Lennar Corp., Miami (NYSE:LEN) and Beazer Homes USA, Atlanta (NYSE:BZH) filed updates early Thursday and late Wednesday, respectively, with the Securities and Exchange Commission regarding the impact of Hurricanes Harvey and Irma on ongoing operations. For both companies, damage to existing inventory was minimal, but both also expect recovery efforts will affect operations.
The back-to-back major hurricanes affected Lennar’s communities in Texas, Florida, Georgia and South Carolina, markets that represent approximately 40% of Lennar’s annual home building revenues.
Hurricane Harvey affected the Houston, San Antonio and Austin markets. Despite the record-setting rainfall and flooding, Lennar said incurred no flood damage to its homes in any of its active communities and all of its communities in the state of Texas are currently open for sale. The company, however, believes Hurricane Harvey will have an affect on approximately 120 new orders and deliveries in the third quarter. Hurricane Harvey is also expected to impact approximately 130 deliveries in the fourth quarter ending November 30, 2017.
Hurricane Irma impacted all of Lennar’s Florida markets as well as its Atlanta and Coastal Carolina markets.Based on a “very preliminary assessment,” Lennar said it believes there to be only minor damage to its communities from the storm. “Although it’s still early in the assessment process, the short-term impact of Hurricane Irma will most likely delay approximately 700 deliveries from the fourth quarter of 2017 into fiscal 2018,” the company stated.
Lennar also provided early guidance on its sales metrics: For the three months ended August 31, 2017, Lennar had 7,610 new orders and 7,598 deliveries including unconsolidated entities, which increased 8% and 12%, respectively, compared to the three months ended August 31, 2016.
At Beazer, only four homes located within a single community suffered flood damage from Harvey, and fewer than 10 homes had what CEO and President Allan Merrill called “unusual storm-related damage” across the five divisions affected by Hurricane Irma. Said Merrill, President and CEO of Beazer Homes. “In the case of both Hurricane Harvey and Hurricane Irma, we took aggressive precautionary steps, including closing sales centers, securing our construction sites and evacuating personnel. I’m happy to report that despite the devastation wrought by these storms, all members of our teams in the affected areas are safe and on the road to recovery. Importantly, our customers also fared well.”
He continued, “Relative to the recent storms’ impact on operations, for our fourth quarter ending September 30, 2017, we continue to expect an improvement in Adjusted EBITDA versus the prior year, although new home sales and closings may be lower than the same period last year. The storm-related impacts on new home sales and closings are the result of temporary conditions and do not diminish our confidence in substantial profitability gains in Fiscal 2018.”
Merrill also said Beazer is committed to donating up to $500,000 to employee and community relief efforts, with funds for these donations to come from the company, board members and employees.
