By Helen Chernikoff
NEW YORK (Reuters) - Beazer Homes USA Inc's
The protracted U.S. housing downturn had its roots in risky lending practices that generated foreclosures, oversupply and plunging prices, but broader macroeconomic problems are now exacerbating it.
"It's just another negative number in the homebuilder sector. The Street knows Beazer's financial troubles," said FBN Securities analyst Joel Locker, who also attributed the decline in demand to the ban on downpayment aid programs that allowed builders to pay part of a home's sales price.
In a statement, the Atlanta-based company said its first-quarter home closings fell 53.2 percent to 938 compared with a year ago.
The plunge in closings reflects a persistently high cancellation rate of 45.6 percent, Locker said.
New home orders -- contracts signed, but not closed -- fell 56 percent to 551, the No. 8 U.S. homebuilder said.
CASH CONCERNS?
Beazer also said it had $436.9 million in cash or cash equivalents. That is down from $584.3 million at the end of the third quarter, a $147 million decline.
Builders often use more cash than they generate in the first half of the year, and Beazer will compensate for this quarter's dip in cash with a second-quarter tax refund of about $150 million, wrote JP Morgan analyst Michael Rehaut, who rates Beazer's shares "underweight."
Locker sees Beazer's cash situation improving in the second half but sees a further risk in the possibility that the company might violate debt covenants with senior bondholders that dictate a minimum level of tangible net worth.
In that case, the company might need to pay bondholders back, hurting its cash position, Locker said.
Beazer could not immediately be reached for comment on its cash.
The company also had to restrict $19 million in additional cash to provide collateral for outstanding letters of credit, which the company often issues instead of a cash deposit for options to buy land, spokeswoman Leslie Kratcoski said.
Beazer's shares were down 2.8 percent at $1.37 around midday on Tuesday on the New York Stock Exchange.
(Editing by Lisa Von Ahn and Matthew Lewis)
