Beazer Homes Reports Record Fiscal Third Quarter Net Income up 89% and Dollar Value Backlog up 35%; Raises FY 2005 Outlook
ATLANTA--(BUSINESS WIRE)--July 28, 2005--Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced results for the quarter and nine months ended June 30, 2005, reporting an all-time record for quarterly net income and earnings per share. Highlights of the quarter are as follows:
Quarter Ended June 30, 2005 -- Record diluted EPS: $2.50 (up 76.1% vs. $1.42 in prior year) -- Home closings: 4,631 (up 14.0%) -- Total revenues: $1,293.2 million (up 28.1%) -- Gross profit from home construction: $312.9 million (up 60.4%) -- Gross margin from home construction: 24.8% (up 510 basis points) -- Operating income: $178.6 million (up 85.6%) -- Operating margin: 13.8% (up 430 basis points) -- Net Income: $112.7 million (up 88.9%) -- New orders: 5,202 homes (up 6.8%), sales value $1.49 billion (up 18.0%) -- All-time record backlog at June 30, 2005: 10,635 homes (up 14.6%), sales value $3.12 billion (up 35.4%) -- Active communities at June 30, 2005: 521 (up 2.8%) June Quarter Results
"We are very pleased to announce record financial results for our third quarter of fiscal 2005. Our June quarter home closings and revenues increased 14.0% and 28.1%, respectively, and the sales value of our new orders increased 18.0%, reflecting continued strength and favorable conditions in the housing industry and for Beazer Homes," said President and Chief Executive Officer, Ian J. McCarthy. "Our June quarter net income and diluted earnings per share both represent all-time quarterly records, increasing 88.9% and 76.1%, respectively, from the prior year. The fundamentals of our business continue to be robust and we are delivering on our commitment of achieving profitable growth by leveraging our size, scale and geographic reach through our national brand."
"Beazer Homes' backlog stands at an all-time record level of 10,635 homes with a sales value of $3.12 billion, up 14.6% and 35.4%, respectively, from June 30, 2004. This sizeable backlog increase provides the basis for strong performance as we move forward into the final quarter of fiscal 2005 and enter fiscal 2006," added McCarthy.
Total home closings of 4,631 were up 14% from the prior year, resulting from increases in the Southeast, West, Central and Mid-Atlantic regions, partially offset by lower closings in the Midwest region, namely in Indiana and Kentucky.
The company experienced strong new order growth during the quarter in its Southeast, Central, Mid-Atlantic and Midwest regions which was partially offset by decreased orders in the West region. In the West region, strong order growth in Arizona, Colorado and Southern California was offset by declines in Nevada and Northern California. The declines in these markets resulted primarily from certain entitlement issues which delayed community openings in addition to the company's overall focus on converting its existing backlog during the quarter.
Strong Financial Performance in June Quarter
"We achieved record earnings and significantly improved margins this quarter as our focus on profitable growth and accelerated closings yielded significant returns," said James O'Leary, Executive Vice President and Chief Financial Officer. "At June 30, 2005, net debt to total capitalization stood at 48.2%, in line with our target range, and our recent successful completion of both a $300 million senior notes offering in June and a $50 million add-on offering in July increased our ability to capitalize on the significant opportunities available to us by enhancing the liquidity required to further our corporate growth initiatives."
During the third quarter of fiscal 2005, the company realized increases over the prior year in its home construction gross margin, total gross margin and operating income margin of 510 basis points, 490 basis points and 430 basis points, respectively, as the company continued to realize benefits from the execution of its profit improvement initiatives. Margins were also favorably impacted by strong pricing in most major markets, as evidenced by the increase in the average sales price of closings and units in backlog to $272,700 and $293,500, respectively. In the prior year third fiscal quarter, the company incurred warranty costs associated with Trinity Homes, LLC, and increased marketing costs associated with the company's branding initiative, both totaling in the aggregate $12.7 million, and having an approximately 130 basis points impact on margin.
Fiscal 2005 EPS Outlook
"Our performance for the nine months ended June 30, 2005, combined with record backlog and expectations of continued strength in the housing market give us confidence in our future growth opportunities," said McCarthy. "In addition, we expect continued execution on our strategic initiatives that utilize our size, scale and capabilities to achieve greater profitability and increased market penetration through focused product expansion, price point diversification and leveraging of our national brand. As such, we are raising our outlook for diluted earnings per share from a range of $7.00 - $7.25 to a range of $8.00 - $8.25 in fiscal 2005 before the goodwill impairment charge recorded in the second quarter but taking into account the charges associated with the class action settlement for Trinity Homes recorded in the first half of the year."
Conference Call
The company will hold a conference call today, July 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 866-367-5568 (available until 5:00 PM ET on August 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 and also provides mortgage origination and title services to its homebuyers. Beazer Homes, a Fortune 500 company, is listed on the New York Stock Exchange under the ticker symbol "BZH."
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, Annual Report on Form 10-K for the year ended September 30, 2004 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2005.
BEAZER HOMES USA, INC. CONSOLIDATED OPERATING AND FINANCIAL DATA (Dollars in thousands, except per share amounts) FINANCIAL DATA -------------- Quarter Ended Nine Months Ended June 30, June 30, ----------------------- ----------------------- 2005 2004 2005 2004 ----------- ----------- ----------- ----------- INCOME STATEMENT Revenues $1,293,227 $1,009,279 $3,181,302 $2,695,968 Costs and expenses: Home construction and land sales 963,699 801,865 2,456,111 2,145,834 Selling, general and administrative expense 150,891 111,176 363,555 300,400 Goodwill impairment charge (1) - - 130,235 - ----------- ----------- ----------- ----------- Operating income 178,637 96,238 231,401 249,734 Equity in income of unconsolidated joint ventures 2,951 813 3,150 1,748 Other income 987 786 4,987 3,803 ----------- ----------- ----------- ----------- Income before income taxes 182,575 97,837 239,538 255,285 Income taxes 69,835 38,157 141,438 99,561 ----------- ----------- ----------- ----------- Net income $ 112,740 $ 59,680 $ 98,100 $ 155,724 =========== =========== =========== =========== Net income per common share (2): Basic $ 2.78 $ 1.49 $ 2.43 $ 3.90 =========== =========== =========== =========== Diluted $ 2.50 $ 1.42 $ 2.24 $ 3.74 =========== =========== =========== =========== Weighted average shares outstanding, in thousands (2): Basic 40,497 39,960 40,400 39,932 Diluted 45,666 42,350 45,510 41,740 Interest incurred $ 22,798 $ 19,469 $ 64,269 $ 54,872 Interest amortized to cost of sales $ 21,568 $ 17,309 $ 54,880 $ 46,183 EPS interest add back (net of taxes) - Convertible Debt $ 1,331 $ 301 $ 3,993 $ 301 Depreciation and amortization $ 5,676 $ 4,065 $ 15,311 $ 12,100 SELECTED BALANCE SHEET DATA June 30, 2005 2004 ----------- ----------- Cash $ 8,098 $ 199,627 Inventory 2,986,994 2,352,869 Total assets 3,467,666 2,976,031 Total debt 1,250,499 1,124,067 Shareholders' equity 1,333,879 1,137,683 (1) The non-cash goodwill impairment charge included in the nine months ended June 30, 2005 is not tax deductible. (2) Share and per share amounts for prior periods have been retroactively adjusted to reflect the effect of the Company's March 2005 three-for-one stock split.
BEAZER HOMES USA, INC. CONSOLIDATED OPERATING AND FINANCIAL DATA (Continued) (Dollars in thousands) OPERATING DATA -------------- Quarter Ended Nine Months Ended June 30, June 30, ----------------------- ----------------------- SELECTED OPERATING DATA 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Closings: Southeast region 1,491 1,340 3,926 3,794 West region 1,774 1,562 4,324 4,180 Central region 409 216 866 664 Mid-Atlantic region 439 409 1,175 1,094 Midwest region 518 534 1,516 1,621 ----------- ----------- ----------- ----------- Total closings 4,631 4,061 11,807 11,353 =========== =========== =========== =========== New orders, net of cancellations: Southeast region 1,875 1,657 4,767 4,336 West region 1,607 1,823 4,863 5,162 Central region 416 297 1,059 833 Mid-Atlantic region 514 427 1,582 1,146 Midwest region 790 665 1,715 1,728 ----------- ----------- ----------- ----------- Total new orders 5,202 4,869 13,986 13,205 =========== =========== =========== =========== Backlog units at end of period: Southeast region 3,470 2,863 West region 3,679 3,269 Central region 622 565 Mid-Atlantic region 1,454 1,169 Midwest region 1,410 1,412 ----------- ----------- Total backlog units 10,635 9,278 =========== =========== Dollar value of backlog at end of period $3,121,702 $2,304,705 =========== =========== Active subdivisions: Southeast region 170 189 West region 107 93 Central region 49 44 Mid-Atlantic region 62 55 Midwest region 133 126 ----------- ----------- Total active subdivisions 521 507 =========== ===========
BEAZER HOMES USA, INC. CONSOLIDATED OPERATING AND FINANCIAL DATA (Continued) (Dollars in thousands) Quarter Ended Nine Months Ended June 30, June 30, ----------------------- ----------------------- SUPPLEMENTAL FINANCIAL DATA: 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Revenues Home sales $1,262,890 $ 989,961 $3,126,302 $2,636,896 Land and lot sales 20,789 10,570 29,767 32,136 Mortgage origination revenue 13,708 11,531 35,872 35,971 Intercompany elimination - mortgage (4,160) (2,783) (10,639) (9,035) ----------- ----------- ----------- ----------- Total revenues $1,293,227 $1,009,279 $3,181,302 $2,695,968 =========== =========== =========== =========== Cost of home construction and land sales Home sales $ 950,013 $ 794,875 $2,442,767 $2,125,202 Land and lot sales 17,846 9,773 23,983 29,667 Intercompany elimination - mortgage (4,160) (2,783) (10,639) (9,035) ----------- ----------- ----------- ----------- Total costs of home construction and land sales $ 963,699 $ 801,865 $2,456,111 $2,145,834 =========== =========== =========== =========== Selling, general and administrative Homebuilding operations $ 141,315 $ 103,403 $ 337,564 $ 277,510 Mortgage origination operations 9,576 7,773 25,991 22,890 ----------- ----------- ----------- ----------- Total selling, general and administrative $ 150,891 $ 111,176 $ 363,555 $ 300,400 =========== =========== =========== ===========
CONTACT: Beazer Homes USA, Inc., Atlanta
Investor Relations & Corporate Communications
Leslie H. Kratcoski, 770/829-3764
lkratcos@beazer.com
SOURCE: Beazer Homes USA, Inc.