Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced its financial results for the three and six months ended March 31, 2018.

Beazer Homes Fiscal Second Quarter 2018 Highlights and Comparison to Fiscal Second Quarter 2017

  • Net income from continuing operations of $11.6 million, compared to net loss of $7.5 million in Fiscal 2017
  • Adjusted EBITDA of $39.5 million, up 19.1%
  • Home building revenue of $441.1 million, up 4.6%, on a 2.2% increase in home closings to 1,266 and a 2.3% increase in average selling price to $348.4 thousand
  • Home building gross margin was 16.9%, up 90 basis points. Excluding impairments, abandonments and interest amortized, home building gross margin was 21.3%, up 60 basis points
  • SG&A as a percentage of total revenue was 12.8%, down 50 basis points
  • Unit orders of 1,679, up 8.4% on a 10.3% increase in sales/community/month to 3.7 and a 1.7% decline in average community count to 151
  • Dollar value of backlog of $885.4 million, up 14.0%
  • Unrestricted cash at quarter end was $158.8 million

Profitability. Net income from continuing operations was $11.6 million, an increase of $9.1 million after adjusting for the $15.6 million loss on debt extinguishment and impairments incurred in the second quarter of Fiscal 2017. Second quarter Adjusted EBITDA of $39.5 million was up $6.3 million, or 19.1%, compared to the same period last year.

Orders. Net new orders for the second quarter increased 8.4% from the prior year, which was achieved even as average community count decreased by 3 communities to 151. The growth in net new orders was driven by an increase in absorption rate to 3.7 sales per community per month, up 10.3% from the previous year. The cancellation rate was 14.9%, down 170 basis points from the second quarter of last year.

Home building Revenue. Second quarter closings of 1,266 homes were 2.2% above the level achieved in the same period last year. Combined with a 2.3% increase in the average selling price to $348.4 thousand, home building revenue rose 4.6% over the prior year to $441.1 million.

Backlog. The dollar value of homes in backlog as of March 31, 2018 increased 14.0% to $885.4 million, or 2,312 homes, which compared to $776.4 million, or 2,236 homes, for the same period last year. The average selling price of homes in backlog rose 10.3% year over year to $383.0 thousand.

Home building Gross Margin. Home building gross margin for the second quarter was 16.9%, an increase of 90 basis points over the prior year. Excluding impairments, abandonments and interest amortized, home building gross margin was 21.3%, up 60 basis points.

SG&A Expenses. Selling, general and administrative expenses, as a percentage of total revenue, were 12.8% for the quarter, down 50 basis points compared to the prior year.

Liquidity. The company ended the quarter with $329.1 million of available liquidity, including $158.8 million of unrestricted cash and $170.3 million available on its secured revolving credit facility.

The company made continued progress with regard to its Gatherings expansion during the second quarter of Fiscal 2018. As of the end of March, two communities were open for sale and another three were owned and in various stages of development. In Orlando’s Gatherings at Lake Nona, building one was in its final stages and was expected to deliver its first closings in May. Additionally, land acquisition for a third Gatherings community in the Dallas market was approved during the second quarter. The company is currently reviewing a large pipeline of potential communities across its geographic footprint and expects to see Gatherings acquisition activity accelerate in the second half of Fiscal 2018.

“Improvements in nearly every one of our core operational metrics led to a significant improvement in profitability in the second quarter,” said Allan P. Merrill, president and CEO of Beazer Homes. “Customer interest was quite strong as continuing job and wage growth, together with low inventories of new and used homes, more than offset concerns about higher home prices and mortgage rates.”

“Our commitment to deliver ‘extraordinary value at an affordable price’ has us well positioned in this environment. We anticipate reaching our ‘2B-10’ and de-leveraging objectives this year, while continuing to improve our return on assets in the quarters and years ahead.”