Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today
announced its financial results for the three months ended
December 31, 2015.
The Company reported net income from continuing operations of
$1.2 million for the quarter ended December 31, 2015, which
included an $828 thousand loss on the extinguishment of debt and a
$3.6 million benefit from insurance recoveries. This compared with
a net loss of $18.1 million for the quarter ended December 31,
2014, which included $13.6 million of charges related to unexpected
warranty expenses.
Increases in both home closings and average selling price
(“ASP”) contributed to substantially higher revenue, Adjusted
EBITDA and net income compared to the prior year. Home closings of
1,049 were up 18.5%, while ASP increased to $320.9 thousand, and
Adjusted EBITDA of $25.9 million was up $9.6 million, or 59.0%,
versus last year.
The Company’s backlog value for the quarter ended
December 31, 2015 was $634.6 million, a 13.2% increase from
the prior year quarter, despite a 4.5% reduction in new home orders
in the quarter. After a slow start to the quarter, the sales pace
improved in November and December to a level in line with
expectations.
Operating margins improved, as an expected reduction in gross
margin compared to the prior year was more than fully offset by a
reduction in selling, general and administrative expenses as a
percentage of revenue.
Relative to the Company’s objective to achieve $2 billion in
revenue with Adjusted EBITDA of at least $200 million, referred to
as the “2B-10” Plan, for the trailing twelve months, revenue was
$1.7 billion, up 18.8%, and Adjusted EBITDA of $153.7 million was
up more than $25.8 million, or 20.2%, compared to last year.
This improvement in profitability was achieved as the Company
took steps to reduce its financial leverage. During the quarter,
approximately $23 million of the Company’s senior notes due in 2016
was repurchased, with an additional $5 million retired subsequent
to quarter end. The Company intends to further reduce debt over the
balance of the fiscal year, as management continues to pursue its
balanced growth approach.
“We are pleased with our fiscal first quarter results, as our
focus on operational improvements allowed us to generate strong top
line growth from a combination of more closings and a higher
average selling price, and substantially improved profitability,”
said Allan Merrill, CEO of Beazer Homes.
Mr. Merrill continued, “We’re well positioned heading into the
spring selling season, as demand patterns in January continue to
point to a steady housing recovery in the coming year. At the same
time, we will take further steps to reduce our leverage, reflecting
our view that doing so will create long-term shareholder
value.”
Summary results for the three months ended December 31,
2015 are as follows:
Q1 Results from
Continuing Operations (unless otherwise specified)
Quarter Ended December
31, 2015 2014
Change* New Home Orders 923 966 (4.5
)
%
Orders per community per month 1.8 2.1 (14.3
)
%
Actual community count at month-end 169 156 8.3 % Average active
community count 169 154 9.7 % Cancellation rates 25.8 % 21.4 % 440
bps Total Home Closings 1,049 885 18.5 % Average selling
price from closings (in thousands) $ 320.9 $ 295.6 8.6 %
Homebuilding revenue (in millions) $ 336.6 $ 261.6 28.7 %
Homebuilding gross margin, excluding impairments and abandonments
(I&A) 17.5 % 13.5 % 400 bps Homebuilding gross margin,
excluding I&A and interest amortized to cost of sales 21.5 %
16.6 % 490 bps Homebuilding gross margin, excluding I&A,
interest amortized to cost of sales and unexpected warranty costs
20.4 % 21.8 % -140 bps Income (loss) from continuing
operations before income taxes (in millions) $ 1.8 $ (18.8 ) $ 20.6
Provision for (benefit from) income taxes (in millions) $ 0.6 $
(0.7 ) $ 1.3 Net income (loss) from continuing operations (in
millions) $ 1.2 $ (18.1 ) $ 19.3 Basic and diluted Income (Loss)
Per Share from continuing operations $ 0.04 $
(0.68
) $ 0.72 Total Company land and land development spending
(in millions) $ 111.7 $ 145.4 $ (33.8
)
Total Company Adjusted EBITDA, excluding unexpected warranty costs
and a litigation settlement in discontinued operations (in
millions) $ 25.9 $ 16.3 59.0 % LTM Adjusted EBITDA, excluding
unexpected warranty costs and a litigation settlement in
discontinued operations (in millions) $ 153.7 $ 127.9 20.2 %
* Change is calculated using unrounded
numbers.
As of December
31, 2015
As of December 31,
2015 2014
Change Backlog units 1,912 1,771 8.0 % Dollar value of
backlog (in millions) $ 634.6 $ 560.5 13.2 % ASP in backlog (in
thousands) $ 331.9 $ 316.5 4.9 % Land and lots controlled 25,326
27,908 (9.3
)
%
Conference Call
The Company will hold a conference call on February 4, 2016 at
10:00 a.m. 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 800-964-3799 or 203-369-3115 and enter the
passcode “3740” (available until 11:59 p.m. ET on February 11,
2016), or visit www.beazer.com. A
replay of the webcast will be available at www.beazer.com for at least 30 days.
Headquartered in Atlanta, Beazer Homes is a geographically
diversified homebuilder with active operations in 13 states
within three geographic regions in the United States. The
Company's homes meet or exceed the benchmark for energy-efficient
home construction as established by ENERGY STAR® and are designed
with Choice Plans 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's active operations are in the following states: Arizona,
California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada,
North Carolina, 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.
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) 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 on the market; (ii) the
cyclical nature of the homebuilding industry and a potential
deterioration in homebuilding industry conditions; (iii) continuing
severe weather conditions or other related events could result in
delays in land development or home construction, increase our costs
or decrease demand in the impacted areas; (iv) our cost of and
ability to access capital, due to factors such as limitations in
the capital markets or adverse credit market conditions, 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; (v) our ability to reduce our
outstanding indebtedness and to comply with covenants in our debt
agreements or satisfy such obligations through repayment or
refinancing; (vi) 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; (vii) 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; (viii) 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;
(ix) 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; (x) increased competition or
delays in reacting to changing consumer preference in home design;
(xi) 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; (xii) estimates related to the potential recoverability
of our deferred tax assets; (xiii) 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, including these related to
the environment; (xiv) the results of litigation or government
proceedings and fulfillment of the obligations in the consent
orders with governmental authorities and other settlement
agreements; (xv) the impact of construction defect and home
warranty claims, including water intrusion issues in Florida and
New Jersey; (xvi) the cost and availability of insurance and surety
bonds; (xvii) the performance of our unconsolidated entities and
our unconsolidated entity partners; (xviii) the impact of
information technology failures 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 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 CONSOLIDATED STATEMENTS OF
INCOME
($ in thousands, except per share
data)
Three Months Ended
December 31, 2015 2014 Total
revenue
$ 344,449 $ 265,764 Home construction and
land sales expenses
285,511 230,546 Inventory impairments
and abandonments
1,356 — Gross profit
57,582 35,218 Commissions
13,774 10,926 General and
administrative expenses
31,669 31,441 Depreciation and
amortization
2,991 2,341 Operating income
(loss)
9,148 (9,490 ) Equity in income of unconsolidated
entities
60 142 Loss on extinguishment of debt
(828
) — Other expense, net
(6,565 ) (9,434 )
Income (loss) from continuing operations before income taxes
1,815 (18,782 ) Expense (benefit) from income taxes
616 (696 ) Income (loss) from continuing operations
1,199 (18,086 ) Loss from discontinued operations, net of
tax
(200 ) (4,254 ) Net income (loss)
$
999 $ (22,340 ) Weighted average number of shares:
Basic
31,757 26,457 Diluted
31,844 26,457 Basic
income (loss) per share: Continuing operations
$ 0.04
$ (0.68 ) Discontinued operations
$ (0.01 ) $
(0.16 ) Total
$ 0.03 $ (0.84 ) Diluted income (loss)
per share Continuing operations
$ 0.04 $ (0.68 )
Discontinued operations
$ (0.01 ) $ (0.16 )
Total
$ 0.03 $ (0.84 )
Three Months
Ended December 31, 2015 2014 Capitalized interest
in inventory, beginning of period
$ 123,457 $ 87,619
Interest incurred
30,088 30,283 Interest expense not
qualified for capitalization and included as other expense
(7,432 ) (9,747 ) Capitalized interest amortized to
house construction and land sales expenses
(13,651 )
(8,287 ) Capitalized interest in inventory, end of period
$
132,462 $ 99,868
BEAZER HOMES USA, INC.
UNAUDITED CONSOLIDATED BALANCE
SHEETS
($ in thousands, except share and per
share data)
December 31, 2015
September 30, 2015
ASSETS
Cash and cash equivalents
$ 144,881 $ 251,583
Restricted cash
39,351 38,901 Accounts receivable (net of
allowance of $921 and $1,052, respectively)
50,555 52,379
Income tax receivable
269 419 Owned Inventory
1,729,937 1,697,590 Investments in unconsolidated entities
11,721 13,734 Deferred tax assets, net
325,058
325,373 Property and equipment, net
20,236 22,230 Other
assets
16,688 18,994 Total assets
$
2,338,696 $ 2,421,203
LIABILITIES AND
STOCKHOLDERS’ EQUITY Trade accounts payable
$
81,395 $ 113,539 Other liabilities
122,268 148,966
Total debt (net of discounts of $3,449 and $3,639, respectively)
1,502,056 1,528,275 Total liabilities
$
1,705,719 $ 1,790,780 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,
33,092,491 issued and outstanding and 32,660,583 issued and
outstanding, respectively)
33 33 Paid-in capital
859,108 857,553 Accumulated deficit
(226,164 )
(227,163 ) Total stockholders’ equity
632,977 630,423
Total liabilities and stockholders’ equity
$
2,338,696 $ 2,421,203
Inventory
Breakdown Homes under construction
$ 386,409 $
377,281 Development projects in progress
808,223 809,900
Land held for future development
271,321 270,990 Land held
for sale
54,546 44,555 Capitalized interest
132,462
123,457 Model homes
76,976 71,407 Total owned
inventory
$ 1,729,937 $ 1,697,590
BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL
DATA – CONTINUING OPERATIONS
($ in thousands, except otherwise
noted)
Quarter Ended December
31, SELECTED OPERATING DATA 2015
2014
Closings: West region
492 316 East region
257 305 Southeast region
300 264 Total
closings
1,049 885
New orders, net
of cancellations: West region
422 405 East region
248 286 Southeast region
253 275 Total
new orders, net
923 966
Backlog
units at end of period: West region
885 646 East region
478 581 Southeast region
549 544 Total
backlog units
1,912 1,771
Dollar
value of backlog at end of period (in millions) $
634.6 $ 560.5
Homebuilding
revenue: West region
$ 157,196 $ 86,318 East
region
94,345 101,832 Southeast region
85,052
73,432 Total homebuilding revenue
$ 336,593
$ 261,582
Quarter Ended December 31,
SUPPLEMENTAL FINANCIAL DATA 2015 2014
Revenues: Homebuilding
$ 336,593 $ 261,582
Land sales and other
7,856 4,182 Total
$ 344,449 $ 265,764
Gross
profit (loss): Homebuilding
$ 58,063 $ 35,277
Land sales and other
(481 ) (59 ) Total
$
57,582 $ 35,218
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. 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.
In addition, given the unusual size and nature of the charges
recorded related to the Florida stucco issues during the three
months ended December 31, 2015 and 2014, homebuilding gross
profit is also shown excluding these charges. Management believes
that this representation best reflects the operating
characteristics of the Company.
Quarter Ended December
31, 2015
2014
Homebuilding gross profit
$ 58,063
17.3 % $ 35,277 13.5 % Inventory
impairments and abandonments (I&A)
788 —
Homebuilding gross profit before I&A
58,851 17.5
% 35,277 13.5 % Interest amortized to cost of sales
13,367 8,194 Homebuilding gross profit before
I&A and interest amortized to cost of sales
72,218
21.5 % 43,471 16.6 % Unexpected
warranty costs related to Florida stucco issues (net of expected
insurance recoveries)
(3,612 ) 13,582
Homebuilding gross profit before I&A, interest amortized to
cost of sales and unexpected warranty costs
$ 68,606
20.4 % $ 57,053 21.8 %
Reconciliation of Adjusted EBITDA (earnings before interest,
taxes, depreciation, amortization, debt extinguishment, impairments
and abandonments) to total Company net 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.
In addition, given the unusual size and nature of certain
charges recorded during the periods presented, Adjusted EBITDA is
also shown excluding these charges. Management believes that this
representation best reflects the operating characteristics of the
Company.
Three Months Ended
LTM Ended December 31,
December 31, (a)
2015 2014
2015
2014 Net income (loss)
$ 999 $ (22,340 )
$ 367,433 $ 17,181 Provision (benefit) from income
taxes
506 (697 )
(324,724 ) (42,551 ) Interest
amortized to home construction and land sales expenses, capitalized
interest impaired and interest expense not qualified for
capitalization
21,083 18,034
89,035 86,716
Depreciation and amortization and stock compensation amortization
4,747 3,715
20,505 16,065 Inventory impairments and
abandonments
1,356 —
4,465 8,031 Loss on debt
extinguishment
828 —
908 19,917
Adjusted EBITDA
$ 29,519 $ (1,288 )
$
157,622 $ 105,359 Unexpected warranty costs related to
Florida stucco issues (net
of expected insurance recoveries)
(3,612 ) 13,582
(3,612 ) 17,872
Unexpected warranty costs related to water intrusion issues in New
Jersey (net of expected insurance recoveries)
— —
—
648 Litigation settlement in discontinued operations
—
4,000
(340 ) 4,000 Adjusted
EBITDA excluding unexpected warranty costs and a litigation
settlement in discontinued operations
$ 25,907
$ 16,294
$ 153,670 $ 127,879
(a) “LTM” indicates amounts for the
trailing 12 months
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160204005268/en/
Beazer Homes USA, Inc.David I. Goldberg, 770-829-3700Vice
President of Treasury and Investor Relationsinvestor.relations@beazer.com
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