9429). To be admitted to the call, enter the pass code
“8571348.” A replay of the conference call will be available, until
5:00 PM ET on May 10, 2020 at 888-566-0596 (for international
callers, dial 203-369-3072) with pass code “3740.”
Headquartered in Atlanta, Beazer Homes (NYSE: BZH) is one of
the country’s largest homebuilders. Every Beazer home is designed
and built to provide Surprising Performance, giving you more
quality and more comfort from the moment you move in - saving you
money every month. With Beazer's Choice Plans™, you can personalize
your primary living areas - giving you a choice of how you want to
live in the home, at no additional cost. And unlike most national
homebuilders, we empower our customers to shop and compare loan
options. Our Mortgage Choice program gives you the resources to
easily compare multiple loan offers and choose the best lender and
loan offer for you, saving you thousands over the life of your
loan. We build our homes in Arizona, California, Delaware, Florida,
Georgia, Indiana, Maryland, Nevada, North Carolina, South Carolina,
Tennessee, Texas, and Virginia. For more information, visit
beazer.com, or check out Beazer on Facebook, Instagram and
Twitter.
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 potential negative impact of the COVID-19 pandemic,
which, in addition to exacerbating each of the risks listed below,
may include a significant decrease in demand for our homes or
consumer confidence generally with respect to purchasing a home, an
inability to sell and build homes in a typical manner or at all,
increased costs or decreased supply of building materials or the
availability of subcontractors, housing inspectors, and other
third-parties we rely on to support our operations, and recognizing
charges in future periods, which may be material, for goodwill
impairments, inventory impairments and/or land option contract
abandonments; (ii) our ability to raise debt and/or equity capital,
due to factors such as limitations in the capital markets
(including market volatility) or adverse credit market conditions,
which have worsened and may continue to worsen as a result of the
COVID-19 pandemic, and our ability to otherwise meet our ongoing
liquidity needs (which could cause us to fail to meet the terms of
our covenants and other requirements under our various debt
instruments and therefore trigger an acceleration of a significant
portion or all of our outstanding debt obligations), including the
impact of any downgrades of our credit ratings or reduction in our
liquidity levels; (iii) market perceptions regarding any capital
raising initiatives we may undertake (including future issuances of
equity or debt capital); (iv) the cyclical nature of the
homebuilding industry and a potential deterioration in homebuilding
industry conditions; (v) economic changes nationally or in local
markets, changes in consumer confidence, wage levels, declines in
employment levels, inflation or increases in the quantity and
decreases in the price of new homes and resale homes on the market;
(vi) shortages of or increased prices for labor, land or raw
materials used in housing production, and the level of quality and
craftsmanship provided by our subcontractors; (vii) the
availability and cost of land and the risks associated with the
future value of our inventory, such as asset impairment charges we
took on select California assets during the second quarter of
fiscal 2019; (viii) factors affecting margins, such as decreased
land values underlying land option agreements, increased land
development costs in communities under development or delays or
difficulties in implementing initiatives to reduce our production
and overhead cost structure; (ix) estimates related to homes to be
delivered in the future (backlog) are imprecise, as they are
subject to various cancellation risks that cannot be fully
controlled; (x) increases in mortgage interest rates, increased
disruption in the availability of mortgage financing, changes in
tax laws or otherwise regarding the deductibility of mortgage
interest expenses and real estate taxes or an increased number of
foreclosures; (xi) increased competition or delays in reacting to
changing consumer preferences in home design; (xii) natural
disasters or other related events that could result in delays in
land development or home construction, increase our costs or
decrease demand in the impacted areas; (xiii) the potential
recoverability of our deferred tax assets; (xiv) 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 or governmental policies, including those related
to the environment; (xv) the results of litigation or government
proceedings and fulfillment of any related obligations; (xvi) the
impact of construction defect and home warranty claims; (xvii) the
cost and availability of insurance and surety bonds, as well as the
sufficiency of these instruments to cover potential losses
incurred; (xiii) the impact of information technology failures,
cybersecurity issues or data security breaches; (xix) terrorist
acts, natural disasters, acts of war or other factors over which
the Company has little or no control; or (xx) the impact on
homebuilding in key markets of governmental regulations limiting
the availability of water.
Any forward-looking statement, including any statement
expressing confidence regarding future outcomes, speaks only as of
the date on which such statement is made and, except as required by
law, we undertake no obligation to update any forward-looking
statement to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time-to-time, and it
is not possible to predict all such factors.
-Tables Follow-
BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
Six Months Ended
March 31,
March 31,
in thousands (except per share
data)
2020
2019
2020
2019
Total revenue
$
489,413
$
421,260
$
907,217
$
823,300
Home construction and land sales
expenses
410,568
356,329
765,235
696,707
Inventory impairments and abandonments
—
147,611
—
148,618
Gross profit (loss)
78,845
(82,680
)
141,982
(22,025
)
Commissions
18,744
15,998
34,809
31,735
General and administrative expenses
40,050
37,372
79,749
76,014
Depreciation and amortization
3,627
2,900
7,054
5,670
Operating income (loss)
16,424
(138,950
)
20,370
(135,444
)
Equity in income of unconsolidated
entities
147
81
134
17
Gain on extinguishment of debt
—
216
—
216
Other expense, net
(1,786
)
(337
)
(3,126
)
(379
)
Income (loss) from continuing operations
before income taxes
14,785
(138,990
)
17,378
(135,590
)
Expense (benefit) from income taxes
4,170
(38,158
)
3,959
(42,080
)
Income (loss) from continuing
operations
10,615
(100,832
)
13,419
(93,510
)
Loss from discontinued operations, net of
tax
(1
)
(30
)
(59
)
(41
)
Net income (loss)
$
10,614
$
(100,862
)
$
13,360
$
(93,551
)
Weighted average number of shares:
Basic
29,868
30,714
29,808
31,263
Diluted
29,975
30,714
30,078
31,263
Basic income (loss) per share:
Continuing operations
$
0.36
$
(3.28
)
$
0.45
$
(2.99
)
Discontinued operations
—
—
—
—
Total
$
0.36
$
(3.28
)
$
0.45
$
(2.99
)
Diluted income (loss) per share:
Continuing operations
$
0.35
$
(3.28
)
$
0.45
$
(2.99
)
Discontinued operations
—
—
—
—
Total
$
0.35
$
(3.28
)
$
0.45
$
(2.99
)
Three Months Ended
Six Months Ended
March 31,
March 31,
Capitalized Interest in
Inventory
2020
2019
2020
2019
Capitalized interest in inventory,
beginning of period
$
137,010
$
151,886
$
136,565
$
144,645
Interest incurred
22,271
25,803
43,827
50,724
Capitalized interest impaired
—
(13,792
)
—
(13,907
)
Interest expense not qualified for
capitalization and included as other expense
(1,928
)
(597
)
(3,370
)
(839
)
Capitalized interest amortized to home
construction and land sales expenses
(22,660
)
(18,544
)
(42,329
)
(35,867
)
Capitalized interest in inventory, end of
period
$
134,693
$
144,756
$
134,693
$
144,756
BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
in thousands (except share and
per share data)
March 31, 2020
September 30, 2019
ASSETS
Cash and cash equivalents
$
294,265
$
106,741
Restricted cash
18,282
16,053
Accounts receivable (net of allowance of
$309 and $304, respectively)
20,574
26,395
Income tax receivable
9,224
4,935
Owned inventory
1,595,300
1,504,248
Investments in unconsolidated entities
4,040
3,962
Deferred tax assets, net
238,766
246,957
Property and equipment, net
25,820
27,421
Operating lease right-of-use assets
15,109
—
Goodwill
11,376
11,376
Other assets
6,239
9,556
Total assets
$
2,238,995
$
1,957,644
LIABILITIES AND STOCKHOLDERS’
EQUITY
Trade accounts payable
$
137,238
$
131,152
Operating lease liabilities
$
17,147
$
—
Other liabilities
108,336
109,429
Total debt (net of debt issuance costs of
$11,867 and $12,470, respectively)
1,428,792
1,178,309
Total liabilities
1,691,513
1,418,890
Stockholders’ equity:
Preferred stock (par value $0.01 per
share, 5,000,000 shares authorized, no shares issued)
—
—
Common stock (par value $0.001 per share,
63,000,000 shares authorized, 31,020,398 issued and outstanding and
30,933,110 issued and outstanding, respectively)
31
31
Paid-in capital
849,643
854,275
Accumulated deficit
(302,192
)
(315,552
)
Total stockholders’ equity
547,482
538,754
Total liabilities and stockholders’
equity
$
2,238,995
$
1,957,644
Inventory Breakdown
Homes under construction
$
634,380
$
507,542
Development projects in progress
706,691
738,201
Land held for future development
28,531
28,531
Land held for sale
10,716
12,662
Capitalized interest
134,693
136,565
Model homes
80,289
80,747
Total owned inventory
$
1,595,300
$
1,504,248
BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND
FINANCIAL DATA – CONTINUING OPERATIONS
Three Months Ended March
31,
Six Months Ended March
31,
SELECTED OPERATING
DATA
2020
2019
2020
2019
Closings:
West region
735
606
1,429
1,207
East region
235
213
427
401
Southeast region
307
315
533
609
Total closings
1,277
1,134
2,389
2,217
New orders, net of
cancellations:
West region
953
806
1,690
1,325
East region
351
334
584
535
Southeast region
357
458
638
714
Total new orders, net
1,661
1,598
2,912
2,574
As of March 31,
Backlog units at end of period:
2020
2019
West region
1,243
976
East region
498
415
Southeast region
490
598
Total backlog units
2,231
1,989
Dollar value of backlog at end of period
(in millions)
$
895.0
$
783.3
in thousands
Three Months Ended March
31,
Six Months Ended March
31,
SUPPLEMENTAL FINANCIAL DATA
2020
2019
2020
2019
Homebuilding revenue:
West region
$
267,231
$
210,430
$
521,629
$
419,374
East region
110,011
93,751
187,656
181,516
Southeast region
110,744
116,764
196,100
221,037
Total homebuilding revenue
$
487,986
$
420,945
$
905,385
$
821,927
Revenue:
Homebuilding
$
487,986
$
420,945
$
905,385
$
821,927
Land sales and other
1,427
315
1,832
1,373
Total revenue
$
489,413
$
421,260
$
907,217
$
823,300
Gross profit (loss):
Homebuilding
$
78,744
$
(44,148
)
$
141,852
$
16,471
Land sales and other
101
(38,532
)
130
(38,496
)
Total gross profit (loss)
$
78,845
$
(82,680
)
$
141,982
$
(22,025
)
Reconciliation of homebuilding gross profit and the related
gross margin before impairments and abandonments and interest
amortized to cost of sales to homebuilding gross profit (loss) and
gross margin, the most directly comparable GAAP measure, is
provided for each period discussed below. Management believes that
this information assists investors in comparing the operating
characteristics of homebuilding activities by eliminating many of
the differences in companies' respective level of impairments and
level of debt.
Three Months Ended March
31,
Six Months Ended March
31,
in thousands
2020
2019
2020
2019
Homebuilding gross profit
(loss)/margin
$
78,744
16.1
%
$
(44,148
)
(10.5
)%
$
141,852
15.7
%
$
16,471
2.0
%
Inventory impairments and abandonments
(I&A)
—
109,023
—
110,030
Homebuilding gross profit/margin before
I&A
78,744
16.1
%
64,875
15.4
%
141,852
15.7
%
126,501
15.4
%
Interest amortized to cost of sales
22,660
18,544
42,329
35,867
Homebuilding gross profit/margin before
I&A and interest amortized to cost of sales
$
101,404
20.8
%
$
83,419
19.8
%
$
184,181
20.3
%
$
162,368
19.8
%
Reconciliation of Adjusted EBITDA to total company 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. These EBITDA measures should
not be considered alternatives to net income (loss) determined in
accordance with GAAP as an indicator of operating performance.
The reconciliation of Adjusted EBITDA to total company net
income (loss) below differs from prior year, as it reclassifies
stock-based compensation expense from an adjustment within EBITDA
to an adjustment within Adjusted EBITDA in order to accurately
present EBITDA per its definition.
Three Months Ended March
31,
Six Months Ended March
31,
LTM Ended
in thousands
2020
2019
2020
2019
2020
2019
Net income (loss)
$
10,614
$
(100,862
)
$
13,360
$
(93,551
)
$
27,391
$
(19,537
)
Expense (benefit) from income taxes
4,170
(38,168
)
3,942
(42,092
)
8,789
(56,691
)
Interest amortized to home construction
and land sales expenses and capitalized interest impaired
22,660
32,336
42,329
49,774
101,496
106,756
Interest expense not qualified for
capitalization
1,928
597
3,370
839
5,640
1,079
EBIT
39,372
(106,097
)
63,001
(85,030
)
143,316
31,607
Depreciation and amortization
3,627
2,900
7,054
5,670
16,143
13,904
EBITDA
42,999
(103,197
)
70,055
(79,360
)
159,459
45,511
Stock-based compensation expense
899
2,180
3,210
4,294
9,442
9,344
(Gain) loss on extinguishment of debt
—
(216
)
—
(216
)
25,136
1,719
Inventory impairments and abandonments
(b)
—
133,819
—
134,711
—
139,249
Joint venture impairment and abandonment
charges
—
—
—
—
—
341
Adjusted EBITDA
$
43,898
$
32,586
$
73,265
$
59,429
$
194,037
$
196,164
(a)
“LTM” indicates amounts for the trailing
12 months.
(b)
In periods during which we impaired
certain of our inventory assets, capitalized interest that is
impaired is included in the line above titled “Interest amortized
to home construction and land sales expenses and capitalized
interest impaired.”
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200430005804/en/
David I. Goldberg Vice President of Treasury and Investor
Relations 770-829-3700 investor.relations@beazer.com
Beazer Homes USA (NYSE:BZH)
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Beazer Homes USA (NYSE:BZH)
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