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Investing.com -- Shares of Beazer Homes (NYSE:BZH) tumbled 14% as the company’s first-quarter earnings fell short of Wall Street expectations. The homebuilder reported a significant decline in profits, citing a challenging sales environment and increased competitive pressures.
Beazer Homes disclosed first-quarter earnings per share (EPS) of $0.10, which was $0.21 below the analyst consensus of $0.31. Although revenue for the quarter slightly exceeded expectations at $468.95 million compared to the forecasted $464.92 million, it was not enough to prevent the stock’s decline.
The company experienced a decrease in net income from continuing operations to $3.1 million, or $0.10 per diluted share, down from $21.7 million, or $0.70 per diluted share, in the same quarter of the previous year. This marked a significant drop in profitability, with adjusted EBITDA also falling by 39.4%. Homebuilding revenue increased by 20.9% YoY, attributed to a 22.1% rise in home closings. However, this was partially offset by a 1.0% decrease in the average selling price to $507.6 thousand.
Beazer Homes’ CEO Allan P. Merrill expressed confidence in the company’s ability to achieve a double-digit return on capital employed in the current fiscal year and emphasized the progress towards multi-year goals. Despite the near-term affordability challenges, Merrill highlighted the year-over-year growth in net new orders and closings, supported by a 20% increase in community count.
Analyst Tyler Batory from Oppenheimer commented on the results, stating, "The company sold fewer homes than it expected in the quarter and spent more on incentives for the sales it made. This result was mostly driven by competitive pressures, in our view." Batory also noted that the company remains on track with its community count expansion targets and that the fiscal year 2025 guidance does not assume any improvement in market conditions, which could be seen as conservative.
The company’s press release also detailed the decline in backlog dollar value by 12.5% with a 15.9% decrease in backlog units. Despite this, the average selling price of homes in backlog increased by 4.0%. SG&A expenses improved slightly as a percentage of total revenue, and the company reported an increase in its land acquisition and development spending by 6.3%.
Looking ahead, Beazer Homes is committed to sustainability, aiming for all new home starts to be Zero Energy Ready by December 2025. The introduction of Charity Home Insurance Agency, which donates profits to the Beazer Charity Foundation, also underscores the company’s community-focused initiatives.
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