Comstock Holding Companies, Inc. Reports Second-Quarter 2013 Results *2Q homebuilding revenue of $12.0 million compared to $3.8 million in Q2 last year *2Q net income from continuing operations of $0.1 million compared to net loss of $(1.9) million last year *Net new home orders increased to 77 for the first six months of 2013 compared to 34 in the prior year *Backlog of $18.8 million at quarter-end, up from $1.5 million one year earlier Business Wire RESTON, Va. -- August 13, 2013 Comstock Holding Companies, Inc. (NASDAQ: CHCI) (“Comstock” or the “Company”), a homebuilding and multi-faceted real estate development and services company in the Washington, D.C. metropolitan area, today announced results for the second quarter of 2013, ended June 30. Business Update “For the second consecutive quarter, our homebuilding revenue for just three months approximated the homebuilding revenue we generated for the full year 2012,” remarked Chairman and CEO Christopher Clemente. “These results reflect the rebounding demand for new homes in the Washington, D.C. area and the positive response to the new communities and products Comstock is bringing to market. “Sales at our open communities continue to reflect increased demand for new homes and the reduced inventory of existing homes for sale. Our robust sales in the first half of 2013 enabled us to generate total first-half revenue of $23.8 million, significantly outpacing last year’s results, while generating current backlog as of August 13th of $23.2 million on 52 pre-sold units. “However, delays in permitting for our newer projects and the well-publicized shortage of skilled labor have resulted in what we believe are temporary production cycle delays. We are now projecting settlements of 125-130 units with a significant number of these settlements to occur in the fourth quarter of 2013. As a result, we expect to report revenue from our homebuilding operations to approximate $64 million and break-even or marginal profitability for 2013.” Clemente added, “Returning Comstock to profitability for 2013 while positioning for additional growth and profitability in 2014 remains a top priority. We are confident in the steps we have taken to position Comstock for further growth in 2014 and look forward to opening additional communities that will build on the progress we have made this year. Recently, we started site development at two new communities:The Townes at Shady Grove Metro (36 townhouses located in Rockville, MD) and Falls Grove (19 single family homes and 110 townhomes located in Manassas, VA). We are also preparing to commence work on additional projects in Loudoun County, VA and Frederick, MD, with the goal of having seven active communities by early 2014. “We anticipate that our production cycle will normalize by early 2014, as critical subcontractor trades increase their workforce to meet the resurgent demand in the Washington, D.C. market. The demonstrated demand for our products, tightening inventory and improved market pricing trends bode well for a 2014.” Second-Quarter 2013 Financial Results Net new orders of homes increased to 44 for the three months ended June 30, 2013 from 14 in the prior year. For the six months ended June 30, 2013, net new orders increased to 77 from 34 in the prior year. The improved order trends resulted in increased backlog of 43 units (representing $18.8 million in revenue) for the six months ended June 30, 2013 compared to eight (representing $1.5 million in revenue) in the prior year. Average backlog price increased to $438,000 from $187,000 in the prior year. Total revenue for the second quarter of 2013 totaled $12.2 million ($12.0 million from 22 home settlements) compared to $4.2 million ($3.8 million from 12 home settlements) for the 2012 second quarter. The Company reported net income from continuing operations of $0.1 million for the second quarter of 2013 compared to a net loss from continuing operations of $(1.9) million for the same period in 2012. In the second quarter of 2013, net loss attributable to Comstock Holding Companies totaled $(0.8) million, or $(0.04) per diluted share, compared to $(3.1) million, or $(0.15) per diluted share, in the prior-year period. The 2012 period included a loss of $(1.2) million within net (loss) income from discontinued operations resulting from the tax impact of the $19.35 million sale of Cascades Apartments, the Company’s first investment grade multi-family property. The Company’s first-quarter 2013 results reflected the reversal of an impairment charge of $0.7 million reflecting increased sales activity at its Eclipse project, which was fully settled and exited by the Company in the second quarter of 2013. Pipeline Update (see Exhibit 1 and Exhibit 2) 73 townhome lots and 38 single-family lots in the Lamond Riggs neighborhood in northeast Washington, D.C. Construction on the single-family units began in August 2012, with the first closings occurring in March 2013. • Hampshires Construction on the townhomes began in April 2013 and the sales center opened in July 2013. There are eight single family units currently in backlog, with average revenue of $730,000. There are seven townhome units currently in backlog, with average revenue of $550,000. 36 townhome lots and 117 multi-family lots across the • Shady Grove street from the Shady Grove Metro station in Rockville, MD (Montgomery County). Closing on the property took place in March 2013 and site development began on schedule in June. 110 townhome lots and 19 single family lots off Route 28 in Manassas, VA (Prince William County). The Company purchased the first seven single-family lots in 2011, • Falls Grove closing on the remaining lots in May 2013. Site development began on schedule in June 2013 and the community’s sales center opened in July. There are nine units currently in backlog with average revenue of $285,000. 66 finished “six-plex” lots in Chantilly, VA (Loudoun County). Construction on the units began in December 2012, • Eastgate with the first closings occurring in March 2013. There are 28 units currently in backlog, with average revenue of $390,000. About Comstock Holding Companies, Inc. Comstock is a homebuilding and multi-faceted real estate development and services company that builds a wide range of housing products under its Comstock Homes brand through its wholly owned subsidiary, Comstock Homes of Washington, LC. Our track record of developing numerous successful new home communities and more than 5,500 homes, together with our substantial experience in building a diverse range of products including apartments, single-family homes, townhouses, mid-rise condominiums, high-rise condominiums and mixed-use (residential and commercial) developments has positioned Comstock as a leading residential developer and homebuilder in theWashington, D.C.metropolitan area. Comstock Holding Companies, Inc. is a publicly traded company, trading on NASDAQ under the symbol CHCI. For more information about Comstock or its new home communities, please visit www.comstockhomes.com. Cautionary Statement Regarding Forward-Looking Statements This release includes “forward-looking” statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of words such as “anticipate,” “believe,” “estimate,” “may,” “intend,” “expect,” “will,” “should,” “seeks” or other similar expressions. Forward-looking statements are based largely on our expectations and involve inherent risks and uncertainties, many of which are beyond our control. You should not place undue reliance on any forward-looking statement, which speaks only as of the date made. Some factors which may affect the accuracy of the forward-looking statements apply generally to the real estate industry, while other factors apply directly to us. Any number of important factors which could cause actual results to differ materially from those in the forward-looking statements include, without limitation: general economic and market conditions, including interest rate levels; our ability to service our debt; inherent risks in investment in real estate; our ability to compete in the markets in which we operate; economic risks in the markets in which we operate, including actions related to government spending; delays in governmental approvals and/or land development activity at our projects; regulatory actions; fluctuations in operating results; our anticipated growth strategies; shortages and increased costs of labor or building materials; the availability and cost of land in desirable areas; natural disasters; our ability to raise debt and equity capital and grow our operations on a profitable basis; and our continuing relationships with affiliates. Additional information concerning these and other important risk and uncertainties can be found under the heading “Risk Factors” in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, for the fiscal year ended December 31, 2012. Our actual results could differ materially from these projected or suggested by the forward-looking statements. Comstock claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements contained herein. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Exhibit 1 Settled Revenue by Community Three Months Ended June 30, 2013 Community Settled Settled Revenue Eastgate Villas 6 $2,268,835 The Hampshires - Singles 4 3,039,877 The Hampshires - Towns 1 503,940 Penderbrook Square (Sold Out Q1) - - The Eclipse 11 6,174,500 Total 22 $11,987,152 Six Months Ended June 30, 2013 Community Settled Settled Revenue Eastgate Villas 11 $4,100,175 The Hampshires - Singles 10 7,509,527 The Hampshires - Towns 1 503,940 Penderbrook Square (Sold Out Q1) 2 365,000 The Eclipse 19 10,904,200 Total 43 $23,382,842 COMSTOCK HOLDING COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except per share data) June 30, 2013 December 31, 2012 ASSETS (unaudited) Cash and cash equivalents $ 11,411 $ 3,539 Restricted cash 3,575 3,203 Trade receivables 1,675 1,611 Real estate held for development and 28,427 27,781 sale Property, plant and equipment, net 266 222 Other assets 2,329 2,343 TOTAL ASSETS $ 47,683 $ 38,699 LIABILITIES AND SHAREHOLDERS’ EQUITY Accounts payable and accrued $ 7,314 $ 4,691 liabilities Notes payable - secured by real 16,784 19,492 estate held for development and sale Notes payable - due to affiliates, 4,956 5,041 unsecured Notes payable - unsecured 2,838 3,096 Income taxes payable - - TOTAL LIABILITIES 31,892 32,320 Commitments and contingencies (Note - - 10) SHAREHOLDERS’ EQUITY Class A common stock, $0.01 par value, 77,266,500 shares authorized, 18,395,978 and 17,969,345 issued and 184 176 outstanding, respectively Class B common stock, $0.01 par value, 2,733,500 shares authorized, 27 27 issued and outstanding Additional paid-in capital 170,535 170,070 Treasury stock, at cost (426,633 (2,480 ) (2,480 ) shares Class A common stock) Accumulated deficit (162,464 ) (162,349 ) TOTAL COMSTOCK HOLDING COMPANIES, 5,802 5,444 INC. EQUITY Non-controlling interest 9,989 935 TOTAL EQUITY 15,791 6,379 TOTAL LIABILITIES AND SHAREHOLDERS’ $ 47,683 $ 38,699 EQUITY COMSTOCK HOLDING COMPANIES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2013 2012 2013 2012 Revenues Revenue—homebuilding $ 11,987 $ 3,766 $ 23,383 $ 6,952 Revenue—other 226 478 387 1,227 Total revenue 12,213 4,244 23,770 8,179 Expenses Cost of 9,621 3,302 18,417 6,056 sales—homebuilding Cost of sales—other 276 743 497 1,807 Impairment reversal - - (722 ) - (Note 2) Selling, general and 2,215 2,096 4,212 3,982 administrative Interest, real estate taxes and indirect costs 118 1,192 344 1,792 related to inactive projects Operating (loss) (17 ) (3,089 ) 1,022 (5,458 ) income Other income, net 131 8 158 37 Income (loss) before 114 (3,081 ) 1,180 (5,421 ) income tax benefit Income tax benefit - 1,202 - 2,114 Net income (loss) from continuing 114 (1,879 ) 1,180 (3,307 ) operations Discontinued operations: Income (loss) from discontinued - 16 (4 ) (106 ) operations (Loss) gain on sale of real estate from - (50 ) - 6,466 discontinued operations Income tax expense from discontinued - (1,202 ) - (2,114 ) operations Net (loss) income from discontinued - (1,236 ) (4 ) 4,246 operations Net income (loss) 114 (3,115 ) 1,176 939 Less: Net income from continuing operations 952 - 1,291 - attributable to non-controlling interests Less: Net income from discontinued operations - - - 103 attributable to non-controlling interests Net (loss) income attributable to $ (838 ) $ (3,115 ) $ (115 ) $ 836 Comstock Holding Companies, Inc. Basic (loss) income per share from: Continuing $ (0.04 ) $ (0.09 ) $ (0.01 ) $ (0.16 ) operations Discontinued - (0.06 ) - 0.20 operations Net (loss) income $ (0.04 ) $ (0.15 ) $ (0.01 ) $ 0.04 per share Diluted (loss) income per share from: Continuing $ (0.04 ) $ (0.09 ) $ (0.01 ) $ (0.16 ) operations Discontinued - (0.06 ) - 0.20 operations Net (loss) income $ (0.04 ) $ (0.15 ) $ (0.01 ) $ 0.04 per share Basic weighted average shares 20,674 20,431 20,599 20,359 outstanding Diluted weighted average shares 20,674 20,431 20,599 20,359 outstanding Net (loss) income attributable to Comstock Holding Companies, Inc.: (Loss) income from continuing $ (838 ) $ (1,879 ) $ (111 ) $ (3,307 ) operations (Loss) income from discontinued - (1,236 ) (4 ) 4,143 operations Net (loss) income $ (838 ) $ (3,115 ) $ (115 ) $ 836 COMSTOCK HOLDING COMPANIES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands, except per share data) Six Months Ended June 30, 2013 2012 Cash flows from operating activities: Net income $ 1,176 $ 939 Adjustment to reconcile net income to net cash provided by (used in) operating activities Amortization of loan discount and deferred 305 1,424 financing fees Depreciation expense 25 99 Provision for bad debt 2 - Earnings from unconsolidated joint venture 42 - Gain on sale of operating real estate, net - (6,466 ) Loss on disposal of property, plant and - 1 equipment Impairment reversals (722 ) - Amortization of stock compensation 278 599 Changes in operating assets and liabilities: Restricted cash (372 ) (32 ) Trade receivables (66 ) 1,162 Real estate held for development and sale 132 4,294 Other assets (482 ) (952 ) Accrued interest (116 ) (709 ) Accounts payable and accrued liabilities 2,623 (1,398 ) Income taxes payable - (10 ) Net cash provided by (used in) operating 2,825 (1,049 ) activities Cash flows from investing activities: Investment in unconsolidated joint venture (7 ) - Purchase of property, plant and equipment (69 ) - Proceeds from sale of Cascades Apartments - 279 18,400 operating real estate, net Net cash provided by investing activities 203 18,400 Cash flows from financing activities: Proceeds from notes payable 16,235 9,960 Payments on notes payable (19,170 ) (22,995 ) Loan financing costs (123 ) - Contribution from non-controlling interests 614 - Distribution to non-controlling interests - (2,944 ) holders Proceeds from Comstock Investor VII, L.C. 7,295 - private placement Proceeds from exercise of stock options 1 - Taxes paid related to net share settlement (8 ) - of equity awards Net cash provided by (used in) financing $ 4,844 (15,979 ) activities Net increase in cash and cash equivalents 7,872 1,372 Cash and cash equivalents, beginning of 3,539 5,639 period Cash and cash equivalents, end of period $ 11,411 $ 7,011 Supplemental disclosure for non-cash activity: Interest paid, net of interest capitalized $ 212 $ 1,334 Reduction in proceeds from sale of Cascades Apartment and increase in other assets $ - $ 950 related to amounts placed in escrow upon settlement of Cascades Apartments sale Increase in class A common stock par value in connection with issuance of stock $ 8 $ - compensation and warrants exercise Contact: Company: Comstock Holding Companies, Inc. Joe Squeri, 703-230-1229 Chief Financial Officer or Investor Relations: LHA Jody Burfening / Harriet Fried 212-838-3777 firstname.lastname@example.org
Comstock Holding Companies, Inc. Reports Second-Quarter 2013 Results
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