Beazer Homes USA Inc (NYSE:BZH) reports a decrease in net income and Adjusted EBITDA for both the fourth quarter and full fiscal year 2023.
Homebuilding revenue declined due to a decrease in home closings, partially offset by an increase in average selling price.
Despite market challenges, BZH increased its community count and controlled lots, positioning for future growth.
On November 16, 2023, Beazer Homes USA Inc (NYSE:BZH) released its 8-K filing, detailing the financial outcomes for the fourth quarter and the full fiscal year ended September 30, 2023. The company faced a challenging market environment characterized by rising mortgage rates and persistent supply chain issues, yet managed to achieve growth in community count and improve backlog conversion.
Fiscal Year 2023 Performance Overview
For the full fiscal year, BZH reported a net income from continuing operations of $158.7 million, or $5.16 per diluted share, a decrease from the previous year's $220.7 million, or $7.17 per diluted share. Adjusted EBITDA also saw a reduction, falling 26.5% to $272.0 million. Homebuilding revenue declined by 4.5% to $2.2 billion, attributed to a 10.7% decrease in home closings, which was slightly mitigated by a 7.0% increase in average selling price to $517.8 thousand.
Fourth Quarter Fiscal 2023 Highlights
The fourth quarter saw net income from continuing operations of $55.8 million, or $1.80 per diluted share, compared to $86.8 million, or $2.82 per diluted share, in the same quarter of the previous year. Adjusted EBITDA for the quarter was down 37.2% to $90.0 million. Homebuilding revenue decreased by 22.2% to $641.8 million, with a 23.7% decrease in home closings, partially offset by a slight increase in average selling price to $520.5 thousand.
Financial Statements Analysis
Examining the balance sheet, BZH ended the fiscal year with $345.6 million in unrestricted cash and a total liquidity of $610.6 million. The total debt to total capitalization ratio improved to 47.0%, down from 51.1% a year ago, reflecting a more efficient and less leveraged balance sheet.
From the income statement perspective, the homebuilding gross margin, excluding impairments, abandonments, and amortized interest, was 24.3% for the fourth quarter, a decrease of 160 basis points year-over-year. SG&A expenses as a percentage of total revenue increased to 11.1%, up 220 basis points from the prior year's quarter.
The cash flow statement highlighted land acquisition and development spending of $213.7 million in the fourth quarter, marking a 41.7% increase from the previous year. BZH also continued its debt repurchase program, buying back $4.0 million of debt during the quarter.
Market Conditions and Outlook
CEO Allan P. Merrill commented on the market conditions, noting a substantial year-over-year increase in new home orders but acknowledging the impact of rising mortgage rates on home affordability. Despite these challenges, the company remains optimistic about the multi-year outlook, citing demographic trends and a persistent undersupply of homes as supportive factors for new home sales.
Beazer Homes' commitment to ESG initiatives was also highlighted, with the company aiming to ensure that by the end of 2025, every home they build will be Zero Energy Ready. This commitment was underscored by the company's recognition as the 2023 Indoor airPLUS Leader of the Year in the Builder category by the U.S. Environmental Protection Agency.
While Beazer Homes USA Inc (NYSE:BZH) navigated a year marked by external challenges, the company's strategic initiatives and commitment to sustainability position it for potential growth in the coming years. Investors and stakeholders will be watching closely to see how BZH adapts to the evolving market conditions and leverages its strengthened community count and controlled lots for future success.
Explore the complete 8-K earnings release (here) from Beazer Homes USA Inc for further details.
This article first appeared on GuruFocus.