EX-99.1 2 a06-10433_1ex99d1.htm EX-99

Exhibit 99.1

 

 

 

 

 

 

 

 

 

PRESS RELEASE

FOR IMMEDIATE RELEASE

Beazer Homes Reports Record Second Quarter 2006 EPS of $2.35

Company Repurchases 1.01 Million Shares in Q2 06;

Diluted EPS Now Expected to be in the Range of $10.00 - $10.50 for Fiscal Year 2006

 

ATLANTA, April 27, 2006 -- Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced results for the quarter ended March 31, 2006, reporting a record for second quarter earnings per share. Highlights of the quarter, compared to the same period of the prior year, are as follows:

 

Quarter Ended March 31, 2006

 

•                  Net income of $104.4 million, or $2.35 per diluted share, compared to a reported net loss of $84.3 million, or $2.09 per diluted share in the prior year’s second quarter, which included a non-cash goodwill impairment charge of $130.2 million. Excluding the goodwill impairment charge, adjusted earnings per diluted share in last year’s second quarter was $1.04.

•                  Home closings: 4,273 (up 18.6%).

•                  Total revenues: $1.27 billion (up 30.0%).

•                  Operating income margin:  13.0%, compared to an operating loss margin in the prior year’s second quarter of (6.0%), which included the goodwill impairment charge.

•                  New orders: 4,224 homes (down 19.4%).

•                  Backlog at 3/31/06: 9,227 homes with a sales value of $2.79 billion, compared to 10,064 homes with a sales value of $2.90 billion at 3/31/05.

•                  Repurchased 1.01 million shares for approximately $66.2 million; year-to-date share repurchases totaled 2.02 million for $133.2 million.

 

Record March Quarter

“We are pleased to announce record results for our second quarter of fiscal 2006,” said President and Chief Executive Officer, Ian J. McCarthy. “We generated quarterly revenues of $1.27 billion on home closings of 4,273, up 30% and 19% from the second quarter of fiscal 2005, respectively, both second quarter company records. Furthermore, net earnings and earnings per diluted share in the March quarter totaled $104 million, and $2.35, respectively, both also second quarter records.”

 

“In a number of markets across the country, we have seen the pace of sales decline and price appreciation moderate relative to that experienced over the past several years, as evidenced by the lower net orders this quarter,” McCarthy continued. “However, we continue to believe that the long-term industry fundamentals, including increased demand driven by demographic and employment trends coupled with further supply constraints in our major markets, remain compelling. Our broad geographic and product diversity, coupled with our commitment to profitable growth and the optimal allocation of capital, position us well in both the near and long term business environments.”

 

Closings of 4,273 homes represents a second quarter record and resulted from year-over-year increases in all regions except for the West. Increased closings in Arizona, Colorado and Nevada were offset by a decline in California, which was particularly impacted by continued entitlement delays in Sacramento, which have led to

 


 

slower than anticipated community openings, coupled with moderating demand in that market.

 

Net new home orders totaled 4,224 homes for the quarter, where increases in several markets in both the Southeast and Central regions were offset primarily by significantly lower new home orders in the West region. In addition, during the quarter the company experienced an increase in the rate of order cancellations from the prior year. In the West, sales declines in Arizona, California and Nevada resulted from both moderating demand and delays associated with community openings. Both of these issues were particularly pronounced in Sacramento, where new order declines were the most significant. In addition, lower new home orders in some Florida markets resulted primarily from moderating demand relative to extremely high levels experienced during the previous year. While orders in the Mid-Atlantic were lower than year-ago levels, market conditions in this region appear to be improving sequentially from those experienced in the first quarter of the fiscal year.

 

Financial Performance in March Quarter

 “We achieved record earnings and improved operating income margin this quarter as we continue to focus on enhanced profitability and the optimal allocation of capital,” said James O’Leary, Executive Vice President and Chief Financial Officer. “We reduced investment in underperforming markets while investing for the future in our most profitable markets and providing a meaningful return to our shareholders through our share repurchase program. During the quarter, we exited certain Indiana sub markets and curtailed operations in Memphis, with the expectation of redeploying this capital into higher returning opportunities prospectively. These actions, together with our continued focus on improved profitability, should position us well going forward.”

 

The company achieved a 13.0% operating income margin in the second quarter, which was an improvement both from the first quarter and year-over-year. In the year ago period, operating income margin was negatively impacted by both the $130.2 million goodwill impairment charge and $45.0 million of expenses associated with the Trinity class action settlement.

 

Share Repurchases

During the second quarter of fiscal 2006, the company repurchased 1,007,200 shares of its common stock under its 10 million share repurchase authorization for approximately $66.2 million or $65.73 per share. At the same time, the company maintained a debt to capitalization ratio of 49%, within its target range. Year to date, the company has repurchased 2,021,800 shares, for a total of $133.2 million.

 

Fiscal 2006 EPS Outlook

McCarthy concluded, “We expect continued execution of our Profitable Growth Strategy, including our share repurchase program, to result in continued growth and enhanced shareholder value in the near and long term. However, the current sales environment in many markets is more difficult than previously anticipated. In addition, as we optimize our capital base and exit markets and land positions returning less than our overall cost of capital, we incur some incremental period costs. As such, we now have broadened our range for expected fiscal 2006 diluted earnings per share to $10.00-$10.50 to explicitly address these factors. This assumes no further deterioration in new order trends during the remaining spring and summer months of this year.”

 

 

Conference Call

The company will hold a conference call today, April 27, 2006, at 11:00 AM ET to discuss the results and take questions. You may listen to the conference call and view the company’s slide presentation over the internet by going to the “Investor Relations” section of the company’s website at www.beazer.com. To access the conference call by telephone, listeners should dial 800-369-1904. To be admitted to the call, verbally supply the passcode “BZH”. A replay of the call will be available shortly after the conclusion of the live call. To directly access the replay, dial 800-239-4680 (available until 5:00 PM ET on May 4, 2006), or visit www.beazer.com.

 

Beazer Homes USA, Inc., headquartered in Atlanta, is one of the country’s ten largest single-family homebuilders with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Mississippi, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia and also provides mortgage origination and title services to its homebuyers. Beazer Homes, a Fortune 500 company, is listed on the New York Stock Exchange under the ticker symbol “BZH.”

 


 

Forward-Looking Statements

Certain statements in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to, changes in general economic conditions, changes in levels of customer demand, fluctuations in interest rates, increases in raw materials and labor costs, levels of competition, potential liability as a result of construction defect, product liability and warranty claims, the possibility that the company’s strategies to broaden target price points and lessen dependence on the entry-level segment in certain markets will not achieve desired results, and other factors described in the company’s Annual Report on Form 10-K for the year ended September 30, 2005 filed with the Securities and Exchange Commission on December 9, 2005.

 

Use of Non-GAAP Financial Information

In addition to the results in this press release reported in accordance with generally accepted accounting principles in the United States (“GAAP”), the company has provided information regarding adjusted net income and earnings per share which excludes the effects of the non-cash goodwill impairment charge recorded during the second quarter of fiscal 2005. Management believes that these adjusted financial results are useful to both management and investors in the analysis of the company’s financial performance when comparing it to prior periods and that they provide investors with an important perspective on the current underlying operating performance of the business by isolating the impact of non-cash adjustments related to a previous acquisition.

 

Below is a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.

 

(in thousands, except per share data)

 

Three Months Ended
March 31, 2005

 

 

 

 

 

Reported net loss

 

$

(84,344

)

Reported net loss per common share

 

$

(2.09

)

 

 

 

 

Adjusted Net Income and Earnings Per Share:

 

 

 

Reported net loss

 

$

(84,344

)

Goodwill impairment charge

 

130,235

 

Net income, excluding goodwill impairment charge

 

$

45,891

 

 

 

 

 

After-tax interest add-back to pro-forma net income for ‘if converted’ treatment of convertible notes in calculation of diluted net income per common share

 

$

1,337

 

 

 

 

 

Adjusted diluted net income per common share, excluding goodwill impairment charge

 

$

1.04

 

 

 

 

 

Diluted weighted average shares outstanding

 

45,597

 

 

Adjusted diluted net income per share, excluding the goodwill impairment loss was calculated by dividing net income, excluding goodwill impairment charge, by the weighted average of all potentially dilutive common shares that were outstanding during the period presented. Diluted net loss per share, as reported in the company’s income statement in accordance with GAAP, disregards the effect of potentially dilutive common shares, as a net loss causes dilutive shares to have an anti-dilutive effect.

 

Contact:

Leslie H. Kratcoski

 

Vice President, Investor Relations & Corporate Communications

 

(770) 829-3764

 

lkratcos@beazer.com`

 

-Tables Follow-   

 


 

BEAZER HOMES USA, INC.

CONSOLIDATED OPERATING AND FINANCIAL DATA

(Dollars in thousands, except per share amounts)

 

FINANCIAL DATA

 

 

 

Quarter Ended
March 31,

 

Six Months Ended
March 31,

 

 

 

2006

 

2005

 

2006

 

2005

 

INCOME STATEMENT

 

 

 

 

 

 

 

 

 

Revenues

 

$

1,269,091

 

$

976,248

 

$

2,374,707

 

$

1,888,075

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Home construction and land sales

 

954,596

 

796,057

 

1,787,382

 

1,492,412

 

Selling, general and administrative expense

 

149,793

 

108,070

 

282,871

 

212,664

 

Goodwill impairment charge

 

—

 

130,235

 

—

 

130,235

 

Operating income (loss)

 

164,702

 

(58,114

)

304,454

 

52,764

 

Equity in income of unconsolidated joint ventures

 

330

 

301

 

682

 

199

 

Other income

 

1,582

 

1,436

 

5,685

 

4,000

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

166,614

 

(56,377

)

310,821

 

56,963

 

Income taxes

 

62,263

 

27,967

 

116,557

 

71,603

 

Net income (loss)

 

$

104,351

 

$

(84,344

)

$

194,264

 

$

(14,640

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

2.58

 

$

(2.09

)

$

4.77

 

$

(0.36

)

Diluted

 

$

2.35

 

$

(2.09

)

$

4.34

 

$

(0.36

)

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, in thousands:

 

 

 

 

 

 

 

 

 

Basic

 

40,442

 

40,409

 

40,703

 

40,352

 

Diluted

 

45,066

 

40,409

 

45,395

 

40,352

 

 

 

 

 

 

 

 

 

 

 

Interest incurred

 

$

27,903

 

$

21,082

 

$

53,436

 

$

41,471

 

Interest amortized to cost of sales

 

$

20,542

 

$

17,353

 

$

38,717

 

$

33,312

 

EPS interest add back - Convertible Debt

 

$

1,347

 

$

—

 

$

2,691

 

$

—

 

Depreciation and amortization

 

$

6,332

 

$

5,142

 

$

11,042

 

$

9,635

 

 

SELECTED BALANCE SHEET DATA

 

 

 

March 31,
2006

 

September 30,
2005

 

March 31,
2005

 

 

 

Cash

 

$

15,183

 

$

297,098

 

$

15,930

 

 

 

Inventory

 

3,481,162

 

2,901,165

 

2,715,191

 

 

 

Total assets

 

4,111,743

 

3,770,516

 

3,144,047

 

 

 

Total debt (net of discount of $3,883, $4,118 and $1,012)

 

1,514,069

 

1,321,936

 

1,163,688

 

 

 

Shareholders’ equity

 

1,576,943

 

1,504,688

 

1,219,659

 

 

 

 


 

OPERATING DATA

 

SELECTED OPERATING DATA

 

 

 

Quarter Ended
March 31,

 

Six Months Ended
March 31,

 

 

 

2006

 

2005

 

2006

 

2005

 

Closings:

 

 

 

 

 

 

 

 

 

Southeast region

 

1,491

 

1,196

 

2,874

 

2,435

 

West region

 

1,356

 

1,358

 

2,496

 

2,550

 

Central region

 

371

 

267

 

707

 

457

 

Mid-Atlantic region

 

502

 

366

 

955

 

736

 

Midwest region

 

553

 

415

 

1,070

 

998

 

Total closings

 

4,273

 

3,602

 

8,102

 

7,176

 

New orders, net of cancellations:

 

 

 

 

 

 

 

 

 

Southeast region

 

1,616

 

1,701

 

3,180

 

2,892

 

West region

 

1,035

 

1,927

 

2,241

 

3,256

 

Central region

 

518

 

406

 

875

 

643

 

Mid-Atlantic region

 

517

 

561

 

800

 

1,068

 

Midwest region

 

538

 

644

 

1,000

 

925

 

Total new orders

 

4,224

 

5,239

 

8,096

 

8,784

 

Backlog units at end of period:

 

 

 

 

 

 

 

 

 

Southeast region

 

3,380

 

3,086

 

 

 

 

 

West region

 

2,862

 

3,846

 

 

 

 

 

Central region

 

683

 

615

 

 

 

 

 

Mid-Atlantic region

 

1,038

 

1,379

 

 

 

 

 

Midwest region

 

1,264

 

1,138

 

 

 

 

 

Total backlog units

 

9,227

 

10,064

 

 

 

 

 

Dollar value of backlog at end of period

 

$

2,793,519

 

$

2,898,247

 

 

 

 

 

 

SUPPLEMENTAL FINANCIAL DATA:

 

 

 

Quarter Ended
March 31,

 

Six Months Ended
March 31,

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

Home sales

 

$

1,239,859

 

$

960,538

 

$

2,313,286

 

$

1,863,412

 

Land and lot sales

 

20,596

 

7,763

 

45,551

 

8,978

 

Mortgage origination revenue

 

13,135

 

11,310

 

24,113

 

22,164

 

Intercompany elimination - mortgage

 

(4,499

)

(3,363

)

(8,243

)

(6,479

)

Total revenues

 

$

1,269,091

 

$

976,248

 

$

2,374,707

 

$

1,888,075

 

Cost of home construction and land sales

 

 

 

 

 

 

 

 

 

Home sales

 

$

940,633

 

$

794,455

 

$

1,751,910

 

$

1,492,754

 

Land and lot sales

 

18,462

 

4,965

 

43,715

 

6,137

 

Intercompany elimination - mortgage

 

(4,499

)

(3,363

)

(8,243

)

(6,479

)

Total costs of home construction and land sales

 

$

954,596

 

$

796,057

 

$

1,787,382

 

$

1,492,412

 

Selling, general and administrative

 

 

 

 

 

 

 

 

 

Homebuilding operations

 

$

139,605

 

$

99,436

 

$

262,000

 

$

196,249

 

Mortgage origination operations

 

10,188

 

8,634

 

20,871

 

16,415

 

Total selling, general and administrative

 

$

149,793

 

$

108,070

 

$

282,871

 

$

212,664