DOW JONES NEWSWIRES
Beazer Homes USA Inc.'s (BZH) fiscal second-quarter loss
narrowed on bigger prior-year write-downs as the homebuilder said
it's too soon to say a recovery is underway, while peer M.D.C.
Holdings Inc. (MDC) posted a narrower first-quarter loss.
The housing sector has been slammed by mounting losses in recent
quarters as the weak economy and tigher credit standards keep
buyers away and rising foreclosures inflate supply. Beazer has
taken action to cut costs by cutting jobs - it said Friday its
total work force is down 43% from a year ago and more than
three-quarters since September 2006.
Chief Executive Ian McCarthy said the results were in line with
seasonal patterns, including its annual February promotion, and the
company saw sequential improvement in sales trends.
He added that although the company has seen some encouraging
signs that more prospective buyers are being encouraged by low
interest rates and tax credits, "we believe it is premature to
conclude that a sustainable recovery is yet underway."
For the period ended March 31, Beazer posted a loss of $114.9
million, or $2.97 a share, compared with a year-earlier loss of
$229.9 million, or $5.96 a share. The latest results included $60.1
million in write-downs, down from $267.7 million last year.
Revenue dropped 54% to $188.3 million.
Analysts polled by Thomson Reuters expected a loss of $1.60 a
share on revenue of $213 million.
Home closings fell 39% to 814 while orders dropped 36% as the
cancellation rate declined to 29.8% from 46.1%. The average sales
price slid 9.9%.
The company's shares were boosted in March after Beazer said an
eco-themed promotion led to more than 500 orders for new homes in
February alone. That compared to 545 orders for all of the prior
quarter.
The company reached an agreement to settle a class-action
lawsuit filed in Georgia earlier this week. It said Friday it was
in talks with the U.S. Attorney for to resolve a separate
investigation, but hasn't reached an agreement yet.
Beazer added entered into a waiver related to its secured
revolving credit facility on Monday, preserving the pact's size at
$150 million instead of lowering it to the previously negotiated
$100 million. In exchange, Beazer has agreed not to borrow under
the facility and maintain the current level of restricted cash.
M.D.C. - larger than Beazer by market capitalization - posted a
first-quarter loss of $40.9 million, or 88 cents a share, compared
with a year-earlier loss of $72.8 million, or $1.58 a share.
Write-downs were roughly half as much in the latest quarter at
$29.9 million.
Revenue decreased 56% to $175.9 million.
Analysts polled by Thomson Reuters expected a loss of 83 cents
on revenue of $130 million.
Chairman and Chief Executive Larry Mizel said the company has
yet to see a "meaningful recovery" in sales activity. He added
M.D.C. is introducing smaller and more affordable homes in many of
its markets in an effort to boost sales.
Home closings slumped 49% to 580 as average prices fell 8%. New
home orders declined 38% as the cancellation rate dropped to 23%
from 43%.
Beazer's shares closed Thursday at $3.07, while M.D.C. finished
at $33.18. Neither has traded premarket. Despite nearly doubling so
far this year, Beazer is still off 71% in the last 12 months. MDC,
by contrast, is down just 22%.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com
