UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest reported event): July 30, 2020
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
(Address of Principal Executive Offices)
(770 ) 829-3700
(Registrant’s telephone number, including area code)
None
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02 | Results of Operations and Financial Condition | ||||
On July 30, 2020 , Beazer Homes USA, Inc. issued a press release announcing results of operations for the three and nine months ended June 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1.
The information provided pursuant to this Item 2.02, including Exhibit 99.1 in Item 9.01, is "furnished" and shall not be deemed to be "filed" with the Securities and Exchange Commission or incorporated by reference in any filing under the Securities and Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in any such filings.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers | ||||
On July 30, 2020, the Company announced that Robert L. Salomon will retire as Executive Vice President and Chief Financial Officer of the Company following the filing of the Company’s 10-K for the fiscal year ending September 30, 2020, and David I. Goldberg, current Vice President and Treasurer of the Company, will be appointed Senior Vice President and Chief Financial Officer upon Mr. Salomon's retirement. The announcement of these management changes and succession plan is included in the press release attached hereto as Exhibit 99.1.
Mr. Goldberg, age 42, has served as the Company’s Vice President and Treasurer since March 2015. Mr. Goldberg has no related party transactions with the Company reportable under Item 404(a) of Regulation S-K and has no family relationships with any director, executive officer or nominee for director or executive officer of the Company.
The terms of Mr. Goldberg’s compensation as Senior Vice President and Chief Financial Officer have not yet been determined. The Company will file an amendment to this Current Report on Form 8-K once such terms have been determined.
| Item 9.01 | Financial Statements and Exhibits | ||||
(d) Exhibits
| 99.1 | |||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BEAZER HOMES USA, Inc. | ||||||||||||||||||||||||||
Date: | By: | /s/ Robert L. Salomon | ||||||||||||||||||||||||
| Robert L. Salomon Executive Vice President and Chief Financial Officer | ||||||||||||||||||||||||||
Exhibit 99.1
PRESS RELEASE
Beazer Homes Reports Strong Third Quarter Fiscal 2020 Results; Announces Succession Plan for Chief Financial Officer
ATLANTA, July 30, 2020 - Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced its financial results for the three and nine months ended June 30, 2020.
“We generated very strong results in the third quarter, as improvements in home closings and margins allowed us to substantially improve profitability,” said Allan P. Merrill, Chairman and Chief Executive Officer of Beazer Homes. “After weathering difficult sales conditions in April, we experienced much stronger demand in the second half of the quarter, culminating in our best June sales month in more than ten years. We also took steps to adjust to the new operating environment by enhancing our liquidity, re-underwriting proposed land acquisition transactions and improving our cost structure. Looking forward, we’re optimistic about the prospects for new home demand as well as our ability to execute on our Balanced Growth strategy.”
Beazer Homes Fiscal Third Quarter 2020 Highlights and Comparison to Fiscal Third Quarter 2019
•Net income from continuing operations of $15.3 million, compared to net income from continuing operations of $11.6 million in fiscal third quarter 2019
•Adjusted EBITDA of $54.0 million, up 39.6%
•Homebuilding revenue of $532.5 million, up 10.4% on a 7.6% increase in home closings to 1,366 and a 2.6% increase in average selling price to $389.8 thousand
•Homebuilding gross margin was 17.0%, up 210 basis points. Excluding impairments, abandonments and amortized interest, homebuilding gross margin was 21.2%, up 180 basis points
•SG&A as a percentage of total revenue was 11.7%, down 50 basis points year-over-year
•Unit orders of 1,372, down 11.1% on a decrease in orders/community/month to 2.7 and a decrease in average community count to 167
•Dollar value of backlog of $884.9 million, which was essentially flat
•Unrestricted cash at quarter end was $152.3 million; total liquidity was $402.3 million
The following provides additional details on the Company's performance during the fiscal third quarter 2020:
Profitability. Third quarter net income from continuing operations was $15.3 million, generating diluted earnings per share of $0.51. This included impairment charges of $2.3 million and restructuring and severance charges of $1.4 million. Adjusted EBITDA of $54.0 million was up $15.3 million year-over-year.
Orders. Net new orders for the third quarter decreased 11.1% year-over-year, to 1,372. The decrease in net new orders was driven by a decrease in the absorption rate to 2.7 sales per community per month, down from 3.0 in the previous year, and a decrease in average community count to 167, down from 174 in the previous year. Net orders improved sequentially each month with April orders down, May orders essentially flat, and June orders up more than 40% year-over-year. The cancellation rate for the quarter was 21.1%, up 590 basis points year-over-year. Early in the quarter, the cancellation rate spiked from a combination of declining orders and increasing cancellations. As conditions improved, the cancellation rate normalized, ending with a June cancellation rate of 13.9%.
Homebuilding Revenue. Third quarter closings rose 7.6% to 1,366 homes. Combined with a 2.6% increase in the average selling price to $389.8 thousand, homebuilding revenue was $532.5 million, up 10.4% year-over-year.
Backlog. The dollar value of homes in backlog as of June 30, 2020 was $884.9 million, or 2,237 homes, essentially flat compared to $881.6 million, or 2,264 homes, at the same time last year. The average selling price of homes in backlog was $395.6 thousand, up 1.6% year-over-year.
Homebuilding Gross Margin. Homebuilding gross margin (excluding impairments, abandonments and amortized interest) was 21.2% for the third quarter, up 180 basis points year-over-year. The increase in homebuilding gross margin was primarily driven by margin improvement on spec homes and reduced incentives.
SG&A Expenses. Selling, general and administrative expenses as a percentage of total revenue was 11.7% for the quarter, down 50 basis points year-over-year.
Liquidity. At the close of the third quarter, the Company had approximately $402.3 million of available liquidity, including $152.3 million of unrestricted cash and $250.0 million available on its secured revolving credit facility.
Succession Plan for Chief Financial Officer
The Company also announced the retirement and succession plans for Robert L. Salomon, Executive Vice President and Chief Financial Officer. Mr. Salomon has decided to retire after a 28-year career in homebuilding following the filing of the Company’s 10-K for the fiscal year ending September 30, 2020 in November. Mr. Salomon joined the Company as Chief Accounting Officer in February 2008 and was promoted to Executive Vice President and Chief Financial Officer in June 2011. Upon Mr. Salomon’s retirement, the Company will be appointing David I. Goldberg to serve as Senior Vice President and Chief Financial Officer. Mr. Goldberg currently serves as the Company’s Vice President and Treasurer, positions he has held since joining the Company in March 2015.
“Bob has been an indispensable part of our management team from the day he joined the Company,” said Mr. Merrill. “He’s been my valued business partner as well as a mentor to operational and corporate leaders across the Company. Since joining us, he has successfully led or managed our financial reporting, internal audit, business planning, capital markets and treasury activities, and in recent years he has overseen crucial corporate functions including land acquisition and information technology. While we will miss his contributions after the end of our fiscal year, he has established a deep and talented finance team, led by David Goldberg. I am very confident that David, working closely with our experienced Senior Leadership Team, will allow us to complete a smooth and successful leadership transition in fiscal 2021.”
Summary results for the three and nine months ended June 30, 2020 are as follows:
| Three Months Ended June 30, | |||||||||||||||||
| 2020 | 2019 | Change* | |||||||||||||||
| New home orders, net of cancellations | 1,372 | 1,544 | (11.1) | % | |||||||||||||
| Orders per community per month | 2.7 | 3.0 | (7.4) | % | |||||||||||||
| Average active community count | 167 | 174 | (4.0) | % | |||||||||||||
| Actual community count at quarter-end | 164 | 173 | (5.2) | % | |||||||||||||
| Cancellation rates | 21.1 | % | 15.2 | % | 590 bps | ||||||||||||
| Total home closings | 1,366 | 1,269 | 7.6 | % | |||||||||||||
| Average selling price (ASP) from closings (in thousands) | $ | 389.8 | $ | 380.1 | 2.6 | % | |||||||||||
| Homebuilding revenue (in millions) | $ | 532.5 | $ | 482.3 | 10.4 | % | |||||||||||
| Homebuilding gross margin | 17.0 | % | 14.9 | % | 210 bps | ||||||||||||
| Homebuilding gross margin, excluding impairments and abandonments (I&A) | 17.1 | % | 14.9 | % | 220 bps | ||||||||||||
| Homebuilding gross margin, excluding I&A and interest amortized to cost of sales | 21.2 | % | 19.4 | % | 180 bps | ||||||||||||
| Income from continuing operations before income taxes (in millions) | $ | 20.3 | $ | 9.4 | $ | 10.8 | |||||||||||
| Expense (benefit) from income taxes (in millions) | $ | 5.0 | $ | (2.2) | $ | 7.2 | |||||||||||
| Income from continuing operations (in millions) | $ | 15.3 | $ | 11.6 | $ | 3.6 | |||||||||||
| Basic income per share from continuing operations | $ | 0.51 | $ | 0.38 | $ | 0.13 | |||||||||||
| Diluted income per share from continuing operations | $ | 0.51 | $ | 0.38 | $ | 0.13 | |||||||||||
| Income from continuing operations before income taxes (in millions) | $ | 20.3 | $ | 9.4 | $ | 10.8 | |||||||||||
| Gain on debt extinguishment (in millions) | $ | — | $ | 0.4 | $ | (0.4) | |||||||||||
| Inventory impairments and abandonments (in millions) | $ | (2.3) | $ | — | $ | (2.3) | |||||||||||
| Restructuring and severance charges | $ | (1.4) | $ | — | $ | (1.4) | |||||||||||
| Income from continuing operations excluding gain on debt extinguishment, inventory impairments and abandonments, and restructuring and severance charges before income taxes (in millions) | $ | 24.0 | $ | 9.0 | $ | 15.0 | |||||||||||
Income from continuing operations excluding gain on debt extinguishment, inventory impairments and abandonments, and restructuring and severance charges after income taxes (in millions)+ | $ | 17.6 | $ | 11.2 | $ | 6.4 | |||||||||||
| Net income | $ | 15.2 | $ | 11.6 | $ | 3.6 | |||||||||||
| Land and land development spending (in millions) | $ | 55.7 | $ | 102.8 | $ | (47.1) | |||||||||||
| Adjusted EBITDA (in millions) | $ | 54.0 | $ | 38.7 | $ | 15.3 | |||||||||||
| LTM Adjusted EBITDA (in millions) | $ | 209.4 | $ | 188.2 | $ | 21.1 | |||||||||||
* Change and totals are calculated using unrounded numbers.
+ For the three months ended June 30, 2020, inventory impairments and abandonments and restructuring and severance charges were tax-effected at the effective tax rate of 26.4%. For the three months ended June 20, 2019, gain on debt extinguishment was tax-effected at the effective tax rate of 25.7%.
"LTM" indicates amounts for the trailing 12 months.
| Nine Months Ended June 30, | |||||||||||||||||
| 2020 | 2019 | Change* | |||||||||||||||
| New home orders, net of cancellations | 4,284 | 4,118 | 4.0 | % | |||||||||||||
| LTM orders per community per month | 2.9 | 2.7 | 7.4 | % | |||||||||||||
| Cancellation rates | 17.3 | % | 16.1 | % | 120 bps | ||||||||||||
| Total home closings | 3,755 | 3,486 | 7.7 | % | |||||||||||||
| ASP from closings (in thousands) | $ | 382.9 | $ | 374.1 | 2.4 | % | |||||||||||
| Homebuilding revenue (in millions) | $ | 1,437.9 | $ | 1,304.2 | 10.2 | % | |||||||||||
| Homebuilding gross margin | 16.1 | % | 6.8 | % | 930 bps | ||||||||||||
| Homebuilding gross margin, excluding impairments and abandonments (I&A) | 16.2 | % | 15.2 | % | 100 bps | ||||||||||||
| Homebuilding gross margin, excluding I&A and interest amortized to cost of sales | 20.7 | % | 19.6 | % | 110 bps | ||||||||||||
| Income (loss) from continuing operations before income taxes (in millions) | $ | 37.6 | $ | (126.1) | $ | 163.8 | |||||||||||
| Expense (benefit) from income taxes (in millions) | $ | 8.9 | $ | (44.3) | $ | 53.2 | |||||||||||
| Income (loss) from continuing operations (in millions) | $ | 28.7 | $ | (81.9) | $ | 110.6 | |||||||||||
| Basic income (loss) per share from continuing operations | $ | 0.96 | $ | (2.65) | $ | 3.61 | |||||||||||
| Basic income (loss) per share from continuing operations | $ | 0.95 | $ | (2.65) | $ | 3.60 | |||||||||||
| Income (loss) from continuing operations before income taxes (in millions) | $ | 37.6 | $ | (126.1) | $ | 163.8 | |||||||||||
| Gain on debt extinguishment (in millions) | $ | — | $ | 0.6 | $ | (0.6) | |||||||||||
| Inventory impairments and abandonments (in millions) | $ | (2.3) | $ | (148.6) | $ | 146.4 | |||||||||||
| Restructuring and severance charges | $ | (1.4) | $ | — | $ | (1.4) | |||||||||||
| Income from continuing operations excluding gain on debt extinguishment, inventory impairments and abandonments, and restructuring and severance charges before income taxes (in millions) | $ | 41.3 | $ | 21.9 | $ | 19.4 | |||||||||||
Income from continuing operations excluding gain on debt extinguishment, inventory impairments and abandonments, and restructuring and severance charges after income taxes (in millions)+ | $ | 31.4 | $ | 25.5 | $ | 5.9 | |||||||||||
| Net income (loss) | $ | 28.5 | $ | (81.9) | $ | 110.5 | |||||||||||
| Land and land development spending (in millions) | $ | 324.7 | $ | 363.6 | $ | (38.9) | |||||||||||
| Adjusted EBITDA (in millions) | $ | 127.3 | $ | 98.1 | $ | 29.2 | |||||||||||
* Change and totals are calculated using unrounded numbers.
+ For the nine months ended June 30, 2020, inventory impairments and abandonments and restructuring and severance charges were tax-effected at the effective tax rate of 26.4%. For the nine months ended June 30, 2019, gain on debt extinguishment and inventory impairments and abandonments were tax-effected at the effective tax rate of 25.7%.
“LTM” indicates amounts for the trailing 12 months.
| As of June 30, | |||||||||||||||||
| 2020 | 2019 | Change | |||||||||||||||
| Backlog units | 2,237 | 2,264 | (1.2) | % | |||||||||||||
| Dollar value of backlog (in millions) | $ | 884.9 | $ | 881.6 | 0.4 | % | |||||||||||
| ASP in backlog (in thousands) | $ | 395.6 | $ | 389.4 | 1.6 | % | |||||||||||
| Land and lots controlled | 18,093 | 21,717 | (16.7) | % | |||||||||||||
Conference Call
The Company will hold a conference call on July 30, 2020 at 5:00 p.m. ET to discuss these results. Interested parties may listen to the conference call and view the Company's slide presentation on the "Investor Relations" page of the Company's website, www.beazer.com. In addition, the conference call will be available by telephone at 800-475-0542 (for international callers, dial 517-308-9429). To be admitted to the call, enter the pass code “8571348". A replay of the conference call will be available, until 10:00 PM ET on August 7, 2020 at 886-463-2180 (for international callers, dial 203-369-1377) with pass code “3740”.
About Beazer Homes
Headquartered in Atlanta, Beazer Homes (NYSE: BZH) is one of the country’s largest homebuilders. Every Beazer home is designed and built to provide Surprising Performance, giving you more quality and more comfort from the moment you move in – saving you money every month. With Beazer's Choice Plans™, you can personalize your primary living areas – giving you a choice of how you want to live in the home, at no additional cost. And unlike most national homebuilders, we empower our customers to shop and compare loan options. Our Mortgage Choice program gives you the resources to easily compare multiple loan offers and choose the best lender and loan offer for you, which will save you thousands over the life of your loan.
We build our homes in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, North Carolina, South Carolina, Tennessee, Texas, and Virginia. For more information, visit beazer.com, or check out Beazer on Facebook, Instagram 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 potential negative impact of the ongoing COVID-19 pandemic, which, in addition to exacerbating each of the risks listed below, may include a significant decrease in demand for our homes or consumer confidence generally with respect to purchasing a home, an inability to sell and build homes in a typical manner or at all, increased costs or decreased supply of building materials or the availability of subcontractors, housing inspectors, and other third-parties we rely on to support our operations, and recognizing charges in future periods, which may be material, for goodwill impairments, inventory impairments and/or land option contract abandonments; (ii) our ability to raise debt and/or equity capital, due to factors such as limitations in the capital markets (including market volatility) or adverse credit market conditions, which have worsened and may continue to worsen as a result of the COVID-19 pandemic, and our ability to otherwise meet our ongoing liquidity needs (which could cause us to fail to meet the terms of our covenants and other requirements under our various debt instruments and therefore trigger an acceleration of a significant portion or all of our outstanding debt obligations), including the impact of any downgrades of our credit ratings or reduction in our liquidity levels; (iii) market perceptions regarding any capital raising initiatives we may undertake (including future issuances of equity or debt capital); (iv) the cyclical nature of the homebuilding industry and a potential deterioration in homebuilding industry conditions; (v) economic changes nationally or in local markets, changes in consumer confidence, wage levels, declines in employment levels, inflation or increases in the quantity and decreases in the price of new homes and resale homes on the market; (vi) 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; (vii) the availability and cost of land and the risks associated with the future value of our inventory, such as asset impairment charges we took on select California assets during the second quarter of fiscal 2019; (viii) factors affecting margins, such as decreased land values underlying land option agreements, increased land development costs in communities under development or delays or difficulties in implementing initiatives to reduce our production and overhead cost structure; (ix) 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; (x) increases in mortgage interest rates, increased disruption in the availability of mortgage financing, changes in tax laws or otherwise regarding the deductibility of mortgage interest expenses and real estate taxes or an increased number of foreclosures; (xi) increased competition or delays in reacting to changing consumer preferences in home design; (xii) natural disasters or other related events that could result in delays in land development or home construction, increase our costs or decrease demand in the impacted areas; (xiii) the potential recoverability of our deferred tax
assets; (xiv) 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 those related to the environment; (xv) the results of litigation or government proceedings and fulfillment of any related obligations; (xvi) the impact of construction defect and home warranty claims; (xvii) the cost and availability of insurance and surety bonds, as well as the sufficiency of these instruments to cover potential losses incurred; (xviii) the impact of information technology failures, cybersecurity issues 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, including any statement expressing confidence regarding future outcomes, speaks only as of the date on which such statement is made and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time-to-time, and it is not possible to predict all such factors.
CONTACT: Beazer Homes USA, Inc.
David I. Goldberg
Vice President of Treasury and Investor Relations
770-829-3700
investor.relations@beazer.com
-Tables Follow-
BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| in thousands (except per share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Total revenue | $ | 533,112 | $ | 482,738 | $ | 1,440,329 | $ | 1,306,038 | |||||||||||||||
| Home construction and land sales expenses | 441,788 | 410,974 | 1,207,023 | 1,107,681 | |||||||||||||||||||
| Inventory impairments and abandonments | 2,266 | — | 2,266 | 148,618 | |||||||||||||||||||
| Gross profit | 89,058 | 71,764 | 231,040 | 49,739 | |||||||||||||||||||
| Commissions | 20,851 | 18,230 | 55,660 | 49,965 | |||||||||||||||||||
| General and administrative expenses | 41,276 | 40,749 | 121,025 | 116,763 | |||||||||||||||||||
| Depreciation and amortization | 3,780 | 3,242 | 10,834 | 8,912 | |||||||||||||||||||
| Operating income (loss) | 23,151 | 9,543 | 43,521 | (125,901) | |||||||||||||||||||
| Equity in income of unconsolidated entities | 4 | 299 | 138 | 316 | |||||||||||||||||||
| Gain on extinguishment of debt | — | 358 | — | 574 | |||||||||||||||||||
| Other expense, net | (2,904) | (755) | (6,030) | (1,134) | |||||||||||||||||||
| Income (loss) from continuing operations before income taxes | 20,251 | 9,445 | 37,629 | (126,145) | |||||||||||||||||||
| Expense (benefit) from income taxes | 4,981 | (2,180) | 8,940 | (44,260) | |||||||||||||||||||
| Income (loss) from continuing operations | 15,270 | 11,625 | 28,689 | (81,885) | |||||||||||||||||||
| Loss from discontinued operations, net of tax | (82) | (23) | (141) | (64) | |||||||||||||||||||
| Net income (loss) | $ | 15,188 | $ | 11,602 | $ | 28,548 | $ | (81,949) | |||||||||||||||
| Weighted average number of shares: | |||||||||||||||||||||||
| Basic | 29,597 | 30,250 | 29,738 | 30,926 | |||||||||||||||||||
| Diluted | 29,674 | 30,489 | 30,014 | 30,926 | |||||||||||||||||||
| Basic income (loss) per share: | |||||||||||||||||||||||
| Continuing operations | $ | 0.51 | $ | 0.38 | $ | 0.96 | $ | (2.65) | |||||||||||||||
| Discontinued operations | — | — | — | — | |||||||||||||||||||
| Total | $ | 0.51 | $ | 0.38 | $ | 0.96 | $ | (2.65) | |||||||||||||||
| Diluted income (loss) per share: | |||||||||||||||||||||||
| Continuing operations | $ | 0.51 | $ | 0.38 | $ | 0.95 | $ | (2.65) | |||||||||||||||
| Discontinued operations | — | — | — | — | |||||||||||||||||||
| Total | $ | 0.51 | $ | 0.38 | $ | 0.95 | $ | (2.65) | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| Capitalized Interest in Inventory | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Capitalized interest in inventory, beginning of period | $ | 134,693 | $ | 144,756 | $ | 136,565 | $ | 144,645 | |||||||||||||||
| Interest incurred | 23,012 | 26,782 | 66,839 | 77,506 | |||||||||||||||||||
| Capitalized interest impaired | (792) | — | (792) | (13,907) | |||||||||||||||||||
| Interest expense not qualified for capitalization and included as other expense | (3,003) | (961) | (6,373) | (1,800) | |||||||||||||||||||
| Capitalized interest amortized to home construction and land sales expenses | (21,814) | (21,752) | (64,143) | (57,619) | |||||||||||||||||||
| Capitalized interest in inventory, end of period | $ | 132,096 | $ | 148,825 | $ | 132,096 | $ | 148,825 | |||||||||||||||
BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| in thousands (except share and per share data) | June 30, 2020 | September 30, 2019 | |||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 152,266 | $ | 106,741 | |||||||
| Restricted cash | 13,086 | 16,053 | |||||||||
| Accounts receivable (net of allowance of $298 and $304, respectively) | 17,846 | 26,395 | |||||||||
| Income tax receivable | 9,224 | 4,935 | |||||||||
| Owned inventory | 1,511,560 | 1,504,248 | |||||||||
| Investments in unconsolidated entities | 4,044 | 3,962 | |||||||||
| Deferred tax assets, net | 233,986 | 246,957 | |||||||||
| Property and equipment, net | 24,078 | 27,421 | |||||||||
| Operating lease right-of-use assets | 14,060 | — | |||||||||
| Goodwill | 11,376 | 11,376 | |||||||||
| Other assets | 10,637 | 9,556 | |||||||||
| Total assets | $ | 2,002,163 | $ | 1,957,644 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Trade accounts payable | $ | 131,200 | $ | 131,152 | |||||||
| Operating lease liabilities | 16,292 | — | |||||||||
| Other liabilities | 110,630 | 109,429 | |||||||||
| Obligations related to land not owned under option agreements | — | — | |||||||||
| Total debt (net of debt issuance costs of $11,450 and $12,470, respectively) | 1,179,725 | 1,178,309 | |||||||||
| Total liabilities | 1,437,847 | 1,418,890 | |||||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock (par value $0.01 per share, 5,000,000 shares authorized, no shares issued) | — | — | |||||||||
| Common stock (par value $0.001 per share, 63,000,000 shares authorized, 31,020,066 issued and outstanding and 30,933,110 issued and outstanding, respectively) | 31 | 31 | |||||||||
| Paid-in capital | 851,289 | 854,275 | |||||||||
| Accumulated deficit | (287,004) | (315,552) | |||||||||
| Total stockholders’ equity | 564,316 | 538,754 | |||||||||
| Total liabilities and stockholders’ equity | $ | 2,002,163 | $ | 1,957,644 | |||||||
| Inventory Breakdown | |||||||||||
| Homes under construction | $ | 607,731 | $ | 507,542 | |||||||
| Development projects in progress | 647,583 | 738,201 | |||||||||
| Land held for future development | 28,531 | 28,531 | |||||||||
| Land held for sale | 16,863 | 12,662 | |||||||||
| Capitalized interest | 132,096 | 136,565 | |||||||||
| Model homes | 78,756 | 80,747 | |||||||||
| Total owned inventory | $ | 1,511,560 | $ | 1,504,248 | |||||||
BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL DATA – CONTINUING OPERATIONS
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
| SELECTED OPERATING DATA | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Closings: | |||||||||||||||||||||||
| West region | 819 | 674 | 2,248 | 1,881 | |||||||||||||||||||
| East region | 220 | 246 | 647 | 647 | |||||||||||||||||||
| Southeast region | 327 | 349 | 860 | 958 | |||||||||||||||||||
| Total closings | 1,366 | 1,269 | 3,755 | 3,486 | |||||||||||||||||||
| New orders, net of cancellations: | |||||||||||||||||||||||
| West region | 775 | 850 | 2,465 | 2,175 | |||||||||||||||||||
| East region | 287 | 334 | 871 | 869 | |||||||||||||||||||
| Southeast region | 310 | 360 | 948 | 1,074 | |||||||||||||||||||
| Total new orders, net | 1,372 | 1,544 | 4,284 | 4,118 | |||||||||||||||||||
| As of June 30, | ||||||||||||||
| Backlog units at end of period: | 2020 | 2019 | ||||||||||||
| West region | 1,199 | 1,152 | ||||||||||||
| East region | 565 | 503 | ||||||||||||
| Southeast region | 473 | 609 | ||||||||||||
| Total backlog units | 2,237 | 2,264 | ||||||||||||
| Dollar value of backlog at end of period (in millions) | $ | 884.9 | $ | 881.6 | ||||||||||
| in thousands | Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||
| SUPPLEMENTAL FINANCIAL DATA | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Homebuilding revenue: | |||||||||||||||||||||||
| West region | $ | 303,500 | $ | 238,723 | $ | 825,129 | $ | 658,097 | |||||||||||||||
| East region | 108,126 | 117,934 | 295,782 | 299,450 | |||||||||||||||||||
| Southeast region | 120,839 | 125,659 | 316,939 | 346,696 | |||||||||||||||||||
| Total homebuilding revenue | $ | 532,465 | $ | 482,316 | $ | 1,437,850 | $ | 1,304,243 | |||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Homebuilding | $ | 532,465 | $ | 482,316 | $ | 1,437,850 | $ | 1,304,243 | |||||||||||||||
| Land sales and other | 647 | 422 | 2,479 | 1,795 | |||||||||||||||||||
| Total revenue | $ | 533,112 | $ | 482,738 | $ | 1,440,329 | $ | 1,306,038 | |||||||||||||||
| Gross profit (loss): | |||||||||||||||||||||||
| Homebuilding | $ | 90,282 | $ | 71,719 | $ | 232,134 | $ | 88,190 | |||||||||||||||
| Land sales and other | (1,224) | 45 | (1,094) | (38,451) | |||||||||||||||||||
| Total gross profit (loss) | $ | 89,058 | $ | 71,764 | $ | 231,040 | $ | 49,739 | |||||||||||||||
Reconciliation of homebuilding gross profit and the related gross margin before impairments and abandonments and interest amortized to cost of sales 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.
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| in thousands | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||
| Homebuilding gross profit/margin | $ | 90,282 | 17.0 | % | $ | 71,719 | 14.9 | % | $ | 232,134 | 16.1 | % | $ | 88,190 | 6.8 | % | |||||||||||||||||||
| Inventory impairments and abandonments (I&A) | 1,009 | — | 1,009 | 110,030 | |||||||||||||||||||||||||||||||
| Homebuilding gross profit/margin before I&A | 91,291 | 17.1 | % | 71,719 | 14.9 | % | 233,143 | 16.2 | % | 198,220 | 15.2 | % | |||||||||||||||||||||||
| Interest amortized to cost of sales | 21,814 | 21,752 | 64,143 | 57,619 | |||||||||||||||||||||||||||||||
| Homebuilding gross profit/margin before I&A and interest amortized to cost of sales | $ | 113,105 | 21.2 | % | $ | 93,471 | 19.4 | % | $ | 297,286 | 20.7 | % | $ | 255,839 | 19.6 | % | |||||||||||||||||||
Reconciliation of Adjusted EBITDA to total company net income (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. These EBITDA measures should not be considered alternatives to net income (loss) determined in accordance with GAAP as an indicator of operating performance.
The reconciliation of Adjusted EBITDA to total company net income (loss) below differs from prior year, as it reclassifies stock-based compensation expense from an adjustment within EBITDA to an adjustment within Adjusted EBITDA in order to accurately present EBITDA per its definition.
| Three Months Ended June 30, | Nine Months Ended June 30, | LTM Ended | |||||||||||||||||||||||||||||||||
| in thousands | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 15,188 | $ | 11,602 | $ | 28,548 | $ | (81,949) | $ | 30,977 | $ | (21,344) | |||||||||||||||||||||||
| Expense (benefit) from income taxes | 4,958 | (2,187) | 8,900 | (44,279) | 15,934 | (63,139) | |||||||||||||||||||||||||||||
| Interest amortized to home construction and land sales expenses and capitalized interest impaired | 22,606 | 21,752 | 64,935 | 71,526 | 102,350 | 106,058 | |||||||||||||||||||||||||||||
| Interest expense not qualified for capitalization | 3,003 | 961 | 6,373 | 1,800 | 7,682 | 1,835 | |||||||||||||||||||||||||||||
| EBIT | 45,755 | 32,128 | 108,756 | (52,902) | 156,943 | 23,410 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 3,780 | 3,242 | 10,834 | 8,912 | 16,681 | 13,490 | |||||||||||||||||||||||||||||
| EBITDA | 49,535 | 35,370 | 119,590 | (43,990) | 173,624 | 36,900 | |||||||||||||||||||||||||||||
| Stock-based compensation expense | 1,659 | 3,699 | 4,869 | 7,993 | 7,402 | 10,559 | |||||||||||||||||||||||||||||
| (Gain) loss on extinguishment of debt | — | (358) | — | (574) | 25,494 | 1,361 | |||||||||||||||||||||||||||||
Inventory impairments and abandonments (b) | 1,474 | — | 1,474 | 134,711 | 1,474 | 139,081 | |||||||||||||||||||||||||||||
| Restructuring and severance expenses | 1,361 | — | 1,361 | — | 1,361 | — | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 54,029 | $ | 38,711 | $ | 127,294 | $ | 98,140 | $ | 209,355 | $ | 188,242 | |||||||||||||||||||||||
(a) “LTM” indicates amounts for the trailing 12 months.
(b) In periods during which we impaired certain of our inventory assets, capitalized interest that is impaired is included in the line above titled “Interest amortized to home construction and land sales expenses and capitalized interest impaired.”