Beazer Homes Reports First Quarter Fiscal 2014 Results

  Beazer Homes Reports First Quarter Fiscal 2014 Results

Business Wire

ATLANTA -- January 30, 2014

Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced its
financial results for the quarter ended December31, 2013. Highlights for the
quarter included a 310 basis point improvement in homebuilding gross margins,
an 18.6% increase in average sales prices and adjusted EBITDA of $21.6
million, nearly triple the amount recorded a year ago.

“We continued to make year-over-year improvements in our key operational
metrics during the quarter,” said Allan Merrill, CEO of Beazer Homes. “Higher
sales per community, average sales prices and gross margins led us to improved
adjusted EBITDA and kept us on track to achieve full year profitability for
Fiscal 2014.”

Summary results for the quarter ended December31, 2013 are as follows:

Q1 Results from Continuing Operations (unless otherwise specified)

                                        Quarter Ended December 31,
                                         2013        2012        Change
New Home Orders                          895           932           (4.0   )%
Orders per month per community           2.2           2.1           4.8    %
LTM orders per month per community       2.9           2.5           16.0   %
Cancellation rates                       21.8    %     26.4    %     -460 bps
                                                                     
Total Home Closings                      1,038         1,038         —      %
Average sales price from closings (in    $ 279.3       $ 235.5       18.6   %
thousands)
Homebuilding revenue (in millions)       $ 290.0       $ 244.4       18.6   %
Homebuilding gross profit margin,
excluding impairments and abandonments   18.8    %     14.7    %     410 bps
(I&A)
Homebuilding gross profit margin,
excluding I&A and interest amortized     21.2    %     18.1    %     310 bps
to cost of sales
                                                                     
Loss from continuing operations before   $ (3.9  )     $ (19.2 )     $ 15.3
income taxes (in millions)
Benefit from income taxes (in            $ —           $ 0.3         $ (0.3 )
millions)
Net loss from continuing operations      $ (3.9  )     $ (18.9 )     $ 15.0
(in millions)
Basic Loss Per Share                     $ (0.16 )     $ (0.78 )     $ 0.62
Inventory impairments (in millions)      $ —           $ (0.2  )     $ 0.2
Net loss from continuing operations
excluding inventory impairments (in      $ (3.9  )     $ (18.7 )     $ 14.8
millions)
Land and land development spending (in   $ 123.8       $ 90.0        $ 33.8
millions)
Total Company Adjusted EBITDA (in        $ 21.6        $ 7.7         $ 13.9
millions)
                                                                            
                                                                            

As of December31, 2013

  *Total cash and cash equivalents: $431.7 million, including unrestricted
    cash of approximately $382.6 million
  *Stockholders' equity: $235.6 million
  *Total backlog from continuing operations: 1,750 homes with a sales value
    of $500.0 million, compared to 1,817 homes with a sales value of $478.3
    million as of December31, 2012
  *Land and lots controlled: 28,978 lots (79.0% owned), an increase of 15.4%
    from December31, 2012

Conference Call

The Company will hold a conference call on January 31, 2014 at 11:00 am 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 800-685-6061 or 203-369-3604 and enter the passcode “3740” (available
until 9:30 pm ET on February 7, 2014), 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 one of the country's 10 largest
single-family homebuilders. The Company's homes meet or exceed the benchmark
for energy-efficient home construction as established by ENERGY STAR® and are
designed with flexible floorplan options 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 offers homes in 16
states, including Arizona, California, Delaware, Florida, Georgia, Indiana,
Maryland, Nevada, New Jersey, New York, North Carolina, Pennsylvania, 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) 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;
(ii) 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 in the
market; (iii) the cyclical nature of the homebuilding industry and a potential
deterioration in homebuilding industry conditions; (iv) estimates related to
homes to be delivered in the future (backlog) are imprecise as they are
subject to various cancellation risks which cannot be fully controlled; (v)
shortages of or increased prices for labor, land or raw materials used in
housing production; (vi) our cost of and ability to access capital 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; (vii) our ability to comply with covenants in our debt
agreements or satisfy such obligations through repayment or refinancing;
(viii) 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;
(ix) increased competition or delays in reacting to changing consumer
preference in home design; (x) 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;
(xi) estimates related to the potential recoverability of our deferred tax
assets; (xii) 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; (xiii) the results of litigation
or government proceedings and fulfillment of the obligations in the Deferred
Prosecution Agreement and consent orders with governmental authorities and
other settlement agreements; (xiv) the impact of construction defect and home
warranty claims; (xv) the cost and availability of insurance and surety bonds;
(xvi) the performance of our unconsolidated entities and our unconsolidated
entity partners; (xvii) delays in land development or home construction
resulting from adverse weather conditions; (xviii) the impact of information
technology failures or data security breaches; (xix) effects of changes in
accounting policies, standards, guidelines or principles; or (xx) terrorist
acts, acts of war and other factors over which the Company has little or no
control.

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.


BEAZER HOMES USA, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share data)
                                                 
                                                 Three Months Ended
                                                 December 31,
                                                 2013            2012
Total revenue                                    $ 293,170        $ 246,902
Home construction and land sales expenses        238,469          210,614
Inventory impairments and option contract        31              204        
abandonments
Gross profit                                     54,670           36,084
Commissions                                      11,821           10,642
General and administrative expenses              28,410           26,328
Depreciation and amortization                    2,907           2,715      
Operating income (loss)                          11,532           (3,601     )
Equity in income of unconsolidated entities      319              36
Other expense, net                               (15,757    )     (15,627    )
Loss from continuing operations before income    (3,906     )     (19,192    )
taxes
Provision for (benefit from) income taxes        42              (253       )
Loss from continuing operations                  (3,948     )     (18,939    )
Loss from discontinued operations, net of tax    (1,190     )     (1,449     )
Net loss                                         $ (5,138   )     $ (20,388  )
Weighted average number of shares:
Basic and Diluted                                25,009           24,294
Basic and Diluted loss per share:
Continuing Operations                            $ (0.16    )     $ (0.78    )
Discontinued Operations                          $ (0.05    )     $ (0.06    )
Total                                            $ (0.21    )     $ (0.84    )
                                                 
                                                 
                                                 
                                                 Three Months Ended
                                                 December 31,
                                                 2013               2012
Capitalized interest in inventory, beginning of  $     52,562       $ 38,190
period
Interest incurred                                32,441             28,418
Interest expense not qualified for               (16,032      )     (16,211  )
capitalization and included as other expense
Capitalized interest amortized to house          (7,135       )     (8,475   )
construction and land sales expenses
Capitalized interest in inventory, end of period $     61,836      $ 41,922 
                                                                             
                                                                             

BEAZER HOMES USA, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands, except share and per share data)
                                                        
                                      December 31, 2013     September 30, 2013
ASSETS
Cash and cash equivalents             $   382,560           $   504,459
Restricted cash                       49,155                48,978
Accounts receivable (net of
allowance of $1,495 and $1,651,       21,074                22,342
respectively)
Income tax receivable                 2,813                 2,813
Inventory
Owned inventory                       1,374,987             1,304,694
Land not owned under option           7,751                9,124           
agreements
Total inventory                       1,382,738             1,313,818
Investments in unconsolidated         47,424                44,997
entities
Deferred tax assets, net              5,333                 5,253
Property, plant and equipment, net    17,437                17,000
Other assets                          24,299               27,129          
Total assets                          $   1,932,833        $   1,986,789   
                                                            
LIABILITIES AND STOCKHOLDERS’
EQUITY
Trade accounts payable                $   60,505            $   83,800
Other liabilities                     117,318               145,623
Obligations related to land not       3,147                 4,633
owned under option agreements
Total debt (net of discounts of       1,516,255            1,512,183       
$4,970 and $5,160 respectively)
Total liabilities                     $   1,697,225        $   1,746,239   
                                                            
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, 25,358,835 and            25                    25
25,245,945 issued and outstanding,
respectively)
Paid-in capital                       846,361               846,165
Accumulated deficit                   (610,778       )      (605,640        )
Total stockholders’ equity            235,608              240,550         
Total liabilities and stockholders’   $   1,932,833        $   1,986,789   
equity
                                                            
Inventory Breakdown
Homes under construction              $   260,359           $   262,476
Development projects in progress      611,736               578,453
Land held for future development      338,512               341,986
Land held for sale                    59,924                31,331
Capitalized interest                  61,836                52,562
Model homes                           42,620                37,886
Land not owned under option           7,751                9,124           
agreements
Total inventory                       $   1,382,738        $   1,313,818   
                                                                            
                                                                            

BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL DATA – CONTINUING OPERATIONS
($ in thousands, except otherwise noted)
                                                  
                                                    Quarter Ended December 31,
SELECTED OPERATING DATA                             2013            2012
Closings:
West region                                         435              499
East region                                         338              353
Southeast region                                    265             186
Total closings                                      1,038           1,038
                                                                     
New orders, net of cancellations:
West region                                         351              424
East region                                         308              309
Southeast region                                    236             199
Total new orders                                    895             932
                                                                     
Backlog units at end of period:
West region                                         654              764
East region                                         631              703
Southeast region                                    465             350
Total backlog units                                 1,750           1,817
                                                                     
Dollar value of backlog at end of period (in        $  500.0        $ 478.3
millions)
                                                                     
Homebuilding Revenue:
West region                                         $  120,212       $ 109,753
East region                                         106,879          96,464
Southeast region                                    62,867          38,208
Total homebuilding revenue                          $  289,958      $ 244,425
                                                                       
                                                                       

                             Quarter Ended December 31,
SUPPLEMENTAL FINANCIAL DATA   2013           2012
Revenues:
Homebuilding                  $  289,958       $ 244,425
Land sales and other          3,212           2,477
Total                         $  293,170      $ 246,902
                                               
Gross profit:
Homebuilding                  $  54,450        $ 35,630
Land sales and other          220             454
Total                         $  54,670       $ 36,084
                                                 

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.

                                  Quarter Ended December 31,                
                                   2013                 2012              
Homebuilding gross profit          $ 54,450   18.8 %     $ 35,630   14.6 %
Inventory impairments and lot      31                     204      
option abandonments (I&A)
Homebuilding gross profit before   54,481       18.8 %     35,834       14.7 %
I&A
Interest amortized to cost of      7,135                  8,475    
sales
Homebuilding gross profit before
I&A and interest amortized to      $ 61,616    21.2 %     $ 44,309    18.1 %
cost of sales
                                                                             

Reconciliation of Adjusted EBITDA (earnings before interest, taxes,
depreciation, amortization, debt extinguishment, impairments and abandonments)
to total company net loss (including discontinued operations), 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.

                                                   Quarter Ended December 31,
                                                    2013         2012
Net loss                                            $ (5,138 )     $ (20,388 )
Benefit from income taxes                           52             (275      )
Interest amortized to home construction and land
sales expenses, capitalized interest impaired,      23,167         24,686
and interest expense not qualified for
capitalization
Depreciation and amortization and stock             3,516          3,499
compensation amortization
Inventory impairments and option contract           31            221       
abandonments
Adjusted EBITDA                                     $ 21,628      $ 7,743   

Contact:

Beazer Homes USA, Inc.
Carey Phelps, 770-829-3700
Director, Investor Relations & Corporate Communications
investor.relations@beazer.com
 
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