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: January 25, 2007

BEAZER HOMES USA, INC.
(Exact name of registrant as specified in its charter)

DELAWARE

 

001-12822

 

54-2086934

(State or other jurisdiction

 

(Commission

 

(IRS Employer

of incorporation)

 

File Number)

 

Identification No.)

 

1000 Abernathy Road, Suite 1200
Atlanta Georgia 30328
(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:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 




Item 2.02.              Results of Operations and Financial Condition

On January 25, 2007, Beazer Homes USA, Inc. reported earnings and results of operations for the quarter ended December 30, 2006.  A copy of the press release is attached hereto as exhibit 99.1.  For additional information, please see the press release.

Item 9.01               Financial Statements and Exhibits.

(d)  Exhibits

99.1

Press Release issued January 25, 2007.

 

2




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: January 25, 2007

By:

/s/ James O’Leary

 

 

 

James O’Leary

 

 

 

Executive Vice President and

 

 

Chief Financial Officer

 

 

3



Exhibit 99.1

 PRESS RELEASE

 FOR IMMEDIATE RELEASE

Beazer Homes Reports Fiscal First Quarter 2007 Financial Results

ATLANTA, January 25, 2007— Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced financial results for the quarter ended December 31, 2006. Summary results of the quarter are as follows:

Quarter Ended December 31, 2006

n              Reported net loss of $(59.0) million, or $(1.54) per share, including charges related to inventory impairments and abandonment of land option contracts of $119.9 million on a pre-tax basis, compared to net income of $89.9 million, or $2.00 per diluted share in the first quarter of the last fiscal year.  Excluding charges for inventory impairments and abandonment of land option contracts, adjusted net income was $15.9 million, or $0.41 per diluted share.

n              Home closings: 2,660 homes, compared to 3,829 in the first quarter of the prior year.

n              Total revenues: $806.4 million, compared to $1.1 billion in the first quarter of the prior year.

n              New orders: 1,779 homes, compared to 3,872 in the first quarter of the prior year.

n              Lots under control totaled 83,422 at 12/31/06, a 22% decline from the prior year.

n              Unsold homes under construction declined 27% from the fourth quarter of fiscal 2006.

n              Backlog at 12/31/06: 4,221 homes with a sales value of $1.29 billion compared to 9,276 homes with a sales value $2.78 billion in the prior year.

“Operating conditions remained extremely challenging for the housing industry during our first quarter of fiscal 2007” said President and Chief Executive Officer, Ian J. McCarthy.  “Most markets across the country continue to experience lower levels of demand for new homes, high cancellation rates and significant levels of discounting.  At this point, we have yet to see any meaningful evidence of a sustainable recovery in the housing market, although we would expect to gain a better read on the market as the traditional spring selling season gets underway.”

Total home closings of 2,660 during the first quarter were 31% below the prior fiscal year’s first quarter record. Net new home orders totaled 1,779 homes for the quarter, a decline of 54% from the first quarter record of the prior fiscal year, resulting from both reduced demand across the Company’s markets and a higher rate of cancellations at 43%, compared to a more historically normal level of cancellations at 26% in the prior year’s first quarter.  However, the cancellation rate was lower sequentially from 57% in the fourth quarter of fiscal 2006.

“During the first quarter, historically our weakest in terms of new orders and closings, we prioritized those initiatives aimed at both strengthening our financial capabilities and positioning us for an anticipated increase in activity as we enter the spring selling season.  These initiatives include implementing overhead reductions, converting existing backlog into closings and reducing unsold home inventories,” McCarthy continued. “We believe this disciplined approach, coupled with our broad geographic and product diversity, will position us well for a continuing difficult market environment and the eventual upturn. We maintain that the long-term industry fundamentals, based on demographic driven demand and employment trends, together with further supply constraints, remain compelling.”

“We remain focused on reducing costs throughout our business and enhancing liquidity as this challenging business environment continues,” said James O’Leary, Executive Vice President and Chief Financial Officer. “We




have aligned our overhead structure with our reduced volume expectations in fiscal 2007.  We have proactively reduced our controlled lot count by over 20% compared to the prior year, by eliminating non-strategic positions to align our land supply with our current expectations for home closings.  These steps are intended to maintain our strong balance sheet and liquidity so that we are in a position to capitalize on those future opportunities that will generate meaningfully higher returns when the housing market recovers.”

During the first quarter, operating margin was negatively impacted by higher market driven sales incentives and reduced revenue as compared to the same period a year ago.  In addition, the Company incurred pre-tax charges to abandon land option contracts and to recognize inventory impairments of $25.2 million and $94.7 million, respectively.  As previously disclosed, the Company also incurred approximately $4.0 million in severance costs during the first quarter of fiscal 2007 related to the alignment of its overhead structure.

Fiscal 2007 Outlook

The current market environment continues to be characterized by weak demand, with heavy discounting required to drive meaningful sales volume.  While this could improve as the year progresses, the Company currently believes that the low end of its previously announced outlook of 12,000 - 13,500 closings is now a more reasonable target in fiscal 2007. At this level of closings and the current conditions in the marketplace, the Company currently expects fiscal 2007 diluted earnings per share to be in the range of $1.25 - $1.50 prior to any impact of inventory impairments and abandonment of land option contracts.

During this period, the Company will focus on maintaining balance sheet strength, continue to reduce costs, and maximize its financial resources to better position the Company to take advantage of those opportunities that will arise when conditions stabilize. Steps taken to date to align the Company’s cost structure with the current environment are consistent with the Company’s goal to be in the top quartile of its peer group with respect to margins and returns.

Conference Call

The Company will hold a conference call today, January 25, 2007, 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 866-433-1154 (available until 5:00 PM ET on February 1, 2007), 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, Nevada, New Jersey, New Mexico, 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.”

Use of Non-GAAP Financial Information

In addition to the results in this press release reported in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company has provided information regarding adjusted net income and earnings per share which excludes the effects of charges for inventory impairments and abandonment of land option contracts recorded during the first quarter of fiscal 2007 and adjusted earnings per share outlook for fiscal 2007.  Management believes that these adjusted financial results are useful to both management and investors in the analysis of the Company’s financial performance when comparing it to prior periods and that they provide investors with an important perspective on the current underlying operating performance of the business by isolating the impact of non-cash charges related to inventory valuation.

Below is a reconciliation of these non-GAAP financial measures for the quarter ended December 31, 2006 to the most directly comparable financial measures calculated and presented in accordance with GAAP:




 

 

Three Months
Ended
December 31,
2006

 

(in thousands, except per share data)

 

 

 

 

 

 

 

Reported net loss

 

$

(59,006

)

Reported net loss per common share

 

($1.54

)

 

 

 

 

Adjusted Net Income and Earnings Per Share:

 

 

 

Reported net loss

 

$

(59,006

)

After-tax charges for inventory impairments and abandonment of land option contracts

 

74,952

 

 

 

 

 

Adjusted net income, excluding charges for inventory impairments and abandonment of land option contracts

 

$

15,946

 

 

 

 

 

After-tax interest add-back to pro-forma net income for
‘if converted’ treatment of convertible notes in calculation of diluted net income per common share

 

$

1,347

 

 

 

 

 

Adjusted diluted net income per common share, excluding charges for inventory impairments and abandonment of land option contracts

 

$

0.41

 

 

 

 

 

Diluted weighted average shares outstanding

 

42,521

 

 

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, changes in levels of customer demand, fluctuations in interest rates, increases in raw materials and labor costs, levels of competition, implementation of overhead realignments and associated costs, potential liability as a result of construction defect, product liability and warranty claims, and other factors described in the Company’s Annual Report on Form 10-K for the year ended September 30, 2006 filed with the Securities and Exchange Commission on December 8, 2006.

Contact:  Leslie H. Kratcoski

  Vice President, Investor Relations & Corporate Communications

  (770) 829-3764

  lkratcos@beazer.com

 

-Tables Follow-




BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL DATA
(Dollars in thousands, except per share amounts)

FINANCIAL DATA

 

 

Quarter Ended
December 31,

 

 

 

 

 

2006

 

2005

 

 

 

INCOME STATEMENT

 

 

 

 

 

 

 

Total revenue

 

$

806,406

 

$

1,105,616

 

 

 

Home construction and land sales expenses

 

665,374

 

829,859

 

 

 

Inventory impairments and option project abandonments

 

119,923

 

2,927

 

 

 

Gross profit

 

21,109

 

272,830

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

115,368

 

133,078

 

 

 

Operating income/(loss)

 

(94,259

)

139,752

 

 

 

Equity in income/(loss) of unconsolidated joint ventures

 

(2,360

)

352

 

 

 

Other income

 

1,993

 

4,103

 

 

 

 

 

 

 

 

 

 

 

Income/(loss) before income taxes

 

(94,626

)

144,207

 

 

 

Income tax expense/(benefit)

 

(35,620

)

54,294

 

 

 

Net income/(loss)

 

$

(59,006

)

$

89,913

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss) per common share:

 

 

 

 

 

 

 

Basic

 

$

(1.54

)

$

2.20

 

 

 

Diluted

 

$

(1.54

)

$

2.00

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, in thousands:

 

 

 

 

 

 

 

Basic

 

38,280

 

40,958

 

 

 

Diluted

 

38,280

 

45,607

 

 

 

 

 

 

 

 

 

 

 

Interest incurred

 

$

34,303

 

$

25,533

 

 

 

Interest amortized to cost of sales

 

$

20,115

 

$

18,175

 

 

 

EPS interest add back - Convertible Debt

 

n/a

 

$

1,344

 

 

 

Depreciation and amortization

 

$

6,279

 

$

4,710

 

 

 

 

 

 

 

 

 

 

 

SELECTED BALANCE SHEET DATA

 

 

 

 

 

 

 

 

 

December 31,
2006

 

September 30,
2006

 

December 31,
2005

 

Cash

 

$

154,984

 

$

172,443

 

$

12,149

 

Inventory

 

3,574,361

 

3,520,332

 

3,263,679

 

Total assets

 

4,313,348

 

4,559,431

 

3,852,719

 

Total debt (net of discount of $3,457, $3,578, and $4,000)

 

1,784,287

 

1,838,660

 

1,379,487

 

Shareholders’ equity

 

1,647,481

 

1,701,923

 

1,538,008

 

 

 

 

 

 

 

 

 

Inventory Breakdown

 

 

 

 

 

 

 

Homes under construction

 

$

1,321,019

 

$

1,368,056

 

$

1,277,524

 

Development projects in progress

 

1,606,549

 

1,623,819

 

1,547,756

 

Unimproved land held for future development

 

11,294

 

12,213

 

46,049

 

Model homes

 

61,671

 

44,803

 

45,906

 

Consolidated inventory not owned

 

573,828

 

471,441

 

346,444

 

 

 

$

3,574,361

 

$

3,520,332

 

$

3,263,679

 

 




BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL DATA
(Dollars in thousands)

OPERATING DATA

 

 

Quarter Ended
December 31,

 

 

 

2006

 

2005

 

SELECTED OPERATING DATA

 

 

 

 

 

Closings:

 

 

 

 

 

West region

 

729

 

1,011

 

Mid-Atlantic region

 

198

 

453

 

Florida region

 

246

 

477

 

Southeast region

 

679

 

866

 

Other homebuilding

 

808

 

1,022

 

Total closings

 

2,660

 

3,829

 

New orders, net of cancellations:

 

 

 

 

 

West region

 

443

 

1,076

 

Mid-Atlantic region

 

236

 

283

 

Florida region

 

93

 

655

 

Southeast region

 

463

 

872

 

Other homebuilding

 

544

 

986

 

Total new orders

 

1,779

 

3,872

 

Backlog units at end of period:

 

 

 

 

 

West region

 

889

 

3,059

 

Mid-Atlantic region

 

615

 

1,023

 

Florida region

 

355

 

1,437

 

Southeast region

 

1,105

 

1,760

 

Other homebuilding

 

1,257

 

1,997

 

Total backlog units

 

4,221

 

9,276

 

Dollar value of backlog at end of period

 

$

1,291,627

 

$

2,780,551

 

 




BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL DATA
(Dollars in thousands)

 

 

Quarter Ended
December 31,

 

 

 

2006

 

2005

 

SUPPLEMENTAL FINANCIAL DATA:

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

Homebuilding operations

 

$

781,996

 

$

1,073,427

 

Land and lot sales

 

12,667

 

24,955

 

Financial services

 

18,290

 

10,978

 

Intercompany elimination

 

(6,547

)

(3,744

)

Total revenues

 

$

806,406

 

$

1,105,616

 

Gross profit

 

 

 

 

 

Homebuilding operations

 

$

(1,245

)

$

262,150

 

Land and lot sales

 

4,064

 

(298

)

Financial Services

 

18,290

 

10,978

 

Total Gross profit

 

$

21,109

 

$

272,830

 

Selling, general and administrative

 

 

 

 

 

Homebuilding operations

 

$

106,855

 

$

122,395

 

Financial services

 

8,513

 

10,683

 

Total selling, general and administrative

 

$

115,368

 

$

133,078

 

 

 

 

 

 

 

SELECTED SEGMENT INFORMATION

 

 

 

 

 

Revenue:

 

 

 

 

 

West region

 

$

297,907

 

$

368,592

 

Mid-Atlantic region

 

92,228

 

199,506

 

Florida region

 

91,245

 

145,581

 

Southeast region

 

155,129

 

176,933

 

Other homebuilding

 

158,154

 

207,770

 

Financial services

 

18,290

 

10,978

 

Intercompany elimination

 

(6,547

)

(3,744

)

Total revenue

 

$

806,406

 

$

1,105,616

 

 

 

 

 

 

 

Operating income/(loss)

 

 

 

 

 

West region

 

$

(26,504

)

$

63,739

 

Mid-Atlantic region

 

(3,251

)

49,501

 

Florida region

 

(28,493

)

30,631

 

Southeast region

 

8,434

 

16,103

 

Other homebuilding

 

(15,708

)

720

 

Financial services

 

3,230

 

295

 

Segment operating income/(loss)

 

62,292

 

160,989

 

Corporate and unallocated

 

(31,967

)

(21,237

)

Total operating income/(loss)

 

$

(94,259

)

$

139,752