Beazer Homes USA, Inc. (BZH Quick QuoteBZH - Free Report) reported impressive fourth-quarter fiscal 2022 results, with earnings and revenues beating their respective Zacks Consensus Estimate. The metrics also increased from the year-ago quarter’s figures on the back of solid home prices and margins improvement.

This leading homebuilder’s shares climbed 2.08% in the after-hour trading session on Nov 10, after earnings release.

Chairman and CEO Allan P. Merrill said, “We remain confident in the multi-year growth of our business and the new home industry. The gap between the structural demand for homes and the likely supply of homes – which has given rise to a multi-million home deficit over the past decade – remains in place. With a seasoned operating team, an ample supply of lots and a more efficient and less leveraged balance sheet, we remain confident that we will be able to create durable value for our stakeholders in the years ahead.”

Earnings & Revenue Discussion

Beazer Homes reported quarterly adjusted earnings of $2.82 per share, which surpassed the Zacks Consensus Estimate of $2.00 by 41% and increased 79.6% from the year-ago period. The increase was primarily driven by a higher homebuilding gross margin.

Total revenues came in at $828 million, up 40.1% year over year. The reported figure beat the consensus mark of $701 million by 18%.

Home Closings, Orders, Margins

Homebuilding revenues of $825.4 million increased 40.1% from the prior-year quarter’s levels. Geography-wise, it generated $444.3 million in revenues from the West, $200.7 million from the East and $180.4 million from the Southeast regions. Total home closings increased 14.9% to 1,616 homes. The average selling price or ASP for home closed was up 22% year over year.

Net new orders decreased 34.1% from the prior year to 704. Cancellation rates rose to 32.8% from 11.7% in a year and sales pace fell 36.3% to 1.9 orders per community per month. The downtrend reflects the weakness in housing demand as a result of the sharp increase in mortgage rates.

Backlog of homes at quarter-end was 2,091 homes, down 24.9% year over year. The value of backlog was also down 10.8% from the prior year to $1.14 billion despite an 18.8% higher ASP.

Homebuilding gross margin (excluding impairments, abandonments and amortized interest) was up 270 basis points (bps) to 25.9% for the fiscal fourth quarter, owing to pricing increases and higher pricing.

Selling, general and administrative expenses, as a percentage of total revenues, improved 210 bps year over year to 8.9% due to increases in closings and revenue. Adjusted EBITDA was $143.3 million, up 88.4% from a year ago.

Balance Sheet Details

At fiscal 2022-end, the company had $214.6 million cash and cash equivalents, $37.2 million of unrestricted cash and $244.5 million available on the secured revolving credit facility. At fiscal 2021 end, cash and cash equivalents were $246.7 million and unrestricted cash of $27.4 million. Total debt (less debt issuance costs) totaled $983.4 million, down from $1.05 billion a year ago.

Inventor at fiscal 2022 end was $1.74 billion compared with $1.5 billion at fiscal 2021-end. Land acquisition and land development spending was $150.8 million versus $245.5 million a year ago.

Fiscal 2022 Highlights

Beazer Homes reported adjusted earnings of $7.17 per share, which increased 78.8% from the year-ago period. Total revenues of $2.32 billion, up 8.3% year over year.

Gross margins (excluding impairments, abandonments and amortized interest) rose to 26.3% or 330 bps year over year. Adjusted EBITDA also improved 40.9% to $370.1 million from the year-ago period’s levels.

During the year, the company acquired the assets of a private, San Antonio-based homebuilder — Imagine Homes — in which it held a one-third ownership stake for the past 16 years.

Q1’FY23 Outlook

The company expects sales pace to be below 2, backlog conversion to be up 400-450 bps, and ASP of $535,000. Also, adjusted gross margin is expected to fall 150-200 bps, SG&A to be up by $4 million and adjusted EBITDA in $45-$50 million range. Tax rate is likely to be 17% for the fiscal first quarter.

Zacks Rank & Peer Releases

Beazer Homes currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PulteGroup Inc. (PHM Quick QuotePHM - Free Report) reported unimpressive results in third-quarter 2022. Quarterly earnings and revenues missed their respective Zacks Consensus Estimate thanks to prevailing industry headwinds.

Nonetheless, PHM’s earnings and revenues increased on a year-over-year basis.

Meritage Homes Corporation (MTH Quick QuoteMTH - Free Report) reported mixed results for third-quarter 2022, with earnings surpassing the Zacks Consensus Estimate and increasing year over year. Revenues rose from the year-ago quarter’s levels but lagged the consensus mark.

Despite prevailing challenges like interest rate hikes, supply chain issues, Hurricane Ian and market uncertainty, Meritage Homes achieved the highest quarterly home closing revenue and record quarterly earnings.

M.D.C. Holdings, Inc. reported lackluster earnings for third-quarter 2022, which missed the Zacks Consensus Estimate and declined year over year. Revenues topped the consensus estimate and rose year over year.

In a bid to stay competitive in the current market condition, MDC is offering great opportunities for the build-to-order buyers, such as long-term interest rate lock programs and other special incentives.