Beazer Homes Reports Second Quarter Fiscal 2016 Results
The Company reported a net loss from continuing operations of
Adjusted EBITDA rose 32.5% versus the prior year to
The Company ended the quarter with nearly
Relative to the Company’s objective to achieve
“Our second quarter results demonstrated our ability to successfully
grow EBITDA while reducing leverage. Although uncertainty in the broader
economy contributed to an uneven start to the spring selling season, we
were encouraged by more consistent new home orders as the quarter
progressed,” said
Mr. Merrill continued, “We are pleased with our results for the quarter and so far this year and look forward to further progress on our joint “2B-10” and deleveraging objectives in the second half of the year.”
Summary results for the three and six months ended March 31, 2016 are as follows:
Q2 Results from Continuing Operations (unless otherwise specified) |
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Three Months Ended March 31, | |||||||||||||||||||
2016 | 2015 | Change* | |||||||||||||||||
New Home Orders | 1,538 | 1,698 | (9.4 | )% | |||||||||||||||
Orders per community per month | 3.1 | 3.5 | (11.4 | )% | |||||||||||||||
Average active community count | 166 | 160 | 3.8 | % | |||||||||||||||
Actual community count at month-end | 163 | 163 | — | % | |||||||||||||||
Cancellation rates | 17.6 | % | 16.7 | % | 90 bps | ||||||||||||||
Total Home Closings | 1,150 | 936 | 22.9 | % | |||||||||||||||
Average selling price from closings (in thousands) | $ | 328.0 | $ | 305.8 | 7.3 | % | |||||||||||||
Homebuilding revenue (in millions) | $ | 377.3 | $ | 286.2 | 31.8 | % | |||||||||||||
Homebuilding gross margin, excluding impairments and abandonments (I&A) | 15.9 | % | 18.3 | % | -240 bps | ||||||||||||||
Homebuilding gross margin, excluding I&A and interest amortized to cost of sales | 20.2 | % | 21.7 | % | -150 bps | ||||||||||||||
Homebuilding gross margin, excluding I&A, interest amortized to cost of sales and unexpected warranty costs | 20.2 | % | 21.7 | % | -150 bps | ||||||||||||||
Loss from continuing operations before income taxes (in millions) | $ | (5.2 | ) | $ | (2.0 | ) | $ | (3.2 | ) | ||||||||||
(Benefit from) provision for income taxes (in millions) | $ | (3.9 | ) | $ | 0.1 | $ | (4.0 | ) | |||||||||||
Loss from continuing operations (in millions) | $ | (1.3 | ) | $ | (2.1 | ) | $ | 0.7 | |||||||||||
Basic and diluted loss per share from continuing operations |
$ | (0.04 | ) | $ | (0.08 | ) | $ | 0.04 | |||||||||||
Total Company land and land development spending (in millions) | $ | 83.6 | $ | 102.1 | $ | (18.5 | ) | ||||||||||||
Total Company Adjusted EBITDA, excluding unexpected warranty costs and a litigation settlement in discontinued operations (in millions) | $ | 26.2 | $ | 19.7 | 32.5 | % | |||||||||||||
LTM Adjusted EBITDA, excluding unexpected warranty costs and a litigation settlement in discontinued operations (in millions) | $ | 160.1 | $ | 129.1 | 24.0 | % | |||||||||||||
Six Months Ended March 31, | |||||||||||||||||||
2016 | 2015 | Change* | |||||||||||||||||
New Home Orders | 2,461 | 2,664 | (7.6 | )% | |||||||||||||||
LTM orders per month per community | 2.6 | 2.8 | (7.1 | )% | |||||||||||||||
Cancellation rates | 20.9 | % | 18.5 | % | 240 bps | ||||||||||||||
Total Home Closings | 2,199 | 1,821 | 20.8 | % | |||||||||||||||
Average sales price from closings (in thousands) | $ | 324.6 | $ | 300.8 | 7.9 | % | |||||||||||||
Homebuilding revenue (in millions) | $ | 713.8 | $ | 547.8 | 30.3 | % | |||||||||||||
Homebuilding gross margin, excluding impairments and abandonments (I&A) | 16.7 | % | 16.0 | % | 70 bps | ||||||||||||||
Homebuilding gross margin, excluding I&A and interest amortized to cost of sales | 20.8 | % | 19.3 | % | 150 bps | ||||||||||||||
Homebuilding gross margin, excluding I&A, interest amortized to cost of sales and unexpected warranty costs | 20.3 | % | 21.8 | % | -150 bps | ||||||||||||||
Loss from continuing operations before income taxes (in millions) | $ | (3.4 | ) | $ | (20.7 | ) | $ | 17.3 | |||||||||||
Benefit from income taxes (in millions) | $ | (3.3 | ) | $ | (0.6 | ) | $ | (2.7 | ) | ||||||||||
Loss from continuing operations (in millions) | $ | (0.1 | ) | $ | (20.1 | ) | $ | 20.0 | |||||||||||
Basic and diluted loss per share from continuing operations | $ | (0.01 | ) | $ | (0.76 | ) | $ | 0.75 | |||||||||||
Total Company land and land development spending (in millions) | $ | 195.3 | $ | 247.6 | $ | (52.3 | ) | ||||||||||||
Total Company Adjusted EBITDA, excluding unexpected warranty costs and a litigation settlement in discontinued operations (in millions) | $ | 52.1 | $ | 36.0 | 44.5 | % | |||||||||||||
* Change is calculated using unrounded numbers.
As of March 31, 2016 |
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As of March 31, | ||||||||||||||||||
2016 | 2015 | Change | ||||||||||||||||
Backlog units | 2,300 | 2,533 | (9.2 | )% | ||||||||||||||
Dollar value of backlog (in millions) | $ | 773.0 | $ | 814.1 | (5.1 | )% | ||||||||||||
ASP in backlog (in thousands) | $ | 336.1 | $ | 321.4 | 4.6 | % | ||||||||||||
Land and lots controlled | 25,132 | 27,794 | (9.6 | )% |
Conference Call
The Company will hold a conference call on April 28, 2016 at
Headquartered in
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, changes in consumer confidence, declines
in employment levels, inflation or 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 or
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
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. |
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UNAUDITED CONSOLIDATED STATEMENTS OF INCOME |
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($ in thousands, except per share data) |
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Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||
Total revenue | $ | 385,607 | $ | 299,359 | $ | 730,056 | $ | 565,123 | |||||||||||||||||
Home construction and land sales expenses | 324,216 | 245,446 | 609,727 | 475,992 | |||||||||||||||||||||
Inventory impairments and abandonments | 1,825 | — | 3,181 | — | |||||||||||||||||||||
Gross profit | 59,566 | 53,913 | 117,148 | 89,131 | |||||||||||||||||||||
Commissions | 14,582 | 11,969 | 28,356 | 22,895 | |||||||||||||||||||||
General and administrative expenses | 38,898 | 32,727 | 70,567 | 64,168 | |||||||||||||||||||||
Depreciation and amortization | 3,056 | 2,781 | 6,047 | 5,122 | |||||||||||||||||||||
Operating income (loss) | 3,030 | 6,436 | 12,178 | (3,054 | ) | ||||||||||||||||||||
Equity in income (loss) of unconsolidated entities | (51 | ) | 82 | 9 | 224 | ||||||||||||||||||||
Loss on extinguishment of debt | (1,631 | ) | — | (2,459 | ) | — | |||||||||||||||||||
Other expense, net | (6,558 | ) | (8,473 | ) | (13,123 | ) | (17,907 | ) | |||||||||||||||||
Loss from continuing operations before income taxes | (5,210 | ) | (1,955 | ) | (3,395 | ) | (20,737 | ) | |||||||||||||||||
Expense (benefit) from income taxes | (3,898 | ) | 105 | (3,282 | ) | (591 | ) | ||||||||||||||||||
Loss from continuing operations | (1,312 | ) | (2,060 | ) | (113 | ) | (20,146 | ) | |||||||||||||||||
Income (loss) from discontinued operations, net of tax | 78 | 64 | (122 | ) | (4,190 | ) | |||||||||||||||||||
Net income (loss) | $ | (1,234 | ) | $ | (1,996 | ) | $ | (235 | ) | $ | (24,336 | ) | |||||||||||||
Weighted average number of shares: | |||||||||||||||||||||||||
Basic | 31,808 | 26,480 | 31,783 | 26,469 | |||||||||||||||||||||
Diluted | 31,808 | 26,480 | 31,783 | 26,469 | |||||||||||||||||||||
Basic income (loss) per share: | |||||||||||||||||||||||||
Continuing operations | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.01 | ) | $ | (0.76 | ) | |||||||||||||
Discontinued operations | $ | — | $ | — | $ | — | $ | (0.16 | ) | ||||||||||||||||
Total | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.01 | ) | $ | (0.92 | ) | |||||||||||||
Diluted income (loss) per share: | |||||||||||||||||||||||||
Continuing operations | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.01 | ) | $ | (0.76 | ) | |||||||||||||
Discontinued operations | $ | — | $ | — | $ | — | $ | (0.16 | ) | ||||||||||||||||
Total | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.01 | ) | $ | (0.92 | ) | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
March 31, | March 31, | ||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||
Capitalized interest in inventory, beginning of period | $ | 132,462 | $ | 99,868 | $ | 123,457 | $ | 87,619 | |||||||||||||||||
Interest incurred | 30,467 | 30,259 | 60,555 | 60,542 | |||||||||||||||||||||
Capitalized interest impaired | (84 | ) | — | (84 | ) | — | |||||||||||||||||||
Interest expense not qualified for capitalization and included as other expense | (6,633 | ) | (7,695 | ) | (14,065 | ) | (17,442 | ) | |||||||||||||||||
Capitalized interest amortized to house construction and land sales expenses | (16,073 | ) | (9,956 | ) | (29,724 | ) | (18,243 | ) | |||||||||||||||||
Capitalized interest in inventory, end of period | $ | 140,139 | $ | 112,476 | $ | 140,139 | $ | 112,476 | |||||||||||||||||
BEAZER HOMES USA, INC. |
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UNAUDITED CONSOLIDATED BALANCE SHEETS |
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($ in thousands, except share and per share data) |
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March 31, 2016 | September 30, 2015 | ||||||||||||
ASSETS | |||||||||||||
Cash and cash equivalents | $ | 134,933 | $ | 251,583 | |||||||||
Restricted cash | 17,279 | 38,901 | |||||||||||
Accounts receivable (net of allowance of $872 and $1,052, respectively) | 55,603 | 52,379 | |||||||||||
Income tax receivable | 221 | 419 | |||||||||||
Owned Inventory | 1,750,652 | 1,697,590 | |||||||||||
Investments in unconsolidated entities | 9,015 | 13,734 | |||||||||||
Deferred tax assets, net | 329,644 | 325,373 | |||||||||||
Property and equipment, net | 20,699 | 22,230 | |||||||||||
Other assets | 15,695 | 18,994 | |||||||||||
Total assets | $ | 2,333,741 | $ | 2,421,203 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||
Trade accounts payable | $ | 98,556 | $ | 113,539 | |||||||||
Other liabilities | 142,028 | 148,966 | |||||||||||
Total debt (net of discounts of $5,272 and $3,639, respectively) | 1,459,605 | 1,528,275 | |||||||||||
Total liabilities | $ | 1,700,189 | $ | 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, 33,092,278 issued and outstanding and 32,660,583 issued and outstanding, respectively) | 33 | 33 | |||||||||||
Paid-in capital | 860,917 | 857,553 | |||||||||||
Accumulated deficit | (227,398 | ) | (227,163 | ) | |||||||||
Total stockholders’ equity | 633,552 | 630,423 | |||||||||||
Total liabilities and stockholders’ equity | $ | 2,333,741 | $ | 2,421,203 | |||||||||
Inventory Breakdown | |||||||||||||
Homes under construction | $ | 446,698 | $ | 377,281 | |||||||||
Development projects in progress | 777,369 | 809,900 | |||||||||||
Land held for future development | 260,222 | 270,990 | |||||||||||
Land held for sale | 49,500 | 44,555 | |||||||||||
Capitalized interest | 140,139 | 123,457 | |||||||||||
Model homes | 76,724 | 71,407 | |||||||||||
Total owned inventory | $ | 1,750,652 | $ | 1,697,590 | |||||||||
BEAZER HOMES USA, INC. |
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CONSOLIDATED OPERATING AND FINANCIAL DATA – CONTINUING OPERATIONS |
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($ in thousands, except otherwise noted) |
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Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||||||||||
SELECTED OPERATING DATA | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||
Closings: | ||||||||||||||||||||||||
West region | 554 | 386 | 1,046 | 702 | ||||||||||||||||||||
East region | 277 | 269 | 534 | 574 | ||||||||||||||||||||
Southeast region | 319 | 281 | 619 | 545 | ||||||||||||||||||||
Total closings | 1,150 | 936 | 2,199 | 1,821 | ||||||||||||||||||||
New orders, net of cancellations: | ||||||||||||||||||||||||
West region | 737 | 715 | 1,159 | 1,120 | ||||||||||||||||||||
East region | 391 | 488 | 639 | 774 | ||||||||||||||||||||
Southeast region | 410 | 495 | 663 | 770 | ||||||||||||||||||||
Total new orders, net | 1,538 | 1,698 | 2,461 | 2,664 | ||||||||||||||||||||
As of March 31, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
Backlog units at end of period: | ||||||||||||||||||||||||
West region | 1,068 | 975 | ||||||||||||||||||||||
East region | 592 | 800 | ||||||||||||||||||||||
Southeast region | 640 | 758 | ||||||||||||||||||||||
Total backlog units | 2,300 | 2,533 | ||||||||||||||||||||||
Dollar value of backlog at end of period (in millions) | $ | 773.0 | $ | 814.1 | ||||||||||||||||||||
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||||||||||
SUPPLEMENTAL FINANCIAL DATA | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||
Homebuilding revenue: | ||||||||||||||||||||||||
West region | $ | 176,940 | $ | 108,766 | $ | 334,136 | $ | 195,084 | ||||||||||||||||
East region | 101,862 | 96,758 | 196,207 | 198,590 | ||||||||||||||||||||
Southeast region | 98,453 | 80,698 | 183,505 | 154,130 | ||||||||||||||||||||
Total homebuilding revenue | $ | 377,255 | $ | 286,222 | $ | 713,848 | $ | 547,804 | ||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Homebuilding | $ | 377,255 | $ | 286,222 | $ | 713,848 | $ | 547,804 | ||||||||||||||||
Land sales and other | 8,352 | 13,137 | 16,208 | 17,319 | ||||||||||||||||||||
Total revenues | $ | 385,607 | $ | 299,359 | $ | 730,056 | $ | 565,123 | ||||||||||||||||
Gross profit: | ||||||||||||||||||||||||
Homebuilding | $ | 58,275 | $ | 52,379 | $ | 116,338 | $ | 87,656 | ||||||||||||||||
Land sales and other | 1,291 | 1,534 | 810 | 1,475 | ||||||||||||||||||||
Total gross profit | $ | 59,566 | $ | 53,913 | $ | 117,148 | $ | 89,131 | ||||||||||||||||
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
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||||||||||||||||
Homebuilding gross profit | $ | 58,275 | 15.4 | % | $ | 52,379 | 18.3 | % | $ | 116,338 | 16.3 | % | $ | 87,656 | 16.0 | % | |||||||||||||||||||||||||
Inventory impairments and abandonments (I&A) | 1,825 | — | 2,613 | — | |||||||||||||||||||||||||||||||||||||
Homebuilding gross profit before I&A | 60,100 | 15.9 | % | 52,379 | 18.3 | % | 118,951 | 16.7 | % | 87,656 | 16.0 | % | |||||||||||||||||||||||||||||
Interest amortized to cost of sales | 16,073 | 9,782 | 29,440 | 17,976 | |||||||||||||||||||||||||||||||||||||
Homebuilding gross profit before I&A and interest amortized to cost of sales | 76,173 | 20.2 | % | 62,161 | 21.7 | % | 148,391 | 20.8 | % | 105,632 | 19.3 | % | |||||||||||||||||||||||||||||
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 | $ | 76,173 | 20.2 | % | $ | 62,161 | 21.7 | % | $ | 144,779 | 20.3 | % | $ | 119,214 | 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 |
Six Months Ended March 31, |
LTM Ended
|
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March 31, |
March 31, |
March 31, (a) |
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2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||||||||||
Net income (loss) | $ | (1,234 | ) | $ | (1,996 | ) | $ | (235 | ) | $ | (24,336 | ) | $ | 368,195 | $ | 23,156 | |||||||||||||||||||||
Provision (benefit) from income taxes | (3,865 | ) | 103 | (3,359 | ) | (594 | ) | (328,692 | ) | (42,392 | ) | ||||||||||||||||||||||||||
Interest amortized to home construction and land sales expenses, capitalized interest impaired and interest expense not qualified for capitalization | 22,790 | 17,651 | 43,873 | 35,685 | 94,174 | 82,328 | |||||||||||||||||||||||||||||||
Depreciation and amortization and stock compensation amortization | 5,087 | 4,322 | 9,834 | 8,037 | 21,270 | 16,899 | |||||||||||||||||||||||||||||||
Inventory impairments and abandonments (b) | 1,741 | — | 3,097 | — | 6,206 | 7,151 | |||||||||||||||||||||||||||||||
Loss on debt extinguishment | 1,631 | — | 2,459 | — | 2,539 | 19,764 | |||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 26,150 | $ | 20,080 | $ | 55,669 | $ | 18,792 | $ | 163,692 | $ | 106,906 | |||||||||||||||||||||||||
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 | — | (340 | ) | — | 3,660 | — | 3,660 | ||||||||||||||||||||||||||||||
Adjusted EBITDA excluding unexpected warranty costs and a litigation settlement in discontinued operations | $ | 26,150 | $ | 19,740 | $ | 52,057 | $ | 36,034 | $ | 160,080 | $ | 129,086 | |||||||||||||||||||||||||
(a) “LTM” indicates amounts for the trailing 12 months.
(b) Amounts for both the three and six months ended March 31,
2016 exclude
View source version on businesswire.com: http://www.businesswire.com/news/home/20160428005145/en/
Source:
Beazer Homes USA, Inc.
David I. Goldberg, 770-829-3700
Vice
President of Treasury and Investor Relations
investor.relations@beazer.com