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Comstock Homebuilding Companies, Inc. Reports Record
Results for 2004
The Company Expects Significant Growth in 2005 as it Moves Aggressively to
Invest Capital from December 2004 IPO
RESTON, Va., March 1, 2005 - Comstock Homebuilding Companies, Inc. (CHCI)
("Comstock or the "Company") today announced results for the year and
quarter ended December 31, 2004. Shares of the Company's stock started
trading publicly on December 14, 2004, with the IPO generating net proceeds
to the Company of $67.8 million. The Company, which builds and markets a
variety of new homes and condominiums primarily in the Greater Washington,
D.C. market, will conduct a conference call for interested investors on
Wednesday, March 2, 2005, at 9:00 AM Eastern Standard Time. During the call,
the Company will provide investors with guidance as to its expectations for
the first quarter and full year of 2005 that is also summarized in this
release. The dial-in number for the call is 866-761-0748 and the access code
is 59484192; the call may also be accessed on the Internet at
http://www.comstockhomebuilding.com in the Investor Relations section.
Background Information:
On December 17, 2004, Comstock, as part of its consolidation of operations
in connection with its IPO, merged its Washington, DC and Raleigh, North
Carolina operations together. Because the merger of Comstock's Raleigh
operation was treated as an acquisition for accounting purposes, the results
from Comstock's Raleigh operation prior to December 17, 2004 are not
included in the Company's year-end financial statements. This resulted in
the exclusion of approximately $19 million (unaudited) of revenue from
homebuilding generated in Raleigh.
For the calendar year 2004, Comstock operated as a taxable entity only from
December 17 to December 31. Comstock will operate as a taxable entity for
the full calendar year 2005.
On December 17, 2004, Comstock sold 3,960,000 shares of Class A common stock
to the public as part of its initial public offering. Post closing, the
Company had 11,026,667 shares issued and outstanding. On December 28, 2004,
the underwriters for the offering exercised their over-allotment option to
purchase an additional 594,000 shares. The Company then had 11,620,667
shares outstanding. Based on the number of days that Comstock was public
during 2004, the weighted average outstanding shares for the year ended
December 31, 2004 were 7,346,618 (basic) and 7,350,685 (diluted). The
weighted average outstanding shares for the three months ended December 31,
2004 were 8,167,109 (basic) and 8,183,379 (diluted).
As a result of permitting delays in one of the Company's key sub-markets,
the Company experienced an unbalanced delivery of units in 2003 with more
than 60 percent of its settlements occurring in the fourth quarter. This
resulted in an exaggerated basis in the fourth quarter of 2003 for purposes
of quarter over quarter comparisons. This phenomenon, which is not uncommon
and is relatively unpredictable, is likely to occur again in 2005. The
Company has factored this into its guidance outlined below.
Full Year Results: The Company generated record results in 2004. The
contract value of new orders for the year ended December 31, 2004 was $241.0
million on 665 new orders as compared to $81.3 million on 258 new orders for
the year ended December 31, 2003, a 196 percent increase in the value of the
new orders and a 158 percent increase in new home orders. Total revenue
increased 73 percent, from $55.5 million in 2003 to $96.0 million in 2004,
with $87.0 million of revenue from homebuilding in 2004 as compared to $49.1
in 2003. The Company delivered 263 new homes at an average price of $328,000
in 2004 versus 162 new homes at an average price of $303,000 in 2003.
Operating income grew 150 percent, from $8.1 million for 2003 to $20.1
million for 2004, due to a significant increase in operating margin from
14.5 percent to 20.9 percent. Net income after tax increased 141 percent
from $5.9 million in 2003 to $14.3 million in 2004. On a proforma basis,
including its Raleigh operation, the Company delivered 328 new homes in 2004
for combined revenue from homebuilding of $105.2 million (unaudited).
Fourth Quarter Results: The contract value of new orders for the
fourth quarter of 2004 was $60.4 million on 131 new orders as compared to
$17.2 million on 50 new orders for the fourth quarter of 2003, a 358 percent
increase in the value of the new orders and a 162 percent increase in new
orders. Total revenue for the three months ended December 31, 2004 was $21.5
million with $19.4 million of revenue from homebuilding, as compared to
total revenue of $32.3 million for the fourth quarter of 2003 with $29.8
million of revenue from homebuilding. The reason for the decrease in revenue
as noted above was that revenue for the fourth quarter of 2003 was unusually
disproportionate to the balance of the year as a result of permitting delays
in one of the Company's sub-markets. The Company delivered 55 new homes at
an average price of $352,000 in the fourth quarter of 2004 versus 98 new
homes at an average price of $304,000 in the fourth quarter of 2003.
Operating income for the fourth quarter of 2004 was $4.9 million, or 23
percent of sales, compared to $5.5 million, or 17 percent of sales, in the
same quarter of 2003. Net income after tax for the quarter decreased from
$4.1 million in the fourth quarter of 2003 to $3.7 million in fourth quarter
of 2004.
Per Share Results: Both basic and fully diluted earnings for the
twelve months ended December 31, 2004, was $1.95 per share based on a
weighted average shares outstanding of 7.4 million shares for 2004. Both
basic and fully diluted earnings for the three months ended December 31,
2004, were $0.45 per share based on a weighted average shares outstanding of
8.2 million for the fourth quarter of 2004. Both basic and diluted earnings
for the year ended December 31, 2003 were $0.84 per share based on 7.1
shares outstanding, adjusted for the offering.
On an unaudited proforma basis as if the Company had been taxable for the
entire year at a 38 percent effective tax rate the basic and diluted
earnings for the twelve months ended December 31, 2004 would be $1.19 per
share based on a weighted average shares outstanding of 7.4 million shares
for 2004. Under the same assumption, the basic and diluted earnings for the
three months ended December 31, 2004 would be $0.26 per share based on a
weighted average 8.2 million shares outstanding.
On an unaudited proforma basis as if the Company's earnings had been taxable
for the entire year at a 38 percent effective tax rate, the basic earnings
for the twelve months ended December 31, 2004 would be $0.75 per share based
on total outstanding shares at December 31, 2004 of 11.6 million shares.
Under the same assumption, the basic earnings for the three months ended
December 31, 2004 would be $0.18 per share based on total outstanding shares
at December 31, 2004 of 11.6 million shares.
Please see the table setting forth unaudited proforma net income and
proforma net income per common share accompanying the attached financial
results for further information on this proforma data.
Balance Sheet at December 31, 2004: The Company's year-end balance sheet
reflected dramatic growth as a result of the public offering. Total assets
at year-end increased $214.3 million to $304.6 million from $90.2 million at
year-end 2003 with increases between years resulting from accumulation in
land position and an increase in cash on hand. As compared to December 31,
2003, real estate held for development and sale increased $39.1 million
primarily as a result of the acquisition of Comstock Service Corp.
(Comstock's Raleigh operation) and the acquisition of new inventory;
Inventory not owned - Variable Interest Entities increased $119 million
resulting from consolidation of the value of five (5) land contracts for
which we had $4 million of non- refundable deposits posted in the aggregate;
and cash increased $57.9 million as a result of the Company's IPO. The
Company ended 2004 with a backlog of 453 ordered but undelivered homes
valued at $174.6 million as compared to 113 units valued at $36.4 million at
December 31, 2003. This represents a 301 percent increase in homes and a 380
percent increase in contract value.
Operating Achievements: The Company realized several significant operating
achievements in 2004, among them:
* The Eclipse at Potomac Yard, the Company's first multi-family high-rise
condominium project was introduced to the market with great success, with
309 unit sales valued at $117.4 million;
* The Company accelerated its land acquisition effort as evidenced by 'Real
estate held for development and sale' of $104 million and 'Inventory not
owned -- Variable Interest Entities' of $118 million at December 31, 2004;
* The Company ended 2004 with approximately 4,000 lots under its direct
control with a market value well in excess of its historical carrying cost;
* In connection with its IPO, the Company successfully negotiated the
purchase of the interests of certain of its minority interest members.
Guidance For the Quarter and Year Ahead: During the Company's investor
conference call scheduled for tomorrow, the expectations for the quarter and
year ahead will be discussed. In summary, the Company believes that its core
market of Greater Washington will continue to be characterized by
significant demand for new housing due to the region's growth and that in
2005 demand for new homes will be greater than the anticipated supply. As a
result, not only does the Company expects to be able to increase the number
of units it sells and settles, it expects that the average sales price and
average revenue per home of its various models should increase.
The Company expects that revenues for the first quarter of 2005, ending
March 31, 2005, will be between $28 million - $29 million, with net income
after tax of between $2.5 million - $2.7 million. This equates to an
estimated range of between $0.20 - $0.23 per share on a fully diluted basis.
The Company expects that total revenue for the year ending December 31, 2005
will be between $250 million - $260 million with an estimated earnings range
of between $2.15 - $2.20 per share (diluted) on an estimated 11.9 million
shares.
Based on the lot inventory currently under the Company's control and the
significant percentage of its backlog at December 31, 2004 that is projected
to settle beyond 2005, the Company currently estimates that it will deliver
revenue in 2006 that represents a 50 - 60 percent increase over 2005.
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.
About Comstock Homebuilding Companies, Inc.
Comstock is a production homebuilder that develops, builds, and markets
single-family homes, townhouses, and 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.
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