Beazer Homes USA, Inc. BZH reported dismal first-quarter fiscal 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. The metrics also fell from the year-ago quarter’s figures due to a decline in home closings and average selling price (ASP).
This leading homebuilder’s shares dropped 4.6% in the after-hours trading session on Feb 1, after the earnings release.
Nonetheless, BZH reported a significant increase in net new orders compared with the previous year’s levels, driven by a higher sales pace and an expanding community count. The company is well-positioned to achieve its growth and profitability targets for the fiscal year, given its large backlog, improved cycle times and community count growth.
Earnings & Revenue Discussion
Beazer Homes reported quarterly adjusted earnings of 70 cents per share, missing the Zacks Consensus Estimate of 71 cents by 1.4% and declining 12.5% from the year-ago period’s levels.
Beazer Homes USA, Inc. Price, Consensus and EPS Surprise
Beazer Homes USA, Inc. Price, Consensus and EPS Surprise
Beazer Homes USA, Inc. price-consensus-eps-surprise-chart | Beazer Homes USA, Inc. Quote
Total revenues came in at $386.8 million, down 13.1% year over year. The reported figure missed the consensus mark of $426.1 million by 9.2%.
Home Closings, Orders, Margins
Homebuilding revenues of $380.9 million declined 14.2% from the prior-year quarter’s levels. Geography-wise, it generated $234.4 million in revenues from the West, $71.7 million from the East and $74.8 million from the Southeast regions. Total home closings fell 10.8% year over year to 743 homes. The ASP for home closed was down 3.8% year over year to $512,700.
Net new orders increased 70.7% from the prior year’s levels to 823. Cancellation rates fell to 19% from 37.1% a year ago. Sales pace rose 50.4% year over year to two orders per community per month. The uptick reflects an improved sales environment.
The backlog of homes at the quarter's end was 1,791 homes, up 2.9% year over year. However, the value of backlog dropped 0.9% from the prior year’s levels to $932.8 million due to a 3.7% year-over-year decline in ASP.
Homebuilding gross margin (excluding impairments, abandonments and amortized interest) was up 60 basis points (bps) to 22.9% for the fiscal first quarter, owing to a decline in build costs. An increase in price concessions and closing cost incentives partially offset this.
Selling, general and administrative expenses, as a percentage of total revenues, increased 200 bps year over year to 14.3% due to lower revenues. The adjusted EBITDA was $38 million, down 19.4% from a year ago levels due to lower homebuilding revenues, partially offset by higher gross margin.
Balance Sheet Details
At the fiscal first quarter-end, the company had $104.2 million cash and cash equivalents and $300 million available on the unsecured revolving credit facility. At the end of fiscal 2023, cash and cash equivalents were $345.6 million and $265 million available on the senior unsecured revolving credit facility. Total debt (less debt issuance costs) totaled $974.6 million, down from $978 million at fiscal 2023-end.
Inventory at the fiscal first-quarter end was $1.95 billion compared with $1.76 billion at fiscal 2023-end. In the fiscal first quarter, land acquisition and land development spending was $198.7 million versus $114.7 million a year ago.
Q2’FY24 Outlook
The company expects sales pace to be around 3 per community per month and an ASP of $515,000. Also, the adjusted homebuilding gross margin is expected to be nearly 21%. SG&A, as a percentage of total revenues, is likely to be around 12%. The adjusted EBITDA is projected to be above $50 million. The tax rate is likely to be about 11% for the fiscal second quarter. The adjusted earnings per share is expected to be around 90 cents.
Zacks Rank
Beazer Homes currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.
A Few Recent Construction Releases
NVR, Inc. NVR reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and Homebuilding revenues missing the same. Both the top and bottom lines decreased on a year-over-year basis due to softened housing demand, given higher mortgage rates during the period.
Meritage Homes Corporation MTH reported better-than-expected results for fourth-quarter 2023. Both earnings and total closing revenues surpassed the Zacks Consensus Estimate.
Earnings and total revenues declined on a year-over-year basis. Also, total closing revenues fell due to reduced home prices and volume, along with increased financing incentives and higher lot costs.
PulteGroup Inc. PHM reported mixed results in fourth-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates, but revenues missed the same. Both metrics decreased year over year.
Nonetheless, during the latter part of the fourth quarter, PulteGroup observed a notable surge in buyer activity, mainly attributed to declining interest rates. December emerged as the quarter's peak sales month. With the anticipation of sustained lower interest rates in 2024, the company remains optimistic that the enhanced affordability landscape will continue to attract prospective buyers.
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