For the twelve months ended December 31, 2007 the Company reported a
net loss of $(87.5) million or ($5.42) per share basic and diluted on
total revenue of $266.2 million as compared to a net loss of $(39.8)
million or ($2.63) per share basic and diluted on revenue of $245.9
million for the twelve months ended December 31, 2006. In connection
with these results the Company announced that it had elected to
record non-cash impairment and write-off charges of $78.3 million, or
$2.96 per share after tax based on a 39% tax rate, for the twelve
months ended December 31, 2007 as compared to charges of $57.4
million, or $2.31 per share after tax based on a 39% tax rate, for
the twelve months ended December 31, 2006. Exclusive of impairment
and write-off charges the Company posted an operating loss of $(13.8)
million for the twelve months ended December 31, 2007 as compared to
an operating loss of $(8.3) million for the twelve months ended
December 31, 2006.
In addition, at December 31, 2007 the Company had recorded a $29.2
million valuation allowance against its deferred tax asset, an
increase of $28.7 million as compared to December 31, 2006. This
increase in the Company's deferred tax asset valuation allowance
represented, on a pro-forma basis, approximately $(1.78) per share of
the loss.
The Company noted that during the twelve months ended December 31,
2007 it reduced its debt by $124.2 million to $171.2 million as
compared to $295.4 million at December 31, 2006. The company's net
debt-to-cap ratio at December 31, 2007 was 75.5% as compared to 65.4%
at December 31, 2006. The Company indicated that it had received all
necessary waivers and/or forbearances from its lenders with respect
to its December 31, 2007 loan covenants.
As previously reported, on March 14, 2008 the Company closed on a new
$40.0 million revolving loan facility with KeyBank National
Association. The proceeds from the new loan were used to refinance
the Company's Eclipse at Potomac Yard and Towns at Station View
projects, provide financing for the restructure of the Company's
$30.0 million senior unsecured notes; pay fees and expenses
associated with the new loan and provide working capital to the
Company.
In connection with the closing of the new loan with KeyBank, and as
previously disclosed, the Company executed on its option to
restructure its $30.0 million senior unsecured notes. Under the
terms of the restructuring, the Company made a $6.0 million payment
to the noteholder, entered into an amended and restated indenture for
$9.0 million and issued the noteholder a warrant to purchase 1.5
million shares of the Company's Class A common stock at a price of
$0.70 per share. In exchange, the noteholder reduced the outstanding
amount due under the notes by an additional $15.0 million.
The Company also announced that in February 2008, based on its
taxable losses for 2007, it had filed for a $13.9 million refund of
federal and state taxes paid in connection with the Company's 2005
fiscal year. The refunds were received in March 2008.
"Last year was a difficult year for our company and the home building
industry by any measure. However, we are confident that the actions
we took during 2007 improve our outlook for future periods," said
Christopher Clemente, Chairman and Chief Executive Officer. "We
reduced debt by nearly one third while obtaining meaningful
concessions from most of our lenders, we significantly reduced
operating expenses and production costs, we enhanced liquidity by
maximizing our tax refund, we reduced the burden of debt service by
temporarily repositioning several projects as rental properties and
selling certain other assets, and accelerated recognition of future
period expenses where practical. We also negotiated a $15 million
discount to our $30 million senior unsecured notes, revalued the
assets we continue to hold through the recognition of impairments
based on a 17% discount model and aggressively sold inventory of
speculative units. While market conditions remain challenging we
believe we have positioned Comstock for improving results in future
periods."
The Company will hold an investor conference call on Tuesday, March
25, 2008 at 1:00 p.m. Eastern Time hosted by Christopher Clemente,
Chief Executive Officer, and Bruce Labovitz, Chief Financial Officer.
The domestic dial-in number is 800-769-8320 and the international
dial-in is 416-695-9719. There is no access code required. Investors
are advised to join at least five minutes prior to the call to
register. The call will also be available via live webcast on the
Comstock Homebuilding Companies' website at
http://www.comstockhomebuilding.com in the "Investor Relations"
section. The call will be archived for seven days: from 5:00 p.m. on
March 25, 2008, until 11:59 p.m. on April 1, 2008. Domestic callers
can access the replay at 800-408-3053 and international callers can
access the replay at 416-695-5800. The replay access code is 3253806.
Selected Highlights of Financial Results - Twelve months ended
December 31, 2007:
In connection with their unqualified opinion regarding the Company's
2007 audit, the Company's independent registered public accounting
firm, PricewaterhouseCoopers, indicated their belief that declining
market conditions and the significant amount of the Company's debt
which matures in 2008 creates substantial doubt that the Company
would continue operating as a going concern. The Company's financials
are nonetheless prepared assuming that the Company will continue as a
going concern.
-- The Company reported a net loss of $(87.5) million or ($5.42) per
share basic and diluted on weighted average shares outstanding of 16.1
million as compared to a net loss of $(39.8) million or ($2.63) per share
basic and diluted on 15.1 million weighted average shares outstanding for
the twelve months ended December 31, 2006;
-- As a result of softening market conditions and project repositioning
in the Company's markets, the Company elected to record $78.3 million of
non-cash impairment and write-off charges as compared to $57.4 million for
the twelve months ended December 31, 2006. On a pro-forma basis, before
impairments and write-offs, the Company's operating loss would have been
$(11.8) million as compared to an operating loss of $(7.0) million for the
twelve months ended December 31, 2006;
-- Total revenue was $266.2 million with revenue from homebuilding
representing $232.8 million, or 87.5% of total revenue, as compared to
total revenue of $245.9 million for the twelve months ended December 31,
2006 with revenue from homebuilding representing $240.1 million, or 97.6%
of total revenue;
-- Gross margin on total revenue was 7.8% as compared to 11.9% for the
twelve months ended December 31, 2006. Gross margin from homebuilding
revenue was 9.3% as compared to 11.9% for the twelve months ended December
31, 2006;
-- SG&A was $34.7 million, or 13.0% of total revenue, representing a $2.8
million decrease as compared to $37.5 million, or 15.3% of total revenue,
for the twelve months ended December 31, 2006. Included in the 2007 SG&A
is a non-cash charge of approximately $4.2 million in connection with the
acceleration of certain restricted stock grants in December 2007. On a pro-
forma basis, exclusive of this acceleration charge, SG&A was $30.5 million,
or 11.5% of total revenue, representing an 18.7% or $7.0 million reduction
as compared to 2006;
-- In connection with its December 31, 2007 financial statements the
Company elected to record a $29.2 million valuation allowance against its
deferred tax asset. This represented a $28.7 million increase as compared
to December 31, 2006. This increase in valuation allowance represented
approximately $(1.78) per share of the loss;
-- Details of the Company's gross new orders, cancellations, deliveries
and backlog for the twelve months ended December 31, 2007 and 2006 are as
follows:
Twelve months ended December 31, 2007
===============================================
Washington North
Metro Area Carolina Georgia Total
=========== =========== =========== ===========
Gross new orders 559 152 116 827
Cancellations 162 28 24 214
Net new orders 397 124 92 613
Gross new order revenue $ 123,909 $ 38,017 $ 35,936 $ 197,862
Cancellation revenue $ 69,974 $ 8,476 $ 7,594 $ 86,044
Net new order revenue $ 53,935 $ 29,541 $ 28,342 $ 111,818
Average gross new order
price $ 222 $ 250 $ 310 $ 239
Settlements 669 131 86 886
Settlement revenue -
homebuilding $ 174,584 $ 31,644 $ 26,577 $ 232,805
Average settlement price $ 261 $ 242 $ 309 $ 263
Backlog units 13 39 18 70
Backlog revenue $ 4,112 $ 12,684 $ 6,051 $ 22,847
Average backlog price $ 316 $ 325 $ 336 $ 326
Twelve months ended December 31, 2006
===============================================
Washington North
Metro Area Carolina Georgia Total
=========== =========== =========== ===========
Gross new orders 625 175 165 965
Cancellations 122 6 43 171
Net new orders 503 169 122 794
Gross new order revenue $ 159,498 $ 45,213 $ 43,236 $ 247,947
Cancellation revenue $ 39,621 $ 2,956 $ 10,631 $ 53,208
Net new order revenue $ 119,877 $ 42,257 $ 32,605 $ 194,739
Average gross new order
price $ 255 $ 258 $ 262 $ 257
Settlements 675 132 107 914
Settlement revenue -
homebuilding $ 180,182 $ 32,255 $ 27,656 $ 240,093
Average settlement price $ 267 $ 244 $ 258 $ 263
Backlog units 285 45 15 345
Backlog revenue $ 123,080 $ 13,245 $ 4,948 $ 141,273
Average backlog price $ 432 $ 294 $ 330 $ 409
About Comstock Homebuilding Companies, Inc.
Established in 1985, Comstock Homebuilding Companies, Inc. is a
publicly traded, diversified real estate development firm with a focus
on affordably priced for-sale residential products. Comstock builds
and markets single-family homes, townhouses, mid-rise condominiums,
high-rise condominiums, and mixed-use urban communities. The company
currently markets its products under the Comstock Homes brand in the
Washington, DC; Raleigh, North Carolina; and Atlanta, Georgia
metropolitan areas. Comstock Homebuilding Companies, Inc. trades on
NASDAQ under the symbol CHCI. For more information on the Company or
its projects please visit 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, DC housing market, are forward-looking statements.
Forward-looking statements involve known and unknown risks and
uncertainties that may cause 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
Company's most recent form 10-K, as filed with the Securities and
Exchange Commission on March 24, 2008. Comstock specifically
disclaims any obligation to update or revise any forward-looking
statements, whether as a result of new information, future
developments or otherwise.
Comstock Homebuilding Companies, Inc.
Balance Sheet December 31,
------------------------
2007 2006
----------- -----------
ASSETS
Cash and cash equivalents $ 6,822 $ 21,263
Restricted cash 4,985 12,326
Receivables 370 4,555
Due from related parties 92 4,053
Real estate held for development and sale 203,860 405,144
Inventory not owned - variable interest
entities 19,250 43,234
Property, plant and equipment 1,539 2,723
Investment in real estate partnership - (171)
Deferred income tax - 10,188
Other assets 22,058 14,114
----------- -----------
TOTAL ASSETS $ 258,976 $ 517,429
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 21,962 $ 55,680
Due to related parties - 1,140
Obligations related to inventory not owned 19,050 40,950
Notes payable 141,214 265,403
Senior unsecured debt 30,000 30,000
----------- -----------
TOTAL LIABILITIES 212,226 393,173
----------- -----------
Commitments and contingencies
Minority interest 231 371
----------- -----------
SHAREHOLDERS' EQUITY
Class A common stock, $0.01 par value,
77,266,500 shares authorized, 15,120,955 and
14,129,081 issued and outstanding,
respectively 151 141
Class B common stock, $0.01 par value,
2,733,500 shares authorized, 2,733,500 issued
and outstanding 27 27
Additional paid-in capital 155,998 147,528
Treasury stock, at cost (391,400 Class A
common stock) (2,439) (2,439)
Accumulated deficit (107,219) (21,372)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 46,519 123,885
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 258,976 $ 517,429
=========== ===========
Twelve Months Ended
Comstock Homebuilding Companies, Inc. December 31,
Income Statement ------------------------
2007 2006
----------- -----------
Revenues
Revenue - homebuilding $ 232,805 $ 240,093
Revenue - other 33,354 5,788
----------- -----------
Total revenue 266,159 245,881
Expenses
Cost of sales - homebuilding 211,068 211,408
Cost of sales - other 34,241 5,249
Impairments and write-offs 78,264 57,426
Selling, general and administrative 34,671 37,500
----------- -----------
Operating (loss) income (92,085) (65,702)
Other (income) expense, net (1,886) (1,487)
----------- -----------
(Loss) income before minority interest and
equity in (loss) earnings of real estate
partnership (90,199) (64,215)
Minority interest (137) 15
----------- -----------
(Loss) income before equity in (loss) earnings
of real estate partnership (90,062) (64,230)
Equity in (loss) earnings of real estate
partnership - (135)
----------- -----------
Total pre tax (loss) income (90,062) (64,364)
Income taxes (benefit) provision (2,552) (24,520)
----------- -----------
Net (loss) income $ (87,510) $ (39,845)
=========== ===========
Basic (loss) earnings per share $ (5.42) $ (2.63)
Basic weighted average shares outstanding 16,140 15,148
=========== ===========
Diluted (loss) income per share $ (5.42) $ (2.63)
Diluted weighted average shares outstanding 16,140 15,148
=========== ===========
Media Contact:
Bruce Labovitz
Email Contact
703.230.1131
SOURCE: Comstock Homebuilding Companies, Inc.