Beazer Homes Reports Strong Second Quarter Fiscal 2021 Results

Rhea-AI Summary

Beazer Homes USA, Inc. (NYSE: BZH) reported strong financial results for the second quarter of 2021, showcasing a net income of $24.6 million, doubling from $10.6 million in Q2 2020. Homebuilding revenue reached $547.4 million, a 12.2% increase, with gross margin improving to 17.8%. Adjusted EBITDA rose 46.2% to $64.2 million. The company anticipates earnings per share for fiscal 2021 to exceed $3.00, supported by a 54.9% increase in backlog value. With continued operational strength and a focus on ESG initiatives, Beazer aims to enhance profitability and shareholder returns.

Positive

• Net income doubled to $24.6 million.
• Homebuilding revenue increased by 12.2% to $547.4 million.
• Adjusted EBITDA rose 46.2% to $64.2 million.
• Backlog value increased by 54.9% to $1,386.4 million.
• Earnings per share expected to exceed $3.00 for fiscal 2021.

Negative

• Average community count decreased by 21.6%.
• Cancellation rate improved but remains at 10.0%.

Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced its financial results for the three and six months ended March 31, 2021.

“We had an extraordinary second quarter, driven by strong operational execution and continued strength in the housing market,” said Allan P. Merrill, the company’s Chairman and Chief Executive Officer. “We generated significant growth in sales pace, average sales price, gross margin and adjusted EBITDA, leading to a doubling in our quarterly net income versus last year. At the same time, we improved our balance sheet efficiency by increasing our share of lots controlled by options while continuing to reduce leverage.”

Commenting on fiscal 2021 full-year expectations, Mr. Merrill said, “With evidence of continued strength in new home demand and the enhanced visibility provided by a backlog that is up more than 50% in dollar value compared to last year, we now expect fiscal 2021 earnings per share to be above $3.00.”

Looking beyond fiscal 2021, Mr. Merrill concluded, “Our balanced growth strategy and commitment to expanding our already robust ESG program, has positioned us to generate further improvements in profitability and returns for shareholders in the years ahead, while creating durable and growing value for our customers, employees and partners as well.”

Beazer Homes Fiscal Second Quarter 2021 Highlights and Comparison to Fiscal Second Quarter 2020

• Net income from continuing operations of $24.6 million, compared to net income from continuing operations of $10.6 million in fiscal second quarter 2020
• Adjusted EBITDA of $64.2 million, up 46.2%
• Homebuilding revenue of $547.4 million, up 12.2% on a 3.2% increase in average selling price to $394.4 thousand and an 8.7% increase in home closings to 1,388
• Homebuilding gross margin was 17.8%, up 170 basis points. Excluding impairments, abandonments and amortized interest, homebuilding gross margin was 22.2%, up 140 basis points
• SG&A as a percentage of total revenue was 11.0%, down 100 basis points year-over-year
• Net new orders of 1,854, up 11.6% on a 42.3% increase in orders/community/month to 4.7 and a 21.6% decrease in average community count to 131
• Dollar value of backlog of $1,386.4 million, up 54.9%
• Unrestricted cash at quarter end was $355.5 million; total liquidity was $605.5 million

The following provides additional details on the Company's performance during the fiscal second quarter 2021:

Profitability. Net income from continuing operations was $24.6 million, generating diluted earnings per share of $0.81. Second quarter adjusted EBITDA of $64.2 million was up $20.3 million year-over-year. The increase in profitability was primarily driven by higher revenue, homebuilding gross margin and improved SG&A leverage.

Orders. Net new orders for the second quarter increased to 1,854, up 11.6% from the prior year, achieving the highest second quarter and the highest first half of the year level in more than a decade. The increase in net new orders was driven by a 42.3% increase in the absorption rate to 4.7 sales per community per month, up from 3.3 in the previous year, partially offset by a 21.6% decrease in average community count to 131. The cancellation rate for the quarter was 10.0%, an improvement of 580 basis points year-over-year.

Backlog. The dollar value of homes in backlog as of March 31, 2021 increased 54.9% to $1,386.4 million, representing 3,303 homes, compared to $895.0 million, representing 2,231 homes, at the same time last year. The average selling price of homes in backlog was $419.7 thousand, up 4.6% year-over-year.

Homebuilding Revenue. Second quarter homebuilding revenue was $547.4 million, up 12.2% year-over-year. The increase in homebuilding revenue was driven by an 8.7% increase in home closings to 1,388 homes and a 3.2% increase in the average selling price to $394.4 thousand.

Homebuilding Gross Margin. Homebuilding gross margin (excluding impairments, abandonments and amortized interest) was 22.2% for the second quarter, up 140 basis points year-over-year, driven primarily by lower sales incentives and pricing increases. Gross margin was up across each of our geographic segments.

SG&A Expenses. Selling, general and administrative expenses as a percentage of total revenue was 11.0% for the quarter, down 100 basis points year-over-year as a result of the Company's continued focus on overhead cost management while driving revenue growth.

Liquidity. At the close of the second quarter, the Company had approximately $605.5 million of available liquidity, including $355.5 million of unrestricted cash and a fully undrawn revolving credit facility capacity of $250.0 million.

Debt Repurchases. The Company repurchased $9.7 million of its outstanding 5.875% unsecured Senior Notes due October 2027 at an average price of $104.792 per $100 principal amount.

Commitment to Net Zero Energy Ready

In April 2021, we received the 2021 ENERGY STAR® Partner of the Year—Sustained Excellence Award from the U.S. Environmental Protection Agency and the U.S. Department of Energy for the sixth consecutive year. The Sustained Excellence Award represents the highest honor bestowed under the ENERGY STAR® program and underscores our commitment to improve energy efficiency. As described in our most recent proxy statement, in December 2020 we became the first national builder to publicly commit to ensuring every home we build is Net Zero Energy Ready by the end of 2025. We calculate the energy performance of our homes using the industry standard Home Energy Rating System (HERS), which measures energy efficiency on an easy to understand scale: the lower the number, the more energy efficient the home. Net Zero Energy Ready means that every home we build will have a gross HERS index score (before any benefit of renewable energy production) of 45 or less, and homeowners will be able to achieve net zero energy by attaching a properly sized renewable energy system. Reaching our Net Zero Energy Ready target represents a significant improvement in energy efficiency and will lead to a reduction in greenhouse gas emissions.

Summary results for the three and six months ended March 31, 2021 are as follows:

	Three Months Ended March 31,
	2021				2020				Change*
New home orders, net of cancellations	1,854				1,661				11.6		%
Orders per community per month	4.7				3.3				42.3		%
Average active community count	131				167				(21.6		)%
Actual community count at quarter-end	132				166				(20.5		)%
Cancellation rates	10.0		%		15.8		%		-580 bps
Total home closings	1,388				1,277				8.7		%
Average selling price (ASP) from closings (in thousands)	$	394.4			$	382.1			3.2		%
Homebuilding revenue (in millions)	$	547.4			$	488.0			12.2		%
Homebuilding gross margin	17.8		%		16.1		%		170 bps
Homebuilding gross margin, excluding impairments and abandonments (I&A)	17.8		%		16.1		%		170 bps
Homebuilding gross margin, excluding I&A and interest amortized to cost of sales	22.2		%		20.8		%		140 bps
Income from continuing operations before income taxes (in millions)	$	32.3			$	14.8			$	17.6
Expense from income taxes (in millions)	$	7.7			$	4.2			$	3.5
Income from continuing operations (in millions)	$	24.6			$	10.6			$	14.0
Basic income per share from continuing operations	$	0.82			$	0.36			$	0.46
Diluted income per share from continuing operations	$	0.81			$	0.35			$	0.46
Income from continuing operations before income taxes (in millions)	$	32.3			$	14.8			$	17.6
Loss on debt extinguishment (in millions)	$	(0.6	)		$	—			$	(0.6	)
Income from continuing operations excluding loss on debt extinguishment before income taxes (in millions)(a)	$	32.9			$	14.8			$	18.1
Income from continuing operations excluding loss on debt extinguishment after income taxes (in millions)(b)	$	25.0			$	10.6			$	14.4
Net income	$	24.5			$	10.6			$	13.9
Land and land development spending (in millions)	$	97.3			$	123.0			$	(25.7	)
Adjusted EBITDA (in millions)	$	64.2			$	43.9			$	20.3
LTM Adjusted EBITDA (in millions)	$	238.9			$	194.0			$	44.9

*		Change and totals are calculated using unrounded numbers.
(a)		Management believes that this measure assists investors in understanding and comparing the operating characteristics of homebuilding activities by eliminating the differences in companies' respective level of loss on debt extinguishment. This measure should not be considered an alternative to income from continuing operations before income taxes determined in accordance with GAAP as an indicator of operating performance.
(b)		For the three months ended March 31, 2021, the loss on debt extinguishment was tax-effected at the effective tax rate of 24.2%. For the three months ended March 31, 2020, there was no loss on debt extinguishment.
"LTM" indicates amounts for the trailing 12 months.

	Six Months Ended March 31,
	2021				2020				Change*
New home orders, net of cancellations	3,296				2,912				13.2		%
LTM orders per community per month	3.8				2.9				31.0		%
Cancellation rates	11.0		%		15.4		%		-440 bps
Total home closings	2,502				2,389				4.7		%
ASP from closings (in thousands)	$	388.3			$	379.0			2.5		%
Homebuilding revenue (in millions)	$	971.6			$	905.4			7.3		%
Homebuilding gross margin	17.7		%		15.7		%		200 bps
Homebuilding gross margin, excluding I&A	17.8		%		15.7		%		210 bps
Homebuilding gross margin, excluding I&A and interest amortized to cost of sales	22.2		%		20.3		%		190 bps
Income from continuing operations before income taxes (in millions)	$	48.5			$	17.4			$	31.1
Expense from income taxes (in millions)	$	11.8			$	4.0			$	7.9
Income from continuing operations (in millions)	$	36.7			$	13.4			$	23.3
Basic income per share from continuing operations	$	1.23			$	0.45			$	0.78
Diluted income per share from continuing operations	$	1.22			$	0.45			$	0.77
Income from continuing operations before income taxes (in millions)	$	48.5			$	17.4			$	31.1
Loss on debt extinguishment (in millions)	$	(0.6	)		$	—			$	(0.6	)
Inventory impairments and abandonments (in millions)	$	(0.5	)		$	—			$	(0.5	)
Income from continuing operations excluding loss on debt extinguishment, and inventory impairments and abandonments before income taxes (in millions)(a)	$	49.6			$	17.4			$	32.2
Income from continuing operations excluding loss on debt extinguishment, and inventory impairments and abandonments after income taxes (in millions)(b)	$	37.4			$	13.4			$	24.0
Net income	$	36.5			$	13.4			$	23.2
Land and land development spending (in millions)	$	206.9			$	269.0			$	(62.1	)
Adjusted EBITDA (in millions)	$	107.8			$	73.3			$	34.5

*		Change and totals are calculated using unrounded numbers.
(a)		Management believes that this measure assists investors in understanding and comparing the operating characteristics of homebuilding activities by eliminating the differences in companies' respective level of loss on debt extinguishment and level of impairments. This measure should not be considered an alternative to income from continuing operations before income taxes determined in accordance with GAAP as an indicator of operating performance.
(b)		For the six months ended March 31, 2021, loss on debt extinguishment, and inventory impairments and abandonments were tax-effected at the effective tax rate of 24.2%. For the six months ended March 31, 2020, there were no loss on debt extinguishment, and inventory impairments and abandonments.
"LTM" indicates amounts for the trailing 12 months.

	As of March 31,
	2021				2020				Change
Backlog units	3,303				2,231				48.1	%
Dollar value of backlog (in millions)	$	1,386.4			$	895.0			54.9	%
ASP in backlog (in thousands)	$	419.7			$	401.2			4.6	%
Land and lots controlled	18,230				19,654				(7.2	)%

Conference Call

The Company will hold a conference call on April 29, 2021 at 5:00 p.m. ET to discuss these results. Interested parties may listen to the conference call and view the Company's slide presentation on the "Investor Relations" page of the Company's website, www.beazer.com. In addition, the conference call will be available by telephone at 800-475-0542 (for international callers, dial 517-308-9429). To be admitted to the call, enter the pass code “8571348". A replay of the conference call will be available, until 10:00 PM ET on May 6, 2021 at 800-839-8789 (for international callers, dial 203-369-3037) with pass code “3740.”

About Beazer Homes

Headquartered in Atlanta, Beazer Homes (NYSE: BZH) is one of the country’s largest homebuilders. Every Beazer home is designed and built to provide Surprising Performance, giving you more quality and more comfort from the moment you move in – saving you money every month. With Beazer's Choice Plans™, you can personalize your primary living areas – giving you a choice of how you want to live in the home, at no additional cost. And unlike most national homebuilders, we empower our customers to shop and compare loan options. Our Mortgage Choice program gives you the resources to easily compare multiple loan offers and choose the best lender and loan offer for you, which will save you thousands over the life of your loan.

We build our homes in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, North Carolina, South Carolina, Tennessee, Texas, and Virginia. For more information, visit beazer.com, or check out Beazer on Facebook, Instagram and Twitter.

This press release contains forward-looking statements. These forward-looking statements represent our expectations or beliefs concerning future events, and it is possible that the results described in this press release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from the results discussed in the forward-looking statements, including, among other things: (i) the cyclical nature of the homebuilding industry and a potential deterioration in homebuilding industry conditions; (ii) economic changes nationally or in local markets, changes in consumer confidence, wage levels, declines in employment levels, inflation and governmental actions that are out of our control and affect the affordability of and demand for, the homes we sell; (iii) the potential negative impact

FAQ

What were Beazer Homes' earnings results for Q2 2021?

Beazer Homes reported a net income of $24.6 million for Q2 2021, compared to $10.6 million in Q2 2020.

What is the outlook for Beazer Homes' earnings per share in fiscal 2021?

Beazer Homes expects earnings per share to exceed $3.00 for fiscal 2021.

How did Beazer Homes' backlog performance compare year-over-year?

The dollar value of Beazer Homes' backlog increased by 54.9% to $1,386.4 million as of March 31, 2021.

What is the increase in homebuilding revenue reported by Beazer Homes?

Beazer Homes reported a 12.2% increase in homebuilding revenue, totaling $547.4 million for Q2 2021.