Comstock Homebuilding Companies, Inc. Reports Record Results for
2004 The Company Expects Significant Growth in 2005 as it Moves
Aggressively to Invest Capital from December 2004 IPO RESTON, Va.,
March 1 /PRNewswire-FirstCall/ -- Comstock Homebuilding Companies,
Inc. (NASDAQ:CHCI) ("Comstock or the "Company") today announced
results for the year and quarter ended December 31, 2004. Shares of
the Company's stock started trading publicly on December 14, 2004,
with the IPO generating net proceeds to the Company of $67.8
million. The Company, which builds and markets a variety of new
homes and condominiums primarily in the Greater Washington, D.C.
market, will conduct a conference call for interested investors on
Wednesday, March 2, 2005, at 9:00 AM Eastern Standard Time. During
the call, the Company will provide investors with guidance as to
its expectations for the first quarter and full year of 2005 that
is also summarized in this release. The dial-in number for the call
is 866-761-0748 and the access code is 59484192; the call may also
be accessed on the Internet at http://www.comstockhomebuilding.com/
in the Investor Relations section. Background Information: On
December 17, 2004, Comstock, as part of its consolidation of
operations in connection with its IPO, merged its Washington, DC
and Raleigh, North Carolina operations together. Because the merger
of Comstock's Raleigh operation was treated as an acquisition for
accounting purposes, the results from Comstock's Raleigh operation
prior to December 17, 2004 are not included in the Company's
year-end financial statements. This resulted in the exclusion of
approximately $19 million (unaudited) of revenue from homebuilding
generated in Raleigh. For the calendar year 2004, Comstock operated
as a taxable entity only from December 17 to December 31. Comstock
will operate as a taxable entity for the full calendar year 2005.
On December 17, 2004, Comstock sold 3,960,000 shares of Class A
common stock to the public as part of its initial public offering.
Post closing, the Company had 11,026,667 shares issued and
outstanding. On December 28, 2004, the underwriters for the
offering exercised their over-allotment option to purchase an
additional 594,000 shares. The Company then had 11,620,667 shares
outstanding. Based on the number of days that Comstock was public
during 2004, the weighted average outstanding shares for the year
ended December 31, 2004 were 7,346,618 (basic) and 7,350,685
(diluted). The weighted average outstanding shares for the three
months ended December 31, 2004 were 8,167,109 (basic) and 8,183,379
(diluted). As a result of permitting delays in one of the Company's
key sub-markets, the Company experienced an unbalanced delivery of
units in 2003 with more than 60 percent of its settlements
occurring in the fourth quarter. This resulted in an exaggerated
basis in the fourth quarter of 2003 for purposes of quarter over
quarter comparisons. This phenomenon, which is not uncommon and is
relatively unpredictable, is likely to occur again in 2005. The
Company has factored this into its guidance outlined below. Full
Year Results: The Company generated record results in 2004. The
contract value of new orders for the year ended December 31, 2004
was $241.0 million on 665 new orders as compared to $81.3 million
on 258 new orders for the year ended December 31, 2003, a 196
percent increase in the value of the new orders and a 158 percent
increase in new home orders. Total revenue increased 73 percent,
from $55.5 million in 2003 to $96.0 million in 2004, with $87.0
million of revenue from homebuilding in 2004 as compared to $49.1
in 2003. The Company delivered 263 new homes at an average price of
$328,000 in 2004 versus 162 new homes at an average price of
$303,000 in 2003. Operating income grew 150 percent, from $8.1
million for 2003 to $20.1 million for 2004, due to a significant
increase in operating margin from 14.5 percent to 20.9 percent. Net
income after tax increased 141 percent from $5.9 million in 2003 to
$14.3 million in 2004. On a proforma basis, including its Raleigh
operation, the Company delivered 328 new homes in 2004 for combined
revenue from homebuilding of $105.2 million (unaudited). Fourth
Quarter Results: The contract value of new orders for the fourth
quarter of 2004 was $60.4 million on 131 new orders as compared to
$17.2 million on 50 new orders for the fourth quarter of 2003, a
358 percent increase in the value of the new orders and a 162
percent increase in new orders. Total revenue for the three months
ended December 31, 2004 was $21.5 million with $19.4 million of
revenue from homebuilding, as compared to total revenue of $32.3
million for the fourth quarter of 2003 with $29.8 million of
revenue from homebuilding. The reason for the decrease in revenue
as noted above was that revenue for the fourth quarter of 2003 was
unusually disproportionate to the balance of the year as a result
of permitting delays in one of the Company's sub-markets. The
Company delivered 55 new homes at an average price of $352,000 in
the fourth quarter of 2004 versus 98 new homes at an average price
of $304,000 in the fourth quarter of 2003. Operating income for the
fourth quarter of 2004 was $4.9 million, or 23 percent of sales,
compared to $5.5 million, or 17 percent of sales, in the same
quarter of 2003. Net income after tax for the quarter decreased
from $4.1 million in the fourth quarter of 2003 to $3.7 million in
fourth quarter of 2004. Per Share Results: Both basic and fully
diluted earnings for the twelve months ended December 31, 2004, was
$1.95 per share based on a weighted average shares outstanding of
7.4 million shares for 2004. Both basic and fully diluted earnings
for the three months ended December 31, 2004, were $0.45 per share
based on a weighted average shares outstanding of 8.2 million for
the fourth quarter of 2004. Both basic and diluted earnings for the
year ended December 31, 2003 were $0.84 per share based on 7.1
shares outstanding, adjusted for the offering. On an unaudited
proforma basis as if the Company had been taxable for the entire
year at a 38 percent effective tax rate the basic and diluted
earnings for the twelve months ended December 31, 2004 would be
$1.19 per share based on a weighted average shares outstanding of
7.4 million shares for 2004. Under the same assumption, the basic
and diluted earnings for the three months ended December 31, 2004
would be $0.26 per share based on a weighted average 8.2 million
shares outstanding. On an unaudited proforma basis as if the
Company's earnings had been taxable for the entire year at a 38
percent effective tax rate, the basic earnings for the twelve
months ended December 31, 2004 would be $0.75 per share based on
total outstanding shares at December 31, 2004 of 11.6 million
shares. Under the same assumption, the basic earnings for the three
months ended December 31, 2004 would be $0.18 per share based on
total outstanding shares at December 31, 2004 of 11.6 million
shares. Please see the table setting forth unaudited proforma net
income and proforma net income per common share accompanying the
attached financial results for further information on this proforma
data. Balance Sheet at December 31, 2004: The Company's year-end
balance sheet reflected dramatic growth as a result of the public
offering. Total assets at year-end increased $214.3 million to
$304.6 million from $90.2 million at year-end 2003 with increases
between years resulting from accumulation in land position and an
increase in cash on hand. As compared to December 31, 2003, real
estate held for development and sale increased $39.1 million
primarily as a result of the acquisition of Comstock Service Corp.
(Comstock's Raleigh operation) and the acquisition of new
inventory; Inventory not owned - Variable Interest Entities
increased $119 million resulting from consolidation of the value of
five (5) land contracts for which we had $4 million of non-
refundable deposits posted in the aggregate; and cash increased
$57.9 million as a result of the Company's IPO. The Company ended
2004 with a backlog of 453 ordered but undelivered homes valued at
$174.6 million as compared to 113 units valued at $36.4 million at
December 31, 2003. This represents a 301 percent increase in homes
and a 380 percent increase in contract value. Operating
Achievements: The Company realized several significant operating
achievements in 2004, among them: * The Eclipse at Potomac Yard,
the Company's first multi-family high-rise condominium project was
introduced to the market with great success, with 309 unit sales
valued at $117.4 million; * The Company accelerated its land
acquisition effort as evidenced by 'Real estate held for
development and sale' of $104 million and 'Inventory not owned --
Variable Interest Entities' of $118 million at December 31, 2004; *
The Company ended 2004 with approximately 4,000 lots under its
direct control with a market value well in excess of its historical
carrying cost; * In connection with its IPO, the Company
successfully negotiated the purchase of the interests of certain of
its minority interest members. Guidance For the Quarter and Year
Ahead: During the Company's investor conference call scheduled for
tomorrow, the expectations for the quarter and year ahead will be
discussed. In summary, the Company believes that its core market of
Greater Washington will continue to be characterized by significant
demand for new housing due to the region's growth and that in 2005
demand for new homes will be greater than the anticipated supply.
As a result, not only does the Company expects to be able to
increase the number of units it sells and settles, it expects that
the average sales price and average revenue per home of its various
models should increase. The Company expects that revenues for the
first quarter of 2005, ending March 31, 2005, will be between $28
million - $29 million, with net income after tax of between $2.5
million - $2.7 million. This equates to an estimated range of
between $0.20 - $0.23 per share on a fully diluted basis. The
Company expects that total revenue for the year ending December 31,
2005 will be between $250 million - $260 million with an estimated
earnings range of between $2.15 - $2.20 per share (diluted) on an
estimated 11.9 million shares. Based on the lot inventory currently
under the Company's control and the significant percentage of its
backlog at December 31, 2004 that is projected to settle beyond
2005, the Company currently estimates that it will deliver revenue
in 2006 that represents a 50 - 60 percent increase over 2005.
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. About Comstock Homebuilding Companies, Inc. Comstock is
a production homebuilder that develops, builds, and markets
single-family homes, townhouses, and condominiums. The Company
currently operates in the Washington, D.C. 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/.
Financial Results of Operations Three months ended Year ended
COMSTOCK HOMEBUILDING December 31, December 31, COMPANIES, INC.
2003 2004 2003 2004 Revenues (Unaudited) Sale of real estate -
Homes $29,786 $19,354 $49,081 $87,003 Other revenue 2,562 2,124
6,440 9,042 Total revenue 32,348 21,478 55,521 96,045 Expenses Cost
of sales of real estate 22,160 12,674 36,620 57,339 Cost of sales
of other 1,948 1,235 5,136 6,654 Selling, general and
administrative 2,754 2,623 5,712 11,940 Operating income 5,486
4,946 8,053 20,112 Other (income) expense, net 26 625 (44) 908
Income before minority interest and equity in earnings of real
estate partnerships 5,460 4,321 8,097 19,204 Minority interest
1,390 900 2,297 5,260 Income before equity in earnings of real
estate partnerships 4,070 3,421 5,800 13,944 Equity in earnings of
real estate partnerships 41 25 139 118 Total pre tax income 4,111
3,446 5,939 14,062 Income Taxes - (241) - (241) Net Income $4,111
$3,687 $5,939 $14,303 Basic earnings per share 0.58 0.45 0.84 1.95
Basic weighted average shares outstanding 7,067 8,167 7,067 7,347
Dilutive earnings per share 0.58 0.45 0.84 1.95 Dilutive weighted
average shares outstanding 7,067 8,183 7,067 7,351 Unaudited
Proforma Net Income and Proforma Net Income per Common Share Three
Months and Years Ended December 31, 2003 and 2004 (in thousands,
except per share data) Proforma net income and proforma net income
per common share Net income $4,111 $3,687 $5,939 $14,303 Income tax
expense - (241) - (241) Income before income tax taxes 4,111 3,446
5,939 14,062 Income tax expense 38% 1,562 1,310 2,257 5,344
Proforma net income $2,549 $2,137 $3,682 $8,719 Shares - Dilutive
weighted average shares outstanding 7,067 8,183 7,067 7,351
Proforma net income per common share $0.36 $0.26 $0.52 $1.19 Shares
outstanding at December 31, 2004 11,621 11,621 11,621 11,621
Proforma net income per common share 0.22 0.18 0.32 0.75
DATASOURCE: Comstock Homebuilding Companies, Inc. CONTACT: Al
Black, +1-703-744-7833, or , for Comstock Homebuilding Companies,
Inc. Web site: http://www.comstockhomebuilding.com/
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