Beazer Homes USA (NYSE:BZH), Atlanta, on Tuesday reported net income of $60.5 million for its fiscal fourth quarter ended Sept. 30, or $0.80 per diluted share, an increase of $26.8 million from the fourth quarter of fiscal 2017. Wall Street was looking for a gain of $0.91 per share.

The gain included a tax benefit of $18.9 million driven by an additional release of the valuation allowance for the company’s deferred tax asset. Offsetting the tax benefit were a $1.9 million loss on debt extinguishment from the retirement of the company’s 2019 Senior Notes, as well as $6.3 million in inventory impairments.

For the full fiscal year, the company posted aet loss from continuing operations of $45.0 million. Excluding impairments, abandonments, debt extinguishment costs, and the impacts from federal tax reform and the changes in the deferred tax asset valuation allowance, the company generated net income from continuing operations of $63.8 million.

For the quarter, on a pretax basis, income from continuing operations, excluding impairments, abandonments and the loss (or gain) on debt extinguishment was up more than $13 million, due to higher ASPs and improved SG&A leverage. Fourth quarter adjusted EBITDA of $90.1 million was up $13.2 million, or 17.2%, compared to the same period in the previous fiscal year.

Net new orders for the fourth quarter decreased 0.8%, or 10 homes, versus the prior year to 1,305. The company said it believes orders would have been up year-over-year in the fourth quarter if operations in Myrtle Beach, Charleston and Raleigh had not been affected.

Average active community count increased 5.0% year over year to 162, and the Company ended the quarter with 160 active communities. The cancellation rate was 21.5%, slightly above the fourth quarter of last year but in line with historical levels.

Home building revenue for the fourth quarter increased 14.4% over the prior year to $761.5 million. This was driven by a 6.6% rise in average selling price to $372,600, combined with a 7.4% increase in closings to 2,044 homes.

The dollar value of homes in backlog as of September 30, 2018 decreased 5.7% to $628.0 million, which compared to $665.8 million in the fourth quarter of fiscal 2017. The number of homes in backlog was 1,632 homes, down from 1,855 homes at the same time last year. The decrease in backlog units was partially offset by a 7.2% increase in the average selling price of homes in backlog to $384.8 thousand.

Home building gross margin for the fourth quarter, excluding impairments and abandonments, was 17.3%, up 10 basis points from the same period last year. Excluding impairments, abandonments and amortized interest, home building gross margin was 21.6%, down 40 basis points versus the prior year. While this was down on a year over year basis, it was above fourth quarter guidance of 20.5% - 21.0%, largely as a result of better warranty experience and a lower purchase accounting impact related to the acquisition of Venture Homes.

Selling, general and administrative expenses, as a percentage of total revenue, were 10.1%, down 40 basis points versus the prior year. The improvement in operating leverage was attributable to both the strong top line growth achieved and a continued focus on overhead cost management.

The company’s fourth quarter income tax provision included non-cash benefits of approximately $27.8 million, of which $27.4 million related to a change in the valuation allowance.

The company ended the quarter with $339.8 million of available liquidity, including $139.8 million of unrestricted cash and $200.0 million available on its undrawn secured revolving credit facility.

On September 25, 2018, the company retired the remaining $96.4 million of outstanding 5.750% unsecured Senior Notes due 2019 using cash on the balance sheet. The transaction marked the successful completion of the company’s three-year, $250 million debt reduction plan and left the company with no debt maturities until 2022.

As part of the expansion of its Gatherings active adult business, the company said it now owns or has acquired for acquisition land for Gatherings communities in Maryland, Virginia, Florida, Georgia, Tennessee, and Texas. Gatherings sales activity will expand or commence in many of these markets in fiscal 2019.

Allan P. Merrill, president and CEO, said, “In the fourth quarter, we also finalized our acquisition of Venture Homes and welcomed our first owners to our new Gatherings community in Orlando. Looking into fiscal 2019, with our long-standing commitment to delivering an ‘extraordinary value at an affordable price’ primarily for first-time and active adult buyers, we’re positioned to address the affordability challenges in the housing market. We are anticipating improved profitability, with a growing community count and a higher average selling price helping us counter more competitive market conditions. In addition, we are committing capital to both stock and debt repurchases, as we believe current pricing for our securities represents an attractive investment opportunity. Collectively, these efforts should allow us to generate a double-digit return on assets in the coming year.”