x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
DELAWARE
|
|
58-2086934
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Class
|
|
Outstanding as of February 1, 2018
|
Common Stock, $0.001 par value
|
|
33,618,155
|
|
December 31,
2017 |
|
September 30,
2017 |
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
177,812
|
|
|
$
|
292,147
|
|
Restricted cash
|
12,082
|
|
|
12,462
|
|
||
Accounts receivable (net of allowance of $329 and $330, respectively)
|
31,804
|
|
|
36,323
|
|
||
Income tax receivable
|
88
|
|
|
88
|
|
||
Owned inventory
|
1,626,721
|
|
|
1,542,807
|
|
||
Investments in unconsolidated entities
|
4,277
|
|
|
3,994
|
|
||
Deferred tax assets, net
|
200,101
|
|
|
307,896
|
|
||
Property and equipment, net
|
18,742
|
|
|
17,566
|
|
||
Other assets
|
6,355
|
|
|
7,712
|
|
||
Total assets
|
$
|
2,077,982
|
|
|
$
|
2,220,995
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Trade accounts payable
|
$
|
97,535
|
|
|
$
|
103,484
|
|
Other liabilities
|
103,157
|
|
|
107,659
|
|
||
Total debt (net of premium of $3,220 and $3,413, respectively, and debt issuance costs of $16,545 and $14,800, respectively)
|
1,324,509
|
|
|
1,327,412
|
|
||
Total liabilities
|
1,525,201
|
|
|
1,538,555
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock (par value $.01 per share, 5,000,000 shares authorized, no shares issued)
|
—
|
|
|
—
|
|
||
Common stock (par value $0.001 per share, 63,000,000 shares authorized, 33,596,091 issued and outstanding and 33,515,768 issued and outstanding, respectively)
|
34
|
|
|
34
|
|
||
Paid-in capital
|
874,351
|
|
|
873,063
|
|
||
Accumulated deficit
|
(321,604
|
)
|
|
(190,657
|
)
|
||
Total stockholders’ equity
|
552,781
|
|
|
682,440
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,077,982
|
|
|
$
|
2,220,995
|
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Total revenue
|
$
|
372,489
|
|
|
$
|
339,241
|
|
Home construction and land sales expenses
|
311,660
|
|
|
285,578
|
|
||
Gross profit
|
60,829
|
|
|
53,663
|
|
||
Commissions
|
14,356
|
|
|
13,323
|
|
||
General and administrative expenses
|
37,285
|
|
|
36,388
|
|
||
Depreciation and amortization
|
2,507
|
|
|
2,677
|
|
||
Operating income
|
6,681
|
|
|
1,275
|
|
||
Equity in (loss) income of unconsolidated entities
|
(101
|
)
|
|
22
|
|
||
Loss on extinguishment of debt
|
(25,904
|
)
|
|
—
|
|
||
Other expense, net
|
(3,145
|
)
|
|
(5,196
|
)
|
||
Loss from continuing operations before income taxes
|
(22,469
|
)
|
|
(3,899
|
)
|
||
Expense (benefit) from income taxes
|
108,106
|
|
|
(2,540
|
)
|
||
Loss from continuing operations
|
(130,575
|
)
|
|
(1,359
|
)
|
||
Loss from discontinued operations, net of tax
|
(372
|
)
|
|
(70
|
)
|
||
Net loss and comprehensive loss
|
$
|
(130,947
|
)
|
|
$
|
(1,429
|
)
|
Weighted average number of shares:
|
|
|
|
||||
Basic and diluted
|
32,055
|
|
|
31,893
|
|
||
Basic and diluted loss per share:
|
|
|
|
||||
Continuing operations
|
$
|
(4.07
|
)
|
|
$
|
(0.04
|
)
|
Discontinued operations
|
(0.01
|
)
|
|
—
|
|
||
Total
|
$
|
(4.08
|
)
|
|
$
|
(0.04
|
)
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(130,947
|
)
|
|
$
|
(1,429
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
2,507
|
|
|
2,677
|
|
||
Stock-based compensation expense
|
2,610
|
|
|
2,176
|
|
||
Inventory impairments and abandonments
|
450
|
|
|
—
|
|
||
Deferred and other income tax expense (benefit)
|
107,795
|
|
|
(2,707
|
)
|
||
Write-off of deposit on legacy land investment
|
—
|
|
|
2,700
|
|
||
Gain on sale of fixed assets
|
(65
|
)
|
|
(46
|
)
|
||
Change in allowance for doubtful accounts
|
(1
|
)
|
|
(4
|
)
|
||
Equity in loss (income) of unconsolidated entities
|
88
|
|
|
(22
|
)
|
||
Cash distributions of income from unconsolidated entities
|
50
|
|
|
6
|
|
||
Non-cash loss on extinguishment of debt
|
3,173
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Decrease in accounts receivable
|
4,520
|
|
|
1,433
|
|
||
Decrease in income tax receivable
|
—
|
|
|
4
|
|
||
Increase in inventory
|
(83,205
|
)
|
|
(39,543
|
)
|
||
Decrease in other assets
|
1,252
|
|
|
1,906
|
|
||
Decrease in trade accounts payable
|
(5,949
|
)
|
|
(17,444
|
)
|
||
Decrease in other liabilities
|
(4,502
|
)
|
|
(12,541
|
)
|
||
Net cash used in operating activities
|
(102,224
|
)
|
|
(62,834
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(3,702
|
)
|
|
(2,874
|
)
|
||
Proceeds from sale of fixed assets
|
84
|
|
|
46
|
|
||
Investments in unconsolidated entities
|
(421
|
)
|
|
(1,397
|
)
|
||
Return of capital from unconsolidated entities
|
—
|
|
|
1,621
|
|
||
Net cash used in investing activities
|
(4,039
|
)
|
|
(2,604
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayment of debt
|
(401,481
|
)
|
|
(2,525
|
)
|
||
Proceeds from issuance of new debt
|
400,000
|
|
|
—
|
|
||
Debt issuance costs
|
(5,649
|
)
|
|
(340
|
)
|
||
Other financing activities
|
(1,322
|
)
|
|
(387
|
)
|
||
Net cash used in financing activities
|
(8,452
|
)
|
|
(3,252
|
)
|
||
Decrease in cash, cash equivalents and restricted cash
|
(114,715
|
)
|
|
(68,690
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
304,609
|
|
|
243,276
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
189,894
|
|
|
$
|
174,586
|
|
(In thousands)
|
|
Three Months Ended December 31, 2016
|
||
Consolidated Statements of Cash Flows:
|
|
|
||
Net cash used in investing activities (as originally reported)
|
|
$
|
(4,162
|
)
|
Movements in restricted cash
|
|
1,558
|
|
|
Net cash used in investing activities (as re-casted)
|
|
$
|
(2,604
|
)
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Supplemental disclosure of non-cash activity:
|
|
|
|
||||
Non-cash land acquisitions
(a)
|
$
|
—
|
|
|
$
|
5,197
|
|
Land acquisitions for debt
|
—
|
|
|
5,555
|
|
||
Supplemental disclosure of cash activity:
|
|
|
|
||||
Interest payments
|
$
|
10,766
|
|
|
$
|
11,824
|
|
Income tax payments
|
—
|
|
|
178
|
|
||
Tax refunds received
|
39
|
|
|
4
|
|
||
Reconciliation of cash, cash equivalents and restricted cash:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
177,812
|
|
|
$
|
158,623
|
|
Restricted cash
|
12,082
|
|
|
15,963
|
|
||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows
|
$
|
189,894
|
|
|
$
|
174,586
|
|
(In thousands)
|
December 31, 2017
|
|
September 30, 2017
|
||||
Beazer’s investment in unconsolidated entities
|
$
|
4,277
|
|
|
$
|
3,994
|
|
Total equity of unconsolidated entities
|
10,152
|
|
|
11,811
|
|
||
Total outstanding borrowings of unconsolidated entities
|
16,460
|
|
|
15,797
|
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Equity in (loss) income of unconsolidated entities
|
$
|
(101
|
)
|
|
$
|
22
|
|
(In thousands)
|
December 31, 2017
|
|
September 30, 2017
|
||||
Homes under construction
|
$
|
461,185
|
|
|
$
|
419,312
|
|
Development projects in progress
|
830,827
|
|
|
785,777
|
|
||
Land held for future development
|
97,166
|
|
|
112,565
|
|
||
Land held for sale
|
19,258
|
|
|
17,759
|
|
||
Capitalized interest
|
144,847
|
|
|
139,203
|
|
||
Model homes
|
73,438
|
|
|
68,191
|
|
||
Total owned inventory
|
$
|
1,626,721
|
|
|
$
|
1,542,807
|
|
(In thousands)
|
Projects in
Progress
(a)
|
|
Land Held for Future Development
|
|
Land Held
for Sale
|
|
Total Owned
Inventory
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
West Segment
|
$
|
712,742
|
|
|
$
|
71,647
|
|
|
$
|
7,445
|
|
|
$
|
791,834
|
|
East Segment
|
271,224
|
|
|
14,561
|
|
|
10,679
|
|
|
296,464
|
|
||||
Southeast Segment
(b)
|
329,589
|
|
|
10,958
|
|
|
1,110
|
|
|
341,657
|
|
||||
Corporate and unallocated
(c)
|
196,742
|
|
|
—
|
|
|
24
|
|
|
196,766
|
|
||||
Total
|
$
|
1,510,297
|
|
|
$
|
97,166
|
|
|
$
|
19,258
|
|
|
$
|
1,626,721
|
|
September 30, 2017
|
|
|
|
|
|
|
|
||||||||
West Segment
|
$
|
673,828
|
|
|
$
|
87,231
|
|
|
$
|
3,848
|
|
|
$
|
764,907
|
|
East Segment
|
250,002
|
|
|
14,391
|
|
|
11,578
|
|
|
275,971
|
|
||||
Southeast Segment
|
301,268
|
|
|
10,943
|
|
|
1,233
|
|
|
313,444
|
|
||||
Corporate and unallocated
(c)
|
187,385
|
|
|
—
|
|
|
1,100
|
|
|
188,485
|
|
||||
Total
|
$
|
1,412,483
|
|
|
$
|
112,565
|
|
|
$
|
17,759
|
|
|
$
|
1,542,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
||
(In thousands)
|
2017
|
||
Discontinued Operations:
|
|
||
Land Held for Sale
|
$
|
450
|
|
Total impairment and abandonment charges
|
$
|
450
|
|
(In thousands)
|
Deposits &
Non-refundable
Pre-acquisition
Costs Incurred
|
|
Remaining
Obligation
|
||||
As of December 31, 2017
|
|
|
|
||||
Unconsolidated lot option agreements
|
$
|
92,864
|
|
|
$
|
380,378
|
|
As of September 30, 2017
|
|
|
|
||||
Unconsolidated lot option agreements
|
$
|
91,854
|
|
|
$
|
408,300
|
|
|
Three Months Ended December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Capitalized interest in inventory, beginning of period
|
$
|
139,203
|
|
|
$
|
138,108
|
|
Interest incurred
|
25,555
|
|
|
27,087
|
|
||
Interest expense not qualified for capitalization and included as other expense
(a)
|
(3,435
|
)
|
|
(5,252
|
)
|
||
Capitalized interest amortized to home construction and land sales expenses
(b)
|
(16,476
|
)
|
|
(15,644
|
)
|
||
Capitalized interest in inventory, end of period
|
$
|
144,847
|
|
|
$
|
144,299
|
|
(In thousands)
|
Maturity Date
|
|
December 31, 2017
|
|
September 30, 2017
|
||||
5 3/4% Senior Notes
|
June 2019
|
|
$
|
96,393
|
|
|
$
|
321,393
|
|
8 3/4% Senior Notes
|
March 2022
|
|
500,000
|
|
|
500,000
|
|
||
7 1/4% Senior Notes
|
February 2023
|
|
24,834
|
|
|
199,834
|
|
||
6 3/4% Senior Notes
|
March 2025
|
|
250,000
|
|
|
250,000
|
|
||
5 7/8% Senior Notes
|
October 2027
|
|
400,000
|
|
|
—
|
|
||
Unamortized debt premium, net
|
|
|
3,220
|
|
|
3,413
|
|
||
Unamortized debt issuance costs
|
|
|
(16,545
|
)
|
|
(14,800
|
)
|
||
Total Senior Notes, net
|
|
|
1,257,902
|
|
|
1,259,840
|
|
||
Junior Subordinated Notes (net of unamortized accretion of $38,320 and $38,837, respectively)
|
July 2036
|
|
62,453
|
|
|
61,937
|
|
||
Other Secured Notes payable
|
Various Dates
|
|
4,154
|
|
|
5,635
|
|
||
Total debt, net
|
|
|
$
|
1,324,509
|
|
|
$
|
1,327,412
|
|
Senior Note Description
|
|
Issuance Date
|
|
Maturity Date
|
|
Redemption Terms
|
5 3/4% Senior Notes
|
|
April 2014
|
|
June 2019
|
|
Callable at any time before March 15, 2019, in whole or in part, at a redemption price equal to 100% of the principal amount, plus a customary make-whole premium; on or after March 15, 2019, callable at 100% of the principal amount plus, in each case, accrued and unpaid interest
|
8 3/4% Senior Notes
|
|
September 2016
|
|
March 2022
|
|
Callable at any time prior to March 15, 2019, in whole or in part, at a redemption price equal to 100% of the principal amount, plus a customary make-whole premium; on or after March 15, 2019, callable at a redemption price equal to 104.375% of the principal amount; on or after March 15, 2020, callable at a redemption price equal to 102.188% of the principal amount; on or after March 15, 2021, callable at a redemption price equal to 100% of the principal amount plus, in each case, accrued and unpaid interest
|
7 1/4% Senior Notes
|
|
February 2013
|
|
February 2023
|
|
Callable at any time prior to February 1, 2018, in whole or in part, at a redemption price equal to 100% of the principal amount, plus a customary make-whole premium; on or after February 1, 2018, callable at a redemption price equal to 103.625% of the principal amount; on or after February 1, 2019, callable at a redemption price equal to 102.41% of the principal amount; on or after February 1, 2020, callable at a redemption price equal to 101.208% of the principal amount; on or after February 1, 2021, callable at 100% of the principal amount plus, in each case, accrued and unpaid interest
|
6 3/4% Senior Notes
|
|
March 2017
|
|
March 2025
|
|
Callable at any time prior to March 15, 2020, in whole or in part, at a redemption price equal to 100% of the principal amount, plus a customary make-whole premium; on or after March 15, 2020, callable at a redemption price equal to 105.063% of the principal amount; on or after March 15, 2021, callable at a redemption price equal to 103.375% of the principal amount; on or after March 15, 2022, callable at a redemption price equal to 101.688% of the principal amount; on or after March 15, 2023, callable at a redemption price equal to 100.000% of the principal amount, plus, in each case, accrued and unpaid interest
|
5 7/8% Senior Notes
|
|
October 2017
|
|
October 2027
|
|
Callable at any time prior to October 15, 2022, in whole or in part, at a redemption price equal to 100% of the principal amount, plus a customary make-whole premium; on or after October 15, 2022, callable at a redemption price equal to 102.938% of the principal amount; on or after October 15, 2023, callable at a redemption price equal to 101.958% of the principal amount; on or after October 15, 2024, callable at a redemption price equal to 100.979% of the principal amount; on or after October 15, 2025, callable at a redemption price equal to 100.000% of the principal amount, plus, in each case, accrued and unpaid interest
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Balance at beginning of period
|
$
|
18,091
|
|
|
$
|
39,131
|
|
Accruals for warranties issued
(a)
|
4,212
|
|
|
2,658
|
|
||
Changes in liability related to warranties existing in prior periods
(b)
|
(2,296
|
)
|
|
5,392
|
|
||
Payments made
(b)
|
(4,191
|
)
|
|
(14,872
|
)
|
||
Balance at end of period
|
$
|
15,816
|
|
|
$
|
32,309
|
|
•
|
Level 1 – Quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2 – Inputs other than quoted prices included in Level 1 that are observable either directly or indirectly through corroboration with market data; and
|
•
|
Level 3 – Unobservable inputs that reflect our own estimates about the assumptions market participants would use in pricing the asset or liability.
|
(In thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Three Months Ended December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan assets
(a)
|
$
|
—
|
|
|
$
|
1,357
|
|
|
$
|
—
|
|
|
$
|
1,357
|
|
Land held for sale
(b)
|
—
|
|
|
—
|
|
|
642
|
|
|
642
|
|
||||
Three Months Ended December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan assets
(a)
|
$
|
—
|
|
|
$
|
1,006
|
|
|
$
|
—
|
|
|
$
|
1,006
|
|
As of September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Deferred compensation plan assets
(a)
|
$
|
—
|
|
|
$
|
1,114
|
|
|
$
|
—
|
|
|
$
|
1,114
|
|
Development projects in progress
(b)
|
—
|
|
|
—
|
|
|
3,791
|
|
|
3,791
|
|
||||
Land held for sale
(b)
|
—
|
|
|
—
|
|
|
325
|
|
|
325
|
|
|
As of December 31, 2017
|
|
As of September 30, 2017
|
||||||||||||
(In thousands)
|
Carrying
Amount (a) |
|
Fair Value
|
|
Carrying
Amount (a) |
|
Fair Value
|
||||||||
Senior Notes
(b)
|
$
|
1,257,902
|
|
|
$
|
1,338,675
|
|
|
$
|
1,259,840
|
|
|
$
|
1,355,657
|
|
Junior Subordinated Notes
|
62,453
|
|
|
62,453
|
|
|
61,937
|
|
|
61,937
|
|
||||
|
$
|
1,320,355
|
|
|
$
|
1,401,128
|
|
|
$
|
1,321,777
|
|
|
$
|
1,417,594
|
|
|
|
Three Months Ended December 31,
|
||||||
(In thousands)
|
|
2017
|
|
2016
|
||||
Stock options expense
|
|
$
|
60
|
|
|
$
|
107
|
|
Restricted stock awards expense
|
|
2,550
|
|
|
2,069
|
|
||
Before tax stock-based compensation expense
|
|
2,610
|
|
|
2,176
|
|
||
Tax benefit
|
|
(662
|
)
|
|
(774
|
)
|
||
After tax stock-based compensation expense
|
|
$
|
1,948
|
|
|
$
|
1,402
|
|
|
|
Three Months Ended
|
||
|
|
December 31, 2017
|
||
Expected life of options
|
|
5.0 years
|
|
|
Expected volatility
|
|
44.71
|
%
|
|
Expected dividends
|
|
—
|
|
|
Weighted average risk-free interest rate
|
|
2.06
|
%
|
|
Weighted average fair value
|
|
$
|
8.49
|
|
|
Three Months Ended
|
|||||
|
December 31, 2017
|
|||||
|
Shares
|
|
Weighted Average
Exercise Price |
|||
Outstanding at beginning of period
|
593,753
|
|
|
$
|
14.76
|
|
Granted
|
23,680
|
|
|
20.46
|
|
|
Exercised
|
(1,666
|
)
|
|
7.56
|
|
|
Expired
|
(56,967
|
)
|
|
23.65
|
|
|
Forfeited
|
(2,641
|
)
|
|
13.87
|
|
|
Outstanding at end of period
|
556,159
|
|
|
$
|
14.11
|
|
Exercisable at end of period
|
435,432
|
|
|
$
|
14.81
|
|
Vested or expected to vest in the future
|
554,381
|
|
|
$
|
14.11
|
|
|
Three Months Ended December 31, 2017
|
|||||||||||||||||||
|
Performance-Based Restricted Stock
|
|
Time-Based Restricted Stock
|
|
Total Restricted Stock
|
|||||||||||||||
|
Shares
|
|
Weighted Average
Grant Date Fair Value |
|
Shares
|
|
Weighted Average
Grant Date Fair Value |
|
Shares
|
|
Weighted Average
Grant Date Fair Value |
|||||||||
Beginning of period
|
668,766
|
|
|
$
|
15.72
|
|
|
872,181
|
|
|
$
|
16.47
|
|
|
1,540,947
|
|
|
$
|
16.14
|
|
Granted
|
144,746
|
|
|
22.40
|
|
|
189,372
|
|
|
20.46
|
|
|
334,118
|
|
|
21.30
|
|
|||
Vested
|
—
|
|
|
—
|
|
|
(225,332
|
)
|
|
14.01
|
|
|
(225,332
|
)
|
|
14.01
|
|
|||
Forfeited
|
(185,601
|
)
|
|
19.03
|
|
|
(8,144
|
)
|
|
16.49
|
|
|
(193,745
|
)
|
|
18.92
|
|
|||
End of period
|
627,911
|
|
|
$
|
16.28
|
|
|
828,077
|
|
|
$
|
18.06
|
|
|
1,455,988
|
|
|
$
|
17.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
December 31, 2017
|
|
September 30, 2017
|
||||
Accrued interest
|
$
|
24,653
|
|
|
$
|
11,024
|
|
Accrued bonus and deferred compensation
|
16,638
|
|
|
36,753
|
|
||
Accrued warranty expense
|
15,816
|
|
|
18,091
|
|
||
Customer deposits
|
13,837
|
|
|
11,704
|
|
||
Litigation accrual
|
3,970
|
|
|
3,899
|
|
||
Income tax liabilities
|
1,033
|
|
|
811
|
|
||
Other
|
27,210
|
|
|
25,377
|
|
||
Total other liabilities
|
$
|
103,157
|
|
|
$
|
107,659
|
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Operating income
(a)
|
|
|
|
||||
West
|
$
|
21,110
|
|
|
$
|
21,015
|
|
East
(b)
|
7,396
|
|
|
1,557
|
|
||
Southeast
|
6,910
|
|
|
5,015
|
|
||
Segment total
|
35,416
|
|
|
27,587
|
|
||
Corporate and unallocated
(c)
|
(28,735
|
)
|
|
(26,312
|
)
|
||
Total operating income
|
$
|
6,681
|
|
|
$
|
1,275
|
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Depreciation and amortization
|
|
|
|
||||
West
|
$
|
1,256
|
|
|
$
|
1,248
|
|
East
|
439
|
|
|
529
|
|
||
Southeast
|
579
|
|
|
466
|
|
||
Segment total
|
2,274
|
|
|
2,243
|
|
||
Corporate and unallocated
(c)
|
233
|
|
|
434
|
|
||
Total depreciation and amortization
|
$
|
2,507
|
|
|
$
|
2,677
|
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Capital Expenditures
|
|
|
|
||||
West
|
$
|
1,776
|
|
|
$
|
1,184
|
|
East
|
595
|
|
|
771
|
|
||
Southeast
|
743
|
|
|
618
|
|
||
Corporate and unallocated
|
588
|
|
|
301
|
|
||
Total capital expenditures
|
$
|
3,702
|
|
|
$
|
2,874
|
|
(In thousands)
|
December 31, 2017
|
|
September 30, 2017
|
||||
Assets
|
|
|
|
||||
West
|
$
|
810,232
|
|
|
$
|
779,964
|
|
East
|
303,429
|
|
|
298,532
|
|
||
Southeast
|
354,659
|
|
|
331,618
|
|
||
Corporate and unallocated
(a)
|
609,662
|
|
|
810,881
|
|
||
Total assets
|
$
|
2,077,982
|
|
|
$
|
2,220,995
|
|
|
Beazer Homes
USA, Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Consolidating
Adjustments |
|
Consolidated
Beazer Homes USA, Inc. |
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
180,282
|
|
|
$
|
3,047
|
|
|
$
|
730
|
|
|
$
|
(6,247
|
)
|
|
$
|
177,812
|
|
Restricted cash
|
10,941
|
|
|
1,141
|
|
|
—
|
|
|
—
|
|
|
12,082
|
|
|||||
Accounts receivable (net of allowance of $329)
|
—
|
|
|
31,804
|
|
|
—
|
|
|
—
|
|
|
31,804
|
|
|||||
Income tax receivable
|
88
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|||||
Owned inventory
|
—
|
|
|
1,626,721
|
|
|
—
|
|
|
—
|
|
|
1,626,721
|
|
|||||
Investments in unconsolidated entities
|
773
|
|
|
3,504
|
|
|
—
|
|
|
—
|
|
|
4,277
|
|
|||||
Deferred tax assets, net
|
200,101
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
200,101
|
|
|||||
Property and equipment, net
|
—
|
|
|
18,742
|
|
|
—
|
|
|
—
|
|
|
18,742
|
|
|||||
Investments in subsidiaries
|
710,741
|
|
|
—
|
|
|
—
|
|
|
(710,741
|
)
|
|
—
|
|
|||||
Intercompany
|
796,658
|
|
|
—
|
|
|
2,331
|
|
|
(798,989
|
)
|
|
—
|
|
|||||
Other assets
|
908
|
|
|
5,447
|
|
|
—
|
|
|
—
|
|
|
6,355
|
|
|||||
Total assets
|
$
|
1,900,492
|
|
|
$
|
1,690,406
|
|
|
$
|
3,061
|
|
|
$
|
(1,515,977
|
)
|
|
$
|
2,077,982
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade accounts payable
|
$
|
—
|
|
|
$
|
97,535
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
97,535
|
|
Other liabilities
|
25,025
|
|
|
77,882
|
|
|
250
|
|
|
—
|
|
|
103,157
|
|
|||||
Intercompany
|
2,331
|
|
|
802,905
|
|
|
—
|
|
|
(805,236
|
)
|
|
—
|
|
|||||
Total debt (net of premium and debt issuance costs)
|
1,320,355
|
|
|
4,154
|
|
|
—
|
|
|
—
|
|
|
1,324,509
|
|
|||||
Total liabilities
|
1,347,711
|
|
|
982,476
|
|
|
250
|
|
|
(805,236
|
)
|
|
1,525,201
|
|
|||||
Stockholders’ equity
|
552,781
|
|
|
707,930
|
|
|
2,811
|
|
|
(710,741
|
)
|
|
552,781
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
1,900,492
|
|
|
$
|
1,690,406
|
|
|
$
|
3,061
|
|
|
$
|
(1,515,977
|
)
|
|
$
|
2,077,982
|
|
|
Beazer Homes
USA, Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Consolidating
Adjustments |
|
Consolidated
Beazer Homes USA, Inc. |
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
283,191
|
|
|
$
|
15,393
|
|
|
$
|
724
|
|
|
$
|
(7,161
|
)
|
|
$
|
292,147
|
|
Restricted cash
|
11,001
|
|
|
1,461
|
|
|
—
|
|
|
—
|
|
|
12,462
|
|
|||||
Accounts receivable (net of allowance of $330)
|
—
|
|
|
36,322
|
|
|
1
|
|
|
—
|
|
|
36,323
|
|
|||||
Income tax receivable
|
88
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|||||
Owned inventory
|
—
|
|
|
1,542,807
|
|
|
—
|
|
|
—
|
|
|
1,542,807
|
|
|||||
Investments in unconsolidated entities
|
773
|
|
|
3,221
|
|
|
—
|
|
|
—
|
|
|
3,994
|
|
|||||
Deferred tax assets, net
|
307,896
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
307,896
|
|
|||||
Property and equipment, net
|
—
|
|
|
17,566
|
|
|
—
|
|
|
—
|
|
|
17,566
|
|
|||||
Investments in subsidiaries
|
808,067
|
|
|
—
|
|
|
—
|
|
|
(808,067
|
)
|
|
—
|
|
|||||
Intercompany
|
606,168
|
|
|
—
|
|
|
2,337
|
|
|
(608,505
|
)
|
|
—
|
|
|||||
Other assets
|
599
|
|
|
7,098
|
|
|
15
|
|
|
—
|
|
|
7,712
|
|
|||||
Total assets
|
$
|
2,017,783
|
|
|
$
|
1,623,868
|
|
|
$
|
3,077
|
|
|
$
|
(1,423,733
|
)
|
|
$
|
2,220,995
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade accounts payable
|
$
|
—
|
|
|
$
|
103,484
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
103,484
|
|
Other liabilities
|
11,229
|
|
|
96,189
|
|
|
241
|
|
|
—
|
|
|
107,659
|
|
|||||
Intercompany
|
2,337
|
|
|
613,329
|
|
|
—
|
|
|
(615,666
|
)
|
|
—
|
|
|||||
Total debt (net of premium and debt issuance costs)
|
1,321,777
|
|
|
5,635
|
|
|
—
|
|
|
—
|
|
|
1,327,412
|
|
|||||
Total liabilities
|
1,335,343
|
|
|
818,637
|
|
|
241
|
|
|
(615,666
|
)
|
|
1,538,555
|
|
|||||
Stockholders’ equity
|
682,440
|
|
|
805,231
|
|
|
2,836
|
|
|
(808,067
|
)
|
|
682,440
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
2,017,783
|
|
|
$
|
1,623,868
|
|
|
$
|
3,077
|
|
|
$
|
(1,423,733
|
)
|
|
$
|
2,220,995
|
|
|
Beazer Homes
USA, Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Consolidating
Adjustments |
|
Consolidated
Beazer Homes USA, Inc. |
||||||||||
Three Months Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
$
|
—
|
|
|
$
|
372,489
|
|
|
$
|
14
|
|
|
$
|
(14
|
)
|
|
$
|
372,489
|
|
Home construction and land sales expenses
|
16,468
|
|
|
295,206
|
|
|
—
|
|
|
(14
|
)
|
|
311,660
|
|
|||||
Gross (loss) profit
|
(16,468
|
)
|
|
77,283
|
|
|
14
|
|
|
—
|
|
|
60,829
|
|
|||||
Commissions
|
—
|
|
|
14,356
|
|
|
—
|
|
|
—
|
|
|
14,356
|
|
|||||
General and administrative expenses
|
—
|
|
|
37,244
|
|
|
41
|
|
|
—
|
|
|
37,285
|
|
|||||
Depreciation and amortization
|
—
|
|
|
2,507
|
|
|
—
|
|
|
—
|
|
|
2,507
|
|
|||||
Operating (loss) income
|
(16,468
|
)
|
|
23,176
|
|
|
(27
|
)
|
|
—
|
|
|
6,681
|
|
|||||
Equity in loss of unconsolidated entities
|
—
|
|
|
(101
|
)
|
|
—
|
|
|
—
|
|
|
(101
|
)
|
|||||
Loss on extinguishment of debt
|
(25,904
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,904
|
)
|
|||||
Other (expense) income, net
|
(3,435
|
)
|
|
296
|
|
|
(6
|
)
|
|
—
|
|
|
(3,145
|
)
|
|||||
(Loss) income before income taxes
|
(45,807
|
)
|
|
23,371
|
|
|
(33
|
)
|
|
—
|
|
|
(22,469
|
)
|
|||||
(Benefit) expense from income taxes
|
(12,185
|
)
|
|
120,303
|
|
|
(12
|
)
|
|
—
|
|
|
108,106
|
|
|||||
Equity in income of subsidiaries
|
(96,953
|
)
|
|
—
|
|
|
—
|
|
|
96,953
|
|
|
—
|
|
|||||
Loss from continuing operations
|
(130,575
|
)
|
|
(96,932
|
)
|
|
(21
|
)
|
|
96,953
|
|
|
(130,575
|
)
|
|||||
Loss from discontinued operations
|
—
|
|
|
(369
|
)
|
|
(3
|
)
|
|
—
|
|
|
(372
|
)
|
|||||
Equity in loss of subsidiaries from discontinued operations
|
(372
|
)
|
|
—
|
|
|
—
|
|
|
372
|
|
|
—
|
|
|||||
Net loss and comprehensive loss
|
$
|
(130,947
|
)
|
|
$
|
(97,301
|
)
|
|
$
|
(24
|
)
|
|
$
|
97,325
|
|
|
$
|
(130,947
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Beazer Homes
USA, Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Consolidating
Adjustments |
|
Consolidated
Beazer Homes USA, Inc. |
||||||||||
Three Months Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenue
|
$
|
—
|
|
|
$
|
339,241
|
|
|
$
|
36
|
|
|
$
|
(36
|
)
|
|
$
|
339,241
|
|
Home construction and land sales expenses
|
15,644
|
|
|
269,970
|
|
|
—
|
|
|
(36
|
)
|
|
285,578
|
|
|||||
Gross (loss) profit
|
(15,644
|
)
|
|
69,271
|
|
|
36
|
|
|
—
|
|
|
53,663
|
|
|||||
Commissions
|
—
|
|
|
13,323
|
|
|
—
|
|
|
—
|
|
|
13,323
|
|
|||||
General and administrative expenses
|
—
|
|
|
36,365
|
|
|
23
|
|
|
—
|
|
|
36,388
|
|
|||||
Depreciation and amortization
|
—
|
|
|
2,677
|
|
|
—
|
|
|
—
|
|
|
2,677
|
|
|||||
Operating (loss) income
|
(15,644
|
)
|
|
16,906
|
|
|
13
|
|
|
—
|
|
|
1,275
|
|
|||||
Equity in income of unconsolidated entities
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|||||
Other (expense) income, net
|
(5,252
|
)
|
|
57
|
|
|
(1
|
)
|
|
—
|
|
|
(5,196
|
)
|
|||||
(Loss) income before income taxes
|
(20,896
|
)
|
|
16,985
|
|
|
12
|
|
|
—
|
|
|
(3,899
|
)
|
|||||
(Benefit) expense from income taxes
|
(7,569
|
)
|
|
5,025
|
|
|
4
|
|
|
—
|
|
|
(2,540
|
)
|
|||||
Equity in income of subsidiaries
|
11,968
|
|
|
—
|
|
|
—
|
|
|
(11,968
|
)
|
|
—
|
|
|||||
(Loss) income from continuing operations
|
(1,359
|
)
|
|
11,960
|
|
|
8
|
|
|
(11,968
|
)
|
|
(1,359
|
)
|
|||||
Loss from discontinued operations
|
(70
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(70
|
)
|
|||||
Equity in loss of subsidiaries from discontinued operations
|
—
|
|
|
(67
|
)
|
|
(3
|
)
|
|
70
|
|
|
—
|
|
|||||
Net (loss) income and comprehensive (loss) income
|
$
|
(1,429
|
)
|
|
$
|
11,893
|
|
|
$
|
5
|
|
|
$
|
(11,898
|
)
|
|
$
|
(1,429
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Beazer Homes
USA, Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Consolidating
Adjustments |
|
Consolidated
Beazer Homes USA, Inc. |
||||||||||
Three Months Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
91,465
|
|
|
$
|
(193,721
|
)
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
(102,224
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
—
|
|
|
(3,702
|
)
|
|
—
|
|
|
—
|
|
|
(3,702
|
)
|
|||||
Proceeds from sale of fixed assets
|
—
|
|
|
84
|
|
|
—
|
|
|
—
|
|
|
84
|
|
|||||
Investments in unconsolidated entities
|
—
|
|
|
(421
|
)
|
|
—
|
|
|
—
|
|
|
(421
|
)
|
|||||
Advances to/from subsidiaries
|
(187,451
|
)
|
|
—
|
|
|
(26
|
)
|
|
187,477
|
|
|
—
|
|
|||||
Net cash used in investing activities
|
(187,451
|
)
|
|
(4,039
|
)
|
|
(26
|
)
|
|
187,477
|
|
|
(4,039
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayment of debt
|
(400,012
|
)
|
|
(1,469
|
)
|
|
—
|
|
|
—
|
|
|
(401,481
|
)
|
|||||
Proceeds from issuance of new debt
|
400,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400,000
|
|
|||||
Debt issuance costs
|
(5,649
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,649
|
)
|
|||||
Advances to/from subsidiaries
|
—
|
|
|
186,563
|
|
|
—
|
|
|
(186,563
|
)
|
|
—
|
|
|||||
Other financing activities
|
(1,322
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,322
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(6,983
|
)
|
|
185,094
|
|
|
—
|
|
|
(186,563
|
)
|
|
(8,452
|
)
|
|||||
(Decrease) increase in cash, cash equivalents and restricted cash
|
(102,969
|
)
|
|
(12,666
|
)
|
|
6
|
|
|
914
|
|
|
(114,715
|
)
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
294,192
|
|
|
16,854
|
|
|
724
|
|
|
(7,161
|
)
|
|
304,609
|
|
|||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
191,223
|
|
|
$
|
4,188
|
|
|
$
|
730
|
|
|
$
|
(6,247
|
)
|
|
$
|
189,894
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Beazer Homes
USA, Inc. |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Consolidating
Adjustments |
|
Consolidated
Beazer Homes USA, Inc. |
||||||||||
Three Months Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash used in operating activities
|
$
|
(2,902
|
)
|
|
$
|
(59,928
|
)
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
(62,834
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
—
|
|
|
(2,874
|
)
|
|
—
|
|
|
—
|
|
|
(2,874
|
)
|
|||||
Proceeds from sale of fixed assets
|
—
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|||||
Investments in unconsolidated entities
|
—
|
|
|
(1,397
|
)
|
|
—
|
|
|
—
|
|
|
(1,397
|
)
|
|||||
Return of capital from unconsolidated entities
|
—
|
|
|
1,621
|
|
|
—
|
|
|
—
|
|
|
1,621
|
|
|||||
Advances to/from subsidiaries
|
(50,314
|
)
|
|
—
|
|
|
—
|
|
|
50,314
|
|
|
—
|
|
|||||
Net cash used in investing activities
|
(50,314
|
)
|
|
(2,604
|
)
|
|
—
|
|
|
50,314
|
|
|
(2,604
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayment of debt
|
—
|
|
|
(2,525
|
)
|
|
—
|
|
|
—
|
|
|
(2,525
|
)
|
|||||
Debt issuance costs
|
(340
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(340
|
)
|
|||||
Advances to/from subsidiaries
|
—
|
|
|
52,224
|
|
|
(2
|
)
|
|
(52,222
|
)
|
|
—
|
|
|||||
Other financing activities
|
(387
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(387
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(727
|
)
|
|
49,699
|
|
|
(2
|
)
|
|
(52,222
|
)
|
|
(3,252
|
)
|
|||||
Decrease in cash, cash equivalents and restricted cash
|
(53,943
|
)
|
|
(12,833
|
)
|
|
(6
|
)
|
|
(1,908
|
)
|
|
(68,690
|
)
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
228,513
|
|
|
18,404
|
|
|
859
|
|
|
(4,500
|
)
|
|
243,276
|
|
|||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
174,570
|
|
|
$
|
5,571
|
|
|
$
|
853
|
|
|
$
|
(6,408
|
)
|
|
$
|
174,586
|
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Total revenue
|
$
|
625
|
|
|
$
|
—
|
|
Home construction and land sales expenses
|
667
|
|
|
78
|
|
||
Inventory impairments and lot option abandonments
|
450
|
|
|
—
|
|
||
Gross loss
|
(492
|
)
|
|
(78
|
)
|
||
General and administrative expenses
|
16
|
|
|
31
|
|
||
Operating loss
|
(508
|
)
|
|
(109
|
)
|
||
Equity in income of unconsolidated entities
|
12
|
|
|
—
|
|
||
Other expense, net
|
(3
|
)
|
|
—
|
|
||
Loss from discontinued operations before income taxes
|
(499
|
)
|
|
(109
|
)
|
||
Benefit from income taxes
|
(127
|
)
|
|
(39
|
)
|
||
Loss from discontinued operations, net of tax
|
$
|
(372
|
)
|
|
$
|
(70
|
)
|
•
|
Sales per community per month was
2.4
and
2.2
for the quarters ended
December 31, 2017
and
December 31, 2016
, respectively.
Our strong emphasis on sales absorptions allowed us to expand the unit and dollar value of our backlog despite higher year-over-year closings and a smaller community count. Sales per community per month increased to
3.0
for the trailing 12 months ended
December 31, 2017
versus
2.8
a year ago, and is within the range established in our “2B-10” plan of
2.8
to
3.2
. We continue to believe that we are among the industry leaders in sales absorption rates, and are focused on driving further increases in our sales pace moving forward.
|
•
|
Our ASP for homes closed during the quarter ended
December 31, 2017
was
$345.0 thousand
, up
2.1%
compared to the prior year.
ASP for closings during the trailing 12 months ended
December 31, 2017
was
$344.4 thousand
, up
3.6%
year-over-year, and our ASP in backlog as of
December 31, 2017
has risen
7.2%
versus the prior year quarter to
$370.9 thousand
. Our targeted "2B-10" metric for ASP is a range of
$340.0 thousand
to
$350.0 thousand
.
|
•
|
During the current quarter, we had an average active community count of
155
, down
0.4%
from the prior year quarter, and ended the quarter with
156
active communities.
We expect our year-over-year increase in spending on land and land development activities to lead to growth in community count going forward. We invested
$141.7 million
in land and land development during the current quarter, compared to
$103.2 million
in the prior year quarter. We consistently evaluate strategic opportunities to purchase land within our geographic footprint, balancing our desire to reduce our leverage with land acquisition strategies that minimize our capital employed. Our “2B-10” target metric is an active community count range between
170
and
175
.
|
•
|
Homebuilding gross margin excluding impairments and abandonments and interest for the quarter ended
December 31, 2017
was
20.9%
, up from
20.5%
in the prior year quarter.
For the trailing 12 months ended
December 31, 2017
, this adjusted gross margin was
21.3%
, which is within our “2B-10” target metric range of
21.0%
to
22.0%
. Our homebuilding gross margin has been favorably impacted this year by a number of factors, including our efforts to reduce construction costs, improve cycle time, raise home prices where possible and, to a lesser extent, some non-recurring benefits. Working against these efforts have been increases in land costs, driven by the location and structure of our land deals, cost pressures in certain labor and material categories and community mix (including an increasing number of closings from recently activated assets formerly classified as land held for future development, which generally have lower margins).
|
•
|
SG&A for the quarter ended
December 31, 2017
was
13.9%
of total revenue, compared to
14.7%
in the prior year quarter.
A $2.7 million charge was recorded within our SG&A during the prior year quarter to write off an uncollectible deposit on a legacy investment, and excluding this write-off, our SG&A as a percentage of homebuilding revenue was flat year-over-year. SG&A for the trailing 12 months ended
December 31, 2017
was
12.2%
of total revenue, a
decrease
of
40
basis points from the prior year. Although SG&A for the trailing 12 months remains slightly above our “2B-10” target range of
11.0%
to
12.0%
, we believe that revenue growth in our fiscal 2018 and beyond will allow us to attain our “2B-10” target range.
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
($ in thousands)
|
2017
|
|
2016
|
||||
Revenues:
|
|
|
|
||||
Homebuilding
|
$
|
367,754
|
|
|
$
|
336,126
|
|
Land sales and other
|
4,735
|
|
|
3,115
|
|
||
Total
|
$
|
372,489
|
|
|
$
|
339,241
|
|
Gross profit:
|
|
|
|
||||
Homebuilding
|
$
|
60,232
|
|
|
$
|
53,204
|
|
Land sales and other
|
597
|
|
|
459
|
|
||
Total
|
$
|
60,829
|
|
|
$
|
53,663
|
|
Gross margin:
|
|
|
|
||||
Homebuilding
|
16.4
|
%
|
|
15.8
|
%
|
||
Land sales and other
|
12.6
|
%
|
|
14.7
|
%
|
||
Total
|
16.3
|
%
|
|
15.8
|
%
|
||
Commissions
|
$
|
14,356
|
|
|
$
|
13,323
|
|
General and administrative expenses (G&A)
(a)
|
37,285
|
|
|
36,388
|
|
||
SG&A (commissions plus G&A) as a percentage of total revenue
|
13.9
|
%
|
|
14.7
|
%
|
||
G&A as a percentage of total revenue
|
10.0
|
%
|
|
10.7
|
%
|
||
Depreciation and amortization
|
$
|
2,507
|
|
|
$
|
2,677
|
|
Operating income
|
$
|
6,681
|
|
|
$
|
1,275
|
|
Operating income as a percentage of total revenue
|
1.8
|
%
|
|
0.4
|
%
|
||
Effective Tax Rate
(b)
|
(481.1
|
)%
|
|
65.1
|
%
|
||
Equity in (loss) income of unconsolidated entities
|
$
|
(101
|
)
|
|
$
|
22
|
|
Loss on extinguishment of debt
|
25,904
|
|
|
—
|
|
|
|
Three Months Ended December 31,
|
|
LTM Ended December 31,
(a)
|
||||||||||||||||||||
(In thousands)
|
|
2017
|
|
2016
|
|
17 vs 16
|
|
2017
|
|
2016
|
|
17 vs 16
|
||||||||||||
Net (loss) income
|
|
$
|
(130,947
|
)
|
|
$
|
(1,429
|
)
|
|
$
|
(129,518
|
)
|
|
$
|
(97,705
|
)
|
|
$
|
2,265
|
|
|
$
|
(99,970
|
)
|
Expense (benefit) from income taxes
|
|
107,979
|
|
|
(2,579
|
)
|
|
110,558
|
|
|
113,179
|
|
|
13,139
|
|
|
100,040
|
|
||||||
Interest amortized to home construction and land sales expenses and capitalized interest impaired
|
|
16,476
|
|
|
15,644
|
|
|
832
|
|
|
89,652
|
|
|
81,315
|
|
|
8,337
|
|
||||||
Interest expense not qualified for capitalization
|
|
3,435
|
|
|
5,252
|
|
|
(1,817
|
)
|
|
13,819
|
|
|
23,208
|
|
|
(9,389
|
)
|
||||||
EBIT
|
|
(3,057
|
)
|
|
16,888
|
|
|
(19,945
|
)
|
|
118,945
|
|
|
119,927
|
|
|
(982
|
)
|
||||||
Depreciation and amortization and stock-based compensation amortization
|
|
5,117
|
|
|
4,859
|
|
|
258
|
|
|
22,431
|
|
|
21,864
|
|
|
567
|
|
||||||
EBITDA
|
|
2,060
|
|
|
21,747
|
|
|
(19,687
|
)
|
|
141,376
|
|
|
141,791
|
|
|
(415
|
)
|
||||||
Loss on extinguishment of debt
|
|
25,904
|
|
|
—
|
|
|
25,904
|
|
|
38,534
|
|
|
12,595
|
|
|
25,939
|
|
||||||
Inventory impairments and abandonments
(b)
|
|
450
|
|
|
—
|
|
|
450
|
|
|
2,839
|
|
|
13,216
|
|
|
(10,377
|
)
|
||||||
Additional insurance recoveries from third-party insurer
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,500
|
)
|
|
15,500
|
|
||||||
Write-off of deposit on legacy land investment
|
|
—
|
|
|
2,700
|
|
|
(2,700
|
)
|
|
—
|
|
|
2,700
|
|
|
(2,700
|
)
|
||||||
Adjusted EBITDA
|
|
$
|
28,414
|
|
|
$
|
24,447
|
|
|
$
|
3,967
|
|
|
$
|
182,749
|
|
|
$
|
154,802
|
|
|
$
|
27,947
|
|
|
Three Months Ended December 31,
|
|||||||||||||
|
New Orders, net
|
|
Cancellation Rates
|
|||||||||||
|
2017
|
|
2016
|
|
17 vs 16
|
|
2017
|
|
2016
|
|||||
West
|
534
|
|
|
467
|
|
|
14.3
|
%
|
|
18.5
|
%
|
|
20.2
|
%
|
East
|
259
|
|
|
228
|
|
|
13.6
|
%
|
|
23.1
|
%
|
|
22.7
|
%
|
Southeast
|
317
|
|
|
310
|
|
|
2.3
|
%
|
|
15.9
|
%
|
|
21.5
|
%
|
Total
|
1,110
|
|
|
1,005
|
|
|
10.4
|
%
|
|
18.9
|
%
|
|
21.2
|
%
|
|
As of December 31,
|
|||||||||
|
2017
|
|
2016
|
|
17 vs 16
|
|||||
Backlog Units:
|
|
|
|
|
|
|||||
West
|
887
|
|
|
785
|
|
|
13.0
|
%
|
||
East
|
447
|
|
|
455
|
|
|
(1.8
|
)%
|
||
Southeast
|
565
|
|
|
686
|
|
|
(17.6
|
)%
|
||
Total
|
1,899
|
|
|
1,926
|
|
|
(1.4
|
)%
|
||
Aggregate dollar value of homes in backlog (in millions)
|
$
|
704.4
|
|
|
$
|
666.1
|
|
|
5.7
|
%
|
ASP in backlog (in thousands)
|
$
|
370.9
|
|
|
$
|
345.8
|
|
|
7.2
|
%
|
|
Three Months Ended December 31,
|
|||||||||||||||||||||||||||||
|
Homebuilding Revenue
|
|
Average Selling Price
|
|
Closings
|
|||||||||||||||||||||||||
($ in thousands)
|
2017
|
|
2016
|
|
17 vs 16
|
|
2017
|
|
2016
|
|
17 vs 16
|
|
2017
|
|
2016
|
|
17 vs 16
|
|||||||||||||
West
|
$
|
176,556
|
|
|
$
|
171,749
|
|
|
2.8
|
%
|
|
$
|
335.7
|
|
|
$
|
336.8
|
|
|
(0.3
|
)%
|
|
526
|
|
|
510
|
|
|
3.1
|
%
|
East
|
85,688
|
|
|
81,250
|
|
|
5.5
|
%
|
|
380.8
|
|
|
374.4
|
|
|
1.7
|
%
|
|
225
|
|
|
217
|
|
|
3.7
|
%
|
||||
Southeast
|
105,510
|
|
|
83,127
|
|
|
26.9
|
%
|
|
335.0
|
|
|
310.2
|
|
|
8.0
|
%
|
|
315
|
|
|
268
|
|
|
17.5
|
%
|
||||
Total
|
$
|
367,754
|
|
|
$
|
336,126
|
|
|
9.4
|
%
|
|
345.0
|
|
|
337.8
|
|
|
2.1
|
%
|
|
1,066
|
|
|
995
|
|
|
7.1
|
%
|
|
Three Months Ended December 31, 2017
|
|||||||||||||||||||||||||||
($ in thousands)
|
HB Gross
Profit (Loss)
|
|
HB Gross
Margin
|
|
Impairments &
Abandonments
(I&A)
|
|
HB Gross
Profit (Loss)w/o
I&A
|
|
HB Gross
Margin w/o
I&A
|
|
Interest
Amortized to
COS (Interest)
|
|
HB Gross Profit
w/o I&A and
Interest
|
|
HB Gross Margin
w/o I&A and
Interest
|
|||||||||||||
West
|
$
|
38,082
|
|
|
21.6
|
%
|
|
$
|
—
|
|
|
$
|
38,082
|
|
|
21.6
|
%
|
|
$
|
—
|
|
|
$
|
38,082
|
|
|
21.6
|
%
|
East
|
16,436
|
|
|
19.2
|
%
|
|
—
|
|
|
16,436
|
|
|
19.2
|
%
|
|
—
|
|
|
16,436
|
|
|
19.2
|
%
|
|||||
Southeast
|
18,578
|
|
|
17.6
|
%
|
|
—
|
|
|
18,578
|
|
|
17.6
|
%
|
|
—
|
|
|
18,578
|
|
|
17.6
|
%
|
|||||
Corporate & unallocated
|
(12,864
|
)
|
|
|
|
—
|
|
|
(12,864
|
)
|
|
|
|
16,468
|
|
|
3,604
|
|
|
|
||||||||
Total homebuilding
|
$
|
60,232
|
|
|
16.4
|
%
|
|
$
|
—
|
|
|
$
|
60,232
|
|
|
16.4
|
%
|
|
$
|
16,468
|
|
|
$
|
76,700
|
|
|
20.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Three Months Ended December 31, 2016
|
|||||||||||||||||||||||||||
($ in thousands)
|
HB Gross
Profit (Loss)
|
|
HB Gross
Margin
|
|
Impairments &
Abandonments
(I&A)
|
|
HB Gross
Profit (Loss) w/o
I&A
|
|
HB Gross
Margin w/o
I&A
|
|
Interest
Amortized to
COS
(Interest)
|
|
HB Gross Profit
w/o I&A and
Interest
|
|
HB Gross Margin
w/o I&A and
Interest
|
|||||||||||||
West
|
$
|
36,817
|
|
|
21.4
|
%
|
|
$
|
—
|
|
|
$
|
36,817
|
|
|
21.4
|
%
|
|
$
|
—
|
|
|
$
|
36,817
|
|
|
21.4
|
%
|
East
|
13,428
|
|
|
16.5
|
%
|
|
—
|
|
|
13,428
|
|
|
16.5
|
%
|
|
—
|
|
|
13,428
|
|
|
16.5
|
%
|
|||||
Southeast
|
14,577
|
|
|
17.5
|
%
|
|
—
|
|
|
14,577
|
|
|
17.5
|
%
|
|
—
|
|
|
14,577
|
|
|
17.5
|
%
|
|||||
Corporate & unallocated
|
(11,618
|
)
|
|
|
|
—
|
|
|
(11,618
|
)
|
|
|
|
15,644
|
|
|
4,026
|
|
|
|
||||||||
Total homebuilding
|
$
|
53,204
|
|
|
15.8
|
%
|
|
$
|
—
|
|
|
$
|
53,204
|
|
|
15.8
|
%
|
|
$
|
15,644
|
|
|
$
|
68,848
|
|
|
20.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding Gross Margin from previously impaired communities:
|
|
|
Pre-impairment turn gross margin
|
(22.6
|
)%
|
Impact of interest amortized to COS related to these communities
|
23.5
|
%
|
Pre-impairment turn gross margin, excluding interest amortization
|
0.9
|
%
|
Impact of impairment turns
|
17.1
|
%
|
Gross margin (post impairment turns), excluding interest amortization
|
18.0
|
%
|
|
Land Sales and Other Revenues
|
|
Land Sales and Other Gross Profit (Loss)
|
||||||||||||||||||||
|
Three Months Ended December 31,
|
|
Three Months Ended December 31,
|
||||||||||||||||||||
(In thousands)
|
2017
|
|
2016
|
|
17 vs 16
|
|
2017
|
|
2016
|
|
17 vs 16
|
||||||||||||
West
|
$
|
1,415
|
|
|
$
|
—
|
|
|
$
|
1,415
|
|
|
$
|
363
|
|
|
$
|
278
|
|
|
$
|
85
|
|
East
|
3,165
|
|
|
2,909
|
|
|
256
|
|
|
213
|
|
|
131
|
|
|
82
|
|
||||||
Southeast
|
155
|
|
|
206
|
|
|
(51
|
)
|
|
31
|
|
|
50
|
|
|
(19
|
)
|
||||||
Corporate and unallocated
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
||||||
Total
|
$
|
4,735
|
|
|
$
|
3,115
|
|
|
$
|
1,620
|
|
|
$
|
597
|
|
|
$
|
459
|
|
|
$
|
138
|
|
|
Three Months Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
17 vs 16
|
||||||
West
|
$
|
21,110
|
|
|
$
|
21,015
|
|
|
$
|
95
|
|
East
(a)
|
7,396
|
|
|
1,557
|
|
|
5,839
|
|
|||
Southeast
|
6,910
|
|
|
5,015
|
|
|
1,895
|
|
|||
Corporate and Unallocated
(b)
|
(28,735
|
)
|
|
(26,312
|
)
|
|
(2,423
|
)
|
|||
Operating income
(c)
|
$
|
6,681
|
|
|
$
|
1,275
|
|
|
$
|
5,406
|
|
|
Three Months Ended December 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Cash used in operating activities
|
$
|
(102,224
|
)
|
|
$
|
(62,834
|
)
|
Cash used in investing activities
|
(4,039
|
)
|
|
(2,604
|
)
|
||
Cash used in financing activities
|
(8,452
|
)
|
|
(3,252
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
$
|
(114,715
|
)
|
|
$
|
(68,690
|
)
|
•
|
$177.8 million
in cash and cash equivalents;
|
•
|
$165.8 million
of remaining capacity under the Facility (due to the use of the Facility to secure
$34.2 million
in letters of credit; as discussed below, we further increased the capacity of the Facility by $20.0 million during the current quarter); and
|
•
|
$12.1 million
of restricted cash, the majority of which is used to secure certain stand-alone letters of credit.
|
•
|
economic changes nationally or in local markets, changes in consumer confidence, declines in employment levels, inflation or increases in the quantity and decreases in the price of new homes and resale homes on the market;
|
•
|
the cyclical nature of the homebuilding industry and a potential deterioration in homebuilding industry conditions;
|
•
|
factors affecting margins, such as decreased land values underlying land option agreements, increased land development costs on communities under development or delays or difficulties in implementing initiatives to reduce our production and overhead cost structure;
|
•
|
the availability and cost of land and the risks associated with the future value of our inventory, such as additional asset impairment charges or write-downs;
|
•
|
shortages of or increased prices for labor, land or raw materials used in housing production, and the level of quality and craftsmanship provided by our subcontractors;
|
•
|
estimates related to homes to be delivered in the future (backlog) are imprecise, as they are subject to various cancellation risks that cannot be fully controlled;
|
•
|
a substantial increase in mortgage interest rates, increased disruption in the availability of mortgage financing, the recent change in tax laws regarding the deductibility of mortgage interest for tax purposes or an increased number of foreclosures;
|
•
|
government actions, policies, programs and regulations directed at or affecting the housing market (including the Tax Cuts and Jobs Act, the Dodd-Frank Act and the tax benefits associated with purchasing and owning a home);
|
•
|
changes in existing tax laws or enacted corporate income tax rates, including pursuant to the Tax Cuts and Jobs Act;
|
•
|
our cost of and ability to access capital, due to factors such as limitations in the capital markets or adverse credit market conditions, and otherwise meet our ongoing liquidity needs, including the impact of any downgrades of our credit ratings or reductions in our tangible net worth or liquidity levels;
|
•
|
our ability to reduce our outstanding indebtedness and to comply with covenants in our debt agreements or satisfy such obligations through repayment or refinancing;
|
•
|
increased competition or delays in reacting to changing consumer preferences in home design;
|
•
|
weather conditions or other related events that could result in delays in land development or home construction, increase our costs or decrease demand in the impacted areas;
|
•
|
estimates related to the potential recoverability of our deferred tax assets;
|
•
|
potential delays or increased costs in obtaining necessary permits as a result of changes to, or complying with, laws, regulations or governmental policies, and possible penalties for failure to comply with such laws, regulations or governmental policies, including those related to the environment;
|
•
|
the results of litigation or government proceedings and fulfillment of any related obligations;
|
•
|
the impact of construction defect and home warranty claims, including water intrusion issues in Florida;
|
•
|
the cost and availability of insurance and surety bonds, as well as the sufficiency of these instruments to cover potential losses incurred;
|
•
|
the performance of our unconsolidated entities and our unconsolidated entity partners;
|
•
|
the impact of information technology failures or data security breaches;
|
•
|
terrorist acts, natural disasters, acts of war or other factors over which the Company has little or no control; or
|
•
|
the impact on homebuilding in key markets of governmental regulations limiting the availability of water.
|
Date:
|
February 6, 2018
|
Beazer Homes USA, Inc.
|
||
|
|
|
|
|
|
|
By:
|
|
/s/ Robert L. Salomon
|
|
|
|
Name:
|
Robert L. Salomon
|
|
|
|
|
Executive Vice President and
Chief Financial Officer
|
1.
|
AWARD OF PERFORMANCE SHARES
|
2.
|
RESTRICTIONS AND RIGHTS
|
3.
|
ADJUSTMENT OF SHARES
|
4.
|
MISCELLANEOUS
|
•
|
Three-year performance period beginning _________, ____ and ending on __________, ____.
|
•
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Three Financial Metrics (defined terms follow):
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◦
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Cumulative Pre-Tax Income;
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◦
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Return on Assets (“ROA”) (improvement in the amount of Adjusted EBITDA as a percentage of Total Assets); and
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◦
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Gathering Home Sales in Fiscal Year ____.
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Total Shareholder Return (“TSR”) Modifier: After determination of shares earned based on performance on Financial Metrics, the result will be subject to increase or decrease by as much as __% based on relative TSR performance against the S&P Homebuilders Select Industry Index.
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Total Shares earned based on Financial Metrics cannot exceed ___% of Target Award, subject to adjustment by application of the TSR Modifier to a maximum ___% of Target Award.
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Performance Required for Achievement at:
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Pre-Tax Income
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Threshold
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Target
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Superior
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Total Increase by Fiscal Year ____ ($)
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$_____
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$_____
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$_____
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Performance Required for Achievement at:
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ROA
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Threshold
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Target
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Superior
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Fiscal Year ____ (%)
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____%
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____%
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____%
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Performance Required for Achievement at:
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Gatherings Home Sales
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Threshold
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Target
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Superior
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Fiscal Year ____
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____
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____
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____
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TSR Percentile Rank vs.
S&P Homebuilders Select Industry Index
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Adjustment to # of Performance Shares
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At or above __ Percentile
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__%
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__ Percentile
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__%
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__ Percentile
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__%
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__ Percentile
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__%
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__ Percentile
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__%
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__ Percentile
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__%
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__ Percentile
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__%
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__ Percentile
Below
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__%
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Below __ Percentile
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__%
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Vesting Percentage
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Financial Performance Metrics
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Below Threshold
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Threshold
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Target
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Superior
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Actual Earned
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A. Pre-Tax Income
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__%
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__%
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__%
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__%
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A
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B. ROA
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__%
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__%
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__%
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__%
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B
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C. Gatherings Home Sales
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__%
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__%
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__%
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__%
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C
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Total Earned % of Target
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A + B + C
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Maximum % of Target Award Earned (Financial Metrics)
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__%
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Relative TSR Modifier
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__%
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__%
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__%
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__% - __%
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Maximum Total % of Target Award Earned (Financial + Relative TSR)
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__%
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Example: achievement of a Threshold level of performance on each of the three Financial Metrics will result in __% of the Target Award earned per metric or a total of __% of the Target Award, subject to adjustment based on the TSR Modifier to calculate the Vesting Percentage.
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Superior level performance on any one Financial Metric (__%) will earn at least a Target Award subject to the TSR Modifier to calculate the Vesting Percentage.
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The maximum number of shares that can be earned based on the results of the three Financial Metrics will be __% of the Target Award even if Superior performance is achieved on all three Financial Metrics (__% of Target Award). In the event of Superior performance on all three Financial Metrics as well as on the TSR Modifier, the maximum Vesting Percentage will be __% of the Target Award.
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For performance between Threshold and Target or between Target and Superior, straight line interpolation between such levels will be applied.
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Beginning and ending date prices for purposes of the TSR Modifier will be based on average closing price for the prior 20 days on the New York Stock Exchange, as applicable.
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“Pre-Tax Income” is defined as the Company’s income from continuing operations for the applicable fiscal year, before taxes and excluding impairments and abandonments, bond losses and such other non-recurring items as the Committee may approve.
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“Adjusted EBIT” (earnings before interest, debt extinguishment charges and taxes) equals net income (loss) before: (a) previously capitalized interest amortized to home construction and land sales expenses, capitalized
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“Adjusted EBITDA” (earnings before interest, taxes, depreciation, amortization, debt extinguishment charges and impairments) is calculated by adding non-cash charges, including depreciation, amortization, inventory impairment and abandonment charges, goodwill impairments and joint venture impairment charges for the period to Adjusted EBIT.
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“Total Assets” is defined as the Company’s total assets as shown on the consolidated balance sheet included in the Company’s Form 10-K for the applicable fiscal year.
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“Vesting Percentage” shall mean the percentage of Target Award earned on the Financial Metrics and after adjustment by application of the TSR Modifier, subject to a maximum of __% of Target Award.
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1.
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I have reviewed this quarterly report on Form 10-Q of Beazer Homes USA, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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1.
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I have reviewed this quarterly report on Form 10-Q of Beazer Homes USA, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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February 6, 2018
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/s/ Allan P. Merrill
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Allan P. Merrill
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President and Chief Executive Officer
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Date:
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February 6, 2018
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/s/ Robert L. Salomon
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Robert L. Salomon
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Executive Vice President and Chief Financial Officer
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