Beazer Homes USA, Inc. BZH reported better-than-expected fourth-quarter fiscal 2024 results, with earnings and revenues surpassing the Zacks Consensus Estimate, respectively.
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This leading homebuilder’s shares gained more than 7% in the after-hours trading session yesterday, after the earnings release.
Beazer Homes' fiscal 2024 performance demonstrated resilience in a challenging market driven by strategic investments and innovation. Moving into 2025, the company is prepared for growth through new communities, a stronger commitment to Zero Energy Ready homes, and adaptability in sales strategies amid high-rate environments.
Over $750 million was invested in land and development, resulting in a 20% increase in active communities (162 communities) year over year, positioning the company for continued growth.
Beazer Homes USA, Inc. Price, Consensus and EPS Surprise
Beazer Homes USA, Inc. Price, Consensus and EPS Surprise
Beazer Homes USA, Inc. price-consensus-eps-surprise-chart | Beazer Homes USA, Inc. Quote
Beazer Homes’ Earnings & Revenue Discussion
Beazer Homes reported quarterly adjusted earnings of $1.69 per share, beating the Zacks Consensus Estimate of $1.36 by 24.3% but declining 6.1% from the year-ago period’s levels.
Total revenues came in at $806.2 million, up 24.9% year over year. The reported figure surpassed the consensus mark of $774 million by 4.1%.
BZH’s Home Closings, Orders, Margins
Homebuilding revenues of $783.8 million improved 22.1% from the prior-year quarter’s levels. Total home closings were up 21.3% year over year to 1,496 homes. The average selling price (ASP) for homes closed was up 0.7% year over year to $523,900.
Net new orders increased 2.6% from the prior-year levels to 1,029. Cancelation rates were up 21.9% from 16.5% a year ago. Sales pace decreased to 2.2 orders per community per month from 2.6 in the previous-year quarter.
As of Sept. 30, 2024, the total dollar value of homes in backlog was $797.2 million, accounting for 1,482 homes. This compares to $886.4 million and 1,711 homes at the same time last year. The ASP of homes in the backlog increased 3.8% year over year, reaching $537,900.
Homebuilding gross margin (excluding impairments, abandonments and amortized interest) was down 390 basis points (bps) to 20.4% in the fiscal fourth quarter.
Selling, general and administrative expenses, as a percentage of total revenues, decreased 140 bps year over year to 9.7%. The adjusted EBITDA was $93.1 million, up 3.5% from the year-ago levels due to higher homebuilding revenues, partially offset by lower gross margin.
BZH’s Balance Sheet Details
At the fiscal fourth-quarter end, the company had $203.9 million in cash and cash equivalents, down from $345.6 million at fiscal 2023-end. At the fiscal fourth-quarter end, the company reported $503.9 million in available liquidity, comprising $203.9 million in unrestricted cash and $300 million in unused credit, down from $610.6 million in the previous year.
The total debt-to-capitalization ratio stood at 45.4%, slightly improved from 47.0% last year. However, net debt to net capitalization rose to 40.0% from 36.4% due to increased land investments. The company aims to reduce this ratio to below 30% by the end of fiscal 2026, with substantial progress expected in fiscal 2025.
Fiscal 2025 Guidance of Beazer Homes
The company expects 10% top-line growth, with adjusted gross margin forecasted between 19.5% and 20.5%. Community count growth will contribute to an anticipated year-over-year increase in sales pace to 2.5-3 homes per community per month.
Beazer aims for 100% of homes to meet Zero Energy Ready standards by the end of fiscal 2025, offering a product with higher customer appeal and margins. Management expects EBITDA growth and a double-digit return on capital employed, with EPS growth potentially impacted by a higher effective tax rate due to reduced tax credits in 2025.
BZH's Zacks Rank
Beazer Homes currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Few Recent Construction Releases
D.R. Horton, Inc. DHI reported fourth-quarter fiscal 2024 (ended Sept. 30, 2024) results, with earnings and revenues missing Zacks Consensus Estimate and decreasing on a year-over-year basis.
D.R. Horton’s quarterly performance fell short of expectations primarily due to a combination of high mortgage rates and buyer hesitancy.
PulteGroup Inc. PHM reported impressive results in the third quarter of 2024, wherein earnings and total revenues handily beat the Zacks Consensus Estimate and grew year over year.
PHM’s result reflects the successful execution of the company’s balanced spec and build-to-order operating model. This, alongside the structural shortage of homes from years of underbuilding, continued to favor the company. Thanks to such tailwinds, the home closings during the quarter grew year over year, resulting in record third-quarter home sale revenues.
NVR, Inc. NVR reported mixed third-quarter 2024 results, with earnings missing the Zacks Consensus Estimate and Homebuilding revenues surpassing the same. On the other hand, both metrics increased on a year-over-year basis.
This upside was backed by improved demand trends, which resulted in higher settlements. Although the cancelation rate increased in the quarter, growth in new orders is encouraging for the company.
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