Beazer Homes ends first quarter with $1.7 billion debt, $436.9 million cash, continues focus on cash

By Jennifer Lanning Drey

Portland, Ore., Feb. 9 - Beazer Homes USA, Inc. ended the first quarter of fiscal 2009 with total debt of $1.7 billion at Dec. 31, representing a $46 million decrease from the same date in 2007 and an $11 million decrease from Sept. 30, Allan P. Merrill, chief financial officer of Beazer, said Monday during the company's quarterly earnings call.

Cash and cash equivalents dropped to $436.9 million at Dec. 31, compared to $584.3 million at Sept. 30.

Merrill said the cash reduction follows the company's typical historical pattern of the December quarter showing a use of cash due to fewer home closings in the winter and investment needs in advance of the spring selling season.

The company continues to work to maximize its cash position and believes it may generate cash in 2009 depending on the number of homes closed during the year.

Subsequent to Dec. 31, the company received cash tax refunds of about $168 million.

"In these difficult times, maintaining and enhancing a sound financial and liquidity position remains our top priority," Ian J. McCarthy, chief executive officer of Beazer, said during the call.

Beazer had no cash borrowings under its secured revolving credit facility at Dec. 31 and has no plans that require cash borrowings, Merrill said.

During the question-and-answer portion of the call, the CFO said Beazer is in "active listening mode" regarding possibilities for a recapitalization but continues to plan to resolve its regulatory issues with the Department of Justice and other governmental agencies before actively beginning a recapitalization.

Net loss improves

Beazer reported a first-quarter net loss from continuing operations of $80.1 million, which included inventory impairments and abandonment of land option contracts of $12.7 million, goodwill impairments of $16.1 million and impairments in joint ventures of $1.3 million.

The figure compares to a net loss from continuing operations of $137.7 million in the prior-year first quarter.

Total revenue was $232.4 million, compared to $500.7 million in the first quarter of the prior year.

"Our financial results for the first quarter are a reflection of the difficult market and economic conditions that we and our peers are facing, McCarthy said.

As a result, Beazer continues to adapt to the reality of lower home closings by further reducing its cost structure, he said.

"Combined with our disciplined focus on generating and maintaining liquidity, we believe these actions will help us weather this unprecedented housing environment," McCarthy said.

Beazer is an Atlanta-based single-family homebuilder.

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