Dominion Homes, Inc. (NASDAQ:DHOM) today announced financial
results for the three months ended March 31, 2006. Highlights for
the first quarter of 2006 compared to the first quarter of 2005
included: -- A net loss of $3.9 million, or $0.49 per diluted
share, versus net income of $642,000, or $0.08 per diluted share;
-- Revenues of $61.8 million, from the delivery of 315 homes,
versus revenues of $92.6 million, from the delivery of 478 homes;
-- Sales of 475 homes, with a sales value of $89.3 million, versus
sales of 626 homes, with a sales value of $120.8 million; -- A
backlog of 590 sales contracts, with an aggregate sales value of
$118.2 million, versus a backlog of 780 sales contracts, with an
aggregate sales value of $157.8 million; -- The sale of a majority
interest in Centennial Home Mortgage, LLC, to Wells Fargo Bank
N.A., that resulted in a $1.8 million pretax gain ($1.1 million
aftertax gain) to the Company during the first quarter of 2006. The
net loss for the first quarter of 2006 is principally due to the
delivery of fewer homes than was expected and a decline in the
gross profit margin due to competitive pricing pressure. Home sales
generally remained slow in the Company's markets. Douglas G.
Borror, Chief Executive Officer, commented, "Based on the level of
sales we are currently experiencing, we do not expect that 2006
will be a profitable year. However, we are undertaking several
initiatives to reduce the expected loss and position the Company
for future success. We've made significant progress on our product
initiatives including active adult, multi-family, and first
time/move up buyer series. We remain focused on reducing overhead
expenses, managing land development and acquisition costs,
improving sales, and operating our business and inventories at a
level consistent with reduced sales levels." The Company will host
a conference call on May 9, 2006, at 10:00 a.m. Eastern Time to
discuss these results and other developments in the business. The
analyst conference call 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 4:00 p.m. Eastern
Time on May 9, 2006 and continuing for approximately 70 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 is
located on its website. First Quarter of 2006 Net Loss The Company
recognized a net loss for the first quarter of 2006 of $3.9
million, or $0.49 per diluted share, compared to net income of
$642,000 or $0.08 per diluted share for the first quarter of 2005.
The loss in the first quarter of 2006 principally reflects fewer
closings and a decline in the gross profit margin. Revenues
Revenues for the first quarter of 2006 were $61.8 million, from the
delivery of 315 homes, compared to $92.6 million, from the delivery
of 478 homes, for the first quarter of 2005. Included in revenues
for the first quarter of 2006 was $724,000 of other income,
principally income from our mortgage financing services subsidiary,
compared to $1.1 million of other income for the first quarter of
2005. The Company's average price of homes delivered during the
first quarter of 2006 increased to $193,800 from $191,500 during
the first quarter of 2005. Selling price increases were partially
offset by an increase in the use of sales discounts in certain
communities and on inventory homes. Gross Profit Gross profit for
the first quarter of 2006 was $9.1 million compared to $18.7
million for the first quarter of 2005. The reduction in gross
profit is attributable to the delivery of 163 fewer homes and a
5.5% decline in the gross profit margin. We also faced pricing
pressure in our markets, particularly in Columbus, where most of
our competitors were offering significant discounts in late 2005
that continued during the first quarter of 2006. Gross profit for
the first quarter of 2006 and 2005 was reduced by approximately
$550,000 and $956,000, respectively, related to deposits and due
diligence costs incurred for land we decided not to purchase and
net realizable value reserves for land held for sale. Selling,
General and Administrative Expenses Selling, general and
administrative expenses for the first quarter of 2006 declined $1.2
million to $14.8 million compared to $16.0 million for the first
quarter of 2005. This decrease resulted principally from continued
attention to reducing all components of overhead to better align
our operations with the current sales level. Gain on Sale of
Investment in Centennial Home Mortgage, LLC On March 31, 2006 the
Company, Dominion Homes Financial Services, Ltd., Wells Fargo Bank
N.A. and its wholly owned subsidiary Wells Fargo Ventures, Inc.
formed a new joint venture, Centennial Home Mortgage, LLC, which
will operate as a full service mortgage bank for the Company's
customers and the general public. The Company recognized a gain of
$1.8 million as a result of a sale of a 50.1% interest in the joint
venture to Wells Fargo. The Company continues to own the remaining
49.9% interest in the joint venture. The joint venture will utilize
Wells Fargo's underwriting expertise, quality control practices,
software systems, operating policies and training programs. The
Company is in the process of exiting the operations of Dominion
Homes Financial Services, Ltd. and expects to complete the
processing of the current pipeline of loan activity by the third
quarter of 2006. Sales The Company sold 475 homes, with a sales
value of $89.3 million, during the first quarter of 2006 compared
to 626 homes, with a sales value of $120.8 million, during the same
period the previous year. The average home sale price for the first
quarter of 2006 was $188,000 compared to $193,000 for the first
quarter of 2005. Backlog at March 31, 2006 was 590 sales contracts,
with a sales value of $118.2 million, compared to 780 sales
contracts, with a sales value of $157.8 million, at March 31, 2005.
The average sales price of homes in backlog at March 31, 2006 was
$200,300 compared to $202,300 at March 31, 2005. The Company had 67
active sales communities at March 31, 2006 compared to 62 at March
31, 2005. 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,
changes in national or local economic conditions, changes in
federal lending programs, 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, 2005. 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
Consolidated Statements of Operations (Unaudited) (In thousands,
except share and per share amounts) Three Months Ended March 31,
2006 2005 ---------- ---------- Revenues $61,785 $92,643 Cost of
real estate sold 52,711 73,949 ---------- ---------- Gross profit
9,074 18,694 Selling, general and administrative 14,773 16,048
---------- ---------- Income (loss) from operations (5,699) 2,646
Gain on sale of investment in Centennial Home Mortgage, LLC 1,800 -
Interest expense (2,308) (1,691) ---------- ---------- Income
(loss) before income taxes (6,207) 955 Provision for income taxes
(2,261) 313 ---------- ---------- Net income (loss) $(3,946) $642
========== ========== Earnings per share (loss) Basic $(0.49) $0.08
========== ========== Diluted $(0.49) $0.08 ========== ==========
Weighted average shares outstanding Basic 8,094,705 8,044,986
========== ========== Diluted 8,094,705 8,207,768 ==========
========== Consolidated Balance Sheets (In thousands) March 31,
December 31, 2006 2005 (unaudited) ------------------------ Assets
Cash and cash equivalents $2,442 $3,554 Accounts receivable 3,988
4,889 Real estate inventories 421,823 426,275 Prepaid expenses and
other 8,827 8,792 Deferred income taxes 1,258 1,485 Net property
and equipment 6,198 6,562 ----------- ------------ Total assets
$444,536 $451,557 =========== ============ Liabilities and
Shareholders' Equity Note payable, banks $215,424 $205,240 Term
debt 9,300 9,300 Other liabilities 27,626 41,484 -----------
------------ Total liabilities 252,350 256,024 -----------
------------ Shareholders' equity 192,189 195,533 -----------
------------ Total liabilities and shareholders' equity $444,536
$451,557 =========== ============ Estimated Land Inventory as of
March 31, 2006 Unimproved Finished Lots Under Land Total Land
Inventory Lots Development Estimated Lots Estimated Lots
------------------- -------- ----------- --------------
-------------- Owned by the Company: Central Ohio 1,685 1,076
10,228 12,989 Kentucky 317 440 1,044 1,801 Controlled by the
Company: Central Ohio 1,793 1,793 Kentucky 200 200 Held for sale:
Central Ohio 434 434 Kentucky 46 48 94
-------------------------------------------------- Total Land
Inventory 2,020 1,562 13,747 17,311 ======== ===========
============== ============== *T
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