Harbor Custom Development, Inc. (“Harbor,” “Harbor Custom Homes®,”
or the “Company”), (NASDAQ: HCDI; HCDIP; HCDIW, HCDIZ), an
innovative and market leading real estate company involved in all
aspects of the land development cycle, today announced its
financial results for the first quarter ended March 31, 2022.
First Quarter 2022 Financial Highlights
Compared to First Quarter 2021
- Consolidated net sales of $28.6
million compared to $13.9 million
- Gross profit of $6.1 million
compared to $0.6 million
- Gross margin of 21.2% compared to
4.4%
- Net income of $1.6 million compared
to a net loss of $(1.5) million
- Basic loss per share (EPS) of
$(0.03) compared to $(0.12)
- EBITDA of $3.5 million compared to
$0.1 million
- Adjusted EBITDA of $3.9 million
compared to $0.2 million
Full Year 2022 Outlook
Estimate
- 2022 revenue expectations remain at
approximately $160 million
- 2022 Adjusted EBITDA expectation
remains at approximately $20 million
Harbor Custom Development’s President and CEO, Sterling Griffin
stated, “We are extremely pleased with our team’s performance
during the first quarter 2022. We again achieved a new quarterly
record for top line sales coming in at $28.6 million, continuing
the momentum from 2021. Our unique and flexible business model
enabled us to achieve top line revenue growth of 106.0% on a
year-over-year basis through the sale of entitled land, developed
lots, single-family homes and fee build income. Our diverse revenue
stream further validates our distinct business plan of monetizing
our real estate assets at the most opportune time during the
development life cycle.”
On a year-over-year basis, the Company also improved gross
profit, gross margin, operating expenses as a percentage of sales,
operating income, net income, EBITDA, and Adjusted EBITDA.
During the quarter, the Company continued to diversify
geographically with the closing of the first two home sales in
Texas with sales prices of approximately $400 per square foot.
Further, the Company has continued to expand its product lines
through the recent listing of six multi-family projects in Western
Washington for $278 million. Mr. Griffin further commented, “As
apartment values continue to escalate to unprecedented levels, we
are well positioned to capitalize on this significant market
opportunity.”
Results for the First Quarter 2022
Net sales for the first quarter 2022 increased by 106.0% to
$28.6 million, compared to net sales of $13.9 million for the first
quarter 2021. This increase was largely due to increases in home
sales of $5.5 million, entitled land sales of $4.5 million, fee
build revenues of $2.7 million, and sales of developed lots of $2.1
million.
Gross profit for the first quarter 2022 increased to $6.1
million compared to $0.6 million for the first quarter 2021. Gross
margin for the first quarter 2022 improved to 21.2%, compared to
4.4% for the first quarter 2021. The $5.4 million increase in gross
profit was primarily attributable to the increase in sales
year-over-year, with entitled land sales having the largest impact.
The 16.8% increase in gross margin was primarily driven by the
significant margins attributable to the sale of entitled land.
Operating expenses for the first quarter 2022 were $3.8 million
compared to $2.0 million for the first quarter 2021. This expected
increase in operating expenses is primarily attributable to
increases associated with the continued investment in public
company infrastructure and our future growth plans, including
payroll related costs, professional fees, marketing and
advertising, and right of use expense for the new corporate office,
as well as stock compensation and depreciation expense. Operating
expenses as a percentage of sales for the first quarter 2022 were
13.4% compared to 14.8% for the first quarter 2021. The improvement
in operating expenses as a percentage of sales is primarily due to
the increased sales year-over-year which have allowed us to scale
the business at a rate that is favorable to operating expenses
incurred.
For the first quarter 2022, net income was $1.6 million compared
to net loss of $(1.5) million for the first quarter 2021. Net loss
attributable to common stockholders was $(0.4) million or $(0.03)
basic EPS compared to $(1.5) million or $(0.12) loss per share.
EBITDA for the first quarter 2022 increased 2,967.0% to $3.5
million compared to EBITDA of $0.1 million for the first quarter
2021. Adjusted EBITDA, which excludes the impact of stock
compensation and other non-recurring costs, for the first quarter
2022 increased by 1,600.0% to $3.9 million compared to $0.2 million
for the first quarter 2021. For the first quarter 2022, Adjusted
EBITDA as a percentage of net sales was 13.6% compared to 1.7% for
the first quarter 2021.
Full Year 2022 Outlook Estimate
Based on our first quarter results, we reiterate our previously
announced 2022 revenue guidance of approximately $160 million and
Adjusted EBITDA guidance of approximately $20 million.
Reconciliation of the forward-looking full year 2022 Adjusted
EBITDA estimate to net income is not being provided as we do not
currently have sufficient data to accurately estimate the variables
and individual adjustments for such reconciliation. Our management
cannot estimate on a forward-looking basis without unreasonable
effort the impact these variables and individual adjustments will
have on our reported net income and reported effective tax rate
because these items, which could be significant, are difficult to
predict and highly variable.
Financial Results Conference Call
Details
Harbor will host a live conference call on Thursday, May 12,
2022, at 9:30 a.m. PT (12:30 p.m. ET) to elaborate on the first
quarter results and the Company’s outlook. The public may access
the conference call through a live audio webcast available at
https://investors.harborcustomhomes.com/events. Those who would
like to submit written questions in advance, please email:
IR@harborcustomdev.com. The conference call will be available by
telephone at 1-877-407-0789 (for international callers, dial
1-201-689-8562), and refer to “Harbor” or conference ID: 13729493.
A replay of the conference call will be available for two weeks at
1-844-512-2921 (for international callers, dial 1-412-317-6671)
using the replay PIN: 13729493.
About Harbor Custom Development, Inc.
Harbor Custom Development, Inc. is a real estate development
company involved in all aspects of the land development cycle
including land acquisition, entitlements, construction of project
infrastructure, home building, marketing, sales, and management of
various residential projects in Western Washington's Puget Sound
region; Sacramento, California; Austin, Texas; and Punta Gorda,
Florida. As a land developer and builder of apartments,
condominiums, single-family homes, and luxury homes, Harbor Custom
Development’s business strategy is to acquire and develop land
strategically based on an understanding of population growth
patterns, entitlement restrictions, infrastructure development, and
geo-economic forces. Harbor focuses on acquiring land with scenic
views to develop and sell residential lots, new home communities,
and multi-story condominium and apartment properties within a 20-
to 60-minute commute of the nation’s fastest-growing metro
employment corridors. Harbor is leading the real estate industry as
the first national land developer and home builder accepting
payment in the form of cryptocurrency for its listed properties.
For more information on Harbor Custom Development, Inc., please
visit www.harborcustomdev.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements relate to, but are not limited to,
expectations of future operating results and financial performance,
including GAAP and non-GAAP guidance for the year ending December
31, 2022, the calculation of certain of our key financial and
operating metrics and expectations regarding sales of inventory, as
well as assumptions relating to the foregoing. Forward-looking
statements are inherently subject to risks and uncertainties, some
of which cannot be predicted or quantified. In some cases, you can
identify forward-looking statements by terminology such as “may,”
“should,” “could,” “expect,” “plan,” anticipate,” “believe,”
“estimate, “predict,” “target,” “project,” “intend,” “potential,”
“would,” “continue,” “ongoing,” or the negative of these terms or
other comparable terminology that concerns our expectations,
strategy, priorities, plans, or intentions. You should not put
undue reliance on any forward-looking statements. Forward-looking
statements should not be read as a guarantee of future performance
or results and will not necessarily be accurate indications of the
times at, or by, which such performance or results will be
achieved, if at all. These forward-looking statements are subject
to various risks and uncertainties, including without limitation
complications due to COVID-19 which could cause delays in dates of
completion or closings, changes in the real estate industry such as
increases in mortgage interest rates which could dampen residential
home purchases, and those risks and uncertainties set forth in the
Company’s filings with the Securities and Exchange Commission.
Thus, actual results could be materially different. This document
includes statements of summarized financial projections. There will
be differences between the projected and actual results because
events and circumstances frequently do not occur as expected and
those differences may be material. The Company expressly disclaims
any obligation to update or alter statements whether as a result of
new information, future events, or otherwise, except as required by
law.
Use of Non-GAAP Financial
Measures
This press release and the financial information contained
herein include EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin,
which are financial measures that have not been calculated in
accordance with accounting principles generally accepted in the
United States, (GAAP), and are therefore referred to as non-GAAP
financial measures. We have provided definitions for these non-GAAP
financial measures and tables in the schedules hereto to reconcile
these non-GAAP financial measures to the comparable GAAP financial
measures.
We believe that these non-GAAP financial measures provide
valuable information regarding our earnings and business trends by
excluding specific items that we believe are not indicative of the
ongoing operating results of our businesses, providing a useful way
for investors to make a comparison of our performance over time and
against other companies in our industry.
We have provided these non-GAAP financial measures as
supplemental information to our GAAP financial measures and believe
these non-GAAP measures provide investors with additional
meaningful financial information regarding our operating
performance and cash flows. Our management and board of directors
also use these non-GAAP measures as supplemental measures to
evaluate our businesses and the performance of management,
including the determination of performance-based compensation, make
operating and strategic decisions, and to allocate financial
resources. We believe that these non-GAAP measures also provide
meaningful information for investors and securities analysts to
evaluate our historical and prospective financial performance.
These non-GAAP measures should not be considered a substitute for
or superior to GAAP results. Furthermore, the non-GAAP measures
presented by us may not be comparable to similarly titled measures
of other companies.
Investor RelationsHanover
InternationalIR@harborcustomdev.com 866-744-0974
|
HARBOR CUSTOM DEVELOPMENT, INC. AND
SUBSIDIARIES |
D/B/A HARBOR CUSTOM HOMES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Cash |
$ |
22,274,900 |
|
|
$ |
25,629,200 |
|
Restricted Cash |
|
597,600 |
|
|
|
597,600 |
|
Accounts Receivable, net |
|
1,177,200 |
|
|
|
1,113,500 |
|
Contract Assets, net |
|
2,639,100 |
|
|
|
2,167,200 |
|
Notes Receivable |
|
12,746,800 |
|
|
|
2,000,000 |
|
Prepaid Expense and Other Assets |
|
2,526,000 |
|
|
|
2,778,100 |
|
Real Estate |
|
129,069,400 |
|
|
|
122,136,100 |
|
Property, Plant and Equipment, net |
|
9,938,400 |
|
|
|
9,199,700 |
|
Right of Use Assets |
|
2,535,000 |
|
|
|
3,429,700 |
|
Deferred Tax Assets |
|
1,014,100 |
|
|
|
649,000 |
|
TOTAL ASSETS |
$ |
184,518,500 |
|
|
$ |
169,700,100 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
Accounts Payable and Accrued Expenses |
$ |
15,917,300 |
|
|
$ |
10,662,800 |
|
Dividends Payable |
|
670,900 |
|
|
|
670,900 |
|
Deferred Revenue |
|
123,000 |
|
|
|
44,800 |
|
Revolving Line of Credit Loan, net of Debt Discount of $1.1M and $0
respectively |
|
10,987,000 |
|
|
|
— |
|
Equipment Loans |
|
5,167,600 |
|
|
|
5,268,500 |
|
Note Payable D&O Insurance |
|
519,400 |
|
|
|
903,800 |
|
Finance Leases |
|
129,900 |
|
|
|
543,400 |
|
Construction Loans, net of Debt Discount of $1.6M and $4.4M
respectively |
|
37,080,400 |
|
|
|
34,957,100 |
|
Construction Loans - Related Party, net of Debt Discount of $0.03M
and $1.1M respectively |
|
10,940,200 |
|
|
|
13,426,600 |
|
Right of Use Liabilities |
|
3,361,200 |
|
|
|
3,484,400 |
|
TOTAL LIABILITIES |
$ |
84,896,900 |
|
|
$ |
69,962,300 |
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
Preferred Stock, No Par, 10,000,000 shares authorized and 4,016,955
issued and outstanding at March 31, 2022 and December 31, 2021 |
$ |
66,507,500 |
|
|
$ |
66,507,500 |
|
Common Stock, No Par, 50,000,000 shares authorized and 13,237,179
outstanding at March 31, 2022 and 13,155,342 issued and outstanding
at December 31, 2021 |
|
32,133,200 |
|
|
|
32,122,700 |
|
Additional Paid In Capital |
|
993,200 |
|
|
|
752,700 |
|
Retained Earnings (Accumulated Deficit) |
|
(12,300 |
) |
|
|
1,646,500 |
|
Total Stockholders’ Equity |
|
99,621,600 |
|
|
|
101,029,400 |
|
Non-Controlling Interest |
|
— |
|
|
|
(1,291,600 |
) |
TOTAL STOCKHOLDERS’
EQUITY |
|
99,621,600 |
|
|
|
99,737,800 |
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
$ |
184,518,500 |
|
|
$ |
169,700,100 |
|
|
|
|
|
|
|
|
|
HARBOR CUSTOM DEVELOPMENT, INC. AND
SUBSIDIARIES |
D/B/A HARBOR CUSTOM HOMES |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) |
|
|
|
|
|
For the Three Months EndedMarch 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
Sales |
$ |
28,581,000 |
|
|
$ |
13,874,200 |
|
|
|
|
|
Cost of Sales |
|
22,526,300 |
|
|
|
13,267,000 |
|
|
|
|
|
Gross Profit |
|
6,054,700 |
|
|
|
607,200 |
|
|
|
|
|
Operating Expenses |
|
3,839,300 |
|
|
|
2,049,800 |
|
|
|
|
|
Operating Income (Loss) |
|
2,215,400 |
|
|
|
(1,442,600 |
) |
|
|
|
|
Other Income (Expense) |
|
|
|
Loss on Sale of Equipment |
|
— |
|
|
|
(35,900 |
) |
Other Income |
|
7,900 |
|
|
|
27,400 |
|
Interest Income |
|
55,000 |
|
|
|
— |
|
Interest Expense |
|
(124,500 |
) |
|
|
(98,100 |
) |
Total Other Expense |
|
(61,600 |
) |
|
|
(106,600 |
) |
|
|
|
|
Income (Loss) Before Income
Tax |
|
2,153,800 |
|
|
|
(1,549,200 |
) |
|
|
|
|
Income Tax Expense |
|
508,500 |
|
|
|
— |
|
|
|
|
|
Net Income (Loss) |
$ |
1,645,300 |
|
|
$ |
(1,549,200 |
) |
|
|
|
|
Net Income (Loss) Attributable
to Non-controlling interests |
|
(500 |
) |
|
|
600 |
|
Preferred Dividends |
|
(2,012,500 |
) |
|
|
— |
|
|
|
|
|
Net Loss Attributable to
Common Stockholders |
$ |
(366,700 |
) |
|
$ |
(1,549,800 |
) |
|
|
|
|
Loss Per Share - Basic |
$ |
(0.03 |
) |
|
$ |
(0.12 |
) |
Loss Per Share - Diluted |
$ |
(0.03 |
) |
|
$ |
(0.12 |
) |
|
|
|
|
Weighted Average Common Shares
Outstanding - Basic |
|
13,200,758 |
|
|
|
13,269,055 |
|
Weighted Average Common Shares
Outstanding - Diluted |
|
13,200,758 |
|
|
|
13,269,055 |
|
|
|
|
|
|
|
|
|
HARBOR CUSTOM DEVELOPMENT, INC. AND
SUBSIDIARIES |
D/B/A HARBOR CUSTOM HOMES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) |
|
For the Three Months Ended March 31, |
|
|
2022 |
|
|
|
2021 |
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
Net Income (Loss) |
$ |
1,645,300 |
|
|
$ |
(1,549,200 |
) |
Adjustments to reconcile net income (loss) to net cash from
operating activities: |
|
|
|
Depreciation |
|
303,800 |
|
|
|
240,200 |
|
Amortization of right of use assets |
|
195,500 |
|
|
|
70,900 |
|
Lease incentives |
|
260,100 |
|
|
|
— |
|
Loss on sale of equipment |
|
— |
|
|
|
35,900 |
|
Stock compensation |
|
242,400 |
|
|
|
115,100 |
|
Forgiveness on PPP loan |
|
— |
|
|
|
(10,000 |
) |
Amortization of revolver issuance costs |
|
45,700 |
|
|
|
— |
|
Net change in assets and liabilities: |
|
|
|
Accounts receivable |
|
(63,700 |
) |
|
|
43,600 |
|
Retainage receivable |
|
— |
|
|
|
(250,000 |
) |
Contract assets |
|
(471,900 |
) |
|
|
— |
|
Notes receivable |
|
(10,746,800 |
) |
|
|
— |
|
Prepaid expenses and other assets |
|
691,500 |
|
|
|
155,200 |
|
Real estate |
|
(6,347,500 |
) |
|
|
(14,712,100 |
) |
Deferred tax asset |
|
(365,100 |
) |
|
|
— |
|
Accounts payable and accrued expenses |
|
5,254,600 |
|
|
|
(93,800 |
) |
Deferred revenue |
|
78,200 |
|
|
|
(896,300 |
) |
Payments on right of use liability |
|
(123,200 |
) |
|
|
(66,100 |
) |
NET CASH USED IN OPERATING
ACTIVITIES |
|
(9,401,100 |
) |
|
|
(16,916,600 |
) |
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES |
|
|
|
Purchase of property and equipment |
|
(1,042,600 |
) |
|
|
(149,100 |
) |
Proceeds on the sale of equipment |
|
— |
|
|
|
69,500 |
|
NET CASH USED IN INVESTING
ACTIVITIES |
|
(1,042,600 |
) |
|
|
(79,600 |
) |
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
Construction loans |
|
6,640,800 |
|
|
|
4,645,000 |
|
Payments on construction loans |
|
(6,930,800 |
) |
|
|
(5,070,500 |
) |
Financing fees construction loans |
|
(577,500 |
) |
|
|
(92,900 |
) |
Related party construction loans |
|
3,757,300 |
|
|
|
4,708,800 |
|
Payments on related party construction loans |
|
(3,838,700 |
) |
|
|
(4,424,300 |
) |
Financing fees related party construction loans |
|
— |
|
|
|
(376,900 |
) |
Revolving line of credit loan |
|
12,038,900 |
|
|
|
— |
|
Financing fees revolving line of credit loan |
|
(1,097,700 |
) |
|
|
— |
|
Payments on financing leases |
|
(43,500 |
) |
|
|
(101,300 |
) |
Payments on PPP loan |
|
— |
|
|
|
(3,400 |
) |
Repayments on note payable D&O insurance |
|
(384,500 |
) |
|
|
(368,500 |
) |
Net proceeds from issuance of common stock |
|
— |
|
|
|
25,101,000 |
|
Preferred dividends |
|
(2,012,500 |
) |
|
|
— |
|
Payments on equipment loans |
|
(471,000 |
) |
|
|
(415,600 |
) |
Proceeds from exercise of stock options |
|
8,600 |
|
|
|
18,000 |
|
Deferred offering cost |
|
— |
|
|
|
27,300 |
|
NET CASH PROVIDED BY FINANCING
ACTIVITIES |
|
7,089,400 |
|
|
|
23,646,700 |
|
|
|
|
|
NET (DECREASE) INCREASE IN
CASH AND RESTRICTED CASH |
|
(3,354,300 |
) |
|
|
6,650,500 |
|
|
|
|
|
CASH AND RESTRICTED CASH AT
BEGINNING OF PERIOD |
|
26,226,800 |
|
|
|
2,396,500 |
|
|
|
|
|
CASH AND RESTRICTED CASH AT
END OF PERIOD |
$ |
22,872,500 |
|
|
$ |
9,047,000 |
|
|
|
|
|
|
|
|
|
HARBOR CUSTOM DEVELOPMENT, INC. AND
SUBSIDIARIES |
D/B/A HARBOR CUSTOM HOMES |
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
(Unaudited) |
|
|
|
|
|
For the Three Months Ended March 31, |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
Net Income (Loss) |
$ |
1,645,300 |
|
$ |
(1,549,200 |
) |
|
|
|
|
Interest Expense - Cost of
Sales |
|
922,700 |
|
|
1,325,200 |
|
Interest Expense - Other |
|
124,500 |
|
|
98,100 |
|
Depreciation |
|
303,800 |
|
|
240,200 |
|
Amortization |
|
800 |
|
|
— |
|
Tax Expense |
|
508,500 |
|
|
— |
|
EBITDA |
$ |
3,505,600 |
|
$ |
114,300 |
|
|
|
|
|
Stock compensation |
|
242,400 |
|
|
115,000 |
|
Other non-recurring costs |
|
150,200 |
|
|
— |
|
Total Add backs |
|
392,600 |
|
|
115,000 |
|
Adjusted EBITDA |
$ |
3,898,200 |
|
$ |
229,300 |
|
|
|
|
|
|
|
|
EBITDA is defined as consolidated net income (loss) before
interest, taxes, depreciation, and amortization.
Adjusted EBITDA is defined as consolidated net income (loss)
before interest, taxes, depreciation, and amortization,
equity-based compensation expense and other non-recurring costs,
which are deemed to be transitional in nature or not related to our
core operations.
Adjusted EBITDA margin is Adjusted EBITDA as a percentage of
sales.
Harbor Custom Development (NASDAQ:HCDI)
Historical Stock Chart
From Aug 2024 to Sep 2024
Harbor Custom Development (NASDAQ:HCDI)
Historical Stock Chart
From Sep 2023 to Sep 2024