Tags: US | Earns | Beazer | Homes

Beazer Homes Turns Profit on Higher Sales

Tuesday, 04 May 2010 06:57 AM


Beazer Homes USA Inc. said it turned a profit in its second quarter, reversing a loss from a year earlier as the number of completed home sales rose.

The homebuilder said it earned $5.3 million, or 9 cents per share, compared with a loss of $114.9 million, or $2.97 per share, in last year's fiscal second quarter.

Total revenue was $198.2 million, up 6 percent from $186.6 million in last year's second quarter.

The Atlanta-based builder completed 852 home sales, a year-over-year increase of 5.6 percent. New home orders increased 49 percent to 1,673.

Beazer said its unsold finished homes totaled 244 as of March 31, a decline of 35.6 percent from a year ago.

Beazer and other homebuilders have enjoyed a bump in sales this year as affordable prices, low mortgage rates and two federal tax credits lured homebuyers into the market.

The government offered an $8,000 credit for first-time buyers and $6,500 for current homeowners who buy and move into another property. Buyers must have signed a contract by April 30 and must complete the transaction by the end of June.

Still, the industry faces challenges, including rising foreclosures, high unemployment, tight lending standards and the expiration of the tax credits.

Some economists think home sales will weaken after the tax credits expire. Sales also could suffer if mortgage rates, which have hovered around 5 percent this year, start to rise.

"We recognize both the signs of improvement and the continued risks to a broad-based housing recovery, but we expect to see gradual improvement over time," Ian J. McCarthy, Beazer's president and CEO, said in a statement.

For Beazer, this year's fiscal second-quarter results included impairment charges of $10.2 million related to inventory and $8.8 million from its investment in a joint venture. That was offset by a $53.6 million gain related to the partial exchange of junior subordinated notes.

Last year's second quarter included impairment charges of $42.9 million related to inventory and $8.3 million from its investment in a joint venture.

Analysts polled by Thomson Reuters expected a loss of 62 cents per share on revenue of $191 million.

Beazer also said it plans to sell 12.5 million shares, 3 million tangible equity units and $300 million in senior unsecured notes. The company said it will use the proceeds from the offerings to buy back debt.

Its shares fell 20 cents, or almost 3 percent, to $6.68 in Monday's after-hours trading. They had closed the regular session up 31 cents, or 4.7 percent, at $6.88.

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