Dominion Homes, Inc. (NASDAQ:DHOM) today announced results for the
three months ended September 30, 2005. Highlights for the third
quarter of 2005 compared to the third quarter of 2004 included: --
Revenues of $106.3 million from the delivery of 549 homes versus
$162.6 million from the delivery of 820 homes; -- Net income of
$1.2 million, or $0.14 per diluted share, versus $7.5 million, or
$0.91 per diluted share; -- Sales of 433 homes, with a sales value
of $81.8 million, versus sales of 598 homes, with a sales value of
$109.4 million; -- Backlog of 771 sales contracts, with a sales
value of $154.6 million, at September 30, 2005, versus a backlog of
845 sales contracts, with a sales value of $166.0 million, at
September 30, 2004; -- The Company had 64 active communities at
September 30, 2005 versus 58 at September 30, 2004. Douglas G.
Borror, Chief Executive Officer, commented, "Our third quarter
results reflect the difficult sales conditions we are experiencing
in our markets, which we anticipate will continue through the
remainder of 2005. We expect to be profitable for the year,
however, earnings will be substantially less than the previous year
due to the lower sales volume. We remain focused on improving our
sales and managing our business operations and inventories." The
Dominion Homes analyst conference call on November 3, 2005 at 10:00
a.m. Eastern Time will be webcast simultaneously in listen-only
mode via Dominion Homes' website, www.dominionhomes.com. For those
who cannot listen to the live webcast, an archived replay will be
available at www.dominionhomes.com beginning at approximately 11:30
a.m. Eastern Time on November 3, 2005, and continuing for
approximately 90 days. Interested parties may listen in by
accessing the Company's website and 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 Third Quarter of 2005
Revenues. Revenues for the third quarter of 2005 were $106.3
million from the delivery of 549 homes, compared to $162.6 million
from the delivery of 820 homes during the same period the previous
year. Revenues for the third quarter of 2005 included $1.4 million
in fees from the Company's mortgage financing services subsidiary
compared to $2.1 million for the third quarter of 2004. Revenues
for the third quarter of 2004 included 21 model home sales with a
sales value of $3.5 million that were subsequently leased back by
the Company for use as sales models. There were no model homes sold
and leased back for use as sales models during the third quarter of
2005. The average delivery price of homes during the third quarter
of 2005 was approximately $191,000 compared to $196,300 for the
third quarter of 2004. Net Income. Net income for the third quarter
of 2005 was $1.2 million or $0.14 per diluted share compared to
$7.5 million or $0.91 per diluted share for the third quarter of
2004. The lower net income for the third quarter of 2005 is
principally due to the delivery of 33.0% fewer homes compared to
the third quarter of 2004. The Company delivered fewer homes during
the third quarter of 2005 due to 16.9% fewer sales contracts in
backlog at the beginning of the third quarter of 2005 compared to
the third quarter of 2004 and a few communities where homes were
sold with extended delivery dates, many of which are expected to
close in the fourth quarter of 2005. Gross Profit. Gross profit for
the third quarter of 2005 was $21.6 million or $14.6 million below
the same period a year ago, principally due to the delivery of
fewer homes. The Company's gross profit margin was 20.3% for the
third quarter of 2005 compared to 22.3% for the third quarter of
2004. The lower gross profit margin was primarily due to higher lot
costs as a percentage of sales. Gross profit for the third quarter
of 2005 and 2004 was also reduced by $570,000 and $1.0 million,
respectively, for write-offs primarily related to deposits and
due-diligence costs incurred for land that the Company decided not
to purchase. Selling, General and Administrative Expense. Selling,
general and administrative expense for the third quarter of 2005
declined to $16.1 million from $21.0 million for the third quarter
of 2004, principally as a result of delivering fewer homes.
Interest Expense and Provisions for Income Taxes. Interest expense
incurred during the third quarter of 2005 increased to
approximately $3.3 million from $2.4 million during the third
quarter of 2004, primarily due to a higher average interest rate
and higher average borrowings. The Company's effective tax rate for
the third quarter of 2005 increased to 47.4% from 41.8% in the
third quarter of 2004 primarily due to increased state tax rates as
a result of new tax legislation enacted in Ohio and Kentucky and
for estimated additional state taxes related to previously filed
tax returns. Sales. The Company sold 433 homes, with a sales value
of $81.8 million, during the third quarter of 2005 compared to 598
homes, with a sales value of $109.4 million, during the third
quarter of 2004. The average home sale price for the third quarter
of 2005 was $188,900 compared to $182,900 for the third quarter of
2004. Backlog. The Company had a backlog of 771 sales contracts,
with a sales value of $154.6 million, at September 30, 2005,
compared to a backlog of 845 sales contracts, with a sales value of
$166.0 million, at September 30, 2004. The average price of homes
in backlog on September 30, 2005 was $200,500 compared to $196,500
on September 30, 2004. First Nine Months of 2005 Revenues. Revenues
for the first nine months of 2005 were $304.2 million from the
delivery of 1,575 homes, compared to revenues of $426.5 million
from the delivery of 2,232 homes during the same period a year ago.
This included $3.8 million of fees from the Company's mortgage
financing services subsidiary compared to $6.2 million for the
first nine months of 2004. In addition, 20 model home sales with a
sales value of $3.2 million were included in revenues for the first
nine months of 2005, compared to 21 model home sales with a sales
value of $3.5 million for the first nine months of 2004. Net
Income. Net income for the first nine months of 2005 was $4.3
million, or $0.53 per diluted share, compared to $19.2 million, or
$2.34 per diluted share, for the same period in 2004. Net income
was lower for the first nine months of 2005 compared to the same
period the prior year principally due to the delivery of 29% fewer
homes. Gross Profit. Gross profit for the first nine months of 2005
was $64.6 million or $32.6 million below gross profit for the first
nine months of 2004. The Company's gross profit margin was 21.2%
for the first nine months of 2005 compared to 22.8% for the first
nine months of 2004. This decline was primarily due to an increase
in the cost of home construction and higher lot costs. Gross profit
for the first nine months of 2005 and 2004 was also reduced by $3.0
million and $1.3 million, respectively, for write-offs primarily
related to deposits and due-diligence costs incurred for land that
the Company decided not to purchase. Gains from the sale of
property in the amount of $824,000 were recognized in the first
nine months of 2005. Selling, General and Administrative Expense.
Selling, general and administrative expense for the first nine
months of 2005 declined by $10.4 million to $49.4 million from
$59.8 million for the first nine months of 2004, principally as a
result of delivering fewer homes. Interest Expense and Provision
for Income Taxes. Interest expense incurred during the first nine
months of 2005 increased to approximately $8.8 million from $6.2
million during the first nine months of 2004, primarily due to
higher average borrowings and a higher average interest rate. The
Company's effective tax rate for the first nine months of 2005
decreased to 32.8% from 38.7% in the first nine months of 2004
primarily due to favorable tax audit settlements that occurred
during the first nine months of 2005. This decline was partially
offset by an increase in the state tax rate as a result of new tax
legislation enacted in Ohio and Kentucky and for estimated
additional state taxes related to previously filed tax returns.
Sales. The Company sold 1,714 homes, with a sales value of $325.7
million, during the first nine months of 2005 compared to 2,058
homes, with a sales value of $385.2 million, during the first nine
months of 2004. The average home sale price was $190,000 for the
first nine months of 2005 compared to $187,200 for the first nine
months of 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 Nine
Months Ended September 30, September 30, 2005 2004 2005 2004
------------------------------------------- Revenues $106,330
$162,623 $304,180 $426,476 Cost of real estate sold 84,720 126,383
239,580 329,232 ---------- ---------- ---------- ---------- Gross
profit 21,610 36,240 64,600 97,244 Selling, general and
administrative 16,059 20,972 49,351 59,769 ---------- ----------
---------- ---------- Income from operations 5,551 15,268 15,249
37,475 Interest expense 3,318 2,389 8,801 6,180 ----------
---------- ---------- ---------- Income before income taxes 2,233
12,879 6,448 31,295 Provision for income taxes 1,059 5,377 2,113
12,116 ---------- ---------- ---------- ---------- Net income
$1,174 $7,502 $4,335 $19,179 ========== ========== ==========
========== Earnings per share Basic $0.15 $0.94 $0.54 $2.40
========== ========== ========== ========== Diluted $0.14 $0.91
$0.53 $2.34 ========== ========== ========== ========== Weighted
average shares outstanding Basic 8,074,722 8,008,556 8,058,226
7,981,174 ========== ========== ========== ========== Diluted
8,207,177 8,222,127 8,207,535 8,178,974 ========== ==========
========== ========== Consolidated Balance Sheets September 30,
December 31, 2005 2004 (Unaudited) -------------- --------------
ASSETS Cash and cash equivalents $5,983 $6,710 Accounts receivable
4,154 4,521 Real estate inventories 453,597 416,519 Prepaid
expenses and other 10,944 6,503 Deferred income taxes 560 2,685 Net
property and equipment 6,058 7,542 -------------- --------------
Total assets $481,296 $444,480 ============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY Note payable, banks $225,987
$194,378 Term debt 14,227 5,819 Other liabilities 46,661 55,386
-------------- -------------- Total liabilities 286,875 255,583
Total shareholders' equity 194,421 188,897 --------------
-------------- Total liabilities and shareholders' equity $481,296
$444,480 ============== ============== Lot Inventory as of
September 30, 2005 Unimproved Finished Lots Under Land Total Land
Inventory Lots Development Estimated Lots Estimated Lots
----------------- ---------- ----------- --------------
-------------- Owned by the Company: Central Ohio 1,797 1,626 9,979
13,402 Kentucky 445 481 1,048 1,974 Controlled by the Company:
Central Ohio - - 2,379 2,379 Kentucky - - 208 208 Held for sale:
Central Ohio - - 1,047 1,047 Kentucky - - 204 204
---------------------------------------------------- Total Land
Inventory 2,242 2,107 14,865 19,214 ========== ===========
============== ============== In addition to the above estimated
lot inventory, the Company was in the process of evaluating
additional cancelable contractual obligations for which it had not
determined if it is reasonably likely that it will complete the
land or lot purchase. *T
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