Earnings Preview: Beazer Homes to post 4Q results

LOS ANGELES - Homebuilder Beazer Homes USA Inc. reports earnings for its fiscal fourth quarter on Tuesday. The following is a summary of key developments in the period.

OVERVIEW: Atlanta-based Beazer has operations in 16 states and was ranked the ninth-biggest homebuilder of 2008 by Builder magazine.

The company is expected to report a quarterly loss for the three months ended Sept. 30, reflecting the dampening effect that the economy, weak consumer confidence and mounting competition from foreclosed homes continues to have on new home sales.

Like other builders, Beazer has seen new home orders improve this year, thanks in part to low mortgage rates and a tax credit of up to $8,000 for first-time homebuyers that was scheduled to expire at the end of this month.

The incentive helped to spur traffic for builders toward the end of the summer, but its impact began to wane by September as it became less likely buyers could close a deal in time to qualify for the credit.

As a result, new home sales in September dropped 3.6 percent nationwide — the first decline since March.

Rivals Pulte Homes Inc., Meritage Homes Corp. and MDC Holdings Inc. each reported a pickup in home orders for the September quarter, and investors will be looking to see whether Beazer's orders also continued to improve.

Beazer, which caters primarily to first-time homebuyers, has said it expects to have a strong fourth quarter with the highest number of completed sales in the fiscal year.

At an investor conference last month, Allan Merrill, Beazer's chief financial officer, said home prices appeared to be hitting bottom in almost all of the builder's markets, including Texas, California, Indianapolis and the Carolinas.

"We are seeing some signs of stability that we hope we can build on during the year," Merrill said.

Beazer should be in better position to compete now that it has resolved government probes into its business practices that had dogged the builder since 2007.

Earlier this year, Beazer agreed to pay more than $50 million to resolve claims of fraudulent mortgage lending and accounting practices.

The company has also taken steps to improve its balance sheet. During the quarter, Beazer bought back $370 million in debt.

WHAT'S AHEAD: Last week, President Barack Obama signed a bill that extends the homebuyer tax credit through next June, as long as the buyer signs a binding contract by the end of April. The program also was expanded to include a $6,500 credit for existing homeowners who buy a new place after living in their current residence for at least five years.

Homebuilders were clamoring for the extension, but there's concern that the current incentive has already tapped into demand builders would have seen over the next few months.

BY THE NUMBERS: Analysts surveyed by Thomson Reuters expect a loss of $1.24 a share on revenue of $338.3 million for the quarter. The six earnings estimates range from a loss of 93 cents a share to a loss of $1.45 a share.

In the same quarter last year, Beazer posted a loss of $473.9 million, or $12.29 a share, on revenue of $712.6 million.

STOCK PERFORMANCE: Beazer's shares soared more than threefold during the quarter to $5.59.

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On the Net:

Beazer Homes USA: http://www.beazer.com/

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