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Comstock Homebuilding Companies, Inc. Reports $0.81 Diluted Earnings Per Share for Third Quarter 2005

11/07/2005

Comstock Homebuilding Companies, Inc. Reports $0.81 Diluted Earnings Per Share for Third Quarter 2005

For the nine months ended September 30, 2005 the Company reported earnings per share of $1.47 (basic) and $1.45 (diluted). On a pro forma basis, adjusted for tax rates and share counts, earnings per share for the nine months ended September 30, 2004 were $0.53 (basic) and $0.52 (diluted).

The Company will conduct a conference call for interested investors on Monday, November 7, 2005, at 4:45 PM Eastern Standard Time. During the call the Company will discuss the financial results and earnings guidance detailed in this release. The dial-in number for the conference call is 800-299-8538 and the access code is 89191233; the call may also be accessed on the Internet at http://www.comstockhomebuilding.com in the Investor Relations section.

    Highlights of Financial Results - Three months ended September 30, 2005:

    * The Company generated basic earnings per share for the quarter of $0.82
      on shares outstanding of 14.0 million and diluted earnings per share of
      $0.81 on shares outstanding of 14.2 million;

    * Total revenue for the quarter was $78.4 million with $72.4 million of
      revenue derived from homebuilding, as compared to total revenue of $25.8
      million for the three months ended September 30, 2004 with $23.4 million
      of revenue derived from homebuilding.  This represents a 204% increase
      in total revenue and a 210% increase in revenue from homebuilding;

    * The Company delivered 202 new homes in the quarter at an average per
      unit revenue of approximately $358,000 as compared to 74 new homes at an
      average per unit revenue of $316,000 during the three months ended
      September 30, 2004;

    * Gross profit from all revenue was $24.5 million for the quarter
      representing a 31.2% gross margin.  Gross profit from condominium
      conversions was $3.4 million representing gross margin of 13.7%.
      Exclusive of condominium conversions gross profit for the quarter was
      $21.1 million representing a gross margin of 39.2%.  Gross profit for
      the three months ended September 30, 2004, during which there was no
      condominium conversion revenue, was $10.2 million representing a 39.3%
      gross margin;

    * The Company sold 19 lots at its Woodlands of Round Hill project
      (previously known as the Hamlets of Blue Ridge) contributing to $6.0
      million of other revenue and a 48.3% gross margin from other revenue;

    * Operating income was $17.9 million for the quarter representing a 22.8%
      operating margin as compared to operating income of $7.5 million and an
      operating margin of 29.1% for the three months ended September 30, 2004.
      Selling, general and administrative expenses for the quarter were $6.6
      million representing 8.4% of total revenue as compared to $2.6 million
      representing 10.2% of total revenue for the three months ended September
      30, 2004.


    Highlights of Financial Results - Nine months ended September 30, 2005:

    * The Company generated basic earnings per share for the nine months of
      $1.47 on weighted average shares outstanding of 12.5 million and diluted
      earnings per share of $1.45 on weighted average shares outstanding of
      12.7 million;

    * Total revenue for the nine months was $147.1 million with $140.5 million
      of revenue derived from homebuilding, as compared to total revenue of
      $74.8 million for the nine months ended September 30, 2004 with $67.6
      million of revenue derived from homebuilding.  This represents a 96.6%
      increase in total revenue and a 107.6% increase in revenue from
      homebuilding;

    * The Company delivered 403 homes during the nine months at an average per
      unit revenue of approximately $349,000 as compared to 208 homes at an
      average per unit revenue of $325,000 during the nine months ended
      September 30, 2004;

    * Gross profit from all revenue was $45.9 million for the nine months
      representing a 31.2% gross margin.  Gross profit from condominium
      conversions was $6.0 million representing gross margin of 13.9%.
      Exclusive of condominium conversions gross profit for the nine months
      was $39.9 million representing a gross margin of 38.3%.  Gross profit
      for the nine months ended September 30, 2004, during which there was no
      condominium conversion revenue, was $24.7 million representing a 33.1%
      gross margin;

    * Operating income was $28.6 million for the nine months representing a
      19.5% operating margin as compared to operating income of $15.2 million
      and an operating margin of 20.3% for the nine months ended September 30,
      2004.  Selling, general and administrative expenses for the nine months
      were $17.2 million representing 11.7% of total revenue as compared to
      $9.5 million representing 12.8% of total revenue for the nine months
      ended September 30, 2004;

    * Backlog revenue at September 30, 2005 was $231.8 million on 567 sold
      units of which approximately $148 million is derived from 371 sold units
      at the Company's Eclipse on Center Park at Potomac Yard project.

"We are extremely pleased with the results of this quarter," said Christopher Clemente, Chairman and CEO. "We delivered 202 homes this quarter alone which represents a record for the company and is in keeping with the growth strategy we have been implementing over the past several years. We feel confident that our inventory is well positioned to continue to provide growth for us. We believe that demand for affordable housing in our core market, the Greater Washington, DC region, will continue as a result of job growth and population growth in the region. Our concentration over the past two years on providing affordably priced product has provided an opportunity for our primary target markets of first time and early move-up buyers to find a home they can afford in a desirable location. Our recent entry into the condominium conversion business has been very successful. The conversion projects we are currently marketing have helped us meet an immediate demand for affordable housing in supply constrained locations. We believe that as long as job growth is strong and incomes remain high, housing demand will continue in the Washington area. We are excited about our prospects for growth throughout the region over the next several years."

About Comstock Homebuilding Companies, Inc.

Comstock is a production homebuilder and real estate developer that develops, builds, and markets single-family homes, townhouses, mid-rise condominiums and high-rise condominiums. The Company currently operates in the Washington, D.C. and Raleigh, North Carolina markets where it targets a diverse range of buyers, including first-time, early move-up, secondary move- up, empty nester move-down and active adult home buyers. For more information on Comstock, please visit http://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. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "may," "will," "expects," "projects," "anticipates," "estimates," "believes," "intends," "plans," "should," "seeks," and similar expressions, including statements related to Comstock's expected future financial results and anticipated growth in the Washington, D.C. housing market, are forward-looking statements. 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. These risks and uncertainties include, but are not limited to, economic, market and competitive conditions affecting Comstock and its operations and products, risks and uncertainties relating to the market for real estate generally and in the areas where Comstock has projects, the availability and price of land suitable for development, materials prices, labor costs, interest rates, Comstock's ability to service its significant debt obligations, fluctuations in operating results, anticipated growth strategies, continuing relationships with affiliates, environmental factors, government regulations, the impact of adverse weather conditions or natural disasters and acts of war or terrorism. Additional information concerning these and other important risks and uncertainties can be found under the heading "Risk Factors" in the prospectus from Comstock's initial public offering, as filed with the Securities and Exchange Commission on December 15, 2004. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

    Financial Results from Operations


Note: The Company's results pre-IPO are referred to as "Predecessor" in the Company's financial statements.

                                 Three Months Ended       Nine Months Ended
    Comstock Homebuilding             Sept 30,                Sept 30,
     Companies, Inc.
    (In thousands US dollars,     2005        2004        2005        2004
     except per share data)
                                           Predecessor             Predecessor
    Revenues
     Sale of real estate -
      Homes                     $  72,409   $  23,395   $ 140,473   $  67,649
     Other revenue                  6,028       2,437       6,604       7,165
    Total revenue                  78,437      25,832     147,077      74,814

    Expenses
     Cost of sales of real
      estate                       50,838      13,897      98,087      44,665
     Cost of sales of other         3,118       1,773       3,138       5,419
     Selling, general and
      administrative                6,562       2,636      17,222       9,546

    Operating income               17,919       7,526      28,630      15,184
    Other (income) expense, net      (463)        241        (653)        301

    Income before minority
     interest and equity in
     earnings of real estate
     partnerships                  18,382       7,285      29,283      14,883
    Minority interest                   6       1,812          14       4,360

    Income before equity in
     earnings of real estate
     partnerships                  18,376       5,473      29,269      10,523

    Equity in earnings of real
     estate partnerships               48          35          82          93

    Total pre tax income           18,424       5,508      29,351      10,616
    Income Taxes                    6,941           -      10,993           -

    Net Income                  $  11,483   $   5,508   $  18,358   $  10,616

    Basic earnings per share         0.82        0.78        1.47        1.50

    Basic weighted average
     shares outstanding            13,987       7,067      12,491       7,067

    Diluted earnings per share       0.81        0.78        1.45        1.50

    Diluted weighted average
     shares outstanding            14,168       7,067      12,653       7,067

    Proforma basic earnings per
     share - adjusted for tax
     and share count                 0.82        0.25        1.47        0.53

    Proforma diluted earnings
     per share - adjusted for
     tax and share count             0.81        0.24        1.45        0.52

SOURCE Comstock Homebuilding Companies, Inc.

CONTACT: Carrie Blewitt, +1-202-448-3129, or [email protected], for
Comstock Homebuilding Companies, Inc.

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