Beazer Homes Reports Third Quarter Fiscal 2018 Results
“Our third quarter results reflected continued growth in revenue and a
substantial increase in net income,” said
“As we approach the end of our fiscal year, we are positioned to achieve
our multi-year ‘2B-10’ goal as well as our planned reduction in
leverage. Looking into fiscal 2019, we remain optimistic about the
fundamentals for our industry. With incremental contributions from the
recently acquired
Beazer Homes Fiscal Third Quarter 2018 Highlights and Comparison to Fiscal Third Quarter 2017
-
Net income from continuing operations of
$13.4 million , up 88.8%. Earnings per share was$0.41 , up 86.4% -
Adjusted EBITDA of
$46.6 million , up 5.3% -
Homebuilding revenue of
$507.0 million , up 7.3%, on a slight increase in home closings to 1,391 and a 7.0% increase in average selling price to$364.5 thousand - Homebuilding gross margin was 16.4%, down 30 basis points. Excluding impairments, abandonments and interest amortized, homebuilding gross margin was 20.8%, down 50 basis points
- SG&A as a percentage of total revenue was 12.1%, down 30 basis points
- Unit orders of 1,450, down 9.1% on a 10.3% decrease in sales/community/month to 3.1 and a 1.3% increase in average community count to 157
-
Dollar value of backlog of
$920.7 million , up 7.1% -
Unrestricted cash at quarter end was
$136.3 million
Profitability. Net income from continuing operations was
Orders. Net new orders for the third quarter decreased 9.1% from the prior year. The drop in net new orders was driven by a decrease in the absorption rate to 3.1 sales per community per month, down from a strong 3.4 the previous year, but in line with third quarter absorptions throughout the upturn. The cancellation rate was 18.6%.
Homebuilding Revenue. Third quarter closings of 1,391 homes were
0.3% above the level achieved in the same period last year. Combined
with a 7.0% increase in the average selling price to
Backlog. The dollar value of homes in backlog as of
Homebuilding Gross Margin. Homebuilding gross margin (excluding impairments, abandonments and interest amortized) was 20.8% for the third quarter, down 50 basis points from the same period in fiscal 2017. Our results last year included approximately 30 basis points of warranty related benefits.
SG&A Expenses. Selling, general and administrative expenses, as a percentage of total revenue, were 12.1% for the quarter, an improvement of 30 basis points compared to the prior year.
Liquidity. The Company ended the quarter with approximately
Gatherings
The Company continued to make progress with its Gatherings rollout
during the third quarter of fiscal 2018. In Orlando’s Gatherings at
Venture Homes Acquisition
As previously disclosed, the Company acquired
Summary results for the three and nine months ended June 30, 2018 are as follows:
| Three Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | Change* | |||||||||||||
| New home orders, net of cancellations | 1,450 | 1,595 | (9.1 | )% | |||||||||||
| Orders per community per month | 3.1 | 3.4 | (10.3 | )% | |||||||||||
| Average active community count | 157 | 155 | 1.3 | % | |||||||||||
| Actual community count at quarter-end | 158 | 154 | 2.6 | % | |||||||||||
| Cancellation rates | 18.6 | % | 16.9 | % | 170 bps | ||||||||||
| Total home closings | 1,391 | 1,387 | 0.3 | % | |||||||||||
| Average selling price (ASP) from closings (in thousands) | $ | 364.5 | $ | 340.6 | 7.0 | % | |||||||||
| Homebuilding revenue (in millions) | $ | 507.0 | $ | 472.4 | 7.3 | % | |||||||||
| Homebuilding gross margin | 16.4 | % | 16.7 | % | -30 bps | ||||||||||
| Homebuilding gross margin, excluding impairments and abandonments and interest amortized to cost of sales | 20.8 | % | 21.3 | % | -50 bps | ||||||||||
| Income from continuing operations before income taxes (in millions) | $ | 17.7 | $ | 12.9 | $ | 4.8 | |||||||||
| Expense from income taxes (in millions) | $ | 4.3 | $ | 5.7 | $ | (1.5 | ) | ||||||||
| Income from continuing operations (in millions) | $ | 13.4 | $ | 7.1 | $ | 6.3 | |||||||||
| Basic income per share from continuing operations | $ | 0.42 | $ | 0.22 | $ | 0.20 | |||||||||
| Diluted income per share from continuing operations | $ | 0.41 | $ | 0.22 | $ | 0.19 | |||||||||
| Income from continuing operations before income taxes (in millions) | $ | 17.7 | $ | 12.9 | $ | 4.8 | |||||||||
| Inventory impairments and abandonments (in millions) | $ | 0.2 | $ | 0.5 | $ | (0.3 | ) | ||||||||
| Income from continuing operations excluding loss on debt extinguishment and inventory impairments and abandonments before income taxes (in millions) | $ | 17.9 | $ | 13.3 | $ | 4.5 | |||||||||
| Net income | $ | 13.4 | $ | 7.1 | $ | 6.3 | |||||||||
| Net income excluding loss on debt extinguishment and inventory impairments and abandonments (in millions)*+ | $ | 13.5 | $ | 7.4 | $ | 6.1 | |||||||||
| Land and land development spending (in millions) | $ | 155.5 | $ | 103.8 | $ | 51.7 | |||||||||
| Adjusted EBITDA (in millions) | $ | 46.6 | $ | 44.3 | $ | 2.4 | |||||||||
| LTM Adjusted EBITDA (in millions) | $ | 191.4 | $ | 167.9 | $ | 23.6 | |||||||||
| * | Change and totals are calculated using unrounded numbers. | |
|
+ |
Loss on debt extinguishment was tax-effected at annualized effective tax rates of 26.7% and 36.7% for the three months ended June 30, 2018 and June 30, 2017, respectively. | |
| “LTM” indicates amounts for the trailing 12 months. | ||
| Nine Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | Change* | |||||||||||||
| New home orders, net of cancellations | 4,239 | 4,149 | 2.2 | % | |||||||||||
| LTM orders per community per month | 3.0 | 2.9 | 3.4 | % | |||||||||||
| Cancellation rates | 17.2 | % | 17.9 | % | -70 bps | ||||||||||
| Total home closings | 3,723 | 3,621 | 2.8 | % | |||||||||||
| ASP from closings (in thousands) | $ | 353.4 | $ | 339.8 | 4.0 | % | |||||||||
| Homebuilding revenue (in millions) | $ | 1,315.8 | $ | 1,230.4 | 6.9 | % | |||||||||
| Homebuilding gross margin | 16.5 | % | 16.2 | % | 30 bps | ||||||||||
| Homebuilding gross margin, excluding impairments and abandonments and interest amortized to cost of sales | 21.0 | % | 20.9 | % | 10 bps | ||||||||||
| Income (loss) from continuing operations before income taxes (in millions) | $ | 7.9 | $ | (3.0 | ) | $ | 10.9 | ||||||||
| Expense (benefit) from income taxes (in millions) | $ | 113.4 | $ | (1.3 | ) | $ | 114.6 | ||||||||
| Loss from continuing operations (in millions)* | $ | (105.5 | ) | $ | (1.7 | ) | $ | (103.8 | ) | ||||||
| Basic and diluted loss per share from continuing operations | $ | (3.29 | ) | $ | (0.05 | ) | $ | (3.24 | ) | ||||||
| Income (loss) from continuing operations before income taxes (in millions) | $ | 7.9 | $ | (3.0 | ) | $ | 10.9 | ||||||||
| Loss on debt extinguishment (in millions) | $ | 25.9 | $ | 15.6 | $ | 10.3 | |||||||||
| Inventory impairments and abandonments (in millions) | $ | 0.2 | $ | 0.8 | $ | (0.6 | ) | ||||||||
| Write-off of deposit on legacy land investment | $ | — | $ | 2.7 | $ | (2.7 | ) | ||||||||
| Income from continuing operations excluding loss on debt extinguishment, inventory impairments and abandonments and write-off of deposit before income taxes (in millions) | $ | 33.9 | $ | 16.0 | $ | 17.9 | |||||||||
| Net loss | $ | (106.0 | ) | $ | (1.8 | ) | $ | (104.1 | ) | ||||||
| Net income excluding loss on debt extinguishment, inventory impairments and abandonments and write-off of deposit (in millions)*+ | $ | 27.9 | $ | 10.3 | $ | 17.6 | |||||||||
| Land and land development spending (in millions) | $ | 440.6 | $ | 309.9 | $ | 130.7 | |||||||||
| Adjusted EBITDA (in millions) | $ | 114.6 | $ | 101.9 | $ | 12.7 | |||||||||
| * | Change and totals are calculated using unrounded numbers. | |
| + | Loss on debt extinguishment was tax-effected at annualized effective tax rates of 26.7% and 36.7% for the nine months ended June 30, 2018 and June 30, 2017, respectively. | |
As of
| As of June 30, | ||||||||||||
| 2018 | 2017 | Change | ||||||||||
| Backlog units | 2,371 | 2,444 | (3.0 | )% | ||||||||
| Dollar value of backlog (in millions) | $ | 920.7 | $ | 859.9 | 7.1 | % | ||||||
| ASP in backlog (in thousands) | $ | 388.3 | $ | 351.8 | 10.4 | % | ||||||
| Land and lots controlled | 22,524 | 22,481 | 0.2 | % | ||||||||
Conference Call
The Company will hold a conference call on July 26, 2018 at
Headquartered in
This press release contains forward-looking statements, including
guidance concerning the remainder of fiscal 2018 and expectations
regarding our performance in fiscal 2019, as well as expectations
regarding Gatherings acquisition activity and the impact of the
Any forward-looking statement 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 that may impact the accuracy of the forward-looking statements in this release emerge from time-to-time, and it is not possible for management to predict all such factors. Please refer to the risk factors described in our most recent annual report on Form 10-K for a more detailed discussion of risks that may affect our business.
-Tables Follow-
|
BEAZER HOMES USA, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (In thousands, except per share data) (Unaudited) |
||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| Total revenue | $ | 511,521 | $ | 478,588 | $ | 1,339,188 | $ | 1,243,297 | ||||||||||||
| Home construction and land sales expenses | 428,109 | 399,675 | 1,119,870 | 1,043,041 | ||||||||||||||||
| Inventory impairments and abandonments | 168 | 470 | 168 | 752 | ||||||||||||||||
| Gross profit | 83,244 | 78,443 | 219,150 | 199,504 | ||||||||||||||||
| Commissions | 19,535 | 18,773 | 51,225 | 48,728 | ||||||||||||||||
| General and administrative expenses | 42,473 | 40,794 | 120,610 | 117,282 | ||||||||||||||||
| Depreciation and amortization | 3,656 | 3,307 | 9,229 | 9,139 | ||||||||||||||||
| Operating income | 17,580 | 15,569 | 38,086 | 24,355 | ||||||||||||||||
| Equity in income of unconsolidated entities | 147 | 158 | 302 | 213 | ||||||||||||||||
| Loss on extinguishment of debt | — | — | (25,904 | ) | (15,563 | ) | ||||||||||||||
| Other expense, net | (30 | ) | (2,871 | ) | (4,628 | ) | (12,007 | ) | ||||||||||||
| Income (loss) from continuing operations before income taxes | 17,697 | 12,856 | 7,856 | (3,002 | ) | |||||||||||||||
| Expense (benefit) from income taxes | 4,268 | 5,742 | 113,386 | (1,262 | ) | |||||||||||||||
| Income (loss) from continuing operations | 13,429 | 7,114 | (105,530 | ) | (1,740 | ) | ||||||||||||||
| (Loss) income from discontinued operations, net of tax | (20 | ) | 9 | (450 | ) | (101 | ) | |||||||||||||
| Net income (loss) and comprehensive income (loss) | $ | 13,409 | $ | 7,123 | $ | (105,980 | ) | $ | (1,841 | ) | ||||||||||
| Weighted average number of shares: | ||||||||||||||||||||
| Basic | 32,147 | 31,971 | 32,113 | 31,944 | ||||||||||||||||
| Diluted | 32,726 | 32,375 | 32,113 | 31,944 | ||||||||||||||||
| Basic earnings (loss) per share: | ||||||||||||||||||||
| Continuing operations | $ | 0.42 | $ | 0.22 | $ | (3.29 | ) | $ | (0.05 | ) | ||||||||||
| Discontinued operations | — | — | (0.01 | ) | — | |||||||||||||||
| Total | $ | 0.42 | $ | 0.22 | $ | (3.30 | ) | $ | (0.05 | ) | ||||||||||
| Diluted income (loss) per share: | ||||||||||||||||||||
| Continuing operations | $ | 0.41 | $ | 0.22 | $ | (3.29 | ) | $ | (0.05 | ) | ||||||||||
| Discontinued operations | — | — | (0.01 | ) | — | |||||||||||||||
| Total | $ | 0.41 | $ | 0.22 | $ | (3.30 | ) | $ | (0.05 | ) | ||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| Capitalized Interest in Inventory | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||
| Capitalized interest in inventory, beginning of period | $ | 149,034 | $ | 146,916 | $ | 139,203 | $ | 138,108 | ||||||||||||
| Interest incurred | 25,803 | 26,243 | 76,850 | 79,812 | ||||||||||||||||
| Interest expense not qualified for capitalization and included as other expense | (205 | ) | (2,934 | ) | (5,290 | ) | (12,232 | ) | ||||||||||||
| Capitalized interest amortized to home construction and land sales expenses | (22,450 | ) | (21,895 | ) | (58,581 | ) | (57,358 | ) | ||||||||||||
| Capitalized interest in inventory, end of period | $ | 152,182 | $ | 148,330 | $ | 152,182 | $ | 148,330 | ||||||||||||
|
BEAZER HOMES USA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) (Unaudited) |
||||||||||
| June 30, 2018 | September 30, 2017 | |||||||||
| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 136,298 | $ | 292,147 | ||||||
| Restricted cash | 12,167 | 12,462 | ||||||||
| Accounts receivable (net of allowance of $392 and $330, respectively) | 28,005 | 36,323 | ||||||||
| Income tax receivable | 119 | 88 | ||||||||
| Owned Inventory | 1,767,983 | 1,542,807 | ||||||||
| Investments in unconsolidated entities | 4,237 | 3,994 | ||||||||
| Deferred tax assets, net | 195,145 | 307,896 | ||||||||
| Property and equipment, net | 22,212 | 17,566 | ||||||||
| Other assets | 10,861 | 7,712 | ||||||||
| Total assets | $ | 2,177,027 | $ | 2,220,995 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Trade accounts payable | $ | 143,135 | $ | 103,484 | ||||||
| Other liabilities | 124,722 | 107,659 | ||||||||
| Total debt (net of premium of $2,833 and $3,413, respectively, and debt issuance costs of $15,170 and $14,800, respectively) | 1,326,503 | 1,327,412 | ||||||||
| Total liabilities | 1,594,360 | 1,538,555 | ||||||||
| 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, 33,678,305 issued and outstanding and 33,515,768 issued and outstanding, respectively) | 34 | 34 | ||||||||
| Paid-in capital | 879,270 | 873,063 | ||||||||
| Accumulated deficit | (296,637 | ) | (190,657 | ) | ||||||
| Total stockholders’ equity | 582,667 | 682,440 | ||||||||
| Total liabilities and stockholders’ equity | $ | 2,177,027 | $ | 2,220,995 | ||||||
| Inventory Breakdown | ||||||||||
| Homes under construction | $ | 641,780 | $ | 419,312 | ||||||
| Development projects in progress | 805,619 | 785,777 | ||||||||
| Land held for future development | 84,813 | 112,565 | ||||||||
| Land held for sale | 10,128 | 17,759 | ||||||||
| Capitalized interest | 152,182 | 139,203 | ||||||||
| Model homes | 73,461 | 68,191 | ||||||||
| Total owned inventory | $ | 1,767,983 | $ | 1,542,807 | ||||||
|
BEAZER HOMES USA, INC. CONSOLIDATED OPERATING AND FINANCIAL DATA – CONTINUING OPERATIONS ($ in thousands, except otherwise noted) |
|||||||||||||||||
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||
| SELECTED OPERATING DATA | 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Closings: | |||||||||||||||||
| West region | 701 | 624 | 1,879 | 1,695 | |||||||||||||
| East region | 299 | 346 | 803 | 849 | |||||||||||||
| Southeast region | 391 | 417 | 1,041 | 1,077 | |||||||||||||
| Total closings | 1,391 | 1,387 | 3,723 | 3,621 | |||||||||||||
| New orders, net of cancellations: | |||||||||||||||||
| West region | 795 | 791 | 2,235 | 1,941 | |||||||||||||
| East region | 274 | 385 | 854 | 1,027 | |||||||||||||
| Southeast region | 381 | 419 | 1,150 | 1,181 | |||||||||||||
| Total new orders, net | 1,450 | 1,595 | 4,239 | 4,149 | |||||||||||||
| As of June 30, | |||||||||||||||||
| Backlog units at end of period: | 2018 | 2017 | |||||||||||||||
| West region | 1,235 | 1,074 | |||||||||||||||
| East region | 464 | 622 | |||||||||||||||
| Southeast region | 672 | 748 | |||||||||||||||
| Total backlog units | 2,371 | 2,444 | |||||||||||||||
| Dollar value of backlog at end of period (in millions) | $ | 920.7 | $ | 859.9 | |||||||||||||
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||
| SUPPLEMENTAL FINANCIAL DATA | 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Homebuilding revenue: | |||||||||||||||||
| West region | $ | 241,588 | $ | 208,004 | $ | 642,505 | $ | 564,908 | |||||||||
| East region | 128,880 | 129,755 | 318,299 | 324,284 | |||||||||||||
| Southeast region | 136,496 | 134,637 | 355,029 | 341,204 | |||||||||||||
| Total homebuilding revenue | $ | 506,964 | $ | 472,396 | $ | 1,315,833 | $ | 1,230,396 | |||||||||
| Revenues: | |||||||||||||||||
| Homebuilding | $ | 506,964 | $ | 472,396 | $ | 1,315,833 | $ | 1,230,396 | |||||||||
| Land sales and other | 4,557 | 6,192 | 23,355 | 12,901 | |||||||||||||
| Total revenues | $ | 511,521 | $ | 478,588 | $ | 1,339,188 | $ | 1,243,297 | |||||||||
| Gross profit: | |||||||||||||||||
| Homebuilding | $ | 83,043 | $ | 78,662 | $ | 217,641 | $ | 199,190 | |||||||||
| Land sales and other | 201 | (219 | ) | 1,509 | 314 | ||||||||||||
| Total gross profit | $ | 83,244 | $ | 78,443 | $ | 219,150 | $ | 199,504 | |||||||||
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, | |||||||||||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||
| Homebuilding gross profit/margin | $ | 83,043 | 16.4 | % | $ | 78,662 | 16.7 | % | $ | 217,641 | 16.5 | % | $ | 199,190 | 16.2 | % | ||||||||||||||||
| Inventory impairments and abandonments (I&A) | — | — | — | 188 | ||||||||||||||||||||||||||||
| Homebuilding gross profit/margin before I&A | 83,043 | 16.4 | % | 78,662 | 16.7 | % | 217,641 | 16.5 | % | 199,378 | 16.2 | % | ||||||||||||||||||||
| Interest amortized to cost of sales | 22,441 | 21,895 | 58,564 | 57,358 | ||||||||||||||||||||||||||||
| Homebuilding gross profit/margin before I&A and interest amortized to cost of sales | $ | 105,484 | 20.8 | % | $ | 100,557 | 21.3 | % | $ | 276,205 | 21.0 | % | $ | 256,736 | 20.9 | % | ||||||||||||||||
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 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 the prior year, as it provides a more simplified presentation of EBIT, EBITDA and Adjusted EBITDA that excludes certain non-recurring amounts recorded during the periods presented. Management believes that this presentation best reflects the operating characteristics of the Company.
|
Three Months Ended |
Nine Months Ended |
LTM Ended June 30,(a) | ||||||||||||||||||||||||||
| in thousands | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
| Net income (loss) | $ | 13,409 | $ | 7,123 | $ | (105,980 | ) | $ | (1,841 | ) | $ | (72,326 | ) | $ | (2,695 | ) | ||||||||||||
| Expense (benefit) from income taxes | 4,261 | 5,740 | 113,233 | (1,332 | ) | 117,186 | 13,083 | |||||||||||||||||||||
| Interest amortized to home construction and land sales expenses and capitalized interest impaired | 22,450 | 21,895 | 58,581 | 57,358 | 90,043 | 85,779 | ||||||||||||||||||||||
| Interest expense not qualified for capitalization | 205 | 2,934 | 5,290 | 12,232 | 8,694 | 18,149 | ||||||||||||||||||||||
| EBIT | 40,325 | 37,692 | 71,124 | 66,417 | 143,597 | 114,316 | ||||||||||||||||||||||
| Depreciation and amortization and stock-based compensation amortization | 6,140 | 6,117 | 16,921 | 16,471 | 22,623 | 22,945 | ||||||||||||||||||||||
| EBITDA | 46,465 | 43,809 | 88,045 | 82,888 | 166,220 | 137,261 | ||||||||||||||||||||||
| Loss on extinguishment of debt | — | — | 25,904 | 15,563 | 22,971 | 26,956 | ||||||||||||||||||||||
| Inventory impairments and abandonments (b) | 168 | 470 | 618 | 752 | 2,255 | 936 | ||||||||||||||||||||||
| Write-off of deposit on legacy land investment | — | — | — | 2,700 | — | 2,700 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 46,633 | $ | 44,279 | $ | 114,567 | $ | 101,903 | $ | 191,446 | $ | 167,853 | ||||||||||||||||
| (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.” |
View source version on businesswire.com: https://www.businesswire.com/news/home/20180726005804/en/
Source:
Beazer Homes USA, Inc.
David I. Goldberg, 770-829-3700
Vice
President of Treasury and Investor Relations
investor.relations@beazer.com