Beazer Homes USA(US:BZH)2023-07-26 16:00Cancellation Rate and Community Performance - Cancellation rate for the quarter ended June 30, 2023 was 16.1%, down from 17.0% in the prior year quarter and 18.6% in the prior fiscal quarter[157] - Average active community count for the quarter ended June 30, 2023 was 124, up 1.1% from 123 in the prior year quarter, ending the quarter with 125 active communities[158] - Sales per community per month for the quarter ended June 30, 2023 was 3.2, compared to 2.5 in the prior year quarter, with net new orders of 1,200, up 29.7% from 925 in the prior year quarter[176] Homebuilding Gross Margin and Profit - Homebuilding gross margin for the quarter ended June 30, 2023 was 20.2%, down from 25.1% in the prior year quarter, while excluding impairments, abandonments, and interest, it was 23.4%, down from 28.1%[177] - Homebuilding gross margin decreased to 20.2% for the three months ended June 30, 2023, down from 25.1% in the prior year period[180] - Homebuilding gross margin excluding impairments and abandonments decreased to 20.3% in Q2 2023 from 25.1% in Q2 2022[191] - Homebuilding gross profit decreased by $16.1 million to $115.5 million for Q2 2023, with gross margin declining by 490 basis points to 20.2%[221] - Homebuilding gross profit decreased by $42.1 million to $302.2 million for the nine months ended June 30, 2023, compared to $344.3 million in the prior year period, with a gross margin decrease of 390 basis points to 19.4%[251] - Total homebuilding gross profit was $344.3 million with a gross margin of 23.3%, and excluding impairments and abandonments, gross profit was $344.8 million with a gross margin of 26.5%[248] Revenue and Orders - Total revenue for the three months ended June 30, 2023 increased to $572.544 million, up 8.7% compared to $526.666 million in the same period of 2022[180] - Total homebuilding revenue for the quarter ended June 30, 2023 increased by 9.0% to $570.5 million compared to $523.2 million in the prior year quarter[189] - Net new orders for the nine months ended June 30, 2023 decreased by 14.7% to 2,863 units compared to 3,357 units in the same period of 2022[182] - Net new orders for Q2 2023 increased by 29.7% to 1,200 units, driven by a 28.3% increase in sales pace to 3.2 sales per community per month[211] Backlog and ASP - The aggregate dollar value of homes in backlog as of June 30, 2023 decreased 36.4% compared to June 30, 2022 due to a 35.4% decrease in backlog units and a 1.6% decrease in ASP[183] - Total backlog units decreased by 35.4% to 1,941 units as of June 30, 2023 compared to 3,003 units in the prior year period[212] - Average selling price (ASP) for homes closed increased by 1.8% to $510.8 thousand in Q2 2023 compared to $501.7 thousand in Q2 2022[200] Segment Performance - Southeast segment homebuilding revenue increased 27.5% for the three months ended June 30, 2023 compared to the prior year quarter, driven by a 39.4% increase in closings[186] - West segment homebuilding revenue increased 5.3% for the nine months ended June 30, 2023 compared to the prior year period, driven by a 14.7% increase in ASP[187] - The Southeast region saw the highest revenue growth at 27.5%, reaching $110.8 million in Q2 2023 compared to $86.9 million in Q2 2022[189] - East Segment homebuilding revenue increased by 18.4% for Q2 2023 compared to Q2 2022, driven by a 19.3% increase in closings, partially offset by a 0.8% decrease in ASP[215] - East Segment homebuilding revenue decreased by 4.6% for the nine months ended June 30, 2023, due to a 9.2% decrease in closings, partially offset by a 5.1% increase in ASP[216] - Southeast Segment homebuilding gross profit increased by $3.6 million in Q2 2023, driven by a 39.4% increase in closings, despite a decrease in gross margin to 23.5%[222] - East Segment homebuilding gross profit decreased by $20.2 million for the nine months ended June 30, 2023, with gross margin declining to 20.3% from 25.0%[224] - Southeast Segment homebuilding gross profit increased by $8.6 million due to a 19.5% increase in closings, but gross margin excluding impairments and abandonments decreased to 22.4% from 23.6%[252] - East Segment homebuilding gross profit decreased by $3.6 million compared to the prior year quarter, with gross margin excluding impairments and abandonments decreasing to 19.6% from 26.4%[250] Operating Income and Expenses - Operating income for the West segment for the nine months ended June 30, 2023 was $138.5 million, compared to $165.9 million in the prior year period[171] - Operating income as a percentage of total revenue decreased to 8.4% for the three months ended June 30, 2023, down from 12.8% in the prior year period[180] - Operating income decreased by $19.3 million to $47.9 million for Q2 2023, primarily due to lower gross profit and higher commissions and marketing costs[231] - West Segment operating income decreased by $27.4 million for the nine months ended June 30, 2023, driven by lower gross profit and higher expenses[234] - Southeast Segment operating income increased by $6.4 million for the nine months ended June 30, 2023, primarily due to higher gross profit[236] - Operating income decreased by $47.6 million to $115.2 million for the nine months ended June 30, 2023, primarily due to the decrease in gross profit[260] - West Segment operating income decreased by $9.5 million compared to the prior year quarter, primarily due to lower gross profit and higher commissions and marketing costs[261] - Southeast Segment operating income increased by $2.5 million compared to the prior year quarter, primarily due to higher gross profit[262] Financial Position and Cash Flow - Total assets as of June 30, 2023 were $2.32 billion, compared to $2.25 billion as of September 30, 2022[174] - Total depreciation and amortization for the nine months ended June 30, 2023 was $8.44 million, compared to $9.10 million in the prior year period[173] - Deferred compensation plan assets as of June 30, 2023 were $6.64 million, compared to $3.18 million as of September 30, 2022[161] - Net cash provided by operating activities was $95.8 million for Q2 2023, compared to a net cash used of $164.5 million in Q2 2022[241] - Net cash used in operating activities was $164.5 million for the nine months ended June 30, 2022, driven by a $351.4 million increase in inventory[266] - The company has an Unsecured Facility with a remaining capacity of $265.0 million as of June 30, 2023, with no borrowings or letters of credit outstanding[270] - Non-refundable deposits and other amounts related to property options totaled approximately $144.7 million as of June 30, 2023[276] - The total remaining purchase price under all options, net of cash deposits, was $747.9 million as of June 30, 2023[276] - Outstanding letters of credit and surety bonds amounted to $32.1 million and $283.6 million, respectively, as of June 30, 2023[278] - Variable rate debt outstanding totaled approximately $73.8 million as of June 30, 2023[283] - A 1% increase in interest rates would increase interest expense by approximately $1.0 million over the next 12 months[283] - The estimated fair value of fixed-rate debt was $887.2 million, compared to a carrying amount of $907.3 million as of June 30, 2023[283] - A hypothetical 1% decrease in discount rates would increase the estimated fair value of fixed-rate debt to $920.9 million as of June 30, 2023[283] - The company plans to expand the use of option agreements to supplement owned inventory supply, subject to market conditions and liquidity[276] - The company expects operating cash flows to be adequate to fund future option exercises without materially affecting liquidity[277] Taxes and Compensation - Income tax expense for the three and nine months ended June 30, 2023 was $6.2 million and $15.5 million, compared to $13.2 million and $29.7 million for the same periods in 2022[162] - Total unrecognized compensation costs related to unvested restricted stock awards as of June 30, 2023 was $8.4 million, expected to be recognized over a weighted average period of 1.79 years[166] - The effective tax rate decreased to 12.5% for the three months ended June 30, 2023, down from 19.5% in the prior year period[180] - Income tax expense for the nine months ended June 30, 2023, was $15.5 million, compared to $29.7 million in the prior year period[265] SG&A and Other Expenses - Total SG&A expenses as a percentage of revenue decreased to 11.5% for the three months ended June 30, 2023, down from 11.8% in the prior year period[180] - SG&A as a percentage of total revenue improved to 11.5% in Q2 2023 from 11.8% in Q2 2022, primarily due to higher revenues[201] - Land sales and other revenue decreased by $1.4 million to $2.0 million for Q2 2023, while gross profit increased by $0.3 million to $1.3 million[230] Adjusted EBITDA and Capital Expenditures - Adjusted EBITDA for the nine months ended June 30, 2023 decreased to $182.062 million, down 19.7% from $226.735 million in the same period of 2022[181] - Capital expenditures increased by 26.2% to $14.1 million for the nine months ended June 30, 2023 compared to $11.2 million in the prior year period[197] Market Outlook and Accounting Policies - The company remains positive on the long-term housing market outlook, citing demographic shifts and a multi-million unit housing deficit[199] - No significant changes to critical accounting policies were reported during the nine months ended June 30, 2023[279]