Beazer Homes USA BZH said Friday it posted a narrower loss in the third quarter, despite lower revenue, as its expenses declined. The quarterly results fell short of Wall Street's expectations.
The company posted a loss of $109.8 million, or $2.85 a share, in the quarter that ended June 30. That compares with a loss of $118.7 million, or $3.09 a share, in the same period last year.
The latest quarter included a $95.5 million charge as the builder walked away from land option contracts and the value of its unsold homes declined.
Revenue slid 40% to $455.6 million, as home closings fell to 37%.
Net new home orders fell almost 42% to 1,774, average selling price dropped 8.8% to $257,400 and backlogs were 2,716 homes valued at $668.1 million, down from 5,952 homes valued at $1.69 billion last year.
Buyer cancellation was up to 36.8%, up from 33.7% in the second quarter.
Analysts surveyed by Thomson Financial expected the builder to report a loss of $2.34 cents a share on revenue of $430.1 million.
"As our third quarter results illustrate, difficult operating conditions in the homebuilding industry persist," McCarthy said in a statement. "Based on these demand dynamics, coupled with high supply levels of new and existing home inventory, we believe industry conditions will remain challenging for the remainder of this fiscal year and as we enter fiscal 2009."
However, Beazer expects to generate positive cash flow in its fiscal fourth quarter.
McCarthy said the company is focusing on reducing costs, improving its cash position, limiting investment in land and homes and trimming its stock of unsold homes to position itself for when the market improves.
Beazer's home closings declined almost 37% from last year, across all of its regions, to 1,677 homes. The steepest declines were in the Southeast, the West and Florida.
Demand for new and preowned homes is down industrywide, adding to a glut of unsold and foreclosed properties on the market. That's keeping downward pressure on home prices and contributing to tighter profit margins for builders.
Rival public builders D.R. Horton DHI, Centex Corp CTX, and Pulte Homes PHM, each reported losses for the three months ended June 30. Each booked impairment charges on inventory and other assets.
In addition to dealing with the housing slump, Beazer has been grappling with investigations of the company's business practices.
The company is under investigation by the Securities and Exchange Commission and the U.S. Attorney's office in the Western District of North Carolina stemming from an internal probe that found employees in the builder's mortgage-origination unit violated federal lending rules.
Beazer said Friday that it intends to negotiate a settlement with prosecutors and regulators, but noted it doesn't have an estimate on the size of the potential fine it might have to pay.