Beazer Homes sharply narrows its 3Q loss

Beazer Homes USA Inc. said Thursday it cut its fiscal third-quarter loss sharply, largely because of a gain from a reduction in its debt load, and the homebuilder noted new home order trends showed signs of improvement.

But the Atlanta-based company’s revenue sank by more than half, due to a 43 percent decline in home closings and a 9 percent drop in the average selling price.

Beazer lost $28 million, or 72 cents per share, in the three months ended June 30. That compares with a loss of $109.8 million, or $2.85 per share, in the same period a year earlier.

The latest results included a $55.2 million gain after the company took steps to reduce its debt.

Revenue declined 51 percent, to $224.7 million from $455.6 million.

Analysts polled by Thomson Reuters were expecting a loss of $1.53 a share on revenue of $225.7 million.

During a conference call with Wall Street analysts, Beazer Chief Executive Ian McCarthy said low interest rates, tax incentives and more affordable homes helped spur the traditional seasonal pickup in sales during the quarter.

He also said a promotion in June that highlighted environmentally friendly features in the company’s homes was a success.

“We are encouraged by signs that some housing market trends may be moderating both at the local and national level and further encouraged by our improvement in sales,” McCarthy said, adding he expects orders over the next two quarters to be positive when compared to the same periods last year.

Still, the executive noted that the recession and rising levels of unemployment make it hard to predict a housing turnaround.

Beazer said completed home sales totaled 950, down from 1,677 in the year-ago period.

The cancellation rate improved to 23 percent from 29.8 percent in the previous quarter and 36.8 percent a year ago.

New home orders totaled 1,537, down 13.4 percent from a year ago, but up 36 percent since the March quarter.

Beazer’s pickup in orders echoed improving trends reported earlier this week by other major builders.

D.R. Horton Inc., Pulte Homes Inc. and Centex Corp. each took in more new home orders last quarter than they did in the first three months of the year. None of the builders were able to beat their year-ago order total, but the trend is still seen as a positive sign that the housing market is on the mend.

Beazer, however, has had more to contend with than housing market doldrums. It’s been dogged by investigations into its business practices since 2007. But the company took steps during the quarter and as recently as last month to resolve the probes.

The company agreed to pay up to $55 million over the next five years to close the door on investigations by the U.S. attorney in North Carolina’s Western District, the Department of Housing and Urban Development and the civil division of the Department of Justice.

Beazer shares fell 28 cents, or about 7.8 percent, to $3.31 on Thursday. The stock added 29 cents, or 8.8 percent, to $3.60 in aftermarket trading following the release of the earnings.

On the Net:

Beazer Homes USA: www.beazer.com/