Nov 5-Beazer Homes Provides Certain Preliminary Fourth Quarter Financial and Operating Data
The Company significantly increased its cash position during its fiscal fourth quarter. At September 30, 2007, the Company had a cash balance of $459.5 million, up from $128.8 million at June 30, 2007. Subsequently, the Company has repaid approximately $75.0 million in secured debt, pledged $107.0 million to collateralize its outstanding letters of credit and paid a consent fee to holders of its Senior Notes and Senior Convertible Notes and related expenses totaling $21.0 million.
These are unaudited results however positive nonetheless and any increase in a cash position is a huge plus and will allow this company to ride out next 6-12 months when housing should start to pick back up.
Also as previously disclosed, the Company has received waivers of events of default under its revolving credit facility and two secured credit facilities arising from the Company's decision to restate its financial statements. It has also received the necessary consents from the holders of its outstanding Senior Notes and Senior Convertible Notes to obtain a waiver of any and all defaults under the Indentures that may have occurred or may occur on or prior to May 15, 2008 due to Beazer's failure to file or deliver reports or other information as required by the Securities and Exchange Commission.
The Company is working expeditiously to complete the restatements and report audited financial results for the quarter and year ended September 30, 2007 as soon as possible.
This is what I'm talking about...from this mornings news:
S&P REITERATES SELL OPINION ON SHARES OF BEAZER HOMES USA
Beazer has not filed its fiscal 2007 (Sep.) 10-K report or its 10-Q report for June-quarter fiscal 2007 due to accounting issues. Absent a fiscal 2007 balance sheet, we are concerned that reported inventory may be overstated to current market conditions as it relates to asset impairments. Despite $230 million in write-downs in Beazer's preliminary unaudited financial release for September-quarter, we believe the company is exposed to more asset impairments in December-quarter due to its weaker position as a small homebuilder. Applying a target-price-to-book value of 0.2X, lowest of peers, we are reducing our target price to $6 from $9. /K. Leon, CPA
>>With book at $30 as of 9/30/07, I think they are in ok shape covenant wise to take another $3/share writedown. <<
I can hardly wait ;>)
Of course, 9/30 was centuries ago....hard to know for sure where they really are today. The writedowns could easily amount to more than $3/share. They aren't selling much and have lost control of the financing since dismembering the mortgage corp. The result is higher levels of washouts.
Beazer has enough cash to pay the bills for at least 18 months. They can continue to sell homes at a slight loss and generate more cash flow.
Remember they have zero drawn on secured credit line. They have enough cash to keep making bond payments for another 18 months. Then if things havn't improved they can probably mortgage some property and keep the lights on for another 6-12 months. If the market doesn't turnaround by spring 2010 selling season, then they may be done. But i tihnk they can make it until then. Certainly until the summer 2009 seling season.
Based on what? They haven't published any financials in months, so it is impossible to determine their position. Keep in mind, their loan covenents require that they maintain a certain assetl level in relation to their liabilities...including $1.2 BILLION in bonds.
They haven't taken any inventory impairments since last May. What do you figure the impairments should be at this time, 9 months later? What do you figure that will do to book value/net worth. What do you figure the odds are that they have already blown the loan covenents?
Look...cash is nice, but it ain't the total picture. They can EASILY be forced into bankruptcy while sitting on a wad of cash.