__________________________________________________________________________________________
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): February 26, 2018
BEAZER HOMES USA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE | 001-12822 | 54-2086934 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
1000 Abernathy Road, Suite 260
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:
¨ | 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)) |
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 7.01 | Regulation FD Disclosure. |
An updated version of an investor presentation used by representatives of Beazer Homes USA, Inc. (the "Company") is attached as Exhibit 99.1. The presentation will be accessible online through the Investors section of the Company’s website located at www.beazer.com. The information on our website is not a part of this Form 8-K.
The information provided pursuant to this Item 7.01, 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 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 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
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: | February 26, 2018 | By: | /s/ Keith L. Belknap | |||||
Keith L. Belknap Executive Vice President, General Counsel and Corporate Secretary | ||||||||
Mission Lane
Oceanside, CA
Beazer Homes USA, Inc
JP Morgan High Yield Conference
This presentation contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements represent our expectations or beliefs concerning future results, and it is possible that the results described will not be achieved.
These forward-looking statements can generally be identified by the use of statements that include words such as “estimate,” “project,” “believe,” “expect,”
“anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “goal,” “target” or other similar words or phrases. All forward-looking statements are based upon
information available to us on the date of this presentation. 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,
the matters discussed in our Form 10-Q for the period ended December 31, 2017 in the section captioned “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.” Additional information about factors that could lead to material changes in performance is contained in Part I, Item 1A— Risk
Factors of our Annual Report on Form 10-K for the fiscal year ended September 30, 2017. These factors are not intended to be an all-inclusive list of risks and
uncertainties that may affect the operations, performance, development and results of our business, but instead are the risks that we currently perceive as potentially
being material. Such factors may include: (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) 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 our production and overhead cost structure;
(iv) 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; (v)
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;
(vi) 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; (vii)
a substantial increase in mortgage interest rates, increased disruption in the availability of mortgage financing, the recent change in tax laws regarding the deductibility
of mortgage interest for tax purposes or an increased number of foreclosures; (viii) government actions, policies, programs and regulations directed at or affecting the
housing market (including the Tax Cuts and Jobs Act, the Dodd-Frank Act and the tax benefits associated with purchasing and owning a home); (ix) changes in existing
tax laws or enacted corporate income tax rates, including pursuant to the Tax Cuts and Jobs Act; (x) 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; (xi) our ability to reduce our outstanding indebtedness and to comply with covenants in our
debt agreements or satisfy such obligations through repayment or refinancing; (xii) increased competition or delays in reacting to changing consumer preferences in
home design; (xiii) weather conditions 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; (xiv) estimates related to the potential recoverability of our deferred tax assets; (xv) 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; (xvi) the results of litigation or government proceedings and fulfillment of any related
obligations; (xvii) the impact of construction defect and home warranty claims, including water intrusion issues in Florida; (xviii) the cost and availability of insurance
and surety bonds, as well as the sufficiency of these instruments to cover potential losses incurred; (xix) the performance of our unconsolidated entities and our
unconsolidated entity partners; (xx) the impact of information technology failures or data security breaches; (xxi) terrorist acts, natural disasters, acts of war or other
factors over which the Company has little or no control; or (xxii) the impact on homebuilding in key markets of governmental regulations limiting the availability of
water. 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 emerge from time-to-time, and it is not possible for management to predict all such factors.
2
Forward Looking Statements
• Top 10 US single-family homebuilder
• Over 175,000 homes delivered since 1994
• Operations in 13 states across three
regions with homes targeted to
Millennials and Baby Boomers
Southeast
28%
East
28%
West
44%
3
(LTM period ended 12/31/17)
Southeast
24%
East
21%
West
55%
(as of 12/31/17)
Overview
Strategic Pillars
• Mortgage Choices
• Choice Plans
• Energy Efficiency
Homebuilding Revenue By Region
Inventory By Region
Beazer at a Glance
Focus on serving Millennials and Baby Boomers
Delivering Extraordinary Value at an Affordable Price
- Desirable locations
- Choices (Choice Plans & Mortgage Choice)
- Energy Efficient homes
3,000
3,200
3,400
3,600
3,800
4,000
4,200
4,400
4,600
4,800
5,000
0 10 20 30 40 50 60 70
Emphasizing Value and Affordability
4
Median Household Income
Population by Age Cohort (thousands) Targeted Buyers Within Income Distribution
Millennials Baby Boomers
Source: Moody’s Analytics
5
$ in millions, except ASP
Q1 Results
Note: Variances are calculated using un-rounded numbers
*Details are included on the “Adjusted EBITDA Reconciliation” slide in the appendix
**Active Community Count was 154 at 12/31/2016 and 156 at 12/31/2017
***Excludes impairments, abandonments, interest included in cost of sales and certain warranty items
**** Q1 FY17 SG&A excludes a $2.7 million write-off of a legacy investment in a development site
FY17 Q1 FY18 Q1 ∆
Profitability
Total Revenue 339.2$ 372.5$ 9.8%
Adjusted EBITDA* 24.4$ 28.4$ 4.0$
Net Income/Loss (Cont. Ops.) (1.4)$ (130.6)$ (129.2)$
Unit Activity
Orders 1,005 1,110 10.4%
Closings 995 1,066 7.1%
Average Sales Price ($000's) 337.8$ 345.0$ 2.1%
Cancellation Rate 21.2% 18.9% (230 bps)
Active Community Count, Avg** 156 155 (0.4)%
Sales/Community/Month 2.2 2.4 10.9%
Margins
HB Gross Margin*** 20.5% 20.9% 40 bps
SG&A (% of Total Revenue)**** 13.9% 13.9% 0 bps
Balance Sheet
Unrestricted Cash 158.6$ 177.8$ 19.2$
Land & Development Spending 103.2$ 141.7$ 38.5$
Balanced Growth Strategy
Improving Balance
Sheet Efficiency
• Debt Refinancing
• LHFFD Activation
• Expanding Gatherings
• Increased Land Spend
6
Six Levers for
EPS Growth
• Community count
• ASP
• Sales pace
• Gross margin
• SG&A leverage
• Lower interest expense %
Balanced Growth = Sales & Profit Growth + More Efficient Balance Sheet
7
“2B-10” is a multi-year plan to reach $2 billion in Revenue and 10% EBITDA Margin
*Excludes impairments, abandonments, interest included in cost of sales and certain warranty items
**Details are included on the “Adjusted EBITDA Reconciliation” slide in the appendix
“2B-10” Plan Ranges vs. LTM Results
"2B-10" Plan
Ranges
Q1 FY18
LTM Results
Sales / Community/ Month 2.8 - 3.2 3.0
Average Selling Price ("ASP") $340k - $350k $344.4k
Average Community Count 170 - 175 155
Total Revenue $2.0 billion $1.9 billion
HB Gross Margin %* 21% - 22% 21.3%
SG&A (% of Total Revenue) 11% - 12% 12.2%
Adjusted EBITDA** $200 million $182.7million
Revenue
Margin
$1,334
$1,436
$1,706
$1,817
$1,950
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
Q1 Q1 Q1 Q1 Q1
FY14 FY15 FY16 FY17 FY18
$100.2
$127.9
$153.7 $154.8
$182.7
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
Q1 Q1 Q1 Q1 Q1
FY14 FY15 FY16 FY17 FY18
Increases in LTM Revenue and EBITDA
Total Revenue* – LTM
$ in millions
Adjusted EBITDA** – LTM
$ in millions
*Total Revenue is for Continuing Operations
**Details are included on the “Adjusted EBITDA Reconciliation” slide in the appendix
8
Average Total Assets vs. LTM EBITDA*
*Details are included on the “Adjusted EBITDA Reconciliation” slide in the appendix
9
$(25)
$-
$25
$50
$75
$100
$125
$150
$175
$200
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
Q1 FY12 Q1 FY13 Q1 FY14 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18
A
d
jus
te
d
E
B
ITD
A
(
$
m
il
li
o
n
s)
A
v
er
a
ge
T
o
ta
l
A
ss
ets
(
$
m
il
li
o
n
s)
Average Total Assets (ex DTA) LTM EBITDA
71%
77% 81%
87%
93%
25%
19%
16%
11%
6%
4% 4%
3% 2% 1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1 Q1 Q1 Q1 Q1
FY14 FY15 FY16 FY17 FY18
Active Inventory % LHFFD % PHFS %
10
Increasing Land Spend & Capital Efficiency
Quarterly Land Spend
At December 31, 2017:
22,324 total controlled lots
20,383 active lots
Total Inventory Dollars
$ in millions
Note: Totals may not foot due to rounding
$74.9
$65.7 $63.5
$97.3 $96.4
$28.3
$37.2 $40.3
$39.2 $45.3
$40.3
$20.3
$0.3
$41.0
$15.6 $143.5
$123.2
$104.1
$177.4
$157.4
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
Q1 Q2 Q3 Q4 Q1
FY17 FY18
Land Land Development LHFFD Activation
Q1 FY14 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18
28% 26% 29% 30% 26%
Option Lots as % of Active Lots
162 159 157 155 155
156 154 155 154 155
50
70
90
110
130
150
170
Q1 Q2 Q3 Q4 Q1
FY17 FY18
Active Community Count, LTM Active Community Count, Quarterly
"2B-10" Range
175
170
Active Communities at 12/31/2017 156
Closing in Next 6 Months - 35
Opening in Next 6 Months + 35
Under Development
(excluding former LHFFD & opening in N6M)
+ 20
Former LHFFD Not Yet Activated
(excluding opening in N6M)
+ 14
Approved But Not Yet Closed
(excluding opening in N6M)
+ 26
11
Average Active Community Count
Note: An active community has achieved at least 2 initial sales and has at least 2 unsold units remaining
Community Count Activity
Community Count
Active
Communities
The information above is as of 12/31/2017
12
Capital Efficiency Strategies: LHFFD & Land Bank Impact
LHFFD
Activation
Land
Banking
Reduction of inactive assets on balance sheet
Cash generation from previously inactive assets
Significantly lower initial cash outlay compared to standard
deals. Enables us to do projects we otherwise would not
Higher IRR on investment
Faster asset turnover (typically about 2x)
Adds incremental EBITDA
Drives higher ROA
The margin impact from our increased use of Land Banking as well as the activation of
former LHFFD has already been largely absorbed, and we do not expect a material
additional impact to Total Company gross margin moving forward
13
Leverage and Capital Structure Improvements
*Details are included on the “Adjusted EBITDA Reconciliation” slide in the appendix
11.3x
10.8x
8.8x
7.6x
6.3x
4x
5x
6x
7x
8x
9x
10x
11x
12x
13x
14x
Q1 FY14 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18
5.0
7.3
-
1
2
3
4
5
6
7
8
9/30/2015 12/31/2017
7.3%
7.0%
6%
7%
8%
9/30/2015 12/31/2017
Net Debt/LTM Adjusted EBITDA*
Weighted Average Maturity (Years)
Weighted Average Interest Rate
$177.8
$12.1
$165.8
$96.4
$500.0
$24.8
$250.0
$400.0
$62.5
$-
$200
$400
$600
Unrestricted Cash Restricted Cash - LC/Escrow
Undrawn Revolver Senior Unsecured Debt
Junior Debt - Net of Accretion
Notes:
-There is an additional $4.2 million of secured divisional debt on the balance sheet with various maturity dates
-Years are calendar years
Maturity Schedule – 12/31/2017
14
Will repay remaining $96.4 million of
2019 Notes at the end of Fiscal 2018
$ in millions
Push Toward 10+ ROA with Declining Cost of Capital
15
Notes
• ROA is LTM Adjusted EBITDA/Total Assets at end of period
• NTM Cash Int Exp is cash interest due for following 12-month period assuming principal balances and
interest rates remain fixed at their end of period position
5.2%
6.5% 6.6%
7.1%
8.8%
$121
$112
$110
$99
$96
$80
$90
$100
$110
$120
$130
0%
2%
4%
6%
8%
10%
Q1 FY14 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18
C
a
sh
I
n
te
rest
E
x
p
en
se
-
N
ex
t
1
2
M
o
n
th
s
($
m
il
li
o
n
s)
R
etu
rn
o
n
A
ss
et
s
ROA NTM Cash Int Exp
Total Assets as of 12/31/2017
$ in millions Assets EBITDA ROA
Unrestricted & Restricted Cash 189.9$
Working Capital 38.2
PPE & Investments 23.0
Active Inventory 1,302.9 182.7$ 11.8%
Former LHFFD - Under Development 207.4
Current LHFFD & PHFS 116.4
Deferred Tax Assets 200.1
Total Assets 2,078.0$ 182.7$ 8.8%
Driving ROA Through Increased Capital Efficiency
Notes:
“Active Inventory” plus “Former LHFFD – Under Development” combined make up the 93% of Total Inventory currently active on Slide 10
$183M of EBITDA generated off of
approximately $1.5B of Active Assets
25% of Total Assets are currently
non-earning assets
16
2nd Quarter Expectations
17
Metric Q2 FY18 vs Prior Year
New Home Orders Flat to Up Slightly
Community Count Relatively Flat
Closings Up
Backlog Conversion Mid to High 60% Range
Average Selling Price Mid to High $340k’s
HB Gross Margin % Relatively Flat
SG&A % of Total Revenue Down
Land Sale Revenue Relatively Flat
Adjusted EBITDA Up
Land Spend Up
18
Balanced Growth =
Earnings Growth + Capital Efficiency
Push to achieve 2B-10
Drive toward double-digit ROA
Focus for Fiscal 2018
Appendices
19
Q1 FY17 Q1 FY18
Quarter Ending Backlog (units) 1,926 1,899
Quarter Ending Backlog ($ in millions) 666.1$ 704.4$
ASP in Backlog ($ in thousands) 345.8$ 370.9$
Quarter Beg. Backlog 1,916 1,855
Scheduled to Close in Future Qtrs. (933) (870)
Backlog Scheduled to Close in the Qtr. 983 985
Backlog Activity:
Cancellations (92) (90)
Pushed to Future Quarters (142) (116)
Close Date Brought Forward 66 61
Sold & Closed During the Qtr 180 226
Total Closings in the Quarter 995 1,066
Backlog Conversion Rate 51.9% 57.5%
Closings as % of BL Scheduled to Close in the Qtr. 101.2% 108.2%
20
Backlog Detail
2.8 2.8
2.9 2.9
3.0
2.2
3.4
3.4
2.8
2.4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Q1 Q2 Q3 Q4 Q1
FY17 FY18
Sales per Active Community per Month, LTM Sales per Active Community per Month, Quarterly
Sales per Active
Community per
Month
2B-10 Range,
3.2
2.8
21
Note: An active community has achieved at least 2 initial sales and has at least 2 unsold units
remaining
Sales Pace Within “2B-10” Target Range
$333 $335
$338
$343 $344 $346
$347
$352
$359
$371
$338
$340 $341
$350
$345
$280
$290
$300
$310
$320
$330
$340
$350
$360
$370
$380
Q1 Q2 Q3 Q4 Q1
FY17 FY18
Average Sales Price, LTM Backlog ASP at Quarter End Average Sales Price, Quarterly
"2B-10" Range, LTM
$350
$340
22
Backlog ASP Suggests Further Growth
$ in thousands
$68.5
$69.4
$70.5
$72.9
$73.4
$65
$66
$67
$68
$69
$70
$71
$72
$73
$74
Q1 Q2 Q3 Q4 Q1
FY17 FY18
HB Gross Profit per Closing, LTM
20.6% 20.7%
20.9%
21.2%
21.3%
20.5%
20.7%
21.3%
22.0%
20.9%
15%
16%
17%
18%
19%
20%
21%
22%
23%
Q1 Q2 Q3 Q4 Q1
FY17 FY18
HB Gross Margin, LTM HB Gross Margin, Quarterly
"2B-10" Range, LTM
22%
21%
23
Homebuilding Gross Margin*
*Excludes impairments, abandonments and interest included in cost of sales as well as certain warranty
items
Gross Margin Within “2B-10” Range
$ in thousands
Homebuilding Gross Profit Dollars Per Closing*
67.4 67.5 67.8 68.5
69.4 70.5
72.9 73.4
40.7 40.7 41.4
42.1 42.0 42.1 42.4 42.6
$30
$35
$40
$45
$50
$55
$60
$65
$70
$75
$80
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
FY16 FY17 FY18
HB Gross Profit* per Closing, LTM SG&A Per Closing, LTM
24
SG&A** Leverage
(% of Total Revenue)
SG&A Leverage as Revenue Grows
*Excludes impairments, abandonments, interest included in cost of sales and certain warranty items
** Q1 FY17 SG&A excludes a $2.7 million write-off of a legacy investment in a development site
LTM Homebuilding
Gross Profit* vs. SG&A** per Closing
$ in thousands
12.4% 12.3% 12.3% 12.2% 12.2%
13.9%
13.3%
12.4%
10.5%
13.9%
6%
8%
10%
12%
14%
16%
Q1 Q2 Q3 Q4 Q1
FY17 FY18
SG&A % - LTM SG&A % - Quarterly
"2B-10" Range
12%
11%
25
Geographic Mix Impacts Year-Over-Year Q1 ASP
Q1 FY17
ASP
Q1 FY18
ASP
Change in
ASP ($)
Change in
ASP (%)
Q1 FY17
Closings
Q1 FY18
Closings
Change in
Mix
West $337K $336K $-1K -0.3% 51.3% 49.3% -2.0%
East $374 $381 $7 1.7 21.8 21.1 -0.7
SE $310K $335K $25K 8.0% 26.9% 29.5% 2.6%
26
Geographic Mix Impacts Year-Over-Year Q1 Margin
Note: Segment gross margin excludes required capitalization of indirects, impairments and interest included
in cost of sales
Q1 FY17
GM%
Q1 FY18
GM%
Change in
GM%
Q1 FY17
Closings
Q1 FY18
Closings
Change in
Mix
West 21.4 21.6 20bps 51.3% 49.3% -2.0%
East 16.5% 19.2% 270bps 21.8 21.1 -0.7
SE 17.5 17.6 10bps 26.9% 29.5% 2.6%
2,359
4,317
8,362
5,345
1,354
587
27
Land Position
Lot Position at December 31, 2017
Homes Under Construction
Finished Lots
Owned Land
Under Development
Land Held for Future Development
Property Held for Sale
Immediate Availability – 30% Near-Term Availability – 61% Long-Term and Non-Strategic Assets – 9%
Lots Under Option
22,324 total controlled lots
20,383 active lots
178 162
119 132
171 167
290
427 536
571
423
481
468
589
655
703
594
648
0
250
500
750
Q4 Q1 Q2 Q3 Q4 Q1
FY16 FY17 FY18
Finished Homes Under Construction
28
Spec Homes
Note: Spec count as of each quarter-end
Available Specs
(In thousands) Maturity Date Next Call Call Price Dec 31, 2016 Dec 31, 2017
5.750% Senior Notes June 2019 3/15/2019 100.000 321,393 96,393
7.500% Senior Notes September 2021 198,000 -
8.750% Senior Notes March 2022 3/15/2019 104.375 500,000 500,000
7.250% Senior Notes February 2023 2/1/2018 103.625 199,834 24,834
6.750% Senior Notes March 2025 3/15/2020 105.063 - 250,000
5.875% Senior Notes October 2027 10/15/2022 102.938 - 400,000
Unamortized debt premium, net 2,260 3,220
Unamortized debt issuance costs (13,314) (16,545)
Total Senior Notes, net 1,208,173 1,257,902
Term Loan March 2018 53,080 -
Junior Subordinated Notes July 2036 60,387 62,453
Other Secured Notes payable Various Dates 14,843 4,154
Total debt 1,336,483$ 1,324,509$
Notes:
Term Loan net of unamortized discount of $725 and unamortized debt issuance costs of $1,195
Junior Subordinated Notes net of unamortized accretion of $40,387 and $38,320 respectively
Debt Structure
29
Three Months Ended December 31, LTM Ended December 31,
2016 2017 Variance 2016 2017 Variance
Net (loss) income (1,429)$ (130,947)$ (129,518)$ 2,265$ (97,705)$ (99,970)$
Expense (benefit) from income taxes (2,579) 107,979 110,558 13,139 113,179 100,040
Interest amortized to home construction and land sales
expenses and capitalized interest impaired
15,644 16,476 832 81,315 89,652 8,337
Interest expense not qualified for capitalization 5,252 3,435 (1,817) 23,208 13,819 (9,389)
EBIT 16,888 (3,057) (19,945) 119,927 118,945 (982)
Depreciation and amortization and stock-based compensation
amortization
4,859 5,117 258 21,864 22,431 567
EBITDA 21,747 2,060 (19,687) 141,791 141,376 (415)
Loss on debt extinguishment - 25,904 25,904 12,595 38,534 25,939
Inventory impairments and abandonments - 450 450 13,216 2,839 (10,377)
Additional insurance recoveries from third-party insurer - - - (15,500) - 15,500
Write-off of deposit on legacy land investment 2,700 (2,700) 2,700 (2,700)
Adjusted EBITDA 24,447$ 28,414$ 3,967$ 154,802$ 182,749$ 27,947$
Adjusted EBITDA Reconciliation
30
$ in thousands
31
Deferred Tax Assets - Summary
As of December 31, 2017, our valuation allowance of $54.7 million related to our deferred tax assets
remains consistent with the determinations we made during the period ended September 30, 2017.
The reductions in our deferred tax assets and valuation allowance during the quarter ended
December 31, 2017 were driven by the reduced Federal corporate tax rate of 21% as a result of the
Tax Cuts and Jobs Act being enacted into law in December. See Form 10-Q for additional detail.
($ in millions) December 31, December 31,
2016 2017
Deferred Tax Assets 378.9$ 254.8$
Valuation Allowance (66.3) (54.7)
Net Deferred Tax Assets 312.7$ 200.1$
Note: Totals may not foot due to rounding
Application of Reduction in Federal tax rate:
Federal Book/Tax
Differences and
NOLs
$310.4 million
Federal Tax Credits
State Tax
Attributes
Federal
NOL VA
($28.9) million
Federal Tax
Credits VA
State Tax
Attributes VA
(124.2) 11.6
Net Reduction of $112.6 million
Not impacted by changes in federal tax rate
Valued at current federal rate Valued at current state rates Tax Credits
Deferred Tax Assets – Impact of Tax Rate Change
32