Beazer Homes Announces First Quarter Fiscal 2025 Financial Results
Beazer Homes USA, Inc. (NYSE: BZH) has announced its financial results for the three months ending December 31, 2024. The company highlighted several key achievements despite a challenging environment for new home sales.
CEO’s Comments on Performance
Allan P. Merrill, Chairman and CEO of Beazer Homes, expressed optimism about the company’s progress. “Although the new home sales environment remains difficult, we had a productive first quarter and made strides toward our full-year and multi-year goals,” Merrill stated. He emphasized that net new orders and closings increased year-over-year, supported by a 20% increase in community count. The company also grew its lot position by 10%, mainly through options, which positions Beazer Homes for community count growth in the future.
Looking ahead to the full fiscal year, Merrill maintained confidence in the company’s prospects. “Despite affordability challenges in the near-term market, we are confident in our ability to deliver a double-digit return on capital employed this year while positioning ourselves for significant growth in the coming years,” he said.
Long-Term Strategy and Multi-Year Goals
Merrill discussed Beazer Homes’ long-term objectives, which include growth in community count, debt reduction, and achieving Zero Energy Ready goals. “We expect to conclude fiscal year 2025 with approximately 180 active communities and have land control to reach 200 communities by the end of fiscal year 2026,” he noted. Additionally, the company anticipates a net debt to net capitalization ratio in the mid-30% range by fiscal year-end, with a target of under 30% by 2026. Beazer is also on track to ensure that 100% of its new homes are built to Zero Energy Ready standards by December 2025.
Key Financial Highlights
For the first quarter of fiscal 2025, Beazer Homes reported:
- Net income from continuing operations of $3.1 million, or $0.10 per diluted share, compared to $21.7 million, or $0.70 per diluted share, in the first quarter of fiscal 2024.
- Adjusted EBITDA of $23.0 million, down 39.4% from the previous year.
- Homebuilding revenue of $460.4 million, reflecting a 20.9% increase. This growth was driven by a 22.1% rise in home closings, which totaled 907 homes, partially offset by a 1.0% decrease in average selling price (ASP) to $507.6 thousand.
- Homebuilding gross margin of 15.2%, down 470 basis points from last year. Excluding impairments, abandonments, and amortized interest, the margin was 18.2%, still a decline of 470 basis points from the prior year.
- Selling, general, and administrative (SG&A) expenses as a percentage of total revenue was 14.0%, a slight decrease from 14.3% in the same quarter last year.
Orders and Backlog
Beazer Homes saw an increase in net new orders, reaching 932 for the quarter, up 13.2% from 823 in the same period last year. The increase was primarily driven by a 17.8% rise in the average community count, which reached 161, up from 137 in the prior year. However, the sales pace per community per month decreased by 3.8% to 1.9 orders. The company’s cancellation rate improved to 16.5%, down from 19.0% in the prior year.
As of December 31, 2024, the dollar value of the homes in backlog was $816.0 million, representing 1,507 homes, compared to $932.8 million, or 1,791 homes, in the previous year. The average selling price of homes in backlog increased by 4.0% to $541.5 thousand, due to a mix of product and community shifts and price increases in certain areas.
Land Position and Liquidity
Beazer Homes continued to expand its land position, with land acquisition and development spending reaching $211.3 million for the quarter, up 6.3% from $198.7 million last year. The company controlled 28,874 lots, a 9.5% increase compared to 26,374 lots in the prior year. Importantly, 58.9% of these lots were controlled through option agreements, compared to 53.1% in 2023.
Beazer Homes ended the quarter with $80.4 million in unrestricted cash and total liquidity of $335.4 million, down from $404.2 million in liquidity a year ago. In January 2025, the company increased its senior unsecured revolving credit facility from $300 million to $365 million, further bolstering its financial flexibility.
Commitment to Sustainability
Beazer Homes remains dedicated to sustainability with a focus on energy-efficient homebuilding. The company is on track to meet its industry-first pledge that all new homes will be Zero Energy Ready by the end of 2025. This means that each home will meet the U.S. Department of Energy’s Zero Energy Ready Home standards, offering superior energy efficiency and environmental performance.
Additionally, Beazer Homes launched Charity Home Insurance Agency in November 2024, providing home insurance based on a customer’s specific home needs. The profits from the agency will be donated to the Beazer Charity Foundation, which supports nonprofits in the communities where Beazer Homes operates.
Summary of Key Results for the Three Months Ended December 31, 2024
- Net new orders: 932, up 13.2% from 823 in the prior year.
- Cancellation rate: 16.5%, improved from 19.0% in the previous year.
- Orders per community per month: 1.9, down 3.8% from 2.0 last year.
- Active community count: 163, a 19.9% increase from 136 at the end of the prior year.
- Homebuilding revenue: $460.4 million, up 20.9% from $380.9 million last year.
- Homebuilding gross margin: 15.2%, a decrease of 470 basis points.
- Net income: $3.1 million, or $0.10 per diluted share, down from $21.7 million, or $0.70 per diluted share, in the first quarter of fiscal 2024.
- Adjusted EBITDA: $23.0 million, down 39.4% from $38.0 million last year.
