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 -- Beazer Homes USA This article documents an lawsuit. Information may change rapidly as the suit progresses. . Beazer Homes USA (NYSE: BZH) is a Fortune 500 American homebuilding company based in Atlanta, Georgia. , Inc. (NYSE NYSE See: New York Stock Exchange : BZH BZH Breizh (French Brittany) BZH Big Zen Hugs ) (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 di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. 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 Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. 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 operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. 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 Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. 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 CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. in our major markets, remain compelling. Our broad geographic and product diversity, coupled with our commitment to profitable growth and the optimal allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as 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 An individual's right to receive a value or benefit provided by law. Commonly recognized entitlements are benefits, such as those provided by Social Security or Workers' Compensation. 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 Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. margin this quarter as we continue to focus on enhanced profitability and the optimal allocation of capital," said James O'Leary James O'Leary may refer to;
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 The right or permission to use a system resource; the process of granting access. See access control. for approximately $66.2 million or $65.73 per share. At the same time, the company maintained a debt to capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. 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 (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. 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 optimize - optimisation our capital base and exit markets and land positions returning less than our overall cost of capital, we incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. some incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. period costs. As such, we now have broadened our range for expected fiscal 2006 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of to $10.00 - $10.50 to explicitly address these factors. This assumes no further deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. 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 Investor relations The process by which the corporation communicates with its investors. " 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 Mexico, state in the SW United States. At its northwestern corner are the so-called Four Corners, where Colorado, New Mexico, Arizona, and Utah meet at right angles; New Mexico is also bordered by Oklahoma (NE), Texas (E, S), and Mexico (S). , New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. , Ohio, Pennsylvania, South Carolina South Carolina, state of the SE United States. It is bordered by North Carolina (N), the Atlantic Ocean (SE), and Georgia (SW). Facts and Figures Area, 31,055 sq mi (80,432 sq km). Pop. (2000) 4,012,012, a 15. , Tennessee, Texas, Virginia and West Virginia West Virginia, E central state of the United States. It is bordered by Pennsylvania and Maryland (N), Virginia (E and S), and Kentucky and, across the Ohio R., Ohio (W). Facts and Figures Area, 24,181 sq mi (62,629 sq km). Pop. and also provides mortgage origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real and title services to its homebuyers. Beazer Homes, a Fortune 500 company, is listed on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors "BZH." Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 defect - bug , product liability and warranty claims, the possibility that the company's strategies to broaden target price points and lessen less·en v. less·ened, less·en·ing, less·ens v.tr. 1. To make less; reduce. 2. Archaic To make little of; belittle. v.intr. To become less; decrease. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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 i·so·late tr.v. i·so·lat·ed, i·so·lat·ing, i·so·lates 1. To set apart or cut off from others. 2. To place in quarantine. 3. 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.
Three Months Ended
March 31, 2005
-----------------------
(in thousands, except per share data)
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. -Tables Follow-
BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL DATA
(Dollars in thousands, except per share amounts)
FINANCIAL DATA
--------------
Quarter Ended Six Months Ended
March 31, 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, Sept. 30, March 31,
2006 2005 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
BEAZER HOMES USA, INC.
CONSOLIDATED OPERATING AND FINANCIAL DATA (Continued)
(Dollars in thousands)
OPERATING DATA
--------------
Quarter Ended Six Months Ended
March 31, March 31,
--------------------------------------------
SELECTED OPERATING DATA 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
Quarter Ended Six Months Ended
March 31, March 31,
---------------------- ---------------------
SUPPLEMENTAL FINANCIAL
DATA: 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
========== ========== ========== ==========
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