Beazer Homes USA, Inc., Atlanta (NYSE: BZH) after market close Thursday reported net income from continuing operations of $11.6 million, or $0.38 per share, for its fiscal third quarter ended June 30, compared to net income from continuing operations of $13.4 million, or $0.42 per share, in fiscal third quarter 2018. Analysts were expecting a gain of $0.17 per share.

Home building revenue for the quarter was $482.3 million, down 4.9% on an 8.8% decrease in home closings to 1,269 and a 4.3% increase in average selling price to $380,100.

Beazer Homes models at Artisan at The Cove.
Beazer Homes models at Artisan at The Cove.

Net new orders for the third quarter increased 6.5% from the prior year, to 1,544. The increase in net new orders was driven by a 10.6% increase in average community count to 174. The cancellation rate for the quarter was 15.2%, down 340 basis points from the previous year.

Third-quarter home building revenue was $482.3 million, down 4.9% from the same period last year. The average selling price rose 4.3% to $380,100, offset by an 8.8% decrease in home closings to 1,269 homes.

The dollar value of homes in backlog as of June 30, 2019 decreased 4.2% to $881.6 million, or 2,264 homes, compared to $920.7 million, or 2,371 homes, at the same time last year. The average selling price of homes in backlog was $389,400, essentially flat year over year.

Home building gross margin (excluding impairments, abandonments and amortized interest) was 19.4% for the third quarter, down 140 basis points from the same period in fiscal 2018.

Selling, general and administrative expenses, as a percentage of total revenue, were 12.2% for the quarter, up 10 basis points compared to the prior year. On an absolute dollar basis, SG&A was down over $3.0 million year over year.

At the close of the third quarter, the company had approximately $173.5 million of available liquidity, including $68.5 million of unrestricted cash and $105.0 million available on its secured revolving credit facility after accounting for borrowings.

The company retired $16.6 million of its outstanding 6.75% unsecured Senior Notes due March 2025 at an average price of $96.61 per $100 principal amount. It entered into an accelerated share repurchase (ASR) agreement during the quarter to repurchase $10.0 million of outstanding common stock, which was completed during July 2019. A total of 1.0 million shares were purchased through the ASR at an average price per share of $9.87. In addition, the company repurchased $0.6 million of shares through open market transactions during the quarter. Year to date, the company has repurchased $21.7 million of debt and $34.6 million of stock.

BZH continued the rollout of its Gatherings active-adult communities during the third quarter of fiscal 2019. New projects were approved in Charleston and Maryland, expanding Gatherings’ geographic footprint to seven of Beazer’s 16 divisions. Orlando and Dallas are currently selling and closing Gatherings homes, and projects are underway in Nashville, Houston, and Atlanta.

“We are pleased to report strong third quarter results that once again exceeded or met our expectations across our key metrics,” said Allan P. Merrill, president and CEO of Beazer Homes. “During the quarter, a continuation of wage growth, low unemployment and lower interest rates provided support for our solid sales and earnings performance. We also executed against our capital allocation priorities by repurchasing $16.6 million of debt and $10.6 million of common stock. We remain committed to full year debt reduction in excess of our share repurchases and now expect to repurchase more than $50.0 million in debt during fiscal 2019. As we look ahead, our balanced growth strategy positions us to achieve higher EBITDA from a more efficient and less leveraged balance sheet. By generating higher returns, we will create enhanced value for our investors.”