After three consecutive profitable quarters, Beazer Homes USA, Altlanta(NYSE:BZH) moved back into the red for its fiscal third quarter ended June 30. Beazer reported a net loss from continuing operations of $27.8 million($0.41 per share). The loss included $5.1 million in consolidated impairments, a $12.5 million impairment related to two unconsolidated joint ventures, a $9 million loss on a debt repurchase and a $28.4 million tax benefit.
For the comparable quarter last year, the company lost $25.4 million, or(-$65 per share), including $11.8 million in impairments, a $4.2 million impairment related to joint ventures and a $55.2 million gain on debt extinguishment.
The loss exceeded analyst expectations for a loss of 29 cents per share.Shares opened sharply lower Thursday and were trading down 2.3% at $4.15 during the first 15 minutes of the session.
Total revenue rose to $339.9 million from $224.1 million in the third quarter of the prior year as home closings from continuing operations jumped 73.3% to 1,643 homes. The company's average selling price fell 12.3% to $206,200, in part due to a shift in geographic mix and to the first-time homebuyer market.
New orders, however, fell 32.5% to 1,037 homes. The cancellation rate increased to 28.9% in the third quarter from 23% in the third quarter of the prior year.
Backlog at quarter's end was 1,175 homes with a sales value of $288.2 million, down from 1,866 homes with a sales value of $430.6 million as of June 30, 2009. The average selling price in backlog increased by 6% to $245,200 from $230,800 in the prior year.
As of June 30, 2010, unsold finished homes totaled 319, an increase of 85 homes, from the level a year ago.
Beazer controlled 29,768 lots at the end of the quarter, 80% owned and 20% under option, including 727 owned lots in discontinued operations. That was down 9.5% from the level at at the same time last year and down 2.8% from the level at September 30, 2009. During the quarter, the company entered into purchase and option transactions relating to 1,679 lots. Year-to-date it has contracted for 2,925 lots through either purchases or options.
Gross profit margin rose to 11.8% from 2.6% in the third quarter of the prior year. SG&A rose to $54.6 million from $49.6 million, 16% of revenues.
During the quarter, Beazer sold $300 million in 9.125% senior notes due 2018, 3.0 million in 7.25% tangible equity units and 12.5 million shares of common stock. The proceeds of approximately $437 million were used with $28 million in cash to buy back 2012 senior notes and 2024 convertible senior notes plus accrued and unpaid interest for a total of $465 million.
The company ended the quarter with cash and cash equivalents of $514.6 million, including restricted cash of $42.6 million primarily to collateralize outstanding letters of credit. Total long-term debt was listed at $1.21 billion. The company did not report its debt-to-capital ratios.
Said Ian J. McCarthy, president and CEO, "As we anticipated earlier this year, the third quarter represented two distinctly different business environments for us. Through the expiration of the first-time homebuyer tax credit on April 30th, traffic and new home orders were tracking well above prior year results. In May and June traffic and new home orders were substantially below the levels experienced in the prior year."
He added, "We believe employment growth and improved consumer confidence remain the keys to a sustainable recovery in the homebuilding industry."