Dominion Homes, Inc. (NASDAQ:DHOM) today announced results for its
second quarter ended June 30, 2005. Highlights included: -0- *T --
Revenues of $105.2 million for the quarter ended June 30, 2005,
compared to $148.2 million for the quarter ended June 30, 2004; --
Net income of $2.5 million for the three months ended June 30,
2005, compared to $6.6 million for the three months ended June 30,
2004; -- Diluted earnings of $0.31 per share for the quarter ended
June 30, 2005, compared to $0.81 per diluted share for the three
months ended June 30, 2004; -- Sales of 655 homes, with a sales
value of $123.1 million, for the quarter ended June 30, 2005,
compared to sales of 510 homes, with a sales value of $98.9
million, for the three months ended June 30, 2004; -- Deliveries of
548 homes for the quarter ended June 30, 2005 compared to 778 homes
delivered for the three months ended June 30, 2004; -- Backlog of
887 sales contracts, with a sales value of $177.1 million, at June
30, 2005, compared to a backlog of 1,067 sales contracts, with a
sales value of $216.4 million, at June 30, 2004; -- Gross profit of
22.3% for the second quarter of 2005 compared to 22.1% for the
second quarter of 2004; -- Selling, general and administrative
expenses of $17.2 million for the second quarter of 2005 compared
to $20.1 million for the second quarter of 2004; and -- Active
communities of 63 at June 30, 2005 compared to 56 at June 30, 2004.
*T Douglas G. Borror, Chief Executive Officer, commented, "Our
second quarter results were better than our original projections.
We are pleased that our sales seem to have stabilized, and that we
continue to strengthen our backlog. We remain focused on increasing
our sales, delivering well-built homes, managing our developed lot
inventory, and focusing on our customers' experience." The Company
will host a conference call on Friday, August 5, 2005 at 10:00 a.m.
Eastern Time. Interested parties may listen in by accessing the
Company's website at www.dominionhomes.com, selecting "About
Dominion Homes," and then selecting "Investor Relations." Dominion
Homes offers a variety of homes, which are differentiated by size,
price, standard features and available options. The Company's "The
Best of Everything" philosophy focuses on providing its customers
with unsurpassed products, quality, and customer service.
Additional information about the Company and its homes is located
on its website. Additional Financial Highlights Second Quarter of
2005 Revenues. Revenues for the second quarter of 2005 were $105.2
million from the delivery of 548 homes, compared to $148.2 million
from the delivery of 778 homes during the same period the previous
year. Second quarter 2005 revenues included fee revenues from the
Company's mortgage financing services subsidiary of $1.3 million
compared to $2.1 million for the second quarter of 2004. Also
included in second quarter 2005 revenues are 20 model home sales,
with a sales value of $3.2 million. These homes were subsequently
leased back by the Company for use as sales models. The average
delivery price of homes during the second quarter of 2005 was
approximately $189,600 compared to $187,700 for the second quarter
of 2004. Net Income. The lower net income for the second quarter of
2005 is principally due to the delivery of 29.6% fewer homes
compared to the second quarter of 2004. The Company delivered fewer
homes during the second quarter of 2005 because of a lower number
of sales contracts in backlog at the beginning of this quarter
compared to the second quarter of 2004. Gross Profit. Gross profit
for the second quarter of 2005 was $9.3 million lower than the same
period a year ago, principally due to the delivery of fewer homes.
Included in gross profit for the second quarter of 2005 and 2004
were $1.4 million and $349,000 of write-offs primarily related to
deposits and due-diligence costs incurred for land that the Company
decided not to purchase. In addition, $824,000 of gains from the
sale of property was recorded in gross profit in the second quarter
of 2005. Selling, General and Administrative Expense. For the
second quarter of 2005 selling, general and administrative expense
decreased to $17.2 million from $20.1 million for the second
quarter of 2004, principally as a result of delivering fewer homes.
Interest Expense and Provisions for Income Taxes. Interest expense
incurred during the second quarter of 2005 increased to
approximately $2.9 million from $2.2 million during the second
quarter of 2004, primarily due to a higher average interest rate.
The Company's effective tax rate for the second quarter of 2005
decreased to 22.7% from 36.7% in the second quarter of 2004
primarily due to favorable tax audit settlements that occurred
during the second quarter of 2005. First Six Months of 2005
Revenues. Revenues for the first six months of 2005 decreased by
$66.1 million to $197.8 million compared to revenues of $263.9
million during the same period a year ago. Home deliveries for the
six months ended June 30, 2005 were 1,026 homes compared to 1,412
homes for the six months ended June 30, 2004. Included in revenues
for the first six months of 2005 was $2.3 million of fee revenues
from the Company's mortgage financing services subsidiary compared
to $4.1 million for the first six months of 2004. Also included in
revenues for the first six months of 2005 were 20 model home sales
with a sales value of $3.2 million. Net Income. Net income for the
first six months of 2005 was $3.2 million, or $0.39 per diluted
share, compared to $11.7 million, or $1.43 per diluted share, for
the same period in 2004. Gross Profit. Gross profit for the first
six months of 2005 was $18.0 million lower than the gross profit
reported for the first six months of 2004. The Company's gross
profit margin was 21.7% for the first six months of 2005 compared
to 23.1% for the first six months of 2004. This decrease in gross
profit margin was primarily due to an increase in the cost of
constructing our homes and higher lot costs. Included in gross
profit for the first six months of 2005 and 2004, respectively,
were $2.4 million and $230,000 of write-offs primarily related to
deposits and due-diligence costs incurred for land that the Company
decided not to purchase. In addition, $824,000 of gains from the
sale of property was recorded in gross profit in the first six
months of 2005. Selling, General and Administrative Expense.
Selling, general and administrative expense for the first six
months of 2005 decreased by $5.5 million to $33.3 million from
$38.8 million for the first six months of 2004. Interest Expense
and Provisions for Income Taxes. Interest expense incurred during
the first six months of 2005 increased to approximately $5.5
million from $3.8 million during the first six months of 2004,
primarily due to a higher average interest rate and higher average
borrowings. The Company's effective tax rate for the first six
months of 2005 decreased to 25.0% from 36.6% in the first six
months of 2004 primarily due to favorable tax audit settlements
that occurred during the first six months of 2005. Sales. The
Company sold 1,281 homes, with a sales value of $243.9 million,
during the first six months of 2005 compared to 1,460 homes, with a
sales value of $275.8 million, during the first six months of 2004.
Backlog. The average price of homes in backlog on June 30, 2005 was
$199,700 compared to $202,800 on June 30, 2004. Certain statements
in this news release are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such statements involve known and unknown risks, uncertainties and
other factors that may cause actual results to differ materially.
Such risks, uncertainties and other factors include, but are not
limited to, weather conditions, changes in general economic
conditions, fluctuations in interest rates, increases in raw
materials and labor costs, levels of competition and other factors
described in the Company's Annual Report on Form 10-K for the year
ended December 31, 2004. All forward-looking statements made in
this press release are based on information presently available to
the management of the Company. The Company assumes no obligation to
update any forward-looking statements. -0- *T FINANCIAL HIGHLIGHTS
(Unaudited) (In thousands, except share and per share amounts)
Consolidated Statements of Operations Three Months Ended Six Months
Ended June 30, June 30, 2005 2004 2005 2004
--------------------------------------------- Revenues $ 105,207 $
148,181 $ 197,850 $ 263,853 Cost of real estate sold 81,776 115,425
154,860 202,849 ---------- ---------- ---------- ---------- Gross
profit 23,431 32,756 42,990 61,004 Selling, general and
administrative 17,244 20,087 33,292 38,797 ---------- ----------
---------- ---------- Income from operations 6,187 12,669 9,698
22,207 Interest expense 2,927 2,178 5,483 3,791 ----------
---------- ---------- ---------- Income before income taxes 3,260
10,491 4,215 18,416 Provision for income taxes 741 3,852 1,054
6,739 ---------- ---------- ---------- ---------- Net income $
2,519 $ 6,639 $ 3,161 $ 11,677 ========== ========== ==========
========== Earnings per share Basic $ 0.31 $ 0.83 $ 0.39 $ 1.47
========== ========== ========== ========== Diluted $ 0.31 $ 0.81 $
0.39 $ 1.43 ========== ========== ========== ========== Weighted
average shares outstanding Basic 8,054,648 7,973,456 8,049,844
7,967,334 ========== ========== ========== ========== Diluted
8,203,815 8,198,251 8,206,933 8,160,487 ========== ==========
========== ========== Consolidated Balance Sheets June 30, December
31, 2005 2004 (Unaudited) ----------- ------------ ASSETS Cash and
cash equivalents $ 7,497 $ 6,710 Accounts receivable 5,419 4,521
Real estate inventories 426,439 416,519 Prepaid expenses and other
8,062 6,503 Deferred income taxes 1,534 2,685 Net property and
equipment 6,451 7,542 -------- -------- Total assets $455,402
$444,480 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY
Note payable, banks $206,389 $194,378 Term debt 8,709 5,819 Other
liabilities 47,714 55,386 -------- -------- Total liabilities
262,812 255,583 Total shareholders' equity 192,590 188,897 --------
-------- Total liabilities and shareholders' equity $455,402
$444,480 ======== ======== Lot Inventory as of June 30, 2005
Unimproved Land Total Finished Lots Under Estimated Estimated Land
Inventory Lots Development Lots Lots ----------------------------
-------- ----------- ---------- --------- Owned by the Company:
Central Ohio 1,602 1,513 9,039 12,154 Kentucky 463 514 1,089 2,066
Controlled by the Company: Central Ohio - - 4,098 4,098 Kentucky -
- 208 208 Held for sale: Central Ohio - - 964 964 Kentucky - - 204
204 ----------------------------------------- Total Land Inventory
2,065 2,027 15,602 19,694 ======== =========== ========== =========
*T
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