This, Fools, may be a too-easy example: Housing is far from finding the road to recovery, at least if you view Beazer Homes' (NYSE:BZH) results for the third quarter of its 2008 fiscal year.
To be sure, things were marginally better at the Atlanta-based company. For instance, the loss from continuing operations "dipped" to $110 million, or $2.85 a share, from a loss of $119 million, or $3.09 a share. The most recent quarter included pre-tax charges totaling $118.4 million for a host of items including inventory impairments, abandoned land options contracts, joint venture impairments, and goodwill impairments.
But Beazer, which, in concert with its mortgage subsidiary, is currently undergoing a pair of federal investigations, didn't wrap itself in a blaze of operating glory for the quarter. For instance, its homebuilding revenues dropped by 41%, while unit closings slid by 37%. New orders were down 42%. Beazer's average sales price was down nearly 9% from a year ago.
Despite these far-from-optimistic metrics, however, Beazer's shares actually roused themselves somewhat following the release. The obvious driver was CFO Alan Merrill's recitation during the conference call that the company is materially pulling in its horns on land costs and in other areas. Regarding land costs, the $694 million that was spent in the first nine months of the past fiscal year has been reduced by 60%, with the final quarter of this year expected to dip to $100 million. At the same time, the company has slashed its number of unsold homes by more than 30%, and its total unsold homes under construction by more than 40%.
So the drill continues at the big builders, with Ryland (NYSE:RYL), Centex (NYSE:CTX), and D.R. Horton (NYSE:DHI) reporting sloppy numbers, and only Meritage (NYSE:MTH) coming forth with anything approaching cause for optimism. For oh so many reasons, it continues to look like a long, tough slog for the builders. I hope my Foolish friends are prepared.
Only Meritage among the above-mentioned builders has moved up to two-star status among Motley Fool CAPS players. What's your assessment of the group?
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