Home builder Beazer Homes USA Inc. announced a net loss of $109.7 million, or $2.85 per share, for the third-quarter ended June 30. The company’s net loss was lower than expected: analysts had predicted a loss of $2.34 per share.
The company, which has been the subject of several ongoing state and federal investigations, reported that the loss included $95.5 million in pre-tax charges related to inventory impairments and the abandment of land option contracts.
The net loss for the quarter was actually an improvement over third-quarter 2007 results, when the company reported a $118.9 million net loss, or $3.09 per share.
Beazer had $455.6 million in total revenues during third-quarter 2008, compared to $753.5 million in total revenues for the same quarter last year. The company reported 1,677 home closings, compared to 2,659 for the prior year’s third quarter.
The average sales price of Beazer-built homes dropped 8.8 percent year-over-year in the third quarter, falling from $282,100 in third-quarter 2007 to $257,400 in third-quarter 2008.
The company reported a total of $314.2 million in cash and cash equivalents as of June 30, and a backlog of 2,716 homes with a sales value of $668.1 million — that compares to a backlog of 5,952 homes with a sales value of $1.69 billion on June 30, 20007.
"Difficult operating conditions in the homebuilding industry persist," said Ian J. McCarthy, the company’s president and CEO, in a statement. "Despite lower home prices, relatively low interest rates and a large choice of available homes, potential home buyers remain reluctant due to eroding consumer confidence amid concerns about employment growth, higher energy costs and the overall economy."
The company and its Beazer Mortgage Corp. subsidiary are the focus of several ongoing investigations — including investigations by the U.S. Attorney’s Office in the Western District of North Carolina, the U.S. Securities and Exchange Commission and other state and federal agencies, and in its earnings announcement Beazer stated that "the company cannot predict or determine the timing or final outcome of the investigations or the effect that any adverse findings in the investigations may have on it."
Also, Beazer noted in its earnings announcement that the company "intends to attempt to negotiate a settlement with prosecutors and regulatory authorities with respect to these matters that would allow us to quantify our exposure associated with reimbursement of losses and payment of regulatory and/or criminal fines, if they are imposed. However, no settlement has been reached with any regulatory authority and the company believes that although it is probable that a liability exists related to this exposure, it is not reasonably estimable at this time."
The company announced late last year that it would be restating earnings going back to 2004, and the company had cut a quarter of its workforce, or 650 positions, last year.
Beazer Homes USA Inc. is among the nation’s largest single-family builders, with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia.
Standard Pacific Homes, another major U.S. home builder, reported in late July that it had a consolidated net loss of $248.2 million for the second quarter ended June 30, compared to a net loss of $165.9 million for the same period last year. The company had homebuilding revenues of $410.6 million for the quarter versus $660.9 million in the prior year’s quarter. Net new home orders slid from 1,564 in second-quarter 2007 to 1,241 in second-quarter 2008, down 21 percent.
"It is clear that the housing market and the broader U.S. economy remain challenged and continue to deteriorate further. Nonetheless, we will remain focused on generating sales and deliveries, reducing inventory levels, carefully managing cash and optimizing our overhead structure," reported Jeffrey V. Peterson, the company’s chairman, CEO and president, in the earnings announcement.
The company reported that average home prices fell 10 percent year-over-year in the quarter, to $327,000, and its land-sale revenues fell $101.4 million year-over-year in the quarter.
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