Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) ("Comstock" or
the "Company") today announced net income for its third quarter
ended September 30, 2009 of $2.3 million or $.13 per share basic
and $.12 diluted on total revenue of $12.6 million compared to a
net loss of $2.2 million or $(.13) per share basic and diluted on
total revenue of $13.1 million for the three months ended September
30, 2008. For the nine months ended September 30, 2009, the Company
reported a net loss of $28.1 million or ($1.60) per share basic and
diluted on total revenue of $21.1 million, compared to a net loss
of $12.3 million or ($0.70) per share basic and diluted on total
revenue of $41.5 million for the nine months ended September 30,
2008. In connection therewith, the Company filed a Form 10-Q with
the Securities and Exchange Commission including its unaudited
results for the three and nine months ended September 30, 2009.
Additional highlights of the Company's 2009 third quarter
results and Form 10-Q filing are provided below:
Due to the extended nature of the economic conditions affecting
the home building industry the Company, in early 2009, formulated
and began implementing its Strategic Realignment Plan, a strategy
for eliminating debt and settling obligations of the Company with
the goal of refocusing the Company's operations on key projects in
its core market of Washington, DC and Raleigh, NC while reaching
amicable agreements with all of the Company's major creditors
before year end 2009 in order to position the Company for improved
operating results in 2010 and beyond.
As previously reported, and as detailed herein, the Company has
made significant progress in that regard. As of September 30, 2009
the company had successfully negotiated settlements with most of
its secured lenders regarding a majority of the loans guaranteed by
the Company and had reduced the outstanding balance of overall debt
from $102.8M at December 31, 2008 to $83.4M at September 30, 2009.
In most cases the Company was released from the obligations under
each subject loan in return for its agreement not to contest the
foreclosure of the real estate assets that it wished to dispose of
and that secured each subject loan. In certain cases the Company
provided the lender a non-interest bearing deficiency note in an
amount equal to a small fraction of the original debt with a term
of three years. Due to the time required to complete the requisite
foreclosures on certain real estate assets, the foreclosure actions
were not all complete at September 30, 2009 and will occur in
future periods.
The Company reported that management and the Company's board of
Directors are continuing their effort to complete the Company's
Strategic Realignment Plan and expects that once fully implemented
the Company will benefit from:
1) Improved cash flow from key projects retained by the Company,
2) Enhanced shareholder equity,
3) Reduced debt service costs,
4) Reduced overall debt (secured and unsecured),
5) Reduced operating costs,
6) Improved operating margins.
Following is a summary of certain key accomplishments of the
Company in connection with its Strategic Realignment Plan so far in
2009:
July 2009 - The Company executed a settlement agreement with
Belmont Bay, L.C., the developer of the Belmont Bay project in
Woodbridge, Virginia, whereby the parties released each other from
pending litigation against each other and the Company was released
from all liability associated with a $1.7 million unsecured loan in
connection with the Belmont Bay project. The settlement agreement
also provided for the Company to release its claims to a $250,000
contract deposit posted in connection with the project
August 2009 - The Company executed agreements with Wachovia Bank
which provided the Company the ability to deliver certain backlog
units in the Raleigh, NC and Washington, DC markets, dispose of
multiple unwanted projects through friendly foreclosures, eliminate
approximately $17.8 million of debt, and eliminate past due
interest and other charges associated with the subject debts. In
connection with the agreement with Wachovia the Company entered
into an unsecured, non-interest bearing three year promissory note
in the original principal amount of approximately $1.8 million
which was subsequently reduced to $.2 million.
September 2009 - The Company executed agreements with Guggenheim
Corporate Funding which provides the Company the ability to
generate significantly increased cashflow for operations from its
existing Penderbrook project in Fairfax, Virginia through reduced
principal payments to Guggenheim as units are settled. Certain
conditions apply to the Company's ability to continue to benefit
from the reduced principal payment schedule, including maintaining
specified sales pace and securing agreement to settle certain other
unsecured debts of the Company. Based on sales achieved at
Penderbrook to date, the Company has met the sales pace requirement
through year end 2009.
September 2009 - The Company executed a settlement agreement
with Cornerstone Bank whereby Cornerstone and the Company each
released all pending litigation against each other and Cornerstone
released the Company from liability under a $5.2 million project
loan on the Gates of Luberon project in Atlanta, GA. In connection
with the agreements with Cornerstone, the Company entered into an
unsecured, non-interest bearing three year promissory note in the
original principal amount of approximately $400,000.
March through September 2009 - The Company entered into multiple
agreements with Manufacturers Traders and Trust Company (M&T
Bank) which provided the Company the ability to deliver certain
backlog units in the Washington, DC market, dispose of an unwanted
project in Woodbridge, Virginia through a friendly foreclosure that
will result elimination of approximately $6.1 million of debt, and
eliminate past due interest and other charges associated with the
released debt. In addition the agreements with M&T Bank
provided for the extension through January 31, 2011 of the $1.1
million project loan in connection with the Cascades project
located in Sterling, Virginia. In connection with the agreements
with M&T Bank the Company entered into a non-interest bearing
three year promissory note in the original principal amount of
approximately $496,000 secured by the Cascades project.
October 2009 - The Company executed agreements with Key Bank
which provides the Company the ability to generate significantly
increased cashflow for operations from its existing Eclipse project
in Arlington, Virginia and its planned Station View project in
Ashburn, Virginia through reduced principal payments to Key Bank as
condominium units are settled at the Eclipse and as the Station
View land is sold. Certain conditions apply to the Company's
ability to continue to benefit from the reduced principal payment
schedule, including maintaining specified sales pace and securing
agreement to settle certain other unsecured debts of the Company.
Based on sales achieved at the Eclipse project to date, the Company
has met the sales pace obligation through year end 2009.
Additionally, the Company has secured a contingent contract to sell
the Station View land, which it expects to settle in the first
quarter of 2010.
November 2009 - The Company executed agreements with Fifth Third
Bank which provides the Company the ability to dispose of an
unwanted project through friendly foreclosures in the Raleigh, NC
market, eliminate approximately $1.3 million of debt, and eliminate
past due interest and other charges associated with the subject
debt. In connection with the agreement with Fifth Third the Company
agreed to provide Fifth Third an unsecured, non-interest bearing
three year promissory note in the original principal amount of
approximately $25,000 provided that Fifth Third completes the
foreclosure proceeding no later then February 28, 2010, unless
extended pursuant to the terms of the agreement.
September 2009 - The Company completed the trial phase of
litigation between the Company and Balfour Beatty regarding certain
construction deficiencies alleged by the Company to be the
responsibility of Balfour Beatty and certain contract breaches by
Balfour Beatty, regarding construction services provided by Balfour
Beatty at the Company's Eclipse project. The Company is awaiting
the court's ruling on claims brought by the Company against Balfour
Beatty and counter claims brought by Balfour Beatty against the
Company and expects to receive the ruling in the first quarter of
2010.
On September 23, 2009 the Company presented its plan for
regaining compliance with all NASDAQ listing requirements to the
NASDAQ Listing Qualifications Panel and requested transfer from the
NASDAQ Global Markets to the NASDAQ Capital Markets. As of
September 30, 2009 the Company has reported shareholder equity of
$2.6 million, slightly exceeding the minimum requirement for
listing on the NASDAQ Capital Markets. However, on November 12,
2009 the Company received notice from NASDAQ Stock Market Listing
Qualifications indicating that the Company's closing bid-price was
under $1.00 for the thirty trading days ended November 11, 2009. As
a result, NASDAQ issued a notice of non-compliance related to this
requirement and providing the Company until May 11, 2010 to regain
compliance. To regain compliance the closing bid-price must remain
over $1.00 for a minimum of ten consecutive trading days prior to
May 11, 2010.
Additionally, in keeping with the primary goals of the Company's
Strategic Realignment Plan, (the elimination of debt and settlement
of obligations of the Company to enable the Company to refocus its
operations on its core markets and to reposition the Company for
improved operating results in 2010 and beyond), on November 13,
2009, the Company caused certain subsidiaries previously operating
in the Atlanta, Georgia market, Parker Chandler Homes, LLC
(formerly known as Comstock Homes of Atlanta, LLC), Buckhead
Overlook, LLC, and Post Preserve, LLC (collectively, "Parker
Chandler Homes"), to file bankruptcy petitions in the United States
Bankruptcy Court, Northern District of Georgia. The Chapter 7
Petitions by Parker Chandler Homes were filed in furtherance of the
Company's Strategic Realignment Plan that includes the liquidation
of Parker Chandler Homes and the winding down of all operations in
the Atlanta market.
"We are committed to taking the steps necessary to return
Comstock Homebuilding to profitability and we look forward to the
opportunities that lay ahead," said Christopher Clemente,
Comstock's Chairman and Chief Executive Officer. "We are pleased
with the progress we have made in the past several months in terms
of executing our Strategic Realignment Plan and we are encouraged
by signs that market conditions are beginning to improve."
Additional results for the three months ended September 30, 2009
include:
-- At September 30, 2009, the Company's reported shareholder
equity was $2.6 million.
-- Gross profit on all revenue was $0.9 million, representing a
gross margin of 7.3% on all revenue, compared to $1.8 million or
13.4% for the three months ended September 30, 2008.
-- Gross profit from homebuilding revenue was $0.7 million
representing a gross margin of 6.6%, compared to gross profit from
homebuilding of $1.3 million or 10.6% for the three months ended
September 30, 2008.
-- SG&A decreased by $3.1 million or 73.3% to $1.1 million,
compared to $4.2 million for the three months ended September 30,
2008.
-- Operating loss decreased to $.7 million, as compared to an
operating loss of $4.7 million for the three months ended September
30, 2008.
Additional results for the nine months ended September 30, 2009
include:
-- Gross profit on all revenue was $2.4 million, representing a
gross margin of 11.3% on all revenue, compared to $5.2 million or
12.6% for the nine months ended September 30, 2008.
-- Gross profit from homebuilding was $1.5 million representing
a gross margin of 8.4%, compared to gross profit from homebuilding
of $4.5 million or 11.3% for the nine months ended September 30,
2008.
-- SG&A decreased by $6.2 million or 53.1% to $5.5 million,
compared to $11.7 million for the nine months ended September 30,
2008.
-- Operating loss increased to $29.8 million as compared to an
operating loss of $24.7 million for the nine months ended September
30, 2008.
Company reported the following orders, cancellations and backlog
for the three and nine months ended September 30, 2009:
Three months ended September 30, 2009
-------------------------------------------
Washington North
Metro Area Carolina Georgia Total
---------- --------- --------- ----------
Gross new orders 29 2 - 31
Cancellations 2 5 - 7
Net new orders 27 (3) - 24
Gross new order revenue $ 8,995 $ 252 $ - $ 9,247
Cancellation revenue $ 460 $ 1,220 $ - $ 1,680
Net new order revenue $ 8,535 $ (968) $ - $ 7,567
Average gross new order price $ 310 $ 126 $ - $ 298
Settlements 39 1 - 40
Settlement revenue -
homebuilding $ 11,116 $ 108 $ - $ 11,224
Average settlement price $ 285 $ 108 $ - $ 281
Backlog units 6 3 - 9
Backlog revenue $ 1,541 $ 977 $ - $ 2,518
Average backlog price $ 257 $ 326 $ - $ 280
Nine months ended September 30, 2009
-------------------------------------------
Washington North
Metro Area Carolina Georgia Total
---------- --------- --------- ----------
Gross new orders 63 15 - 78
Cancellations 7 11 1 19
Net new orders 56 4 (1) 59
Gross new order revenue $ 19,999 $ 2,571 $ - $ 22,570
Cancellation revenue $ 2,128 $ 2,314 $ 386 $ 4,828
Net new order revenue $ 17,871 $ 257 $ (386) $ 17,742
Average gross new order price $ 317 $ 171 $ - $ 289
Settlements 53 7 - 60
Settlement revenue -
homebuilding $ 17,053 $ 1,033 $ - $ 18,086
Average settlement price $ 322 $ 148 $ - $ 301
Backlog units 6 3 - 9
Backlog revenue $ 1,541 $ 977 $ - $ 2,518
Average backlog price $ 257 $ 326 $ - $ 280
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Revenues
Revenue - homebuilding $ 11,224 $ 12,270 $ 18,086 $ 39,645
Revenue - other 1,400 803 3,025 1,807
--------- --------- --------- ---------
Total revenue 12,624 13,073 21,111 41,452
Expenses
Cost of sales - homebuilding 10,484 10,968 16,565 35,168
Cost of sales - other 1,216 356 2,166 1,069
Impairments and write-offs - 2 22,938 14,580
Selling, general and
administrative 1,126 4,211 5,480 11,684
Interest, real estate taxes
and indirect costs related
to inactive projects 454 2,199 3,808 3,615
--------- --------- --------- ---------
Operating loss (658) (4,663) (29,846) (24,664)
Gain on troubled debt
restructuring (2,803) (1,194) (2,803) (9,519)
Other (income) loss, net (134) (1,268) 1,063 (2,865)
--------- --------- --------- ---------
Total pre tax loss 2,279 (2,201) (28,106) (12,279)
Income taxes expense - 5 2 5
--------- --------- --------- ---------
Net (loss) income 2,279 (2,206) (28,108) $ (12,284)
Net (loss) income attributable
to noncontrolling interest - (4) - (7)
--------- --------- --------- ---------
Net (loss) income attributable
to Comstock Homebuilding
Companies, Inc 2,279 (2,202) (28,108) (12,277)
========= ========= ========= =========
Basic loss per share $ 0.13 $ (0.13) $ (1.60) $ (0.70)
Basic weighted average shares
outstanding 17,618 17,475 17,575 17,431
========= ========= ========= =========
Diluted loss per share $ 0.12 $ (0.13) $ (1.60) $ (0.70)
Diluted weighted average shares
outstanding 19,467 17,475 17,575 17,431
========= ========= ========= =========
September 30, December 31,
2009 2008
------------ ------------
ASSETS
Cash and cash equivalents $ 872 $ 5,977
Restricted cash 3,432 3,859
Receivables 15 -
Real estate held for development and
sale 87,783 129,542
Inventory not owned - variable interest
entities - 19,250
Property, plant and equipment, net 279 829
Other assets 2,145 1,402
------------ ------------
TOTAL ASSETS $ 94,526 $ 160,859
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued
liabilities $ 8,533 $ 8,232
Obligations related to inventory not
owned - 19,050
Notes payable - secured by real estate 66,181 90,086
Notes payable - unsecured 17,236 12,743
------------ ------------
TOTAL LIABILITIES 91,950 130,111
------------ ------------
Commitments and contingencies (Note 9)
SHAREHOLDERS' EQUITY
Class A common stock, $0.01 par value,
77,266,500 shares authorized,
15,608,433 and 15,608,433 issued and
outstanding, respectively 156 156
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 157,216 157,058
Treasury stock, at cost (391,400 Class
A common stock) (2,439) (2,439)
Accumulated deficit (152,384) (124,277)
------------ ------------
TOTAL COMSTOCK HOMEBUILDING
COMPANIES, INC SHAREHOLDERS'
EQUITY 2,577 30,525
Noncontrolling interest - 223
------------ ------------
TOTAL EQUITY 2,577 30,749
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 94,526 $ 160,859
============ ============
About Comstock Homebuilding Companies, Inc.
Established in 1985, Comstock Homebuilding Companies, Inc. is a
publicly traded, diversified real estate development firm with a
focus on a variety of for-sale residential products. The company
currently actively markets its products under the Comstock Homes
brand in the Washington, D.C. and Raleigh, N.C. metropolitan areas.
Comstock Homebuilding Companies, Inc. trades on NASDAQ under the
symbol CHCI. For more information on the Company or its projects
please visit 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. 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. Additional
information concerning these and other important risks and
uncertainties can be found under the heading "Risk Factors" in the
Company's most recent Form 10-K, as filed with the Securities and
Exchange Commission on March 31, 2009. Comstock specifically
disclaims any obligation to update or revise any forward-looking
statements, whether as a result of new information, future
developments or otherwise.
Contact: Jeff Dauer 703.883.1700
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