Beazer Homes Reports Third Quarter Fiscal 2019 Results

ATLANTA--()--Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced its financial results for the three and nine months ended June 30, 2019.

“We are pleased to report strong third quarter results that once again exceeded or met our expectations across our key metrics,” said Allan P. Merrill, President and CEO of Beazer Homes. “During the quarter, a continuation of wage growth, low unemployment and lower interest rates provided support for our solid sales and earnings performance. We also executed against our capital allocation priorities by repurchasing $16.6 million of debt and $10.6 million of common stock. We remain committed to full year debt reduction in excess of our share repurchases and now expect to repurchase more than $50.0 million in debt during fiscal 2019.”

“As we look ahead, our balanced growth strategy positions us to achieve higher EBITDA from a more efficient and less leveraged balance sheet. By generating higher returns, we will create enhanced value for our investors.”

Beazer Homes Fiscal Third Quarter 2019 Highlights and Comparison to Fiscal Third Quarter 2018

  • Net income from continuing operations of $11.6 million, compared to net income from continuing operations of $13.4 million in fiscal third quarter 2018
  • Adjusted EBITDA of $38.7 million, down 17.0%
  • Homebuilding revenue of $482.3 million, down 4.9% on an 8.8% decrease in home closings to 1,269 and a 4.3% increase in average selling price to $380.1 thousand
  • Homebuilding gross margin was 14.9%, down 150 basis points. Excluding impairments, abandonments and amortized interest, homebuilding gross margin was 19.4%, down 140 basis points
  • SG&A as a percentage of total revenue was 12.2%, up 10 basis points year over year
  • Unit orders of 1,544, up 6.5% on a 10.6% increase in average community count to 174 and a 3.7% decrease in sales/community/month to 3.0
  • Dollar value of backlog of $881.6 million, down 4.2%
  • Unrestricted cash at quarter end was $68.5 million; total liquidity was $173.5 million
  • Retired $16.6 million of the 6.75% Senior Notes due March 2025, recognizing a $0.4 million pre-tax gain on extinguishment of debt
  • Commenced a $10.0 million accelerated share repurchase, which settled in July 2019, and repurchased $0.6 million of shares through open market transactions

Profitability. Net income from continuing operations was $11.6 million, generating diluted earnings per share of $0.38. This included energy tax credits of $4.4 million and a gain on debt extinguishment of $0.4 million. Third quarter adjusted EBITDA of $38.7 million was down $7.9 million compared to the same period last year.

Orders. Net new orders for the third quarter increased 6.5% from the prior year, to 1,544. The increase in net new orders was driven by a 10.6% increase in average community count to 174. The cancellation rate for the quarter was 15.2%, down 340 basis points from the previous year.

Homebuilding Revenue. Third quarter homebuilding revenue was $482.3 million, down 4.9% from the same period last year. The average selling price rose 4.3% to $380.1 thousand, offset by an 8.8% decrease in home closings to 1,269 homes.

Backlog. The dollar value of homes in backlog as of June 30, 2019 decreased 4.2% to $881.6 million, or 2,264 homes, compared to $920.7 million, or 2,371 homes, at the same time last year. The average selling price of homes in backlog was $389.4 thousand, essentially flat year over year.

Homebuilding Gross Margin. Homebuilding gross margin (excluding impairments, abandonments and amortized interest) was 19.4% for the third quarter, down 140 basis points from the same period in fiscal 2018.

SG&A Expenses. Selling, general and administrative expenses, as a percentage of total revenue, were 12.2% for the quarter, up 10 basis points compared to the prior year. On an absolute dollar basis, SG&A was down over $3.0 million year over year.

Liquidity. At the close of the third quarter, the Company had approximately $173.5 million of available liquidity, including $68.5 million of unrestricted cash and $105.0 million available on its secured revolving credit facility after accounting for borrowings.

Share and Debt Repurchases. The Company retired $16.6 million of its outstanding 6.75% unsecured Senior Notes due March 2025 at an average price of $96.61 per $100 principal amount. We entered into an accelerated share repurchase (ASR) agreement during the quarter to repurchase $10.0 million of our outstanding common stock, which was completed during July 2019. A total of 1.0 million shares were purchased through the ASR at an average price per share of $9.87. In addition, the Company repurchased $0.6 million of shares through open market transactions during the quarter. Year to date, the Company has repurchased $21.7 million of debt and $34.6 million of stock.

Gatherings

The Company continued the rollout of its Gatherings active-adult communities during the third quarter of fiscal 2019. New projects were approved in Charleston and Maryland, expanding Gatherings’ geographic footprint to seven of Beazer’s 16 divisions. Orlando and Dallas are currently selling and closing Gatherings homes, and projects are underway in Nashville, Houston, and Atlanta.

Summary results for the three and nine months ended June 30, 2019 are as follows:

 

Three Months Ended June 30,

 

2019

 

2018

 

Change*

New home orders, net of cancellations

1,544

 

 

1,450

 

 

6.5

%

Orders per community per month

3.0

 

 

3.1

 

 

(3.7

)%

Average active community count

174

 

 

157

 

 

10.6

%

Actual community count at quarter-end

173

 

 

158

 

 

9.5

%

Cancellation rates

15.2

%

 

18.6

%

 

-340 bps

 

 

 

 

 

 

Total home closings

1,269

 

 

1,391

 

 

(8.8

)%

Average selling price (ASP) from closings (in thousands)

$

380.1

 

 

$

364.5

 

 

4.3

%

Homebuilding revenue (in millions)

$

482.3

 

 

$

507.0

 

 

(4.9

)%

Homebuilding gross margin

14.9

%

 

16.4

%

 

-150 bps

Homebuilding gross margin, excluding impairments and abandonments (I&A)

14.9

%

 

16.4

%

 

-150 bps

Homebuilding gross margin, excluding I&A and interest amortized to cost of sales

19.4

%

 

20.8

%

 

-140 bps

 

 

 

 

 

 

Income from continuing operations before income taxes (in millions)

$

9.4

 

 

$

17.7

 

 

$

(8.3

)

(Benefit) expense from income taxes (in millions)

$

(2.2

)

 

$

4.3

 

 

$

(6.5

)

Income from continuing operations (in millions)

$

11.6

 

 

$

13.4

 

 

$

(1.8

)

Basic income per share from continuing operations

$

0.38

 

 

$

0.42

 

 

$

(0.04

)

Diluted income per share from continuing operations

$

0.38

 

 

$

0.41

 

 

$

(0.03

)

 

 

 

 

 

 

Income from continuing operations before income taxes (in millions)

$

9.4

 

 

$

17.7

 

 

$

(8.3

)

(Gain) on debt extinguishment (in millions)

$

(0.4

)

 

$

 

 

$

(0.4

)

Inventory impairments and abandonments (in millions)

$

 

 

$

0.2

 

 

$

(0.2

)

Income from continuing operations excluding gain on debt extinguishment and inventory impairments and abandonments before income taxes (in millions)

$

9.0

 

 

$

17.9

 

 

$

(8.9

)

Income from continuing operations excluding gain on debt extinguishment and inventory impairments and abandonments after income taxes (in millions)+

$

11.2

 

 

$

13.5

 

 

$

(2.3

)

 

 

 

 

 

 

Net income

$

11.6

 

 

$

13.4

 

 

$

(1.8

)

 

 

 

 

 

 

Land and land development spending (in millions)

$

102.8

 

 

$

155.5

 

 

$

(52.7

)

 

 

 

 

 

 

Adjusted EBITDA (in millions)

$

38.7

 

 

$

46.6

 

 

$

(7.9

)

LTM Adjusted EBITDA (in millions)

$

188.2

 

 

$

191.4

 

 

$

(3.2

)

* Change and totals are calculated using unrounded numbers.

+ For the three months ended June 30, 2019, the gain on debt extinguishment was tax-effected at the effective tax rate of 25.7%. For the three months ended June 30, 2018, inventory impairments and abandonments were tax-effected at the effective tax rate of 26.7%.

“LTM” indicates amounts for the trailing 12 months.

Nine Months Ended June 30,

 

2019

 

2018

 

Change*

New home orders, net of cancellations

4,118

 

 

4,239

 

 

(2.9

)%

LTM orders per community per month

2.7

 

 

3.0

 

 

(10.0

)%

Cancellation rates

16.1

%

 

17.2

%

 

-110 bps

 

 

 

 

 

 

Total home closings

3,486

 

 

3,723

 

 

(6.4

)%

ASP from closings (in thousands)

$

374.1

 

 

$

353.4

 

 

5.9

%

Homebuilding revenue (in millions)

$

1,304.2

 

 

$

1,315.8

 

 

(0.9

)%

Homebuilding gross margin

6.8

%

 

16.5

%

 

-970 bps

Homebuilding gross margin, excluding impairments and abandonments (I&A)

15.2

%

 

16.5

%

 

-130 bps

Homebuilding gross margin, excluding I&A and interest amortized to cost of sales

19.6

%

 

21.0

%

 

-140 bps

 

 

 

 

 

 

(Loss) income from continuing operations before income taxes (in millions)

$

(126.1

)

 

$

7.9

 

 

$

(134.0

)

(Benefit) expense from income taxes (in millions)

$

(44.3

)

 

$

113.4

 

 

$

(157.7

)

Loss from continuing operations (in millions)

$

(81.9

)

 

$

(105.5

)

 

$

23.6

 

Basic and diluted loss per share from continuing operations

$

(2.65

)

 

$

(3.29

)

 

$

0.64

 

 

 

 

 

 

 

(Loss) income from continuing operations before income taxes (in millions)

$

(126.1

)

 

$

7.9

 

 

$

(134.0

)

(Gain) loss on debt extinguishment (in millions)

$

(0.6

)

 

$

25.9

 

 

$

(26.5

)

Inventory impairments and abandonments (in millions)

$

148.6

 

 

$

0.2

 

 

$

148.4

 

Income from continuing operations excluding (gain) loss on debt extinguishment and inventory impairments and abandonments before income taxes (in millions)

$

21.9

 

 

$

34.0

 

 

$

(12.1

)

Income from continuing operations excluding (gain) loss on debt extinguishment, inventory impairments and abandonments, and remeasurement of deferred tax assets due to Tax Act after income taxes (in millions)+

$

25.5

 

 

$

27.9

 

 

$

(2.4

)

 

 

 

 

 

 

Net loss

$

(81.9

)

 

$

(106.0

)

 

$

24.0

 

 

 

 

 

 

 

Land and land development spending (in millions)

$

363.6

 

 

$

440.6

 

 

$

(77.0

)

 

 

 

 

 

 

Adjusted EBITDA (in millions)

$

98.1

 

 

$

114.6

 

 

$

(16.4

)

* Change and totals are calculated using unrounded numbers.

+ For the nine months ended June 30, 2019, inventory impairments and abandonments recognized during the second quarter of fiscal 2019 were tax-effected at the tax rate of 27.5%. For the prior year period, loss on debt extinguishment and inventory impairments and abandonments were tax-effected at the effective tax rate of 26.7%, which excludes the impact of the $112.6 million provisional tax expense that was recognized due to the remeasurement of our deferred tax assets as a result of the enactment of the Tax Cut and Jobs Act (Tax Act) in December 2017.

 

As of June 30,

 

2019

 

2018

 

Change

Backlog units

2,264

 

 

2,371

 

 

(4.5

)%

Dollar value of backlog (in millions)

$

881.6

 

 

$

920.7

 

 

(4.2

)%

ASP in backlog (in thousands)

$

389.4

 

 

$

388.3

 

 

0.3

%

Land and lots controlled

21,717

 

 

22,524

 

 

(3.6

)%

Conference Call

The Company will hold a conference call on August 1, 2019 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 8, 2019 at 866-499-4561 (for international callers, dial 203-369-1806) with pass code “3740.”

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, saving 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.com 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) economic changes nationally or in local markets, changes in consumer confidence, and 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; (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 asset impairment charges we took on select California assets during the second quarter of fiscal 2019; (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) increases in mortgage interest rates, increased disruption in the availability of mortgage financing, a change in tax laws regarding the deductibility of mortgage interest for tax purposes or an increased number of foreclosures; (viii) our cost of and ability to access capital, due to factors such as limitations in the capital markets or adverse credit market conditions, and ability to 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; (ix) our ability to reduce our outstanding indebtedness and to comply with covenants in our debt agreements or satisfy such obligations through repayment or refinancing; (x) our ability to implement and complete our capital allocation plans, including our share and debt repurchase programs; (xi) increased competition or delays in reacting to changing consumer preferences in home design; (xii) 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; (xiii) estimates related to the potential recoverability of our deferred tax assets, and a potential reduction in corporate tax rates that could reduce the usefulness of our existing 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 performance of our unconsolidated entities and our unconsolidated entity partners; (xix) the impact of information technology failures or data security breaches; (xx) terrorist acts, natural disasters, acts of war or other factors over which we have little or no control; or (xxi) 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 to predict all such factors.

-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)

2019

 

2018

 

2019

 

2018

Total revenue

$

482,738

 

 

$

511,521

 

 

$

1,306,038

 

 

$

1,339,188

 

Home construction and land sales expenses

410,974

 

 

428,109

 

 

1,107,681

 

 

1,119,870

 

Inventory impairments and abandonments

 

 

168

 

 

148,618

 

 

168

 

Gross profit

71,764

 

 

83,244

 

 

49,739

 

 

219,150

 

Commissions

18,230

 

 

19,535

 

 

49,965

 

 

51,225

 

General and administrative expenses

40,749

 

 

42,473

 

 

116,763

 

 

120,610

 

Depreciation and amortization

3,242

 

 

3,656

 

 

8,912

 

 

9,229

 

Operating income (loss)

9,543

 

 

17,580

 

 

(125,901

)

 

38,086

 

Equity in income of unconsolidated entities

299

 

 

147

 

 

316

 

 

302

 

Gain (loss) on extinguishment of debt

358

 

 

 

 

574

 

 

(25,904

)

Other expense, net

(755

)

 

(30

)

 

(1,134

)

 

(4,628

)

Income (loss) from continuing operations before income taxes

9,445

 

 

17,697

 

 

(126,145

)

 

7,856

 

(Benefit) expense from income taxes

(2,180

)

 

4,268

 

 

(44,260

)

 

113,386

 

Income (loss) from continuing operations

11,625

 

 

13,429

 

 

(81,885

)

 

(105,530

)

Loss from discontinued operations, net of tax

(23

)

 

(20

)

 

(64

)

 

(450

)

Net income (loss)

$

11,602

 

 

$

13,409

 

 

$

(81,949

)

 

$

(105,980

)

Weighted average number of shares:

 

 

 

 

 

 

 

Basic

30,250

 

 

32,147

 

 

30,926

 

 

32,113

 

Diluted

30,489

 

 

32,726

 

 

30,926

 

 

32,113

 

Basic income (loss) per share:

 

 

 

 

 

 

 

Continuing operations

$

0.38

 

 

$

0.42

 

 

$

(2.65

)

 

$

(3.29

)

Discontinued operations

 

 

 

 

 

 

(0.01

)

Total

$

0.38

 

 

$

0.42

 

 

$

(2.65

)

 

$

(3.30

)

Diluted income (loss) per share:

 

 

 

 

 

 

 

Continuing operations

$

0.38

 

 

$

0.41

 

 

$

(2.65

)

 

$

(3.29

)

Discontinued operations

 

 

 

 

 

 

(0.01

)

Total

$

0.38

 

 

$

0.41

 

 

$

(2.65

)

 

$

(3.30

)

 

 

Three Months Ended

 

Nine Months Ended

 

June 30,

 

June 30,

Capitalized Interest in Inventory

2019

 

2018

 

2019

 

2018

Capitalized interest in inventory, beginning of period

$

144,756

 

 

$

149,034

 

 

$

144,645

 

 

$

139,203

 

Interest incurred

26,782

 

 

25,803

 

 

77,506

 

 

76,850

 

Capitalized interest impaired

 

 

 

 

(13,907

)

 

 

Interest expense not qualified for capitalization and included as other expense

(961

)

 

(205

)

 

(1,800

)

 

(5,290

)

Capitalized interest amortized to home construction and land sales expenses

(21,752

)

 

(22,450

)

 

(57,619

)

 

(58,581

)

Capitalized interest in inventory, end of period

$

148,825

 

 

$

152,182

 

 

$

148,825

 

 

$

152,182

 

BEAZER HOMES USA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

in thousands (except share and per share data)

June 30, 2019

 

September 30, 2018

ASSETS

 

 

 

Cash and cash equivalents

$

68,491

 

 

$

139,805

 

Restricted cash

16,293

 

 

13,443

 

Accounts receivable (net of allowance of $358 and $378, respectively)

20,287

 

 

24,647

 

Owned inventory

1,702,724

 

 

1,692,284

 

Investments in unconsolidated entities

3,941

 

 

4,035

 

Deferred tax assets, net

258,713

 

 

213,955

 

Property and equipment, net

28,276

 

 

20,843

 

Goodwill

11,376

 

 

9,751

 

Other assets

10,178

 

 

9,339

 

Total assets

$

2,120,279

 

 

$

2,128,102

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Trade accounts payable

$

152,441

 

 

$

126,432

 

Other liabilities

117,635

 

 

126,389

 

Total debt (net of premium of $2,061 and $2,640, respectively, and debt issuance costs of $12,027 and $14,336, respectively)

1,316,367

 

 

1,231,254

 

Total liabilities

1,586,443

 

 

1,484,075

 

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, 31,047,607 issued and outstanding and 33,522,046 issued and outstanding, respectively)

31

 

 

34

 

Paid-in capital

851,786

 

 

880,025

 

Accumulated deficit

(317,981

)

 

(236,032

)

Total stockholders’ equity

533,836

 

 

644,027

 

Total liabilities and stockholders’ equity

$

2,120,279

 

 

$

2,128,102

 

 

 

 

 

Inventory Breakdown

 

 

 

Homes under construction

$

679,181

 

 

$

476,752

 

Development projects in progress

753,048

 

 

907,793

 

Land held for future development

28,531

 

 

83,173

 

Land held for sale

13,352

 

 

7,781

 

Capitalized interest

148,825

 

 

144,645

 

Model homes

79,787

 

 

72,140

 

Total owned inventory

$

1,702,724

 

 

$

1,692,284

 

BEAZER HOMES USA, INC.

CONSOLIDATED OPERATING AND FINANCIAL DATA – CONTINUING OPERATIONS

 

Three Months Ended June 30,

 

Nine Months Ended June 30,

SELECTED OPERATING DATA

2019

 

2018

 

2019

 

2018

Closings:

 

 

 

 

 

 

 

West region

674

 

 

701

 

 

1,881

 

 

1,879

 

East region

246

 

 

299

 

 

647

 

 

803

 

Southeast region

349

 

 

391

 

 

958

 

 

1,041

 

Total closings

1,269

 

 

1,391

 

 

3,486

 

 

3,723

 

 

 

 

 

 

 

 

 

New orders, net of cancellations:

 

 

 

 

 

 

 

West region

850

 

 

795

 

 

2,175

 

 

2,235

 

East region

334

 

 

274

 

 

869

 

 

854

 

Southeast region

360

 

 

381

 

 

1,074

 

 

1,150

 

Total new orders, net

1,544

 

 

1,450

 

 

4,118

 

 

4,239

 

 

 

As of June 30,

Backlog units at end of period:

2019

 

2018

West region

1,152

 

 

1,235

 

East region

503

 

 

464

 

Southeast region

609

 

 

672

 

Total backlog units

2,264

 

 

2,371

 

Dollar value of backlog at end of period (in millions)

$

881.6

 

 

$

920.7

 

 

in thousands

Three Months Ended June 30,

 

Nine Months Ended June 30,

SUPPLEMENTAL FINANCIAL DATA

2019

 

2018

 

2019

 

2018

Homebuilding revenue:

 

 

 

 

 

 

 

West region

$

238,723

 

 

$

241,588

 

 

$

658,097

 

 

$

642,505

 

East region

117,934

 

 

128,880

 

 

299,450

 

 

318,299

 

Southeast region

125,659

 

 

136,496

 

 

346,696

 

 

355,029

 

Total homebuilding revenue

$

482,316

 

 

$

506,964

 

 

$

1,304,243

 

 

$

1,315,833

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

Homebuilding

$

482,316

 

 

$

506,964

 

 

$

1,304,243

 

 

$

1,315,833

 

Land sales and other

422

 

 

4,557

 

 

1,795

 

 

23,355

 

Total revenue

$

482,738

 

 

$

511,521

 

 

$

1,306,038

 

 

$

1,339,188

 

 

 

 

 

 

 

 

 

Gross profit (loss):

 

 

 

 

 

 

 

Homebuilding

$

71,719

 

 

$

83,043

 

 

$

88,190

 

 

$

217,641

 

Land sales and other

45

 

 

201

 

 

(38,451

)

 

1,509

 

Total gross loss

$

71,764

 

 

$

83,244

 

 

$

49,739

 

 

$

219,150

 

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

2019

 

2018

 

2019

 

2018

Homebuilding gross profit/margin

$

71,719

 

14.9

%

 

$

83,043

 

16.4

%

 

$

88,190

 

6.8

%

 

$

217,641

 

16.5

%

Inventory impairments and abandonments (I&A)

 

 

 

 

 

 

110,030

 

 

 

 

 

Homebuilding gross profit/margin before I&A

71,719

 

14.9

%

 

83,043

 

16.4

%

 

198,220

 

15.2

%

 

217,641

 

16.5

%

Interest amortized to cost of sales

21,752

 

 

 

22,441

 

 

 

57,619

 

 

 

58,564

 

 

Homebuilding gross profit/margin before I&A and interest amortized to cost of sales

$

93,471

 

19.4

%

 

$

105,484

 

20.8

%

 

$

255,839

 

19.6

%

 

$

276,205

 

21.0

%

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.

 

Three Months Ended June 30,

 

Nine Months Ended June 30,

 

LTM Ended June 30,(a)

in thousands

2019

 

2018

 

2019

 

2018

 

2019

 

2018

Net income (loss)

$

11,602

 

 

$

13,409

 

 

$

(81,949

)

 

$

(105,980

)

 

$

(21,344

)

 

$

(72,326

)

(Benefit) expense from income taxes

(2,187

)

 

4,261

 

 

(44,279

)

 

113,233

 

 

(63,139

)

 

117,186

 

Interest amortized to home construction and land sales expenses and capitalized interest impaired

21,752

 

 

22,450

 

 

71,526

 

 

58,581

 

 

106,058

 

 

90,043

 

Interest expense not qualified for capitalization

961

 

 

205

 

 

1,800

 

 

5,290

 

 

1,835

 

 

8,694

 

EBIT

32,128

 

 

40,325

 

 

(52,902

)

 

71,124

 

 

23,410

 

 

143,597

 

Depreciation and amortization and stock-based compensation amortization

6,941

 

 

6,140

 

 

16,905

 

 

16,921

 

 

24,049

 

 

22,623

 

EBITDA

39,069

 

 

46,465

 

 

(35,997

)

 

88,045

 

 

47,459

 

 

166,220

 

(Gain) loss on extinguishment of debt

(358

)

 

 

 

(574

)

 

25,904

 

 

1,361

 

 

22,971

 

Inventory impairments and abandonments (b)

 

 

168

 

 

134,711

 

 

618

 

 

139,081

 

 

2,255

 

Joint venture impairment and abandonment charges

 

 

 

 

 

 

 

 

341

 

 

 

Adjusted EBITDA

$

38,711

 

 

$

46,633

 

 

$

98,140

 

 

$

114,567

 

 

$

188,242

 

 

$

191,446

 

(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.” We recognized no impairment of capitalized interest during the three months ended June 30, 2019 and 2018. During the nine and twelve months ended June 30, 2019, we impaired capitalized interest of $13.9 million and $15.9 million, respectively, compared to capitalized interest impairments of less than $0.1 million for the nine and twelve months ended June 30, 2018, respectively.

 

Contacts

Beazer Homes USA, Inc.
David I. Goldberg
Vice President of Treasury and Investor Relations
770-829-3700
investor.relations@beazer.com

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Contacts

Beazer Homes USA, Inc.
David I. Goldberg
Vice President of Treasury and Investor Relations
770-829-3700
investor.relations@beazer.com