Exposure to Entry Level: BZH has high exposure to the credit-challenged entry level market, wherein about 60% of its customers are first-time home buyers.
BZH has weaker credit metrics, particularly higher leverage, than most of its peers, including M/I Homes (B+/Positive Outlook) and KB Home (B+/Positive Outlook) but is better positioned relative to Hovnanian Enterprises, Inc.
However, positive rating actions may be considered if the recovery in housing is maintained and is meaningfully better than Fitch's current outlook, BZH shows continuous improvement in credit metrics (including net debt/capitalization below 60%, debt/EBITDA consistently below 8x and interest coverage above 2x), and the company preserves a healthy liquidity position.
Good Liquidity: BZH ended the June 2017 quarter with $168.
Well-Laddered Debt Maturity Schedule: BZH completed several transactions during the past twelve months that pushed out its debt maturities and lessened refinancing risk relating to debt maturing in 2018 and 2019.
In September 2012, BZH also amended and expanded its secured revolving credit facility from $22 million to $150 million.
The improved liquidity position provides BZH with some cushion as Fitch expects the company will continue to have operating losses and negative cash flow through fiscal 2013.
Based on the latest 12-month closings, BZH controlled 5.
Assuming that the company is able to redeem all of its 2015 notes, BZH will not have any major debt maturities until 2016, when $172.
In addition to the equity offerings, BZH has also negotiated a commitment letter with four financial institutions for a proposed $150 million secured revolving credit agreement, which would replace the company's existing $22 million facility.
Through the first half of fiscal year 2012 (ending March 31, 2012), BZH spent roughly $100 million on land and land development compared with $123.
Based on the latest 12 month closings, BZH controlled 6.