Beazer Homes Reports Fiscal Second Quarter Results with Record Backlog And Raises Outlook for Fiscal 2005
ATLANTA--(BUSINESS WIRE)--April 28, 2005--Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced results for the quarter ended March 31, 2005. Summary results for the quarter are as follows:
Quarter Ended March 31, 2005 -- Total revenues: $976.2 million (up 11.4%) -- Reported net loss of ($84.3) million, or ($2.09) per share, which includes a non-cash goodwill impairment charge of ($130.2) million, or ($3.22) per share, and charges associated with the class action settlement for Trinity Homes of ($45.0) million, or ($0.69) per share. The Company preliminarily announced estimates for both of these charges on March 29, 2005 of approximately $131.0 million and $40.0 million, respectively. -- Home closings: 3,602 (down 2.2%) -- New orders: 5,239 (up 4.1%) -- Backlog at 3/31/05: 10,064 homes (up 18.8%), sales value $2.9 billion (up 42.3%) March Quarter Results
"Our March quarter revenues increased 11%, and new orders were up 4%, both indicating continued strength and favorable conditions in the housing industry and Beazer Homes' strong market position," said president and chief executive officer, Ian J. McCarthy. "While our results this quarter were adversely impacted by the goodwill impairment charge and additional charges related to Trinity Homes, the fundamentals of our business continue to be robust and we remain committed to achieving profitable growth by leveraging our size, scale and geographic reach through our national brand."
"Beazer Homes' backlog now stands at an all-time record level of 10,064 homes with a sales value of $2.9 billion, up 19% and 42%, respectively, from the backlog homes and sales value at March 31, 2004. This sizeable backlog increase provides the basis for strong performance in the second half of fiscal 2005 and provides us with a high degree of confidence in raising our outlook for the year," added McCarthy.
The growth in new home orders for the quarter resulted from increases in the Company's Southeast, Central, West and Mid-Atlantic regions. Order growth in these regions was partially offset by decreased orders in the Midwest region and the Charlotte market.
Total home closings of 3,602 were down 2% from the prior year, as weather related closing delays in the Southeast and West regions have shifted a significant portion of the year's expected results to the second half of the fiscal year. Increased closings in several markets across the country this quarter were more than offset by these delays and continued weak performance in the Midwest and Charlotte.
Results for the second quarter include $45.0 million in charges associated with the settlement agreement between the parties in the previously disclosed class action suit related to construction defect claims from water intrusion against Trinity Homes LLC ("Trinity") and Beazer Homes Investment Corp., Trinity's parent. The Company preliminarily announced an estimate for these charges of approximately $40.0 million on March 29, 2005. The charges taken this quarter to adjust recorded liabilities are the Company's best estimate of the ultimate liability for this matter at the present time.
Goodwill Impairment Charge
As previously announced on March 29, 2005, the Company and its Board of Directors concluded that substantially all of the goodwill allocated to certain underperforming operations in Indiana, Ohio, Kentucky, and Charlotte, North Carolina, which was recorded upon the acquisition of Crossmann Communities in April 2002, was impaired. The Company recently conducted impairment testing of goodwill in accordance with Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, and results for the second quarter of fiscal 2005 reflect a non-cash goodwill impairment charge of $130.2 million. This non-cash impairment charge does not impact the Company's ability to generate cash flow in the future or its compliance with its debt covenants. In addition, this charge is not tax deductible.
While the Company remains committed to the Indiana, Ohio, Kentucky and Charlotte, North Carolina markets, they presently suffer from weaker than anticipated local economies, particularly in the Midwest markets, and severe price competition, particularly at entry level price points. The Company has put in place several strategies to broaden its target price points and to reduce its investment in and exposure to the entry level segment in these markets.
The Company's financial position remained strong during the March quarter with net debt to total capitalization standing at 48.2%.
Fiscal 2005 EPS Outlook
"Record backlog coupled with expectations of continued strength in the housing market and our continued execution on our strategic initiatives give us confidence in our future growth opportunities," said McCarthy. "As such, we are raising our outlook for earnings per share from a range of $6.67 - $7.00 to a range of $7.00 - $7.25 in fiscal 2005 before the goodwill impairment charge recorded this quarter but taking into account the charges associated with the class action settlement for Trinity Homes." Although closing delays in the Southeast and West regions have shifted a significant portion of the year's expected results to the second half of the fiscal year, performance to date, coupled with extremely strong backlog, gives the Company a high degree of confidence in its near term performance. While the Midwest and Charlotte, NC markets are weaker than originally anticipated, strength in the Company's other major markets is currently expected to more than offset any shortfall in operating contribution from the Midwest and Charlotte.
Conference Call
The Company will hold a conference call today, April 28, 2005, at 11:00 AM ET to discuss the results and take questions. You may listen to the conference call and view the Company's slide presentation over the internet by going to the "Investor Relations" section of the Company's website at www.beazer.com. To access the conference call by telephone, listeners should dial 800-369-1904. 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 866-497-7585 (available until midnight on May 5, 2005), or visit www.beazer.com.
Beazer Homes USA, Inc., headquartered in Atlanta is one of the country's ten largest single-family homebuilders with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Mississippi, Nevada, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia. Beazer Homes also provides mortgage origination and title services to its homebuyers.
Forward-Looking Statements
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to, changes in general economic conditions, fluctuations in interest rates, increases in raw materials and labor costs, levels of competition, potential liability as a result of construction defect, product liability and warranty claims, the possibility that the Company's improvement plan for the Midwest and strategies to broaden target price points and lessen dependence on the entry-level segment in certain markets will not achieve desired results, and other factors described in the Company's Form S-3/A filed with the Securities and Exchange Commission on August 17, 2004 and Annual Report on Form 10-K for the year ended September 30, 2004.
BEAZER HOMES USA, INC. CONSOLIDATED OPERATING AND FINANCIAL DATA (Dollars in thousands, except per share amounts) FINANCIAL DATA ---------------------- Quarter Ended Six Months Ended March 31, March 31, ----------------------- ----------------------- 2005 2004 2005 2004 ----------- ----------- ----------- ----------- INCOME STATEMENT Revenues $976,248 $876,581 $1,888,075 $1,686,689 Costs and expenses: Home construction and land sales 796,057 699,020 1,492,412 1,343,969 Selling, general and administrative expense 108,070 99,717 212,664 189,224 Goodwill impairment charge 130,235 - 130,235 - ----------- ----------- ----------- ----------- Operating income (loss) (58,114) 77,844 52,764 153,496 Equity in income of unconsolidated joint ventures 301 378 199 935 Other income 1,436 1,872 4,000 3,017 ----------- ----------- ----------- ----------- Income (loss) before income taxes (56,377) 80,094 56,963 157,448 Income taxes 27,967 31,236 71,603 61,404 ----------- ----------- ----------- ----------- Net income (loss) $(84,344) $48,858 $(14,640) $96,044 =========== =========== =========== =========== Net income (loss) per common share: Basic $(2.09) $1.22 $(0.36) $2.41 =========== =========== =========== =========== Diluted $(2.09) $1.17 $(0.36) $2.31 =========== =========== =========== =========== Weighted average shares outstanding, in thousands: Basic 40,409 39,993 40,352 39,918 Diluted 40,409 41,595 40,352 41,538 Interest incurred $21,082 $18,532 $41,471 $35,403 Interest amortized to cost of sales $17,353 $15,187 $33,312 $28,874 Depreciation and amortization $5,143 $4,021 $9,635 $8,035 SELECTED BALANCE SHEET DATA March 31, 2005 2004 ----------- ----------- Cash $15,930 $89,559 Inventory 2,715,191 2,273,855 Total assets 3,131,149 2,764,900 Total debt 1,150,790 948,979 Shareholders' equity 1,219,659 1,094,032 BEAZER HOMES USA, INC. CONSOLIDATED OPERATING AND FINANCIAL DATA (Continued) (Dollars in thousands) OPERATING DATA ---------------------- Quarter Ended Six Months Ended March 31, March 31, ----------------------- ----------------------- SELECTED OPERATING DATA 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Closings: Southeast region 1,196 1,197 2,435 2,454 West region 1,358 1,404 2,550 2,618 Central region 267 208 457 448 Mid-Atlantic region 366 367 736 685 Midwest region 415 508 998 1,087 ----------- ----------- ----------- ----------- Total closings 3,602 3,684 7,176 7,292 =========== =========== =========== =========== New orders, net of cancellations: Southeast region 1,701 1,636 2,892 2,679 West region 1,927 1,885 3,256 3,339 Central region 406 351 643 536 Mid-Atlantic region 561 403 1,068 719 Midwest region 644 757 925 1,063 ----------- ----------- ----------- ----------- Total new orders 5,239 5,032 8,784 8,336 =========== =========== =========== =========== Backlog units at end of period: Southeast region 3,086 2,546 West region 3,846 3,008 Central region 615 484 Mid-Atlantic region 1,379 1,151 Midwest region 1,138 1,281 ----------- ----------- Total backlog units 10,064 8,470 =========== =========== Dollar value of backlog at end of period $2,898,247 $2,036,493 =========== =========== Active subdivisions: Southeast region 166 184 West region 101 98 Central region 51 44 Mid-Atlantic region 58 51 Midwest region 130 131 ----------- ----------- Total active subdivisions 506 508 =========== =========== BEAZER HOMES USA, INC. CONSOLIDATED OPERATING AND FINANCIAL DATA (Continued) (Dollars in thousands) Quarter Ended Six Months Ended March 31, March 31, ----------------------- ----------------------- SUPPLEMENTAL FINANCIAL DATA: 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Revenues Home sales $960,538 $853,638 $1,863,412 $1,646,935 Land and lot sales 7,763 13,831 8,978 21,566 Mortgage origination revenue 11,310 12,294 22,164 24,440 Intercompany elimination - mortgage (3,363) (3,182) (6,479) (6,252) ----------- ----------- ----------- ----------- Total revenues $976,248 $876,581 $1,888,075 $1,686,689 =========== =========== =========== =========== Cost of home construction and land sales Home sales $794,455 $690,210 $1,492,754 $1,330,327 Land and lot sales 4,965 11,992 6,137 19,894 Intercompany elimination - mortgage (3,363) (3,182) (6,479) (6,252) ----------- ----------- ----------- ----------- Total costs of home construction and land sales $796,057 $699,020 $1,492,412 $1,343,969 =========== =========== =========== =========== Selling, general and administrative Homebuilding operations $99,436 $91,994 $196,249 $174,107 Mortgage origination operations 8,634 7,723 16,415 15,117 ----------- ----------- ----------- ----------- Total selling, general and administrative $108,070 $99,717 $212,664 $189,224 =========== =========== =========== ===========
CONTACT: Beazer Homes USA, Inc.
Leslie H. Kratcoski, 770-829-3764
lkratcos@beazer.com
SOURCE: Beazer Homes USA, Inc.