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Beazer Homes Reports Third Quarter Fiscal 2012 Results

Beazer Homes USA, Inc. (NYSE: BZH) ( www.beazer.com) today announced its financial results for the quarter ended June 30, 2012.

“I am very pleased with our third quarter results,” said Allan Merrill, CEO of Beazer Homes. “We generated improvement in new home orders, home closings and backlog, recording our fourth consecutive quarter of year-over-year increases in these metrics. This improvement reflects both the continuing operational benefits of our path-to-profitability strategies and gradually improving conditions in the housing market.

Subsequent to quarter-end, we successfully raised over $170 million in growth capital from concurrent equity and equity-linked offerings which we will use to reinvest in targeted markets. We also refinanced our 12% secured notes at a significantly lower cost which will save approximately $15 million per year. Taken together, we expect these actions to help accelerate our return to profitability.”

Summary results of the quarter are as follows:

Quarter Ended June 30, 2012 - Results from Continuing Operations (unless otherwise specified)

  • Total new orders: 1,555 homes, a 28.0% increase from fiscal 2011
    • Cancellation rates: 24.5%, compared with 24.3% in fiscal 2011
  • Total home closings: 1,109 homes, a 40.2% increase from fiscal 2011
  • Revenue: $254.6 million, compared to $172.8 million in fiscal 2011
    • Average sales price from closings: $227.3 thousand, compared with $213.0 thousand in fiscal 2011
  • Gross profit margin: 8.3%, compared to 8.0% in fiscal 2011. These margins were impacted by $5.8 million and $6.9 million in fiscal 2012 and fiscal 2011, respectively, for impairments and option contract abandonments.
    • Homebuilding gross profit margin, excluding impairments and abandonments: 10.5%, compared to 11.1% in fiscal 2011
    • Homebuilding gross profit margin, excluding impairments, abandonments and interest amortized to cost of sales: 16.7%, compared to 17.8% in fiscal 2011.
  • Net loss from continuing operations: $(38.1) million, or a diluted loss per share of $(0.38), including non-cash pre-tax charges of $5.8 million for inventory impairments. This compared to a loss from continuing operations in the third quarter of fiscal 2011 of $(55.8) million, or $(0.75) per share, which included non-cash pre-tax charges of $6.9 million for inventory impairments.
  • Net Loss: $(39.9) million (including a loss from discontinued operations of $(1.8) million), compared with a net loss of $(59.1) million for fiscal 2011 (including loss from discontinued operations of $(3.4) million)
  • Total Company land and land development spending: $40.5 million, compared with $54.2 million in fiscal 2011

Nine Months Ended June 30, 2012 - Results from Continuing Operations (unless otherwise specified)

  • Total new orders: 3,791 homes, a 29.8% increase from fiscal 2011
    • Cancellation rates: 26.0%, compared with 24.1% in fiscal 2011
  • Total home closings: 2,820 homes, a 50.6% increase from fiscal 2011
  • Revenue: $634.7 million, compared to $407.5 million in fiscal 2011
    • Average sales price from closings: $222.9 thousand, compared with $213.0 thousand in fiscal 2011
  • Gross profit margin: 10.0%, compared to 5.8% in fiscal 2011. These margins were impacted by $10.5 million and $25.3 million in fiscal 2012 and fiscal 2011, respectively, for impairments and option contract abandonments.
    • Homebuilding gross profit margin, excluding impairments and abandonments was 11.4% for both periods
    • Homebuilding gross profit margin, excluding impairments, abandonments and interest amortized to cost of sales was 18.0% for both periods
  • Net loss from continuing operations: $(75.2) million, or a diluted loss per share of $(0.90), including non-cash pre-tax charges of $10.5 million for inventory impairments. This compared to a loss from continuing operations for the nine months ended in fiscal 2011 of $(157.8) million, or $(2.14) per share, which included non-cash pre-tax charges of $25.3 million for inventory impairments.
  • Net Loss: $(79.1) million (including a loss from discontinued operations of $(3.9) million), compared with a net loss of $(161.7) million for fiscal 2011 (including loss from discontinued operations of $(3.9) million)
  • Total Company land and land development spending: $140.6 million, compared with $178.0 million in fiscal 2011

As of June 30, 2012

  • Total cash and cash equivalents: $503.4 million, including unrestricted cash of approximately $231.6 million
  • Stockholders' equity: $179.1 million, not including $9.4 million of mandatory convertible subordinated notes, which automatically convert to common stock at maturity in 2013
  • Total backlog from continuing operations: 2,421 homes with a sales value of $572.8 million, compared to 1,820 homes with a sales value of $431.2 million as of June 30, 2011
  • Land and lots controlled: 25,088 lots (84.2% owned), a decrease of 15.8% from June 30, 2011

Capital Raising Initiative

Subsequent to June 30, 2012, we engaged in several capital raising transactions designed to further strengthen our balance sheet and position us to better participate in the emerging housing recovery. We completed underwritten public offerings of 22 million shares of Beazer common stock at $2.90 per share and 4.6 million 7.50% tangible equity units and a private placement $300 million of 6.625% senior secured notes due 2018, generating net proceeds of approximately $466 million. A portion of these proceeds were used to fund the redemption of our $250 million 12% senior secured notes due 2017. The remaining funds will be used to fund an expansion in our new home community count in targeted markets and for general corporate purposes, including the repayment of outstanding indebtedness.

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