Housing Bubble
Beazer Homes announces record results
Beazer Homes USA, Inc. today announced results for the quarter ended December 31, 2002, the first quarter of its 2003 fiscal year. Highlights of the quarter, compared to the same quarter of the prior year, included:
- Home closings: 3,482 (up 47%)
- Total revenues $700 million (up 43%)
- New orders: 3,141 homes (up 25%)
- Backlog: 6,178 homes (up 50%), sales value $1.2 billion (up 52%)
Ian J. McCarthy, President and Chief Executive Officer of Beazer Homes, said, "We are extremely pleased to announce record December quarter EPS of $2.75 and net income of $37 million for the first quarter of our 2003 fiscal year. Net income increased 59% over the first quarter of fiscal 2002 while revenues were up 43%. Once again, we reported a greater increase in net income than revenues as our gross margin hit an all-time company record. Gross margin before interest was 21.2%, up 130 basis points from December 2001."
Mr. McCarthy continued, "The increase in our gross margin for the quarter reflects the continuing strong housing environment, as well as our ability to control costs and build more efficiently. Initiatives to control our building costs, through increased use of national purchasing contracts and more efficient product design, have been and continue to be a major emphasis at Beazer and are beginning to yield significant benefits that we believe will accelerate in the coming years."
Mr. McCarthy also said, "New orders were up 25% during the quarter ended December 31, 2002, and at the end of the quarter our backlog was up 50% in units and 52% in dollar value. New orders and backlog in the December 2002 quarter include Crossmann Communities, which we acquired in April 2002. Crossmann's operations have been fully integrated with Beazer's, including merging operations where there was geographic overlap."
Financial position
David S. Weiss, Executive Vice President and Chief Financial Officer, said, "Our current conservative financial position gives us the financial flexibility to adapt to changes in the homebuilding or general economic environment. It also gives us the ability to opportunistically shift between growth in our existing business and expansion through acquisition as we see appropriate. Given the current environment, we believe that growth in our existing business will be the more dominant factor as we open new communities in our current operations."
Outlook for US homebuilding industry
Beazer Reiterates Target EPS of $12.25 Per Share for Fiscal 2003 Mr. McCarthy said, "As described in our recently issued Annual Report for 2002, we believe that there are a number of strong positive indicators of future growth for both Beazer and the overall US homebuilding industry. Over the past six years, net income for the top ten US homebuilders has increased consistently and dramatically, with a compound annual growth rate of well over 40%, in an environment where housing starts have averaged an annual increase of 2%. Our own performance during the December quarter, with net income up 59%, demonstrates the continuation of that trend. Three significant factors indicate that this trend should continue in the coming years: strong population growth fueled by immigration; a constrained supply of housing; and a dramatically consolidating industry."
Mr. McCarthy concluded, "Our performance during the December quarter, with earnings of $2.75 per share, gives us a strong start for fiscal 2003. With this performance we reiterate our EPS target of $12.25 for the full fiscal year, which represents a 14% increase over fiscal 2002. This target is based on 16,500 home closings with an average price in the low $190,000 range. It also assumes that the margin achieved in the December quarter, which was significantly higher than last year's gross margin, is sustained through the remainder of this fiscal year. We recognize that these targets are subject to economic fluctuations in the current uncertain macroeconomic environment, however we enter this year's spring selling season confident in our ability to take advantage of opportunities and adapt to economic changes."
The Company also announced that, consistent with the practice of most other publicly-traded homebuilders, it will discontinue reporting new orders on a monthly basis. It will continue to report quarterly new orders soon after the end of each quarter.
Source: Beazer Homes USA, Inc.
