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Beazer Homes (BZH) Q4 Earnings Beat Estimates, Down Y/Y

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Beazer Homes USA, Inc. (BZH - Free Report) reported mixed results for the fourth quarter of 2019, with earnings beating the Zacks Consensus Estimate but revenues missing the same.

Adjusted earnings came in at 93 cents per share (after adjusting for loss of $25.5 million on debt extinguishment), which topped the consensus mark of 81 cents by 14.8%. However, it declined 19.1% from the year-ago quarter’s level of $1.15 per share.

Quarterly revenues were $781.7 million, which missed the Zacks Consensus Estimate of $787.3 million by 0.7%. However, the figure inched up 1.8% from the year-ago quarter’s figure.

Beazer Homes USA, Inc. Price, Consensus and EPS Surprise



Segment Discussion

: Revenues in the segment increased 1.5% to $733 million from the prior-year quarter’s tally to $761.5 million. The upside can be attributed to higher average selling price (up 3%). This was partly offset by 1.5% dip in home closings.

Also, due to softer demand for new homes in many of its markets during the first half of fiscal 2019, homebuilding gross margin (excluding impairments, abandonments and amortized interest) declined 170 basis points (bps) to 19.9% from the year-ago quarter’s figure.

Unit orders & Backlog

Net new orders in fiscal fourth quarter increased 11.7% year over year to 1,458, courtesy of healthy demand. The upside can be attributed to a 3.7% increase in average community count. The cancellation rate of 16.3% in the quarter was down 520 bps year over year.

Total backlog as of Sep 30, 2019, was $665.1 million (or 1,708 homes), up 5.9% year over year.  Average selling price of homes in backlog was $389.4 thousand, up 1.2% year over year.

Operating Highlights

Selling, general and administrative expenses (as a percentage of total revenues) of 9.5% fell 60 bps from the prior-year quarter’s level.

Balance Sheet

As of Sep 30, 2019, cash and cash equivalents totaled $106.7 million compared with $139.8 million on Sep 30, 2018.

Fiscal 2019 Highlights

Net income from continuing operations (excluding loss on debt extinguishment, inventory impairments and abandonments, and one-time tax items) was $38.7 million in the year, down 39.3% year over year.

Homebuilding revenues of $2.1 billion were flat year over year. Deliveries were up 4.6% in the year and average selling price was rose 4.8%. Homebuilding gross margin (excluding impairments, abandonments and amortized interest) was down 150 bps year on year to 19.7%.

Zacks Rank & Other Key Picks

Beazer Homes holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other top-ranked stocks in the Zacks Building Products - Home Builders industry are KB Home KBH, M/I Homes, Inc MHO and Meritage Homes Corporation MTH, each sporting a Zacks Rank #1.

KB Home current year earnings are expected to rise by 67.3%.

M/I Homes earnings surpassed estimates in all of the trailing four quarters, the average being 16.2%.

Meritage Homes has three-five year expected earnings per share growth rate of 11.2%.

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