Homebuilder Beazer Homes USA Inc. (BZH) announced Tuesday morning that its loss for the fourth quarter sharply widened from last year, hurt by higher income tax provisions and a sharp decline in quarterly revenues amid struggling housing market. The company also noted that margins continued to be negatively impacted by a decline in average sales price.
The deterioration of the U.S. housing market, which triggered the prevailing credit crisis that is eroding trillions of dollars from the hands of investors and companies, has been initiated in mid-2006, when excessive building and loose credit standards resulted in drop in prices and a wave of foreclosures. In the unprecedented economic conditions, homebuilders in general are finding it hard to sell homes, while buyers are waiting for prices to fall further.
In September, Credit Suisse analyst Oppenheim lowered his stance on the homebuilders to 'Market Weight' from 'Overweight', as he has continued to see declines in traffic throughout late summer and, after the recent 50% move off the bottom, homebuilding stocks are trading at 1.3 times his adjusted book value estimates.
Recently, the National Association of Home Builders, or NAHB, released a report showing that homebuilder confidence has fallen substantially in the month of November, with the homebuilder confidence index falling to a record low. The report showed that the NAHB /Wells Fargo Housing Market Index fell to a reading of 9.0 in November from 14.0 in October. With the decrease, the index fell to its lowest level recorded since the series was created in January of 1985.
In a statement, NAHB Chairman Sandy Dunn said, "Today's report shows that we are in a crisis situation. If there's any hope of turning this economy around, Congress and the Administration need to focus on stabilizing housing."
Fourth Quarter Results
The Atlanta, Georgia-based designer, builder and seller of single-family and multi-family homes reported a net loss of $473.94 million or $12.29 per share for the fourth quarter, sharply wider than $155.23 million or $4.03 per share in the prior-year quarter.
Net loss from continuing operations sharply widened to $475.17 million or $12.32 per share from $151.99 million or $3.95 per share in the year-ago quarter.
On average, seven analysts surveyed by First Call/Thomson Financial expected the company to incur a loss of $2.10 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Results for the latest quarter include non-cash pre-tax charges related to inventory impairments and abandonment of land option contracts of $58.8 million, impairments related to joint venture investments of $6.0 million, and non-cash deferred tax valuation allowance under SFAS 109 of $398.6 million.
Total revenues for the quarter dropped to $0.71 billion from $1.09 billion in the same quarter last year, but topped five Wall Street analysts' consensus estimate of $593.40 million.
Peer Performance
Among Beazer Homes' peer's, Miami, Florida-based Lennar Corp. (LEN,LEN.B) in late September reported a significantly narrower net loss of $88.96 million in its third quarter on decline in expenses. Meanwhile, top-line fell 53% from last year on lower deliveries and prices amid struggling housing market, yet managed to beat market projections.
Also in late September, another peer KB Home (KBH) reported a wider loss in the third quarter of fiscal 2008 over the same period last year that included a gain from discontinued operations, combined with a sharp decline in revenues amid market slowdown. On a continuing operations basis, quarterly loss narrowed from the year-ago quarter, but was wider than analysts' estimates.
Other Metrics
Revenues from Homebuilding operations fell 44.6% to $0.59 billion from $1.07 billion in the comparable quarter a year ago, while land and lots sales revenues were $121.26 million, sharply higher than $25.67 million in the prior-year quarter.
Home closings for the quarter dropped 38.2% to 2,441 from the same quarter last year, with a 9.9% decline in average selling price from last year. Net new home orders totaled 1,083, up 10.3% from the year-ago quarter, driven largely by a lower cancellation rate of 45.7% during the fourth quarter, compared to 68.1% in the same period of the prior year.
At the end of the fourth quarter, total backlog units were 1,358 homes with a dollar value of $326.6 million, lower than 2,985 homes with a dollar value of $838.8 million in the year-ago quarter.
The company's income tax provision climbed to $334.94 million, compared to a tax gain of $76.62 million in the same quarter last year.
The company ended the fourth quarter with cash and cash equivalents of $584.3 million, compared to $454.3 million at end of the prior-year quarter.
Commenting on the results, president and chief executive officer, Ian McCarthy said, "Conditions in both the overall economy and housing market came under greater pressure during our fourth quarter and have continued to deteriorate since that time. Home buyer demand for new homes continues to be adversely affected by low levels of consumer confidence, falling home prices, extensive new and existing home supply and reduced access to mortgage financing."
Fiscal 2008 Highlights
For the full year, Beazer Homes reported a net loss of $951.91 million or $24.69 per share, sharply wider than $411.07 million or $10.70 per share posted in fiscal 2007.
Net loss from continuing operations sharply widened to $951.25 million or $24.68 per share from $410.38 million or $10.68 per share reported last year. Analysts expected the company to report a loss of $14.20 per share for the full-year 2008.
Total revenues for the full-year 2008 dropped to $2.07 billion from $3.47 billion reported in the full-year 2007. The Street was looking for revenues of $1.95 billion for fiscal 2008.
Looking ahead……
Recently, president and chief executive officer of Lennar Corp., Stuart Miller said, "Although the Federal government has recognized that stabilizing the housing market is critical to solving the current credit crisis, the government has yet to act meaningfully to help stabilize home prices."
"While we were encouraged that Congress passed the July housing stimulus bill as a first step, additional government actions will be necessary to help facilitate housing market stabilization, which in turn will help stabilize the financial markets as well," Miller added.
Stock Quote
BZH, which was trading in a broad range of $1.13 to $12.40 in the past 52 weeks, settled its trading on Monday at $1.50, down $0.27 on a volume of 0.82 million shares, higher than the three-month average volume of 2.03 million shares.
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May 22, 2026 14:46 ET Minutes of the latest Fed policy session was the highlight of the week along with survey data on the U.S. housing market. In Europe, survey data signaled the trends in the euro area private sector. Further, consumer price inflation data from the U.K. was in focus. In Asia, various economic indicators from China drew attention to the health of the economy.