Comstock Homebuilding Companies, Inc. Reports 93% Increase in Net Income for 2005 as Compared to 2004
RESTON, VA, Mar 06, 2006 (MARKET WIRE via COMTEX News Network) -- Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) ("Comstock" or
the "Company") today announced net income for the three months ended
December 31, 2005 of $9.2 million on total revenue of $77.2 million
representing a 149.6% increase in net income for the fourth quarter
2005 over the fourth quarter 2004. The Company reported 2005 net
income of $27.6 million for the year on total revenue of $224.3
million representing a 92.7% increase in year over year net income.
The Company will conduct a conference call for interested investors
on Tuesday, March 7, 2006, at 8:45 AM Eastern Standard Time. During
the call the Company will discuss its financial results and 2006
earnings guidance. The dial-in number for the conference call is
866-406-5408 and the access code is 7097712; the call may also be
accessed in the Investor Relations section of the company's web site
at www.comstockhomebuilding.com.
Highlights of Financial Results -- Three months ended December 31,
2005 (4th Quarter):
-- The Company delivered 200 new homes in the quarter at an average per
unit revenue of approximately $379,000 per unit;
-- The Company generated basic earnings per share for the quarter of
$0.66 on shares outstanding of 14.0 million and diluted earnings per share
of $0.65 on weighted average shares outstanding of 14.1 million. For
comparison purposes, when the Company's earnings per share for the three
months ending December 31, 2004 are adjusted proforma for similar tax rates
and share counts the results are $0.16 (basic) and $0.15 (diluted)
representing approximately 323.0% growth on a proforma year over year
basis;
-- Total revenue for the quarter was $77.2 million with $75.8 million of
revenue derived from homebuilding, as compared to total revenue of $21.5
million for the three months ended December 31, 2004 with $19.4 million of
revenue derived from homebuilding. This represents a 260% increase in total
revenue and a 292% increase in revenue from homebuilding;
-- Gross profit from all revenue was $20.7 million for the quarter
representing a 26.9% gross margin. Gross profit from all revenue during the
three months ended December 31, 2004 was $7.6 million representing a 35.2%
gross margin. The reduction in gross margin was a result of product mix
which included more lower margin condominium conversion settlements;
-- Operating income was $13.8 million for the quarter representing a
17.8% operating margin as compared to operating income of $4.9 million and
an operating margin of 23.0% for the three months ended December 31, 2004.
Selling, general and administrative expenses for the quarter were $7.0
million representing 9.0% of total revenue as compared to $2.6 million
representing 12.2% of total revenue for the three months ended December 31,
2004. This represents a 26.1% increase in overhead efficiency or 3.2
percentage points;
Highlights of Financial Results -- Twelve months ended December 31,
2005:
-- The Company delivered 603 homes during the twelve months at an average
per unit revenue of approximately $359,000 per unit;
-- The Company generated basic earnings per share for the twelve months
of $2.14 on weighted average shares outstanding of 12.9 million and diluted
earnings per share of $2.12 on weighted average shares outstanding of 13.0
million. For comparison purposes, when the Company's earnings per share for
the twelve months ending December 31, 2004 are adjusted proforma for
similar tax rates and share counts the results are $0.69 (basic) and $0.68
(diluted) representing approximately 210.9% growth on a proforma year over
year basis;
-- Total revenue for the twelve months was $224.3 million with $216.3
million of revenue derived from homebuilding as compared to total revenue
of $96.0 million for the twelve months ended December 31, 2004 with $87.0
million of revenue derived from homebuilding. This represents a 133.5%
increase in total revenue and a 148.6% increase in revenue from
homebuilding;
-- During the fourth quarter the Company performed a discounted cash flow
analysis of its active operations in Raleigh, North Carolina. As a result
of this review the Company recorded a $1.2 million impairment to the
carrying value of its Real estate held for development and sale at Kelton
II, a townhouse project in the Raleigh area. The impairment charge is
included as a component of the Company's Cost of sales in the fourth
quarter of 2005;
-- Gross profit from all revenue was $66.6 million for the twelve months
representing a 29.7% gross margin. Gross profit for the twelve months ended
December 31, 2004, was $32.1 million representing a 33.4% gross margin. The
reduction in gross margin was a result of product mix which included more
lower margin condominium conversion settlements;
-- Operating income was $42.4 million for the twelve months representing
an 18.9% operating margin as compared to operating income of $20.1 million
and an operating margin of 20.9% for the twelve months ended December 31,
2004. Selling, general and administrative expenses for the twelve months
were $24.2 million representing 10.8% of total revenue as compared to $11.9
million representing 12.4% of total revenue for the twelve months ended
December 31, 2004. This represents a 12.9% increase in overhead efficiency
or 1.6 percentage points;
-- Backlog revenue at December 31, 2005 was $190.4 million on 475 sold
units as compared to $174.6 million on 329 homes at December 31, 2004;
-- Of the Company's December 31, 2005 backlog, approximately $157.6
million is derived from 390 sold units at the Company's Eclipse on Center
Park at Potomac Yard project. In December 2005 the Company conducted a
limited release and sold 21 units in Phase II of the Eclipse project at an
average sale price of approximately $488,000. The Company announced that it
received notices of cancellation on 4 contracts during the course of 2005.
Gross project to date sales at the Eclipse on December 31,2005 were 400
units at an average price of $403,500 with a total 10 recorded
cancellations valued at approximately $5.8 million. The project formally
reopened for sales of the final phase units in Phase II on February 25,
2006. To date 10 additional sales have been written;
-- The Company's debt to capitalization ratio at December 31, 2005 was
49.8% with real estate held for development and sale of $263.8 million as
compared to 55.2% and $104.3 million respectively at December 31, 2004.
"Our tremendous growth in 2005 is a result of the hard work and
dedication of every member of the Comstock Homebuilding team," said
Christopher Clemente, Chairman and Chief Executive Officer. "I am
confident that the extensive experience of our management team in
dealing with challenging market conditions will lead to continued
positive results for 2006."
The Company issued 2006 guidance in a range of $2.25 to $2.75. Based
on current backlog the Company expects a significant portion of the
2006 earnings to be derived from settlements in the second half of the
year.
"The primary driver of this unbalanced earnings stream is our Eclipse
at Potomac Yard project," continued Clemente. "Construction is going
well with the first tower having recently been topped off.
Accordingly, we are confident we will begin delivering units this
fall and deliver much of the backlog this year. The timing of
settlements that occur and the associated revenue will depend on many
factors including the timing of the first round of settlements."
"Given the significant impact the Eclipse has on our 2006 earnings,
we are providing quarterly guidance in wider ranges this year than we
did last year," said Bruce Labovitz, Chief Financial Officer. "We
caution the markets to look more to the mid-points of our ranges for
guidance and to keep in mind that while we are comfortable at this
time with our annual earnings estimate there may be shifting of
revenue and earnings between the quarters leaving us at the lower end
of one range and the higher end of another."
The Company issued quarterly and annual guidance for 2006 as
follows:
The Company issued quarterly and annual guidance for 2006 as follows:
Three months ending March 31, 2006 $0.02 to $0.22
Three months ending June 30, 2006 $0.15 to $0.40
Three months ending September 30, 2006 $0.25 to $0.50
Three months ending December 31, 2006 $1.50 to $1.90
Full year ending December 31, 2006 $2.25 to $2.75
About Comstock Homebuilding Companies, Inc.
Comstock is a production homebuilder and real estate developer that
develops, builds, and markets single-family homes, townhouses,
condominium redevelopments, mid-rise condominiums and high-rise
condominiums for first time and first move-up buyers as well as
active adult buyers. The Company currently operates in the
Washington, D.C; Atlanta, Georgia; Myrtle Beach, South Carolina;
Charlotte, North Carolina and Raleigh, North Carolina markets where
it targets a diverse range of buyers, including first-time, early
move-up, secondary move-up, empty nester move-down and active adult
home buyers. For more information on Comstock, please visit
http://www.comstockhomebuilding.com.
Cautionary Statement Regarding Forward-Looking Statements
This release contains "forward-looking" statements that are made
pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. Statements that are predictive in
nature, that depend upon or refer to future events or conditions, or
that include words such as "may," "will," "expects," "projects,"
"anticipates," "estimates," "believes," "intends," "plans," "should,"
"seeks," and similar expressions, including statements related to
Comstock's expected future financial results and anticipated growth
in the Washington, D.C. housing market, are forward-looking
statements. Forward-looking statements involve known and unknown
risks and uncertainties that may cause actual future results to
differ materially from those projected or contemplated in the
forward-looking statements. These risks and uncertainties include,
but are not limited to, economic, market and competitive conditions
affecting Comstock and its operations and products, risks and
uncertainties relating to the market for real estate generally and in
the areas where Comstock has projects, the availability and price of
land suitable for development, materials prices, labor costs,
interest rates, Comstock's ability to service its significant debt
obligations, fluctuations in operating results, anticipated growth
strategies, continuing relationships with affiliates, environmental
factors, government regulations, the impact of adverse weather
conditions or natural disasters and acts of war or terrorism.
Additional information concerning these and other important risks and
uncertainties can be found under the heading "Risk Factors" in the
prospectus from Comstock's follow-on offering, as filed with the
Securities and Exchange Commission in June 2005. Comstock
specifically disclaims any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future developments or
otherwise.
Preliminary Operating Results - Comstock Homebuilding Companies, Inc.
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
-------- -------- -------- --------
Revenues
Sale of real estate-Homes $ 75,792 $ 19,354 $216,265 $ 87,003
Other revenue 1,436 2,124 8,040 9,042
-------- -------- -------- --------
Total revenue 77,228 21,478 224,305 96,045
Expenses
Cost of sales of real estate 56,015 12,674 154,102 57,339
Cost of sales of other 466 1,235 3,604 6,654
Selling, general and
administrative 6,968 2,623 24,190 11,940
-------- -------- -------- --------
Operating income 13,779 4,946 42,409 20,112
Other (income) expense, net (797) 625 (1,450) 908
-------- -------- -------- --------
Income before minority interest
and equity in earnings of real
estate partnerships 14,576 4,321 43,859 19,204
Minority interest 16 900 30 5,260
-------- -------- -------- --------
Income before equity in earnings
of real estate partnerships 14,560 3,421 43,829 13,944
Equity in earnings of real
estate partnerships 17 25 99 118
-------- -------- -------- --------
Total pre tax income 14,577 3,446 43,928 14,062
Income Taxes 5,373 (241) 16,366 (241)
-------- -------- -------- --------
Net Income $ 9,204 $ 3,687 $ 27,562 $ 14,303
======== ======== ======== ========
Basic earnings per share 0.66 0.45 2.14 1.95
======== ======== ======== ========
Basic weighted average shares
outstanding 13,991 8,167 12,870 7,347
======== ======== ======== ========
Diluted earnings per share 0.65 0.45 2.12 1.95
======== ======== ======== ========
Diluted weighted average shares
outstanding 14,105 8,183 13,022 7,351
======== ======== ======== ========
Actual and proforma basic
earnings per share $ 0.66 $ 0.16(1)$ 2.14 $ 0.69(1)
Actual and proforma diluted
earnings per share $ 0.65 $ 0.15(1)$ 2.12 $ 0.68(1)
(1) Proforma 2004 is Net Income per share adjusted for tax rates and share
counts
Preliminary Balance Sheet - Comstock Homebuilding Companies, Inc.
December 31, December
31,
2005 2004
-------- --------
ASSETS
Cash and cash equivalents $ 42,167 $ 67,559
Restricted cash 10,800 7,500
Receivables 6,365 239
Note receivables 1,250 -
Due from related parties 2,899 1,447
Real estate held for development and sale 263,802 104,326
Inventory not owned - variable interest entities 89,890 118,558
Property, plant and equipment 605 488
Investment in real estate partnerships (35) 1,029
Deferred income tax 2,545 821
Other assets 11,031 2,540
-------- --------
TOTAL ASSETS $431,319 $304,507
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities 59,131 $ 35,532
Income taxes payable - 290
Due to related parties 40 148
Obligations related to inventory not owned 83,015 114,333
Notes payable 142,994 65,684
Notes payable-related parties 663 10,944
Distribution payable - 12,655
-------- --------
TOTAL LIABILITIES 285,843 239,586
-------- --------
Minority interest 400 2,695
-------- --------
SHAREHOLDERS' EQUITY
Class A common stock, $0.01 par value,
77,266,500 shares authorized, 11,532,442 and
9,160,608 issued and outstanding 115 92
Class B common stock, $0.01 par value,
2,733,500 shares authorized, 2,733,500 issued
and outstanding 27 27
Additional paid-in capital 129,009 75,510
Unearned compensation (2,548) (4,314)
Retained earnings (accumulated deficit) 18,473 (9,089)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 145,076 62,226
-------- --------
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT) $431,319 $304,507
======== ========
SOURCE: Comstock Homebuildings Company, Inc.