With Beazer Homes USA's fiscal second quarter loss of $54.9 million, or $0.74 per share, exceeding analysts' expectations of a loss of $0.47 per share, company executives focused on explaining to the investor community how the company will get back to profitability during a conference call Tuesday. The plan was three-pronged: Improve efficiencies, create new opportunities, and invest for future growth.
After strategically shifting operations into neutral during 2010, valuing margins over units, executives at Standard Pacific Homes have changed gears in 1Q2011 and are moving to accelerate the company's volumes. The company opened 18 new communities during the quarter, boosting its overall community count by 10% year over year. At quarter-end, the company had 142 communities on its roster. Although sales were down 14% year over year, 22% of first quarter orders came from new communities.
Amid many builders talking about the 2011 spring selling season that wasn't, M/I Homes CEO Robert Schottenstein had a different takeaway. Despite the company's widening losses for the quarter, compared with the same quarter of 2010, he said he'd give this year's season a B-, calling it "clearly not great but far from poor."
D.R. Horton executives further validated a number of other builders' senses that the move-up market is gaining strength in home sales environment, telling analysts during a conference call Friday that going forward move-up homes will make up a greater percentage of the company's business. This decision is a strategic development, as the company has long been a heavy hitter in the entry-level home buyer market. In its most recent quarter, closings to first-time home buyers represented 55% of the company's business.
The spring selling season's tepid results led Meritage Homes CEO Steve Hilton to scale back his performance expectations for the company in 2011. Rather than making promises of improving upon last year's profit, he ratcheted down investor expectations, referring to a "reasonable opportunity to be profitable in 2011." He added, "The best opportunity we're seeing today is in the move-up market."
