Modest Geographic Diversity: BZH was the 11th largest homebuilder in 2016 (based on closings) and has active operations in 31 markets in 13 states across the country.
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 $168.4 million of unrestricted cash and $140.1 million of borrowing availability under its $180 million secured revolving credit facility that matures in February 2019.
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.