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Beazer Homes Reports First Quarter Fiscal 2020 Results

January 30, 2020 GMT

ATLANTA--(BUSINESS WIRE)--Jan 30, 2020--

Beazer Homes USA, Inc. (NYSE: BZH) ( www.beazer.com ) today announced its financial results for the three months ended December 31, 2019.

“We were very pleased with our first quarter results,” said Allan P. Merrill, Chairman and CEO of Beazer Homes. “Increases in both home sales and gross margins reflected improved consumer demand for new homes and our efforts to drive increases in profitability and returns. These results have enhanced our visibility and confidence in reaching our Fiscal 2020 goals of generating a return on assets above 10% and a double-digit growth rate in Adjusted EBITDA.

“Longer term, our focus on delivering ‘extraordinary value at an affordable price’, principally to first time and downsizing buyers, is ideally aligned with demographics and responsive to the challenge of providing affordable new homes. We remain confident in our ability to improve profitability and returns while reducing debt below $1 billion in the years ahead.”

Beazer Homes Fiscal First Quarter 2020 Highlights and Comparison to Fiscal First Quarter 2019

The following provides additional details on the Company’s performance during the fiscal first quarter 2020:

Profitability. First quarter adjusted EBITDA of $29.4 million was up $2.5 million year-over-year. Net income from continuing operations was $2.8 million, generating diluted earnings per share of $0.09. Net income was down $4.5 million year-over-year with less income tax credits and incremental interest expense more than offsetting higher EBITDA .

Orders. Net new orders for the first quarter increased 28.2% year-over-year, to 1,251. The increase in net new orders was primarily driven by a 21.8% increase in sales/community/month to 2.5. The cancellation rate for the quarter was 14.9%, down 490 basis points year-over-year.

Homebuilding Revenue. First quarter closings rose 2.7% to 1,112 homes. Combined with a 1.4% increase in the average selling price to $375.4 thousand, homebuilding revenue was $417.4 million, up 4.1% year-over-year.

Backlog. The dollar value of homes in backlog as of December 31, 2019 increased 23.4% to $732.1 million, or 1,847 homes, compared to $593.1 million, or 1,525 homes, at the same time last year. The average selling price of homes in backlog was $396.4 thousand, up 1.9% year-over-year.

Homebuilding Gross Margin. Homebuilding gross margin (excluding impairments, abandonments and amortized interest) was 19.8% for the first quarter, up 10 basis points year-over-year.

SG&A Expenses. Selling, general and administrative expenses, as a percentage of total revenue, were 13.3% for the quarter, down 20 basis points year-over-year.

Liquidity. At the close of the first quarter, the Company had approximately $261.3 million of available liquidity, including $41.3 million of unrestricted cash and $220.0 million available on its secured revolving credit facility after accounting for borrowings.

Gatherings

The first quarter of fiscal 2020 represented another step forward for our Gatherings business. Fiscal year-over-year, Gatherings experienced an increase in sales in both actively selling communities located in Dallas and Orlando. We anticipate selling efforts to begin in two new communities in Dallas and Nashville during early calendar 2020, adding to our selling opportunities. New communities are under various stages of entitlement and development in Atlanta, Charleston, Dallas, Houston, Maryland, and Orlando, positioning Gatherings for continued growth in fiscal 2020.

Summary results for the three months ended December 31, 2019 are as follows:

 

 

Three Months Ended December 31,

 

2019

 

2018

 

Change*

New home orders, net of cancellations

1,251

 

 

976

 

 

28.2

%

Orders per community per month

2.5

 

 

2.0

 

 

21.8

%

Average active community count

168

 

 

160

 

 

5.2

%

Actual community count at quarter-end

166

 

 

162

 

 

2.5

%

Cancellation rates

14.9

%

 

19.8

%

 

-490 bps

 

 

 

 

 

 

Total home closings

1,112

 

 

1,083

 

 

2.7

%

Average selling price (ASP) from closings (in thousands)

$

375.4

 

 

$

370.3

 

 

1.4

%

Homebuilding revenue (in millions)

$

417.4

 

 

$

401.0

 

 

4.1

%

Homebuilding gross margin

15.1

%

 

15.1

%

 

0 bps

Homebuilding gross margin, excluding impairments and abandonments (I&A)

15.1

%

 

15.4

%

 

-30 bps

Homebuilding gross margin, excluding I&A and interest amortized to cost of sales

19.8

%

 

19.7

%

 

10 bps

 

 

 

 

 

 

Income from continuing operations before income taxes (in millions)

$

2.6

 

 

$

3.4

 

 

$

(0.8

)

Benefit from income taxes (in millions)

$

(0.2

)

 

$

(3.9

)

 

$

3.7

 

Income from continuing operations (in millions)

$

2.8

 

 

$

7.3

 

 

$

(4.5

)

Basic income per share from continuing operations

$

0.09

 

 

$

0.23

 

 

$

(0.14

)

Diluted income per share from continuing operations

$

0.09

 

 

$

0.23

 

 

$

(0.14

)

 

 

 

 

 

 

Income from continuing operations before income taxes (in millions)

$

2.6

 

 

$

3.4

 

 

$

(0.8

)

Inventory impairments and abandonments (in millions)

$

 

 

$

1.0

 

 

$

(1.0

)

Income from continuing operations excluding inventory impairments and abandonments before income taxes (in millions)

$

2.6

 

 

$

4.4

 

 

$

(1.8

)

Income from continuing operations excluding inventory impairments and abandonments after income taxes (in millions) +

$

2.8

 

 

$

8.1

 

 

$

(5.3

)

 

 

 

 

 

 

Net income

$

2.7

 

 

$

7.3

 

 

$

(4.6

)

 

 

 

 

 

 

Land and land development spending (in millions)

$

146.0

 

 

$

121.0

 

 

$

25.0

 

 

 

 

 

 

 

Adjusted EBITDA (in millions)

$

29.4

 

 

$

26.8

 

 

$

2.5

 

LTM Adjusted EBITDA (in millions)

$

182.7

 

 

$

203.1

 

 

$

(20.4

)

* Change and totals are calculated using unrounded numbers.

+ There was no inventory impairments and abandonments for the three months ended December 31, 2019. For the three months ended December 31, 2018, inventory impairments and abandonments were tax-effected at the effective tax rate of 24.9%.

“LTM” indicates amounts for the trailing 12 months.

 

 

As of December 31,

 

2019

 

2018

 

Change

Backlog units

1,847

 

 

 

1,525

 

 

 

21.1

%

Dollar value of backlog (in millions)

$

732.1

 

 

 

$

593.1

 

 

 

23.4

%

ASP in backlog (in thousands)

$

396.4

 

 

 

$

388.9

 

 

 

1.9

%

Land and lots controlled

19,742

 

 

 

23,149

 

 

 

(14.7

)%

 

Conference Call

The Company will hold a conference call on January 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 10:00 PM ET on February 6, 2020 at 800-324-4696 (for international callers, dial 402-220-3856) 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. 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.com 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 cyclical nature of the homebuilding industry and a potential deterioration in homebuilding industry conditions; (ii) 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; (iii) 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; (iv) 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; (v) 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; (vi) 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; (vii) 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; (viii) our allocation of capital and the cost of and ability to access capital, due to factors such as limitations in the capital markets or adverse credit market conditions, and ability to otherwise meet our ongoing liquidity needs, including the impact of any downgrades of our credit ratings or reduction in our liquidity levels; (ix) our ability to reduce our outstanding indebtedness and to comply with covenants in our debt agreements or satisfy such obligations through repayment or refinancing; (x) our ability to continue to execute and complete our capital allocation plans, including our share and debt repurchase programs; (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; (xviii) 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

 

 

December 31,

in thousands (except per share data)

 

2019

 

2018

Total revenue

 

$

417,804

 

 

$

402,040

 

Home construction and land sales expenses

 

354,667

 

 

340,378

 

Inventory impairments and abandonments

 

 

 

1,007

 

Gross profit

 

63,137

 

 

60,655

 

Commissions

 

16,065

 

 

15,737

 

General and administrative expenses

 

39,699

 

 

38,642

 

Depreciation and amortization

 

3,427

 

 

2,770

 

Operating income

 

3,946

 

 

3,506

 

Equity in loss of unconsolidated entities

 

(13

)

 

(64

)

Other expense, net

 

(1,340

)

 

(42

)

Income from continuing operations before income taxes

 

2,593

 

 

3,400

 

Benefit from income taxes

 

(211

)

 

(3,922

)

Income from continuing operations

 

2,804

 

 

7,322

 

Loss from discontinued operations, net of tax

 

(58

)

 

(11

)

Net income

 

$

2,746

 

 

$

7,311

 

Weighted average number of shares:

 

 

 

 

Basic

 

29,746

 

 

31,801

 

Diluted

 

30,138

 

 

32,055

 

Basic income per share:

 

 

 

 

Continuing operations

 

$

0.09

 

 

$

0.23

 

Discontinued operations

 

 

 

 

Total

 

$

0.09

 

 

$

0.23

 

Diluted income per share:

 

 

 

 

Continuing operations

 

$

0.09

 

 

$

0.23

 

Discontinued operations

 

 

 

 

Total

 

$

0.09

 

 

$

0.23

 

 
 

 

 

Three Months Ended

 

 

December 31,

Capitalized Interest in Inventory

 

2019

 

2018

Capitalized interest in inventory, beginning of period

 

$

136,565

 

 

$

144,645

 

Interest incurred

 

21,556

 

 

24,921

 

Capitalized interest impaired

 

 

 

(115

)

Interest expense not qualified for capitalization and included as other expense

 

(1,442

)

 

(242

)

Capitalized interest amortized to home construction and land sales expenses

 

(19,669

)

 

(17,323

)

Capitalized interest in inventory, end of period

 

$

137,010

 

 

$

151,886

 

 

  

BEAZER HOMES USA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

  

in thousands (except share and per share data)

 

December 31, 2019

 

September 30, 2019

ASSETS

 

 

 

 

Cash and cash equivalents

 

$

41,277

 

 

$

106,741

 

Restricted cash

 

18,759

 

 

16,053

 

Accounts receivable (net of allowance of $313 and $304, respectively)

 

19,439

 

 

26,395

 

Income tax receivable

 

4,612

 

 

4,935

 

Owned inventory

 

1,574,280

 

 

1,504,248

 

Investments in unconsolidated entities

 

3,930

 

 

3,962

 

Deferred tax assets, net

 

247,382

 

 

246,957

 

Property and equipment, net

 

26,623

 

 

27,421

 

Operating lease right-of-use assets

 

12,975

 

 

 

Goodwill

 

11,376

 

 

11,376

 

Other assets

 

7,451

 

 

9,556

 

Total assets

 

$

1,968,104

 

 

$

1,957,644

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Trade accounts payable

 

$

110,153

 

 

$

131,152

 

Operating lease liabilities

 

$

15,158

 

 

$

 

Other liabilities

 

95,451

 

 

109,429

 

Total debt (net of debt issuance costs of $12,080 and $12,470, respectively)

 

1,208,062

 

 

1,178,309

 

Total liabilities

 

1,428,824

 

 

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, 31,383,068 issued and outstanding and 30,933,110 issued and outstanding, respectively)

 

31

 

 

31

 

Paid-in capital

 

852,055

 

 

854,275

 

Accumulated deficit

 

(312,806

)

 

(315,552

)

Total stockholders’ equity

 

539,280

 

 

538,754

 

Total liabilities and stockholders’ equity

 

$

1,968,104

 

 

$

1,957,644

 

 

 

 

 

 

Inventory Breakdown

 

 

 

 

Homes under construction

 

$

580,580

 

 

$

507,542

 

Development projects in progress

 

732,380

 

 

738,201

 

Land held for future development

 

28,531

 

 

28,531

 

Land held for sale

 

11,443

 

 

12,662

 

Capitalized interest

 

137,010

 

 

136,565

 

Model homes

 

84,336

 

 

80,747

 

Total owned inventory

 

$

1,574,280

 

 

$

1,504,248

 

 

 

   

BEAZER HOMES USA, INC.

CONSOLIDATED OPERATING AND FINANCIAL DATA – CONTINUING OPERATIONS

   

 

  

Three Months Ended December 31,

SELECTED OPERATING DATA

  

2019

 

 

2018

Closings:

  

 

 

 

 

West region

  

694

 

 

 

601

 

East region

  

192

 

 

 

188

 

Southeast region

  

226

 

 

 

294

 

Total closings

  

1,112

 

 

 

1,083

 

 

  

 

 

 

 

New orders, net of cancellations:

  

 

 

 

 

West region

  

737

 

 

 

519

 

East region

  

233

 

 

 

201

 

Southeast region

  

281

 

 

 

256

 

Total new orders, net

  

1,251

 

 

 

976

 

 

 

As of December 31,

Backlog units at end of period:

2019

 

2018

West region

1,025

 

 

776

 

East region

382

 

 

294

 

Southeast region

440

 

 

455

 

Total backlog units

1,847

 

 

1,525

 

Dollar value of backlog at end of period (in millions)

$

732.1

 

 

$

593.1

 

 

in thousands

Three Months Ended December 31,

SUPPLEMENTAL FINANCIAL DATA

2019

 

2018

Homebuilding revenue:

 

 

 

West region

$

254,398

 

 

$

208,944

 

East region

77,645

 

 

87,765

 

Southeast region

85,356

 

 

104,273

 

Total homebuilding revenue

$

417,399

 

 

$

400,982

 

 

 

 

 

Revenue:

 

 

 

Homebuilding

$

417,399

 

 

$

400,982

 

Land sales and other

405

 

 

1,058

 

Total revenue

$

417,804

 

 

$

402,040

 

 

 

 

 

Gross profit:

 

 

 

Homebuilding

$

63,108

 

 

$

60,619

 

Land sales and other

29

 

 

36

 

Total gross profit

$

63,137

 

 

$

60,655

 

 

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 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 December 31,

in thousands

 

2019

 

2018

Homebuilding gross profit/margin

 

$

63,108

 

15.1

%

 

$

60,619

 

15.1

%

Inventory impairments and abandonments (I&A)

 

 

 

 

1,007

 

 

Homebuilding gross profit/margin before I&A

 

63,108

 

15.1

%

 

61,626

 

15.4

%

Interest amortized to cost of sales

 

19,669

 

 

 

17,323

 

 

Homebuilding gross profit/margin before I&A and interest amortized to cost of sales

 

$

82,777

 

19.8

%

 

$

78,949

 

19.7

%

 

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.

  

 

 

Three Months Ended
December 31,

 

LTM Ended
December 31, (a)

in thousands

 

2019

 

2018

 

2019

 

2018

Net income (loss)

 

$

2,746

 

 

$

7,311

 

 

$

(84,085

)

 

$

92,883

 

Benefit from income taxes

 

(228

)

 

(3,924

)

 

(33,549

)

 

(17,530

)

Interest amortized to home construction and land sales expenses and capitalized interest impaired

 

19,669

 

 

17,438

 

 

111,172

 

 

94,075

 

Interest expense not qualified for capitalization

 

1,442

 

 

242

 

 

4,309

 

 

2,132

 

EBIT

 

23,629

 

 

21,067

 

 

(2,153

)

 

171,560

 

Depreciation and amortization and stock-based compensation amortization

 

5,738

 

 

4,884

 

 

26,139

 

 

23,832

 

EBITDA

 

29,367

 

 

25,951

 

 

23,986

 

 

195,392

 

Loss on extinguishment of debt

 

 

 

 

 

24,920

 

 

1,935

 

Inventory impairments and abandonments (b)

 

 

 

892

 

 

133,819

 

 

5,430

 

Joint venture impairment and abandonment charges

 

 

 

 

 

 

 

341

 

Adjusted EBITDA

 

$

29,367

 

$

26,843

 

 

$

182,725

 

$

203,098

(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/20200130005736/en/

CONTACT: Beazer Homes USA, Inc.

David I. Goldberg

Vice President of Treasury and Investor Relations

770-829-3700

investor.relations@beazer.com

KEYWORD: UNITED STATES NORTH AMERICA GEORGIA

INDUSTRY KEYWORD: CONSTRUCTION & PROPERTY RESIDENTIAL BUILDING & REAL ESTATE

SOURCE: Beazer Homes USA, Inc.

Copyright Business Wire 2020.

PUB: 01/30/2020 04:15 PM/DISC: 01/30/2020 04:15 PM

http://www.businesswire.com/news/home/20200130005736/en