Macro Tsimmis

intelligently hedged investment

Beazer Homes (BZH) update #13

Posted by intelledgement on Tue, 02 Dec 08

Wow—getting to be wooden stake time here for the (former) bloodsucking residential real estate development company we have sold short, Beazer Homes (BZH). They announced their 4Q08 and full year 2008 results today (their fiscal year ends 30 Sep), and even considering the current meltdown, the numbers were stunningly bad.

Revenue in 4Q08 was down 35% from 4Q07 and closings were down 38%. The company lost a record $475 million in the quarter—their eighth consecutive quarter of red ink—up from $155 million of losses a year ago and sharply worse than the $110 million they lost in 3Q08. For the full year, the results were similar: revenue was down 40% from 2007, closings down 35%, and the loss of $951 million (-$24.68 per share!) easily lapped the 2007 loss of $410 million—in fact, Beazer lost more money in 4Q08 than in all of 2007. The cumulative loss for 2007 and 2008 has reached -$1.4B.

And the descent persists.

“Conditions in both the overall economy and housing market came under greater pressure during our fourth quarter and have continued to deteriorate since that time,” the press release quoted Ian J. McCarthy, President and Chief Executive Officer as stating. “Home buyer demand for new homes continues to be adversely affected by low levels of consumer confidence, falling home prices, extensive new and existing home supply and reduced access to mortgage financing. In recent months this difficult environment has been greatly exacerbated by turmoil in financial markets, heightened concerns about the global economy and a substantial rise in the number of home foreclosures.”

The stock closed at $1.38, down 9% on heavy volume, after trading as low as $1.21. You have to wonder how long a company worth $1.38/share can afford to keep losing $4.43/share each quarter (as they have on average for the last eight quarters). Things have gotten so bad that earlier today Jim Cramer publically called for Beazer to go out of business.

It’s tempting to keep riding this to the end in the interests of science, but the stock price is low enough here that we have to consider just booking our profit. Stay tuned.

Previous BZH-related posts:

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