For the three months ended September 30, 2007 the Company reported a
net loss of $42.5 million or ($2.63) per share basic and diluted on
total revenue of $52.0 million as compared to a net loss of $5.8
million or ($0.36) per share basic and diluted on revenue of $35.3
million for the three months ended September 30, 2006. In connection
with these results the Company announced that it had elected to
record non-cash impairment charges of $61.4 million and option
related write-offs of $7.6 million for the three months ended
September 30, 2007 as compared to total non-cash charges of $1.8
million for the three months ended September 30, 2006.
For the nine months ended September 30, 2007 the Company reported a
net loss of $48.8 million or ($3.04) per share basic and diluted on
total revenue of $213.0 million as compared to a net loss of $11.6
million or ($0.78) per share basic and diluted on revenue of $122.6
million for the nine months ended September 30, 2006. In connection
with these results the Company announced that it had elected to
record non-cash impairment and write-off charges of $77.4 million for
the nine months ended September 30, 2007 as compared to charges of
$14.7 million for the nine months ended September 30, 2006.
At September 30, 2007 the Company's reported book value was
approximately $80.8 million or $4.54 per share based on 17.8 million
shares issued and outstanding. The Company noted that during the
three months ended September 30, 2007 it reduced its debt by $28.5
million to $201.6 million as compared to June 30, 2007, by $93.8
million as compared to December 31, 2006 and by $138.7 million as
compared to September 30, 2006. The company's net debt-to-cap ratio
at September 30, 2007 was 68.3%, an increase of 7.8 percentage points
as compared to June 30, 2007. The Company indicated that it had
received all necessary waivers from its lenders regarding the
violation of certain of its tangible net worth covenants as a result
of the impairment charges. The Company believes that at September
30, 2007 it is in compliance with all other financial covenants of
its debt.
"Current market conditions remain weak," said Christopher Clemente,
Chairman and Chief Executive Officer. "However, we continue to
generate new orders and current period cancellations have been
trending lower. The vast majority of cancellations reported during
the third quarter were cancellations of contracts written in 2005 or
2006 and represent purchaser defaults as the final building was
completed. Non-Eclipse cancellations were approximately 10% of new
orders during the period. Now that we have substantially completed
the Eclipse we expect our cancellation rates to be much lower."
"We do not expect market conditions to improve markedly in the near
term," Clemente continued. "Although our Gold Rush Days marketing
campaign has generated increased new orders, the lack of consumer
confidence in housing continues to negatively impact pricing.
Nonetheless, we believe we are positioned for improved operating
results in future periods."
The Company will hold an investor conference call hosted by
Christopher Clemente, Chairman and Chief Executive Officer, and Bruce
Labovitz, Chief Financial Officer, to discuss financial results for
the third quarter ended September 30, 2007. The call will be held on
Monday, November 12, 2007 at 1:00 p.m. Eastern Time. This investor
call will be available via live webcast on the Comstock Homebuilding
Companies' website at www.comstockhomebuilding.com in the "Investor
Relations" section. To participate by telephone, the dial-in number
is 866-542-4237 and the access code is 3238679. Investors are advised
to join at least five minutes prior to the call to register. The call
will be archived for seven days: from 6:45 p.m. Monday, November 12,
2007, until 11:59 p.m. Monday, November 19, 2007. To retrieve the
archived call by telephone, the dial-in number is 866-542-4237 and
the access code is 3238679.
Selected Highlights of Financial Results - Three months ended
September 30,
2007:
- The Company reported a net loss of $42.5 million or ($2.63) per share
basic and diluted on weighted average shares outstanding of 16.2 million as
compared to a net loss of $5.8 million or ($0.36) per share basic and
diluted on 15.8 million weighted average shares outstanding for the three
months ended September 30, 2006;
- On a pro-forma basis, before impairment and write-off charges, the
Company's results would have been a net loss of $0.3 million or ($0.02) per
share basic and diluted as compared to a net loss of $4.7 million or
($0.29) per share basic and diluted for the three moths ended September 30,
2006;
- Total revenue was $52.0 million compared to $35.3 million for the
three months ended September 30, 2006. Revenue from homebuilding increased
$17.4 million or 57.2% to $47.8 million, as compared to $30.4 million of
revenue derived from homebuilding for the three months ended September 30,
2006;
- The Company delivered 141 new homes at an average per unit revenue of
approximately $339,000 as compared to 110 new homes at an average per unit
revenue of $276,000 for the three months ended September 30, 2006;
- Gross profit from homebuilding before impairment and write-off charges
was $6.0 million representing a 12.6% gross margin as compared to $2.1
million before impairment and write-off charges for the three months ended
September 30, 2006 representing a gross margin from homebuilding of 6.8%;
- Gross new order revenue was $24.5 million on 81 gross new orders
including for average new order revenue of $303,000 as compared to $36.9
million of gross new order revenue on 127 new orders for an average of
$291,000 per gross new order for the three months ended September 30, 2006;
- Backlog at September 30, 2007 was $32.8 million on 100 sold units as
compared to $211.3 million on 550 units at September 30, 2006. Backlog
does not include $14.5 million of backlog revenue related to the sale of
the retail complex at the Company's Eclipse project;
- As a result of softening market conditions and project repositioning
in the Company's markets, the Company elected to record $69.0 million of
non-cash impairment and write-off charges as compared to $1.8 for the three
months ended September 30, 2006.
Selected Highlights of Financial Results - Nine months ended
September 30,
2007:
- The Company reported a net loss of $48.8 million or ($3.04) per share
basic and diluted on weighted average shares outstanding of 16.0 million as
compared to a net loss of $11.6 million or ($0.78) per share basic and
diluted on 14.9 million weighted average shares outstanding for the nine
months ended September 30, 2006;
- On a pro-forma basis, before impairments and write-offs, the Company's
results would have been a net loss of $1.4 million or ($0.09) per share
basic and diluted as compared to a net loss of $2.7 million or ($0.18) per
share basic and diluted for the nine months ended September 30, 2006;
- Total revenue was $213.0 million compared to $122.6 million for the
nine months ended September 30, 2006. Revenue from homebuilding increased
$84.0 million or 71.7% to $201.1 million, as compared to $117.1 million of
revenue derived from homebuilding for the nine months ended September 30,
2006;
- The Company delivered 777 new homes including 316 units at its
Bellemeade project at an average per unit revenue of approximately $259,000
as compared to 387 new homes at an average per unit revenue of $303,000 for
the nine months ended September 30, 2006. Net of the Bellemeade units the
Company's average revenue per delivery was $333,000;
- Gross profit from homebuilding before impairment and write-off
charges, was $19.6 million representing a 9.8% gross margin from
homebuilding as compared to $20.3 million for the nine months ended
September 30, 2006 representing a gross margin from homebuilding of 17.4%.
Net of the Bellemeade units the Company's gross margin from homebuilding
was 12.8%;
- Gross new order revenue was $166.7 million on 717 gross new orders
including 316 units at Bellemeade for average gross new order revenue of
$232,000 as compared to $177.5 million of gross new order revenue on 586
gross new orders for an average of $303,000 per new order for the nine
months ended September 30, 2006. Net of the Bellemeade units the Company's
average gross new order revenue was $297,000;
- Backlog at September 30, 2007 was $32.8 million on 100 sold units as
compared to $211.3 million on 550 units at September 30, 2006. Backlog
does not include $14.5 million of backlog revenue related to the sale of
the retail complex at the Company's Eclipse project;
- As a result of softening market conditions and project repositioning
in the Company's markets, the Company elected to record $77.4 million of
non-cash impairment and write-off charges as compared to $14.7 million for
the nine months ended September 30, 2006.
About Comstock Homebuilding Companies, Inc.
Established in 1985, Comstock Homebuilding Companies is a diversified
real estate development firm with a focus on moderately priced
for-sale residential products. Comstock builds and markets
single-family homes, townhouses, mid-rise condominiums, high-rise
condominiums, mixed-use urban communities and active adult
communities. The company currently markets its
products under the Comstock Homes brand in the Washington, D.C.;
Raleigh, North Carolina; and Atlanta, Georgia metropolitan areas.
Comstock develops mixed-use, urban communities and active-adult
communities under the Comstock Communities brand. Comstock
Homebuilding Companies Inc. trades on Nasdaq under the symbol CHCI.
For more information on the Company or it projects 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 initial public offering, as filed with the
Securities and Exchange Commission on December 15, 2004. Comstock
specifically disclaims any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future developments or otherwise.
September 30, December 31,
2007 2006
------------ ------------
ASSETS
Cash and cash equivalents $ 8,814 $ 21,263
Restricted cash 6,527 12,326
Receivables 629 4,555
Due from related parties 162 4,053
Real estate held for development and sale 240,835 405,144
Inventory not owned - variable interest
entities 19,496 43,234
Property, plant and equipment 2,096 2,723
Investment in real estate partnership 0 (171)
Deferred income tax 34,494 10,188
Other assets 18,443 14,114
------------ ------------
TOTAL ASSETS 331,496 517,429
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities 29,462 55,680
Due to related parties - 1,140
Obligations related to inventory not owned 19,287 40,950
Notes payable 171,559 265,403
Senior unsecured debt 30,000 30,000
------------ ------------
TOTAL LIABILITIES 250,308 393,173
------------ ------------
Commitments and contingencies (Note 12)
Minority interest 361 371
------------ ------------
SHAREHOLDERS' EQUITY
Class A common stock, $0.01 par value,
77,266,500 shares authorized, 15,081,777 and
14,129,081 issued and outstanding,
respectively 151 141
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 151,602 147,528
Treasury stock, at cost (391,400 Class A
common stock) (2,439) (2,439)
(Accumulated deficit) (68,513) (21,372)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 80,828 123,885
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 331,496 $ 517,429
============ ============
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues
Revenue - homebuilding $ 47,769 $ 30,367 $ 201,106 $ 117,083
Revenue - other 4,217 4,913 11,902 5,489
--------- --------- --------- ---------
Total revenue 51,986 35,280 213,008 122,572
Expenses
Cost of sales -
homebuilding 41,748 28,290 181,491 96,746
Cost of sales - other 3,643 4,994 10,947 5,024
Impairments and
write-offs 69,017 1,802 77,400 14,717
Selling, general and
administrative 7,860 9,903 24,235 25,978
--------- --------- --------- ---------
Operating loss (70,282) (9,709) (81,065) (19,893)
Other income, net (715) (330) (1,361) (918)
--------- --------- --------- ---------
Loss before minority interest
and equity in losses of real
estate partnership (69,567) (9,379) (79,704) (18,975)
Minority interest (2) 12 (7) 17
--------- --------- --------- ---------
Loss before equity in losses of
real estate partnership (69,565) (9,391) (79,697) (18,992)
Equity in losses of real estate
partnership - (13) - (66)
--------- --------- --------- ---------
Total pre tax loss (69,565) (9,404) (79,697) (19,058)
Income taxes benefit (27,097) (3,650) (30,893) (7,421)
--------- --------- --------- ---------
Net loss $ (42,468) $ (5,754) $ (48,804) $ (11,637)
========= ========= ========= =========
Basic loss per share $ (2.63) $ (0.36) $ (3.04) $ (0.78)
Basic weighted average shares
outstanding 16,151 15,804 16,046 14,946
========= ========= ========= =========
Diluted loss per share $ (2.63) $ (0.36) $ (3.04) $ (0.78)
Diluted weighted average shares
outstanding 16,151 15,804 16,046 14,946
========= ========= ========= =========
Media Contact:
Bryan Murray
Email Contact
703.230.1217
SOURCE: Comstock Homebuilding Companies, Inc.