Homebuilder Beazer Homes posts loss in fiscal 3rd quarter; new orders drop 33 percent

Beazer Homes posts loss in fiscal 3rd quarter

LOS ANGELES — Beazer Homes USA Inc. said Thursday it trimmed its fiscal third-quarter loss as the last gasp of stimulus from federal homebuyer tax credits helped drive a 73 percent jump in completed sales for the homebuilder.

Once the tax credits expired on April 30, however, prospective homebuyers lost their urgency, and the builder’s new home orders plunged 33 percent for the quarter.

Despite the industrywide housing tax credits hangover, Beazer management anticipates housing demand will strengthen next year and is ratcheting up land development spending for the first time in years.

The company said the number of home communities it has open has likely stopped shrinking and will grow modestly from now on.

“Almost everyone now is concurring that we’ve hit the bottom, we are bumping along the bottom, and that subject to some improvements in the economy and certainly improvement in unemployment, we are going to see an upside,” said CEO Ian McCarthy. “So that’s what gives us confidence in saying that we need to get out there.”

In the first six months of the year, Beazer acquired or purchased options to buy 47 new home communities.

McCarthy noted that the turnaround in demand hinges on an improvement in jobs, now seen by the industry as the biggest hurdle to home sales.

“We have to believe that unemployment will improve as we get through the next six, 12, 18 months,” he said. “And that will release the pent-up demand for housing.”

The optimistic outlook did not appear to sway most investors. Beazer shares fell 17 cents, or 4 percent, to $4.08 in afternoon trading.

Sales of new U.S. homes jumped in June, but it was the second-weakest month on record. High unemployment, slow job growth, and tight credit, meanwhile, continue to keep many people from buying homes despite the availability of the lowest mortgage rates in decades.

The homebuyer tax credits that helped spur buyers back into the market last year and again this spring pulled demand forward, raising uncertainty over when sales will recover now that there’s no government incentive for buyers.

Earlier this week, homebuilders D.R. Horton Inc. and PulteGroup Inc. each said demand had slowed sharply since April, but has shown some signs of improvement in recent weeks.

Beazer, which is based in Atlanta, said it lost $27.8 million, or 41 cents a share, in the three months ended June 30. That compares with a loss of $28 million, or 72 cents a share, in the prior-year period.

The period included several one-time items, including a $5.1 million inventory impairment charge, a $12.5 million impairment charge related to two joint ventures, a $9 million loss on debt extinguishment and a $28.4 million benefit from income taxes.

The number of shares outstanding rose 76 percent during the quarter to 68.3 million from 38.8 million in the prior year.

Revenue rose 52 percent to $339.9 million from $224.1 million.

Analysts polled by Thomson Reuters expected a loss of 29 cents a share on revenue of about $325.1 million. Analyst estimates typically exclude one-time items.

Beazer’s new orders fell 33 percent to 1,037 homes. The company still expects to end its fiscal year with more home orders than in fiscal 2009.

“It’s clear that our margin for error is somewhat smaller,” McCarthy said.