Beazer Homes USA, Inc. (NYSE: BZH) after market close Monday announced its financial results for the three months ended December 31, 2018.
Beazer Homes Fiscal First Quarter 2019 Highlights and Comparison to Fiscal First Quarter 2018
|•||Net income from continuing operations of $7.3 million. Diluted earnings per share was $0.23|
|•||Adjusted EBITDA of $26.8 million, down 5.5%|
|•||Homebuilding revenue of $401.0 million, up 9.0%, on a 1.6% increase in home closings to 1,083 and a 7.3% increase in average selling price to $370.3 thousand|
|•||Homebuilding gross margin was 15.1%, down 130 basis points. Excluding impairments, abandonments and amortized interest, homebuilding gross margin was 19.7%, down 120 basis points|
|•||SG&A as a percentage of total revenue was 13.5%, down 40 basis points|
|•||Unit orders of 976, down 12.1% on a 14.6% decrease in sales/community/month to 2.0 and a 3.0% increase in average community count to 160|
|•||Dollar value of backlog of $593.1 million, down 15.8%|
|•||Unrestricted cash at quarter end was $84.4 million|
|•||Repurchases of 1.6 million shares of common stock for $16.5 million|
Net income from continuing operations was $7.3 million, generating diluted earnings per share of $0.23. This included energy tax credits of $5.3 million, partially offset by an impairment of $1.0 million. Analysts were expecting a gain of $0.14 per share. First quarter Adjusted EBITDA of $26.8 million was down $1.6 million, or 5.5%, compared to the same period last year.Orders.
Net new orders for the first quarter decreased 12.1% from the prior year, to 976. The decrease in net new orders was driven by a reduction in the absorption rate to 2.0 sales per community per month, down from 2.4 during the same period last year, but was comparable to the company’s first quarter absorption rate over the prior five years. The cancellation rate for the quarter was 19.8%.
First quarter home closings of 1,083 homes were 1.6% above the level achieved in the same period last year. Combined with a 7.3% increase in the average selling price to $370.3 thousand, home building revenue rose 9.0% over the same period last year to $401.0 million.
The dollar value of homes in backlog as of December 31, 2018 decreased 15.8% to $593.1 million, or 1,525 homes, compared to $704.4 million, or 1,899 homes, at December 31, 2017. The average selling price of homes in backlog rose 4.9% year-over-year to $388.9 thousand.
Home building Gross Margin. Home building gross margin (excluding impairments, abandonments and amortized interest) was 19.7% for the first quarter, down 120 basis points from the same period in fiscal 2018. This was in part due to the Company’s efforts to sell and close additional spec homes during the quarter, with specs accounting for a higher percentage of our closings than they have historically.
Selling, general and administrative expenses as a percentage of total revenue were 13.5% for the quarter, an improvement of 40 basis points compared to the same period last year.Liquidity.
The company ended the quarter with approximately $267.9 million of available liquidity, including $84.4 million of unrestricted cash and $183.5 million available on its secured revolving credit facility after accounting for borrowings and outstanding letters of credit.
Beazer completed a $16.5 million accelerated share repurchase program during the first quarter. The company bought back approximately 1.6 million common shares at an average share price of $10.62.
The company continued the rollout of its Gatherings active-adult communities during the initial quarter of fiscal 2019. As of December 31, 2018, there were 9 active or approved Gatherings projects spread across 6 divisions, and the company expects to acquire, begin construction and/or launch sales in additional communities throughout the remainder of the year.
In its press release, the company stated, "In the first quarter, we delivered improved revenue and net income, despite challenging conditions for new home sales. In addition, we completed the initial tranche of our share buyback program, acquiring approximately 1.6 million shares, or 5% of total shares outstanding, at prices well below our book value.""Our strategy is designed to deliver extraordinary value at an affordable price primarily for first-time and active-adult buyers, leaving us well positioned to compete in a challenging demand environment. As we continue to execute on our share and debt repurchases this year, we will generate value for shareholders and further reduce our leverage."