Home orders slow at Beazer
The First Time Homebuyer Tax Credit of 2010 impacted the results of yet another builder, as Beazer Homes reported 1,194 orders for new homes in the first quarter of 2011, a 26.7% drop from the first quarter of 2010. Total home closings from continued operations were 573, a 31.1% decrease from the prior year.
Revenue from continuing operations for the quarter was $127.5 million, compared with $192.5 million in the same period a year ago. The Atlanta-based company recorded a net loss of $54.6 million. For the prior year, Beazer posted net income of $5.3 million.
The home builder’s total backlog was 1,416 homes, with a sales value of $339.6 million compared with 1,781 homes, with a sales value of $394.5 million as of March 31, 2010.
"As expected, year-over-year comparisons were unfavorably impacted this quarter by the First Time Homebuyer Tax Credit, which pulled forward sales volumes into the second quarter of 2010," said Ian McCarthy, president and CEO of Beazer Homes. "However, we did see seasonal improvement with orders and gross margins up over the first quarter of fiscal 2011. We are hopeful that the latest improvements in employment will help lift consumer confidence in the coming quarters, which is necessary for any significant recovery in housing to occur."
Beazer operates in 16 states: Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas and Virginia.
Sales flat at West Fraser for Q1
Wood products producer West Fraser reported C$687 million in first-quarter sales, a very slight dip from sales of C$688 million in the same quarter a year ago. Net earning were C$19 million, compared with C$29 million in the corresponding quarter of 2010.
In the lumber division, sales were reported as C$411 million, compared with C$409 million a year ago. Shipments were down 6%, the Vancouver, B.C.-based company said, although production rose by 9%. West Fraser’s Canadian mills operated at capacity, while its U.S. mills operated at approximately 75% of capacity.
For panels, which includes both plywood and MDF, West Fraser posted C$91 million in sales, compared with C$100 million in sales a year ago. Shipments for plywood and MDF were down 14% and 24%, respectively. Production was up slightly in plywood but down 9% in MDF.
In its short-term outlook, West Fraser predicted that demand for lumber will remain soft due to the depressed U.S. housing market, thereby putting continued pressure on lumber prices. Demand in China should continue to increase, however.
U.S. plywood imports will most likely continue until the Canadian dollar weakens or U.S. housing improves, the forecast said. Plywood prices should remain soft as a result.
West Fraser Timber is an integrated forest products company producing lumber, wood chips, fiberboard, plywood, pulp and newsprint. It operates mills in British Columbia, Alberta, and eight U.S. states, most of them in the Southeast.
Losses widen at Standard Pacific
Residential builder Standard Pacific has reported a net loss of $14.8 million for its first fiscal quarter, compared with a net loss of $5.1 million for the same period a year ago. The increase in the quarterly loss was driven primarily by an 18% decrease in home-sale revenues from $174.9 million for the 2010 first quarter to $143.7 million for the 2011 first quarter, which ended March 31, and a 220-basis point decline in the company’s gross margin to 20.5%. The decrease in revenues was primarily the result of an 18% decline in new-home deliveries to 439 homes from 537 in last year’s first quarter.
The company’s consolidated average home price for the 2011 first quarter was $327,000, up slightly from $326,000 for the year-earlier period, largely due to a mix shift, which was partially offset by slightly lower pricing and fewer California deliveries.
Net new orders (excluding joint ventures) for the 2011 first quarter decreased 14% from the 2010 first quarter to 652 homes. There was a 10% increase in the number of average active selling communities from 126 to 138. The company’s cancellation rate for the 2011 first quarter was 14% versus 15% for the 2010 first quarter and 23% for the 2010 fourth quarter. The total number of sales cancellations for the 2011 first quarter was 106, of which 59 cancellations related to homes in the company’s 2011 first-quarter beginning backlog and 47 related to orders generated during the quarter.
The dollar value of homes in backlog (excluding joint ventures) decreased 24% to $211.8 million, or 627 homes, compared with $278.3 million, or 821 homes, for the 2010 first quarter. The decrease in backlog value was driven primarily by a 14% decrease in net new orders.
Ken Campbell, CEO of Standard Pacific, said in a prepared statement: "Despite challenging housing market conditions, we continued to make progress with our strategy of opening new communities. We opened 18 new communities during the quarter and expect to open another 22 communities by the middle of the year, representing a 20% increase in community count compared with last year and bringing our total community count to north of 155." He added: "While home pricing has been under pressure over the last few quarters, our gross margin has remained above 20% for the sixth consecutive quarter. In addition, we increased the dollar value of our backlog by 54% over the 2010 fourth quarter, while holding the line on our margins in backlog."
The Irvine, Calif.-based company continues to purchase lots, Campbell pointed out, while preserving its liquidity. "Consistent with our land strategy, we approved the purchase of 2,000 lots totaling $122 million and purchased 1,100 lots for $87 million during the quarter,” he said. “With $620 million of cash on hand and the additional liquidity provided by our new senior unsecured revolving credit facility, we believe we have ample liquidity to navigate through the market downturn."
Standard Pacific operates in a number of major metropolitan areas across the country, including California, Florida, Arizona, the Carolinas, Texas, Colorado and Nevada.