Beazer Homes USA, Inc. (NYSE: BZH) on Thursday reported a net loss from continuing operations of $1.4 million for the fiscal first quarter ended December 31, 2016, compared with net income from continuing operations of $1.2 million for the same period last year. Results were affected by a $2.7 million pre-tax charge related to the write-off of a legacy investment in a development site. Additionally, first quarter Fiscal 2016 results included a $3.6 million credit for insurance recoveries related to the Florida stucco issues.
Shares of Beazer tanked on the news, losing nearly 9% of their value in midday trading before recovering a bit less than half the early losses.
“Our first quarter results reflected strong increases in both sales pace and average selling price, as well as a modestly higher gross margin,” said Allan Merrill, CEO of Beazer Homes. “These improvements allowed us to largely overcome the anticipated reduction in closings and community count, as well as a non-recurring SG&A expense.”
Merrill continued, “Looking forward, we are well positioned to advance our balanced growth strategy, which anticipates revenue and profitability growth, as well as an additional $100 million reduction in our debt through Fiscal 2018. We have a significant pipeline of new communities in place, targeting value-oriented first-time and active adult buyers, that will enable us to reach and surpass our “2B-10” targets. This includes a number of future Gatherings communities, as we expand this unique offering across our footprint.”
The results included:
- Home building revenue of $336.1 million, effectively flat versus the prior year
- 995 new home deliveries, down 5.1%
- Average selling price (ASP) of $337.8 thousand, up 5.3%
- Home building gross margin was 15.8%. Excluding impairments, abandonments, amortized interest and unexpected warranty costs (net of insurance recoveries), home building gross margin was 20.5%, up 10 basis points
- Selling, general and administrative expenses (SG&A) as a percentage of total revenue were 14.7%, up 150 basis points
- Unit orders of 1,005, up 8.9%. Average community count was 156, down 7.9%
- Unrestricted cash at quarter end was $158.6 million
Net new orders for the first quarter increased 8.9% versus the prior year, driven by an 18.2% increase in the absorption rate to 2.2 sales per community per month. The average community count declined 7.9% to 156 communities. The cancellation rate was 21.2%, down 460 basis points relative to the first quarter of last year and in line with historical levels.
The dollar value of homes in backlog as of December 31, 2016 rose 5.0% to $666.1 million, or 1,926 homes, compared to $634.6 million, or 1,912 homes, at this time last year. The average selling price of homes in backlog was $345.8 thousand, up nearly $14 thousand year-over-year.
Home building gross margin for the first quarter was 15.8%. Excluding impairments, abandonments, amortized interest and unexpected warranty costs (net of insurance recoveries), home building gross margin was 20.5%, up approximately 10 basis points versus the prior year.
Selling, general and administrative expenses, as a percentage of total revenue, were 14.7%, up approximately 150 basis points versus the prior year. The increase in SG&A was in part related to the previously mentioned $2.7 million charge, which was included in our general and administrative expenses. Excluding this charge, SG&A as a percentage of total revenue would have been 13.9%.
The Company ended the quarter with more than $300 million of available liquidity, including $158.6 million of unrestricted cash and $142.5 million available on its secured revolving credit facility.
