QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | ☐ | ☒ | Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company | |||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ |
in thousands (except share and per share data) | June 30, 2020 | September 30, 2019 | |||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Accounts receivable (net of allowance of $ | |||||||||||
Income tax receivable | |||||||||||
Owned inventory | |||||||||||
Investments in unconsolidated entities | |||||||||||
Deferred tax assets, net | |||||||||||
Property and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Trade accounts payable | $ | $ | |||||||||
Operating lease liabilities | |||||||||||
Other liabilities | |||||||||||
Total debt (net of debt issuance costs of $ | |||||||||||
Total liabilities | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock (par value $ | |||||||||||
Common stock (par value $ | |||||||||||
Paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
in thousands (except per share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Home construction and land sales expenses | |||||||||||||||||||||||
Inventory impairments and abandonments | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Commissions | |||||||||||||||||||||||
General and administrative expenses | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Operating income (loss) | ( | ||||||||||||||||||||||
Equity in income of unconsolidated entities | |||||||||||||||||||||||
Gain on extinguishment of debt | |||||||||||||||||||||||
Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
Income (loss) from continuing operations before income taxes | ( | ||||||||||||||||||||||
Expense (benefit) from income taxes | ( | ( | |||||||||||||||||||||
Income (loss) from continuing operations | ( | ||||||||||||||||||||||
Loss from discontinued operations, net of tax | ( | ( | ( | ( | |||||||||||||||||||
Net income (loss) | $ | $ | $ | $ | ( | ||||||||||||||||||
Weighted average number of shares: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted | |||||||||||||||||||||||
Basic income (loss) per share: | |||||||||||||||||||||||
Continuing operations | $ | $ | $ | $ | ( | ||||||||||||||||||
Discontinued operations | |||||||||||||||||||||||
Total | $ | $ | $ | $ | ( | ||||||||||||||||||
Diluted income (loss) per share: | |||||||||||||||||||||||
Continuing operations | $ | $ | $ | $ | ( | ||||||||||||||||||
Discontinued operations | |||||||||||||||||||||||
Total | $ | $ | $ | $ | ( |
Three Months Ended June 30, 2020 | |||||||||||||||||||||||||||||
Common Stock | Paid-in Capital | Accumulated Deficit | |||||||||||||||||||||||||||
in thousands | Shares | Amount | Total | ||||||||||||||||||||||||||
Balance as of March 31, 2020 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
Net income and comprehensive income | — | — | — | ||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | ||||||||||||||||||||||||||
Shares issued under employee stock plans, net | — | — | — | — | |||||||||||||||||||||||||
Forfeiture of restricted stock | ( | — | — | — | — | ||||||||||||||||||||||||
Common stock redeemed for tax liability | ( | — | ( | — | ( | ||||||||||||||||||||||||
Balance as of June 30, 2020 | $ | $ | $ | ( | $ |
Nine Months Ended June 30, 2020 | |||||||||||||||||||||||||||||
Common Stock | Paid-in Capital | Accumulated Deficit | |||||||||||||||||||||||||||
in thousands | Shares | Amount | Total | ||||||||||||||||||||||||||
Balance as of September 30, 2019 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
Net income and comprehensive income | — | — | — | ||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | ||||||||||||||||||||||||||
Exercises of stock options | — | — | |||||||||||||||||||||||||||
Shares issued under employee stock plans, net | — | — | — | — | |||||||||||||||||||||||||
Forfeiture and other settlements of restricted stock | ( | — | ( | — | ( | ||||||||||||||||||||||||
Common stock redeemed for tax liability | ( | — | ( | — | ( | ||||||||||||||||||||||||
Share repurchases | ( | — | ( | — | ( | ||||||||||||||||||||||||
Balance as of June 30, 2020 | $ | $ | $ | ( | $ |
Three Months Ended June 30, 2019 | |||||||||||||||||||||||||||||
Common Stock | Paid-in Capital | Accumulated Deficit | |||||||||||||||||||||||||||
in thousands | Shares | Amount | Total | ||||||||||||||||||||||||||
Balance as of March 31, 2019 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
Net income and comprehensive income | — | — | — | ||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | ||||||||||||||||||||||||||
Shares issued under employee stock plans, net | — | — | — | — | |||||||||||||||||||||||||
Forfeiture of restricted stock | ( | — | — | — | — | ||||||||||||||||||||||||
Common stock redeemed for tax liability | — | ( | — | ( | |||||||||||||||||||||||||
Share repurchases | ( | ( | ( | — | ( | ||||||||||||||||||||||||
Balance as of June 30, 2019 | $ | $ | $ | ( | $ |
Nine Months Ended June 30, 2019 | |||||||||||||||||||||||||||||
Common Stock | Paid-in Capital | Accumulated Deficit | |||||||||||||||||||||||||||
in thousands | Shares | Amount | Total | ||||||||||||||||||||||||||
Balance as of September 30, 2018 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
Net loss and comprehensive loss | — | — | — | ( | ( | ||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | ||||||||||||||||||||||||||
Exercises of stock options | — | — | |||||||||||||||||||||||||||
Shares issued under employee stock plans, net | — | — | — | — | |||||||||||||||||||||||||
Forfeiture of restricted stock | ( | — | — | — | — | ||||||||||||||||||||||||
Common stock redeemed for tax liability | ( | — | ( | — | ( | ||||||||||||||||||||||||
Share repurchases | ( | ( | ( | — | ( | ||||||||||||||||||||||||
Balance as of June 30, 2019 | $ | $ | $ | ( | $ |
Nine Months Ended | |||||||||||
June 30, | |||||||||||
in thousands | 2020 | 2019 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation expense | |||||||||||
Inventory impairments and abandonments | |||||||||||
Deferred and other income tax expense (benefit) | ( | ||||||||||
Gain on sale of fixed assets | ( | ( | |||||||||
Change in allowance for doubtful accounts | ( | ( | |||||||||
Equity in income of unconsolidated entities | ( | ( | |||||||||
Cash distributions of income from unconsolidated entities | |||||||||||
Loss (gain) on extinguishment of debt, net | ( | ||||||||||
Changes in operating assets and liabilities: | |||||||||||
Decrease in accounts receivable | |||||||||||
Decrease in income tax receivable | |||||||||||
Increase in inventory | ( | ( | |||||||||
Increase in other assets | ( | ( | |||||||||
Increase in trade accounts payable | |||||||||||
Increase (decrease) in other liabilities | ( | ||||||||||
Net cash provided by (used in) operating activities | ( | ||||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | ( | ( | |||||||||
Proceeds from sale of fixed assets | |||||||||||
Acquisition, net of cash acquired | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Repayment of debt | ( | ( | |||||||||
Repayment of borrowings from credit facility | ( | ( | |||||||||
Borrowings from credit facility | |||||||||||
Debt issuance costs | ( | ( | |||||||||
Repurchase of common stock | ( | ( | |||||||||
Tax payments for stock-based compensation awards | ( | ( | |||||||||
Stock option exercises and other financing activities | ( | ||||||||||
Net cash (used in) provided by financing activities | ( | ||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | ||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
in thousands | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Homebuilding revenue | $ | $ | $ | $ | |||||||||||||||||||
Land sales and other revenue | |||||||||||||||||||||||
Total revenue (a) | $ | $ | $ | $ |
Nine Months Ended | |||||||||||
June 30, | |||||||||||
in thousands | 2020 | 2019 | |||||||||
Supplemental disclosure of non-cash activity: | |||||||||||
Beginning operating lease right-of-use asset (ASC 842 adoption) | $ | $ | — | ||||||||
Beginning operating lease liability (ASC 842 adoption) | — | ||||||||||
Supplemental disclosure of cash activity: | |||||||||||
Interest payments | $ | $ | |||||||||
Income tax payments | |||||||||||
Tax refunds received | |||||||||||
Reconciliation of cash, cash equivalents, and restricted cash: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ | $ |
in thousands | June 30, 2020 | September 30, 2019 | |||||||||
Investment in unconsolidated entities | $ | $ | |||||||||
Total equity of unconsolidated entities | |||||||||||
Total outstanding borrowings of unconsolidated entities | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
in thousands | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Equity in income of unconsolidated entities | $ | $ | $ | $ | |||||||||||||||||||
in thousands | June 30, 2020 | September 30, 2019 | |||||||||
Homes under construction | $ | $ | |||||||||
Development projects in progress | |||||||||||
Land held for future development | |||||||||||
Land held for sale | |||||||||||
Capitalized interest | |||||||||||
Model homes | |||||||||||
Total owned inventory | $ | $ |
in thousands | Projects in Progress (a) | Land Held for Future Development | Land Held for Sale | Total Owned Inventory | |||||||||||||||||||
June 30, 2020 | |||||||||||||||||||||||
West Segment | $ | $ | $ | $ | |||||||||||||||||||
East Segment | |||||||||||||||||||||||
Southeast Segment | |||||||||||||||||||||||
Corporate and unallocated (b) | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
September 30, 2019 | |||||||||||||||||||||||
West Segment | $ | $ | $ | $ | |||||||||||||||||||
East Segment | |||||||||||||||||||||||
Southeast Segment | |||||||||||||||||||||||
Corporate and unallocated (b) | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
in thousands | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Projects in Progress: | |||||||||||||||||||||||
West | $ | $ | $ | $ | |||||||||||||||||||
Southeast | |||||||||||||||||||||||
Corporate and unallocated (a) | |||||||||||||||||||||||
Total impairment charges on projects in progress | $ | $ | $ | $ | |||||||||||||||||||
Land Held for Sale: | |||||||||||||||||||||||
West | $ | $ | $ | $ | |||||||||||||||||||
Southeast | |||||||||||||||||||||||
Corporate and unallocated (a) | |||||||||||||||||||||||
Total impairment charges on land held for sale | $ | $ | $ | $ | |||||||||||||||||||
Abandonments: | |||||||||||||||||||||||
West | $ | $ | $ | $ | |||||||||||||||||||
East | |||||||||||||||||||||||
Southeast | |||||||||||||||||||||||
Total abandonments charges | $ | $ | $ | $ | |||||||||||||||||||
Total impairment and abandonment charges | $ | $ | $ | $ |
in thousands | Deposits & Non-refundable Pre-acquisition Costs Incurred | Remaining Obligation | |||||||||
As of June 30, 2020 | |||||||||||
Unconsolidated lot option agreements | $ | $ | |||||||||
As of September 30, 2019 | |||||||||||
Unconsolidated lot option agreements | $ | $ | |||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
in thousands | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Capitalized interest in inventory, beginning of period | $ | $ | $ | $ | |||||||||||||||||||
Interest incurred | |||||||||||||||||||||||
Capitalized interest impaired | ( | ( | ( | ||||||||||||||||||||
Interest expense not qualified for capitalization and included as other expense (a) | ( | ( | ( | ( | |||||||||||||||||||
Capitalized interest amortized to home construction and land sales expenses (b) | ( | ( | ( | ( | |||||||||||||||||||
Capitalized interest in inventory, end of period | $ | $ | $ | $ |
in thousands | Final Maturity Date | June 30, 2020 | September 30, 2019 | ||||||||||||||
Senior Unsecured Term Loan (Term Loan) | September 2022 | $ | $ | ||||||||||||||
6 3/4% Senior Notes (2025 Notes) | March 2025 | ||||||||||||||||
5 7/8% Senior Notes (2027 Notes) | October 2027 | ||||||||||||||||
7 1/4% Senior Notes (2029 Notes) | October 2029 | ||||||||||||||||
Unamortized debt issuance costs | ( | ( | |||||||||||||||
Total Senior Notes, net | |||||||||||||||||
Junior Subordinated Notes (net of unamortized accretion of $ | July 2036 | ||||||||||||||||
Revolving Credit Facility | February 2022 | ||||||||||||||||
Other Secured Notes payable | Various Dates | ||||||||||||||||
Total debt, net | $ | $ |
Senior Note Description | Issuance Date | Maturity Date | Redemption Terms | |||||||||||||||||
6 3/4% Senior Notes | March 2017 | March 2025 | On or prior to March 15, 2020, we may redeem up to | |||||||||||||||||
Callable at any time prior to March 15, 2020, in whole or in part, at a redemption price equal to | ||||||||||||||||||||
5 7/8% Senior Notes | October 2017 | October 2027 | On or prior to October 15, 2022, we may redeem up to | |||||||||||||||||
Callable at any time prior to October 15, 2022, in whole or in part, at a redemption price equal to | ||||||||||||||||||||
7 1/4% Senior Notes | September 2019 | October 2029 | On or prior to October 15, 2022, we may redeem up to | |||||||||||||||||
Callable at any time prior to October 15, 2024, in whole or in part, at a redemption price equal to |
Weighted-average remaining lease term | |||||
Weighted-average discount rate |
Fiscal Years Ending September 30, | |||||
in thousands | |||||
2020 (a) | $ | ||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 | |||||
Thereafter | |||||
Total lease payments | |||||
Less: imputed interest | |||||
Total operating lease liabilities | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
in thousands | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Balance at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
Accruals for warranties issued (a) | |||||||||||||||||||||||
Changes in liability related to warranties existing in prior periods | ( | ( | ( | ||||||||||||||||||||
Payments made | ( | ( | ( | ( | |||||||||||||||||||
Balance at end of period | $ | $ | $ | $ |
in thousands | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
As of June 30, 2020 | |||||||||||||||||||||||
Deferred compensation plan assets (a) | $ | $ | $ | $ | |||||||||||||||||||
Land held for sale (b) | (c) | ||||||||||||||||||||||
As of September 30, 2019 | |||||||||||||||||||||||
Deferred compensation plan assets (a) | $ | $ | $ | $ | |||||||||||||||||||
Development projects in progress (b) | (c) | ||||||||||||||||||||||
Land held for sale (b) | (c) | ||||||||||||||||||||||
As of June 30, 2020 | As of September 30, 2019 | ||||||||||||||||||||||
in thousands | Carrying Amount (a) | Fair Value | Carrying Amount (a) | Fair Value | |||||||||||||||||||
Senior Notes (b) | $ | $ | $ | $ | |||||||||||||||||||
Junior Subordinated Notes (c) | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
in thousands | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Stock-based compensation expense | $ | $ | $ | $ |
Nine Months Ended | |||||||||||
June 30, 2020 | |||||||||||
Shares | Weighted Average Exercise Price | ||||||||||
Outstanding at beginning of period | $ | ||||||||||
Granted | |||||||||||
Exercised | ( | ||||||||||
Cancelled | ( | ||||||||||
Outstanding at end of period | $ | ||||||||||
Exercisable at end of period | $ | ||||||||||
Vested or expected to vest in the future | $ |
Nine Months Ended June 30, 2020 | |||||||||||||||||
Performance-Based Restricted Shares | Time-Based Restricted Shares | Total Restricted Shares | |||||||||||||||
Beginning of period | |||||||||||||||||
Granted | |||||||||||||||||
Vested | ( | ( | ( | ||||||||||||||
Forfeited | ( | ( | |||||||||||||||
End of period |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
in thousands, except per share data | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Income (loss) from continuing operations | $ | $ | $ | $ | ( | ||||||||||||||||||
Loss from discontinued operations, net of tax | ( | ( | ( | ( | |||||||||||||||||||
Net income | $ | $ | $ | $ | ( | ||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Basic weighted-average shares | |||||||||||||||||||||||
Dilutive effect of restricted stock awards | |||||||||||||||||||||||
Dilutive effect of stock options | |||||||||||||||||||||||
Diluted weighted-average shares (a) | |||||||||||||||||||||||
Basic income (loss) per share: | |||||||||||||||||||||||
Continuing operations | $ | $ | $ | $ | ( | ||||||||||||||||||
Discontinued operations | |||||||||||||||||||||||
Total | $ | $ | $ | $ | ( | ||||||||||||||||||
Diluted income (loss) per share: | |||||||||||||||||||||||
Continuing operations | $ | $ | $ | $ | ( | ||||||||||||||||||
Discontinued operations | |||||||||||||||||||||||
Total | $ | $ | $ | $ | ( |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
in thousands | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Stock options | |||||||||||||||||||||||
Time-based restricted stock | |||||||||||||||||||||||
Performance-based restricted stock |
in thousands | June 30, 2020 | September 30, 2019 | |||||||||
Accrued bonus and deferred compensation | $ | $ | |||||||||
Customer deposits | |||||||||||
Accrued interest | |||||||||||
Accrued warranty expense | |||||||||||
Litigation accrual | |||||||||||
Income tax liabilities | |||||||||||
Other | |||||||||||
Total | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
in thousands | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Revenue | |||||||||||||||||||||||
West | $ | $ | $ | $ | |||||||||||||||||||
East | |||||||||||||||||||||||
Southeast | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
in thousands | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Operating income (loss) (a) | |||||||||||||||||||||||
West | $ | $ | $ | $ | ( | ||||||||||||||||||
East | |||||||||||||||||||||||
Southeast | |||||||||||||||||||||||
Segment total | ( | ||||||||||||||||||||||
Corporate and unallocated (b) | ( | ( | ( | ( | |||||||||||||||||||
Total operating income (loss) | $ | $ | $ | $ | ( | ||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
in thousands | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
West | $ | $ | $ | $ | |||||||||||||||||||
East | |||||||||||||||||||||||
Southeast | |||||||||||||||||||||||
Segment total | |||||||||||||||||||||||
Corporate and unallocated (b) | |||||||||||||||||||||||
Total depreciation and amortization | $ | $ | $ | $ |
Nine Months Ended | |||||||||||
June 30, | |||||||||||
in thousands | 2020 | 2019 | |||||||||
Capital Expenditures | |||||||||||
West | $ | $ | |||||||||
East | |||||||||||
Southeast | |||||||||||
Corporate and unallocated | |||||||||||
Total capital expenditures | $ | $ |
in thousands | June 30, 2020 | September 30, 2019 | |||||||||
Assets | |||||||||||
West | $ | $ | |||||||||
East | |||||||||||
Southeast | |||||||||||
Corporate and unallocated (a) | |||||||||||
Total assets | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
in thousands | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Home construction and land sales expenses | |||||||||||||||||||||||
Gross (loss) profit | ( | ( | ( | ||||||||||||||||||||
General and administrative expenses | |||||||||||||||||||||||
Operating loss | ( | ( | ( | ( | |||||||||||||||||||
Equity in loss of unconsolidated entities | ( | ||||||||||||||||||||||
Other expense, net | ( | ( | ( | ||||||||||||||||||||
Loss from discontinued operations before income taxes | ( | ( | ( | ( | |||||||||||||||||||
Benefit from income taxes | ( | ( | ( | ( | |||||||||||||||||||
Loss from discontinued operations, net of tax | $ | ( | $ | ( | $ | ( | $ | ( |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||||
$ in thousands | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Homebuilding | $ | 532,465 | $ | 482,316 | $ | 1,437,850 | $ | 1,304,243 | |||||||||||||||
Land sales and other | 647 | 422 | 2,479 | 1,795 | |||||||||||||||||||
Total | $ | 533,112 | $ | 482,738 | $ | 1,440,329 | $ | 1,306,038 | |||||||||||||||
Gross profit (loss): | |||||||||||||||||||||||
Homebuilding | $ | 90,282 | $ | 71,719 | $ | 232,134 | $ | 88,190 | |||||||||||||||
Land sales and other | (1,224) | 45 | (1,094) | (38,451) | |||||||||||||||||||
Total | $ | 89,058 | $ | 71,764 | $ | 231,040 | $ | 49,739 | |||||||||||||||
Gross margin: | |||||||||||||||||||||||
Homebuilding | 17.0 | % | 14.9 | % | 16.1 | % | 6.8 | % | |||||||||||||||
Land sales and other | (189.2) | % | 10.7 | % | (44.1) | % | (2,142.1) | % | |||||||||||||||
Total | 16.7 | % | 14.9 | % | 16.0 | % | 3.8 | % | |||||||||||||||
Commissions | $ | 20,851 | $ | 18,230 | $ | 55,660 | $ | 49,965 | |||||||||||||||
General and administrative expenses (G&A) | $ | 41,276 | $ | 40,749 | $ | 121,025 | $ | 116,763 | |||||||||||||||
SG&A (commissions plus G&A) as a percentage of total revenue | 11.7 | % | 12.2 | % | 12.3 | % | 12.8 | % | |||||||||||||||
G&A as a percentage of total revenue | 7.7 | % | 8.4 | % | 8.4 | % | 8.9 | % | |||||||||||||||
Depreciation and amortization | $ | 3,780 | $ | 3,242 | $ | 10,834 | $ | 8,912 | |||||||||||||||
Operating income (loss) | $ | 23,151 | $ | 9,543 | $ | 43,521 | $ | (125,901) | |||||||||||||||
Operating income (loss) as a percentage of total revenue | 4.3 | % | 2.0 | % | 3.0 | % | (9.6) | % | |||||||||||||||
Effective tax rate (a) | 24.6 | % | (23.1) | % | 23.8 | % | 35.1 | % | |||||||||||||||
Equity in income of unconsolidated entities | $ | 4 | $ | 299 | $ | 138 | $ | 316 | |||||||||||||||
Gain on extinguishment of debt | $ | — | $ | 358 | $ | — | $ | 574 |
Three Months Ended June 30, | Nine Months Ended June 30, | LTM Ended June 30,(a) | |||||||||||||||||||||||||||||||||||||||||||||||||||
in thousands | 2020 | 2019 | 20 vs 19 | 2020 | 2019 | 20 vs 19 | 2020 | 2019 | 20 vs 19 | ||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 15,188 | $ | 11,602 | $ | 3,586 | $ | 28,548 | $ | (81,949) | $ | 110,497 | $ | 30,977 | $ | (21,344) | $ | 52,321 | |||||||||||||||||||||||||||||||||||
Expense (benefit) from income taxes | 4,958 | (2,187) | 7,145 | 8,900 | (44,279) | 53,179 | 15,934 | (63,139) | 79,073 | ||||||||||||||||||||||||||||||||||||||||||||
Interest amortized to home construction and land sales expenses and capitalized interest impaired | 22,606 | 21,752 | 854 | 64,935 | 71,526 | (6,591) | 102,350 | 106,058 | (3,708) | ||||||||||||||||||||||||||||||||||||||||||||
Interest expense not qualified for capitalization | 3,003 | 961 | 2,042 | 6,373 | 1,800 | 4,573 | 7,682 | 1,835 | 5,847 | ||||||||||||||||||||||||||||||||||||||||||||
EBIT | 45,755 | 32,128 | 13,627 | 108,756 | (52,902) | 161,658 | 156,943 | 23,410 | 133,533 | ||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 3,780 | 3,242 | 538 | 10,834 | 8,912 | 1,922 | 16,681 | 13,490 | 3,191 | ||||||||||||||||||||||||||||||||||||||||||||
EBITDA | 49,535 | 35,370 | 14,165 | 119,590 | (43,990) | 163,580 | 173,624 | 36,900 | 136,724 | ||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 1,659 | 3,699 | (2,040) | 4,869 | 7,993 | (3,124) | 7,402 | 10,559 | (3,157) | ||||||||||||||||||||||||||||||||||||||||||||
(Gain) loss on extinguishment of debt | — | (358) | 358 | — | (574) | 574 | 25,494 | 1,361 | 24,133 | ||||||||||||||||||||||||||||||||||||||||||||
Inventory impairments and abandonments (b) | 1,474 | — | 1,474 | 1,474 | 134,711 | (133,237) | 1,474 | 139,081 | (137,607) | ||||||||||||||||||||||||||||||||||||||||||||
Joint venture impairment and abandonment charges | — | — | — | — | — | — | — | 341 | (341) | ||||||||||||||||||||||||||||||||||||||||||||
Restructuring and severance expenses | 1,361 | — | 1,361 | 1,361 | — | 1,361 | 1,361 | — | 1,361 | ||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 54,029 | $ | 38,711 | $ | 15,318 | $ | 127,294 | $ | 98,140 | $ | 29,154 | $ | 209,355 | $ | 188,242 | $ | 21,113 |
Three Months Ended June 30, | |||||||||||||||||||||||||||||
New Orders, net | Cancellation Rates | ||||||||||||||||||||||||||||
2020 | 2019 | 20 vs 19 | 2020 | 2019 | |||||||||||||||||||||||||
West | 775 | 850 | (8.8) | % | 21.8 | % | 15.9 | % | |||||||||||||||||||||
East | 287 | 334 | (14.1) | % | 19.4 | % | 13.9 | % | |||||||||||||||||||||
Southeast | 310 | 360 | (13.9) | % | 21.1 | % | 14.7 | % | |||||||||||||||||||||
Total | 1,372 | 1,544 | (11.1) | % | 21.1 | % | 15.2 | % | |||||||||||||||||||||
Nine Months Ended June 30, | |||||||||||||||||||||||||||||
New Orders, net | Cancellation Rates | ||||||||||||||||||||||||||||
2020 | 2019 | 20 vs 19 | 2020 | 2019 | |||||||||||||||||||||||||
West | 2,465 | 2,175 | 13.3 | % | 17.9 | % | 16.4 | % | |||||||||||||||||||||
East | 871 | 869 | 0.2 | % | 15.8 | % | 16.0 | % | |||||||||||||||||||||
Southeast | 948 | 1,074 | (11.7) | % | 17.1 | % | 15.4 | % | |||||||||||||||||||||
Total | 4,284 | 4,118 | 4.0 | % | 17.3 | % | 16.1 | % |
As of June 30, | |||||||||||||||||
2020 | 2019 | 20 vs 19 | |||||||||||||||
Backlog Units: | |||||||||||||||||
West | 1,199 | 1,152 | 4.1 | % | |||||||||||||
East | 565 | 503 | 12.3 | % | |||||||||||||
Southeast | 473 | 609 | (22.3) | % | |||||||||||||
Total | 2,237 | 2,264 | (1.2) | % | |||||||||||||
Aggregate dollar value of homes in backlog (in millions) | $ | 884.9 | $ | 881.6 | 0.4 | % | |||||||||||
ASP in backlog (in thousands) | $ | 395.6 | $ | 389.4 | 1.6 | % |
Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Homebuilding Revenue | Average Selling Price | Closings | |||||||||||||||||||||||||||||||||||||||||||||||||||
$ in thousands | 2020 | 2019 | 20 vs 19 | 2020 | 2019 | 20 vs 19 | 2020 | 2019 | 20 vs 19 | ||||||||||||||||||||||||||||||||||||||||||||
West | $ | 303,500 | $ | 238,723 | 27.1 | % | $ | 370.6 | $ | 354.2 | 4.6 | % | 819 | 674 | 21.5 | % | |||||||||||||||||||||||||||||||||||||
East | 108,126 | 117,934 | (8.3) | % | 491.5 | 479.4 | 2.5 | % | 220 | 246 | (10.6) | % | |||||||||||||||||||||||||||||||||||||||||
Southeast | 120,839 | 125,659 | (3.8) | % | 369.5 | 360.1 | 2.6 | % | 327 | 349 | (6.3) | % | |||||||||||||||||||||||||||||||||||||||||
Total | $ | 532,465 | $ | 482,316 | 10.4 | % | $ | 389.8 | $ | 380.1 | 2.6 | % | 1,366 | 1,269 | 7.6 | % | |||||||||||||||||||||||||||||||||||||
Nine Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Homebuilding Revenue | Average Selling Price | Closings | |||||||||||||||||||||||||||||||||||||||||||||||||||
$ in thousands | 2020 | 2019 | 20 vs 19 | 2020 | 2019 | 20 vs 19 | 2020 | 2019 | 20 vs 19 | ||||||||||||||||||||||||||||||||||||||||||||
West | $ | 825,129 | $ | 658,097 | 25.4 | % | $ | 367.1 | $ | 349.9 | 4.9 | % | 2,248 | 1,881 | 19.5 | % | |||||||||||||||||||||||||||||||||||||
East | 295,782 | 299,450 | (1.2) | % | 457.2 | 462.8 | (1.2) | % | 647 | 647 | — | % | |||||||||||||||||||||||||||||||||||||||||
Southeast | 316,939 | 346,696 | (8.6) | % | 368.5 | 361.9 | 1.8 | % | 860 | 958 | (10.2) | % | |||||||||||||||||||||||||||||||||||||||||
Total | $ | 1,437,850 | $ | 1,304,243 | 10.2 | % | $ | 382.9 | $ | 374.1 | 2.4 | % | 3,755 | 3,486 | 7.7 | % |
Three Months Ended June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
$ in thousands | HB Gross Profit (Loss) | HB Gross Margin | Impairments & Abandonments (I&A) | HB Gross Profit (Loss) w/o I&A | HB Gross Margin w/o I&A | Interest Amortized to COS (Interest) | HB Gross Profit w/o I&A and Interest | HB Gross Margin w/o I&A and Interest | |||||||||||||||||||||||||||||||||||||||
West | $ | 67,050 | 22.1 | % | $ | 452 | $ | 67,502 | 22.2 | % | $ | — | $ | 67,502 | 22.2 | % | |||||||||||||||||||||||||||||||
East | 21,932 | 20.3 | % | 32 | 21,964 | 20.3 | % | — | 21,964 | 20.3 | % | ||||||||||||||||||||||||||||||||||||
Southeast | 23,849 | 19.7 | % | 525 | 24,374 | 20.2 | % | — | 24,374 | 20.2 | % | ||||||||||||||||||||||||||||||||||||
Corporate & unallocated | (22,549) | — | (22,549) | 21,814 | (735) | ||||||||||||||||||||||||||||||||||||||||||
Total homebuilding | $ | 90,282 | 17.0 | % | $ | 1,009 | $ | 91,291 | 17.1 | % | $ | 21,814 | $ | 113,105 | 21.2 | % | |||||||||||||||||||||||||||||||
Three Months Ended June 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
$ in thousands | HB Gross Profit (Loss) | HB Gross Margin | Impairments & Abandonments (I&A) | HB Gross Profit (Loss) w/o I&A | HB Gross Margin w/o I&A | Interest Amortized to COS (Interest) | HB Gross Profit w/o I&A and Interest | HB Gross Margin w/o I&A and Interest | |||||||||||||||||||||||||||||||||||||||
West | $ | 49,632 | 20.8 | % | $ | — | $ | 49,632 | 20.8 | % | $ | — | $ | 49,632 | 20.8 | % | |||||||||||||||||||||||||||||||
East | 22,015 | 18.7 | % | — | 22,015 | 18.7 | % | — | 22,015 | 18.7 | % | ||||||||||||||||||||||||||||||||||||
Southeast | 20,407 | 16.2 | % | — | 20,407 | 16.2 | % | — | 20,407 | 16.2 | % | ||||||||||||||||||||||||||||||||||||
Corporate & unallocated | (20,335) | — | (20,335) | 21,752 | 1,417 | ||||||||||||||||||||||||||||||||||||||||||
Total homebuilding | $ | 71,719 | 14.9 | % | $ | — | $ | 71,719 | 14.9 | % | $ | 21,752 | $ | 93,471 | 19.4 | % |
Nine Months Ended June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
$ in thousands | HB Gross Profit (Loss) | HB Gross Margin | Impairments & Abandonments (I&A) | HB Gross Profit (Loss) w/o I&A | HB Gross Margin w/o I&A | Interest Amortized to COS (Interest) | HB Gross Profit w/o I&A and Interest | HB Gross Margin w/o I&A and Interest | |||||||||||||||||||||||||||||||||||||||
West | $ | 175,964 | 21.3 | % | $ | 452 | $ | 176,416 | 21.4 | % | $ | — | $ | 176,416 | 21.4 | % | |||||||||||||||||||||||||||||||
East | 57,780 | 19.5 | % | 32 | 57,812 | 19.5 | % | — | 57,812 | 19.5 | % | ||||||||||||||||||||||||||||||||||||
Southeast | 57,963 | 18.3 | % | 525 | 58,488 | 18.5 | % | — | 58,488 | 18.5 | % | ||||||||||||||||||||||||||||||||||||
Corporate & unallocated | (59,573) | — | (59,573) | 64,143 | 4,570 | ||||||||||||||||||||||||||||||||||||||||||
Total homebuilding | $ | 232,134 | 16.1 | % | $ | 1,009 | $ | 233,143 | 16.2 | % | $ | 64,143 | $ | 297,286 | 20.7 | % | |||||||||||||||||||||||||||||||
Nine Months Ended June 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
$ in thousands | HB Gross Profit (Loss) | HB Gross Margin | Impairments & Abandonments (I&A) | HB Gross Profit (Loss) w/o I&A | HB Gross Margin w/o I&A | Interest Amortized to COS (Interest) | HB Gross Profit w/o I&A and Interest | HB Gross Margin w/o I&A and Interest | |||||||||||||||||||||||||||||||||||||||
West | $ | 43,671 | 6.6 | % | $ | 92,912 | $ | 136,583 | 20.8 | % | $ | — | $ | 136,583 | 20.8 | % | |||||||||||||||||||||||||||||||
East | 52,843 | 17.6 | % | — | 52,843 | 17.6 | % | — | 52,843 | 17.6 | % | ||||||||||||||||||||||||||||||||||||
Southeast | 54,713 | 15.8 | % | 858 | 55,571 | 16.0 | % | — | 55,571 | 16.0 | % | ||||||||||||||||||||||||||||||||||||
Corporate & unallocated | (63,037) | — | 16,260 | (46,777) | 57,619 | 10,842 | |||||||||||||||||||||||||||||||||||||||||
Total homebuilding | $ | 88,190 | 6.8 | % | $ | 110,030 | $ | 198,220 | 15.2 | % | $ | 57,619 | $ | 255,839 | 19.6 | % |
Homebuilding Gross Margin from previously impaired communities: | |||||
Pre-impairment turn gross margin | (1.4) | % | |||
Impact of interest amortized to COS related to these communities | 4.5 | % | |||
Pre-impairment turn gross margin, excluding interest amortization | 3.1 | % | |||
Impact of impairment turns | 17.8 | % | |||
Gross margin (post impairment turns), excluding interest amortization | 20.9 | % |
Land Sales and Other Revenue | Land Sales and Other Gross Profit (Loss) | ||||||||||||||||||||||||||||||||||
Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||
in thousands | 2020 | 2019 | 20 vs 19 | 2020 | 2019 | 20 vs 19 | |||||||||||||||||||||||||||||
West | $ | — | $ | — | $ | — | $ | (89) | $ | — | $ | (89) | |||||||||||||||||||||||
East | — | 422 | (422) | — | 45 | (45) | |||||||||||||||||||||||||||||
Southeast | 647 | — | 647 | 25 | — | 25 | |||||||||||||||||||||||||||||
Corporate and unallocated (a) | — | — | — | (1,160) | — | (1,160) | |||||||||||||||||||||||||||||
Total | $ | 647 | $ | 422 | $ | 225 | $ | (1,224) | $ | 45 | $ | (1,269) | |||||||||||||||||||||||
Land Sales and Other Revenue | Land Sales and Other Gross Profit (Loss) | ||||||||||||||||||||||||||||||||||
Nine Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||||||||||||||
in thousands | 2020 | 2019 | 20 vs 19 | 2020 | 2019 | 20 vs 19 | |||||||||||||||||||||||||||||
West | $ | 500 | $ | — | $ | 500 | $ | (69) | $ | (37,963) | $ | 37,894 | |||||||||||||||||||||||
East | 1,325 | 1,718 | (393) | 101 | 141 | (40) | |||||||||||||||||||||||||||||
Southeast | 654 | 77 | 577 | 34 | (4) | 38 | |||||||||||||||||||||||||||||
Corporate and unallocated (a) | — | — | — | (1,160) | (625) | (535) | |||||||||||||||||||||||||||||
Total | $ | 2,479 | $ | 1,795 | $ | 684 | $ | (1,094) | $ | (38,451) | $ | 37,357 | |||||||||||||||||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||||||||||||||
in thousands | 2020 | 2019 | 20 vs 19 | 2020 | 2019 | 20 vs 19 | |||||||||||||||||||||||||||||
West | $ | 42,574 | $ | 29,268 | $ | 13,306 | $ | 106,128 | $ | (53,489) | $ | 159,617 | |||||||||||||||||||||||
East | 12,423 | 11,247 | 1,176 | 29,257 | 23,571 | 5,686 | |||||||||||||||||||||||||||||
Southeast | 11,787 | 8,043 | 3,744 | 23,757 | 16,747 | 7,010 | |||||||||||||||||||||||||||||
Corporate and unallocated (a) | (43,633) | (39,015) | (4,618) | (115,621) | (112,730) | (2,891) | |||||||||||||||||||||||||||||
Operating income (loss) (b) | $ | 23,151 | $ | 9,543 | $ | 13,608 | $ | 43,521 | $ | (125,901) | $ | 169,422 |
Nine Months Ended June 30, | |||||||||||
in thousands | 2020 | 2019 | |||||||||
Cash provided by (used in) operating activities | $ | 58,956 | $ | (94,205) | |||||||
Cash used in investing activities | (7,296) | (20,291) | |||||||||
Cash (used in) provided by financing activities | (9,102) | 46,032 | |||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | $ | 42,558 | $ | (68,464) |
in thousands | As of June 30, 2020 | As of September 30, 2019 | |||||||||
Total assets | $ | 2,000,495 | $ | 1,955,950 | |||||||
Due to non-guarantor subsidiary | $ | 1,646 | $ | 1,680 | |||||||
Total liabilities | $ | 1,437,837 | $ | 1,418,877 |
Nine Months Ended | Year Ended | ||||||||||
in thousands | June 30, 2020 | September 30, 2019 | |||||||||
Total revenues | $ | 1,440,329 | $ | 2,087,739 | |||||||
Gross profit | $ | 231,040 | $ | 165,921 | |||||||
Income (loss) from continuing operations | $ | 28,689 | $ | (79,507) | |||||||
Net income (loss) | $ | 28,571 | $ | (79,592) |
22 | |||||
31.1 | |||||
31.2 | |||||
32.1 | |||||
32.2 | |||||
101.INS | Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | ||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
Date: | July 30, 2020 | Beazer Homes USA, Inc. | ||||||||||||
By: | /s/ Robert L. Salomon | |||||||||||||
Name: | Robert L. Salomon | |||||||||||||
Executive Vice President and Chief Financial Officer |
As of June 30, 2020, the following subsidiaries of Beazer Homes USA, Inc., a Delaware corporation (the “Company”), jointly and severally and fully and unconditionally, guaranteed the Company’s (i) 6 3/4% Senior Notes due 2025, (ii) 5 7/8% Senior Notes due 2027, and (iii) 7 1/4% Senior Notes due 2029: | ||||||||
Name of Guarantor Subsidiary | Jurisdiction of Incorporation | |||||||
Beazer Clarksburg, LLC | Maryland | |||||||
Beazer Gain, LLC | Delaware | |||||||
Beazer General Services, Inc. | Delaware | |||||||
Beazer Homes Holdings, LLC | Delaware | |||||||
Beazer Homes Indiana Holdings Corp. | Delaware | |||||||
Beazer Homes Indiana LLP | Indiana | |||||||
Beazer Homes Investments, LLC | Delaware | |||||||
Beazer Homes Sales, Inc. | Delaware | |||||||
Beazer Homes Texas Holdings, Inc. | Delaware | |||||||
Beazer Homes Texas, L.P. | Delaware | |||||||
Beazer Homes, LLC | Delaware | |||||||
Beazer Mortgage Corporation | Delaware | |||||||
Beazer Realty Corp. | Georgia | |||||||
Beazer Realty Los Angeles, Inc. | Delaware | |||||||
Beazer Realty Services, LLC | Delaware | |||||||
Beazer-Inspirada LLC | Delaware | |||||||
BH Building Products, LP | Delaware | |||||||
BH Procurement Services, LLC | Delaware | |||||||
Clarksburg Arora LLC | Maryland | |||||||
Clarksburg Skylark, LLC | Maryland | |||||||
Dove Barrington Development LLC | Delaware | |||||||
Elysian Heights Potomia, LLC | Virginia |
Date: | July 30, 2020 | |||||||
/s/ Allan P. Merrill | ||||||||
Allan P. Merrill | ||||||||
President and Chief Executive Officer |
Date: | July 30, 2020 | |||||||
/s/ Robert L. Salomon | ||||||||
Robert L. Salomon | ||||||||
Executive Vice President and Chief Financial Officer |
Date: | July 30, 2020 | |||||||
/s/ Allan P. Merrill | ||||||||
Allan P. Merrill | ||||||||
President and Chief Executive Officer |
Date: | July 30, 2020 | |||||||
/s/ Robert L. Salomon | ||||||||
Robert L. Salomon | ||||||||
Executive Vice President and Chief Financial Officer |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Sep. 30, 2019 |
---|---|---|
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Allowances for accounts receivable | $ 298 | $ 304 |
Unamortized debt issuance expense | $ 11,450 | $ 12,470 |
Preferred stock, par value (in US$ per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in US$ per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 63,000,000 | 63,000,000 |
Common stock, shares issued | 31,020,066 | 30,933,110 |
Common stock, shares outstanding | 31,020,066 | 30,933,110 |
Description of Business |
9 Months Ended |
---|---|
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Beazer Homes USA, Inc. (“we,” “us,” “our,” “Beazer,” “Beazer Homes” and the “Company”) is a geographically diversified homebuilder with active operations in 13 states within three geographic regions in the United States: the West, East, and Southeast. Our homes are designed to appeal to homeowners at different price points across various demographic segments and are generally offered for sale in advance of their construction. Our objective is to provide our customers with homes that incorporate exceptional value and quality, while seeking to maximize our return on invested capital over the course of a housing cycle. For an additional description of our business, refer to Item 1 within our Annual Report on Form 10-K for the fiscal year ended September 30, 2019 (2019 Annual Report).
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Basis of Presentation and Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. The unaudited condensed consolidated financial statements do not include all of the information and disclosures required by GAAP for complete financial statements. As such, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 2019 Annual Report. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements. The results of the Company's consolidated operations presented herein for the three and nine months ended June 30, 2020 are not necessarily indicative of the results to be expected for the full fiscal year due to seasonal variations in our operations and other factors, such as the effects of the coronavirus (“COVID-19”) pandemic and its influence on our future results. Basis of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Beazer Homes USA, Inc. and its consolidated subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. Our net income (loss) is equivalent to our comprehensive income (loss), so we have not presented a separate statement of comprehensive income (loss). In the past, we have discontinued homebuilding operations in various markets. Results from certain of these exited markets are reported as discontinued operations in the accompanying unaudited condensed consolidated statements of operations for all periods presented (see Note 16 for a further discussion of our discontinued operations). Our fiscal year 2020 began on October 1, 2019 and ends on September 30, 2020. Our fiscal year 2019 began on October 1, 2018 and ended on September 30, 2019. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make informed estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Accordingly, actual results could differ from these estimates. Share Repurchase Program During the first quarter of fiscal 2019, the Company's Board of Directors approved a share repurchase program that authorizes the Company to repurchase up to $50.0 million of its outstanding common stock. As part of this program, the Company repurchased common stock during fiscal 2019 through open market transactions, 10b5-1 plans, and accelerated share repurchase (ASR) agreements. All shares have been retired upon repurchase during fiscal 2019. The aggregate reduction to stockholders’ equity related to share repurchases during the fiscal year ended September 30, 2019 was $34.6 million. The Company repurchased 362 thousand shares of its common stock for $3.3 million at an average price per share of $9.20 in the first half of fiscal 2020 through open market transactions and 10b5-1 plans. The Company repurchased 2.2 million shares of its common stock for $24.0 million at an average price per share of $10.89 during the six months ended March 31, 2019. All shares have been retired upon repurchase. No share repurchases were made during the three months ended June 30, 2020. As of June 30, 2020, the remaining availability of the share repurchase program was $12.0 million. The Company does not intend to make additional share repurchases under the program for the remainder of the current fiscal year in light of the COVID-19 pandemic and because of restrictions placed on share repurchases under the Eighth Amendment to the Facility (see Note 7 for further discussion). Inventory Valuation Inventory assets are assessed for recoverability no less than quarterly in accordance with the policies described in Notes 2 and 5 to the audited consolidated financial statements within our 2019 Annual Report. Homebuilding inventories that are accounted for as held for development (projects in progress) include land and home construction assets grouped together as communities. Homebuilding inventories held for development are stated at cost (including direct construction costs, capitalized indirect costs, capitalized interest, and real estate taxes) unless facts and circumstances indicate that the carrying value of the assets may not be recoverable. For communities that have been idled (land held for future development), all applicable interest and real estate taxes are expensed as incurred, and the inventory is stated at cost unless facts and circumstances indicate that the carrying value of the assets may not be recoverable. We record land held for sale at the lower of the carrying value or fair value less costs to sell. Revenue Recognition We recognize revenue upon the transfer of promised goods to our customers in an amount that reflects the consideration to which we expect to be entitled by applying the following five-step process specified in Accounting Standards Codification Topic 606. •Identify the contract(s) with a customer •Identify the performance obligations •Determine the transaction price •Allocate the transaction price •Recognize revenue when the performance obligations are met The following table presents our total revenue disaggregated by revenue stream:
(a) Please see Note 15 for total revenue disaggregated by reportable segment. Homebuilding revenue Homebuilding revenue is reported net of any discounts and incentives and is generally recognized when title to and possession of the home are transferred to the buyer at the closing date. The performance obligation to deliver the home is generally satisfied in less than one year from the original contract date. Home sale contract assets consist of cash from home closings held by title companies in escrow for our benefit, typically for less than five days, and are considered accounts receivable. Contract liabilities include customer deposits related to sold but undelivered homes and totaled $16.3 million and $11.5 million as of June 30, 2020 and September 30, 2019, respectively. Of the customer liabilities outstanding as of September 30, 2019, $0.6 million and $10.6 million were recognized in revenue during the three and nine months ended June 30, 2020, respectively, upon closing of the related homes. Land sales and other revenue Land sales revenue relates to land that does not fit within our homebuilding programs and strategic plans. Land sales typically require cash consideration on the closing date, which is generally when performance obligations are satisfied. In some periods, we also have other revenue related to broker fees as well as fees received for general contractor services that we perform on behalf of third parties. Revenue for broker and general contractor services are typically immaterial and are generally recognized as performance obligations are satisfied. Recent Accounting Pronouncements Leases. On October 1, 2019, we adopted Accounting Standards Update (ASU) No. 2016-02, Leases (ASU 2016-02) and related amendments, collectively codified in ASC 842, Leases (ASC 842). ASC 842 requires lessees to record most leases on their balance sheets by recognizing a right-of-use asset, representing the right to use the identified asset during the lease term, and a corresponding lease liability, representing the present value of the lease payments over the lease term. Lessor accounting will be largely similar to that under the previous accounting rules. ASC 842 also requires significantly enhanced disclosures around an entity's leases and the related accounting. As part of our adoption of ASC 842, we applied a modified retrospective approach, whereby prior year financial statements were not recast. As a result, our consolidated financial statements as of and for the year ending September 30, 2019 were not restated and continues to be reported under the previous lease standard (ASC 840) and is therefore not comparative. We also elected the package of transition practical expedients, which allowed us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) the initial direct costs for any existing leases. In addition, we elected the practical expedient that allows lessees to account for lease and non-lease components together as a single component for all leases. Upon adoption of ASC 842, we recorded net operating lease right-of-use (ROU) assets of $13.9 million and operating lease liabilities of $16.0 million. Existing prepaid rent and accrued rent were recorded as an offset to the gross operating lease ROU assets. The adoption of ASC 842 did not have any impact on our retained earnings. See Note 8 for additional discussion of our operating leases. Fair Value Measurements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework (ASU 2018-13). The updated guidance improves the disclosure requirements for fair value measurements. The updated guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted for any removed or modified disclosures. We are currently assessing the impact of adopting the updated provisions. Internal-Use Software. In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (ASU 2018-15). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This new guidance will be effective for public companies for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company early adopted this standard as of April 1, 2020 on a prospective basis. The adoption of this standard had no material impact on our consolidated financial statements and related disclosure. Reference Rate Reform. In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04). ASU 2020-04 provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This guidance is effective beginning on March 12, 2020, and we may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the effect that the new guidance will have on its consolidated financial statements and related disclosures.
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Supplemental Cash Flow Information |
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Supplemental Cash Flow Information | Supplemental Cash Flow Information The following table presents supplemental disclosure of non-cash and cash activity as well as a reconciliation of total cash balances between the condensed consolidated balance sheets and condensed consolidated statements of cash flows for the periods presented:
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Investments in Unconsolidated Entities |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Unconsolidated Entities | Investments in Unconsolidated Entities Unconsolidated Entities As of June 30, 2020, the Company participated in certain joint ventures and had investments in unconsolidated entities in which it had less than a controlling interest. The following table presents the Company's investment in these unconsolidated entities as well as the total equity and outstanding borrowings of these unconsolidated entities as of June 30, 2020 and September 30, 2019:
Equity in income from unconsolidated entity activities included in income from continuing operations is as follows for the periods presented:
For the three and nine months ended June 30, 2020 and 2019, there were no impairments related to investments in unconsolidated entities. Guarantees Historically, the Company's joint ventures typically obtained secured acquisition, development, and construction financing. In addition, the Company and its joint venture partners provided varying levels of guarantees of debt and other debt-related obligations for these unconsolidated entities. However, as of June 30, 2020 and September 30, 2019, the Company had no outstanding guarantees or other debt-related obligations related to our investments in unconsolidated entities. The Company and its joint venture partners generally provide unsecured environmental indemnities to land development joint venture project lenders. These indemnities obligate the Company to reimburse the project lenders for claims related to environmental matters for which they are held responsible. During the three and nine months ended June 30, 2020 and 2019, the Company was not required to make any payments related to environmental indemnities. In assessing the need to record a liability for these guarantees, the Company considers its historical experience in being required to perform under the guarantees, the fair value of the collateral underlying these guarantees, and the financial condition of the applicable unconsolidated entities. In addition, the fair value of the collateral of unconsolidated entities is monitored to ensure that the related borrowings do not exceed the specified percentage of the value of the property securing the borrowings. As of June 30, 2020, no liability was recorded for the contingent aspects of any guarantees that were determined to be reasonably possible but not probable.
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Inventory |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory The components of our owned inventory are as follows as of June 30, 2020 and September 30, 2019:
Homes under construction include homes substantially finished and ready for delivery and homes in various stages of construction, including the cost of the underlying lot. We had 183 (with a cost of $61.7 million) and 238 (with a cost of $82.2 million) substantially completed homes that were not subject to a sales contract (spec homes) as of June 30, 2020 and September 30, 2019, respectively. Development projects in progress consist principally of land acquisition, land development and other common costs. These land related costs are allocated to individual lots on a pro-rata basis, and the lot costs are transferred to homes under construction when home construction begins for the respective lots. Certain of the fully developed lots in this category are reserved by a customer deposit or sales contract. Land held for future development consists of communities for which construction and development activities are expected to occur in the future or have been idled and are stated at cost unless facts and circumstances indicate that the carrying value of the assets may not be recoverable. All applicable interest and real estate taxes on land held for future development are expensed as incurred. Land held for sale includes land and lots that do not fit within our homebuilding programs and strategic plans in certain markets, and land is classified as held for sale once certain criteria are met (refer to Note 2 to the audited consolidated financial statements within our 2019 Annual Report). These assets are recorded at the lower of the carrying value or fair value less costs to sell. The amount of interest we are able to capitalize depends on our qualified inventory balance, which considers the status of our inventory holdings. Our qualified inventory balance includes the majority of our homes under construction and development projects in progress but excludes land held for future development and land held for sale (see Note 6 for additional information on capitalized interest). Total owned inventory by reportable segment is presented in the table below as of June 30, 2020 and September 30, 2019:
(a) Projects in progress include homes under construction, development projects in progress, capitalized interest, and model home categories from the preceding table. (b) Projects in progress amount includes capitalized interest and indirect costs that are maintained within our Corporate and unallocated segment. Inventory Impairments When conducting our community level review for the recoverability of inventory related to projects in progress, we establish a quarterly “watch list” comprised of communities that carry profit margins in backlog or in our forecast that are below a minimum threshold of profitability, as well as recent closings that have gross margins less than a specified threshold. Each community is first evaluated qualitatively to determine if there are temporary factors driving the low profitability levels. Following our qualitative evaluation, communities with more than ten homes remaining to close are subjected to additional financial and operational review that considers the competitive environment and other factors contributing to gross margins below our watch list threshold. Our assumptions about future home sales prices and absorption rates require significant judgment because the residential homebuilding industry is cyclical and is highly sensitive to changes in economic conditions. For certain communities, it may be prudent to reduce sales prices or further increase sales incentives in response to a variety of factors, including competitive market conditions in those specific submarkets for the product and locations of these communities. For communities where the current competitive and market dynamics indicate that assets may not be recoverable, a formal impairment analysis is performed. The formal impairment analysis consists of both qualitative considerations and quantitative analyses reflecting market and asset specific information. For the quarter ended June 30, 2020 and taking into consideration the factors discussed above, we identified five communities on our quarterly watch list: two in the West segment and three in the Southeast segment. None of these communities required further analysis to be performed after considering certain quantitative and qualitative factors. However, because the full magnitude and duration of the COVID-19 pandemic is uncertain and difficult to predict, changes in our cash flow projections may change our conclusions on the recoverability of inventory in the future. For the quarter ended June 30, 2019, there were five communities on our quarterly watch list: three in the West segment, one in the East, and one in the Southeast segment. However, none of these communities required further analysis to be performed after considering certain quantitative and qualitative factors. During the quarter ended June 30, 2020, we decided to sell two communities under development in the West and Southeast segments representing a total of 88 lots. As a result of the change in strategy with respect to the future use of these assets, we reclassified these assets from development projects in progress to land held for sale, and recognized a $1.3 million impairment charge. Impairments on land held for sale generally represent write downs of these properties to net realizable value based on sales contracts, letters of intent, current market conditions, and recent comparable land sale transactions, as applicable. Absent an executed sales contract, our assumptions related to land sales prices require significant judgment because the real estate market is highly sensitive to changes in economic conditions, and our estimates of sale prices could differ significantly from actual results. From time-to-time, we may determine to abandon lots or not exercise certain option contracts that are not projected to produce adequate results, no longer fit with our long-term strategic plan. In determining whether to abandon lots or lot option contracts, our evaluation is primarily based upon the expected cash flows from the property. Additionally, in certain limited instances, we are forced to abandon lots due to seller non-performance, or permitting or other regulatory issues that do not allow us to build on those lots. If we intend to abandon or walk away from a property, we record an abandonment charge to earnings for the deposit amount and any related capitalized costs in the period such decision is made. During the quarter ended June 30, 2020, we recognized $1.0 million abandonment charges related to four under contract land acquisition deals that we decided to terminate. The following table presents, by reportable segment, our total impairment and abandonment charges for the periods presented:
(a) Amount represents capitalized interest and indirects balance that was impaired. Capitalized interest and indirects are maintained within our Corporate and unallocated segment. Lot Option Agreements and Variable Interest Entities (VIE) As previously discussed, we also have access to land inventory through lot option contracts, which generally enable us to defer acquiring portions of properties owned by third parties and unconsolidated entities until we have determined whether to exercise our lot option. The majority of our lot option contracts require a non-refundable cash deposit or irrevocable letter of credit based on a percentage of the purchase price of the land for the right to acquire lots during a specified period of time at a specified price. Under lot option contracts, purchase of the properties is contingent upon satisfaction of certain requirements by us and the sellers. Our liability under option contracts is generally limited to forfeiture of the non-refundable deposits, letters of credit, and other non-refundable amounts incurred. We expect to exercise, subject to market conditions and seller satisfaction of contract terms, most of our remaining option contracts. Various factors, some of which are beyond our control, such as market conditions, weather conditions, and the timing of the completion of development activities, will have a significant impact on the timing of option exercises or whether lot options will be exercised at all. The following table provides a summary of our interests in lot option agreements as of June 30, 2020 and September 30, 2019:
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Interest |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest | Interest Interest capitalized during the three and nine months ended June 30, 2020 and 2019 was limited by the balance of inventory eligible for capitalization. The following table presents certain information regarding interest for the periods presented:
(a) The amount of interest capitalized depends on the qualified inventory balance, which considers the status of the Company's inventory holdings. The qualified inventory balance includes the majority of homes under construction and development projects in progress but excludes land held for future development and land held for sale. (b) Capitalized interest amortized to home construction and land sales expenses varies based on the number of homes closed during the period and land sales, if any, as well as other factors.
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Borrowings |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | Borrowings The Company's debt, net of unamortized debt issuance costs consisted of the following as of June 30, 2020 and September 30, 2019:
Secured Revolving Credit Facility The Secured Revolving Credit Facility (the Facility) provides working capital and letter of credit capacity of $250.0 million with four lenders. For additional discussion of the Facility, refer to Note 8 to the audited consolidated financial statements within our 2019 Annual Report. On April 27, 2020 (the Eighth Amendment Effective Date), the Company executed an Eighth Amendment to the Facility, which, among other things, (1) reduces the aggregate collateral ratio (as defined in the Facility) from 4.00:1.00 to 2.50:1.00 for period commencing on the Eighth Amendment Effective Date through September 30, 2020; (2) reduces the after-acquired property exclusionary conditions (as defined in the Facility) from the product of the aggregate amount of the commitments multiplied by 4.0 to the product of the aggregate amount of commitments multiplied by 2.5 for the period commencing on the Eighth Amendment Effective Date though September 30, 2020; (3) restricts the repurchase of the Company's capital stock through open market transactions for the period commencing on the Eighth Amendment Effective Date through September 30, 2020; and (4) reduces the aggregate amount of other investments (as defined in the Facility) that can be made by the Company from $100.0 million to $50.0 million for the period commencing on the Eight Amendment Effective Date through September 30, 2020. As of June 30, 2020, no borrowings and no letters of credit were outstanding under the Facility, resulting in $250.0 million remaining capacity. As of September 30, 2019, no borrowings and no letters of credit were outstanding under the Facility. The Facility requires compliance with certain covenants, including negative covenants and financial covenants. As of June 30, 2020, the Company was in compliance with all such covenants. Senior Unsecured Term Loan On September 9, 2019, the Company entered into a term loan agreement, which provides for a Senior Unsecured Term Loan (the Term Loan) in an aggregate principal amount of up to $150.0 million. The Term Loan will (1) mature in September 2022, with $50.0 million annual repayment installments in September 2020 and September 2021; (2) bears interest at a fixed rate of 4.875%; and (3) includes an option to prepay, subject to certain conditions and the payment of certain premiums. The Term Loan contains covenants generally consistent with the covenants contained in the Facility. As of June 30, 2020, the Company was in compliance with all such covenants. Letter of Credit Facilities The Company has entered into stand-alone, cash-secured letter of credit agreements with banks to maintain pre-existing letters of credit and to provide for the issuance of new letters of credit (in addition to the letters of credit issued under the Facility). As of June 30, 2020 and September 30, 2019, the Company had letters of credit outstanding under these additional facilities of $11.2 million and $14.1 million, respectively, all of which were secured by cash collateral in restricted accounts. The Company may enter into additional arrangements to provide additional letter of credit capacity. In May 2018, the Company entered into a reimbursement agreement, which provides for the issuance of performance letters of credit, and an unsecured credit agreement that provides for the issuance of up to $50.0 million of standby letters of credit to backstop the Company's obligations under the reimbursement agreement (collectively, the "Bilateral Facility"). On June 17, 2020, the Company executed an Amendment No. 1 to the Bilateral Facility that extends the termination date of the agreement from June 10, 2021 to June 10, 2022. As of June 30, 2020, the total stated amount of performance letters of credit issued under the reimbursement agreement was $37.5 million (and the stated amount of the backstop standby letter of credit issued under the credit agreement was $40.0 million). The Company may enter into additional arrangements to provide greater letter of credit capacity. Senior Notes The Company's Senior Notes are unsecured obligations ranking pari passu with all other existing and future senior indebtedness. Substantially all of the Company's significant subsidiaries are full and unconditional guarantors of the Senior Notes and are jointly and severally liable for obligations under the Senior Notes and the Facility. Each guarantor subsidiary is a 100% owned subsidiary of Beazer Homes. All unsecured Senior Notes rank equally in right of payment with all existing and future senior unsecured obligations, senior to all of the Company's existing and future subordinated indebtedness and effectively subordinated to the Company's existing and future secured indebtedness, including indebtedness under the Facility, if outstanding, to the extent of the value of the assets securing such indebtedness. The unsecured Senior Notes and related guarantees are structurally subordinated to all indebtedness and other liabilities of all of the Company's subsidiaries that do not guarantee these notes but are fully and unconditionally guaranteed jointly and severally on a senior basis by the Company's wholly-owned subsidiaries party to each applicable indenture. The Company's Senior Notes are issued under indentures that contain certain restrictive covenants which, among other things, restrict our ability to pay dividends, repurchase our common stock, incur certain types of additional indebtedness, and make certain investments. Compliance with the Senior Note covenants does not significantly impact the Company's operations. The Company is in compliance with the covenants contained in the indentures of all of its Senior Notes as of June 30, 2020. For additional redemption features, refer to the table below that summarizes the redemption terms of our Senior Notes:
Junior Subordinated Notes The Company's unsecured junior subordinated notes (Junior Subordinated Notes) mature on July 30, 2036. The Junior Subordinated Notes are redeemable at par and paid interest at a fixed rate of 7.987% for the first ten years ending July 30, 2016. The securities now have a floating interest rate as defined in the Junior Subordinated Notes Indenture, which was a weighted-average of 4.25% as of June 30, 2020. The obligations relating to these notes are subordinated to the Facility and the Senior Notes. In January 2010, the Company modified the terms of $75.0 million of these notes and recorded them at their then estimated fair value. Over the remaining life of the Junior Subordinated Notes, we will increase their carrying value until this carrying value equals the face value of the notes. As of June 30, 2020, the unamortized accretion was $33.2 million and will be amortized over the remaining life of the notes. As of June 30, 2020, the Company was in compliance with all covenants under the Junior Subordinated Notes.
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Operating Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Leases | Operating Leases The Company leases certain office space and equipment under operating leases for use in our operations. We recognize operating lease expense on a straight-line basis over the lease term. Certain of our lease agreements include one or more options to renew. The exercise of lease renewal options is generally at our discretion. Variable lease expense primarily relates to maintenance and other monthly expense that do not depend on an index or rate. We determine if an arrangement is a lease at contract inception. Lease and non-lease components are accounted for as a single component for all leases. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the expected lease term, which includes optional renewal periods if we determine it is reasonably certain that the option will be exercised. As our leases do not provide an implicit rate, the discount rate used in the present value calculation represents our incremental borrowing rate determined using information available at the commencement date. Operating lease expense is included as a component of general and administrative expenses in our condensed consolidated statements of operations. For the three and nine months ended June 30, 2020, we recorded operating lease expense of $1.1 million and $3.4 million, respectively. Cash payments on lease liabilities during the three and nine months ended June 30, 2020 totaled $1.1 million and $3.5 million, respectively. Sublease income and variable lease expenses are de minimis. The Company increased both its operating lease ROU asset and operating lease liability by $30 thousand and $3.1 million as a result of additional leases that commenced during the three and nine months ended June 30, 2020, respectively. At June 30, 2020, weighted-average remaining lease term and discount rate were as follows:
The following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of June 30, 2020:
(a) Remaining lease payments are for the period beginning July 1, 2020 through September 30, 2020. At September 30, 2019, under ASC 840, Leases (“ASC 840”), the future minimum rental commitments totaled $20.2 million under non-cancelable operating leases as follows: 2020 - $4.7 million; 2021 - $4.5 million; 2022 - $3.6 million; 2023 - $2.9 million; 2024 - $1.8 million; and $2.6 million thereafter.
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Contingencies |
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Contingencies | Contingencies Beazer Homes and certain of its subsidiaries have been and continue to be named as defendants in various construction defect claims, complaints, and other legal actions. The Company is subject to the possibility of loss contingencies related to these defects as well as others arising from its business. In determining loss contingencies, we consider the likelihood of loss and our ability to reasonably estimate the amount of such loss. An estimated loss is recorded when it is considered probable that a liability has been incurred and the amount of loss can be reasonably estimated. Warranty Reserves We currently provide a limited warranty ranging from to two years covering workmanship and materials per our defined quality standards. In addition, we provide a limited warranty for up to ten years covering only certain defined structural element failures. Our homebuilding work is performed by subcontractors who typically must agree to indemnify us with regard to their work and provide certificates of insurance demonstrating that they have met our insurance requirements and have named us as an additional insured under their policies. Therefore, many claims relating to workmanship and materials that result in warranty spending are the primary responsibility of these subcontractors. In addition, we maintain insurance coverage related to our construction efforts that can result in recoveries of warranty and construction defect costs above certain specified limits. Warranty reserves are included in other liabilities within the condensed consolidated balance sheets, and the provision for warranty accruals is included in home construction expenses in the condensed consolidated statements of operations. Reserves covering anticipated warranty expenses are recorded for each home closed. Management assesses the adequacy of warranty reserves each reporting period based on historical experience and the expected costs to remediate potential claims. Our review includes a quarterly analysis of the historical data and trends in warranty expense by division. Such analysis considers market-specific factors such as warranty experience, the number of home closings, the prices of homes, product mix, and other data in estimating warranty reserves. In addition, the analysis also contemplates the existence of any non-recurring or community-specific warranty-related matters that might not be included in historical data and trends. While estimated warranty liabilities are adjusted each reporting period based on the results of our quarterly analyses, we may not accurately predict actual warranty costs, which could lead to significant changes in the reserve. Changes in warranty reserves are as follows for the periods presented:
(a) Accruals for warranties issued are a function of the number of home closings in the period, the selling prices of the homes closed, and the rates of accrual per home estimated as a percentage of the selling price of the home. Insurance Recoveries The Company has insurance policies that provide for the reimbursement of certain warranty costs incurred above specified thresholds for each period covered. Amounts recorded for anticipated insurance recoveries are reflected within the condensed consolidated statements of income as a reduction of home construction expenses. Amounts not yet received from our insurer are recorded on a gross basis, without any reduction for the associated warranty expense, within accounts receivable on our condensed consolidated balance sheets. Litigation In the normal course of business, we are subject to various lawsuits. We cannot predict or determine the timing or final outcome of these lawsuits or the effect that any adverse findings or determinations in pending lawsuits may have on us. In addition, an estimate of possible loss or range of loss, if any, cannot presently be made with respect to certain of these pending matters. An unfavorable determination in any of the pending lawsuits could result in the payment by us of substantial monetary damages that may not be fully covered by insurance. Further, the legal costs associated with the lawsuits and the amount of time required to be spent by management and our Board of Directors on these matters, even if we are ultimately successful, could have a material adverse effect on our financial condition, results of operations, or cash flows. Claims Related to Inventory Impairment Charges. During the quarter ended March 31, 2019, we recognized inventory impairment charges related to 15 communities in California, all of which were previously land held for future development assets. Related to these inventory impairment charges, on June 5, 2019, a putative class action lawsuit was filed against Beazer Homes USA, Inc. and certain of our officers in the U.S. District Court for the Southern District of New York. The proposed class consisted of all persons and entities that acquired our securities between August 1, 2014 and May 2, 2019. On October 18, 2019, the plaintiffs filed a notice of voluntary dismissal of this case, and the Court subsequently entered an order dismissing the case. Beginning June 25, 2019, several shareholder derivative lawsuits relating to the same inventory impairment charges discussed above were filed against Beazer Homes USA, Inc., certain of our officers and members of our Board of Directors in the U.S. District Court for the Northern District of Georgia. The plaintiffs in these cases allege breaches of fiduciary duty, unjust enrichment and violations of the federal securities laws. These federal actions have been consolidated into a single derivative action. Additionally, a substantially similar derivative action has been filed in the Superior Court of Fulton County, Georgia. The plaintiffs in each of these actions seek, among other things, monetary damages, disgorgement of profits and attorneys’ and experts’ fees, but do not specify any specific amounts. We believe the allegations are without merit and intend to vigorously defend against the claims. However, because the outcome of these legal proceedings cannot be predicted with certainty, we have determined that the amount of any possible losses or range of possible losses in connection with these matters is not reasonably estimable. Other Matters We and certain of our subsidiaries have been named as defendants in various claims, complaints, and other legal actions, most relating to construction defects, moisture intrusion, and product liability. Certain of the liabilities resulting from these actions are covered in whole or in part by insurance. In our opinion, based on our current assessment, the ultimate resolution of these matters will not have a material adverse effect on our financial condition, results of operations, or cash flows. We have an accrual of $3.6 million and $3.4 million in other liabilities on our condensed consolidated balance sheets related to litigation and other matters, excluding warranty, as of June 30, 2020 and September 30, 2019, respectively. We had outstanding letters of credit and performance bonds of approximately $48.7 million and $255.6 million, respectively, as of June 30, 2020, related principally to our obligations to local governments to construct roads and other improvements in various developments.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements As of the dates presented, we had assets on our condensed consolidated balance sheets that were required to be measured at fair value on a recurring or non-recurring basis. We use a fair value hierarchy that requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value as follows: •Level 1 – Quoted prices in active markets for identical assets or liabilities; •Level 2 – Inputs other than quoted prices included in Level 1 that are observable either directly or indirectly through corroboration with market data; and •Level 3 – Unobservable inputs that reflect our own estimates about the assumptions market participants would use in pricing the asset or liability. Certain of our assets are required to be recorded at fair value on a recurring basis. The fair value of our deferred compensation plan assets is based on market-corroborated inputs (Level 2). Certain of our assets are required to be recorded at fair value on a non-recurring basis when events and circumstances indicate that the carrying value of these assets may not be recovered. We review our long-lived assets, including inventory, for recoverability when factors indicate an impairment may exist, but no less than quarterly. Fair value on assets deemed to be impaired is determined based upon the type of asset being evaluated. Fair value of our owned inventory assets, when required to be calculated, is further discussed within Notes 2 and 5. The fair value of our investments in unconsolidated entities is determined primarily using a discounted cash flow model to value the underlying net assets of the respective entities. Due to the substantial use of unobservable inputs in valuing the assets on a non-recurring basis, they are classified within Level 3. During the three months ended June 30, 2020, we recognized impairments of $1.3 million on land held for sale compared to no such impairments during the three months ended June 30, 2019. During the nine months ended June 30, 2020, we recognized impairments of $1.3 million on land held for sale compared to $110.0 million in impairments on projects in process and $38.6 million on land held for sale during the nine months ended June 30, 2019. Determining within which hierarchical level an asset or liability falls requires significant judgment. We evaluate our hierarchy disclosures each quarter. The following table presents the period-end balances of assets measured at fair value on a recurring basis and the impairment-date fair value of certain assets measured at fair value on a non-recurring basis for each hierarchy level. These balances represent only those assets whose carrying values were adjusted to fair value during the periods presented:
(a) Measured at fair value on a recurring basis. (b) Measured at fair value on a non-recurring basis, including the capitalized interest and indirect costs related to the asset. (c) Amount represents the impairment-date fair value of the development projects in progress and land held for sale assets that were impaired during the period indicated. The fair value of cash and cash equivalents, restricted cash, accounts receivable, trade accounts payable, other liabilities, amounts due under the Facility (if outstanding), and other secured notes payable approximate their carrying amounts due to the short maturity of these assets and liabilities. When outstanding, obligations related to land not owned under option agreements approximate fair value. The following table presents the carrying value and estimated fair value of certain other financial liabilities as of June 30, 2020 and September 30, 2019:
(a) Carrying amounts are net of unamortized debt premiums/discounts, debt issuance costs, or accretion. (b) The estimated fair value for our publicly-held Senior Notes and the Term Loan have been determined using quoted market rates (Level 2). (c) Since there is no trading market for our Junior Subordinated Notes, the fair value of these notes is estimated by discounting scheduled cash flows through maturity (Level 3). The discount rate is estimated using market rates currently being offered on loans with similar terms and credit quality. Judgment is required in interpreting market data to develop these estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize in a current market exchange.
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Income Taxes |
9 Months Ended |
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Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income Tax Provision The Company's income tax provision for quarterly interim periods is based on an estimated annual effective income tax rate calculated separately from the effect of significant, infrequent, or unusual items. The total income tax provision, including discontinued operations, was a tax expense of $5.0 million and $8.9 million for the three and nine months ended June 30, 2020, respectively, compared to an income tax benefit of $2.2 million and $44.3 million for the three and nine months ended June 30, 2019, respectively. Income tax expense for the nine months ended June 30, 2020 was substantially driven by (1) income from continuing operations, partially offset by (2) the completion of work necessary to claim an additional $0.8 million in tax credits related to prior fiscal years, and (3) the discrete impact related to stock-based compensation expense as a result of current period activity. Income tax benefit for the nine months ended June 30, 2019 was primarily driven by (1) $148.6 million of book impairments on our land inventory assets, and (2) the completion of work necessary to claim an additional $9.8 million in tax credits related to prior fiscal years, partially offset by (3) the discrete impact related to our stock-based compensation expense. Deferred Tax Assets and Liabilities As of December 31, 2019, the net deferred tax asset was comprised of various tax attributes that included $4.6 million of minimum tax credit carryforwards. Beginning in our fiscal 2019, the Company started making cash refund claims for significant portions of these credits due to the elimination of the alternative minimum tax in the Tax Cuts and Jobs Act. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act provides companies with the ability to make a refund claim for their entire minimum tax carryforward as early as their 2018 tax return. As a result, in the quarter-ended March 31, 2020, we reduced our deferred tax asset by the remaining $4.6 million of minimum tax credits and increased our tax receivable for the refund we expect to receive with the filing of our fiscal 2019 tax return. The Company continues to evaluate its deferred tax assets each period to determine if a valuation allowance is required based on whether it is more likely than not that some portion of these deferred tax assets will not be realized. As of June 30, 2020, management concluded that it is more likely than not that a substantial portion of our deferred tax assets will be realized. As part of our analysis, we considered both positive and negative factors that impact profitability and whether those factors would lead to a change in the estimate of our deferred tax assets that may be realized in the future. As we continue to monitor the impacts of the COVID-19 pandemic on our business, any sustained or prolonged reductions in future earnings periods may change our conclusions on whether we are more likely than not to realize portions of our deferred tax assets. At this time, our conclusions on the valuation allowance and Internal Revenue Code Section 382 limitations related to our deferred tax assets remain consistent with the determinations we made during the period ended September 30, 2019, and such conclusions are based on similar company specific and industry factors to those discussed in Note 13 to the audited consolidated financial statements within our 2019 Annual Report.
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Stock-based Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | Stock-based Compensation Stock-based compensation expense is included in general and administrative expenses in the condensed consolidated statements of operations. Following is a summary of stock-based compensation expense related to stock options and restricted stock awards for the three and nine months ended June 30, 2020 and June 30, 2019, respectively.
Stock Options Following is a summary of stock option activity for the nine months ended June 30, 2020:
As of June 30, 2020 and September 30, 2019, total unrecognized compensation cost related to unvested stock options was $56 thousand and $0.1 million, respectively. The remaining cost as of June 30, 2020 is expected to be recognized over a weighted-average period of 0.56 years. Restricted Stock Awards During the nine months ended June 30, 2020, the Company issued time-based restricted stock awards that vest ratably over three years on each anniversary from the grant date and performance-based restricted stock awards with a payout subject to the achievement of performance and market conditions over a three-year period. Following is a summary of restricted stock activity for the nine months ended June 30, 2020:
Each of our performance-based restricted share represents a contingent right to receive one share of the Company's common stock if vesting is satisfied at the end of the three-year performance period. Our performance stock award plans provide that any performance shares earned in excess of the target number of performance shares issued may be settled in cash or additional shares at the discretion of the Compensation Committee. In November 2019, we cash settled 135,337 shares earned above target level based on the performance level achieved under our 2017 performance-based award plan. The cash payment totaled $2.1 million, which was reflected as a reduction to paid-in capital in the accompanying condensed consolidated statements of stockholders' equity. We have not cash settled any such performance-based awards prior to or subsequent to the November 2019 transaction, and we have no current plans to cash settle any additional performance-based restricted shares in the future. As of June 30, 2020 and September 30, 2019, total unrecognized compensation cost related to unvested restricted stock awards was $9.5 million and $9.0 million, respectively. The remaining cost as of June 30, 2020 is expected to be recognized over a weighted average period of 1.82 years.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares outstanding during the period. Diluted income (loss) per share adjusts the basic income (loss) per share for the effects of any potentially dilutive securities in periods in which the Company has net income and such effects are dilutive under the treasury stock method. Following is a summary of the components of basic and diluted income (loss) per share for the periods presented:
(a) The following potentially dilutive shares were excluded from the calculation of diluted income (loss) per share as a result of their anti-dilutive effect. Due to the reported net loss for the nine months ended June 30, 2019, all common stock equivalents were excluded from the computation of diluted loss per share for those periods because inclusion would have resulted in anti-dilution.
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Other Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities | Other Liabilities Other liabilities include the following as of June 30, 2020 and September 30, 2019:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information We currently operate in 13 states that are grouped into three homebuilding segments based on geography. Revenues from our homebuilding segments are derived from the sale of homes that we construct and from land and lot sales. Our reportable segments have been determined on a basis that is used internally by management for evaluating segment performance and resource allocations. We have considered the applicable aggregation criteria and have combined our homebuilding operations into three reportable segments as follows: West: Arizona, California, Nevada, and Texas East: Delaware, Indiana, Maryland, New Jersey(a), Tennessee, and Virginia Southeast: Florida, Georgia, North Carolina, and South Carolina (a) During our fiscal 2015, we made the decision that we would not continue to reinvest in new homebuilding assets in our New Jersey division; therefore, it is no longer considered an active operation. However, it is included in this listing because the segment information below continues to include New Jersey. Management’s evaluation of segment performance is based on segment operating income (loss). Operating income (loss) for our homebuilding segments is defined as homebuilding and land sales and other revenue less home construction, land development, and land sales expense, commission expense, depreciation and amortization, and certain G&A expenses that are incurred by or allocated to our homebuilding segments. The accounting policies of our segments are those described in Note 2 to the consolidated financial statements within our 2019 Annual Report. The following tables contain our revenue, operating income, and depreciation and amortization by segment for the periods presented:
(a) Operating income (loss) is impacted by impairment and abandonment charges incurred during the periods presented (see Note 5). For the nine months ended June 30, 2020 and June 30, 2019, we recognized $1.1 million and $131.7 million of inventory impairment and abandonment charges, respectively. (b) Corporate and unallocated operating loss includes amortization of capitalized interest, movement in capitalized indirect costs, expenses related to numerous shared services functions that benefit all segments but are not allocated to the operating segments reported above, including information technology, treasury, corporate finance, legal, branding and national marketing, and other amounts that are not allocated to our operating segments. Corporate and unallocated depreciation and amortization represents depreciation and amortization related to assets held by our corporate functions that benefit all segments. For the nine months ended June 30, 2020 and June 30, 2019, we wrote off $1.2 million and $16.9 million of capitalized interest and capitalized indirect costs, respectively (see Note 5 for further information). The following table presents capital expenditures by segment for the periods presented:
The following table presents assets by segment as of June 30, 2020 and September 30, 2019:
(a) Primarily consists of cash and cash equivalents, restricted cash, deferred taxes, capitalized interest and indirect costs, and other items that are not allocated to the segments.
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Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Discontinued Operations We continually review each of our markets in order to refine our overall investment strategy and to optimize capital and resource allocations in an effort to enhance our financial position and to increase stockholder value. This review entails an evaluation of both external market factors and our position in each market and over time has resulted in the decision to discontinue certain of our homebuilding operations. During our fiscal 2015, we made the decision that we would not continue to reinvest in new homebuilding assets in our New Jersey division; therefore, it is no longer considered an active operation. However, the results of our New Jersey division are not included in the discontinued operations information shown below. We have classified the results of operations of our discontinued operations separately in the accompanying condensed consolidated statements of operations for all periods presented. There were no material assets or liabilities related to our discontinued operations as of June 30, 2020 or September 30, 2019. Discontinued operations were not segregated in the condensed consolidated statements of cash flows. Therefore, amounts for certain captions in the condensed consolidated statements of cash flows will not agree with the respective data in the condensed consolidated statements of operations. The results of our discontinued operations in the condensed consolidated statements of operations for the periods presented were as follows:
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Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Consolidation | Basis of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Beazer Homes USA, Inc. and its consolidated subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. Our net income (loss) is equivalent to our comprehensive income (loss), so we have not presented a separate statement of comprehensive income (loss). In the past, we have discontinued homebuilding operations in various markets. Results from certain of these exited markets are reported as discontinued operations in the accompanying unaudited condensed consolidated statements of operations for all periods presented (see Note 16 for a further discussion of our discontinued operations). Our fiscal year 2020 began on October 1, 2019 and ends on September 30, 2020. Our fiscal year 2019 began on October 1, 2018 and ended on September 30, 2019.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make informed estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Accordingly, actual results could differ from these estimates.
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Share Repurchase Program | Share Repurchase ProgramDuring the first quarter of fiscal 2019, the Company's Board of Directors approved a share repurchase program that authorizes the Company to repurchase up to $50.0 million of its outstanding common stock. As part of this program, the Company repurchased common stock during fiscal 2019 through open market transactions, 10b5-1 plans, and accelerated share repurchase (ASR) agreements. All shares have been retired upon repurchase during fiscal 2019. |
Inventory Valuation | Inventory Valuation Inventory assets are assessed for recoverability no less than quarterly in accordance with the policies described in Notes 2 and 5 to the audited consolidated financial statements within our 2019 Annual Report. Homebuilding inventories that are accounted for as held for development (projects in progress) include land and home construction assets grouped together as communities. Homebuilding inventories held for development are stated at cost (including direct construction costs, capitalized indirect costs, capitalized interest, and real estate taxes) unless facts and circumstances indicate that the carrying value of the assets may not be recoverable. For communities that have been idled (land held for future development), all applicable interest and real estate taxes are expensed as incurred, and the inventory is stated at cost unless facts and circumstances indicate that the carrying value of the assets may not be recoverable. We record land held for sale at the lower of the carrying value or fair value less costs to sell.
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Revenue Recognition | Revenue Recognition We recognize revenue upon the transfer of promised goods to our customers in an amount that reflects the consideration to which we expect to be entitled by applying the following five-step process specified in Accounting Standards Codification Topic 606. •Identify the contract(s) with a customer •Identify the performance obligations •Determine the transaction price •Allocate the transaction price •Recognize revenue when the performance obligations are met Homebuilding revenue Homebuilding revenue is reported net of any discounts and incentives and is generally recognized when title to and possession of the home are transferred to the buyer at the closing date. The performance obligation to deliver the home is generally satisfied in less than one year from the original contract date. Home sale contract assets consist of cash from home closings held by title companies in escrow for our benefit, typically for less than five days, and are considered accounts receivable. Contract liabilities include customer deposits related to sold but undelivered homes and totaled $16.3 million and $11.5 million as of June 30, 2020 and September 30, 2019, respectively. Of the customer liabilities outstanding as of September 30, 2019, $0.6 million and $10.6 million were recognized in revenue during the three and nine months ended June 30, 2020, respectively, upon closing of the related homes. Land sales and other revenue Land sales revenue relates to land that does not fit within our homebuilding programs and strategic plans. Land sales typically require cash consideration on the closing date, which is generally when performance obligations are satisfied. In some periods, we also have other revenue related to broker fees as well as fees received for general contractor services that we perform on behalf of third parties. Revenue for broker and general contractor services are typically immaterial and are generally recognized as performance obligations are satisfied.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements Leases. On October 1, 2019, we adopted Accounting Standards Update (ASU) No. 2016-02, Leases (ASU 2016-02) and related amendments, collectively codified in ASC 842, Leases (ASC 842). ASC 842 requires lessees to record most leases on their balance sheets by recognizing a right-of-use asset, representing the right to use the identified asset during the lease term, and a corresponding lease liability, representing the present value of the lease payments over the lease term. Lessor accounting will be largely similar to that under the previous accounting rules. ASC 842 also requires significantly enhanced disclosures around an entity's leases and the related accounting. As part of our adoption of ASC 842, we applied a modified retrospective approach, whereby prior year financial statements were not recast. As a result, our consolidated financial statements as of and for the year ending September 30, 2019 were not restated and continues to be reported under the previous lease standard (ASC 840) and is therefore not comparative. We also elected the package of transition practical expedients, which allowed us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) the initial direct costs for any existing leases. In addition, we elected the practical expedient that allows lessees to account for lease and non-lease components together as a single component for all leases. Upon adoption of ASC 842, we recorded net operating lease right-of-use (ROU) assets of $13.9 million and operating lease liabilities of $16.0 million. Existing prepaid rent and accrued rent were recorded as an offset to the gross operating lease ROU assets. The adoption of ASC 842 did not have any impact on our retained earnings. See Note 8 for additional discussion of our operating leases. Fair Value Measurements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework (ASU 2018-13). The updated guidance improves the disclosure requirements for fair value measurements. The updated guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted for any removed or modified disclosures. We are currently assessing the impact of adopting the updated provisions. Internal-Use Software. In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (ASU 2018-15). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This new guidance will be effective for public companies for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company early adopted this standard as of April 1, 2020 on a prospective basis. The adoption of this standard had no material impact on our consolidated financial statements and related disclosure. Reference Rate Reform. In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04). ASU 2020-04 provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This guidance is effective beginning on March 12, 2020, and we may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the effect that the new guidance will have on its consolidated financial statements and related disclosures.
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Fair Value Measurements | As of the dates presented, we had assets on our condensed consolidated balance sheets that were required to be measured at fair value on a recurring or non-recurring basis. We use a fair value hierarchy that requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value as follows: •Level 1 – Quoted prices in active markets for identical assets or liabilities; •Level 2 – Inputs other than quoted prices included in Level 1 that are observable either directly or indirectly through corroboration with market data; and •Level 3 – Unobservable inputs that reflect our own estimates about the assumptions market participants would use in pricing the asset or liability. Certain of our assets are required to be recorded at fair value on a recurring basis. The fair value of our deferred compensation plan assets is based on market-corroborated inputs (Level 2). Certain of our assets are required to be recorded at fair value on a non-recurring basis when events and circumstances indicate that the carrying value of these assets may not be recovered. We review our long-lived assets, including inventory, for recoverability when factors indicate an impairment may exist, but no less than quarterly. Fair value on assets deemed to be impaired is determined based upon the type of asset being evaluated. Fair value of our owned inventory assets, when required to be calculated, is further discussed within Notes 2 and 5. The fair value of our investments in unconsolidated entities is determined primarily using a discounted cash flow model to value the underlying net assets of the respective entities. Due to the substantial use of unobservable inputs in valuing the assets on a non-recurring basis, they are classified within Level 3.
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Basis of Presentation and Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table presents our total revenue disaggregated by revenue stream:
(a) Please see Note 15 for total revenue disaggregated by reportable segment.
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Supplemental Cash Flow Information (Tables) |
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Supplemental disclosure of non-cash activity | The following table presents supplemental disclosure of non-cash and cash activity as well as a reconciliation of total cash balances between the condensed consolidated balance sheets and condensed consolidated statements of cash flows for the periods presented:
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Investments in Unconsolidated Entities (Tables) |
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Investments in unconsolidated joint ventures, total equity and outstanding borrowings | The following table presents the Company's investment in these unconsolidated entities as well as the total equity and outstanding borrowings of these unconsolidated entities as of June 30, 2020 and September 30, 2019:
Equity in income from unconsolidated entity activities included in income from continuing operations is as follows for the periods presented:
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Inventory (Tables) |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventory | The components of our owned inventory are as follows as of June 30, 2020 and September 30, 2019:
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Schedule of total owned inventory, by segment | Total owned inventory by reportable segment is presented in the table below as of June 30, 2020 and September 30, 2019:
(a) Projects in progress include homes under construction, development projects in progress, capitalized interest, and model home categories from the preceding table. (b) Projects in progress amount includes capitalized interest and indirect costs that are maintained within our Corporate and unallocated segment.
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Schedule of inventory impairments and lot option abandonment charges | The following table presents, by reportable segment, our total impairment and abandonment charges for the periods presented:
(a) Amount represents capitalized interest and indirects balance that was impaired. Capitalized interest and indirects are maintained within our Corporate and unallocated segment.
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Summary of interests in lot option agreements | The following table provides a summary of our interests in lot option agreements as of June 30, 2020 and September 30, 2019:
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Interest (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Inventory, Capitalized Interest Costs | The following table presents certain information regarding interest for the periods presented:
(a) The amount of interest capitalized depends on the qualified inventory balance, which considers the status of the Company's inventory holdings. The qualified inventory balance includes the majority of homes under construction and development projects in progress but excludes land held for future development and land held for sale. (b) Capitalized interest amortized to home construction and land sales expenses varies based on the number of homes closed during the period and land sales, if any, as well as other factors.
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Borrowings (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | The Company's debt, net of unamortized debt issuance costs consisted of the following as of June 30, 2020 and September 30, 2019:
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Debt Instrument Redemption | For additional redemption features, refer to the table below that summarizes the redemption terms of our Senior Notes:
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Operating Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost | At June 30, 2020, weighted-average remaining lease term and discount rate were as follows:
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Lessee, Operating Lease, Liability, Maturity | The following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of June 30, 2020:
(a) Remaining lease payments are for the period beginning July 1, 2020 through September 30, 2020.
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Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warranty reserves | Changes in warranty reserves are as follows for the periods presented:
(a) Accruals for warranties issued are a function of the number of home closings in the period, the selling prices of the homes closed, and the rates of accrual per home estimated as a percentage of the selling price of the home.
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value assets measured on a recurring and non-recurring basis | The following table presents the period-end balances of assets measured at fair value on a recurring basis and the impairment-date fair value of certain assets measured at fair value on a non-recurring basis for each hierarchy level. These balances represent only those assets whose carrying values were adjusted to fair value during the periods presented:
(a) Measured at fair value on a recurring basis. (b) Measured at fair value on a non-recurring basis, including the capitalized interest and indirect costs related to the asset. (c) Amount represents the impairment-date fair value of the development projects in progress and land held for sale assets that were impaired during the period indicated.
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Schedule of carrying values and estimated fair values of other financial assets and liabilities | The following table presents the carrying value and estimated fair value of certain other financial liabilities as of June 30, 2020 and September 30, 2019:
(a) Carrying amounts are net of unamortized debt premiums/discounts, debt issuance costs, or accretion. (b) The estimated fair value for our publicly-held Senior Notes and the Term Loan have been determined using quoted market rates (Level 2). (c) Since there is no trading market for our Junior Subordinated Notes, the fair value of these notes is estimated by discounting scheduled cash flows through maturity (Level 3). The discount rate is estimated using market rates currently being offered on loans with similar terms and credit quality. Judgment is required in interpreting market data to develop these estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize in a current market exchange.
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Stock-based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of stock-based compensation expense | Following is a summary of stock-based compensation expense related to stock options and restricted stock awards for the three and nine months ended June 30, 2020 and June 30, 2019, respectively.
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Schedule of stock options outstanding | Following is a summary of stock option activity for the nine months ended June 30, 2020:
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Schedule of nonvested stock awards activity | Following is a summary of restricted stock activity for the nine months ended June 30, 2020:
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Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of basic and diluted earnings per share | Following is a summary of the components of basic and diluted income (loss) per share for the periods presented:
(a) The following potentially dilutive shares were excluded from the calculation of diluted income (loss) per share as a result of their anti-dilutive effect. Due to the reported net loss for the nine months ended June 30, 2019, all common stock equivalents were excluded from the computation of diluted loss per share for those periods because inclusion would have resulted in anti-dilution.
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share |
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Other Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other liabilities | Other liabilities include the following as of June 30, 2020 and September 30, 2019:
|
Segment Information (Tables) |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment reporting information | The following tables contain our revenue, operating income, and depreciation and amortization by segment for the periods presented:
(a) Operating income (loss) is impacted by impairment and abandonment charges incurred during the periods presented (see Note 5). For the nine months ended June 30, 2020 and June 30, 2019, we recognized $1.1 million and $131.7 million of inventory impairment and abandonment charges, respectively. (b) Corporate and unallocated operating loss includes amortization of capitalized interest, movement in capitalized indirect costs, expenses related to numerous shared services functions that benefit all segments but are not allocated to the operating segments reported above, including information technology, treasury, corporate finance, legal, branding and national marketing, and other amounts that are not allocated to our operating segments. Corporate and unallocated depreciation and amortization represents depreciation and amortization related to assets held by our corporate functions that benefit all segments. For the nine months ended June 30, 2020 and June 30, 2019, we wrote off $1.2 million and $16.9 million of capitalized interest and capitalized indirect costs, respectively (see Note 5 for further information).The following table presents capital expenditures by segment for the periods presented:
The following table presents assets by segment as of June 30, 2020 and September 30, 2019:
(a) Primarily consists of cash and cash equivalents, restricted cash, deferred taxes, capitalized interest and indirect costs, and other items that are not allocated to the segments.
|
Discontinued Operations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Results of Discontinued Operations | The results of our discontinued operations in the condensed consolidated statements of operations for the periods presented were as follows:
|
Description of Business (Details) |
Jun. 30, 2020
state
region
|
---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of states in which home building segments operate | state | 13 |
Number of regions in which entity operates | region | 3 |
Basis of Presentation and Summary of Significant Accounting Policies - Share Repurchase Program (Details) - USD ($) $ / shares in Units, shares in Thousands |
3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2020 |
Mar. 31, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Sep. 30, 2019 |
Dec. 31, 2018 |
|
Accounting Policies [Abstract] | |||||||
Authorized amount repurchase of common stock | $ 50,000,000.0 | ||||||
Share repurchases | $ 10,620,000 | $ 3,300,000 | $ 24,000,000.0 | $ 3,327,000 | $ 34,624,000 | $ 34,600,000 | |
Completed common stock repurchase (in shares) | 362 | 2,200 | |||||
Average price per share (in dollars per share) | $ 9.20 | $ 10.89 | |||||
Remaining authorized repurchase amount | $ 12,000,000.0 |
Basis of Presentation and Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Sep. 30, 2019 |
|
Disaggregation of Revenue [Line Items] | |||||
Total revenue | $ 533,112 | $ 482,738 | $ 1,440,329 | $ 1,306,038 | |
Customer deposits | 16,293 | 16,293 | $ 11,539 | ||
Contract with customer, liability, revenue recognized | 600 | 10,600 | |||
Homebuilding revenue | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | 532,465 | 482,316 | 1,437,850 | 1,304,243 | |
Land sales and other revenue | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | $ 647 | $ 422 | $ 2,479 | $ 1,795 |
Basis of Presentation and Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Oct. 01, 2019 |
Sep. 30, 2019 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right-of-use assets | $ 14,060 | $ 0 | |
Operating lease liabilities | 16,292 | $ 0 | |
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right-of-use assets | 13,895 | $ 13,900 | |
Operating lease liabilities | $ 16,028 | $ 16,000 |
Supplemental Cash Flow Information - Supplemental Disclosure of Non-cash Activity (Details) - USD ($) $ in Thousands |
9 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Oct. 01, 2019 |
Sep. 30, 2019 |
|
Cash and Cash Equivalents [Line Items] | ||||
Operating lease right-of-use assets | $ 14,060 | $ 0 | ||
Operating lease liabilities | 16,292 | 0 | ||
Supplemental disclosure of cash activity: | ||||
Interest payments | 60,678 | $ 64,648 | ||
Income tax payments | 2 | 568 | ||
Tax refunds received | 315 | 12 | ||
Reconciliation of cash, cash equivalents, and restricted cash: | ||||
Cash and cash equivalents | 152,266 | 68,491 | 106,741 | |
Restricted cash | 13,086 | 16,293 | $ 16,053 | |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | 165,352 | $ 84,784 | ||
Accounting Standards Update 2016-02 | ||||
Cash and Cash Equivalents [Line Items] | ||||
Operating lease right-of-use assets | 13,895 | $ 13,900 | ||
Operating lease liabilities | $ 16,028 | $ 16,000 |
Investments in Unconsolidated Entities - Outstanding Borrowings of Unconsolidated Entities and Equity in Income (Loss) (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Sep. 30, 2019 |
---|---|---|
Equity Method Investments and Joint Ventures [Abstract] | ||
Investment in unconsolidated entities | $ 4,044 | $ 3,962 |
Total equity of unconsolidated entities | 5,734 | 9,969 |
Total outstanding borrowings of unconsolidated entities | $ 15,556 | $ 12,658 |
Investments in Unconsolidated Entities - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Sep. 30, 2019 |
|
Equity Method Investments and Joint Ventures [Abstract] | |||||
Impairment of unconsolidated entity investments | $ 0 | $ 0 | $ 0 | $ 0 | |
Schedule of Equity Method Investments [Line Items] | |||||
Equity in income of unconsolidated entities | 4 | 299 | 138 | 316 | |
Equity in income of unconsolidated entities | 0 | $ 0 | 0 | $ 0 | |
Financial Guarantee | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Outstanding guarantees | $ 0 | $ 0 | $ 0 |
Inventory - Schedule of Inventory (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Mar. 31, 2020 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
---|---|---|---|---|---|---|
Inventory Disclosure [Abstract] | ||||||
Homes under construction | $ 607,731 | $ 507,542 | ||||
Development projects in progress | 647,583 | 738,201 | ||||
Land held for future development | 28,531 | 28,531 | ||||
Land held for sale | 16,863 | 12,662 | ||||
Capitalized interest | 132,096 | $ 134,693 | 136,565 | $ 148,825 | $ 144,756 | $ 144,645 |
Model homes | 78,756 | 80,747 | ||||
Total owned inventory | $ 1,511,560 | $ 1,504,248 |
Inventory - Summary of Interests in Lot Option Agreements (Details) - Unconsolidated lot option agreements - USD ($) $ in Thousands |
Jun. 30, 2020 |
Sep. 30, 2019 |
---|---|---|
Real Estate Properties [Line Items] | ||
Deposits & Non-refundable Pre-acquisition Costs Incurred | $ 69,341 | $ 78,202 |
Remaining Obligation | $ 384,892 | $ 389,705 |
Interest - Schedule of Capitalized Interest (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Real Estate Inventory, Capitalized Interest Costs [Roll Forward] | ||||
Capitalized interest in inventory, beginning of period | $ 134,693 | $ 144,756 | $ 136,565 | $ 144,645 |
Interest incurred | 23,012 | 26,782 | 66,839 | 77,506 |
Capitalized interest impaired | (792) | 0 | (792) | (13,907) |
Interest expense not qualified for capitalization and included as other expense | (3,003) | (961) | (6,373) | (1,800) |
Capitalized interest amortized to home construction and land sales expenses | (21,814) | (21,752) | (64,143) | (57,619) |
Capitalized interest in inventory, end of period | $ 132,096 | $ 148,825 | $ 132,096 | $ 148,825 |
Operating Leases - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2020 |
|
Leases [Abstract] | ||
Operating lease expense | $ 1,100 | $ 3,400 |
Operating lease payments | 1,100 | 3,500 |
Increase (decrease) operating leases right-of-use asset | 30 | 3,100 |
Increase (decrease) operating leases liability | $ 30 | $ 3,100 |
Operating Leases - Weighted-Average Remaining Lease Term and Discount Rate (Details) |
Jun. 30, 2020 |
---|---|
Leases [Abstract] | |
Weighted-average remaining lease term | 5 years 2 months 12 days |
Weighted-average discount rate | 4.87% |
Operating Leases - Maturity Analysis of the Annual Undiscounted Cash Flows (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Sep. 30, 2019 |
---|---|---|
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2020 | $ 1,213 | |
2021 | 4,573 | |
2022 | 3,743 | |
2023 | 2,933 | |
2024 | 1,818 | |
Thereafter | 4,270 | |
Total lease payments | 18,550 | |
Less: imputed interest | 2,258 | |
Total operating lease liabilities | $ 16,292 | $ 0 |
Operating Leases - Future Minimum Rental Commitments (Details) $ in Millions |
Sep. 30, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Total future minimum rental commitments | $ 20.2 |
2020 | 4.7 |
2021 | 4.5 |
2022 | 3.6 |
2023 | 2.9 |
2024 | 1.8 |
Thereafter | $ 2.6 |
Contingencies - Warranty (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Commitments and Contingencies Disclosure [Abstract] | ||||
Standard product warranty length, minimum | 1 year | |||
Standard product warranty length, maximum | 2 years | |||
Limited product warranty length (up to) | 10 years | |||
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Balance at beginning of period | $ 12,058 | $ 12,585 | $ 13,388 | $ 15,331 |
Accruals for warranties issued | 2,798 | 2,650 | 7,170 | 7,504 |
Changes in liability related to warranties existing in prior periods | (285) | 157 | (1,369) | (1,811) |
Payments made | (2,279) | (3,155) | (6,897) | (8,787) |
Balance at end of period | $ 12,292 | $ 12,237 | $ 12,292 | $ 12,237 |
Contingencies - Litigation and Other Matters (Details) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019
Community
|
Jun. 30, 2020
USD ($)
|
Sep. 30, 2019
USD ($)
|
|
Legal Reserve | |||
Loss Contingencies [Line Items] | |||
Accrued amounts for litigation and other contingent liabilities | $ 3.6 | $ 3.4 | |
Performance Bonds | |||
Loss Contingencies [Line Items] | |||
Letters of credit secured using cash collateral | 48.7 | ||
Outstanding performance bonds | $ 255.6 | ||
CALIFORNIA | |||
Loss Contingencies [Line Items] | |||
Number of communities | Community | 15 |
Fair Value Measurements - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Fair Value Disclosures [Abstract] | ||||
Impairment charges on projects in progress | $ 0 | $ 0 | $ 0 | $ 110,030,000 |
Impairment charge | 1,100,000 | 131,700,000 | ||
Impairment of land held for sale | $ 1,257,000 | $ 0 | $ 1,257,000 | $ 38,588,000 |
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Mar. 31, 2020 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Abstract] | ||||||
Expense (benefit) from income taxes | $ 4,981 | $ (2,180) | $ 8,940 | $ (44,260) | ||
Tax credit | 800 | 9,800 | ||||
Inventory impairments and abandonments | $ 2,266 | $ 0 | $ 2,266 | $ 148,618 | ||
Deferred tax assets, tax credit carryforwards | $ 4,600 | $ 4,600 |
Stock-based Compensation - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Share-based Payment Arrangement [Abstract] | ||||
Stock-based compensation expense | $ 1,659 | $ 3,699 | $ 4,869 | $ 7,993 |
Stock-based Compensation - Narrative (Details) - USD ($) $ in Thousands |
1 Months Ended | 9 Months Ended | |
---|---|---|---|
Nov. 30, 2019 |
Jun. 30, 2020 |
Sep. 30, 2019 |
|
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation costs related to non-vested stock options award | $ 56 | $ 100 | |
Weighted average period to recognize remaining cost | 6 months 21 days | ||
Performance-Based Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 3 years | ||
Performance based restricted stock settled in cash payment (in shares) | 135,337 | ||
Cash settlement of performance-based restricted stock | $ 2,100 | ||
Nonvested Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average period to recognize remaining cost | 1 year 9 months 25 days | ||
Unrecognized compensation costs related to non-vested stock awards | $ 9,500 | $ 9,000 |
Stock-based Compensation - Restricted Stock Awards (Details) |
9 Months Ended |
---|---|
Jun. 30, 2020
shares
| |
Restricted Stock | |
Shares | |
Beginning of period (in shares) | 1,390,421 |
Granted (in shares) | 587,702 |
Vested (in shares) | (539,198) |
Forfeited (in shares) | (17,674) |
End of period (in shares) | 1,421,251 |
Performance-Based Restricted Stock Awards | |
Shares | |
Beginning of period (in shares) | 778,814 |
Granted (in shares) | 260,131 |
Vested (in shares) | (242,921) |
Forfeited (in shares) | 0 |
End of period (in shares) | 796,024 |
Time Based Restricted Stock Awards | |
Shares | |
Beginning of period (in shares) | 611,607 |
Granted (in shares) | 327,571 |
Vested (in shares) | (296,277) |
Forfeited (in shares) | (17,674) |
End of period (in shares) | 625,227 |
Earnings Per Share - Antidilutive Securities (Details) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Stock options | ||||
Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 372 | 406 | 390 | 529 |
Time-based restricted stock | ||||
Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 286 | 94 | 49 | 643 |
Performance-based restricted stock | ||||
Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 | 0 | 796 |
Other Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Mar. 31, 2020 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
---|---|---|---|---|---|---|
Other Liabilities Disclosure [Abstract] | ||||||
Accrued bonus and deferred compensation | $ 37,515 | $ 36,237 | ||||
Customer deposits | 16,293 | 11,539 | ||||
Accrued interest | 15,748 | 12,767 | ||||
Accrued warranty expense | 12,292 | $ 12,058 | 13,388 | $ 12,237 | $ 12,585 | $ 15,331 |
Litigation accrual | 3,570 | 3,420 | ||||
Income tax liabilities | 1,177 | 648 | ||||
Other | 24,035 | 31,430 | ||||
Total | $ 110,630 | $ 109,429 |
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