Beazer Homes USA homes announced its third quarter results today and, as with Meritage last week, weather played a role. Beazer’s EPS missed both J.P. Morgan and UBS’ projections. But the reason was explainable.
“Overall, results for the quarter reflect the impact of delayed closings in Texas related to severe inclement weather,” wrote UBS’ Susan Maklari. “More specifically, the underperformance was driven by lower than estimated profitability as the HB EBIT margin (including amortized interest) was ~130 basis points below our model, reducing EPS by ~$0.12.”
The quarter wasn’t all misses, however. Orders, up 18% year-over-year to 1,524, came in 300 basis points above UBS’ projections.
“This growth was driven by a 17% YOY increase in average community count, while absorptions were flat,” Maklari wrote. “In part, reflecting the delayed closing, the unit backlog rose 25% at the end of the quarter and now represents five months of visibility based on our forward estimates. Despite timing issues, we were impressed with the order trends during the quarter and expect continued growth as the benefits of the company's land spend over the last two years materializes.”
In fact, Maklari is bullish on Beazer moving forward. “We continue to believe the turnaround underway at Beazer remains one of the best themes in the homebuilding space,” she wrote.
Here were some highlights from Beazer’s third quarter vs 2014’s third quarter:
- Net income of $12.2 million versus a loss of $13.2 million.
- Absorption rates of 3.1 per community, which was unchanged.
- Community count at quarter end of 168 versus 142.
- Cancellation rate of 196%, which dropped 140 basis points.
- Total closings of 1,293 up 4.2%
- Average sales price of $318,000, which rose 11.7% and is the highest in company history.
- Home building gross profit margin excluding impairments and abandonments of 18% down 190 basis points.
- Backlog of 2,764 homes worth $899 million, which is up 25% in homes and 35.6% in value from a year ago.
- By region, orders in the West and Southeast rose 42% and 15%, while the East fell 7%.